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Market: TSX-V
Sector: Oil & Gas Exploration & Production
EPIC: TAO
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Tag Oil
www.tagoil.com
TAG Oil Ltd. is a rapidly growing, profitable oil and gas producer with high impact exploration activities in New Zealand.
Full Tag Oil profile here
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Tag Oil inks deal for Apache to conduct exploration on New Zealand assets

2nd Sep 2011, 2:14 pm by Brad Lemaire
Tag Oil inks deal for Apache to conduct exploration on New Zealand assets

Vancouver-based Tag Oil (TSE:TAO) reported Friday it has signed a farmout agreement for Apache (NYSE:APA) to explore and develop its oil and natural gas permits in the East Coast Basin, New Zealand.

Under the agreement, energy company Apache will conduct a multi-phased exploration, appraisal and development program within TAG's East Coast Basin exploration permits, which comprise more than one million prospective acres of onshore oil and gas opportunities.

TAG currently holds a 100% working interest in the properties.

Apache has agreed to pay a portion of Tag’s direct costs it has incurred so far, as well as provide Tag a full carry on three phases of operations to a maximum agreed cost in each phase.

Further, Apache will pay a majority share of any drilling or seismic costs if the agreed price is exceeded in any phase, or if more operations are conducted.

Operational phases will include an aggressive program of both 2-D and 3-D seismic, and drilling, with Apache’s stake in the property increasing after each phase, said Tag. Apache will have spent up to $100 million upon completion of phase three to earn a 50% interest in the permits.

Tag Oil said the planned exploration work program will be carried-out over the next four years, with seismic operations slated to start this September and drilling to begin early 2012.

Apache will be the operator for all activities during the campaign, excluding the initial four vertical wells of the work program, after which Tag will take over. If Apache commits to a fourth phase, all costs will be shared equally between the two companies going forward, they said.

"Tag Oil is excited to partner with Apache to convert the potential of the East Coast Basin to proven reserves with integrity, respect and excellence in a safe and environmentally responsible manner,” said Tag CEO, Garth Johnson, in a statement.

Tag Oil is an oil and gas producer and explorer, with assets consisting of more than 2.4 million acres of land onshore in the Taranaki and East Coast Basin of New Zealand. The company runs offices in New Zealand and Canada.

The Vancouver-based company’s stock climbed 56 cents, or 7.88%, to $7.67 Friday afternoon on the Toronto Stock Exchange, while Apache Corp’s shares were down 3.02% to $98.70.

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