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TAG Oil Ltd., (TSX-V: TAO) a Canadian-listed, New Zealand-focused oil production and exploration company, has filed its second quarter financial report for the period ended September 30, 2010. Vancouver, BC, Canada, December 16, 2010 --(PR.com)-- TAG Oil Ltd., (TSX-V: TAO) a Canadian-listed, New Zealand-focused oil production and exploration company, is pleased to provide an operational update and advises that the Company has filed its second quarter financial report for the period ended September 30, 2010. All figures reported are in Canadian dollars unless otherwise noted. TAG Recent Highlights: - Production revenue for second quarter of $2.41 million. - Successful workover operations completed on Cheal-B3 and Cheal-1 increase daily production. - TAG acquires Cardiff condensate-rich deep gas discovery. - Sidewinder-1 oil and gas discovery in PEP 38748 is drilled. - Cheal-BH-1 horizontal well is drilled and completed. - $60 million bought-deal equity financing closed. - Rig agreement signed for five wells, with an additional five-well option starting early 2011. Taranaki Basin Operations TAG is anticipating substantial near-and-long-term production growth in Taranaki through development of multiple oil and gas discoveries within the Company's 100%-controlled Taranaki Basin assets. The Company plans to drill up to 10 prospects identified on 3-D seismic coverage, commencing in early 2011. This program consists of development and step-out wells within Cheal and further exploration wells in the Sidewinder project area. For further information on TAG Oil's Operations please visit http://www.tagoil.com/operations.asp Sidewinder-1 Oil / Gas Discovery TAG plans to immediately proceed with development and the commercialization of Sidewinder-1. The Sidewinder-1 exploration well was drilled to 1601m and encountered 14m of net (22m gross) oil-and-gas-bearing sandstones with excellent reservoir porosities and permeability. A 10-day production test recorded stabilized flow rates of 1461 barrels of oil equivalent ("BOE") per day, consisting of 8.5 million cubic feet of gas and 44 barrels of oil per day. Subsequent interpretation of bottom hole pressure build-up data indicated no measurable pressure depletion, and the extended unrestricted flow rate was calculated at 30 million cubic feet of gas per day. Production forecast modeling has focused initially on gas to date and results indicate the initial flow rates anticipated from Sidewinder-1 to be greater than 10 million cubic feet of gas per day declining over 36
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months to rates still in excess of 5 million cubic feet of gas per day. Production profiles and facility plans also anticipate oil contributing more significantly to daily flow rates over time, which would be consistent to analogous oil and gas fields nearby Sidewinder. With Sidewinder's close proximity to existing gas and oil infrastructure, combined with New Zealand's low 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 Field Cheal-B3, the second Mt. Messenger vertical well that TAG Oil recently optimized, has recorded significantly 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 section within the Mt. Messenger Formation (1735-2285m). Uphole mudlogs have recorded better than expected oil and gas shows within the secondary Urenui Formation target at a depth of approximately 1400m. In the Mt. Messenger horizontal section of the well, a total of 430m of continuous reservoir was encountered with high oil and gas readings during the drilling operations. The multi-phase fracture stimulation of the horizontal section of the well has now been completed and the Company has mobilized a coil-tubing unit to 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 BOE of gas per day. Summary of Second Quarter Results The Company recorded production revenue of $2.41 million (six months: $4.23 million) and a net loss for the three-month period of $508,823 (six month loss: $389,384). Expenditures on the Company's oil and gas properties during the quarter totaled just under $3.5 million (six months: $5.3 million) relating primarily to costs of the Cheal-B3 and Cheal-1 optimization operations and the Cheal-BH-1 horizontal well and the Sidewinder-1 vertical exploration well. Liquidity and Capital Resources The 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 option granted to the Underwriters.
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This news release summarizes the Company's 2011 second-quarter results of operations and financial condition and should be read in conjunction with its Quarterly Report, which contains unaudited consolidated financial statements and Management's Discussion and Analysis. Copies of these documents can be obtained electronically at: www.sedar.com or through the Company's website http://www.tagoil.com/financial-reports.asp. Contact: Dan Brown or Garth Johnson TAG Oil Ltd. 1-604-682-6496 Website: http://www.tagoil.com "BOE"s may be misleading, particularly if used in isolation. A BOE conversion ratio of 6Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Cautionary Note Regarding Anticipated Results and Forward-Looking Statements: Statements contained in this news release that are not historical facts are forward-looking statements that involve various risks and uncertainty affecting the business of TAG Oil. These statements are based on certain factors and assumptions including those relating to TAG Oil's successful exploration and development of its oil and gas properties within Cheal and the Sidewinder project area, the production of oil and gas in accordance with TAG Oil's expectations at Cheal and at Sidewinder-1, oil and gas price assumptions and fluctuations, foreign exchange rates, expected growth, results of operations, performance, prospects, evaluations and opportunities and effective income tax rates. While TAG Oil considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Actual results may vary materially from the information provided in this release, and there is no representation by TAG Oil that the actual results realized in the future will be the same in whole or in part as those presented herein. TAG Oil is involved in the exploration for and production of hydrocarbons and all of its current property holdings, with the exception of the Cheal Oil Field and Sidewinder-1 project area, are in the grass roots or primary exploration stage. Exploration for hydrocarbons is a speculative venture necessarily involving substantial risk. There is no certainty that the expenditures incurred on TAG Oil's exploration properties will result in discoveries of commercial quantities of hydrocarbons. TAG Oil's future success in exploiting and increasing its current reserve base will depend on TAG Oil's ability to develop its current properties and on its ability to discover and acquire properties or prospects that are producing. But, there is no assurance that TAG Oil's future exploration and development efforts will result in the discovery or development of additional commercial accumulations of oil and natural gas. Other factors that could cause actual results to differ from those contained in the forward-looking statements related to upcoming operations, production forecast modeling and other items that are set forth in, but are not limited to, filings that the TAG Oil and its independent evaluator have made, including the
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TAG Oil's most recent reports in Canada under National Instrument 51-101. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. ###
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Contact Information: TAG Oil Ltd. Dan Brown 1-604-682-6496 firstname.lastname@example.org www.tagoil.com
Online Version of Press Release: You can read the online version of this press release at: http://www.pr.com/press-release/281463
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