TAG Announces Sale of New Zealand Assets and Operations

VANCOUVER, Nov. 6, 2018 /CNW/ - TAG Oil Ltd. ("TAG", TSX: TAO and OTCQX: TAOIF) announced today that it, along with certain of its subsidiaries in New Zealand, has entered into a definitive share and asset purchase agreement with Australian-based Tamarind Resources Pte. Ltd. ("Tamarind"), and certain of its subsidiaries (the "SPA").

This arm's length transaction is for the sale of substantially all of TAG's Taranaki Basin assets and operations in New Zealand (the "Transaction"). The sale will include TAG's 100% working interests in: PMP 38156 (Cheal and Cardiff), PMP 53803 (Sidewinder), PMP 60454 (Supplejack), PEP 51153 (Puka), PEP 57065 (Waitoriki) and TAG's 70% interest in PMP 60291 (Cheal East) and PEP 54877 (Cheal East) (collectively, the "NZ Assets"). Formal closing of the Transaction is expected in calendar Q1 2019, depending on timing of regulatory approvals.

Transaction Highlights

• Cash payment to TAG of US$30 million at closing.
• TAG to receive a 2.5% gross overriding royalty on future production from all NZ Assets.
• Up to US$5 million in event specific payments payable on achieving various milestones (first milestone, grant of PMP 60454 (Supplejack) conversion, has already been achieved triggering payment of US$500,000 at closing).
• The Transaction will be funded from Tamarind's available financial resources.

Commenting on the Transaction, Toby Pierce, CEO of TAG said, "We are very pleased to announce this transaction for TAG's New Zealand assets, which presents an attractive premium to the current market value of the assets for TAG shareholders. Further, the royalty and event specific payments provide continued exposure to future upside from the assets and Tamarind's aggressive capital program."

Following completion of the Transaction, TAG expects to have over C$0.50 per share in cash and working capital, continued exposure to the current operations and upside of the NZ Assets. Additionally, TAG will be in a better position to pursue its exploration prospects covering over 275,000 net acres in Australia, including the producing 25,000-acre petroleum mining license in the Surat Basin.

Additional Information on the Transaction

The Transaction will require the approval of two thirds of votes cast in person or by proxy by holders of common shares of TAG at the special meeting of TAG shareholders to be held in December 2018 (the "Meeting"). Information regarding the Transaction will be contained in the management information circular (the "Circular") that TAG will prepare, file and mail to shareholders in connection with the Meeting. All shareholders are urged to read the Circular as it contains additional important information.

Completion of the Transaction is also subject to a number of additional conditions typical of a transaction of this nature, including: (i) the receipt of Toronto Stock Exchange approval, New Zealand regulatory approval and all other required regulatory approvals and third party consents or approvals; (ii) the approval of TAG shareholders; (iii) the continued accuracy of the parties' representations and warranties as at the closing date; and (iv) the fulfillment of all covenants and obligations of the parties under the SPA having been complied with or performed, in all material respects, as of the closing date.

The SPA provides for, among other things, a non-solicitation covenant on the part of TAG, subject to a "fiduciary out" provision that entitles TAG to consider and accept a superior proposal to the Transaction. The SPA also provides for a non-completion fee of US$1 million if the Transaction is terminated by TAG in certain circumstances, including if TAG enters into an agreement with respect to a superior proposal.

The full text of the SPA may be found under TAG's profile at www.sedar.com. Additional information will be provided in the Circular provided to shareholders in connection with the Meeting.

Recommendation of the Board

The board of TAG, following an extensive review and analysis of the Transaction and the consideration of other available alternatives, and after consulting with its financial and legal advisors and receiving the recommendation of the Special Committee consisting of the independent directors of TAG's board, has unanimously: (i) determined that the Transaction is in the best interest of TAG; (ii) determined that the consideration being offered to TAG is fair from a financial point of view; and (iii) recommended that TAG's shareholders vote their shares in favor of the Transaction.

Advisors and Fairness Opinion

PillarFour Securities is acting as financial advisor to TAG with respect to the Transaction and has provided the board with a fairness opinion that, subject to the various factors, assumptions, qualifications and limitations upon which the opinion is based, the consideration to be received by TAG pursuant to the Transaction is fair, from a financial point of view, to TAG.  FirstEnergy Capital LLP ("GMP FirstEnergy") has provided the Special Committee and the remaining board members, with a fairness opinion that, subject to the various factors, assumptions, qualifications and limitations upon which the opinion is based, the consideration to be received by TAG pursuant to the Transaction is fair, from a financial point of view, to TAG.

Blake, Cassels and Graydon LLP is acting as Canadian legal counsel to TAG and Greenwood Roche is acting as New Zealand legal counsel to TAG.

About TAG Oil Ltd.

TAG Oil (http://www.tagoil.com/) is an international oil and gas explorer with established high netback production, development and exploration assets, including production infrastructure in New Zealand and Australia. TAG Oil currently has 85,282,252 shares outstanding. 

Completion of the Transaction is subject to several conditions, including TSX acceptance, shareholder approval and New Zealand regulatory approval. The Transaction cannot close until, among other things, the required shareholder, TSX and New Zealand regulatory approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of TAG should be considered highly speculative.

The TSX has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this release.

Cautionary Note Regarding Forward-Looking Statements and Disclaimer

Statements contained in this release that are not historical facts are forward-looking statements that involve various risks and uncertainty affecting the business of TAG. 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.

Forward-looking statements and information concerning anticipated financial performance are based on management's assumptions using information currently available. Forward-looking statements in this release include TAG's expectations regarding the ability to complete, and the anticipated results of, the Transaction, the funds that will be available to TAG upon completion of the Transaction, the achievement of any of the event specific payments, the anticipated closing date of the Transaction, the benefits to TAG of the gross overriding royalty, and the anticipated timing of the Meeting.

In making the forward-looking statements in this release, TAG has applied certain factors and assumptions that are based on information currently available to TAG as well as TAG's current beliefs and assumptions made by TAG, including that TAG will be able to complete the Transaction on the timelines expected, or at all, that the Transaction will benefit TAG, that TAG's New Zealand business will continue to be operated by Tamarind in a way that is beneficial to TAG and results in the achievement of the event specific payments and payment pursuant to the gross overriding royalty. Although TAG considers these beliefs and assumptions to be reasonable based on information currently available to it, they may prove to be incorrect, and the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors that may cause future results to differ materially from those expressed or implied in such forward-looking statements. These risks include that the Transaction does not close on the anticipated timeline, or at all, that TAG's New Zealand business will not be operated in a way that is beneficial to TAG or results in the achievement of the event specific payments pursuant to the gross overriding royalty. Although TAG has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. TAG undertakes no obligation, except as otherwise required by law, to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors change.

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SOURCE TAG Oil Ltd.

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