Egypt is becoming a major player in the oil game and TAG Oil Ltd. (TSXV:TAO) is in a prime position to capitalize on this potential.
The Vancouver-based oil and gas exploration company recently began drilling the horizontal portion of the BED4-T100 (T100) well in the Badr Oil Field (BED-1), a 107-square-kilometre concession in the Western Desert of Egypt.
Horizontal drilling
The company successfully drilled the vertical pilot hole to a depth of 3,290 metres and performed open-hole logging, formation imaging and pressure measurement, followed by cement plugback of the lower vertical pilot hole. The team then proceeded into whip-stock drilling of build and lateral horizontal sections in the Abu Roash “F” (ARF) reservoir.
In a media release, the company outlined the early progress, stating that the horizontal part of the well will target oil in the ARF’s unconventional tight, carbonate reservoir. The lateral section of the horizontal well is expected to extend more than 1,000 metres.
The T100 well design includes a vertical pilot assessment well for potential coring, open-hole logging, formation imaging, pressure measurement and fluid sampling, followed by cement plug-back of lower vertical pilot hole and whip-stock drilling of build and lateral horizontal sections in the ARF reservoir.
The company anticipates that the T100 well will be completed by calendar Q4 2023 and will use the well’s performance to base planning and execution of future drilling. TAG Oil said the results of the T100 well will be used to design a follow-up drilling program anticipated to begin by Q1 2024.
Based on an independent resource report, initial production from a successful well is expected to run between 1,000 to 1,500 bbl/d (barrels a day), which is anticipated to begin by Q1 2024.
The T100 drilling program represents a major milestone for TAG. The design is made up of a vertical pilot assessment well for potential coring, open hole logging, formation imaging, pressure measurement and fluid sampling.
Source: TAG Oil Ltd.
Resources available at the project
The data gathered from drilling the T100 well, including mud logging and drill cuttings to assess the reservoir quality across the lateral section, will be used along with geochemical data and 3D seismic interpretation to design the well completion and fracture stimulation program.
In an interview with Stockhouse, the company’s CEO and director, Toby Pierce, BSc., MBA, explained that the company is targeting a very large resource of more than half a billion barrels in the BED-1 field.
“We hope to produce oil out of that well in early December,” he said. “We are targeting a source rock formation that is very prevalent across the Western Desert in Egypt, there is a lot of oil there, we are just trying to unlock that oil and produce it.”
Performance from the T100 well will be used for planning and executing future drilling plans. The ARF section was about 50 metres thick and very close to the structural elevation anticipated.
On the company’s website, it was noted that potentially more than 500 million barrels of oil are initially in place, and to date, the zone has never been developed in Egypt.
TAG Oil financials
With a market cap of C$100.88 million, for the interim period ending June 30, 2023, TAG Oil had C$17.9 million in working capital and C$15.5 million in cash with no debt. In September 2023, the company completed a C$12.3 million financing.
TAG Oil management
TAG Oil is helmed by a team with deep experience in the industry. CEO Pierce is a natural-resource executive with more than 25 years of extensive transactional and valuation experience in deal sizes ranging from several million to C$1.3 billion in value.
He is joined by the company’s Executive Chairman Abby Badwi, a geologist and petroleum industry executive with more than 40 years of international upstream experience, leading public and private energy companies with oil and gas assets in many international jurisdictions.
Vice President and Chief Operating Officer Suneel Gupta is a senior executive in the international petroleum oil and gas industry with more than 30 years of experience and a successful track record of value creation in oil and gas.
Management and insiders own 25.97 percent of the company. There are 184.23 million shares outstanding, and 136.40 million free-float traded shares.
Investment corner
TAG Oil Ltd. is entering a very active period in the coming months, with its main focus on the T100 well and developing the field more generally.
According to the International Energy Agency’s September oil market report, world oil demand is on track to grow by 2.2 million barrels per day (MMbbl/d) this year to 101.8 MMbbl/d.
As oil prices climb with demand on the rise, Egypt is in a position to become a major producer, which could yield much potential for a company in the country with an eye on untapped reserves.
To keep up with the latest developments on the company, visit www.tagoil.com.
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