Gross daily production rates from the Cheal discovery for fiscal 2009 averaged 443 barrels of oil per day; currently the oil field is producing approximately 350 gross barrels of oil per day. During the 2009 fiscal year the Cheal field produced 161,713 gross barrels of oil; 174,558 gross barrels of oil were sold with oil prices averaging $92 per barrel. Royalty and production costs averaged $33 per barrel, resulting in a netback per barrel of approximately $59. An independent assessment of reserves conducted as of March 31, 2009 has assigned gross proved/probable reserves of 530,000 barrels of oil equivalent ("BOE") and a net present value of US$9.3 million (TAG 30.5% Share US$3 million) based on year-end oil prices and a 10% discount rate.
On June 17 and July 2, 2009 TAG signed binding agreements (subject to various approvals) to acquire the remaining 69.5% interest in the Cheal Mining Licence, oil production facilities and the remaining 66.67% interest in Petroleum Exploration Permit 38748, where a number of prospects are defined by 3D.
Mr. Johnson further commented, "I am very pleased with the acquisition of the remaining interest in Cheal and in PEP 38748. In my opinion, full development of the Cheal discovery and further exploration was held back by the financial difficulties of the previous operator and joint venture partner. Upon TAG taking over full control, we are poised to unlock the value of the acreage by initiating optimization and workover plans to the existing wells, reducing operating costs and planning our exploration drilling campaign."
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