TAG Oil Ltd. is initiating a $66 million capital expenditure program within the 100%-controlled Cheal and Sidewinder fields in the Taranaki Basin, New Zealand. This program consists of continued high-impact exploration and development drilling targeting the shallow (~2000m) oil prone zones, deeper drilling (~4000m) targeting large liquids-rich gas prospects and various workover operations to existing wells. In addition, TAG will also expand the Company's 100%-owned production infrastructure in order to bring additional production on-stream arising from new discoveries and production that currently sits behind pipe. This capital expenditure program will be funded from existing working capital and revenues from current oil and gas production.
Ongoing Cheal and Sidewinder Field Drilling and Secondary Recovery Plans
TAG's shallow drilling and workover program will focus on building proved and probable reserves, increasing net present value of reserves, increasing recovery factors and increasing daily production. The drilling plan continues to build upon TAG's highly successful exploration, appraisal and development program at both the Cheal and Sidewinder oil and gas fields. In addition, TAG's program also includes workovers to a number of existing wells to perforate previously bypassed oil pay intersected within the Urenui Formation and to initiate Cheal's first waterflood recovery program.
Deep Drilling Targets Significant Liquids-Rich Gas Prospects
Using TAG's proprietary 3D-seismic data, the Company has identified two deep liquids-rich gas plays with undiscovered resource potential of approximately 500 billion cubic feet of gas and approximately 20 million barrels of associated condensates:
TAG's Infrastructure Plans
TAG's recent drilling of 14 successful wells in a row, combined with an ongoing Taranaki drilling program, has necessitated the immediate expansion of infrastructure at Cheal as follows:
TAG Oil CEO, Garth Johnson commented, "TAG's substantial growth over the past year has prompted this new capital expenditure program, which is the largest in the history of our company. As one of New Zealand's most prominent oil companies, I'm very excited to enter this next phase of growth and increasing our contributions to the local economy. Our excellent drilling success has surpassed our infrastructure capabilities and the investment into expanding our infrastructure will allow us to bring all of our current production on stream, as well as provide commercialization of all future discoveries without delay."
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