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Tag Oil Reports Earning And Gives Operational Update

|Includes: TAG Oil Ltd. (TAOIF)

Tag Oil reported earnings this week, here are some highlights:

At June 30, 2013 , the Company had cash of $57.2 million , working capital of $63.5 million and no debt.

  • Production revenue increased to $14.7 million .
  • Net income of $4.5 million generated, before the deduction of non-cash share-based compensation.
  • Operations generated $9.6 million in cashflow.
  • Daily average production increased 39% in Q1-14 compared to Q4-13.
  • Purchased 260,000 common shares of the Company for cancellation and return to treasury at an average price of $3.05 per share.
  • Drilled and cased the Ngapaeruru-1 well in the East Coast Basin, intersecting 155 meters of unconventional oil and gas reservoir in the source rock.
  • Signed a new surface access agreement in the East Coast Basin permit to allow for drilling access on PEP 38348 (Waitangi Hill area).

The numbers are better than last year and the company is profitable, cashed up, has no debt, and is buying back shares. According to the company they will be conducting a 12 well drilling campaign across all of their properties. The blog on the company website says they will begin drilling the Cheal E-1 well this weekend. I think the market has revalued the company based on the disappointment of lower production from last quarter. The drilling activity going forward will be the catalyst for the share price in the next six to twelve months. This will be a game of patience. Any further perceived success in the East Coast basin, which is my main reason for owning this stock, will result in a move higher in my view.

Disclosure: I am long OTCQX:TAOIF.