Cheal Oil Discovery Development

Cheal is currently producing 350 to 400 barrels of oil per day, with all wells tied into the Cheal Production Facility. Under the previous operator, cash constraints delayed production optimization work necessary to maximize flow rates from each oil well.

TAG Oil has initiated an optimization plan consisting of hydraulic fracturing and down-hole heating within the producing Cheal wells. This work is not only expected to increase production rates from each well, it is also expected to increase overall recovery factors from the pool. Previous N.I. 51-101 Reserve Reports at Cheal assigned low recovery factors (1P = 8.5%) as a result of the lack of implemented down hole optimization. It is expected the performance of the pool after optimization will justify an increase in assigned recovery factors, which could materially affect the Net Present Value at Cheal.

Future Cheal Development
The Cheal Oil Field provides TAG a wealth of technical data we can now incorporate into our development model. Two years of production has already shown which areas of the pool are under-performing, and which areas are over-performing. Coupled with our 3-D seismic coverage of the entire Mining Permit, this critical geotechnical and engineering data provides a clear path to future asset development. Step out development drilling will proceed after rigorous technical diligence, recognizing that the industry maxim “Where there’s one pool, there’s probably more” likely stands true at Cheal. Data indicates multiple opportunities and potential both at Cheal and in the surrounding areas.

With the under-utilized Cheal facility in the heart of the development area, every new well will be brought on stream quickly, efficiently and cost-effectively.