e-mail: debbie.lewis@canaccord.com e-mail: david.pescod@canaccord.

com February 10, 2010

AN INTERVIEW WITH CLIVE STOCKDALE
VP CANACCORD
Tag Oil (As of February 6, 2010)

David Pescod: Clive the last time we spent a lot of time

hounding you for information, it was about an unconven-
tional gas story-Ultra Petroleum-close to a decade ago and
who would have thought that would have become a 100
bagger! Any thoughts on that unconventional gas story
looking back and how technology has changed in the last
decade?

Clive Stockdale: That technology has evolved is indisput-

able-with increasing momentum and the sea change that it
has brought, not surprisingly, is still a science not settled-
for example the impact medium and long term on natural
gas prices and energy substitution. You mention Ultra Pe-
troleum, and that certainly was an overwhelming introduc-
tion to the new potential of hitherto marginal plays and,
just as success, as opposed to failure, has been said to
have many parents, so there have been numerous claim-
ants to the title "Son of Ultra"

The consensus embedded in the market right now is that

there is room for all the natural gas. That was the message,
more or less, presented to the U.S. Congress by the Project
Coordinator for the proposed Alaskan Gas Pipeline and
Ziff's recent prediction of 20BCF/day of shale gas produc-
tion in the North American Market ten year's from now
would suggest ample room for other sources. I have some
nagging reservations, based on maybe being overly im-
pressed by U.S. technical know how, and especially relat-
ing to Western Canadian prices, the proximity of major
Eastern shale plays to markets-location is all.

D.P: We are now looking at a play in (of all places) New

Zealand and there are two parts to it. One is a shale play
which is unconventional and one which is the stuff we kind
of know as standard oil and gas that could grow. But if you
could take a look at that and more importantly, your take
on the potential for what some suggest is a Bakken look-a-
like.

C.S: New Zealand probably doesn't look like the end of the
world to the Asian Giants. But, yes, TAG Oil is in the oil and
gas business in New Zealand with, broadly speaking, con-
ventional and shale oil and gas plays in the Northern Is-
land.
David Pescod 780-408-1750 Debbie Lewis 780-408-1748 Fax: 780-408-1501 Page 2
In the west in the Taranaki Basin the Company has a
100% working interest in the Cheal oil pool and it is cur-
rently carrying reserves of 530,000 barrels to that inter-
est It’s quite a complex play in the sense that faulting
has brought compartmentalization, and that complexity
has been absorbed by the Company in the school of
hard knocks. It has expanded its acreage position from
5800 acres to 16000 acres and, given the pool size distri-
bution in the basin, looks for potential reserves net to
the Company of 10 million barrels.

To elaborate a little, now the Company has a 100% inter-

est at Cheal it is moving ahead to optimize production
from current wells and this could increase production to
600bbls/day in the near term without even drilling a well.
Development drilling is aimed at adding two million bar-
rels of new reserves and step-out drilling into new fault
blocks within the Cheal mining permit brings substantial
upside potential that has yet to be estimated by the Com-
pany or by the Company’s reserve evaluator. The situa-
tion is dynamic; a 7910 acre Winchester permit is their
most recent acquisition and here, based on 3D seismic,
they consider that they have six drill-ready prospects on
the west side of the permit, and at least that number of
leads. In house estimates of the six-drill ready prospects
set a target of 19 million barrels of oil in place.

The unconventional play is in the eastern part of the

North Island and involves source rocks called the Wa-
paiwa and Whangai shales and analogies with the Bak-
ken shale can in my opinion trip one up. Some of the
shales preliminarily look better, some worse since, after
all, we are dealing with 2.4 million acres.

D.P: The significance is that little TAG Oil, with only 30

million shares outstanding does have 2.4 million acres.
And, in Saskatchewan and North Dakota, if you have a
couple of thousand acres, you’re considered lucky. How
carried away should one get with all this?

C.S: That’s up to you Dave. Hopefully one can appraise

it in the context of a risk investment and attempt the cal-
culation of a risk-reward profile. But, before even doing
this it's of some comfort to find that such speculation is
not confined to the extreme fringe. What piqued my inter-
est was seeing a European bank investment report
evaluating a U.S. senior oil and gas company, specifi-
cally concentrating on its stealthy acquisition of North
American unconventional oil play acreage, valuing as a
base case that acreage at $8.6 billion.

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David Pescod 780-408-1750 Debbie Lewis 780-408-1748
Using its parameters for TAG resulted in the astronomical
figure of well over $100.00 per share. The point is that the
rising tide of unconventional plays is leading to evalua-
tions that were at the extreme risk fringe moving into the
main stream. Once again, however, analogies cause more
problems than they solve, so, while piquing interest, it is
no substitute for specific information.
D.P: Clive, I realize there are some huge numbers being
thrown about by companies doing exploration, suggesting
that they might have a billion barrels here or a billion
there. But when TAG is suggesting in some research re-
ports that they might have up to 12 billion barrels (if not
more) how much credibility should a person give to this?
C.S: TAG has two reports on the East Coast Basin oil and
gas potential. The first done by Sproule in March 2008
gives a figure of 1.7 billion barrels in place, and the analy-
sis identifies 56 leads or prospects-as grassroots as that.
Main target reservoirs cited being Miocene sandstones
and Pliocene limestone formations. This is an assessment
of conventional oil and gas potential. The second report,
dated September 2008, by AJM Petroleum Consultants
contains the figure of 12.7 billion barrels to which you
alluded. In fact its best estimate is 12.7 billion barrels for
estimated total original hydrocarbons in place combining
both shale potentials with -wait for it- a high estimate of
40billion barrels. This estimate of original oil in place by
AJM is based on 187,470 acres of the 2.4 million acres.
More interesting to me, however, is a second table of esti-
mates "Prospective Hydrocarbons in Place-Free Hydro-
carbons" which has a mean estimate of 6.1 billion barrels
going to a high figure of 13.3 billion barrels. That mean
figure, employing the bank technique referred to above,
i.e. a recovery rate of 2.2% and $6.24 a barrel would give a
mean figure of $28.00 per share. However, the consultants
give further direction by estimating recoverable hydrocar-
bons which, on the mean instance, they assess at 182
million barrels-value that at $6.24 per barrel and then the
figure becomes $40 per share.
What would carried away mean? Going to the best esti-
mate of 12 billion could be one avenue or maybe to the 40
billion! Changing the recovery rate on the eastern conven-
tional plays is another way to go. Additionally, using the
high estimate for recoverable hydrocarbons on the shale
play could increase the upside to $60 per share. And, of
course, we could go with the bank approach.
D.P: One of the most important things here is the timing of
this play and it’s unfortunate that they won’t be doing
their vertical wells until the summer and doing the all-
important horizontals until the third quarter of this year
and even then, we know nothing in the oil and gas busi-
ness happens on time. This is disappointing, isn’t it?
Fax: 780-408-1501 Page 3
C.S: I don't think disappointment is warranted. Only bad
weather is delaying the start of a three well shallow oil
well program on the eastern acreage and early March
should see the beginning of optimization work on Cheal
targeting three wells initially. Success at the shallow 250
meter cored drilling will not result in substantial produc-
tion increases. These wells are following up on a 100
year old discovery where a 600’ well recorded production
of 20 to 50 bbls/day of 50 API sweet oil. This oil was
tested and confirmed as having the underlying Whangai
and Waipawa shales as the source. The three shallow
cored wells will provide TAG with information to deter-
mine if there are economics to develop a shallow oil play
and on a success case, TAG will plan a multi-well follow-
up program to establish commercial production in the
Basin which will significantly enhance the basin’s profile
and prospectivity. Production is anticipated to be of the
order of 20 to 50 barrels per day per well, but I would ex-
pect it to have market impact focusing, as it should, the
investor’s attention on the Sproule report and the con-
cept of free hydrocarbons within the shale formations.
Again, successful optimization progress at Cheal will
support the idea of expansion of the Taranaki play and
that also should increase investor interest. So instead of
being a disappointment, these near term activities could
well act as a curtain raiser for the more significant show
starting later in the year. Presently this includes the
Broadside #1 well in August/September bordering on the
10 million barrel Ngatoro oil field with success accelerat-
ing drilling, notably at Winchester. Again, later this year
they plan to drill a serious test of the shale play. The
Boar Hill well is scheduled to go to 2000 meters and is
significant enough to warrant heightened investor inter-
est.
D.P: TAG has a bit of interesting history over the last
while with the merging of a few companies and stock roll
back, but it looks like its got good leverage with few
shares out and money in the bank. Comments?
C.S: It does have an interesting history and I would refer
you to the Company’s web-site where it is well set out.
What comes through here is that TAG has had its ups and
downs, but it has stuck to the job and it has rationalized
its interests in an efficient manner and that includes 30
million shares outstanding.
D.P: Are there any things we should know about New Zea-
land considering it is probably the last place in the world
many of us thought one should be looking for oil. Or the
fact that it even had any production?
David Pescod 780-408-1750 Debbie Lewis 780-408-1748 Fax: 780-408-1501 Page 4
C.S: Don’t underestimate the value of the New Zealand setting and it’s not just the point that they are really good at
sailing and rugby... They enjoy, if that's the right word, the rule of law, Anglo-Saxon law, and, going on memory, I think
they are number one in a published list compiled to show various degrees of corruption faced by businesses, where
the lower you go on the list the more corruption you encounter. Just in case I haven't said that clearly, in the context
of doing business and avoiding corruption they are the best. They are the most honest. Not only that, as I said earlier,
they are well placed for the Asian markets.

D.P: We hear too frequently some people suggesting that some company with a high risk/reward play will be either a
$50 stock or a $0.50 stock. How appropriate would this be when considering TAG Oil.

C.S: I don't flinch from that at all. From the previous comments the upside should be clear, so I'll concentrate on the
risk aspect. My view of the matter in the beginning was that taking into account present reserves at Taranaki and add-
ing in working capital of $11 million the company was worth $1.00 per share. So the recent move in the stock price
reflects the markets growing awareness of the possible growth in reserves at Taranaki and the huge potential in the
shales. Dividing the premium equally between the two it would seem to me that the current price embodies the idea of
a 20% chance that the Taranaki development will develop its full potential leaving a $1.00 per share for the shale play
and the associated conventional play, or maybe we could lump the eastern conventional play in with Taranaki and
suggest that the premium embodies an overall chance of success of seven percent for success in the conventional
plays, assessing the eastern conventional play at a 2.2% chance of developing recoverable reserves based on the es-
timate of oil in place in the Sproule report, using the bank approach again. though that was used for shale oil. So, the
$1.00 per share premium now applies only to the shale play and that, with the shares outstanding, amounts to $30
million.

D.P: How does that sit?

C.S: Is that out of line? There's no point in going back to the upside considerations since we've gone over that, so one
is thrown back on analogies. Another of the companies which I like is CGX Energy which you have advocated
throughout the piece. Now with 140 million shares outstanding that company's market value is $226 million and I'm
mesmerized by it because of its huge potential in the enormous Atlantic Basin deep water play. But it’s on the come.
Similarly, TAG has huge potential, but it is trading with a market valuation of $90 million. Investors are prepared to
accept risk premiums and your investors have had the experience of knowing that such high potentials will support
premiums in the market over substantial time. Consider the outstanding tenacity of the management of CGX in the
face of country border disputes and despite dry holes offshore and frustrating results onshore yet the market sup-
ports it because it appreciates both its growing sophistication in analyzing the offshore play and because of the devel-
oping deep water play itself. Similarly the market is, via the Bakken successes gaining a greater appreciation of the
growing sophistication in unlocking shale oil and the people involved in TAG have also shown impressive tenacity.
Now I have probably offended both companies.

D.P: That’s true.

C.S: From my own experience, when I started in the business, the Cardium was regarded as a really skinny play and I
remember participating in wells in the eighties that were regarded as a failure because they only found oil in the Bak-
ken. It bears remembering that one should keep an open mind to developing technology. Again New Zealand is not at
the end of the world with its favorable position near to the Asian economies. There are some large players looking at
shale plays with fresh eyes and that was not the situation before. A recent news release that three majors are reported
to have signed confidential agreements with Toreador Resources to do due diligence on its shale deposits in the Paris
Basin is a sign of the times.

D.P: Thank you Clive!

DEB’S DITTY:
I understand the concept of being a responsible adult…
I just don’t understand how it’s relevant to me.