TAG Oil announces reserve increases

ERC’s 2P reserves estimates were 4143 million boe (92% oil) compared to 3619 million boe (93% oil) 2P reserves reported by TAG Oil on 31 March 2016. The increase in the company’s reserves of approximately 14% is attributable to the following factors: an approximate 27% increase in annual reserves revisions of 962 million boe, which is primarily due to improved recovery, technical revisions and reclassification from the no reserves assigned (NRA) category; and an approximate 12% decrease due to 438 million boe produced over the 12 month period in fiscal year 2017.

The reserve increase is predominately from the inclusion of waterflood volumes, as TAG Oil has commenced injection into the Cheal-B3 wellbore, and has recently converted the Cheal-A2 wellbore to an injector. These waterflood conversions will provide pressure support to the Cheal A and B-Sites, and are expected to increase the overall Cheal field recovery by 5% and 10% respectively for the 2P volumes. Additional behind pipe pay opportunities have also been assigned reserves that were not previously included, which consist of recompletions in the Urenui formation on the Cheal-A11, A7 and B7 wells.

Technical revision for the gross proved volumes increased due to revisions to the production profiles and the inclusion of reserves from the Cheal-E2, E5 and E6 wells as they had previously been classified as NRA due to operational issues. The Cheal-E5 well is back on production, and TAG Oil has development plans to bring the Cheal-E2 and E6 wells back on line in the near term.

Due to revisions to the production profiles and geological modelling, the probable volumes decreased for Cheal-A3X, B3, B6 and B8. The infill locations for Cheal-BP, BQ and BR locations have also been reduced as lower recovered volumes have been assigned due to the depletion of the Cheal B-site.

The workover and recompletion of the Sidewinder-1 and 2 wells, along with the planned workovers of the Sidewinder-3 and 4 wells, has added proved, probable possible reserves up from having no reserves or resources assigned the 2016 fiscal year.

Toby Pierce, CEO of TAG Oil, commented: “I am very pleased with TAG Oil’s reserve additions in fiscal 2017. Not only did we replace our production, but we also managed to increase reserves through our field activities without drilling a conventional production well. The company is well placed to grow our asset base over the next year and beyond as we move on to the second of up to five exploration wells following the successful completion and tie-in of the Cheal-E8 conventional oil well. Despite the recent weaker Brent oil prices, TAG Oil continues to maintain a strong balance sheet, positive cash flow and an active work programme over the remainder of fiscal 2018.”