Casimir analyst The Energy Report TER interview (Highlighting/Boldfacing is mine...)
Casimir Analyst Interview
4 - 4 - 2013
https://www.theenergyreport.com/pub/na/15129?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+theenergyreport/caoK+(The+Energy+Report+-+Exclusive+Articles)
TER: TAG Oil Ltd. (TAO:TSX.V) website notes that two Canadian independents, Addax Petroleum (AXC:TSX) and Tanganyika Oil Company Ltd. (TYK:TSX.V), were acquired by Chinese majors. Is TAG looking for a buyer?
RG: Everyone is potentially for sale for the right price. What TAG is looking to do in the near term is advance its East Coast shale prospects in New Zealand. It is a massive unconventional oil resource play, and TAG is looking to drill that imminently to see what kind of oil shale potential it has on the East Coast. I think it wants to see how that goes before it even considers selling the company, because there's huge value there. Apache Corp. (APA:NYSE) recently exited the joint venture for reasons unrelated to technical feasibility of the shale. TAG has already gotten other interest from parties that might be looking to establish a new joint venture. But I think TAG wants to see what it has before looking at any other options, because it's pretty confident in the potential of oil shale in New Zealand.
TER: What is TAG's reason for focusing on exploration and production in New Zealand?
RG: New Zealand has conventional production but also huge unconventional potential on the East Coast. So when management was first getting into New Zealand, it had a view that conventional supplies worldwide were approaching a peak and there was a need to look for unconventional resources worldwide. We had started to see horizontal, multistage frack technology in North America. So the expectation was if you could find some interesting assetsglobally, especially in a politically safe jurisdiction like New Zealand and that is closer to demand centers like Southeast Asia, then you could have potential to develop an unconventional resource base. That's what TAG likes there. The resource assessment it got for East Coast was pointing to 12 billion barrels (12 Bbbl), so it's a huge prize.
TER: Share prices for both TAG and Sterling have fallen over the last year. What makes them strong buys, in your opinion?
RG: First of all, big conventional production is finally arriving. TAG has behind-pipe oil and gas wells that need to be tied in. We've been waiting a little while to get that in place, but we hear that it's ready to rock and roll and move forward with a big production ramp up, currently from around 2 million barrels oil equivalent per day (2 Mboe/d) to between 4–6 Mboe/d.
Second, TAG is advancing on the East Coast shale with a likely spud date in late April or early May for the first vertical stratigraphic well. So if it sees the oil that it's expecting, that could be absolutely massive for the stock. Once you've drilled a few shale wells to delineate the resource, a large area becomes very prospective for additional shale oil drilling and development.
The last reason that TAG is a strong buy is that this summer it is also likely to be drilling a deep gas condensate prospect called Cardiff. Based on what other operators have seen in the same formation nearby, Cardiff could have the potential to be a 30-MMcf/d producer.
There is significant upside to the stock in multiple areas over the next few months.