VANCOUVER, June 30, 2014 /PRNewswire/ - TAG Oil Ltd.
(TSX: TAO) and (OTCQX: TAOIF), reports the Company has filed its
audited consolidated financial statements, management discussion
and analysis, annual information form and information pursuant to
the requirements of National Instrument 51-101 – Standards for
Disclosure of Oil and Gas Activities with the Canadian Securities
Administrators relating to reserves data and other oil and gas
information for the Company's March 31,
2014 fiscal year-end. Copies of these documents can be
obtained electronically at http://www.sedar.com. For additional
information, please visit TAG Oil's website at
http://www.tagoil.com/.
Garth Johnson, TAG Oil's CEO
commented, "We are all proud of our successful year achieving
record cash flow provided from our producing assets and adding a
new oil discovery and development area at Greater Cheal. This
coming year's $60 million capital
program is sure to be exciting for us all, which includes low risk
development drilling to maintain and exceed current production,
combined with high-impact exploration drilling, providing near term
catalysts to capture new reserves. Our major infrastructure
investment in the previous year — and maintaining 100% ownership of
all these production facilities and associated pipeline
infrastructure in the Taranaki Basin on the TAG-operated Cheal,
Cardiff and Sidewinder oil and gas
fields — is paying off, by ensuring we can commercialize all
discoveries and developments expeditiously allowing TAG to
capitalize on the high netback production being achieved."
FY2014 TAG OIL HIGHLIGHTS
- TAG had $55,836,009 in working
capital at fiscal year-end with no debt and 64,006,452 common
shares outstanding.
- Oil and gas revenue increased by 29% to $57.6 million compared with $44.6 million in fiscal year 2013.
- Record volume of annual production achieved in FY2014 of
681,615 BOE (75% oil) with average gross daily production
increasing by 15% for the fiscal year to 2,027 BOE/d compared with
1,756 BOE/d in fiscal year 2013. Average net daily production
increased by 6% to 1,868 BOE/d compared with 1,756 BOE/d in
2013.
- Net income before taxes increased by 190% for the fiscal year
to $14.7 million compared with
$5.1 million in fiscal year 2013,
driven primarily by a 15% increase in oil production.
- Revenue from oil sales increased 18% to $45.8 million compared with $38.7 million due to increased oil production
(15%) and pricing (3%). Revenue from gas sales increased 38% to
$7.7 million compared with
$5.6 million due to the ability to
process and sell previously flared Cheal gas volumes. Revenue
generated from electricity sales contributed $3.9 million compared with $0.3 million due to TAG's 49% ownership of
Coronado Resources Ltd.
- Operating Netbacks increased by 24% to $59.63 per BOE compared with $48.11 per BOE in fiscal year 2013. The increase
is mainly due to a 22% increase in revenue per BOE to $84.36 per BOE compared with $69.07 per BOE as a result of a greater
proportion of revenue from increasing oil sales.
- With an effective date of March 31,
2014, Sproule International Limited, a qualified reserves
evaluator in accordance with NI 51-101 and the COGE Handbook,
assigned 1p, 2p and 3p reserves of 1,973,000 BOE (93% oil),
5,898,000 BOE (94% oil) and 8,105,000 BOE (91% oil),
respectively.
- TAG's 2P reserve value is estimated at $2.97 per share based on a net present value of
proved plus probable reserves at March 31,
2014 at a 10% discount before taxes, divided by issued and
outstanding shares at March 31, 2014
(Note 1).
FY2014 YEAR-END RESERVES
The focus of FY2014 was step
out drilling into neighboring unproven acreage in three new
Taranaki Permits awarded in the 2012 New Zealand Blocks Offer,
referred to as the Greater Cheal Permits. As a result, TAG did not
drill any development wells within its proved reserve areas at
Cheal or Sidewinder this fiscal year, and therefore did not add new
reserves in the Company's traditional reserve growth area. However,
a total of ten step out wells were drilled in the Greater Cheal
permits during the 2014 fiscal year and into the early part of the
2015 fiscal year. Production resulting from this step out drilling
program began in November of 2013 and the successful wells have
produced approximately 120,000 barrels of oil as well as solution
gas from start-up to June 30, 2014,
adding approximately 893,000 BOE of new reserves (625,000 net to
TAG). This new discovery area production has been consistent and
during Q1 of FY2015 has continued at a gross production rate of
approximately 600 bbls of oil per day (420 bbls net) plus solution
gas. Importantly, this drilling success has translated into several
new, highly promising, development drilling locations on TAG's
100%-controlled acreage.
3 Year 2p Reserve
Reconciliation(1)
|
FY2012
|
FY2013
|
FY2014
|
Opening
Reserves
|
1,912,000
|
6,624,000
|
6,112,000
|
Annual
Production
|
(489,878)
|
(641,142)
|
(681,615)
|
Net Additional
Reserves From Drilling
|
5,201,878
|
129,142
|
467,615
|
Closing 2P
Reserves
|
6,624,000
|
6,112,000
|
5,898,000
|
Year End Valuation
(NPV10%)
|
$207,867,000
|
$205,521,000
|
$190,535,000
|
Future Capital
Expenditure Included in Valuation
|
$45,651,000
|
$37,211,000
|
$48,598,000
|
Note:
|
|
(1)
|
Estimates of reserves
were prepared by Sproule, a qualified reserves evaluator in
accordance with NI 51-101 and the COGE Handbook, with effective
dates of March 31, 2012, March 31, 2013, and March 31,
2014.
|
|
|
Going forward into FY2015, TAG will return to its focus of
development drilling within the proved Cheal (TAG-100%) field as
well as the newly discovered Greater Cheal area, with the goal of
building additional oil reserves and further exploiting the oil
discovery potential in this lightly explored acreage. At the
Sidewinder field, two new step-out wells will target the oil
potential identified in this lightly explored acreage. This oil
discovery potential is supported by 3D seismic data coverage,
consistent oil shows in multiple zones intercepted in the
Sidewinder gas wells drilled and placed onto production in 2011/12,
and the significant oil that has been discovered in the neighboring
successful Ngatoro field, which has been producing high netback oil
for more than 25 years.
Other new resources targeted during the coming year, which could
significantly impact proved reserves, includes establishing
production from the gas/condensate zones intercepted in the deep
Cardiff-3 well (TAG-100%) and at
least two East Coast Basin unconventional exploration wells,
Waitangi Valley-1 and Boar Hill-1 (TAG-100%). Both the Waitangi
Valley-1 and Boar Hill-1 wells are identified to have major
discovery potential and are the top priority drilling locations
identified in the joint venture work conducted by Apache
Corporation and TAG Oil.
FINANCIAL RESULTS SUMMARY
|
2014
|
|
2013
|
|
|
|
|
|
|
Production
revenue
|
$
57,546,899
|
$ 44,591,201
|
|
|
|
Net income prior to
stock-based compensation
|
16,779,473
|
10,694,371
|
|
|
|
Net income before
taxes
|
14,731,055
|
5,073,359
|
|
|
|
Net income for the
year after taxes
|
7,682,708
|
5,073,359
|
|
|
|
Comprehensive income
for the year
|
28,912,667
|
9,596,351
|
|
|
|
Earnings per
share
|
0.13
|
0.09
|
|
|
|
Working
capital
|
55,836,009
|
68,073,376
|
|
|
|
Total
assets
|
278,660,659
|
215,883,701
|
|
|
|
Long term
debt
|
-
|
-
|
|
|
|
Shareholder's
equity
|
$249,168,299
|
$
191,693,597
|
|
|
|
|
|
|
|
|
|
|
|
OIL AND NATURAL GAS PRODUCTION PRICING AND REVENUE
Fiscal year
|
2014
|
2013
|
Year ended March
31
|
|
Q4
|
Q3
|
Q4
|
2014
|
2013
|
Daily production
volumes(1)
|
|
|
|
|
|
Oil
(bbls/d)
|
1,072
|
1,069
|
1,013
|
1,107
|
959
|
Natural gas
(BOE/d)
|
414
|
458
|
678
|
761
|
797
|
Combined
(BOE/d)
|
1,486
|
1,527
|
1,691
|
1,868
|
1,756
|
|
|
|
|
|
|
Daily sales
volumes(1)
|
|
|
|
|
|
Oil
(bbls/d)
|
1,081
|
1,061
|
1,007
|
1,107
|
957
|
Natural gas
(BOE/d)
|
279
|
351
|
436
|
632
|
548
|
Combined
(BOE/d)
|
1,360
|
1,412
|
1,443
|
1,739
|
1,505
|
|
|
|
|
|
|
Natural Gas
(Mmcf/d)
|
1,674
|
2,106
|
2,618
|
3,792
|
3,287
|
|
|
|
|
|
|
Product
pricing
|
|
|
|
|
|
Oil
($/bbl)
|
122.76
|
112.74
|
116.59
|
113.43
|
110.87
|
Natural gas
($/Mcf)
|
6.34
|
5.43
|
4.94
|
5.49
|
4.63
|
Sales
|
|
|
|
|
|
Total revenue –
gross
|
$14,024,675
|
$12,939,442
|
$12,297,777
|
$57,546,899
|
$44,591,201
|
Less other revenue –
gross(3)
|
(1,128,773)
|
(881,134)
|
(304,634)
|
(3,992,429)
|
(304,634)
|
Oil and natural gas
revenue – gross
|
$12,895,902
|
$12,058,308
|
$11,993,143
|
$53,554,470
|
$44,286,201
|
Oil and natural gas
royalties(2)
|
(1,276,615)
|
(1,398,536)
|
(1,376,561)
|
(5,781,663)
|
(5,036,005)
|
Oil and natural gas
Revenue – net
|
$11,619,287
|
$10,659,772
|
$10,616,582
|
$47,772,807
|
$39,250,562
|
|
|
|
|
|
|
|
|
|
(1) |
Natural gas production converted at 6
Mcf:1BOE (for BOE figures). |
(2) |
Includes a 7.5% royalty related to the
acquisition of a 69.5% interest in the Cheal field. |
(3) |
Other revenue is electricity revenue related
to OHL. |
|
|
OUTLOOK FOR FISCAL YEAR 2015
As announced in May 2014, TAG's
capital budget for fiscal year 2015 is CDN$60 million; fully funded by forecasted cash
flow and working capital on hand.
TAG's goal for the coming fiscal year capital program is to
create value and upside from five play areas:
- Maintain and grow baseline reserves, production, and cashflow
in Taranaki via low-risk development drilling;
- Unlock the major resource potential by confirming the
commerciality of the East Coast Basin's unconventional fractured
source rocks;
- Establish production and reserves from the Cardiff-3 well within the deep Kapuni
Formation in Taranaki;
- Prepare to drill a shallow water offshore Kaheru Prospect
(TAG-40%) in Taranaki in mid-2015; and
- Define a new frontier shallow onshore oil exploration play in
the Canterbury Basin.
GUIDANCE FOR FISCAL YEAR 2015
As previously announced on May 7,
2014, TAG continues to hold estimates for fiscal year 2015
cash flow from operations to be approximately $40 million, with production averaging
approximately 2,000 barrels of oil equivalent per day (80% oil).
This guidance is based only on TAG's shallow development drilling
in proven areas and existing production. This guidance assumes
initial production rates from the development wells of 150 bbls of
oil + 50 BOE/d of gas in seven new shallow Taranaki wells to be
drilled in FY 2015. This guidance also estimates commodity prices
of US$106.00 per bbl based on Brent
pricing and US$5.40 per mcf for
natural gas. An exchange rate of CDN$1.10 to
US$1.00 and CDN$0.935 to
NZ$1.00 is also assumed.
TAG's current average daily gross production is approximately
1,970 BOE/d per day (1,750 BOE/d net to TAG) with 75% of the
production being oil. It is expected that current production levels
can be maintained during the year, based on established decline
rates offset by the Company's intended 2015 shallow Taranaki
development drilling program. At the present time, TAG has
identified 50 shallow step-out and development drilling locations
on the Company's Taranaki acreage, which is a five year inventory
based on the current pace of drilling.
About TAG Oil Ltd.
TAG Oil Ltd. (http://www.tagoil.com/) is a Canadian-based
production and exploration company with operations focused
exclusively in New Zealand. With
100% ownership over all its core assets, including extensive oil
and gas production infrastructure, TAG is enjoying significant
organic value creation through exploration success and ongoing
development and appraisal drilling of several light oil and gas
discoveries. As New Zealand's
leading explorer, TAG actively drills high-impact conventional and
unconventional exploration prospects identified in the Taranaki,
East Coast and Canterbury Basins that covers 2.8 million net acres
of land, prospective for major discovery in New Zealand.
BOEs:
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.
Analogous Information:
Certain information in this release may constitute "analogous
information" as defined in NI 51-101, including, but not limited
to, information relating to the areas in geographical proximity to
the lands held by TAG. Such information is derived from a variety
of publicly available information from government sources,
regulatory agencies, public databases or other industry
participants (as at the date stated therein) that TAG believes are
predominantly independent in nature. TAG believes this information
is relevant as it helps to define the reservoir characteristics in
which TAG may hold an interest. TAG is unable to confirm that the
analogous information was prepared by a qualified reserves
evaluator or auditor or in accordance with the COGE Handbook. Such
information is not an estimate of the reserves or resources
attributable to lands held or to be held by TAG and there is no
certainty that the reservoir data and economics information for the
lands held by TAG will be similar to the information presented
therein. The reader is cautioned that the data relied upon by TAG
may be in error and/or may not be analogous to TAG's land
holdings.
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 growth in baseline reserves, future guidance
on production and cashflow, expected results of development
drilling, resource potential, new production and discoveries and
other objectives, goals, 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 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 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 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.
SOURCE TAG Oil Ltd.