International Energy

TAG Oil Ltd. (TAO-V, $2.45)

Recommendation: Speculative Buy
Kevin Shaw, P.Eng. (403) 781-2715; kshaw@wwcm.com Ronald Cheung, CFA (403) 781-2718; rcheung@wwcm.com September 20, 2010 All values in C$ unless otherwise noted. Current Price Target Price (12-Month) Implied Capital Gain Changes Production (boe/d) F 11E
CFPS FD FY 2011E

$2.45 $3.80 55% Old n.a. n.a. n.a. n.a. n.a. n.a. New 649 $0.17 1,675 $0.62 Spec. Buy $3.80

New Zealand Pure Play w/ Big Conventional & Unconventional Oil Resource Potential

Proven-producing Taranaki basin estimated at ~100 mmboe OOIP Cheal asset is currently producing ~490 boe/d net; prodn could easily reach 1,000+ boe/d within 3 to 4 months w/ current 10 drill program. E. Coast basin Waipawa/Whangai oil: call option on 14+ Bboe OOIP Basin offers 1.7 billion bbls OOIP conventional & 12.7 billions bbls OOIP unconventional play (shale compares to Bakken & Paris Basin Liassic). Sept. kick-off of Taranaki drills, workovers & 1st hztl multi-stage frac Set to spud expln test (Sidewinder-1) on Broadside block targeting Mt. Messenger zone, then 1st hztl multi-stage frac test at Cheal (Cheal-BH-1). Initiating coverage with Spec Buy & $3.80 target; key attributes are 2+ mm acres, no debt, & $26mm w/c. Target based on 2P NPV, risked NPV (Taranaki scenario), EMV/sh (incl. expln upside), & FY12 DACF.

Production (boe/d) F 12E

CFPS FD FY 2012E

Recommendation Target Price

Company Profile TAG Oil Ltd. (TAO) is an emerging international exploration and production company operating in New Zealands East Coast and Taranaki basins. The company has three permits in the East Coast basin (~14 billion bbls OOIP) and two permits in the Taranaki basin (~100 million boe OOIP). TAG is currently producing ~490 boe/d from the Cheal initial discovery / pool in the Taranaki basin with 2P reserves of 0.7 million boe, although we expect significant resource upside in these two areas.

Price Chart
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Financial Summary
1,000,000 900,000 800,000
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3.00 700,000
Daily Volume

2.50
Price (C$)

600,000 500,000 400,000 300,000

2.00 1.50 1.00

200,000 0.50 0.00

Nov-09 Sep-09 May-10 Mar-10 Sep-10 Jan-10 Jul-10

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Shares FY 2011 O/S (mm, FD TSM) Market Capitalization (C$mm) Net Debt (C$mm) Enterprise Value (C$mm) Forecasts Production (boe/d) % gas Modeled WTI Oil Price (US$/bbl) Modeled US$/CAD$ Exchange Rate Realized Oil Price (C$/boe) Revenues (C$mm) Cashflow (C$mm) DACF (C$mm) Capex (C$mm) EPS (FD TSM) CFPS (FD TSM)

39.0 $98 (26) $72 FY 2009* 135 0% $61.56 $0.88 $44.14 $4.9 $2.0 $2.0 $2.5 ($1.05) $0.11

52-Week Trading Range Average Weekly Volume Market Float (mm) Risked EMV/Share FY 2010* FY 2011E* 201 649 0% 0% $70.49 $80.23 $0.98 $0.95 $82.64 $68.28 $6.5 $16.4 $0.3 $6.5 $0.3 $6.5 $2.3 $19.5 ($0.08) $0.05 $0.01 $0.17 2011E 12.7x $127,949 51.4x 20.5x

$0.40-$3.71 557,358 $72 $13.32 FY 2012E* 1,675 0% $83.75 $0.95 $73.17 $44.7 $24.4 $24.4 $30.0 $0.30 $0.62 2012E 3.6x $52,891 8.2x 5.7x

Source: Thomson One

Valuation EV/DACF EV/BOE/d (per unit production) P/E Target EV/DACF * Fiscal year ends on March 31 each year Source: Company reports, Wellington West Capital Markets Inc.

Please see disclaimers on the last two pages of this report.

TAG Oil Ltd.

Investment Summary and Outlook

TAG Oil (TAG) is a pure play New Zealand based exploration and production company positioned to exploit over 2 million prospective acres & 14+ billion barrels of original oil in place (OOIP), offering both high impact exploration and lower risk development upside. TAG offers a mix of risk and reward opportunity across a combination of large oil-in-place conventional reservoirs and emerging unconventional resource plays. The Taranaki basin in North New Zealand is a mature proven-producing basin yet remains highly underexplored as compared to other mature basins around the world like those found in North America. The lower risk Taranaki basin offers significant growth potential across two acreage blocks (or permits) which holds an estimated 100 million bbls OOIP and is 100% owned by TAG. The companys near-term (Q4 2010 / Q1 2011) focus is to delineate reserves and boost corporate oil production via an estimated ~$20 million work program on its Taranaki permits. The East Coast basin offers game changing upside for TAG throughout the prove-up and commerciality of multiple oil shale zones which have similar technical characteristics to both the North Dakota Bakken & emerging Paris Basin Liassic resource plays. Both the Taranaki and East Coast basins are prime candidates for application of North American based multi-stage frac technology with TAG set to implement the first uses of this technology in 2010 / 2011. TAG has also recently acquired 100% of the overlapping gas-condensate rights & an initial liquids-rich gas discovery on one of its Taranaki permits where the company controls the facility infrastructure. We are initiating coverage with a $3.80 target price and a Speculative Buy rating. Given TAG is an early-stage exploration and development company and is just starting to become active with its initial drilling & frac operations in Q4 2010, we focus our valuation on the companys exploration upside shown by our net risked EMV/sh of ~$13.32. Our EMV/sh is driven by a risked recoverable resource potential of up to ~52 mmbbls vs. unrisked of ~455 mmbbls recoverable. As the company executes high impact exploration, makes discoveries, and tests North American based technologies to commercialize its potentially game-changing oil shale assets, we believe significant shareholder value could be unlocked across TAGs 2+ million net undeveloped acres and 14+ billion bbl OOIP prize. We believe TAG shares represent a compelling opportunity for investors looking to gain exposure to a well financed New Zealand explore-co with a mix of lower risk plays in the medium-term and higher risk, higher reward plays over the longer-term.

Investment Highlights
Huge Land Position, 100% W.I. & Ready to Exploit Over 14 Billion Barrels of OOIP
TAG has two highly prospective areas (100% working interest) covering more than 2 million acres in New Zealand located in the emerging East Coast basin and the proven-producing Taranaki basin. The East Coast basin offers both conventional and unconventional opportunities on acreage originally acquired through a transaction with Trans-Orient Energy (details to follow). According to two independent engineering evaluations by Sproule and AJM,

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 2

TAG Oil Ltd.

these two basins have 14 billion barrels OOIP indentified on less than 10% of the companys existing land base. Currently, TAG has three permits in the East Coast basin and two permits in the Taranaki basin. We see the East Coast basin as a free call option on recoverable resource potential of possibly over 1 billion barrels.

Ramping Oil Production and Cashflow - Taranaki Basin Production Positioned to Double in 3 Months to 6 Months
TAGs initial Cheal oil pool is already producing at ~490 boe/d and is expected to reach 1,000+ boe/d within several months and 1,500+ boe/d in mid 2011. Following a relatively recent $20mm financing, TAG is initiating sizeable work programs in 2010 & 2011 for the Cheal & Broadside blocks within the Taranaki basin. TAGs strategy is focused on building oil production & cashflow on lower risk development and exploration plays prior to conducting exploration activities in the East Coast basin in 2011. The Taranaki basin offers an estimated 100 mmboe of OOIP with TAG expected to further test the Urenui & Mt. Messenger formations (i.e. known oil producing zones in New Zealand) and utilize technology advancements both in horizontal multi-stage fracs as well as downhole heater systems to enhance production rates, increase recovery factors, and add new reserves. Leveraging relatively lower risk development of Taranaki producing assets into a cashflow engine to fund the companys planned East Coast basin exploration, we believe, is a solid strategy to build shareholder value.

East Coast Basin Call Option on a BIG Oil Resource Play & a Prime Candidate for Horizontal Multi-Stage Fracs
99% of the companys OOIP is in the East Coast basin which contains oil shale which appears analogous to the Bakken and Paris Basin Liassic Oil Shale, and could offer tremendous upside to TAG. The East Coast basin is a high impact area with more than 2 million acres of unexplored lands. Hundreds of drilling prospects at depths between 250 meters and 2,000 meters have been identified with only 38 test holes drilled on the acreage since 1955. Within the East Coast basin, there is potential for three separate play types, including: 1. Shallow conventional oil in the Waitangi formation (i.e. 200 meters to 300 meters in depth; 2. Deep conventional oil targets (i.e. less than 1,500 meters deep) in the Miocene sandstones offering 2 mmbbl to 10 mmbbl reserve targets per prospect; and, 3. Unconventional oil-shale which is widespread regionally (i.e. less than 2000 meters deep) and could prove similar to the North American Bakken and emerging Paris Basin Liassic plays. The East Coast basin is a prime candidate for horizontal multi-stage frac technology within two known unconventional fractured shale plays in source rocks known as the Waipawa & Whangai. Reserves have not yet been booked for any of the conventional or unconventional zones of interest included in the East Coasts 14 billon OOIP resource estimate.

New Zealand: Stable, Fiscally Attractive, and Underexplored

All of TAGs assets are in New Zealand, an economically and politically stable country. An investment in TAG provides investors with the opportunity to invest in an international exploration company with relatively low in country

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 3

TAG Oil Ltd.

risks (i.e. geo-political, threat of wars, corruption, etc.) which exist in many hydrocarbon rich countries in other parts of the world. New Zealands permitting regime and fiscal terms are highly ranked among the world. Specifically, policy framework promotes the discovery of petroleum with a competitive fiscal regime. The royalty rate for TAG is 5% for oil and 1% for gas sales and a 15% accounting profits royalty for an onshore discovery for the first NZ$250 million sales and 20% thereafter. The Taranaki & East Coast basins are expected to yield high netbacks with oil revenues fetching WTI benchmark pricing.

Strong Balance Sheet, Fully Financed for Taranaki Drill Program

With $26mm in working capital and no debt, TAG is in a strong financial position to move forward with an initial Taranaki basin development & exploration program. The company has sufficient capital to fund its current capital program within the Taranaki basin and further ramp oil production upon success. Upon success of multiple wells in late 2010 or early 2011, we anticipate TAG requiring additional capital either via equity and/or debt to finance future development within the Taranaki basin and kick-off high impact exploration drilling on the East Coast.

Attractive Valuation Based on our Risked NPV/sh & Risked EMV/sh

TAG is trading at 0.2X our risked EMV/sh estimate of $13.32 and 0.9X our risked NPV/sh estimate of $2.67. With our risked NPV/sh based solely on the companys initial Taranaki potential, there is significant upside as new exploration and resource development plays within the East Coast basin move from the testing / prove-up stage to development. We believe TAG is a Speculative Buy as the company begins its initial capital program in onshore New Zealand in 2010 and works to delineate new reserves & apply horizontal technology.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 4

TAG Oil Ltd.

Valuation and Summary Recommendation

We are initiating coverage on TAG Oil with a Speculative Buy rating and a $3.80 target. We believe TAG offers investors exposure to significant upside through lower risk development and exploration on its two Taranaki basin blocks, with high impact game changing opportunities in the East Coast basin. TAG offers exposure to big oil upside via horizontal technology applications within both proven producing assets and new frontier higher risk acreage, where multiple zones of interest have been identified. Until a number of TAGs initial plays are further proved-up, TAG carries a higher overall risk rating like many emerging explore-cos, however the investment risk is somewhat mitigated given TAG has existing oil production (i.e. operates 490 boe/d with associated gas) and is expected to increase production volumes over the medium term to 1,000+ boe/d without leveraging the balance sheet. We estimate a risked NPV/sh of $2.01 (not including cash) on TAGs Taranaki basin potential with a risked EMV/sh of $13.32 which includes both further exploration within Taranaki, the high impact plays on the East Coast and working capital. TAGs huge upside can be seen in our EMV/sh valuation and is driven by the East Coast basin with an unrisked recoverable resource estimate of 455 mmbbls accounting for only a 3% recovery factor on the 14+ billion bbl OOIP prize. Our risked EMV/sh holds ~52 mmbbls of recoverable resource. If proved successful, the East Coast basin could support hundreds of vertical and horizontal development locations both targeting conventional & unconventional oil plays. Exhibit 1: WWCM Risked NPV/sh Valuation Possible Scenario for Initial Taranaki Assets Alone
Prospect/Field Taranaki Cash (Net Debt) Total
Source: Wellington West Capital Markets Inc.

WWCM Unrisked Resource Estimate (mmbbls, net) 6.0 6.0

COS (%) 60%

WWCM Risked Resource Estimate (mmbbls, net) 3.6 3.6

Unrisked NPV/sh $3.35 $0.66 $4.01

Risked NPV/sh $2.01 $0.66 $2.67

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 5

TAG Oil Ltd.

Exhibit 2: WWCM Risked EMV/sh Valuation Breakdown Including Exploration & Development Upside for Both Taranaki & East Coast Basins
Prospect/Field East Coast Basin Conventional Waipawa Oil Shale Whangai Oil Shale Taranaki Basin Cheal - Mt. Messenger Cheal - Urenui Broadside - Mt. Messenger Broadside - Urenui Cash (Net debt) Total WWCM Unrisked Working Resource Interest (Gross, mmboe) (%) 87.0 175.0 175.0 7.0 5.0 4.0 2.0 455.0 100% 100% 100% 100% 100% 100% 100% COS (%) WWCM Risked Net Risked Resource EMV/sh (Net, mmboe) 8.7 17.5 17.5 3.9 1.8 2.2 0.7 52.2 $2.65 $3.56 $3.56 $1.44 $0.61 $0.73 $0.10 $0.66 $13.32

10% 10% 10% 55% 35% 55% 35%

Source: Company reports, Wellington West Capital Markets Inc.

Exhibit 3: Summary Valuation Table Drives our Target of $3.80

Valuation Matrix Core 2P NPV10 Risked NPV/sh. (Taranaki Assets only) Asset EMV/share 2011E DACF (Fiscal Yr. 2012) Forecast $ 1.41 $ 2.67 $ 13.32 $ 0.62 Target Multiple 1.0 1.0 1.0 4.0 Value $ 1.41 $ 2.67 $ 13.32 $ 2.50 Weighting 35% 35% 15% 15% Weighted Value $ 0.49 $ 0.93 $2.00 $ 0.37

12-month derived target price

$ 3.80

Source: Wellington West Capital Markets Inc. estimates

Operating Areas New Zealand

TAG is a pure play focused solely on oil and gas exploration and production in New Zealands Taranaki and East Coast basins. With two key target areas, TAG has a portfolio of low risk and high risk plays. The Taranaki basin in North Island New Zealand has been producing for many years, yet it is still relatively underexplored. The East Coast basin is expected to hold a significantly larger resource potential, although will require more exploration work (see Exhibit 9). The lower risk Taranaki basin will be the companys focus in the near-term to ramp production, while the East Coast basin could generate significant shareholder value over the longer-term.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 6

TAG Oil Ltd.

Exhibit 4: TAGs Taranaki Basin and East Coast Basin Acreage Located on North Island of New Zealand

Source: Company reports

Taranaki Basin Lower Risk, Historically Undercapitalized & Highly Prospective TAG has two permits with 100% interests in the proven but underexplored Taranaki basin (see Exhibit 5). Although the basin covers 100,000 square kms, only 175 wildcats have been drilled since 1955. Hence, it offers significant opportunity to expand reserves through exploration and development. The proven basin thus far has 600 million barrels of oil and 7 trillion cubic feet of recoverable gas reserves. Currently, the basin is producing 53,700 bbl/d of oil and 397 mmcf/d of gas. TAG has already indentified more than 30 initial drilling locations within the Taranaki basin to further explore and develop its two key land permits.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 7

TAG Oil Ltd.

Exhibit 5: Taranaki Basin: TAGs Cheal and Cardiff Discoveries, 2 Permits and Operated Facilities are in the Middle of Increasing Industry Activity

Source: Company reports, Wellington West

TAG has 100% working interests in Cheal and is producing ~490 boe/d (approx. 86% oil). Permit 38156-S, where the initial Cheal discovery is located, covers 7,487 acres and has 3-D seismic coverage over the area. The Cheal A and B blocks (see Exhibit 6) were the first developed and hold an estimated 10 mmbbls OOIP with recovery factors (RFs) in the 8% to 12% range. These RFs are expected to increase via the implementation of downhole heater systems and horizontal development. Moreover, there are several undeveloped blocks to the NE and NW of the current development area (Blocks A and B) which have the potential to increase the companys existing 2P reserves (initial bookings of ~0.7 mmbbls) by 4 to 10 times. TAG has identified up to 20 additional horizontal locations among the undeveloped blocks with the potential to achieve rates up to 1,000 boe/d per horizontal. With TAG kicking-off its initial drilling activities in Q4 2010, we expect the company to further delineate the undeveloped Cheal blocks offset to blocks A&B.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 8

TAG Oil Ltd.

Exhibit 6: Taranaki Basin Existing Cheal Pools and Undeveloped Blocks w/ Potential to Increase 2P Reserves by 4 to 10x

Source: Company reports

Horizontal development tests are planned for both the Mt. Messenger and Urenui formations. The Mt. Messenger formation is about 1,800 m deep whereas the Urenui is ~1,400 m. Exhibit 7, which shows an outcrop photograph from New Zealand, demonstrates that the Mt. Messenger formation is comprised of multiple thin (~1m) individual sandstone beds. Each lobe is 150-200 m across and the sandstone beds are separated by shale. Each Mt. Messenger pool is made up of hundreds of overlapping lobes covering an area of multiple kilometers. The company plans to test the development of this known producing formation (i.e. on offset acreage) using horizontal multi-stage frac execution with the concept of applying this North American based technology to intercept hundreds of lobes with a single horizontal wellbore (i.e. vertical wells can only intercept 510 individual lobes per well). Successful horizontal tests could significantly increase the 2P reserves for TAG, given the Mt. Messenger reserves at Taranaki are currently modestly booked with respect to recovery factors from vertical wells only.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 9

TAG Oil Ltd.

Exhibit 7: Taranaki Basin: Mt. Messenger Formation Prime Candidate for Horizontal Multi-Stage Frac Technology

Source: Company reports

The Urenui formation is present in all 11 Cheal wells drilled to date. This Miocene-aged formation is well defined on 3D seismic and is ~1,400 m deep. Strong hydrocarbon shows on mudlogs were evident in 10 of 11 wells drilled in the permit and three wells actually tested oil and gas with no water. With the application of cost effective downhole heaters, the ultimate recovery factors and reserve values for the Urenui formation could significantly increase, as no previous reserves have been booked to this formation. Wax technology (i.e. downhole heaters) was applied to two vertical wells in May / June 10 to pilot different downhole completion designs to enhance overall productivity. The prize going forward is to sustain much higher well rates from the known Urenui formation which if successful, could support development drilling across the Taranaki assets. Broadside (Permit 38748) is strategically located in the heart of the Taranaki fairway and is highly complimentary to Cheal. It covers 7,910 acres (100% TAG) and is located to the north of Cheal. Sharing many of the same geotechnical characteristics as Cheal, Broadside will benefit from the exploration and development experience executed on the Cheal blocks. The first exploration well is expected to be drilled by TAG in Q4 2010 on the Broadside acreage and is targeting the Mt. Messenger and Urenui oil formations which are

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 10

TAG Oil Ltd.

producing at Cheal and/or have been identified on surrounding blocks. To start, five drillable prospects have been indentified with another five to ten wells to follow upon initial success. The first well is expected to be drilled in September / October 2010 to put this new permit into play. Exhibit 8: Taranaki Basin: Broadside Permit A New Exploration Area in the Heart of the Fairway

Source: Company reports

East Coast Basin The Free Call Option Massive upside potential in the East Coast basin exists and could be game changing to TAG who owns 100% working interest in three permits covering more than 2 million acres of undeveloped land. Unlike the Taranaki basin, the East Coast basin is higher risk, but offers significant upside for an investor who takes a longer-term view. The permits were acquired through a take-over of Trans-Orient in December 2009. TAG is planning on exploring & developing the basin with conventional and unconventional methods while the latter is expected to be the main focus for this basin. Even though it is still early days for the widespread unconventional oil shales which have been identified on these permits, the East Coast basin can be compared to both the Bakken shale

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 11

TAG Oil Ltd.

play in North America and the Paris Basin Liassic (see Exhibit 12). As a result, TAG offers a unique opportunity for investors to gain exposure to an unexploited Bakken type oil-shale on the international circuit, within New Zealands fiscally attractive and stable environment. The huge OOIP offers both conventional and unconventional opportunities. The East Coast basin has 14+ billion barrels of OOIP which, as estimated by two independent qualified engineers. As shown in Exhibit 9, 12.65 billion barrels of unconventional OOIP have been assessed by AJM while 1.74 billion barrels of conventional OOIP have been estimated by Sproule. Geotechnical work to date has identified a number of conventional and unconventional prospects at depths between 250 and 2,000 m. Exhibit 9: TAGs OOIP Breakdown

Source: Company reports

TAG has indentified three approaches to explore and develop the East Coast basin. Exhibit 10 identifies the stratigraphy of the basin and the multi-zone potential within 3 distinct resource play types. We believe that horizontal multistage frac technology will be key to unlocking this big oil opportunity to commercialize the large in-place reserves within a widespread hydrocarbon charged source rock. Hence, the company is taking steps to utilize proven technology for shale plays in North America and apply them to the East Coast basin with the first vertical and horizontal test wells expected into this play in 2011 (i.e. post an initial work program within the Taranaki basin). Exhibits 10 and 11 identify historical activity, resource estimates, and future activities planned given specific reservoir characteristics.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 12

TAG Oil Ltd.

Exhibit 10: East Coast Basin: Stratigraphy & Three Targets of Interest

Paris Basin Liassic

Source: Company reports, Wellington West

Exhibit 11: Summary of the Approaches for the East Coast Basin
Shallow Conventional Targets Source: Company reports First of three Cored Strat wells now complete at Waitangi Hill shallow oil and gas at high pressure discovered 1912 Bore Hole still bubbling 50 degree API, sweet crude oil and gas today Oil geochemically typed to Waipawa/Whangai source rocks Potential to drill 15 wells on Waitangi Hill alone Potential for stacked conventional targets, as well 4-way dip closure on Miocene through Paleocene formations Sproule estimates 1.74 billion barrels OOIP of conventional oil Extremely over pressured Basin (3,100 psi at 1,000m), impenetrable seal Naturally fractured and 50 degree API oil Oil-and gas-rich Waipawa and Whangai fractured shale system widespread & thickly developed across TAGs holdings Improved horizontal, multi-stage fracturing technology optimizes extraction Comparable in total organic carbon content and oil and gas maturity level to Bakken Shale AJM undiscovered resource potential of 12.65 billion barrels of unconventional OOIP Boar Hill -1, Kawakawa-1, Waitangi Deep-1: all highgraded potential deep tests

Deep Conventional Targets

Unconventional Targets

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 13

TAG Oil Ltd.

Exhibit 12: How Does TAGs Oil Shale Stack-up: Waipawa / Whangai vs. Bakken / Paris Basin Liassic
North Dakota Bakken Depth (m) Net Thick (m) Primary Perm (microdarcies) Tmax (C) TOC % Quartz Content % Vit Refl R Total Porosity % Source Rock / Oil Gravity (API) 2,700 3,500 10 50 40 50 420 450 1.1 12 20 68 0.3 1.2 8 12 Type II/42 Waipawa 0 5,000 10 60 10 200 430 445 3.0 12 40 80 0.3 0.4 9 23 Type II/50 Paris Basin Liassic 1,650 1,850 1 40 50 445 4.5 26 58 1.0 1.3 45 Type II/38 0 5,000 300 600+ 10 110 420 445 0.2 1.7 40 80 0.1 1.4 16 -31 Type II/50 Whangai

Source: Company reports

Recent Entry into Gas Exploration Another Call Option for TAG
On September 15, TAG strategically announced that it has acquired a 100% interest in a condensate-rich deep gas discovery and the gas hydrocarbon rights which overlap TAGs existing Cheal oil acreage. There are 16 gas fields in the country where the production is dominated by three key fields (see Exhibit 13). The offshore 3.4 Tcf Maui gas field was discovered in 1969 and was the crown jewel of the oil and gas industry in New Zealand. However, since initial production in 1979, the field has more recently been declining at a relatively steep rate. As a result, the price of natural gas in New Zealand has been increasing at a rather steep rate. Domestic gas prices have increased from US$1.36/mcf in 2000 to US$5.29/mcf in 2008 (see Exhibit 14).

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 14

TAG Oil Ltd.

Exhibit 13: New Zealand Historical Natural Gas Production by Fields

700

600

500
Production (mmcf/d)

400

300

200

100

0 2000

2001

2002 Maui

2003

2004

2005

2006

2007 Other

2008

2009

Kapuni

Pohokura

Source: Ministry of Economic Development

Exhibit 14: New Zealand Historical Gas Price Trending Upwards

$6

$5

$4
US$/mcf

$3

$2

$1

$0 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: Ministry of Economic Development

The acquisition of the Cardiff gas/condensate discovery (Permit 38156-D) fits strategically with its Cheal asset (see Exhibit 15). It is located within Permit 38156-S and the acquisition ends the split rights of the area allowing TAG to control 100% of Permit 38156. Gas with rich condensate was discovered within the upper Kapuni zone with 12m of net pay flowing at over 3 mcf/d and 100 bbl/d of condensate (light oil) from a vertical alone. Significant potential may exists in the deeper K1A and K3E zones where strong gas shows were encountered over a gross interval of 600 m. Cardiff gas can easily be sold to the

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 15

TAG Oil Ltd.

North Island gas market given its close proximity to existing gas infra0structure which is controlled by TAG on its oil operations in the area. Exhibit 15: Cardiff Gas Discovery Location

Source: Company reports

Near-term Catalysts and 2010 Program

TAG recently announced their upcoming work program focused in the Taranaki basin, which includes new exploration and development drills, workover optimization operations, and the first horizontal multi-stage frac test. The program kicks off mid September 2010 with an exploration well, Sidewinder-1, on the Broadside permit which is planned to reach a total measured depth of 1,457 m in approximately 10 days targeting the Mt. Messenger Formation. Depending on the results, TAG has the option to drill one or more additional follow-on exploration prospects for further delineation of Mt. Messenger oil within the Broadside permit. Following this initial exploration well, the rig will move to the existing Cheal production permit to drill the ChealBH-1 horizontal well into the proven producing area of the Cheal A block directly offsetting vertical producers in the area. A 600 m horizontal leg is planned for this first test development well at a TVD of 2,325 m. This will be an important well completion as a multi-stage fracture treatment has not as yet been deployed in New Zealand.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 16

TAG Oil Ltd.

Exhibit 16: Lots of Catalysts in 2010 with Focus on Taranaki Basin & Building Oil Cashflow; High Impact East Coast Basin to Follow in 2011
Property Operation Cost
($mm)

Taranaki Basin - 2010 Focus - Building Production & Cashflow; Delineating New Development Reserves Broadside 1st of multiple exploration targets; "Sidewinder-1" to be spud ~mid Sept. '10 $2.5 Cheal BH-1 Mt. Messenger Well - Horizontal Multi-Stage Frac (Development well - lower risk) $3.5 Cheal Optimize B3 & B1 Wells frac & potential dual completion $1.5 Cheal Urenui Well with Horizontal Multi-Stage Frac $3.5 Broadside Mt. Messenger Well Vertical with Frac $2.5 Cheal 1st of multiple Cheal "Step-Outs" starting with B5 - Horizontal Multi-Stage Frac $3.5 Cheal Cheal B-4 Side-Track $2.5 East Coast Basin - 2011 Focus TBD Shallow Strat Wells for Data Gathering TBD Vertical/Horizontal Pilot Program Testing Oilshale Potential

TBD TBD

Source: Company reports

Operating and Financial Forecasts

As the company executes their phased exploration and field development plan within the Taranaki basin focused at Cheal and on the Broadside permit, we expect (with success) TAGs production to increase from ~490 boe/d to ~1,200 boe/d by end of fiscal 2011 (March 2011). A key development to watch for is the horizontal drilling planned for late October or early November this year. Cash flows generated from the Cheal operations and work program are expected to be key to help fund future exploration and development activities both within the Taranaki basin and on the East Coast. With no debt and $26mm in working capital, TAG is positioned for growth by investing in five 100% controlled permit areas within the Taranaki and East Coast basins. The Taranaki basin could generate cash flows of $6.5mm and $24.4mm in fiscal 2011 and 2012, respectively, depending on execution results from the initial work programs. Even though it is early days, the East Coast basin has the potential to add significant value for shareholders over the longer-term and is a great call option on what could be BIG international oil. Our risked EMV for the East Coast basin is $9.77/sh. Overall, we view TAG as an attractive early stage play on what could shift from an emerging explore-co and early development E&P to a larger scale manufacturing story (i.e. upon success on one of the companys conventional and unconventional oil resource plays).

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 17

TAG Oil Ltd.

History and Management

TAG Oil has assembled a highly focused management team and Board of Directors with international oil and gas experience. Key management and technical team members have been together for 7+ years focusing on New Zealand and the company has added key technical staff over the last few months as TAG begins to get active with the drill bit in Q4 2010. The company has focused efforts on the Taranaki Basin since 2003, and has been acquiring additional permits and acreage in the country. In December of 2009, TAG Oil acquired 100% interests in Trans-Orient Petroleum, which held exploration rights in the East Coast Basin. Led by Garth Johnson, CEO & Director, the management team has extensive experience in New Zealand and some members have held previous roles with Trans-Orient. Management, together with the Board of Directors, holds 26% of the shares outstanding. Exhibit 17: TAG Management Team and Board of Directors Management Team
Garth Johnson, CEO & Director

Mr. Johnson joined TAG Oil as the corporate accountant in 1997. Mr. Johnson is a Certified General Accountant who has extensive experience in executive management, acquisitions, corporate finance, accounting and regulatory reporting for public companies in the oil and gas industry and has been instrumental in developing junior companies from start-up to listing on the TSX and AMEX exchanges for the last 14 years. Mr. Johnson is also a corporate business executive and has focused, primarily in New Zealand and Papua New Guinea. Currently, Mr. Johnson is the Chief Executive Officer and a director of TAG Oil and has previously served as a director and officer of Trans-Orient, Austral and AMG.
Blair Johnson, CFO & Director

Mr. Johnson currently serves as the Chief Financial Officer of TAG Oil. Mr. Johnson, holds a Bachelor of Management Studies with First Class Honors in Accounting and Marketing and has worked with TAG Oil for the last four years. Mr. Johnsons responsibilities with TAG Oil have included corporate governance and accounting functions for TAG Oils New Zealand subsidiaries. Mr. Johnson is a member of the Chartered Institute of Management Accountants (UK), and a member of the Institute of Chartered Accountants of New Zealand. Prior to joining 25 TAG Oil, Mr. Johnson was Finance Director for Bridge Petroleum Limited (NZ) and has an extensive track record of managing operational risk in highly regulated industries.
Drew Cadenhead, COO & Director

Mr. Cadenhead currently serves as the Chief Operating Officer of TAG Oil. Mr. Cadenhead obtained his B.SC. in Geology from the University of Calgary and began his career in the oil and gas exploration business in 1979. Mr. Cadenhead has extensive technical and operational experience in Western Canada and New Zealand and he has gained an in-depth knowledge of both international and domestic oil and gas exploration and development. Mr. Cadenhead has worked for Canadian Hunter Exploration, and also worked in various leadership capacities for a number of other Canadian-based companies including Ulster Petroleum, Selkirk Energy and Summit Resources. At Summit Resources, Mr. Cadenhead was responsible for identifying and leading the company into the Gunnell area of B.C. to test the Upper Devonian Jean Marie Formation where multi-TCF gas deposits were subsequently discovered. Mr. Cadenhead gained his New Zealand experience with Fletcher Challenge Energy Taranaki, leading a team of geoscientists, engineers and technical support staff into a successful multi-well drilling program and secondary recovery implementation before joining TAG Oil in 2003. Mr. Cadenhead is also a member of APEGGA.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 18

TAG Oil Ltd.

Giuseppe (Pino) Perone, Corporate Secretary

Mr. Perone currently serves as the Corporate Secretary of TAG Oil. Mr. Perone is currently practicing as a corporate lawyer for TAG Oil and other public and private companies, and has legal experience in a variety of corporate and commercial matters. Mr. Perone obtained a B.A. with Distinction in Sociology from the University of Victoria in 2001 and an LL.B. from the University of Alberta in 2005, and has previously articled at the law firm of Lang Michener LLP in their Vancouver, British Columbia office. Mr. Perone is also an active member of the Law Society of British Columbia and the Canadian Bar Association. Mr. Perone has previously served as a director of TAG Oil.
John (Jack) P. Doyle, Drilling & Completion Manager

Mr. Doyle is a professional Petroleum Engineer, with over 30 years experience in the Canadian oil and gas business. Jack is the CEO and founding partner of BASE Engineering, a Calgarybased engineering firm that provides total engineering solutions and project management to the oil and gas industry. Jack started his successful career with Amoco Canada (later Dome Petroleum), spending 18 years working through positions of escalating seniority in the drilling, completions, production and facility engineering departments. The last 12 years of Mr. Doyles career have seen him take lead engineering supervisory roles with Northstar Energy, Dominion Exploration, and Hawker Resources, before establishing BASE Engineering. Mr. Doyle graduated with a B.Sc. in Petroleum Engineering from the Montana College of Mineral Science and Technology and is a member of APEGGA.
Carey G. Davis, Exploration & New Ventures Manager

Mr. Davis is a Professional Petroleum Geologist with 15 years of international exploration and development experience. Carey started his career with PetroCorp, the New Zealand Stateowned oil company. He continued developing his geological knowledge in New Zealand with Fletcher Challenge Energy before striking out into broader international waters. In 2001, Carey accepted a position with Talisman Energy, where he provided geotechnical leadership roles in North Africa, Trinidad and Western Canada. He returned to New Zealand in 2003, where he accepted the position of Senior Geologist with Swift Energy and later in 2007, Exploration Technical Advisor for Mighty River Power. Carey is highly skilled in Reservoir Geology, Petrophysics, Seismic Interpretation and Petroleum Risk/Resource Assessment as a result of working in challenging and complex geological environments worldwide. Carey recently joined TAG on a fulltime basis in New Zealand, specializing in onshore Taranaki as well as the other emerging exploration basins within New Zealand. Carey graduated from Canterbury University in Christchurch with a B.Sc. in Geology, and a M.Sc. with First Class Honors in Petroleum Geology from Curtin University in Perth, Australia.
David Francis, Senior Geologist

A senior geologist with over 30 years experience with extensive knowledge of the East Coast Basin, Mr. Francis has worked extensively in the Australasian region however has taken a passionate personal interest in the East Coast Basin. He previously served as a field geologist for the New Zealand Geological Survey, conducting extensive mapping and basin analysis and has authored dozens of scientific papers and reports detailing East Coast Basin petroleum geology, and has built a large database of geological information on this basin. Mr. Francis' expertise lies in his ability to interpret field data and communicate with and direct other specialists. In 1981 he played a major role in discovering a large ore body in Western Australia resulting in a substantial increase in mineable ore. He has an M.Sc. from Auckland University.
Carlos Kazianis, New Zealand Operations Manager

Mr. Kazianis has extensive international field experience in well site supervision, management of drilling operations and critical technical support. He also provides collation and completion of geological prognosis for drilling, well planning, selection of service companies and other technical assistance. Well-known for his diligence, Mr. Kazianis has worked in Europe, Africa, Middle East, South East Asia, Papua New Guinea and New Zealand. Previously, he was a senior advisor to the Petroleum and Minerals Investment Unit of New Zealand's Crown Minerals and a former Lieutenant in the New Zealand army.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 19

TAG Oil Ltd.

Board of Directors
Alex Guidi, Director

Mr. Guidi has been a director of TAG Oil since December 16, 2009. Mr. Guidi has over 30 years of experience as a self-employed investor and financier and has enjoyed success in having founded a number of oil and gas companies focused on Western Canada and Australasia. In New Zealand, Mr. Guidi was the founder of Austral, Trans-Orient and TAG Oil which, for many years, 24 have made, and continue to make, a significant contribution to exploration and development activity in New Zealand and Papua New Guineas Foreland region. In North America, Mr. Guidi was a founder of Walking Stick Oil and Gas Ltd. as well as the major shareholder in a company that participated in the development of the Karr gas field in West Central Alberta. Mr. Guidis extensive career has also involved successful entrepreneurial endeavors in technology and real estate development. Mr. Guidi has previously served as a director and officer of TAG Oil, Austral and AMG.
John Vaccaro, Director

Mr. Vaccaro has been a director of TAG Oil since June 11, 2008. Mr. Vaccaro has over 20 years of experience in the financial services industry where he directed and provided investment consulting to high net worth individuals as well as corporate and institutional clients. He acted as a senior investment executive with CIBC Wood Gundy from January 2002 to March 2007. Mr. Vaccaro has since established a private client consulting practice in the financial services sector, Yield Management Consultants, and acts as Managing Partner and a consultant for the practice. Mr. Vaccaro is also an active member of the Fellowship of the Canadian Securities Institute and holds a degree from the University of British Columbia in Urban Land Economics with double Majors.
Ronald Bertuzzi, Director

Mr. Bertuzzi has been a director of TAG Oil since December 16, 2009. Mr. Bertuzzi holds a Bachelor of Economics from the University of British Columbia and he has more than 20 years of executive, board and committee experience with U.S. and Canadian junior listed companies focused primarily in the oil and gas industry that are doing business in Australasia. Mr. Bertuzzis experience covers various stages of company development beginning with initial start-up and initial public offerings, acquiring and exploring significant exploration acreages and ending in discovery, facility development and commercial production of oil and gas. Mr. Bertuzzi has previously served as a director of Trans-Orient and Austral.
Michael Hart, Director

Mr. Hart has been a director of the Company since December 16, 2009. Mr. Hart is a long-time investor in natural resources and has experience with public companies in the oil and gas industry. Mr. Hart has previously worked in the financial markets sector with a number of financial institutions where he acted as an account executive and financial consultant. Since 1995, Mr. Hart has worked with an investment-banking group responsible for taking projects from startup to the public markets. Mr. Hart is currently the Corporate Secretary and a director of Entourage and has previously served as a director and officer of Trans-Orient and AMG.
Garth Johnson, Director, See bio in Management Team section. Source: Company reports

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 20

TAG Oil Ltd.

Investment Risks
Our fundamental outlook for oil and gas producers remains favorable, however, several normal industry risks do exist that could impact TAG Oils ability to achieve our forecasts, including: Commodity price fluctuations could have a material impact on the companys re-investment capacity, and hence ultimate growth potential. High netback gas reserves and low cost structure, along with a healthy balance sheet helps to mitigate commodity price exposure, coupled periodically with price protection through hedging strategies. Adverse well or reservoir performance in any one or a number of producing pools could result in abnormally high production decline rates, impacting overall corporate volumes. Long life gas reserves, operated under prudent production practices, and more diversity in producing horizons helps mitigate exposure to high decline well/pool exposure. Field operational hazards such as well blowouts, explosions and fires within pipeline/gathering/facility infrastructure, mechanical equipment failures could lead to sour gas releases, spills, personal injuries and/or damage to the environment. Industry insurance policies, particularly those which include business disruption, help to mitigate financial exposure to such mishaps. Industry capacity constraints due to high levels of activities can result in shortages of services, products, equipment, or man power in many or all necessary components of the exploration and development drilling cycle. Increased competition leads to escalated land costs, along with other service costs during peak activity levels. Political instability and changes in fiscal policy can result in; a forced reduction in equity or nationalization of assets, higher taxes and royalties, endangerment to employees, and terrorist threats to physical assets (pipelines or processing facilities). Instability and changes can lead to a reduction in the companys share of profits and/or shut-down operations. Extraordinary hazards such as unusual swings in weather patterns, changes in regulatory operating terms, or actions by certain groups such as industry organizations, local communities, or militant groups could impact the companys ability to re-invest for future growth.

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 21

TAG Oil Ltd.

Exhibit 18: Consolidated Statement of Income

(stated in C$000's, except per share amounts) 2008 2009 2010 2011E 2012E

Revenue Oil and Gas Revenues Royalties Interest and Other Income Expenses Operating General and Administrative Stock Based Compensation Depletion and Depreciation, and Accretion Foreign Exchange Loss (gain) Write-off of Impaired Assets Legal Settlement Interest and Bank Charges Loss (gain) on disposition of oil and gas properties Risk Management (gain) Non-cash items

4,104 209 3,895 427 4,321 1,814 2,110 80 1,349 864 6,763 (471) (208) 12,301 (7,980) (7,980) (7,980) (30,663) (38,643) ($0.07) ($0.07) 132 $0.00 $0.00

4,924 249 4,675 159 4,833 1,874 1,545 20 1,374 (355) 19,565 (182) (132) 23,708 (18,875) (18,875) (18,875) (38,643) (57,518) ($1.05) ($1.05) 2,064 $0.12 $0.12

6,528 1,875 4,652 67 4,719 1,655 2,114 303 923 702 64 (27) 1,560 27 7,320 (2,601) (2,601) (2,601) (57,518) (60,118) ($0.09) ($0.08) (1,614) ($0.05) ($0.05)

16,379 2,294 14,085 99 14,184 5,216 2,686 229 4,401 (248) 12,284 1,901 1,901 1,901 (60,118) (58,218) $0.05 $0.05 6,302 $0.17 $0.16

44,666 5,360 39,306 100 39,406 12,224 2,800 300 12,224 27,548 11,858 11,858 11,858 (58,218) (46,360) $0.31 $0.30 24,082 $0.64 $0.62

Income before taxes Current taxes Capital taxes Future taxes

Net income Dividends on common shares Net income to common Retained earnings, beginning of period Redemption of shares Retained earnings, end of period Earnings per common share Earnings per fully diluted common share EBITDA EBITDA per common share EBITDA per fully diluted common share
Source: Company reports

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 22

TAG Oil Ltd.

Exhibit 19: Consolidated Balance Sheet

(stated in C$000's, except per share amounts)

2008

2009

2010

2011E

2012E

Assets Current Assets Cash and Cash Equivalents Accounts Receivable & Prepaids Inventory

6,553 1,537 1,016 9,106 29,382 29,382 38,488

7,385 193 779 8,357 4,548 218 4,765 13,123

9,967 357 713 11,037 9,490 601 10,091 21,128 697

14,818 493 949 16,260 121 24,479 697 25,297 41,557

9,200 493 949 10,642 121 42,255 697 43,073 53,715

Restricted Cash Plants, Properties and Equipment Other Assets

Liabilities Current Liabilities Accounts Payable and Accrued Liabilities Asset Retirement Obligation

1,595 1,595 4,145 514 4,659 6,254

485 485 813 813 1,297

1,467 348 1,815 1,949 1,949 3,764

1,294 345 1,639 1,871 1,871 3,510

1,294 345 1,639 1,871 1,871 3,510

Long-term Loan Future Income Tax Asset Retirement Obligation

Shareholders Equity Share Capital Contributed Surplus Retained Earnings Accumulated Other Comprehensive Loss

69,980 898 (38,643) 32,234 38,488

69,645 918 (57,518) 13,044 (1,219) 13,123 11,826 $0.66 $0.66

76,228 1,219 (60,118) 17,328 36 21,128 17,364 $0.58 $0.56

94,804 1,448 (58,218) 38,034 13 41,557 38,047 $1.01 $0.97

94,804 1,748 (46,360) 50,192 13 53,715 50,205 $1.33 $1.29

Book Value Book Value per share (common) Book Value per share (diluted)

32,234 $0.29 $0.29

Source: Company reports

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 23

TAG Oil Ltd.

Exhibit 20: Consolidated Statement of Cash Flows

(stated in C$000's, except per share amounts) 2008 2009 2010 2011E 2012E

Operating Activities
Net income Items not involving cash Depletion and Depreciation Stock Based Compensation Write-off of Impaired Assets Write-down of Inventory Realized Loss on Investment Foreign Exchange Loss (Gain) Other Other non-cash Change in Non-cash Working Capital Items

(7,980) 1,349 80 6,562 201 212 (1,713) (1,500) (1,500)

(18,875) 1,374 20 19,565 (132) 1,952 1,743 3,695 (335) (335) 3,360

(2,601) 923 303 64 127 1,432 2 250 (65) 185 93 (42) 51 236

1,901 4,401 229 6,531 (517) 6,014 18,534 (121) 42 18,454 24,469

11,858 12,224 300 24,382 24,382 24,382

Financing Activities
Issue of Common Shares, net of costs Restricted Cash Shares Purchased and Returned to Treasury Share capital from exercised options Change in non-cash Working Capital

Cash Available for Investing Activities

Investing Activities
Oil and Gas Properties Investments Cash Assumed on Acquisition Proceeds from Sale of Properties Purchase of shares Change in Non-cash Working Capital Items

(5,372) (5,372) (6,873) 13,426 6,553 $0.00 $0.00

(2,524) (4) (2,528) 832 6,553 7,385 $0.11 $0.11

(2,303) (194) 4,843 2,346 2,582 7,385 9,967 $0.01 $0.01

(19,500) (118) (19,618) 4,850 9,967 14,818 $0.17 $0.17

(30,000) (30,000) (5,618) 14,818 9,200 $0.65 $0.62

Increase (Decrease) in Cash Cash and Short-term Deposits - Beginning of Period Cash and Short-term Deposits - End of Period Cash Flow per Common Share Cash Flow per Fully Diluted Share

Source: Company reports

Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 24

TAG Oil Ltd.

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The rating system is based on the stocks expected absolute total return over the next 12 months. Generally, Strong Buy rating is expected to produce a total return of 25% or more, Buy a total return of 10% to 25%, Market Perform a total return of 0% to 10% and Underperform a negative total return. Speculative Buy rating is expected to produce a total return of 25% or more, but is based on factors and forecasts that have high degrees of uncertainty. The distribution of the recommendations for the last three-month period and their relationship with investment banking business are available on request by emailing to compliance@wwcm.com.

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Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 25

TAG Oil Ltd.

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Company Name TAG Oil Ltd. Ticker Symbol TAO-V Applicable Disclosure -

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Kevin Shaw, P.Eng, (403)781-2715; kshaw@wwcm.com

September 20, 2010- 26