Vancouver, B.C. – October 14, 2015 – TAG Oil Ltd. (TSX: TAO) and (OTCQX: TAOIF), is cutting its forward guidance and planned capital expenditures for the remainder of fiscal 2016 in response to the low commodity price environment, and due to a slower than expected ramp up of our workover program in the Taranaki Basin of New Zealand. TAG will focus on preserving capital, continuing with a reduced workover program and reducing costs.
GUIDANCE AND OUTLOOK FOR THE REMAINDER OF FISCAL YEAR 2016
CURRENT PRODUCTION, CASH BALANCES AND PLANNED ACTIVITY
TAG currently has $19 million in cash and cash equivalents and $23 million in working capital at October 14, 2015, with no debt and 62,239,052 common shares outstanding.
Average net daily production is currently 1,300 BOE/d (75% oil).
In order to meet TAG’s revised goals for fiscal 2016 TAG recently commenced a portion of the multi-well workover program with the Rival-1 service rig. Results include:
TAG recently completed surface casing repairs on two wells to ensure continued safe operations going forward. In addition, TAG expects to optimize its artificial lift (pumping) at Cheal E during Q3, to perforate some bypassed pay, and to re-perforate several zones of interest in the Urenui and Mt. Messenger Formation.
TAG will continue to focus on the following goals during the remainder of the 2016 fiscal year:
Despite lower oil prices and a reduced appetite for risk in global equity markets, TAG Oil is financially strong and well positioned for the future.
Toby Pierce, TAG Oil’s CEO commented, “We continue to maintain cash flow positive operations despite historically low oil prices. Driven by our operational expertise and strategic focus on cost containment and value creation, our current breakeven price for oil production remains at approximately US$38/BOE – well below the current industry average for similar conventional production.”
Mr. Pierce continued, “We have deliberately slowed our workover program over the next several months, and have made the decision to defer major capital expenditures until later in the year or until we see better oil pricing. We are committed to exiting this downturn in a position to pursue strategic acquisitions with a strong balance sheet, the ability to maximize the value of our existing assets and to do so without any dilution of equity. While I am unhappy with our share price performance, I continue to gain confidence in both TAG’s asset base and the recovery of the oil equity markets.”
“Finally, I would like to take this opportunity to thank the TAG Oil team for their continued safe operations and hard work over the last quarter.”
About TAG Oil Ltd.
TAG Oil Ltd. (https://tagoil.com/) is a Canadian-based development-stage oil and gas company with extensive operations, including production infrastructure, in the Taranaki region of New Zealand. As one of New Zealand’s leading operators, TAG is positioned for long-term, reserve-based growth, with attractive exploration activities in the lightly explored Taranaki Basin discovery fairway. As a low cost, high netback oil and gas producer, TAG is debt-free and reinvests its cash flow into development and step-out drilling along trend with the Company’s existing production.
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, 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. All estimates and statements that describe the Company’s future guidance on production and cashflow, capital expenditures, planned operational activities, production rates, test rates, hydraulic fracture operations, optimization, infrastructure capacity, timing of operations, work-over results, and/or future plans with respect to the drilling at TAG’s various permits and acreage in the Taranaki, Canterbury and East Coast Basins 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 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 www.sedar.com. 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.