TAO.to/taoif, 3.62, down 26% on lower production than expected. In early April they said they had potential to have 5000 boepd when they connected all wells to the new processing infrastructure they had just completed. Now they have still not tied in all the wells, but 2700 is a long way from 5000, and they give no explanation for the difference. I own a lot of this so it's been an ugly day.
They do still have lots of potential, but the market never likes the over promise, under deliver model.
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TAG ties in all but six wells at Taranaki
2013-05-28 04:46 ET - News Release
Mr. Drew Cadenhead reports
TAG OIL'S TARANAKI BASIN SUCCESS PAVES THE WAY FOR FUTURE GROWTH IN NEW ZEALAND
With the completion of TAG Oil Ltd.'s Taranaki basin production facility expansion and associated pipeline, all but six wells capable of commercial production have now been tied into the facility and optimized for long-term production.
With all production facilities (100 per cent owned and operated by TAG) now in place, the company is able to rapidly commercialize any new discoveries and leverage its strong Taranaki-region operational position. This includes maximizing TAG Oil's position as a completely independent processor, transporter, and marketer of the oil and gas the company discovers, extracts, and produces.
TAG's current production -- entirely from the shallow Miocene section within the Cheal and Sidewinder fields -- varies between 2,500 and 3,000 barrels of oil equivalent per day, with an average baseline production of 2,700 barrels of oil equivalent per day over the past 10 days. Baseline production will increase as remaining shut-in wells are brought on stream, as well as any success arising from the 10 new wells planned to be drilled by year-end which could materially increase this production figure.
This baseline production and cash flow platform, combined with extensive production infrastructure, provide a strong foundation for TAG Oil's foray into many years of high-impact exploration opportunities. New Zealand is recognized as an untapped oil and gas frontier with some of the best fiscal terms and lowest royalties in the industry, and where TAG can enjoy the benefits of a high-impact international portfolio without the political and economic disadvantages associated with many other parts of the world.
Robust netbacks of $73 per barrel of oil and $3.88 per thousand cubic feet of gas.
TAG's current production in Taranaki consists of roughly a 46/54ths split of light oil and natural gas: TAG receives Brent Crude oil prices which averaged 15 per cent higher than North American pricing year to date, and a thriving New Zealand natural gas market with prices at 34 per cent higher than North America.
"TAG Oil's shallow drilling campaign of the past two years resulted in baseline production from a well-executed drilling campaign. In addition to adding reserves and cash flow this campaign has enabled TAG to collect critical comprehensive data on geological, geophysical and well-performance capability. This accumulated knowledge translates into many years of low-risk shallow development drilling," said Drew Cadenhead, TAG's chief operating officer. "Even more important for the long term, is that for the first time in TAG's existence, we can better predict companywide production rates, and we have reliable data to more accurately forecast the commerciality of wells that contribute to our shallow conventional play in Taranaki. Although TAG's been involved in about 12 per cent of the around 400 wells drilled in Taranaki since 1950, the geological database we can pull from is remarkably small, considering an equivalent area in Alberta has over 100,000 wells drilled. But we're amassing data, and TAG's learning curve with respect to the commerciality of the shallow Miocene play has been rapid."
