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TAG Oil to drill high impact exploration well - provides operational update

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Oilfield Technology,

TAG Oil Ltd. has provided the following update on its operations in New Zealand and Australia.

New Zealand Exploration Drilling

TAG Oil and its joint venture partner (Melbana Energy – 30% WI) have begun operations on the Pukatea-1 exploration well. The Nova-1 drill rig is expected to be mobilised to the drilling pad by mid-January, with drilling expected to commence on or around January 25, 2018 from the existing production pad. The Puka permit (PEP 51135, 70% TAG Oil) covers an area of approximately 85 km2 (21 000 acres) and is located close to existing infrastructure and several low-cost alternative development paths.

The primary objective of the Pukatea-1 well will be the deep Tikorangi Limestone formation, which will be drilled to a total depth of ~3170 m. The Pukatea-1 well is adjacent to the Waihapa oil field that has produced more than 23 million bbls from the Tikorangi Limestone and where individual wells produced up to ~5000 bpd. In addition to the high impact Tikorangi Limestone exploration opportunity, TAG Oil has identified a secondary objective to intersect in the shallower Mt. Messenger formation while drilling on the way to the deeper target. This has resulted in some technical adjustments to the drilling plan, which include adding an additional wireline logging run for data gathering and an additional casing string to isolate the Mt. Messenger formation.

The updated design for the wellbore path is expected to intersect the Mt. Messenger sands approximately 150 m east of the Puka-2 wellbore (currently shut-in and awaiting a work-over). The Puka-2 well tested 719 bpd of oil over a 12-hour period on a 22/64 in. choke back in April 2013.

New Zealand Production

TAG Oil expects to exit fiscal 2018 at March 31, 2018 in New Zealand with production of ~1300 boe/d. Between now and fiscal year-end, the Company is planning a number of well clean-outs, pump changes, and workovers. In addition, TAG Oil will focus a moderate amount of time and capital on optimising the waterflood programme.

TAG Oil’s waterflood program is continuing, with water injection rates of ~1400 bw/d at the Cheal permit (PMP 38156, 100% TAG Oil) and ~800 bw/d at the Cheal East permit (PEP 54877, 70% TAG Oil). Based on injection rates and pressure data in the main Cheal permit field, current expectations are that a more definitive uplift of production and recovery factors will likely be seen by mid-2018.


In Australia, production from the Bennett field is approximately 20 bpd of light, sweet crude following improvements to the surface facilities at PL-17 and a pump change on the Bennett-4 well. Further, TAG Oil is encouraged by the continued steady production from the field despite it having been on production for approximately 50 years. The current mapping (ahead of the interpreted 3D seismic data) indicates the potential for further upside. TAG Oil will continue its work on enhancing production from the existing wells on the block.

TAG Oil’s interpretation and processing of the first modern 3D seismic recently acquired over of the core of the PL-17 acreage is nearing completion. The 70 km2 of 3D seismic will provide an enhanced subsurface understanding of the Bennett and Leichardt fields and allow various drilling targets to be identified, with future drilling likely occur in late calendar 2018 or 2019.

Toby Pierce, TAG Oil’s CEO commented, “I am excited that Pukatea-1 is about to commence drilling. Along with the significant potential in the Tikorangi Limestone, we also have a secondary target in the Mt. Messenger formation that is expected to be part of the existing Puka field. Further, with the significant increase in Brent Oil prices over the last few months (~50% in six months) TAG Oil will generate more cashflow per barrel of oil produced and may see an appreciation in its equity value as the stock market starts to appreciate the strengthening fundamentals in the market. Finally, I’d like to highlight the fact that our waterflood is starting to work on the Cheal East pool with an increase in pressures month over month, and we expect pressures and production to continue to rise accordingly from all four of our waterflood projects through 2018.”

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