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TAG Oil Announces FY2017 Capital Budget and Guidance

Vancouver, B.C. – April 14, 2016 – TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF) announces that its capital budget for the Company’s 2017 fiscal year (April 1, 2016 to March 31, 2017) will be approximately $7.6 million, which will be funded entirely by forecasted cash flow and working capital on hand. A further $4.6 million of incremental capital expenditures are contingent on oil prices improving significantly. While oil prices appear to be strengthening since hitting 12-year lows earlier this year, TAG’s primary goal is to conservatively manage its balance sheet with plans to end its fiscal 2017 with at least $10 million in cash on hand.

Budget Detail

The FY2017 capital budget of $7.6 million will focus primarily on low-expenditure, in-field production optimization opportunities and other necessary activities that are core to its business. These opportunities have been identified through an extensive ongoing geotechnical and engineering review of the Company’s Taranaki development and exploration acreage, and include the following:

  • Increasing production through the implementation of a water-flood program at the Cheal A, B and E-Sites, the installation of a rod pump in the Cheal-E1 well, and the reactivation of several shut-in wells.
  • Meeting various permit obligations, including the acquisition and reprocessing of seismic data on the Cheal G and Wai-iti permits. This will allow TAG to properly select infill and exploration drilling opportunities in due course.
  • Undertaking abandonment and rehabilitation activities associated with the East Coast acreage. As part of TAG’s commitment to New Zealand and stakeholder relations, the Company is ensuring that it remains current on these obligations.

The FY2017 capital budget may also include approximately $4.6 million of discretionary activity, which will be continuously reviewed and revised depending on the results of the activities outlined above, economic analysis and changing economic conditions. This includes potentially constructing two drilling pads for future exploration opportunities and drilling a Sidewinder North (PEP 57065) exploration well in FQ4/17.


TAG is estimating that FY2017 revenue from operations will be approximately $22 million, with production averaging approximately 1,200 BOE/D (80% oil). This guidance is based on TAG’s planned optimization of in-field opportunities and existing production, and also assumes a flat Brent oil price for the year of US$45/bbl and natural gas prices of NZ$4.75/GJ, which is currently fixed under a gas sales agreement with a scheduled increase to NZ$5.10/GJ in January 2017. An increase in oil prices could have a positive impact on this guidance. Further, this assumes no incremental production from the proposed water-flood program or any acquisitions.

FQ1/17 Activity

During FQ1/17, TAG will focus on the following activities:

  • Bringing the Cheal-B7 well back online using a conventional jet-pump. Results are expected in May with a potential uplift in production of approximately 50 BOE/D.
  • An extension of perforations and production test of the Cheal-E7 well.
  • Ahead of water-flood activities at the Cheal E-Site, geotechnical and engineering work is underway to determine which well will be most suitable for use as the initial water injector. Results are also expected in May.
  • A solvent soak and clean out of the Cheal-B5 well to enhance production. Results are expected in June with a potential uplift in production of approximately 50 BOE/D.
  • Drilling of two water source wells at the Cheal A and E-Sites to provide a continuous source of water for the water-flooding activities. Completion is expected by early June.
  • Commencing water-flood injection into the Cheal B-Site pool, which is expected to begin in mid-June. Results will likely begin to become measurable in the FQ2/17 or FQ3/17 time frame.  

Toby Pierce, CEO commented, “We are carefully watching our capital spending while focusing on enhancing our current production base, and therefore have set conservative budgets and guidance for the 2017 financial year. I am confident that the water-flood programs will add both incremental production and reserves to TAG. However, at this early stage in the process, it is still difficult to have a firm understanding of the potential upside to TAG and over what time frame it will be achieved.”

Further, “We have a large number of opportunities in our portfolio, providing TAG with a large amount of both optionality and flexibility should oil prices increase above our price forecasts or production exceed our guidance. Our focus remains on acquisitions and building out our inventory of opportunities going forward, while quietly preparing for exploration drilling when higher oil prices return. Finally, I am very excited about where TAG is at currently, and I expect fiscal 2017 to be a year of growth and opportunity for the Company and its shareholders.”

TAG Oil Ltd.

TAG Oil Ltd. ( is a development-stage Australasian focussed oil and gas production and exploration company with extensive operations and production infrastructure in the Taranaki Basin region of New Zealand. As one of New Zealand’s leading operators, TAG is positioned for reserve-based growth with high impact exploration upside in the lightly explored Taranaki discovery fairway. As a low cost, high netback oil and gas producer, TAG is debt-free and reinvests its cash flow into development opportunities and exploration drilling along trend with the Company’s existing production.

For further information:

Ashley Garnot, General Manager
Phone: 1-604-682-6496
Email: [email protected]


TAG Oil has adopted the standard of six thousand cubic feet of gas to equal one barrel of oil when converting natural gas to “BOEs.” BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Cautionary Note Regarding Forward-Looking Statements:

Statements contained in this news release that are not historical facts are forward-looking statements that involve various risks and uncertainty affecting the business of TAG. Such statements can be generally, but not always, be identified by words such as “expects”, “plans”, “anticipates”, “intends”, “estimates”, “forecasts”, “guidance”, “schedules”, “prepares”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. All estimates and statements with respect to operations are forward-looking statements under applicable securities laws and necessarily involve risks and uncertainties including, without limitation: risks associated with oil and gas exploration, development, exploitation and production, geological risks, marketing and transportation, availability of adequate funding, volatility of commodity prices, environmental risks, competition from other producers, and changes in the regulatory and taxation environment. Actual results may vary materially from the information provided in this release, and there is no representation by TAG Oil that the actual results realized in the future would be the same in whole or in part as those presented herein.

Other factors that could cause actual results to differ from those contained in the forward-looking statements are also set forth in filings that TAG and its independent evaluator have made, including TAG’s most recently filed reports in Canada under NI 51-101, which can be found under TAG’s SEDAR profile at TAG undertakes no obligation, except as otherwise required by law, to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors change.