TAG Oil Ltd. announced its anticipated 2013 Taranaki Basin drilling program within the Cheal and Sidewinder fields, and within TAG's newly awarded acreage. This drilling campaign is expected to consist of a minimum 13 wells, and will continue to target the Mt. Messenger/Urenui Formation targets, as well as deeper high-impact targets in the Kapuni Formation.
TAG's CEO, Garth Johnson, stated "Building on our string of success in 2011 and 2012 and driving revenue as a result, we expect calendar 2013 to be another exciting and transformational year for TAG. With a record number of wells to drill in Taranaki as well as plans for the upcoming drilling in the East Coast Basin, I'm confident our plans will continue to become our reality."
TAG has enjoyed significant growth in the last two years, drilling 21 consecutive successful wells in Taranaki. Given this success, and the correlative increase in operating cash flows, TAG will now begin to include a higher risk, higher impact deep drilling component to its Taranaki Basin exploration efforts.
The deeper wells will target the Kapuni Formation, which is a proven prolific play in Taranaki and where most of New Zealand's landmark onshore and offshore fields have been discovered, including the large Maui, Kapuni and Mangahewa fields. TAG holds a number of attractive Kapuni prospect opportunities within its portfolio, including the Cardiff prospect where gas-rich condensates were discovered and tested within a 600m interval in the Kapuni Formation in 1992. TAG will contract Ensign Drilling's Deep Rig #31 to drill one or more deep prospects including Cardiff, which are tentatively scheduled to commence in May 2013.
The capital expenditure to drill, complete and test the 13 wells is estimated at $36 million and will be funded primarily by operating cash flow generated from current production of approximately 2,000 barrels of oil equivalent per day, plus production that is currently behind pipe, which is anticipated to be on stream in late March 2013.
In addition to the anticipated new wells, consenting operations are underway seeking approvals for an additional 10 new surface drilling pads within TAG's Taranaki Basin permits. Each drill pad is intended to host up to 12 wells per pad, providing potential for TAG to drill up to 120 new wells in the coming years.
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