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TAG Oil eyes good year in NZ

NZ Newswire logoNZ Newswire 19/04/2017 Pattrick Smellie

Vancouver-based onshore Taranaki oil and gas explorer and producer TAG Oil is forging ahead with capital expenditure of $C27.4 million ($NZ29m) of exploration, production and work-over projects.

Another C$8.4m will be available if farm-in partners emerge and oil prices rise.

The debt-free company says it's anticipating a busy 2018 capital programme.

"TAG is planning at least five exploration wells during fiscal 2018 into a range of oil and gas targets," said chief executive Toby Pierce in a statement.

"In addition, we have a range of work-over and re-completion 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."

TAG planned to end the year with at least C$10m in cash on hand.

The company has continued to invest despite the plunge in global oil prices that has seen offshore exploration and production decline at the expense of lower-cost onshore production, routinely using the rock-fracturing process known as fracking to release tightly trapped oil and gas deposits.

It estimates annual revenue from operations will be around C$28m, with production averaging around 1400 barrels of oil equivalent per day, rising to 1900 boe/d by March next year.

"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," Mr Pierce said.

In the last 12 months, TAG shares have traded as high as C96 cents in early September and as low as C54c last month. They last traded at C62c.

Its work programme in Taranaki involves two exploration wells each in the Sidewinder and Cheal permits, one in the Puka permit, continued appraisal of the Cardiff permit and completion of various permit-holding obligations and commercialisation of the Supplejack gas discovery.

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