TAG's Recent Taranaki 3-D Survey Identifies New Prospects

TAG Oil has recently participated in the largest 3-D seismic program in the history of the onshore Taranaki Basin, New Zealand's most prolific oil and gas region. The final stages of seismic interpretation are near completion and preliminary results have identified a number of low-risk, shallow prospects.

TAG Oil President Drew Cadenhead commented, "The history of successful exploration in the Taranaki Basin is built on 3D seismic. The basin boasts a high success rate of profitable discovery that has given us great confidence as we move toward the commencement of our upcoming drilling campaign in early 2004. Obviously completing our survey was important for this reason but more importantly it has confirmed the presence of excellent low-risk prospects in the oil-prone Mt. Messenger formation."

The survey also further highlighted the potential of the deep Waitoriki gas prospect. Waitoriki is analogous in all respects to offsetting discoveries such as the Mangahewa and McKee discoveries and TAG's internally generated mapping suggests a potential reserve size in excess of 100 billion cubic feet of gas.

Additionally the company confirms the completion of preliminary seismic interpretive work in the offshore Taranaki. The survey further highlighted the potential of the Orca Prospect that directly offsets Shell's recent Pohokura discovery estimated to be in excess of 500 billion cubic feet of gas. "We believe the prospects we have identified in this Permit collectively have the potential to equal or better those associated with the Pohokura discovery" stated Cadenhead, "Our newly acquired 2-D seismic demonstrates all the aspects of another major gas accumulation."

The developing gas shortage in New Zealand has brought attention to the potential of the significant untapped gas potential in the offshore Canterbury Basin. An assessment of the Corvette Prospect conducted by an independent U.S. engineering firm assigned a potential reserve of 1 trillion cubic feet of gas (TCF) and 45 million barrels of associated condensate. "To put the potential size of the resource into perspective, at US$3 per thousand cubic feet of gas and before costs such as capital expenditures, production expenses and royalty payments, puts the potential gross revenues from the prospect at roughly US$3 billion over the life of the project," Cadenhead remarked. TAG is currently re-interpreting existing offshore seismic data on these permits and expects to announce the delineation of further prospects.