Oil and gas exploration and production company, TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF, "TAG"), announces successful initial flow testing at the Cardiff field and further information on its Supplejack-1 well flow testing program.
TAG is pleased to report that the Cardiff-3 well has successfully conducted an interim flow test with gas and condensate produced to surface. Based on the preliminary test results, further long term testing will need to be undertaken in order to support commercialization of Cardiff production via tie back to the TAG's nearby Cheal A facility.
The Cardiff field is located on TAG's 100% owned Cheal oil permit in the Taranaki Basin, North Island of New Zealand. The Cardifffield lies beneath TAG's producing Cheal field in the deeper Kapuni formation, named after the nearby Kapuni field, which was New Zealand's first major gas discovery and has produced 1.4 Tcf of gas and 65 mmb of condensate to date.
Three Cardiff wells have previously tested gas to surface, but not in commercial volumes due to mechanical damage to the reservoir during completion. However, following a review of existing opportunities in TAG's portfolio, the Cardiff-3 well was identified as having the potential to become a producer following clean-up operations.
Cardiff resources have been previously estimated to contain 160 Bcf of P50 best estimate gas initially in place and 5.5 mmb of condensate initially in place in a report prepared by Sproule International in accordance with NI 51-101 requirements. TAG plans to update the resource estimate based on the results of the recent testing, as necessary.
Subsequent testing operations and analysis have now been completed on the Supplejack-1 well which, as reported on November 8, 2016, had tested at rates of up to 7.2 mmscf/d from the Mt. Messenger Formation before being limited by mechanical constraints.
Initial estimates by TAG indicate that the Supplejack-1 well is an economic discovery, which contains approximately 2.8 Bcf original gas in place as a mid-case estimate, with recovery factors approaching 90% with compression. Initial production rates are forecasted at over 2 mmscf/d.
Toby Pierce, CEO of TAG Oil commented:
"I am very pleased to announce TAG's successful initial well test results at the Cardiff-3 well. Demonstrating the possibility for economic production at Cardiff is the first step in unlocking the significant resources present in this deeper formation on our 100% Cheal owned acreage. The resources identifed at Cardiff have the potential to become the major source of production for TAG following development. Further, the positive results of the Supplejack-1 flow test and analysis represent a new producing location for TAG, with additional drilling opportunities identified. The TAG team is continuing to build off our recent momentum at Cardiff and Supplejack and we will update the market with further information on these two assets in due course."
Stock Option Grant
TAG also announces the approval to grant up to 1,585,000 share options at a price of approximately $1.05 per share to various directors, executive officers, employees, and consultants, as part of TAG's ongoing strategy of granting share options to attract and retain talent, as well as motivating its team to work towards ensuring the success of TAG.