Canadians launch Kiwi campaign

IT has been an eventful start to the year for Canadian explorer TAG Oil, with the company recently launching a US$36 million drilling campaign in New Zealand’s Taranaki Basin and concluding a joint venture with Apache New Zealand.
Targeting the Urenui and Kapuni formations, the drilling program will dig at least 13 wells across six permits and will be funded by operating cash flow from the production of 2000 barrels of oil equivalent.
The prolific Taranaki Basin is where most of New Zealand’s onshore and offshore fields have been discovered.
TAG chief executive Garth Johnson said he was optimistic about the campaign.
“Building on our string of success in 2011 and 2012, and driving revenue as a result, we expect calendar 2013 to be another exciting and transformational year for TAG,” Mr Johnson said.
“With a record number of wells to drill in Taranaki, as well as plans for the upcoming drilling in the East Coast Basin, I’m confident our plans will continue to become our reality.”
While North America and Canada are currently oversupplied with natural gas, Mr Johsnon said TAG had identified a lack of supply in New Zealand.
“Over the last few years, we’ve successfully followed our strategy of increasing cash flow by targeting our lower risk drilling opportunities – allowing us to minimize shareholder dilution,” he said.
“Our financial position remains very strong, with no debt, approximately $65 million in working capital and estimated fiscal 2014 operating revenue of more than $100 million.
“Success on our 2013 drilling campaign, particularly from the deeper plays, could have an additional significant impact on projected revenues.”
Apache New Zealand’s exit from a farm out agreement with TAG dealt an early blow to the company and was attributed to several tenements on the east coast.
As part of the separation agreement, Apache will pay TAG a lump sum to meet its original deal obligations and allow TAG to keep any seismic and technical data collected to date.
“Although we are disappointed that Apache’s shift in corporate strategy resulted in a refocusing of their international holdings, we do understand that tough decisions sometimes need to be made,”Mr Johnson said “We are also pleased to have full control back over the project with funding in place. “Drilling remains on schedule to being in March 2013.”

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