TAG told the Toronto Stock Exchange last Friday that it now held a 30.5% interest in the shallow licence PEP 38738-S (Cheal) and a 15.1% interest in the deep licence PEP 38738-D (Cardiff), following the takeover of Cheal Petroleum’s interests in licences PEP 38738, PEP 38757 and PEP 38758 from Cheal’s parent company South Pacific Lease Operations.
TAG paid South Pacific Lease approximately $NZ18.5 million ($A15 million), as well as 5 million TAG shares and a 0.775% gross over-riding royalty on PEP 38738-D production.
TAG president Drew Cadenhead said the acquisitions gave his company a significant interest in the Cheal oil pool that included two wells to be placed into permanent production and four more development and appraisal wells to be drilled as part of a significant development plan within the next year or so.
The existing Cheal-A3X and A4 wells had so far produced 37,000 barrels and 54,000 bbl of oil, respectively, each averaging more than 300 bbl of oil per day on intermittent testing last year.
Canadian independent engineering consultants Sproule International recently assigned the Cheal oil pool proved, probable and possible undeveloped reserves of 5.01 million bbl of oil equivalent.
“This production and reserve acquisition provides TAG with significant cash flow, long-life reserves and further exploration potential, which in turn enables us to move forward with some of our high-impact projects. And that’s what this company is really all about.
“The Cheal-Cardiff acquisition grows us from a pure exploration company to a producing and reserve-based company with cash flow, which will enhance our ability to carry out high-impact exploration in New Zealand over the coming years,” said Cadenhead.
Sproule International has estimated Cardiff contains “probabilistic” reserves in place of 215 billion cubic feet of gas and 12.8 million bbl of condensate, though long-term production testing has yet to confirm the commerciality of one or more of the three main hydrocarbon-bearing zones encountered.
The new licence holdings are PEP 38738-S (Cheal) operator Austral Pacific Energy (36.5%), TAG Oil (30.5%) and Arrowhead Energy (33%); PEP 38738-D (Cardiff) operator Austral (25.1%), Genesis Energy (40%), TAG (15.1%) and International Resource Management Company (19.8%).