VANCOUVER, May 31, 2011 /CNW/ - TAG Oil Ltd. (TSXV: TAO) and (OTCQX: TAOIF) is pleased to announce that completion and flow testing operations on the Cheal-B4ST discovery well located in PML 38156, Taranaki Basin, New Zealand, have been completed, and the well has now been placed on permanent production into TAG's 100%-owned Cheal Production Facility.
The Cheal-B4ST vertical exploration well was drilled to a total depth of 1821m (5973 feet), encountering net pay in both the Urenui and Mt. Messenger Formations. Flow rates averaged 400 barrels of oil equivalent (BOE) per day (360 barrels of oil + 240 thousand cubic feet gas) after the first week of production.
The Cheal-B4ST well encountered 17 meters (56 feet) of net pay within the Urenui (~1400m) and Mt. Messenger (~1700m) zones. These Miocene-aged zones were isolated and tested separately, confirming oil and gas flow rates from both zones. The final completion co-mingles the two zones.
TAG Oil CEO Garth Johnson commented, "The Cheal-B4ST well represents a significant milestone for the Cheal oil and gas field and opens the door for substantial reserve growth. Prior to this year, all our Cheal reserves were assigned solely to the Mt. Messenger Formation, but with Cheal-B4ST, we now have three wells producing oil from the Urenui Formation as well. Given these excellent results, further development of the widespread Urenui Formation will be a top priority."
TAG also reports that the Company is expanding the capabilities of the artificial lift systems at the Cheal Production Facility to accommodate the new wells drilled in the last nine months. At present, the Plant is producing approximately 1000 barrels of oil equivalent per day with approximately 350 barrels of oil equivalent per day that is shutin, awaiting completion of the expansion. The expansion work is scheduled to be complete by September 2011 at a nominal cost.
The Cheal oil and gas field is located in Petroleum Mining Permit 38156 in the Taranaki Basin New Zealand. For further information on the Cheal Oil and gas field please visit http://www.tagoil.com/operations.asp
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% control over all its core assets, including oil and gas production infrastructure, TAG is anticipating 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 2,712 sections of land in the onshore Taranaki and East Coast Basins of New Zealand's North Island.
In the East Coast Basin, TAG Oil is pursuing the significant unconventional resource potential estimated in the fractured shale source-rock formations that are widespread over the Company's acreage. These oil-rich, naturally fractured and thermally mature source-rock formations have many similarities to North America's Bakken Shale source-rock formation in the successful Williston Basin.
"BOE"s 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 Oil. These statements are based on certain factors and assumptions including those related to the exploration and development of TAG Oil's Cheal oil and gas field and specifically the Cheal-B4ST light oil and gas discovery in the Taranaki Basin of New Zealand. Actual results may vary materially from the information provided in this release. As a result, there is no representation by TAG Oil that actual results realized in the future would be the same in whole or in part as those presented herein. Factors that could cause actual results to differ from those contained in the forward-looking statements are set forth in, but are not limited to, filings that the Company and its independent evaluator have made, including the Company's most recent reports in Canada under National Instrument 51-101.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
