Canadian-based oil and gas producer and explorer, TAG Oil has received the results from the interim independent reserves review on its 30.5% interest in the Cheal Oil Pool, onshore Taranaki Basin, New Zealand.
The report was completed by Sproule International Limited, a subsidiary of Sproule Associates Limited, one of the largest and most highly regarded geological, geophysical, and petroleum engineering consulting companies in North America.
The independent report conducted as of December 31, 2008 has assigned a present value using a 10% discount rate of $3.9 million to TAG's share of proved and probable reserves located at Cheal. In addition, gross proved and probable reserves estimates of the Cheal pool have been reduced from 2.783 million boe at March 31, 2008 to 510,000 boe. These reductions in value and reserves are based on a number of factors such as:
TAG Oil CEO, Garth Johnson, commented, "Although this report is based on the operators suggested work program which has not been approved by TAG at this point, we feel the report gives us an accurate view of the present value of the field based on 2008 production history and drilling results. The unfortunate outcome of the Cheal A6 and A6ST wells, combined with global economic conditions have resulted in a Joint Venture decision to carefully stage the timing of new well development plans for the pool. We feel the Cheal field has upside potential, however a new cost-effective strategy must be implemented given the new technical and reserve information."
TAG Oil also announces today that the Company completed its previously announced sale of its 15.1% interest in PEP 38738-D and PMP 38156-D ("Cardiff") to a subsidiary of New Zealand based Genesis Energy for a combination of cash and a 1% royalty on any future production from both permits.
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