TAG Oil Blog

2014 New Zealand Petroleum & Minerals Block Offer Awards

Posted by Denise della Santina on Dec 16, 2014 2:31:00 PM

Every year, the government of New Zealand allocates petroleum exploration permits in an annual tender called a Block Offer. This year’s was the most successful to date, with 15 permits granted, totaling 405,000 square kilometers. There was strong interest from existing operators and new players, paying off New Zealand Petroleum & Minerals’ efforts to raise awareness of New Zealand’s oil and gas exploration potential, and the government’s commitment to support responsible investment in petroleum exploration. 

TAG Oil received both permits that we bid on, both located in the Taranaki Basin: Permit 57065 (“Sidewinder North”) and Petroleum Exploration Permit 57063 (“Waiiti”), adding 36,781 acres to the Company’s portfolio. As noted in a press release late last week, the permits are situated in a prolific oil and gas production fairway in close proximity to producing oil and gas fields, making them strategic for TAG, and complementary to our existing producing operations.

Sidewinder North provides an opportunity to extend TAG Oil’s known Sidwinder oil and gas discovery play area, while Waiiti gives TAG the opportunity to explore for both shallow Miocene oil and deep Eocene condensate-rich gas, where a prior operator encountered significant elevated gas and oil shows. 

Tag OilNew Zealand Country Manager Max Murray (left) at the ceremony with Minister of Energy and Resources, Simon Bridges (right). 

Topics: Taranaki, Announcements

Building strong minds and bodies

Posted by Denise della Santina on Nov 26, 2014 2:48:00 PM

While our TAG team in North America is being buffeted by winter rains and cold temps, our New Zealand community is enjoying oncoming summer. And with the good weather come some of our favorite community sponsorship events. 

Surf Life Saving: a sport and a community service

Surrounded by water as we are, surf safety and respect for the ocean are ingrained in every New Zealand child from a young age. TAG contributes to hundreds of junior surf lifeguards in training, helping them with the opportunity to become full-fledged Surf Life Guards through fun training and competition.

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Never too young for surf life saving
and fun on the beaches of Taranaki. 

 

     

 

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Some challenging surf encountered by
the older surf life saving participants.

 

Meanwhile, on terra firma…

The Stratford Golf Club, sponsored by TAG Oil, held a golf tournament for primary schools in the central Taranaki region. More than 50 students took to the fairways to play in the TAG Oil Juniors tournament. And during the four weeks leading up to the tournament and a professional coach came in one day a week to provide lessons. 

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TAG’s land liaison manager Rodney Hosking, back row, was present to hand out the prizes to this fine group of golfers.

Topics: community, Taranaki, New Zealand

Drilling and optimization work has resumed in Taranaki

Posted by Denise della Santina on Nov 14, 2014 3:14:00 PM
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There hasn’t been much blog news from the field lately, sometimes geology and science can be quiet, solitary stuff. But we’re pleased to report that as of October 2014 TAG achieved record monthly production of 1,990 BOE (76% oil) per day. 

And now with the Nova-1 drill rig back in Taranaki we’ve resumed the next wave of development, appraisal, step-out drilling, and field optimization work in our Taranaki oil and gas fields.

We’re kicking off this portion of TAG Oil’s Taranaki drilling campaign with the Cheal-E-JV-6 and the Cheal-E7 wells, acreage that we believe is prospective for high productivity wells. The strong production performance of Cheal-E1, Cheal-E4, and Cheal-E5 makes further development of the Cheal-E site particularly compelling.

 When finished, the Nova-1 drill rig will move to our Sidewinder oil and gas field to target the oil potential identified from oil shows encountered in TAG’s six Sidewinder gas wells. This acreage borders the Ngatoro/ Kaimiro field, which has been producing for 31 years, and still has millions of BOE’s of recoverable reserves remaining. 

Cardiff-3 Deep Uphole Completion Update

After further technical analysis of Cardiff-3’s lower K3E zone (which returned gas and condensate but at uneconomic rates), TAG is now in the planning stages to production test the primary uphole zones, the McKee and K1A Formations. These are both producing formations in large fields along trend to the Cardiff prospect.

Near-term anticipated schedule for Taranaki operations

Permit Number

Well Name

TAG Working Interest

Date

PEP 54877

Cheal-E-JV-6 development

70%

Nov 2014

PMP 38156

Cheal-E7 appraisal

100%

Dec 2014

PEP 54877

Recomplete Cheal-E-JV-2

70%

Jan  2015

PMP 38156

Build Cheal E to A pipeline

100%

Feb 2015

PMP 38156

Cardiff-3 uphole test

100%

Mar 2015

PEP 55769

Sidewinder-B1

100%

Apr 2015

PEP 55769

Sidewinder-B2

100%

May 2015

Topics: Taranaki, Cheal Oil Field, Sidewinder Discovery, Cardiff Deep Gas, drilling

TAG Oil sponsors a festive Taranaki community event

Posted by Denise della Santina on Oct 23, 2014 2:15:00 PM

When most of us think of a mid-December festival, we envision frost, hot apple cider, mittens, and short days with long nights. In New Zealand, however, the annual New Plymouth Festival of Lights kicks off on December 14th to celebrate the southern hemisphere’s summer season.  

Summer Scene, sponsored by TAG Oil and Horizon Energy Services, is the daytime events' portion of the greater Festival, specially planned for children and families. It includes a scavenger hunt, a big beach dig, craft-making and a craft sale, magician shows, picnics, the return of the popular futsal court, where families and friends challenge one another to five-a-side football matches, and much more.

Twilight Craft Sale2

Melissa Devine-Collins, New Plymouth District Council events manager, told The Taranaki Daily News, "Having these companies on board will make it easier for us to deliver an exciting programme of events for children and adults this summer."

The entire event was voted the “Best Established Community Event in New Zealand,” by the New Zealand Association of Event Professionals, and we’re proud to be taking part! To learn more and keep an eye on the schedule of activities, go to the Festival of Lights website.

Topics: community, Taranaki, New Zealand

TAG Oil sponsors Tough Kid 2014!

Posted by Denise della Santina on Sep 19, 2014 6:07:00 PM

Tough Kid 2014, sponsored by TAG Oil and hosted by Sport Taranaki, is all set for its third year with a whopping 1,450 sold-out competitors.

These primary schoolers will compete in an obstacle course that includes a water slide, tire scramble and much more, around the back fields of Yarrow Stadium.

The event is designed to teach children how to overcome challenges, and to promote health and physical activity in a fun way.

TAG is proud to partner with Sport Taranaki, a community-focused organization dedicated to the promotion of sport and physical recreation, to make this event happen. And it’s truly a community event: The local police are on board as volunteers, and the fire department will help maintain the giant water slide.

Be safe, have a blast, and to our minds, everyone who competes is a winner.

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Topics: community, Taranaki

NZCT AIMS GAMES International Sporting Championships

Posted by Denise della Santina on Sep 12, 2014 4:58:00 PM

The 11th NZCT AIMS Games – possibly New Zealand's biggest sporting event – launched this week in Tauranga.

TAG Oil sponsored the sports bags for the Oakura Primary Football team, who have joined 7,500 other athletes from around New Zealand to participate in the AIMs games.

This year’s athletes come from 228 schools participating in 17 sports, and more than 10,000 attendees are expected to descend upon Tauranga, on the east coast of the North Island.

The boys are playing well and are having a great week, and we wish good luck to all the athletes! 

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Topics: community, Taranaki, New Zealand

Cheal Oil & Gas Field: Good News for Production and Development Drilling

Posted by Denise della Santina on Aug 13, 2014 8:14:00 AM

As announced last week, shallow development drilling and production in the Taranaki are averaging about 1,959 barrels of oil equivalent (“boe”) per day, 80% of which is oil. So we're on track with the estimates CEO Garth Johnson and COO Drew Cadenhead gave in TAG Oil's last quarterly call. With continued success via the drill bit, the Company expects to meet its May 2014 forecast of an average daily production rate of 2,000 boe per day and cash flow generated from operations of $40 million for FY 2015.

Almost all of the current production comes from TAG Oil’s lightly explored Cheal and Greater Cheal oil and gas fields. When we include our Sidewinder field, we have another 50 shallow, drill-ready prospects identified, and we expect more to come as work continues over the years ahead.

After a drop in gas production in Q3/Q4 2014, daily production rates for the last three quarters have stabilized, with high-net-back oil steadily growing to 78% of the daily production. Growing oil production generates stronger revenues, as seen in Q4/14 and Q1/15: increased oil production has resulted in netbacks increasing from $49 per BOE in Q1/14 to more than $70 per BOE in Q1/15.

TAG gas oil rev chart 8.14

Topics: Cheal Production Facility, Taranaki, Cheal oil and gas site, oil and gas production

Cheal South Permit Testing Update

Posted by Denise della Santina on Aug 11, 2014 9:30:00 AM

Here are a few pictures of our Cheal South permit (TAG Oil: 50% interest), during initial testing of the Cheal-G1 well that may prove to be economic.

As announced back in May, in a 50-50 joint venture with East West Petroleum, TAG drilled four shallow exploration wells and one exploration sidetrack well within the Cheal South and Southern Cross areas. While the other wells on this site were plugged and abandoned, the Cheal-G1 well is currently undergoing production testing as a new discovery. 

Pic1

Site setup for G1 well testing - flare tank (center) lineheater (middle) test separator (right) power fluid (left).

Pic2

G1 power fluid pump and temporary tanks.

     

Pic3

G1 temporary wellhead hookup.
 

Pic4

Flaring off excess G1 gas during testing, the only time it’s necessary anymore.
 

     

Pic5

Self-contained well test separator complete with gas, water, and hydrocarbon measurement.

Topics: Taranaki, New Zealand, Cheal G site, Cheal Oil Field

Year-end, and full speed ahead.

Posted by Denise della Santina on Jul 14, 2014 2:24:00 PM

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What better way to bookend TAG Oil’s 2014 fiscal year than with great panoramic shots of two exploration drill sites: above is the Taranaki Basin at Southern Cross, and below is our upcoming Waitangi Valley-1 well drilling pad in the East Coast Basin.

It was a good year at TAG, with active step-out drilling and approximately 893,000 BOE of new gross reserves to date. New discovery area production has been consistent and that success has opened up several new, promising, development drilling locations.

On the other side of the island is the Waitangi Valley-1 drill site. This exploration prospect is TAG's second unconventional well, this time targeting the source rocks in a deeper basinal setting than the Ngapaeruru-1 well. It also includes possible conventional discovery potential, as we drill through a number of Miocene-age sands similar to what we produce from in Taranaki.

At Cardiff-3 we are planning an uphole completion once the drilling data has been further analyzed and our team has determined the best way to complete the well.

Meanwhile, sticking to plan and equipment availability, we move on to development drilling within TAG’s 100%-owned, proven Cheal field, the newly discovered Greater Cheal area, and two new step-out wells targeting the oil potential in our lightly explored Sidewinder field acreage, neighbor to the successful Ngatoro field, which has been producing high netback oil for more than 25 years.

Company finances remain strong, and so does our commitment to the community, as we fund a Stratford High School scholarship (hats off to this year’s winner Anna England, who will be studying Geology at Victoria University), sponsoring the Taranaki Rugby Football Union, the New Plymouth Surf Life Saving Club, donating a new kitchen to the Ngaere School, and much more.

There’s much to do and we’re all energized!

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Topics: East Coast Basin, Financials, unconventional oil, Taranaki, Cheal Oil Field, Cardiff Deep Gas

Strategy stays the course, even as new plans take shape

Posted by Denise della Santina on May 21, 2014 11:05:00 AM

TAG Oil CEO Garth Johnson and COO Drew Cadenhead took to the phone lines last week to discuss recent drilling announcements and the new fiscal year’s operational plans. Typically forthright, forthcoming and realistic, they outlined the Company’s plans and answered participant questions.

TAG’s vision remains in focus, to:

  • Grow baseline reserves, production, and cash flow in Taranaki
  • Build a steady stream of long-term predictable cash flow from production
  • Continue to pursue high-impact Taranaki exploration in deep Kapuni and the offshore Kaheru
  • Unlock the vast potential of unconventional East Coast basin assets
  • Focus on maintaining balance sheet strength.

Said CEO Johnson: “Our approach to our business plan has always been to start off with an understanding of what we can afford to do. We high-grade our prospects that we have in inventory. We analyze our commitments to maintain permits in good standing. And we agree what the acceptable risks are versus the potential returns with each drill prospect, and then we execute our plan.

We always consider the amount of value that can be created by a variety of potential programs as part of our process. So we ensure we choose the right program that provides an opportunity for large-scale success without putting the Company at risk financially….

Can we guarantee success? No. But we set our sights high. We work hard. We study our data. We learn from our mistakes. We manage the risks and we stick to our business plan, which gives us the best shot at success.”

Specific details of the CapEx program

TAG has defined a $60 million CapEx program for the fiscal year, fully funded through forecasted cash flow and working capital on-hand. The investments break down as follows:

  • $31 million invested in onshore shallow Taranaki, to:

        -  Drill five low-risk Cheal wells and two higher risk Sidewinder B oil wells

        -  Acquire new seismic

        -  Complete plant, facility and well optimization work

  • $5 million slated for offshore Taranaki in preparation to drill the Kaheru prospect (40% interest)
  • $3 million for an uphole completion at Cardiff-3, once the data has been studied
  • $1 million to drill a well in the frontier Canterbury basin, where oil and gas seeps onshore and discoveries offshore have confirmed the hydrocarbon system is working
  • $20 million to drill and test East Coast unconventional wells:

         - Drill the new Waitangi Valley-1 well

         - Drill the new Boar Hill-1 well

         - Test the Ngapaeruru 1 well at the same time

On recent challenges

  • Sidewinder Miocene gas BOEs declined rapidly early on, but are now steady at 150 BOEs a day.
  • While Cardiff’s deepest K3E zone wasn’t immediately successful, the data confirms the zone is filled with hydrocarbons: gas, oil and condensate. We just have to figure out how best to unlock it.
  • Meanwhile, the upper two, previously proven zones, are our next target, as soon as we have a rig free.
  • The only economical rig in New Zealand is the Nova 1 rig, which is booked for two Cheal-B wells starting next week, then one East Coast deep well at Waitangi Valley. So we're looking at three to six months before that rig returns to Taranaki.
  • While the actual operational aspects of the completion and testing are quick, the pre-operational setup steps for fracking in New Zealand are long and involved, and also fairly new. These include specific consents both on regional district council consents, water consents, and much more.
  • Because we have to mobilize an entirely different set of equipment over to the east coast to test wells, we made a strategic / economic decision to delay further testing of the Ngapaeruru well until we had two or three wells to test back to back, if warranted.

Looking ahead

While there are no guarantees in this business, we see every reason to continue setting our4734035818 e888d30cde z sights high. TAG Oil is excellent at reading its data, managing its risks, and sticking to its business plan. And operationally, we’re still looking ahead to another big surprise well like Cheal E1 or B5, cracking Cardiff, branching out into Kaheru offshore, and establishing a new oil and gas zone in the East Coast Basin, or maybe even the Canterbury Basin. We’re counting on our quality team, the data, excellent acreage, and sound fundamentals, but only time will tell for sure.

Read or listen to the full transcript of the FY15 Operations call here.

Topics: East Coast Basin, Taranaki, Kapuni gas/condensate, Cheal Oil Field, Sidewinder Discovery, Cardiff Deep Gas, Kaheru