VANCOUVER, April 22, 2013 /PRNewswire/ - TAG Oil Ltd. (TSX: TAO) and (OTCQX: TAOIF), is pleased to announce that drilling of the Ngapaeruru-1 exploration well is now underway in TAG's 100% controlled Petroleum Exploration Permit 38349, located in the East Coast Basin of New Zealand. The Ngapaeruru-1 exploration well, spudded at 4:30am on April 22nd, 2013 is targeting the Waipawa Black Shale and Whangai source rock formations at an anticipated depth of 1,800 meters, and will test the unconventional discovery potential in this portion of the Basin.
The Waipawa Black Shale and Whangai formations are high-quality source rock formations present throughout most of TAG's million-acre East Coast Basin land holdings. These oil-and gas-rich source rocks are comparable in total organic carbon content and oil and gas maturity levels to successful tight oil and gas plays such as North Dakota's Bakken shale in the prolific Williston Basin.
Garth Johnson, TAG Oil's CEO commented, "Our strategy has always been to build reserves, production infrastructure, and cash flow from our lower risk conventional assets, leveraging these successes to intelligently pursue high-impact opportunities such as the East Coast Basin. With TAG's continued success in the Taranaki Basin - and our successful commercialization of these discoveries - we continue to deliver on the first part of this plan. Drilling Ngapaeruru-1 is another step in delivering on our business plan: pursuing these higher risk, higher impact exploration wells from a very strong financial position."
Live oil recovered from shallow wells drilled by TAG in 2011, as well as oil sampled from seeps in the East Coast Basin, confirm that the source of the high-quality oil was generated from the Waipawa Black Shale and Whangai formations. Extensive geotechnical work on TAG's East Coast acreage, including proprietary 2D and 3D seismic, have confirmed that the source rock parameters in TAG's East Coast Basin play compare favorably to commercial unconventional plays throughout the world.
In addition, TAG's East Coast Basin play has particular features that provide encouragement in regard to prospectivity of this unconventional exploration play, including:
- The source rocks are up to 600 meters thick in some areas;
- The source rocks are naturally fractured;
- The oil confirmed as coming from the source rocks, is 50 degree API;
- The East Coast Basin is over-pressured at depth, confirming a competent seal situated above the source rocks.
These parameters were also considered in an independent report that estimated potential undiscovered oil initially-in-place amounting to 14 billion barrels, calculated on just 20% of TAG's East Coast Basin acreage that is believed to be prospective for unconventional discovery. TAG Oil was the first company to identify the unconventional play in the East Coast Basin, and therefore selected the acreage where the Company believed it to be the most prospective for unconventional exploration. TAG's acreage is where both the Waipawa Black Shale and Whangai source rocks are the most widespread, thickly developed, and reachable at depths that offer the best chance for commercial feasibility.
Mr. Johnson continued: "Given this very significant potential, we're pleased to have 100% control over the project, with a substantial portion of exploration costs to date funded by our previous joint venture partner. While their shift in corporate strategy resulted in a refocusing of their international holdings, our work together validated and confirmed the major exploration potential of these lands. As a result, Ngapaeruru-1 is the first of several exploration wells directly testing these unconventional targets."
For further information on TAG's unconventional source rock targets please visit: https://www.tagoil.com/unconventional-oil.asp.
TAG Oil COO Drew Cadenhead commented, "Since this is the first well directly targeting the Waipawa Black Shale and Whangai source rocks in the East Coast Basin, the Company has planned operations to obtain the maximum amount of data to guide future exploration activities. This includes specialized electric log data and other unconventional source rock analysis data. TAG has been working up to this for about six years, and we're excited to finally be here. While we know drilling conditions can be tricky in this over-pressured Basin, our drilling department is well prepared to complete these operations safely and with minimal impact to the environment."
TAG is using Webster Drilling's Nova #1 Drilling Rig, which was mobilized from the Company's Sidewinder gas and oil field in the Taranaki Basin, after drilling another successful step-out well, Sidewinder-A7, which will soon be production tested.