TAG Oil Reports Q2 2018 Results

VANCOUVER, Nov. 14, 2017 /PRNewswire/ - TAG Oil Ltd. (the "Company" or "TAG Oil") (TSX: TAO and OTCQX: TAOIF) reports its second quarter results for the interim period ending September 30, 2017, highlighted by an 11% increase in revenues and a 34% increase in operating netbacks from the previous quarter. TAG Oil also added 809 gross acres to its petroleum mining permit portfolio with PMP 60291, which has been sectioned off from its existing Cheal East permit (PEP 54877).

Toby Pierce, TAG Oil's CEO, commented "The Company had a busy fiscal quarter in which we continued to lay the ground work for growth with the recovery in oil prices. We are eagerly awaiting results from our 3D seismic acquisition at PL17 and increased production from our ongoing waterflood program. Assuming a continued improvement in Brent oil prices, we expect that our revenue operating cashflow and netbacks will continue to grow into calendar 2018. Finally, our focus for the remainder of the year will be on increasing our production and continuing to prepare for drilling opportunities."

Q2 2018 FINANCIAL AND OPERATING HIGHLIGHTS

    --  At September 30, 2017, the Company had $2.7 million (June 30, 2017:
        $12.2 million) in cash and cash equivalents and $8.7 million (June 30,
        2017: $15.2 million) in working capital.
    --  Average net daily production decreased by 2% for the quarter ended
        September 30, 2017 to 1,151 boe/d (78% oil) from 1,169 boe/d (77% oil)
        for the quarter ended June 30, 2017. A breakdown of net production is as
        follows:
        --  Average net daily oil production increased by less than 1% to 897
            bbl/d compared with 895 bbl/d for the quarter ended June 30, 2017,
            which is primarily a result of the inclusion of PL17 oil production,
            Cheal-B1 staying online for the entire quarter, and increased plant
            uptime after the planned full shutdown at the Cheal production
            facility for eight days in the prior quarter for statutory
            inspection purposes. This was partly offset by Cheal-A12 coming
            offline for most of September 2017 due to a parted pump.
        --  Average net daily gas production decreased by 7% to 1.5 MMcf/d
            compared with 1.6 MMcf/d for the quarter ended June 30, 2017, which
            is mainly due to Cheal-A12, and reduced gas production from Cheal-E8
            as the well comes off flush production and natural decline. This was
            partly offset by increased production uptime at the Cheal production
            facility.
    --  Revenues generated from oil and gas sales increased by 11% for the
        quarter ended September 30, 2017 to $6.0 million from $5.4 million for
        the quarter ended June 30, 2017, which is due to a 19% increase in
        average Brent oil prices and less than 1% increase in average net daily
        oil production, partly offset by an 7% decrease in gas volume.
    --  Operating netbacks increased by 34% for the quarter ended September 30,
        2017 to $30.95 per boe compared with $23.09 per boe for the quarter
        ended June 30, 2017, which is also attributable to a 19% increase in
        average Brent oil prices and less than 1% increase in average net daily
        oil production.
    --  Capital expenditures totalled $6.8 million for the quarter ended
        September 30, 2017 compared to $9.8 million for the quarter ended June
        30, 2017. The majority of the expenditure in Q2 2018 related to
        permanent tie-in of the Cheal-E8 well, drilling and testing the Cheal-D1
        well, the Pukatea site upgrade, and the seismic acquisition at PL17.
    --  On August 4, 2017, New Zealand Petroleum and Minerals ("NZP&M") approved
        the surrender of the Company's 50% working interest of the Cheal South
        permit (PEP 54879). All asociated costs related to the permit have been
        expensed as at September 30, 2017.
    --  On September 5, 2017, TAG Oil announced the completion of drilling and
        testing operations at the Cheal-D1 exploration well, which is located
        near the northern portion of TAG's 70% working interest and operated PEP
        54877. TAG Oil drilled and completed the Cheal-D1 well approximately
        five days ahead of schedule to a total measured depth of 2,400 m. The
        Company perforated an 18 m section of gas bearing sands in the Urenui
        formation and following extensive testing it was determined that gas was
        present, but not in sufficient quantities to produce as an economic
        discovery. The well has been suspended with a plan to potentially
        re-enter in the future.
    --  On September 15, 2017, NZP&M approved the petroleum mining permit
        application for the Company's 70% working interest of PMP 60291. The
        permit has been carved out of the existing PEP 54877 and part of the
        remaining acerage has been included in an application to extend the
        duration of PEP 54877, which was submitted on September 14, 2017.

RECENT DEVELOPMENTS / LOOKING AHEAD

Preparation for the Pukatea-1 well, located onshore in New Zealand within the Puka permit (PEP 51153), continues from the existing production pad where three wells have previously been drilled.

Further, TAG Oil is about to commence a workover campaign targeting production improvements and reinstatement of wells offline. Up to six wells will be initially targeted over the next few months. Based on conservative estimates, it is anticipated that at least 200 boe/d of production can potentially be added with paybacks achieved from these activities in under a year.

Going forward, management will continue to employ its disciplined approach and remain focused on production, appraisal and exploration opportunities, and TAG will continue to work towards achieving the following goals:

    --  Maximizing the value of its operations in its producing fields by
        maintaining enhanced oil and gas recovery techniques to optimize
        production and lower per barrel production costs;
    --  Enhancing the development of its exploration program through careful
        evaluation of its exploration prospects;
    --  Establishing additional proved reserves and commercializing its oil and
        gas exploration properties;
    --  Reviewing potential acquisitions of overlooked/undervalued opportunities
        in New Zealand and Australia; and
    --  Managing its operating cash flows and balance sheet as effectively as
        possible to minimize costs while focusing on shareholder returns.

About TAG Oil Ltd.

TAG Oil (http://www.tagoil.com/) is an international oil and gas explorer with established high netback production, development and exploration assets, including production infrastructure in New Zealand and Australia. TAG Oil is poised for significant reserve and production growth with several oil and gas fields under development and high-impact exploration in proven oil and gas fairways. TAG Oil is debt-free and currently has 85,282,252 shares outstanding.

Cautionary Note Regarding Forward-Looking Statements and Disclaimer

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 Oil. Such statements can generally, but not always, be 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 plans relating to operations are forward-looking statements under applicable securities laws and necessarily involve risks and uncertainties. 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 Oil and its independent evaluator have made, including TAG Oil's most recently filed reports in Canada under National Instrument 51-101, which can be found under TAG Oil's SEDAR profile at www.sedar.com. TAG Oil 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.

Disclosure provided herein in respect of boe (barrels of oil equivalent) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

SOURCE TAG Oil Ltd.