Canada's TAG Oil Ltd. announced Thursday the commencement of drilling operations at the Company’s 100 percent-controlled Waitangi Valley-1 exploration well in Petroleum Exploration Permit 38348, located in New Zealand’s East Coast Basin. The Waitangi Valley-1 well was spud July 23 and will be drilled to a total depth of approximately 11,800 feet (3,600 meters).
Waitangi Valley-1 is situated 155 miles (250 kilometers) north of TAG’s Ngapaeruru-1 unconventional well, and is the Company’s second high impact exploration well targeting the Waipawa Black Shale and Whangai Formation source rocks. Waitangi Valley-1 is interpreted with proprietary seismic data to potentially intersect stacked, repeated sections of these naturally fractured, over-pressured oil-and-gas-rich source rocks as well as conventional oil and gas bearing sands in the Miocene section at depths between 155 to 1,242 miles (250 to 2000 meters).
Independent assessments on TAG’s acreage have estimated, on a mid-range (P50) basis, an undiscovered resource potential of approximately 14 billion barrels of oil initially in place within less than 20 percent of the Company’s East Coast Basin acreage. These resource estimates were prepared by Sproule International Limited with an effective date of Sept. 30, 2007, and by AJM Petroleum Consultants with an effective date of Sept. 1, 2008. Each is a qualified reserves evaluator in accordance with National Instrument 51-101 and the Canadian Oil and Gas Evaluation Handbook.
The Waipawa Black Shale and Whangai Formations are the source of the high quality (50-degree API) light oil found in nearby oil seeps, core sampling, and shallow drilling in the Waitangi area. These source rocks are comparable in both total organic carbon content (TOC) and maturity levels to successful unconventional oil and gas plays such as the Bakken Shale of North America's Williston Basin and the Eagle Ford shale in South Texas.
“Waitangi Valley-1 will provide TAG with the opportunity to acquire additional sub-surface data on this major exploration prospect, as well as potentially establish the first unconventional production in the East Coast Basin. The Company has previously confirmed that these source rocks are responsible for the oil seeping to the surface just 3.1 miles (5 kilometers) from the Waitangi Valley-1 location, so this well may give us the chance to produce oil directly from the source,” commented TAG Oil’s Chief Operating Officer Drew Cadenhead. “Our team has done a great job in safely preparing our lease, mobilizing the drilling rig and other necessary equipment into a remote location ahead of schedule with no incidents or complaints from local stakeholders. We intend to continue that track record throughout the drilling process and we’re confident we will execute the Waitangi Valley operations as safely and diligently as we have all our New Zealand operations.”
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