months to rates still in excess of 5 million cubic feet of gas per day. Production profiles and facility plansalso anticipate oil contributing more significantly to daily flow rates over time, which would be consistentto analogous oil and gas fields nearby Sidewinder.With Sidewinder's close proximity to existing gas and oil infrastructure, combined with New Zealand'slow royalties and oil and gas prices that are substantially higher than in North America, development of the Sidewinder discovery will be cost-effective, efficient and commercially attractive.Cheal Oil and Gas FieldCheal-B3, the second Mt. Messenger vertical well that TAG Oil recently optimized, has recordedsignificantly improved oil and gas production rates during the 50 days since the workover was completed.Cheal-B3 is currently producing 330 BOE per day (290 barrels of oil and 40 BOE of gas per day)compared to 156 BOE per day (140 barrels of oil and 16 BOE of gas) prior to the workover operations.The Cheal-BH-1 horizontal well reached total depth of 2285m, including a 550m horizontal sectionwithin the Mt. Messenger Formation (1735-2285m). Uphole mudlogs have recorded better than expectedoil and gas shows within the secondary Urenui Formation target at a depth of approximately 1400m. Inthe Mt. Messenger horizontal section of the well, a total of 430m of continuous reservoir was encounteredwith high oil and gas readings during the drilling operations. The multi-phase fracture stimulation of thehorizontal section of the well has now been completed and the Company has mobilized a coil-tubing unitto prepare the well for production testing, commencing approximately December 5, 2010.Current production from the Cheal Field is 570 BOE per day consisting of 490 barrels of oil and 80 BOEof gas per day.Summary of Second Quarter ResultsThe Company recorded production revenue of $2.41 million (six months: $4.23 million) and a net loss forthe three-month period of $508,823 (six month loss: $389,384). Expenditures on the Company's oil andgas properties during the quarter totaled just under $3.5 million (six months: $5.3 million) relatingprimarily to costs of the Cheal-B3 and Cheal-1 optimization operations and the Cheal-BH-1 horizontalwell and the Sidewinder-1 vertical exploration well.Liquidity and Capital ResourcesThe Company ended the second quarter of the 2011 fiscal year with 37,646,608 shares outstanding(44,291,060 fully diluted) with no debt, $23.96 million in cash and $22.9 million in working capital.Subsequent to September 30, 2010 the Company issued a total of 11,550,000 common shares at a price of $5.20 per share for aggregate gross proceeds of $60,060,000, inclusive of the over-allotment optiongranted to the Underwriters.