TAG Oil Reports Strong Q1 2014 Financial Results and 12 Well
Drilling Campaign Underway
VANCOUVER, Aug. 14, 2013 /PRNewswire/ - TAG Oil Ltd. (TSX:
TAO) and (OTCQX:
TAOIF), reports the Company has filed its financial results with
the
Canadian Securities Administrators for the Company's June 30, 2013
first quarter fiscal 2014 year. 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/.
Q1 2014 TAG Oil Highlights
At June 30, 2013, the Company had
cash of $57.2 million, working
capital
of $63.5 million and no debt.
Production revenue increased to $14.7
million.
Net income of $4.5 million generated,
before the deduction of non-cash
share-based compensation.
Operations generated $9.6 million in
cashflow.
Daily average production increased 39% in Q1-14 compared to
Q4-13.
Purchased 260,000 common shares of the Company for cancellation
and
return to treasury at an average price of $3.05 per share.
Drilled and cased the Ngapaeruru-1 well in the East Coast
Basin,
intersecting 155 meters of unconventional oil and gas reservoir in
the
source rock.
Signed a new surface access agreement in the East Coast Basin
permit to
allow for drilling access on PEP 38348 (Waitangi Hill
area).
Financial and Production Review
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Q1 2014
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Q1 2013
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Production revenue
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$
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14,698,198
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$
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11,825,925
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Net income prior to share-based compensation
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4,458,507
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5,559,964
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Net income
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3,520,609
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4,719,243
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Earnings per share
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0.06
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0.09
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Working capital
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63,473,910
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105,656,367
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Total assets
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201,039,747
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197,056,416
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Long term debt
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-
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-
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Shareholder's equity
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$
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189,623,960
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$
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182,939,137
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TAG currently has 59,196,752 common shares outstanding and
62,905,086
common shares outstanding on a fully diluted basis.
Oil and Natural Gas Production, Pricing and Revenue
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3 Months Ended
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2014 Q1
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2013 Q4
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2013 Q1
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Daily production volumes(1)
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Oil (bbls/d)
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1,075
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1,013
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1,125
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Natural gas (BOE/d)
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1,279
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678
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596
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Combined (BOE/d)
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2,354
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1,691
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1,721
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Daily sales volumes(1)
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Oil (bbls/d)
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1,058
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1,007
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1,120
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Natural gas (BOE/d)
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1,115
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436
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353
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Combined (BOE/d)
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2,173
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1,443
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1,473
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Natural Gas (Mmcf/d)
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6,690
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2,618
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2,118
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Product pricing
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Oil ($/bbl)
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104.87
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116.59
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107.36
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Natural gas ($/Mmcf)
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5.72
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4.94
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4.61
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Sales
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Total revenue - gross
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14,698,198
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11,993,143
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11,825,925
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Less other revenue - gross
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(1,120,919)
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304,634
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-
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Oil and natural gas revenue - gross
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$ 13,577,279
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$ 12,297,777
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$11,825,925
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Oil and natural gas royalties(2)
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(1,473,864)
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(1,376,561)
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(1,329,541)
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Oil and natural gas Revenue - net
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$ 12,103,415
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$ 10,921,216
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$10,496,384
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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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Includes a 7.5%royalty related to the acquisition of a 69.5%
interest in
the Cheal field
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(3)
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Other revenue is electricity revenue related to
OHL.
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Fully Funded 12-Well Drilling Campaign Launching August 2013
During the remainder of the 2014 fiscal year TAG will execute the
most
diverse and active exploration drilling campaign in the
Company's
history. This high-impact drilling campaign includes nine
conventional
wells across three new permits with partner East West Petroleum,
plus a
minimum of two 100% TAG owned deep Kapuni Formation wells
("Cardiff and
Heatseeker") in the Taranaki Basin, and at least one
unconventional
well in the East Coast Basin (TAG 100%). Consistent with our
corporate
strategy, this drilling program will be funded from cash flow
provided
from TAG's Cheal and Sidewinder production and a strong,
debt-free
balance sheet.
TAG's new Taranaki region production and delivery infrastructure
ensures
efficient and cost-effective commerciality of any new wells that
arise
from this drilling program. A summary of the resource potential
limited
to the twelve prospects included in this drilling program are
described
below. The Company expects to continue to identify additional
resource
potential through new lead and prospect generation as analysis of
the
permit data continues.
Permit
Number
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Permit Name
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TAG Interest
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#of
Wells
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Target Depth
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54877
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Cheal North
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70%
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5
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Miocene <2,500m
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54876
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Southern Cross
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50%
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1
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Miocene <2,500m
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54879
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Cheal South
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50%
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3
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Miocene <2,500m
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38156
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Cardiff
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100%
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1
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Eocene > 4,000m
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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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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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Undiscovered Resource Potential Estimated Per Explored
Prospect
Permit#
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TAG
Interest
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Resources
Category(1,5)
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Low
Estimate
(p90)
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Best
Estimate
(p50)
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High
Estimate
(p10)
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54877(2,4)
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70%
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Prospective
Resources
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5.06 mmbls
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11.31 mmbls
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25.41 mmbls
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54876(2,4)
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50%
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Prospective
Resources
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1.035 mmbls
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2.205 mmbls
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4.60 mmbls
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54879(2,4)
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50%
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Prospective
Resources
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1.31 mmbls
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3.03 mmbls
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6.98 mmbls
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38156(3,4)
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100%
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Undiscovered
Gas Initially -
in-Place
(BCF)
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137.3 Bcf
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214.5 Bcf
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341.4 Bcf
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38156(3,4)
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100%
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Undiscovered
Condensate
Initially- in-
place
(Million
Barrels)
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8 mmbls
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12.8 mmbls
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21.5 mmbls
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54873(2,4)
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100%
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Undiscovered
Gas Initially-
in-Place
(BCF)
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83.1 Bcf
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197.3 Bcf
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468.58 Bcf
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38348
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100%
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TBD
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TBD
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TBD
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TBD
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(1) Undiscovered Condensate Initially In-Place and Undiscovered
Gas
Initially In-Place (equivalent to undiscovered resources) is
that
quantity of Condensate and Gas, respectively, that is estimated, on
a
given date, to be contained in accumulations yet to be
discovered.
There is no certainty that any portion of the undiscovered
resources
will be discovered or that, if discovered, it will be
economically
viable or technically feasible to produce any portion of the
resources.
(2) The resource estimates in this news release were prepared on
nine
prospects with an effective date of June, 30, 2013. These
estimates
have been internally prepared by an internal qualified reserves
evaluator in accordance with NI 51-101 and the Canadian Oil and
Gas
Evaluations Handbook.
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(3) One prospect based on independent resource assessment by
Sproule
International Ltd.
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(4) Exploration for hydrocarbons is a speculative venture
necessarily
involving substantial risk. TAG's future success in exploiting
and
increasing its current reserve base will depend on its ability
to
explore and then if deemed to be appropriate, develop the above
properties that are capable of commercial production. However,
there is
no assurance that TAG's future exploration and development efforts
will
result in the discovery or development of additional commercial
accumulations of oil and natural gas. In addition, even if
further
hydrocarbons are discovered, the costs of extracting and delivering
the
hydrocarbons to market and variations in the market price may
render
uneconomic any discovered deposit. Geological conditions are
variable
and unpredictable. Even if production is commenced from a well,
the
quantity of hydrocarbons produced inevitably will decline over
time,
and production may be adversely affected or may have to be
terminated
altogether if TAG encounters unforeseen geological conditions. TAG
is
subject to uncertainties related to the proximity of any reserves
that
it may discover to pipelines and processing facilities. It expects
that
its operational costs will increase proportionally to the
remoteness
of, and any restrictions on access to, the properties on which any
such
reserves may be found. Adverse climatic conditions at such
properties
may also hinder TAG's ability to carry on exploration or
production
activities continuously throughout any given year. The
significant
positive factors that are relevant to the estimate contained in
the
Resource Assessment are:
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proven production in close proximity;
proven commercial quality reservoirs in close proximity;
and
oil and gas shows while drilling wells nearby; and
nearby infrastructure with excess capacity
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The significant negative factors that are relevant to the
estimate
contained in the Resource Assessment are:
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tectonically complex geology could compromise seal potential;
and
seismic attribute mapping in the Taranaki Basin area can be
indicative
but not certain in identifying proven resource
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(5) Prospective Resources are those quantities of petroleum
estimated as
of a given date, to be potentially recoverable from
undiscovered
accumulations by application of future development
projects.
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Conference Call Information
TAG Oil will host a discussion of its Q1 2014 financial results
and
forward program on Wednesday August 14,
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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August 14, 2013
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Time
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1:00 pm Pacific Time
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Toll-Free Dial-in #
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1-877-474-9501
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Secondary Dial-in #
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1-857-244-7554
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Conference Passcode
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29103463
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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 2,669,780 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.
The resource estimates in this news release were prepared with
an
effective date of June, 30, 2013. These estimates have been
internally
prepared by an internal qualified reserves evaluator in accordance
with
NI 51-101 and the Canadian Oil and Gas Evaluations
Handbook.
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 and
production
guidance, 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 and production rates, 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.