TAG Oil Adds Cheal Oil Field and 22,222 Gross Acres
TAG Oil has completed the acquisition of 100% of Cheal Petroleum Limited, PEP 38757 Ltd. and PEP 38758 Ltd. from parent company South Pacific Lease Operations Ltd. TAG Oil now holds a 30.5% interest in the proven Cheal Oil Field (PEP 38738-S), and a 15.1% interest in PEP 38738-D, which holds the Cardiff Deep gas discovery, both situated in New Zealand's Taranaki Basin.
The acquisition gives TAG a significant interest in the Cheal oil pool, which includes two wells to be placed into permanent production, and four more development and appraisal wells to be drilled as part of a significant development plan underway for the field. Existing wells Cheal A3X and Cheal A4 have produced 37,000 barrels and 54,000 barrels of oil respectively, averaging over 300 bbls/day each on intermittent 2005 testing.
Independent engineering firm Sproule International recently assigned the Cheal oil pool Gross Proved Undeveloped Reserves of 1,589,700 boe, and Gross Probable Reserves of 1,830,000 boe. Sproule reported another 1,592,500 boe of Gross Possible Reserves for a 3-P reserve total of 5,012,200 boe (TAG net 1,528,721 boe).
President and CEO Drew Cadenhead commented: "This production and reserve acquisition provides TAG with significant cash flow, long-life reserves and further exploration potential, which in turn enables us to move forward with some of our high impact projects -- and that's what this company is really all about.
TAG Oil is a junior company that is well capitalized and particularly well staffed, and the Cheal/Cardiff acquisition grows us from a pure exploration company, to a producing and reserve-based company with cash flow, which will enhance our ability to carry out high-impact exploration in New Zealand over the coming years."
The acquisition of Cheal Petroleum from South Pacific Lease Operations
Ltd. includes cash totaling NZ$18,542,857 (approximately CDN$12,800,000) as
well as 5.0 million shares of TAG Oil Ltd. and a 0.775% Gross Over Riding
Royalty on PEP 38738-D production.
- TAG Oil Gets Approval to Take 70% Operating Stake in NZ's PEP51153 (Jun 06)
- NZ-Focused TAG Oil Cuts Capex for Rest of FY16 Due to Low Oil Prices (Oct 15)
- TAG Prepares for NZ's Cheal East Field Development with New Pipeline Link (May 27)