Brochure - Tag Oil

C O M P A N YO V E R V I E W

TAG Oil:TAG Oil: Canadian Owned,New Zealand RunMerging the best of Northern and Southern Hemisphere exploration

Written by: Ian Hanner Produced by: Wayne Masciotro

5 0

TAG Oil:TAG Oil: Canadian Owned,New Zealand RunMerging the best of Northern and Southern Hemisphere exploration

Written by: Ian Hanner Produced by: Wayne Masciotro

5 1 S e p t e m b e r 2 0 1 4

TAG OIL

BY BLENDING PRODUCTION styles from Canada and New Zealand, TAG Oil has managed to find a sweet spot for operations in the Southern Hemisphere.

TAG Oil was founded in Canada in 2002 by Alex Guidi with the express purpose of exploration in New Zealand. While trading on the Toronto Stock Exchange, the company invests nearly 100 percent of their capital in the development of projects in their host country. Though a relatively small company in the world of oil production, Chief Operating Officer Drew Cadenhead says the company has no problem

competing in their niche market. “We are the most active explorer

in New Zealand and have had good exploration success over the last few years,” Cadenhead said. “A very strong financial position [has us] positioned well for future growth into the next few years.”

Cadenhead’s optimism is not without merit. TAG Oil has seen tremendous growth in the last decade. TAG Oil was “relatively inactive” for the first seven years of its existence, according to Cadenhead, who used to be the Chief Executive Officer.

“We were just JV partners with

Aerial view of 2013’s Ngapaeruru-1 exploration

E X P L O R AT I O N W O R L D

www.tago i l .com/defau l t .asp 5 2

TAG OIL

Hydrocarbon storage tank at TAG Oil’s Sidewinder Field

some other companies, so once we took control of things ourselves and we were getting much more active operationally, I switched from CEO to COO,” he said. “I relocated myself and my family back to New Zealand to run all of our operations here. Our CFO at the time, Garth Johnson, took over the role of CEO up in Vancouver.”

Cadenhead’s expertise comes from several decades of experience working for various exploration companies in both Canada and New Zealand. He also holds a Bachelors of Science Degree in Geology from the University of Calgary. Now tasked with the direction of TAG Oil’s operations in New Zealand, he’s putting his skills to work.

“It is something that’s very important to us: our perception as a good corporate citizen; as a very safety and health-oriented company. Our record is impeccable here and it’s very important for us to maintain that record.”

energy services ltd

TAG OIL E X P L O R AT I O N W O R L D


“Our niche here in New Zealand is to run our company as a small nimble junior company-- sort of like a Canadian model, not surprisingly,” he said. “What we found was that there were a number of Majors down here, [such as] Shell and some of the big Australian companies, mainly focusing offshore. No one was really focusing on-shore where there’s some really nice oil. In particular, shallow oil plays, so really kind of up our alley as far as what we were familiar with as Canadians working in Calgary.”

One of TAG Oil’s strongest plays is in the Taranaki Basin. The only

sedimentary basins in New Zealand to have been commercialized to date, the company has invested heavily in the region with three plants and a wholly-owned network of pipelines just east of the field. From there, everything ties into their mother facility, the Cheal plant.

The drilling operations in that region produce between 2,300 and 2,500 barrels of oil equivalent per day, securing a steady cash flow. According to Cadenhead, TAG Oil will be producing in that region for years to come having only drilled roughly 25 percent of the company’s total acreage.

energy services ltd

Horizon Energy Services Ltd, a specialist oil and gas service provider based in New Plymouth, New Zealand has held the operations and maintenance contract for TAG Oils Cheal Production Station and well sites for over seven years.

We currently supply a full operations team to TAG, including an onsite Production Manager, Operations and well testing Technicians, permit issuers and safety personnel.

In addition to providing personnel support, our extensive expertise has also been pivotal in the development of a document management, HSE and permitting system, operational procedures and training regime to complement TAGs own infrastructure.

Our people and processes have developed along with TAGs growing operations, and we continue to work alongside each other in a very seamless and synergistic way.

Website: www.horizonenergy.co.nz

SUPPLIER PROFILE TAG OIL

HG Tubulars (Canada) Ltd is a distributor of casingand tubing in Canada and worldwide. We have our manufacturing facility in Hebei Province, China which produces API casing, tubing and couplings. We are proud to supply Tag Oil with their tubular requirements.

High Quality Tubular Products at the Best Price

Tel: 001 403 266 6367Fax: 001 403 266 6341

Email: [email protected]

CONTACT US:

HG Tubulars (Canada) LTD.



“If we were to stop drilling here today, the oil would keep flowing for about another 10 to 15 years,” he said. “They’re nice long reserve life, index fields. They produce very well.”

Speaking about new drilling operations in the region, he added, “These wells will cost us about $3 million to drill and complete and tie in and we’ll get a net present value out of these wells of somewhere between $10 to 30 million. It’s really a great little play for us.”

The success of smaller scale, but very stable operations in shallow plays like these, has afforded the company the ability to develop higher risk operations. With reportedly zero debt and about $50 million in reserve, TAG Oil is looking to explore deeper targets in the region. According to Cadenhead, there are numerous reservoirs situated at depths of between 4,000 and 5,000 meters. With larger pool sizes, he estimates the value of each of these wells would be closer to $20 million.

With stable cash flow from the Taranaki Basin, the company has been able to turn its attention to

other regions yet to be developed, such as the East Coast Basin.

“[The East Coast Basin] clearly has a working hydrocarbon system,” Cadenhead said. “We know that because there’s 300 or 400 oil and gas seeps where oil and gas is actually gurgling out of the ground. So we know the kitchen is working there and we recognized that about five years ago and secured a very large land base-- nearly 2 million acres.”

He estimated it would take about three years to gather enough data and drill enough exploratory wells to prove commercial viability, but according to Cadenhead, several independent engineering assessments have indicated that the company is sitting atop reserves in the billions of barrels.

“It just remains to be seen if it can be cracked,” he said. “We’re the only ones trying to crack it. It’s one of the main reasons the shareholders in TAG are keeping their fingers crossed and hoping for a hit over there, as well as the good work that we’re doing in the Taranaki Basin.”

The small staff size at TAG makes the company’s successes thus far

Taranaki Civil Construction Ltd is a family owned business that is proud to carry out all site works and road

construction for TAG Oil Ltd.

Taranaki Civil Construction Ltd is a family owned business that is proud to carry out all site works and road

construction for TAG Oil Ltd.

CONTINUING TO GROW & DIVERSIFY

Tel: +64 6 7566080Email: [email protected]

Solving challenges.™

Halliburton brings a wealth of knowledge and expertise to mature fields with over six hundred and fifty industry-leading consultants and project managers. We’re involved in all the major oil-producing provinces across the globe and have a track

record of increasing ultimate recovery an average of 20%. In one instance, a well treated with our SandWedge® conductivity enhancer raised initial production, maintained it, and its cumulative production was 50% higher than wells fractured with sand

only. Whether it’s reassessment and planning, field productivity, well productivity, or well abandonment, we help maximize the value of mature fields.

What’s your mature fields challenge? To learn more, visit Halliburton.com/MatureFields

© 2014 Halliburton. All rights reserved.

THE SOLUTION IS HALLIBURTON.UNCONVENTIONALS

WHEN THE CHALLENGE IS MATURE FIELDS,



even more impressive. With only 25 employees in New Plymouth, TAG’s revenue for the 2014 fiscal year was just over $2.3 million per person. Over the last five years that the company has been growing, the staff has been hired on one-by-one, with only two people leaving the company in that time span,

according to Cadenhead.“We have a lot of fun here,” he

said. “It’s a really loose atmosphere and because it’s such a small group, we don’t get bogged down in red tape and paper work. We just yell at each other down the hallway instead of sending memos around. We chat around the coffee pot. It really is a

The Ngapaeruru-1 well

TAG OIL

Australia +61 8 9483 1700 New Zealand +64 9 917 1040

[email protected]

Contact us to discuss your onshore and offshore requirements:

• End-to-end assurance

• Secure supply from the region’s best Mills

• Logistics management

• Inventory control

• Technical support

We supply steel tubulars & offer:

Oceania’s leading supplier of OCTG and Linepipe

in a way that it hasn’t before. “It’s probably one of the

biggest challenges for us, to tell you the truth, and one of the biggest risks is getting permission and consent to drill wells,” he said. “It’s something we put a lot of effort into and I can honestly say many, many more times the effort than we [put into it] just four or five years ago. It just wasn’t a consideration. It has become a consideration. And that’s not just here in New Zealand; that’s a global phenomenon.”

He added, “It is something that’s very important to us: our perception as a good corporate citizen; as a very safety and health-oriented company. Our record is impeccable here and it’s very important for us to maintain that record.”

The natural gas produced by the company doesn’t just benefit New Zealand by introducing jobs and taxable revenue. Since TAG Oil doesn’t own a facility to liquefy natural gas, all of the

small family type of [operation] here.”As a foreign entity operating in

another country, TAG Oil has to be extra careful about their perception as good for the community. With a very active role sponsoring both local academic and sporting organizations, the company tries to make it clear that they’re trying to give back to their host country.

The process isn’t easy though. Cadenhead pointed out that in recent year, the oil and gas industry has come under scrutiny from the public

E X P L O R AT I O N W O R L D


TAG OIL

natural gas produced in the country is sold in New Zealand without the added costs accrued by shipping overseas.

Meanwhile, the company’s crude oil is shipped to primarily Asian markets such as China, Japan and India, which require oils with very low sulfur content, and sold at a premium. From there the company imports cheaper oil back from the Middle East to refine into gasoline and diesel for use in New Zealand.

“We’ve got the choice of either consuming that oil here or shipping it offshore,” Cadenhead said. “There’s an insatiable thirst for oil in the Southeast Asia part of the world. It’s a great place to find oil. It’s a great place to find high quality oil in particular. As I said, we’re netting back on our oil sales here probably close to $80 a barrel right now.”

Cadenhead said he could see the company taking a number of paths in the decade to come. Most exciting would be proving commercial viability on their unconventional plays in the East Coast Basin.

“If the unconventional play starts to work for us and we can have success with the proof of concept of being able to flow hydrocarbons from those multi-billion barrel reservoirs that we see over on the East Coast Basin, that’s a completely different ball game,” he said. “Most likely, TAG, at the size that we are, would get bought out by a Major at that point.”

Company Information

I N D U S T RY

Oil and Gas

H E A D Q U A RT E R S

Vancouver, Canada

F O U N D E D

2002

E M P L O Y E E S

25

R E V E N U E

$57,546,899 (2014)

P R O D U C T S /

S E R V I C E S

TAG Oil is a Canadian-owned exploration and production company for both oil and gas that operates exclusively in New Zealand. By merging the styles of both countries, the company has been able to solve problems no one else has, becoming the busiest explorer in New Zealand. With a small staff size, the company is able to stay highly-adaptive to an evolving energy market and act fast to capitalize on growth opportunities.

TAG Oil

Address 885 W. Georgia St., Ste. 2040

Vancouver, British Columbia, Canada

Tel. (604) 682-6496 Fax. (604) 682-1174

[email protected] www.tagoil.com/default.asp

Documents

Brochure - Tag Oil