TAG Oil Reports 2013 Fiscal Year End Financial Results and 2014
Drilling Program
VANCOUVER, June 28, 2013 /PRNewswire/ - TAG Oil Ltd. (TSX:
TAO) and (OTCQX:
TAOIF), reports the Company has filed its consolidated, audited
financial statements, management discussion and analysis and
annual
information form with the Canadian Securities Administrators for
the
Company's March 31, 2013 fiscal
year-end. Copies of these documents can
be obtained electronically at http://www.sedar.com, or for
additional information please visit TAG Oil's website at
http://www.tagoil.com/.
Poised for Many Years of Growth
During FY2012 and 2013, TAG Oil conducted an extensive Taranaki
drilling
campaign consisting of wells averaging approximately 2,000
meters
depth, commonly referred to as TAG's shallow drilling program.
This
program, which targeted the Urenui and Mt. Messenger formations
within
the Company's 100% owned Cheal and Sidewinder fields, now provides
TAG
with ongoing high netback production and steady cash flow.
Decline rates from new wells tied in are now stable and in line
with
other typical Cheal wells on long term production. Some wells from
the
drilling campaign came onstream with record flow rates, however did
not
maintain these high rates and declined to production levels in
line
with other profitable wells in the field. The resulting long-term
cash
flow has positioned TAG to execute the Company's most diverse
and
active drilling campaign in the Company's history, including
high-impact drilling in the East Coast Basin, while maintaining a
very
strong debt free balance sheet. Furthermore, control of
extensive
Taranaki production and delivery infrastructure ensures rapid
commerciality of new wells.
FY2013 TAG Oil Highlights
At March 31, 2013, the Company had
cash of $68.9 million, working
capital of $68.1 million and no
debt.
Daily average production increased 23% for the year, from 1,433 BOE
to
1,756 BOE.
Income of $10.69 million was recorded
for fiscal 2013 before the
deduction of non-cash share-based compensation, and production
revenue
increased 4% to $44.59 million.
Operations generated $34.21
million in cashflow, compared to $15.56
million in 2012.
Total production for the year was 641,142 BOE's.
Sproule International assigned 1p, 2p and 3p reserves of 2,216,000
BOE
(85% oil), 6,112,000 BOE (88% oil) and 8,268,000 BOE (86% oil),
respectively.
Successfully drilled, completed and placed on permanent production
at
the Cheal field: Cheal-A11, Cheal-A12 and Cheal-B8 wells.
Successfully drilled, completed and placed on permanent production
at
the Sidewinder field: Sidewinder-A5 and Sidewinder-A6, and drilled
the
Sidewinder-A7 well.
Successfully drilled and cased the Ngapaeruru-1 well and
encountered
excellent mud gas shows indicating the presence of gas zones or
soluble
gas in oil between the intervals within a 155m gross
hydrocarbon
column.
Infrastructure expansion program completed by March 31, 2013 as planned,
allowing increased production capacity, processing of natural
gas
including liquid stripping capabilities, and export of natural gas
to
the open-access pipeline infrastructure.
In May 2012, TAG closed a bought deal
financing at $10.45 per share,
issuing 4,435,000 common shares for net proceeds of $43,365,746.
The Company acquired a 90% interest in a New Zealand electricity
generation and retailing company, Opunake Hydro Limited ("OHL")
through
the investment of approximately $5.0
million, with all funds being used
to acquire new gas-fired generation equipment to be located at
the
Company's Cheal site.
Acquired 40% in Coronado Resources Ltd. (TSXV: CRD) and will
acquire an
additional 10% of Coronado's
common shares as a result of selling OHL.
The deal is subject to the terms and conditions of the Share
Purchase
Agreement that has been executed by all parties involved.
Acquired three New Zealand
exploration permits in the East Coast and
Canterbury basins: PEP 52589, PEP
52676 and PEP 53674, comprised of
approximately two-million acres in favourable geological areas
offering
high-impact exploration opportunities.
Awarded four new onshore Taranaki exploration blocks in
New Zealand's
2012 Block Offer adding at least 10 drilling prospects plus
numerous
leads identified on 3D seismic in close proximity to TAG's
producing
Cheal oil field. A Joint Venture created with East West Petroleum
Ltd.
on three of the new permits carries TAG through $10 million in
exploration costs while maintaining operatorship.
Financial and Production Review
|
|
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2013
|
|
|
|
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2012
|
Production revenue
|
|
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$
|
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44,591,201
|
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$
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42,908,655
|
Net income prior to share-based compensation
|
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10,694,371
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18,924,540
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Net income
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5,073,359
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12,376,019
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Earnings per share
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0.09
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0.24
|
Working capital
|
|
|
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68,073,376
|
|
|
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65,371,541
|
Total assets
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|
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210,937,314
|
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148,883,278
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Long term debt
|
|
|
|
|
-
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-
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Shareholder's equity
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$
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191,190,601
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$
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133,368,183
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TAG currently has 59,344,052 common shares outstanding and
63,052,386
common shares outstanding on a fully diluted basis.
Oil and Natural Gas Production, Pricing and Revenue
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Three months ended March 31
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Year ended March 31
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2013
|
2012
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2013
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2012
|
Daily production volumes(1)
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Oil (bbls/d)
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1,013
|
1,405
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959
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918
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Natural gas (BOE/d)
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678
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752
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797
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515
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Combined (BOE/d)
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1,691
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2,157
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|
1,756
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1,433
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|
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|
|
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Daily sales volumes(1)
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Oil (bbls/d)
|
|
1,007
|
1,407
|
|
957
|
|
925
|
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Natural gas (BOE/d)
|
|
436
|
496
|
|
548
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|
413
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Combined (BOE/d)
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1,443
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1,903
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1,505
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1,338
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Natural Gas (Mmcf/d)
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2,618
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2,977
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3,287
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2,480
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Product pricing
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Oil ($/bbl)
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116.59
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119.54
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110.87
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115.57
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Natural gas ($/Mmcf)
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4.94
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4.48
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4.63
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4.16
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Sales
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Oil and natural gas revenue - gross
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$11,993,143
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$16,701,663
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$44,286,567
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$42,908,655
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Other revenue - gross(2)
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304,634
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-
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304,634
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-
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Total revenue - gross
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12,297,777
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16,701,663
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44,591,201
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42,908,655
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Oil and natural gas royalties(3)
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(1,376,561)
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(2,973,964)
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(5,036,005)
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(9,706,513)
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Revenue - net
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$10,921,216
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$13,727,699
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$39,555,196
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$33,202,142
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(1)
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Natural gas production converted at 6 Mcf:1BOE (for BOE
figures)
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(2)
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Other revenue is electricity revenue related to
OHL.
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(3)
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Includes a 25% royalty related to the acquisition of a 69.5%
interest in
the Cheal field that was reduced to 7.5% during the fourth quarter
of
fiscal 2012.
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A summary of TAG's drilling program over the next 12
months:
Permit Number
|
Well Name
|
TAG
Interest
|
# of Wells
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Target Depth
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PEP 54877
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Cheal D & E-Sites
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70%
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5
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Miocene <2,500m
|
PEP 54876
|
Southern Cross
|
50%
|
1
|
Miocene <2,500m
|
PEP 54879
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Cheal F & G-Sites
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50%
|
3
|
Miocene <2,500m
|
PMP 38156
|
Cardiff
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100%
|
1
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Eocene > 4,000m
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PEP 54873
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Heatseeker
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100%
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1
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Eocene > 4,000m
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PEP 38348
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Waitangi
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100%
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1
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Unconventional
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Shallow-Well Program
The program will consist of nine shallow Taranaki wells with
permit
interests between 50% to 70%. The Company will apply what it
has
learned from the extensive new drilling data acquired in the last
three
years to target the low-risk step out prospects, and build the
Company's net proved and probable reserves of 6,112,000 BOE's (88%
oil)
estimated by Sproule as of March 31,
2013. The intention of this
drilling program is to continue to exploit the shallow play
potential
and further maximize the value of the Cheal and Sidewinder fields
which
remain lightly explored.
Deep Gas and Condensate Program
TAG will step up its efforts in the Taranaki Basin to drill
larger,
seismically defined, prospects which have the potential to
materially
bolster the Company's long-term production and reserve growth
profiles.
The Company will drill at least two of its 100% owned deep
Kapuni
gas/condensate prospects in FY2014.
Cardiff and Heatseeker are
scheduled to commence in the third quarter of
calendar 2013. A third prospect, the Hellfire deep prospect, may
be
drilled contingent on the results of Cardiff and Heatseeker. These deep
Eocene-aged targets are materially larger in reserve size and
deliverability potential than what TAG has been targeting in
the
shallow Miocene formations. Drilling of TAG's Kapuni prospects will
use
a large seismic database to target prospect depths of
approximately
3,500 to 4,000 meters. TAG's Kapuni targets are on trend and
similar to
the large deep gas/condensate plays in Taranaki such as the
Kapuni
Field that has produced 1.5 TCF and 65 mmbls of condensate to date
and
800 BCF Mangahewa field operated by Shell and Todd
Petroleum.
In a report dated February 28, 2011,
Sproule International Limited
estimates the gross undiscovered resource potential associated
with
TAG's Cardiff Prospect as follows:
Resources
Category
|
Low Estimate
(p90)
|
Best Estimate
(p50)
|
High Estimate
(p10)
|
Mean
|
Undiscovered Gas
Initially-in-Place
(BCF)
|
137.3
|
214.5
|
341.4
|
230.7
|
Undiscovered
Condensate Initially-
in-place
(Million Barrels)
|
8
|
12.8
|
21.5
|
14
|
East Coast Basin Tight Oil
In April of 2013, the Company drilled and cased its first
unconventional
test well, Ngapaeruru-1. The Ngapaeruru-1 well reached a total
depth of
1,417 meters after successfully drilling through the Waipawa
and
Whangai source rock formations, the main objective of the well.
Initial
results are very encouraging with 155 meters of potential tight oil
and
gas pay. TAG cut and recovered sidewall cores over 14 separate
intervals within the 155 meters of potential tight pay, sampled
total
organic content (TOC) and acquired in-situ gas analysis at
depth.
Detailed petrophysical evaluation is now underway with a full suite
of
unconventional logs to ascertain source rock quality, fracture
identification, geochemistry, and rock moduli data. This data will
be
used to determine the most suitable completion method for
production
testing the Ngapaeruru-1 well.
TAG plans to drill at least three more exploration wells in the
East
Coast Basin over the next 18 months, to achieve the Company's goal
of
converting a potentially major undiscovered unconventional
resource
into proven reserves.
Canterbury Basin
After some encouraging early stage results, further resource
potential
is being assessed after processing and interpreting 80km's of
recently
acquired seismic data. TAG's new 2D seismic, acquired over
leads
initially identified using geochemical surface data, has resulted
in a
clearly imaged subsurface, resulting in four newly mapped
features
within the permit. TAG intends to acquire additional seismic over
these
specific leads to confirm aerial extent of the anomalies as well
as
closure prior to making a commitment to drill.
The Canterbury Basin is an
underexplored oil and gas frontier that is
recognized to have major discovery potential. Large energy
companies
such as US-based Anadarko Petroleum and Australian-based Origin
Energy are exploring the offshore region in the immediate vicinity
to TAG's
1.17 million acres under permit.
Conference Call Information
TAG Oil will host a discussion of its 2014 forward program as well
as
fourth quarter 2013 results conference call on Friday June 28, 2013 at
1:00 pm Pacific Time. Please call in
ten minutes before the conference
call starts and stay on the line (an operator will be available
to
assist you should you have questions of management during the
call). In
addition, questions can be forwarded by e-mail in advance to
info@tagoil.com.
Interested parties may access the conference call using the
information
below:
Date
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June 28th, 2013
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Time
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1:00pm Pacific Time
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Toll-Free Dial-in #
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1-866-318-8614
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Secondary Dial-in #
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1-617-399-5133
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Conference Passcode
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51004241
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E-mail questions to:
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info@tagoil.com
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TAG Oil Ltd.
TAG Oil Ltd. (http://www.tagoil.com/) is a Canadian-based
production and exploration company with operations
focused exclusively in New
Zealand. With 100% ownership over all its
core assets, including extensive oil and gas production
infrastructure,
TAG is enjoying substantial oil and gas production and reserve
growth
through development of several light oil and gas discoveries. TAG
is
also actively drilling high-impact exploration prospects
identified
across more than 2,984,171 net acres of land in New Zealand.
In the East Coast Basin, TAG is exploring the major
unconventional
resource potential believed to exist in the source-rock formations
that
are widespread over the Company's acreage. These oil-rich and
naturally
fractured formations have many similarities to North America's Bakken
source-rock formation in the successful Williston Basin.
TAG Oil has adopted the standard of six thousand cubic feet of gas
to
equal one barrel of oil when converting natural gas to "BOEs". BOEs
may
be misleading, particularly if used in isolation. A BOE
conversion
ratio of 6Mcf: 1 Bbl is based on an energy equivalency
conversion
method primarily applicable at the burner tip and does not
represent a
value equivalency at the wellhead.
Cautionary Note Regarding Forward-Looking Statements:
Statements contained in this news release that are not historical
facts
are forward-looking statements that involve various risks and
uncertainty affecting the business of TAG. Such statements can
be
generally, but not always, identified by words such as
"expects",
"plans", "anticipates", "intends", "estimates", "forecasts",
"schedules", "prepares", "potential" and similar expressions, or
that
events or conditions "will", "would", "may", "could" or "should"
occur.
These statements are based on certain factors and assumptions
including:
A. All estimates and statements that describe the Company's
objectives,
goals, production rates, optimization, infrastructure capacity and
or
future plans relating to the seismic, testing, work over and
drilling
programs in the Taranaki, Canterbury and East Coast Basins are
forward-looking statements under applicable securities laws and
necessarily involve risks and uncertainties including, without
limitation: risks associated with oil and gas exploration,
development,
exploitation, production, marketing and transportation, volatility
of
commodity prices, imprecision of reserve estimates,
environmental
risks, competition from other producers, and changes in the
regulatory
and taxation environment. These forward-looking statements are
based on
certain factors and assumptions, including factors and
assumptions
regarding the management's views on the oil and gas potential in
TAG's
permits, well performance, the success of any operations,
completing
infrastructure and the costs necessary to complete the operations;
and
B. Those relating to TAG Oil's exploration and development of its
oil
and gas properties within the Cheal and Sidewinder project areas,
the
production and establishment of additional production of oil and
gas in
accordance with TAG Oil's expectations at Cheal and Sidewinder,
well
performance, drilling, the completion of new infrastructure at
Cheal
and Sidewinder, optimization, the increase of cash flow from
new
production, expected growth, results of operations,
performance,
prospects, evaluations and opportunities. While TAG Oil considers
these
factors and assumptions to be reasonable based on information
currently
available, they may prove to be incorrect. Actual results may
vary
materially from the information provided in this release, and there
is
no representation by TAG Oil that the actual results realized in
the
future will be the same in whole or in part as those presented
herein.
TAG Oil is involved in the exploration for and production of
hydrocarbons, and its property holdings with the exception of the
Cheal
and Sidewinder project areas are in the grass roots or primary
exploration stage. Exploration for hydrocarbons is a
speculative
venture necessarily involving substantial risk. There is no
certainty
that the expenditures incurred on TAG Oil's exploration properties
will
result in discoveries of commercial quantities of hydrocarbons.
TAG
Oil's future success in exploiting and increasing its current
reserve
base will depend on TAG Oil's ability to develop its current
properties
and on its ability to discover and acquire properties or prospects
that
are producing. There is no assurance that TAG Oil's future
exploration
and development efforts will result in the discovery or development
of
additional commercial accumulations of oil and natural gas.
Other
factors that could cause actual results to differ from those
contained
in the forward-looking statements are also set forth in filings
that
TAG and its independent evaluator have made, including TAG's
most
recently filed reports in Canada
under National Instrument 51-101,
which can be found under TAG's SEDAR profile at
www.sedar.com.
TAG undertakes no obligation, except as otherwise required by law,
to
update these forward-looking statements in the event that
management's
beliefs, estimates or opinions, or other factors change.
SOURCE TAG Oil Ltd.