VANCOUVER, April 19, 2017 /CNW/ – TAG Oil Ltd. (the “Company” or “TAG Oil”) (TSX: TAO and OTCQX: TAOIF) announces that the capital budget for the Company’s 2018 fiscal year (April 1, 2017 to March 31, 2018) will be up to approximately C$27.4 million, which will be funded entirely by forecasted cash flow and working capital on hand. A further C$8.4 million of incremental capital expenditures are contingent mainly on the status of locating suitable joint venture or farm-in partners and notable improvements in oil prices. Farm-out discussions have commenced and more information will be provided as it becomes available in due course. TAG Oil intends to diligently manage its balance sheet and end its 2018 fiscal year with at least C$10 million in cash on hand.
As TAG Oil enters the next phase of its reserve and production growth, the FY2018 capital budget of C$27.4 million will re-introduce an exploration focused capital program for the Company and continue with other necessary activities that are core to its business. These opportunities have been identified through an extensive ongoing geotechnical and engineering review of the Company’s development and exploration acreage, and namely include the following:
- Drilling of two exploration wells at Sidewinder East (PEP 55769);
- Drilling of two exploration wells at Cheal East (PEP 54877);
- Drilling of one exploration well at Puka (PEP 51135);
- Continued appraisal of the Cardiff field;
- Meeting various permit obligations, including the acquisition and reprocessing of seismic data on the Sidewinder North (PEP 57065) and PL-17 permits, which will allow TAG Oil to properly select exploration drilling opportunities in due course; and
- Commercialization of the Supplejack (PEP 57065) gas discovery.
The FY2018 capital budget may also include approximately C$8.4 million of discretionary activity, which will be continuously reviewed and revised depending on the results of the activities outlined above, ongoing economic analysis and changing economic conditions.
TAG Oil is estimating that FY2018 revenue from operations will be ~C$28 million, with production averaging ~1,400 boe/d (75% oil). TAG Oil expects to exit FY2018 (March 31, 2018) with production of ~1,900 boe/d. This guidance is based on TAG Oil’s optimization of in-field opportunities and existing production, and assumes a Brent oil price for the year of US$55/bbl. An increase in oil prices could have a positive impact on this guidance, as well as success from any of the five planned exploration wells to be drilled in the next 12 months.
During FQ1/18, TAG Oil will focus on the following activities:
- Commercialization of the Supplejack-1 well;
- Drilling of the Cheal-E8 exploration well (spud ~April 25/17);
- Preparation of the FY2017 year-end reserves report by ERC Equipoise (qualified reserves evaluator);
- Commencement of waterflood enhanced recovery at the Cheal A field; and
- 3D seismic acquisition on the Company’s PL-17 permit in Australia.
TAG Oil is also pleased to report that operations at its main Cheal processing facility have fully recommenced following the completion of a planned maintenance shut down for statutory inspection of the assets. There were no significant issues identified during the inspection, which was completed ahead of schedule.
Toby Pierce, CEO commented, “We are excited to commence our busy 2018 capital program that we expect will not only satisfy the bulk of our commitments on our acreage, but also potentially contribute significantly to production and resource growth. TAG is planning at least five exploration wells during fiscal 2018 into a range of oil and gas targets. In addition, we have a range of work-over and recompletion opportunities in both Australia and New Zealand. Given the stronger Brent oil price curve, our clean balance sheet and early indications of positive farm-out interest, we are planning to exit fiscal 2018 with a significantly stronger platform to grow off going forward.”
About TAG Oil
TAG Oil (http://www.tagoil.com/) is a development-stage international oil and gas producer with established high netback production, development and exploration assets, including production infrastructure in New Zealand and Australia. TAG Oil is poised for significant reserve and production growth with several oil and gas fields under development and high-impact exploration in proven oil and gas fairways. TAG Oil is debt-free and currently has 85,282,252 shares outstanding.
Cautionary Note Regarding 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. Such statements can generally, but not always, be identified by words such as “expects”, “plans”, “anticipates”, “intends”, “estimates”, “forecasts”, “schedules”, “prepares”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. All estimates and statements that describe the Company’s objectives, goals, or future plans relating to operations are forward-looking statements under applicable securities laws and necessarily involve risks and uncertainties. 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.
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. Such statements can generally, but not always, be identified by words such as “expects”, “plans”, “anticipates”, “intends”, “estimates”, “forecasts”, “schedules”, “prepares”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. All estimates and statements that describe the operations are forward-looking statements under applicable securities laws and necessarily involve risks and uncertainties. Estimates and statements underlying the Company’s objectives, goals, production rates, optimization, infrastructure capacity and/or future plans with respect to drilling involve risks and uncertainties including, without limitation: risks associated with oil and gas exploration, development, exploitation and production, geological risks, marketing and transportation, the risk associated with estimating undiscovered original initially in-place described above, availability of adequate funding, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers and changes in the regulatory and taxation environment.
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 differ 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. Other factors that could cause actual results to differ from those contained in the forward-looking statements are also set forth in filings that TAG Oil and its independent evaluator have made, including TAG Oil’s most recently filed reports in Canada under NI 51-101, which can be found under TAG Oil’s SEDAR profile at www.sedar.com. TAG Oil undertakes no obligation, except as otherwise required by law, to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors change.
SOURCE TAG Oil Ltd.