TAG Oil reported that drilling operations have now resumed at the Company's 100%-owned Cheal oil and gas field, with the spudding of the Cheal-C2 well. TAG anticipates drilling five new wells at Cheal before moving the drill rig to the Sidewinder oil and gas field, both oil and gas fields are located in the onshore Taranaki Basin, New Zealand.
This next phase of development drilling will continue to target the multi-zone Miocene prospects identified on 3D seismic within the Mt. Messenger (~1800m) and Urenui (~1400m) Formations. It is anticipated that commercialization of any successful new well arising from this drilling campaign can occur rapidly through TAG's 100%-owned production facilities.
In addition to the drilling activity, TAG Oil will also initiate a water flood program at the Cheal "A" pool. This secondary recovery strategy is both good oilfield practice and can cost-effectively increase ultimate reserve recoveries, as well as increasing the net present value of the pool.
"Given the strong results of TAG's previous drilling program, including six successful exploration wells drilled in succession over a six-month time span, I'm confident this next phase of drilling will continue to yield good results," commented Garth Johnson, TAG CEO. "Now that Apache Corporation has agreed to conduct a multi-phased exploration, appraisal and potential development program within TAG's East Coast Basin exploration permits, we can utilize TAG's strong working capital position and growing cash flow to accelerate exploration and development of our high-impact Taranaki acreage."
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