Tag Touts Flow Test Results at Cheal-B4ST Well

TAG Oil announced that completion and flow testing operations on the Cheal-B4ST discovery well located in PML 38156, Taranaki Basin, New Zealand, have been completed, and the well has now been placed on permanent production into TAG's 100%-owned Cheal Production Facility.

The Cheal-B4ST vertical exploration well was drilled to a total depth of 1821m (5973 feet), encountering net pay in both the Urenui and Mt. Messenger Formations. Flow rates averaged 400 barrels of oil equivalent (BOE) per day (360 barrels of oil + 240 thousand cubic feet gas) after the first week of production.

The Cheal-B4ST well encountered 17 meters (56 feet) of net pay within the Urenui (~1400m) and Mt. Messenger (~1700m) zones. These Miocene-aged zones were isolated and tested separately, confirming oil and gas flow rates from both zones. The final completion co-mingles the two zones.

TAG Oil CEO Garth Johnson commented, "The Cheal-B4ST well represents a significant milestone for the Cheal oil and gas field and opens the door for substantial reserve growth. Prior to this year, all our Cheal reserves were assigned solely to the Mt. Messenger Formation, but with Cheal-B4ST, we now have three wells producing oil from the Urenui Formation as well. Given these excellent results, further development of the widespread Urenui Formation will be a top priority."

TAG also reports that the Company is expanding the capabilities of the artificial lift systems at the Cheal Production Facility to accommodate the new wells drilled in the last nine months. At present, the Plant is producing approximately 1000 barrels of oil equivalent per day with approximately 350 barrels of oil equivalent per day that is shutin, awaiting completion of the expansion. The expansion work is scheduled to be complete by September 2011 at a nominal cost.

The Cheal oil and gas field is located in Petroleum Mining Permit 38156 in the Taranaki Basin New Zealand.