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TAG Oil Gets Consent for Fracture Stimulation at Cardiff-3 in PML 38156

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Canada-based TAG Oil Ltd., reported that the Taranaki Regional Council has granted the Company consent to perform a fracture stimulation on the Cardiff-3 well located in Petroleum Mining License 38156, New Zealand should drilling results call for it.

Cardiff-3 was spud Sept. 2 and is presently drilling ahead, on-time and on budget at a depth of 12,854.3 feet (3,918 meters). It will take approximately 14 more days to reach its total projected depth of 16,076.1 feet (4,900 meters), at which time, a decision will be made whether to complete the well. Economic factors for completion, which would likely include a hydraulic-fracture stimulation, will consider total meters of net gas pay, indicative in situ permeability, and the interpreted volume of original gas in place that could be accessed with this well bore.

It is anticipated that in the event of a success at Cardiff-3, three wells would be needed to fully develop prospective resources estimated at 160 billion cubic feet (Bcf) and 5.49 million barrels of condensate on a P50 basis.

Cardiff-3 is the first of three back-to-back deep wells being drilled 100 percent by TAG Oil, all targeting Taranaki’s successful deep Kapuni Formation. TAG’s “mid case” (P50) prospective resources of the three deep Kapuni prospects total 476 Bcf of natural gas and 18 million barrels of condensate.

Careful study has shown the formations being targeted for potential hydraulic fracturing at Cardiff-3 to be completely sealed by over 2.49 miles (4 kilometers) of impermeable rock. If hydraulic fracturing is required, new generation plant-based fracking fluid will be used and all fluids and water will be contained in a closed system.

Cardiff Background

The Cardiff structure is a large anticlinal trap, some 7.46 miles (12 kilometers) long by 1.86 miles (3 kilometers) wide, and is a prospective target across the span of the structure. Gas and condensates were discovered in the Cardiff-1 (Shell-1991) and Cardiff-2A (Austral-Pacific 2002) wells: Cardiff-2 encountered 39.37 feet (12 meters) of net pay within the uppermost McKee Formation of the Kapuni Group sands, and flowed over 3 million cubic feet and 100 barrels of condensate per day (without fracture stimulation) on short-term testing. More significant prospective resources exist in the deeper K1A and K3E zones – the primary targets in the Cardiff-3 well – where strong gas shows were encountered over a gross 1,968.5 foot (600 meter) interval in the Cardiff-2A well. These went untested due to mechanical problems the operator experienced while drilling the well, but these lower Kapuni Group formations are the primary producing intervals in the nearby 1.4 trillion cubic feet (Tcf) and 65 million barrels of condensate Kapuni Field.

Access to market for Cardiff gas is relatively straightforward, with the surface location of Cardiff-3 being situated directly adjacent to TAG-owned production infrastructure. This tie-in provides a link to the strong North Island gas market, providing a number of commercial opportunities, including clean power generation.

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