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Studied: Power Engineering, Exploration Technology, Worked Upstream, Midstream, Downstream in Oil and Gas, Pipelines, Drilling, Refineries. I'm Interested in very big picture, game changers that come from sizeable economic deposits of Oil, Gas, Gold, Silver, Uranium, Specialty Metals used in... More
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  • Kapuni Sand May Hold Company Maker Liquids-Rich Gas For Tag Oil 14 comments
    Nov 4, 2013 9:10 PM | about stocks: TAOIF

    (click to enlarge)

    (click to enlarge)

    The Cardiff-3 well is heading over 4Km deep into a zone dubbed K3 and should reach its target by the end of November.

    It's a beautiful site, these folks office might be the envy of many cubicle goers who can only imagine the view of this rigs office.

    The Mountain in the background is actually a Volcano, not just any volcano but the legendary Mount Taranaki. About 4.9Km below her lies a basin called Kapuni, that is showing some hefty structures on 3D seismic that have likely trapped a sizeable prize of hydrocarbons. If this Geological theory and Geophysical story turns out to be confirmed when the drill bit reaches total depth, then this will be quite a story indeed.

    (Tag Oil, Mt.Taranaki in the background)

    (You will need a sense of humor)

    (Aerial shot of a lease, and rig drilling into multiple kapuni zones)

    The well above is already 4113m into the McKee Sands, and is forging ahead to the next stop, the K1A Sands, and finally the big fella, the very deep, very mysterious K3 Sands. At these depths we could see higher than average pressures, and this is exploration meaning there are still some unknown unknowns that drillers, engineers and geo science folks may encounter on their journey.

    Yet, it wouldn't be so exciting, if we already knew how it will end. The play is just heating up, Tag Oil is first to employ highly experienced teams since Shell and others first tried to approach this target using modern technology, experienced drillers and equipment that can handle the job. There is a lot of modern technology that has never been applied to this basin, and that is why this play has such promise to shareholders.

    The exploration team knows the structure is there, they know it is likely full of gas and condensate but they still have serious days to get through before this goes from just an idea, to a great investment.

    In the past some less experienced operators (drillers of the wells) made some expensive errors and this play does not forgive inexperienced drillers, selecting the wrong type of completion method or incorrect testing operations.

    It comes down to respecting Taranaki, its a beautiful area, but the basin only seems to reward those who have smarts, tenacity, spirit, and the right overall attitude.

    If the combination is unlocked by Tag Oil and their operator, then like the wheel on a casino game the K3 could match 7-7-7 and TAO shares may ring cha-ching for what lies beneath this fascinating geological play.

    Earlier in the year, the company stated that over 600m of zones that bear hydrocarbons have been identified by nearby wells. That number attracted the industry and the brightest from near and far to zoom in on this formation and put the play together.

    (click to enlarge)

    (click to enlarge)"Petroleum Mining Permit 38156 - Cardiff-3 (TAG 100%)

    The deep Cardiff-3 well targeting the Eocene-aged Kapuni Formation is drilling ahead at approximately 4,113 meters after some delays due to the well encountering a high-permeability, hydrocarbon-bearing zone in the McKee Sands, at approximately 4,100 meters depth.

    After drilling through the McKee Sands and into the second target zone, the K1A zone, TAG has encountered additional encouraging gas kicks of up to 20 times background levels. The Company expects to drill through the remainder of the main Kapuni Formation target zones in November and, at that time, will make a decision whether to complete and production test the well, if supported by data acquired as expected. "

    (click to enlarge)

    [CORRECTION in slide above: Tag owns 38,990,410 shares in CRD]

    (Cardiff-3 could be a big deal long term and here is why)

    (click to enlarge)

    (click to enlarge)

    OHL also have gas fired generation for which OHL owns two 1MW generators located on TAG's Cheal oil and gas field site in Taranaki, New Zealand, which supplies electricity to the Cheal oil and gas field's production facilities and provides excess electricity into New Zealand's main power grid.

    In addition, OHL has obtained the rights to purchase a 1.15MW containerized gas fired generator which was installed on TAG's Cheal oil and gas field site in June 2013 and intends to acquire and install an additional 1MW gas fired generator in the near term.

    Opunake Hydro generates retail power in New Zealand. OHL's power generation business falls into two categories: (a) hydro generation for which OHL owns the Opunake hydro power scheme,consisting of a 0.7 megawatt (MW) generator located on Lake Opunake in Taranaki, New Zealand.

    So not only does Tag Oil earn from selling natural gas from its deep gas wells, it earns another bonus from earning a % of the profits from the sale of electricity through its 5 million dollar stake in Coronado Resources Ltd. who owns 100% of the power generation company Opunake Hydro who makes electricity from the gas that Tag oil produces from wells it drills in the Taranaki basin. TMX: CRD has 79,273,092 shares issued and Tag Oil owns 38,990,410 shares of CRD or about 49.18%. So once a discovery is made, and co-generation starts all these companies start earning cash.

    On Nov 4, 2013 the share price was around $4 even. A fair entry pt. Any new discovery, and you won't see these bargains again.

    The

    Cardiff Well is part of permit 38156 and targets the deeper condensate-rich Eocene play in Taranaki.

    The New Zealand oil and gas business credits these deeper, tight sand reservoirs for creating the industry in NZ. The 1.5 TCF Kapuni pool is a proven pool and Tag Oil is after exactly the same formation, the Kapuni sands. They have chosen to twin an existing well for the Cardiff-3. Condensate fetches a pretty penny and so it offers some long term upside that is just too good to resist in a market that will buy up whatever liquids they can get.

    (The Rig set-up has to be able to reach nearly 5 Km depth)

    (Cardiff-3 is on permit 38156)

    The story will get much more interesting in a few weeks.

    On Nov. 13 the $25 Million Private Placement (PP) at $4.40 will be announced as completed, which will give Tag Oil enough cash to get through to their next milestone. Notice the (PP) is 10% higher than today's $4.00 price, so management must have had some compelling data to share with bankers to sell $25 million shares if the deal is fully sold out by Nov 13. (we will see very soon).

    The above blog post has only mentioned the Taranaki Basin, on the West side of the North Island. However the real big opportunity which has the entire industry buzzing, is on the East of the Island. The 'east coast basin' is hopefully the next big chapter in Tag Oil and several other companies exploration story.

    New Zealand is full of plays that are fantastic so Stay Tuned -

    Below is a 3 year TAO chart.

    The big run up at 1) could repeat at 5) 'if' the company can deliver some good results on the Cardiff play.

    You can expect some more events very soon, as they have 3 rigs on contract and they have lots of activity for a rather small staff so expect that news flow will be more frequent starting mid-november. Investors were expecting some higher production numbers in the spring at chart point 4) and a 25% plunge occured, which if you backtrack you will see i suggested was a great dip to enter the day that event happened. Exploration stocks seem to over-react to both Good events and events the market interprets as Bad, yet Oil and Gas or armchair retail traders should view these as the best events for Profit taking or Entry points if they like the liquidity of the trades. I

    would argue that any successful completion of the EAST COAST WELL will turn this play into a world class play instantly, and any success at the Cardiff play in Taranaki would de-risk much of the exploration downside for quite some time.

    (click to enlarge)

    Disclaimer: This is a risky play, do your homework. Don't invest more than you can afford to lose some % of, and if you do invest and make gains, be smart and take some % of profit at every viable opportunity because the convoluted chart above is actually normal for Exploration and if you don't trade in/out to your gain you will miss the whole opportunity. By risk i mean, geological risk, environmental challenges, market price turmoil, drilling cost over-runs, engineering and completion risks, and unknown unknowns that are part and parcel in exploration and energy companies.

    (Any liquids rich gas can be easily tied in to market here)

    Update: Nov 14

    Gas volumes are usually measured in multiples of cubic feet (ft3) or cubic meters (m3).

    Gas reserves are expressed in billion cubic feet (bcf) (109), or trillion cubic feet (tcf) (10x12)

    Gas volume produced or consumed is often expressed in million cubic feet (MMcf), (10x6), and Mcf (thousand cubic feet).

    Gas volume can also be expressed in million cubic feet per day (MMcfd), sometimes written as MMscfd to denote standard conditions, and its metric counterpart, billion cubic meters per day (bcmd).

    So lets look at what Tag Oil is chasing at Cardiff-3.

    Tag Oil is chasing 67.89 Bcf in the ground with a value in the hundreds of millions over the time it is extracted from multiple wells. With $12-15MM per well the reservoir is expensive to drill due its depth and pressures but the rewards are enough to take the chance.

    Contrary to popular opinion, gas is not generally sold per unit of volume, but rather per unit of energy that can be produced by burning the gas.

    The heat energy of a particular gas stream is measured by units of calorific value, which is defined by the number of heat units released when a unit volume of the gas burns. The value Tag received in Q2 was on avg. $5.18 /Mcf selling its gas to its customers. This number was used as a ballpark to value the entire reservoir, not one well, but the entire gas-in-place in the entire field and its in the hundreds of millions of dollars.

    (click link to go to news release)

    Do not base your investment decision soley on this chart, this not indicative of what will happen this is only a ballpark ideal estimate. I am obvious as hopeful as everyone else, but this is the 5th attempt in 23 years to unlock the 7-7-7 combination that Kapuni has yet to allow its mysterious combination to line up for explorationists. This year we hope the lucky 13-13 financing of $25MM on 11-13-13 helps those who are superstitious hit the TagOil jackpot by December 13, 2013.

    (The Nat Gas Price in NZ has been on the rise since 2001) Red line

    (Price/Gigajoule is much higher in NZ due to market size dynamics)

    (This makes a KAPUNI GAS find very attract to usa/cdn investors)

    Before you start thinking gas in NZ is being price unfairly, first understand that the Natural Gas exchange in canada handles $1 Billion a month in Canada serving a North American market for natural gas.

    With a population of 30+ million in canada and 300+ million in the USA the NGX sells around 60 BCF of contracts daily to 250+ participants.

    New Zealand on the other hand has only 4 million+ population, not yet the demand side of industrial or residental customers in country or comparable infrastructure like seen in north america. So the price side of gas is much higher in $NZD for supply/demand dynamics. If this $ differential for gas did not exist, the TARANAKI opportunity for exploration would not be what it its today.

    North America also has a huge pipeline network and capacity to handle the flow to residential and commercial suppliers. New Zealand has infrastructure, but the demand side is not proportional to USA or Canada so Sellers of Gas can obtain a better margin.

    [ Nov 7 ,2013 Special Note ]

    Price of Oil $$ dropped today due to Euro Central Bank rate cut. Mark Shenk reported that a euro rate cut strengthened the dollar and that had the affect on the Futures Market of what they call a contango, where the future price is cheaper than the today price. So traders sell out today to get a better price a month away, this drops Oil benchmarks and has effects on markets.

    I stand by my conviction that BRENT OIL is needed 1-3-5 years out, and the better the quality the more $ it will fetch. New reserves in the ground stand to fetch better prices when Opec production falls. No one can predict the future, but Oil will be desired at some fair price and the new players can grow much faster and leaner than the big companies.

    A year from now, refineries will still be looking for Brent Oil, and the New Zealand companies will still be a good bet looking outward 1 year or more.

    TARANAKI UPDATE: NOV 26, 2013 (NZ date/time)

    A Small Protest in Taranaki: Ngati Haua Whanui Inc (Ngaruahine Iwi)

    A link to the website of the news of protest (Maori: Hikoi)

    Who are the Ngaruahine Iwi ? A group entrusted to protect the lands of their Ancestors and an Organization who are in negotiations with the Crown over many environment and land issues.

    Mt. Taranaki is at the center of a group marching against oil and gas drilling near their mountain ("maunga" in maori).

    "When I pass the rivers, it's the veins to our maunga, and they are breaking up our veins with the drilling," "We are the mountain, and the mountain is us," Mr Potaua Rangitaawa, of Ngaruahine said.

    The Mountain is a Volcano, that to one group is sacred and to another is responsible for providing virgin geology with unprecidented oil and gas bearing rock layers of a thickness that could hold decades of energy. Such is the irony of the location where the wells are best located are on sacred or sensitive territory.

    [CLICK LINK TO READ ARTICLE]

    He (Rangitaawa) is part of a hikoi marching to protest against Tag Oil being granted consent to establish and test up to eight oil and gas exploration sites, and establish oil and gas production facilities, at Rowan Rd, Mahoe.

    Ngati Haua Whanui Inc, a subsidiary of Ngaruahine Iwi

    One TRUST has some opposition to the drilling of HEATSEEKER which was scheduled to drill in late Q4 or early Q1 2014. The group is an unincorporated TRUST with Ocean claims toward the Crown and in their Trust Deed they have stated what their future goals are in terms of protecting a Mountain they view as sacred, as well as the land in the park in which the Mountain resides.

    Respectfully, the history of MT.TARANAKI is absolutely fascinating. It is such a majestic place, and it offers much to its many neighbors who have a connection to the weather it provides which makes its park area so lush. I'll save that story for another day.

    The protest appeared to have an effect on the Operator of the wells being drilled in Taranaki. East West Petroleum, dropped 17% on modest volume on the first trading day of the protest. EW is the drilling operator for Tag Oil in the Taranaki Basin. The sell off was rather low volume and likely a mild reaction to the hikoi walk organized over the weekend by the group below.

    This is one more reason to properly promote balanced education over the issue around drilling and fracturing technologies. New Zealand is far behind other countries in education and public awareness surrounding such new technologies.

    Tag oil and East West will have their challenges ahead addressing communities and groups who also have a vested stake in the area and are less informed about the new science and advanced technology that is part of the business of drilling for precious energy resources.

    Savvy investors know these things tend to worth themselves out with education, dialogue and sharing of sides of any issues. The actual shares of EW are a bargain today, but for how long? If Cardiff-3 hits payday soon, or if results from the east coast are release by the new year,this will be quite a different story overnight in a positive way.

    (Reaction 25/11/2013)

    Don't forget how fast this Junior can run up on + news, and keep in mind there are 9 wells underway in the basin. So a blip on the screen like the chart above is a great entry point to hang on during the run ups like in the chart below.

    And don't forget the upcoming projects in the East Coast Basin. In the coming months the land and exploration planned could make any activity in Taranaki an old story instantly. The key to this story is soon to be unlocked, and you won't find a better play than the geology offer up by New Zealand on the East Coast.

    (EW could still surprise in Q4)

    Understand that the folks at Ngaruahine are just doing their jobs, and as these and other community groups get more familiar with, and teach other about this project it will improve. The safety of the operators on this and other plays proove they are competent and capable of doing their minimal impact work and reclaimation, the relations will strengthen and the projects will be welcomed. At present there aren't enough years of relation building to solve every concern by laypeople, and the hard science will back me up here, we are at the forefront of an oil revolution that is no longer the danger so often promoted by misinformed environmental scientists who haven't been inside a hard science research facility.

    I guess I'm saying, you ain't seen nothing yet when it comes to New Zealand, the new tech coming there is so advanced, of such scale the risk going to go so low, i think the world is about to change forever, in a good way. It's that big of a deal.

    (Link to the Iwi groups website for reference)

    (A slide from their May 2013 Presentation)

    Ka mate and te mate, ka ora and ahau - when death itself is dead, I myself shall be alive.

    Titokowaru - paramount chief of Ngaruahine 1868.

    Mandated to negotiate a settlement of the historical treaty grievances for Ngaruahine Iwi and establish the Post Settlement Governance Entity (PSGE) that will receive and mange the settlement assets

    Description An interactive way of staying in touch. If you have any questions contact us:
    (e) administrator@ngaruahine.iwi.nz
    (w) ngaruahine.iwi.nz
    (p) 06 278 1070

    General InformationBy the year 2034 we want Ngāruahine Iwi to be:
    * socially responsible
    * culturally competent
    * economically sound
    * politically savvy

    Tihei Mauriora!

    About ngaruahine.iwi.nz

    (Their Core Values)

    The desecration and muru that followed after the implementation of the scorched earth policy left Ngaruahine bereft, naked and with absolutely nothing. For ten years, our people remained hidden on the Maunga, isolated and disconnected from their homes on the Wainnate plains. They became a forgotten people, a people unable to return home because of fear.

    The use of the word Korowai in the name refers to the protection and safety from the elements that our people would have needed while living on the Maunga. The Korowai represents our old people and those whom have gone before us. Through telling the stories of our ancestors, we honour them. By bringing their stories to life, we create a foundation of knowledge for generations to come. The Korowai represents the knowledge we have as a collective of whanau, hap and marae within Ngaruahine. In order for Ngaruahine to create an effective Korowai that represents these aspirations, we will all need to work together - kia tU Ngaruahine ai tatou.

    The Korowai also represents a new beginning for Ngaruahine, a brighter future where the possibilities are endless. A future where Ngaruahine is united. A future where we are politically savvy, financially sound, socially responsible and culturally competent. A future where our people are strong in knowing their reo, culture and identity, an identity that ultimately connects them back to their Ngaruahinetanga through knowing their whakapapa.

    Te Korowai o Ngaruahine Trust will represent the future aspirations for the people of Ngaruahine. It will be the vehicle to drive Ngaruahine forward into the future, and beyond.

    Disclosure: I am long TAOIF.

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Comments (14)
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  • Flying
    , contributor
    Comments (20) | Send Message
     
    At this price, I believe this company is not a risky speculation. There is no debt and there was $60 million prior to starting the Cardiff Drill. There is enough production out of the Cheal and Sidewinder to make a profit out of wells in production. There is very little downside risk even if there is a bust at Cardiff and the East Coast Well because the Taranaki basin is producing enough to cover the cash spent for exploration. The potential for success is huge. Tag has the best reward:risk ratio of any security I know of -- the up side has to be in the neighborhood of $100/share and the downside, other than temporary, very small.
    5 Nov 2013, 08:02 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Thanks for your comment Flying. Appreciate your insights.

     

    When I say risky, I should be more specific, I mainly refer to geological risks in exploration wells, drilling cost overrun risks, engineering, mechanical and well completion risks during construction of each well, reservoir decline risks and anti-fracking public reaction risks. That being said, these things are all part of any company in the exploration space. Like you say, tag has the cash to ride out the season even with any hiccups.

     

    Tag Oil has had incredible operational success thus far, they know their craft well. This ambitious drilling program has multiple zones in multiple wells which offer tremendous chances for early shareholders to actually do quite well.
    6 Nov 2013, 09:05 AM Reply Like
  • Flying
    , contributor
    Comments (20) | Send Message
     
    Thanks for the additional viewpoint. I've been invested since 23 cents and have left a lot of money on the table by not selling when it was trading at $10 to $11 -- bulls, bears, and hogs you know. I was a hog and still am. I believe the upside potential is huge, though as you say, far from certain...
    6 Nov 2013, 09:17 AM Reply Like
  • benduck
    , contributor
    Comment (1) | Send Message
     
    Thank you for your informative blog. I am invested in TAO for the long haul; enjoy their financial position, enjoy the excitement of the hunt and above all, I respect the management and their modus operandi. I have a question that remains unanswered; thought you could shed some light on it...it's relative to their pricing structure of oil. How do they price their bpd? I understand that there is WTI and Brent, but do I understand it correctly that they enter into year long contracts with Shell and others based on another indicator? They recently explained that they received $113 per barrel for their last financial quarter; how did/do they arrive at that figure? How often do they negotiate their oil prices, etc?

     

    Any light you could shed on how TAO prices their oil would be of great help. Thank you Tullii for you blog and input. Much appreciated.
    20 Nov 2013, 02:36 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » TAO (TagOil) prices their Taranaki Oil in the TAPIS Benchmark, as they sell to Australia Asia area refineries, TAPIS is a lower sulphur content oil, since sulphur is expensive to remove by refineries, they are happy to pay a premium to producers who find Oil of this Quality. TAPIS is a Malaysia or Austral Asia Pacific price of Oil. Using WTI as a benchmark to start measuring from, TAPIS is near Brent Oil pricing.

     

    USD) used to measure it shrank in purchasing power and now it took up more notches on the measuring stick to buy the same unit of goods the BBL of Oil.

     

    You have here an analogy of 4 trains running down 4 separate tracks relative to each other. Train 1 is Supply, Train 2 is Demand, Train 3 is Benchmark price Train 4 is USD measuring stick.

     

    Every day bets are made by traders on the relative moves between Trains 1-2-3-4 and these events materially affect present and future moves in the markets for trader decisions to speed up or slow down each train, and the relative gap between each train on tracks 1-4 is not fixed, however the OIL CONTRACTS attempt to solve this by Agreement between train owners (oil companies, refiners, traders, shippers) train drivers (engineers, drillers, petroleum engineers, drilling companies) and train track owners (shipping tankers, pipelines, transport companies). It's not a perfect system, but it's what we have in place, and some people claim to understand it and they are like the weatherman, often wrong, but people want someone to believe, and there is this guy on TV telling you it's going to be sunny this weekend, so you plan a camping trip and then he is wrong, it rains all weekend, but come Monday you watch the weatherman again to see if he is right for next weekend.

     

    A long winded way of saying, even with agreements and contracts the prediction business is best left to phd mathematicians and psychics because the only certainty is things change and you have to react daily to those changes.

     

    You have a lot of really valid oil price questions, and the more specific your question the more specific the answer can be.
    The really nitty gritty details of Oil Price contracts are not likely public domain until they become part of a past financial statement. These are questions left best to a CFA (Certified Financial Analyst), or one of the paid companies that follow TAG Oil such as the several Analysts covering the company.

     

    If I publish errors or interpret something wrong and share it publicly I open myself up to unpleasantries. That being said I will do some digging to see if I can shed some light on your price and contract prices but it will be historical data rather than predictive. I will put up some new posts in the next couple weeks and try to incorporate this into the next post.
    21 Nov 2013, 11:13 AM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Update: Dec 5th 2013

     

    East West Petroleum Awarded an Interest in New Zealand East Coast Basin Acreage and Provides Operations Update

     

    VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec. 5, 2013) - East West Petroleum Corp. (TSX VENTURE:EW) (the "Company" or "East West") is pleased to announce that New Zealand Petroleum and Minerals ("NZPAM") has awarded the Company a 40% interest and its joint venture partner and operator TAG Oil Ltd ("TAG") a 60% interest in petroleum exploration permit 55770 ("PEP 55770") covering 106,157 acres in the East Coast Basin of New Zealand as part of the 2013 New Zealand Block Offer.

     

    The initial 12-month work program will be funded by the Company and consists of reprocessing available seismic data. Going forward, in order to maintain the Company's 40% interest in the permit, the Company can choose to fund the acquisition of 60 km's of new 2D seismic and one unconventional well drilled to approximately 2,500 meters by April 2017.

     

    David Sidoo, President and CEO of East West Petroleum commented, "We are very happy and excited for TAG and East West to be awarded this new acreage in the 2013 New Zealand Block Offer. This expansion into the East Coast Basin with a proven operator like TAG will provide East West with high impact exploration potential in New Zealand. We are also pleased to continue to grow our relationship with TAG, a company that has proven to be very successful over many years with their New Zealand asset portfolio."

     

    The East Coast Basin is a lightly explored, Cretaceous-Cenozoic age fore-arc basin. The basin contains numerous oil and gas seeps and has potential for significant discoveries of both conventional and unconventional hydrocarbons. The basin contains a working hydrocarbon system and initial studies have shown the sources rocks to be highly comparable to proven unconventional plays, such as the Bakken in North America.

     

    Cheal E Update

     

    The Company has been informed by TAG that the Cheal-E4 well located in the Cheal North permit (PEP 54877) has reached a total depth of 2,235 meters, and that operations were completed on time and on budget. The Cheal-E5 well was immediately spudded by the Nova-1 drilling rig with the expectation of reaching total depth by mid-December.

     

    In addition TAG has informed the Company that the Cheal-E1 well is expected to be placed back on production on December 9, 2013 after being temporarily shut-in for planned pressure and temperature analysis and that similar testing operations on Cheal-E2 through to Cheal-E5 will continue over the next two months with all successful wells expected to be placed on production throughout December and January. Initial oil produced during the Cheal-E1 test has been delivered to New Plymouth for subsequent sale and eventual export.

     

    Additional information on East West's Taranaki exploration program can be found in the Company's press releases dated August 19th and November 14th.

     

    About East West Petroleum Corp.

     

    East West Petroleum (http://bit.ly/1dT5g2e) is a TSX Venture Exchange listed company established in 2010 to invest in international oil & gas opportunities. East West has built a diverse platform of attractive exploration assets covering an area over 1.6 million acres. In New Zealand, East West holds an interest in three exploration permits near to existing commercial production in the Taranaki Basin with a nine well drilling campaign, operated by TAG Oil Ltd. (TSX:TAO), is in progress. The Company also interests in four exploration concessions covering 1,000,000 acres in the prolific Pannonian Basin of western Romania with a subsidiary of Russia's GazpromNeft; a joint venture exploration program covering 8,000 gross acres in the San Joaquin Basin of California; an oil-prone exploration block of 100,000 acres in the Assam region of India with the three largest exploration and production Indian firms ONGC, Oil India and GAIL; and a 100% interest in a 500,000 acre exploration block onshore Morocco. The Company is now poised to enter operational phases in Romania, where it will be fully carried by its partner Gazprom-controlled Naftna Industrija Srbije in a seismic and 12-well drilling program now underway. The Company has adequate funds to cover all anticipated seismic and exploratory drilling operations through 2013.

     

    Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Such factors include, but are not limited to: the ability to raise sufficient capital to fund exploration and development; the quantity of and future net revenues from the Company's reserves; oil and natural gas production levels; commodity prices, foreign currency exchange rates and interest rates; capital expenditure programs and other expenditures; supply and demand for oil and natural gas; schedules and timing of certain projects and the Company's strategy for growth; competitive conditions; the Company's future operating and financial results; and treatment under governmental and other regulatory regimes and tax, environmental and other laws.

     

    Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be subclassified based on project maturity. Best estimate resources are considered to be the best estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term is a measure of central tendency of the uncertainty distribution (most likely/mode, P50/median, or arithmetic average/mean). As estimates, there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources that the estimated reserves or resources will be recovered or produced.

     

    This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise.

     

    Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

     

    East West Petroleum Corp.
    Chris Beltgens
    Corporate Development Manager
    +1 604 682 1568
    +1 604 682 1558
    http://bit.ly/1dT5g2e
    5 Dec 2013, 04:33 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » http://bit.ly/1bWctY1

     

    VANCOUVER, Jan. 9, 2014 /CNW/ - TAG Oil Ltd. (the "Company" or "TAG") (TSX: TAO) and (OTCQX: TAOIF) is pleased to provide the following exploration and development drilling update in both the shallow and deeper targets within the Taranaki Basin. As TAG enters calendar year 2014, the Company will be maintaining its strategy of deploying capital to high impact exploration targets while developing shallow reservoirs to provide sustainable capital for continuous exploration activities.

     

    Deep / Eocene Exploration Taranaki Program (TAG 100%)

     

    TAG is pleased to announce the Cardiff-3 well targeting the Eocene-aged Kapuni Formation reached Total Depth of 4,863 meters in December, fully penetrating and evaluating all three deep target zones as planned; the well took longer to drill than anticipated due to encountering thick coal sections in the Eocene-aged Mangahewa Formation.

     

    Condensate-rich gas shows were recorded in all three target zones within the Kapuni Formation and as a result TAG is casing the well to total depth and will pursue a completion and testing program. Evaluation will begin with perforation and, if necessary, hydraulic stimulation of the deepest targeted prospect, the Kapuni K3E zone. Following evaluation of the K3E zone, the shallower K1A and Mckee Sand zones will be evaluated and a decision will then be made on an overall production strategy. In total TAG encountered over 230 meters of potential net pay over the three target zones to be evaluated.

     

    TAG COO Drew Cadenhead commented; "Significant data collected during the drilling operation is encouraging, and we will now move on to flow-testing which is the only definitive way to evaluate commercial success in these condensate rich tight-gas plays. This next stage of evaluation will occur throughout the next few months."

     

    Shallow / Miocene Development Taranaki Program

     

    Cheal-E Site (TAG 70%)

     

    TAG successfully completed its initial five well drilling program at the Cheal-E Site in mid-December. Cheal-E1 has been naturally flowing through a 17/64" choke, for 44 days and has produced at an average of 547 BOE/d (88% oil) while Cheal-E4 has been naturally flowing through a 10/64" choke for 7 days and has produced an average of 315 boe/d (87% oil). In aggregate Cheal-E1 and Cheal-E4 have produced more than 23,100 barrels of oil (26,400 BOEs) to January 7, 2014. Following perforation, Cheal-E2 and Cheal-E3 tested oil naturally to surface and will require artificial lift to maximize production as expected. This work, as well as the perforation and completion of Cheal-E5 will be initiated in the second half of January as equipment becomes available. As required work is completed, Cheal-E Site wells will be tied in for permanent production at TAG's recently commissioned Cheal-E Site separation facilities.

     

    Results of the Cheal-E drilling program have significantly extended the known oil and gas saturated area within TAG's 100% owned Cheal Mining Permit discovery through to E-Site. Pending completion of the outstanding activities at E-Site and further analysis of all results, TAG feels there is potential for 15 – 20 follow-up locations in the newly awarded areas.

     

    Joint venture partner East West Petroleum (30% interest) paid 100% of the first $5 million in drilling costs of the first two Cheal-E wells and is entitled to recover the first $5 million in revenue from Cheal-E Site sales while also paying 100% of the costs to produce that revenue. Subsequent to the $5 million in revenue, all cash flow and operations will revert to 70% TAG and 30% East West. At present production rates, that payout is forecasted to occur in less than two months.

     

    Cheal-G Site

     

    With the conclusion of the Cheal E-Site drilling program, TAG moved its Miocene focused drilling rig to the Cheal G-Site where Cheal-G1 was spudded on January 3, 2014 kicking off a 3 well drilling program. Joint Venture partner East West Petroleum will fund the first $2.5 million in capital expenditure, and is entitled to receive the first $2.5 million in revenue sales while also paying 100% of the costs to produce that revenue, before costs and interest in the wells will revert to 50% TAG and 50% East West.

     

    2014 Miocene Focus

     

    Throughout 2013, TAG's Miocene strategy was focused on oil production growth, resulting in the reallocation of drilling capital towards oil targets versus potentially higher BOE/d rate, yet moderately less economic, shallow natural gas targets. With TAG achieving a netback of approximately CDN$83 / barrel for oil production in December, this strategy will continue into 2014 with the intention to drill a minimum of 10 gross shallow, Miocene wells within the greater Cheal area. The program will include at least seven 100% working interest development oil focused locations. Further details of the 2014 Miocene program as well as TAG's deep Kapuni and East Coast Basin will follow.

     

    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 Basin, East Coast Basin and Canterbury Basin that covers more than 2,736,390 net acres of land, prospective for major discovery in New Zealand.

     

    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 objectives, goals, production rates, test rates, optimization, infrastructure capacity timing of operations and or future plans with respect to the drilling and testing in the Taranaki Basin 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 will 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 http://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.
    9 Jan, 03:59 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan. 9, 2014) - East West Petroleum Corp. (TSX VENTURE:EW) (the "Company" or "East West"), is pleased to provide the following operational update on its activities in the Taranaki Basin of New Zealand. All of the wells are operated by joint venture partner TAG Oil Ltd. ("TAG").

     

    Cheal E-site update (30% EW)

     

    The Company has been informed by TAG the initial five well drilling program at the Cheal-E site on the Cheal North permit (PEP 54877) was successfully completed in mid-December. Cheal-E1 has been naturally flowing, 17/64" choke, for 44 days and has produced at an average of 547 boe/d (88% oil) while Cheal-E4 has been naturally flowing, 10/64" choke, for seven days and has produced an average of 315 boe/d (87% oil); both wells having produced in aggregate more than 23,100 barrels of oil to date (26,400 boe).

     

    Following perforation, Cheal-E2 and Cheal-E3 tested oil naturally to surface and will require artificial lift to maximize production as expected. This work, in addition to the perforation and completion of Cheal-E5 will be initiated in the second half of January as equipment becomes available. As required work is completed, Cheal-E site wells will be tied in for permanent production at TAG's recently commissioned Cheal-E site separation facilities.

     

    Pending completion of the outstanding activities at E-site and further analysis of all results, the joint venture estimates there is potential for 15 - 20 follow-up locations on the permits awarded in December 2012.
    9 Jan, 04:05 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Fracking Fuels and Friction Radio New Zealand Program

     

    http://bit.ly/1j0roJG

     

    Brief discussion of East Coast Drilling potential at 3min 40sec mark
    1 Feb, 10:14 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Tag Oil discusses initiating drill program on
    East Coast of New Zealand. Radio New Zealand interviews
    Drew Cadenhead of Tag Oil.

     

    Brief mention of 2013 well drilled in Dannevirk, he states "we know the kitchen is working" which is geology speak for Oil from Kerogen is present in the unconventional rock layer they are targeting.

     

    It's a short clip, not much that followers of the play aren't already aware of, but good to see that they are proceeding with the public relations and getting the word out in NZ.

     

    http://bit.ly/1fFuQFA
    3 Feb, 09:09 AM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » EAST WEST PETROLEUM up 20% as they announced buy back of 9.53% of shares for cancellation called Normal Course Issuer Bid.
    VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan. 31, 2014) - East West Petroleum Corp. (the "Company") (TSX VENTURE:EW) wishes to announce that, subject to regulatory approval, it will conduct a normal course issuer bid (the "Bid"). The Bid will be for up to 8,882,872 shares of the Company over a period of one year (the "Bid Period"), being 9.53% of Company's issued and outstanding common shares, with up to 1,864,438 shares of the Company purchasable over any 30-day period within the Bid Period, being 2% of Company's issued and outstanding common shares. The Bid Period will commence on February 3, 2014 and will continue until the earlier of February 3, 2015 or the date by which the Company has acquired the maximum 8,882,872 shares which may be purchased under the bid.

     

    Management believes that the market price of the Company's shares may not fully reflect the value of its business and future prospects, and as such it believes that purchasing its own shares for cancellation is an appropriate strategy for increasing long-term shareholder value. With respect to the Company's previous Bid, which expired on October 16, 2013, a total of 998,500 shares of the Company were purchased under the Bid at an average price of $0.3085 per share. As per the previous Bid, purchases will be made through the facilities of the TSX Venture Exchange (the "Exchange"), and the price at which the Company will purchase its shares will be the market price of the shares at the time of acquisition. The Company has appointed Mackie Research Capital Corporation as its broker to conduct normal course issuer bid transactions.

     

    The Company has 93,211,165 common shares issued and outstanding. Common shares purchased by the Company will be returned to treasury for cancellation.

     

    About East West Petroleum Corp.

     

    East West Petroleum (http://bit.ly/1dT5g2e) is a TSX Venture Exchange listed company established in 2010 to invest in international oil & gas opportunities. East West has built a diverse platform of attractive exploration assets covering a gross area of approximately 1.8 million acres. In New Zealand, East West holds an interest in three exploration permits near to existing commercial production in the Taranaki Basin with a nine well drilling campaign, operated by TAG Oil Ltd

     

    Read more at http://bit.ly/1esY2zX
    3 Feb, 11:54 AM Reply Like
  • jmale
    , contributor
    Comments (8) | Send Message
     
    Hi Tullii,
    what do You think about the percentage of TOC on the East Coast? On TAO's web page (http://bit.ly/1cOizii#) there is a stack up comparing the numbers between Bakken and East Coast. TOC on the thicker Whangai is quite low (0.2 – 1.7) which Schlumberger sees from poor to fair in kerogen quality and concerning the shale gas Schlumberger mentions: "…although values of 2% are considered the minimum for shale gas reservoirs…"
    Do You have an opinion on this? I have very little capacity to understand the criterias needed for the unconventionals.
    3 Feb, 04:08 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » For what it is worth, the academics will argue up and down what the
    East Coast may or may not hold and without several exploration and appraisal wells over a vast area the data is still a prediction.

     

    In my opinion we still don't know and we won't know more till end of Q2 or Q3, but i'm not a scientist nor reservoir engineer and truthfully they are the only people you should likely take an opinion from by reading a whitepaper or reserves report.

     

    The truth above will only be understood by drilling and studying the new core and the logs over multiple wells. These numbers above are likely accurate but a degree are still highly predictive at this time.

     

    Shale gas is not what they are targeting on the east coast, (your quote above referred to gas) Oil from the Kerogen Kitchen is what the Whangai holds most p[romise for and the percentages they can obtain via fracturing are truly not known until they actually break up the rock layer near the wellbore by fracturing it and stimulating it making the rock more permeable and measuring the flow rates and quantifying the well economics from studying certain data. There are not enough wells drilled even as stratigraphic wells to say for certain what is in the Whangai or Waipawa. Lots of work planned by multiple players so by Q4 2014 we (public) will be much more informed later in the year if not sooner this summer.

     

    I would rather own a Bakken "investment" right now over an east coast play only from the fact that Bakken is "proven up" and takes no promoting to sell the story, plus the existing sales infrastructure is much better in North Dakota. However as an "exploration and speculation play" in New Zealand, the east coast is much better over the next 3-5 years if you got in for cheap due to the fact its still unproven and you can get in at the ground floor taking the unknown risks along with the companies.

     

    I think you may have a few more months to build a east coast position but I wouldn't wait too much past mid-march to get in at these low prices regardless of what the markets do the Oil in Taranaki and East Coast isn't diminishing and will be very valuable for years to come.

     

    TOC is Total organic carbon found in a geological formation, particularly the source rock for a petroleum play. The thickness of Whangai is huge and the fact is its unconventional meaning its Tight Rock with low permeability, so it will have to be fractured artificially to liberate the oil. This is now possible more than ever and this means we can expect to create commercial activity out of what was not possible 5 years earlier.

     

    The low end is 0.5 TOC, the acceptable number would be 2%.
    Yet lets say even say 4% TOC could still be end up being un-commercial economically if certain other parameters don't work, and on the flipside even 0.2% could be commercial given todays new near wellbore fracturing technologies and stimulation technologies if the rates, price and length of reservoir life add up to be economic.

     

    I wish it was simpler to explain. Its not. I'm not the guy to follow when it comes to interpreting reservoir engineering data I see myself more like a parrot, I just repeat what they publish because they are peer-reviewed publications and they know their craft better that I do. The number are easy to read but not easy to agree on or interpret and the non-scientists and bankers are often too simple minded to understand why the academics argue over such numbers because they have no idea the labour involved in obtaining such data. Its tough to get certainty. That is why wars are fought over Oil and why it fetches $100+ a Barrel.

     

    East Coast Basin is in unchartered waters so to speak, we could be very surprised or very frustrated and its too early to tell from what is available as public data.

     

    What is exciting today is the number of VSP and OPM getting attracted to New Zealand is increasing dramatically year over year. (VSP is my own acronym for very smart people, and opm is other partners money like join ventures and risk sharing contracts)

     

    As the number of $$$ and people invested into the study and drilling increase the data and knowledge accelerates. Eventually the odds of commercial discovery increase and the early players hold the most probable lands for such a discovery.

     

    What happened in the Bakken could easily happen again in NZ. Exploration land in North Dakota went for $300/Acre before a discovery and then shot up to $30,000/Acres 5 years later.
    The farm-out and joint venture model will accelerate once the lands shoot up in price and that could occur shortly after a commercial well is announced.

     

    Could be much later this year but I think early indications show that
    East Coast is still very exploration worthy.

     

    If you study CANACOL ENERGY and MADELENA ENERGY presentations and then look at the share prices you will see the kind of value that can be unlocked over 2 years by going into such unconventionals. They had the same obstacles to overcome with bankers and investors and they came through eventually with % returns that beat the markets.

     

    Its risky, so it needs to be understood by investors that you don't get the % return without time and stomaching the risk, but the caliber of people and companies doing this work are exceptional so its got very substantial upside if you can wait out the exploration phase and bank the returns just at the time all the risk is gone and the institutional money piles in which drives up the share prices.

     

    3 Feb, 06:30 PM Reply Like
  • jmale
    , contributor
    Comments (8) | Send Message
     
    Thank You for this deeper perspective Tullii, I appreciate the way You grab to the elementary information, in this case to the tighter oil.
    4 Feb, 04:17 PM Reply Like
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