TAG Enters Farmout Agreement with Apache in NZ East Coast Basin

- TAG Enters Farmout Agreement with Apache in NZ East Coast Basin

Friday, September 02, 2011
TAG Oil Ltd.

TAG Oil reported that it has entered into a farmout agreement with Apache to explore and potentially develop oil and natural gas resources in the East Coast Basin of New Zealand.

Apache has agreed to conduct a multi-phased exploration, appraisal and potential development program within TAG's East Coast Basin exploration permits PEP 38348, PEP 38349 and PEP 50940. The Permits comprise in excess of one million prospective acres of onshore oil and gas opportunities located on the southeast portion of the North Island. TAG currently holds a 100% working interest in the properties.

Apache has agreed to pay for a portion of TAG's direct costs incurred to date, as well as providing TAG a full carry on three phases of operations to a maximum agreed cost in each phase. If the agreed cost is exceeded in any phase, or if additional operations are conducted, Apache will pay a majority share of any drilling or seismic costs in the specified percentages set out in the Agreement.

Each phase of operations will include an aggressive program of both 2D / 3D seismic and drilling with Apache earning an increasing interest in the Permits as follows:

• Phase 1: Apache will earn a 50% interest in 5,120 acres of the Permits after operations are conducted and by committing to Phase 2.
• Phase 2: Apache will earn a 25% interest in the Permits after operations are conducted and by committing to Phase 3.
• Phase 3: Apache will earn a 50% interest in the Permits after operations are conducted and by committing to Phase 4 operations.

Subject to certain conditions, the planned exploration work program will be conducted over the next four years. Seismic operations will start in 2011 with drilling to commence in 2012.

Apache will be the Operator for all activities undertaken pursuant to the Agreement, excluding the initial four vertical wells of the work program that TAG will operate with Apache's assistance. Apache will spend up to $100 million upon completion of Phase 3 to earn a 50% interest in the Permits. At the end of Phase 3 operations TAG will remain as operator of the Permits. If Apache commits to Phase 4 operations, all costs will then be shared equally between Apache and TAG going forward.

TAG Oil CEO, Garth Johnson, commented, "TAG Oil is excited and honored to partner with Apache in the East Coast Basin to achieve a common goal of converting the potential of the East Coast Basin to proven reserves with integrity, respect and excellence in a safe and environmentally responsible manner. We are planning an aggressive exploration program with Apache with a starting date of September 2011 to initiate seismic acquisition with drilling to begin in early 2012"

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Shell NZ to Join Great South Basin JV, Seismic Program to Begin in 4Q11

- Shell NZ to Join Great South Basin JV, Seismic Program to Begin in 4Q11

Tuesday, August 16, 2011
OMV

OMV New Zealand and Shell New Zealand announced major milestones for the Great South Basin joint venture, with the addition of Shell into the venture and confirmation that a comprehensive 3D seismic program will begin later this year on Permits 50119 and 50120. Permit 50121 will be returned to the Crown.

Subject to ministerial approval, under the new joint venture agreement Shell, a world leader in deep water exploration and production with a 100 year history in New Zealand, will take a 50% share while the existing joint venture partners OMV and PTTEP retain 18% each and Mitsui Australia retains 14%.

OMV New Zealand will remain operator of the Great South Basin permits until the end of the seismic acquisition program which is expected to be completed in early 2012. The 3D program itself will be undertaken by the state of-the-art vessel Polarcus Alima and is expected to cover about 3,000 km2.

Shell will become the joint venture's operator once the seismic acquisition program is completed.

"We are very pleased to announce these developments which we believe clearly demonstrate the joint venture's commitment to the Great South Basin. It is important to be geared up for the next steps in the exploration of a frontier basin," said OMV New Zealand Managing Director Peter Zeilinger.

"We have allocated significant manpower to studying the Great South Basin over the past four years and invested over NZ$50 million to date. The joint venture is now committing to an additional significant investment for the next phase of the project," he said.

In late 2010 OMV and its joint venture partners began an in-depth review of their planning for the Great South Basin. As part of that assessment, the joint venture identified the need for an additional partner with considerable deep water experience and best practice exploration and operating processes.

OMV New Zealand

"We undertook a detailed evaluation of several companies who could meet these tests. Shell's proven track record as an internationally experienced deep water operator with high safety and environmental standards made them the logical partner of choice," Mr. Zeilinger said.

Shell brings valuable technical expertise to the joint venture from safely delivering more than 20 groundbreaking deepwater projects around the globe. Shell's membership in the Great South Basin joint venture builds on its continuing investment in Taranaki, where it is a joint venture partner in the Maui, Kapuni and Pohokura fields.

Chairman Shell Companies in New Zealand Rob Jager said the new Great South Basin venture reflected Shell's continuing commitment to exploration and production in New Zealand.

"Shell has been investing in New Zealand for more than 100 years and safely operating offshore for more than 30 years in the challenging conditions off the coast of Taranaki. We have been impressed by the work of the joint venture to date, and see this as an exciting opportunity to bring our local and global experience to another promising region," he said.

Exploring a new frontier area is very much a long term process, Mr. Zeilinger explained.

"There are no guarantees that drilling will take place, but we are hopeful that the seismic survey will yield positive results. Our focus right now is on carrying out a robust survey," he said.

Mr. Jager said that as the new joint venture partner and future operator Shell is looking forward to working with OMV on the next stage of the project.

"Safety comes first for Shell. We have a Goal Zero operating philosophy which demands no harm to people and protect the environment. Another top priority is to get to know the local stakeholders better so that we have a strong understanding of their views and a positive foundation for continuing engagement over the coming years," he said.

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