VANCOUVER, Feb. 17, 2015 /PRNewswire/ - TAG Oil Ltd.
(TSX: TAO) and (OTCQX: TAOIF), is pleased to report the third
quarter results for fiscal year ending March
31, 2015. The Company achieved operating revenues of
$12.28 million during the quarter,
and average daily production grew 8% to 1,991 BOE/d (77% oil)
compared to 1,845 BOE/d (78% oil) last quarter.
To see a table of TAG Oil's average daily production and revenue
per quarter, please visit
http://www.tagoil.com/investors/opportunity/growth/
Growing TAG's oil production from its core Taranaki Basin oil
field development area has been – and will continue to be – a
priority, and has been trending consistently upwards for an
extended period of years. TAG's shallow Miocene drilling focus,
which has been substantially de-risked through extensive 3-D
seismic coverage and drilling over the past four years, will help
fuel TAG's reserve-based growth in Taranaki. The Company also
expects growth to come from drilling success on attractive shallow
and deep formation prospects along trend with existing oil and gas
discoveries in Taranaki.
"I commend the TAG Oil team for achieving a good result over the
quarter, while reducing costs and identifying optimization
opportunities," commented Alex
Guidi, TAG Oil Chairman. "Although we are reducing the level
of high-risk capital expenditure, TAG controls a quality, long-term
development-stage asset, producing premium-priced (Brent) light oil
with substantial remaining development, appraisal and exploration
upside in multiple proven producing formations. When oil prices
improve, should markets become more favorable, or should other
opportunities arise, TAG is in position to increase the level of
exploration activity."
Financial and Operating Highlights of Q3 FY15 (March 31 Year End)
- Average net daily production increased by 8% for the quarter
ended December 31, 2014 to 1,991
boe/d (77% oil) from 1,845 boe/d (78% oil) for the quarter ended
September 30, 2014.
- Oil and gas production increased by 7% and 10% respectively,
due to the successful completion of the Cheal-B9, B10 and E6
development drilling, and continued production optimization at the
Cheal E production site.
- Record net oil production volumes were achieved, averaging
1,543 bbl/d for the quarter ended December
31, 2014, which equates to a 44% increase over the same
period last year.
- Average net daily production decreased by 7% for the first nine
months of fiscal year 2015 to 1,863 boe/d (77% oil) from 1,992
boe/d (56% oil) for the same period last year due to lower
Sidewinder gas production.
- At December 31, 2014, the Company
had $31.1 million (December 31, 2013: $68.5
million) in cash and cash equivalents and $32.9 million (December
31, 2013: $71.2 million) in
working capital.
- Revenue increased by 1% for the first nine months of fiscal
year 2015 to $44 million from
$43.5 million over the same period
last year.
- Operating netback increased by 4% for the first nine months of
fiscal year 2015 to $59 per BOE from
$56.62 per BOE over the same period
last year.
- Cashflow provided from operating activities increased by 9% for
the first nine months of fiscal year 2015 to $23.3 million from $21.3
million over the same period last year.
- Net income before taxes decreased by 11% for the first nine
months of fiscal year 2015 to $7.9
million from $8.9 million over
the same period last year.
- The Company was awarded a 100% interest in the Sidewinder North
acreage, extending TAG's Sidewinder gas and oil discovery play area
by an additional 14,725 acres.
SUMMARY OF QUARTERLY INFORMATION
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2015
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2014
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2013
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Canadian $000s,
except per share or boe
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Q3
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Q2
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Q1
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Q4
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Q3
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Q2
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Q1
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Q4
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Net production
volumes (boe/d)
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1,991
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1,845
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1,750
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1,486
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1,527
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2,100
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2,354
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1,691
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Total
revenue
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12,282
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16,179
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15,571
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14,025
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12,939
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15,885
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14,698
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12,298
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Operating
costs
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(5,806)
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(6,213)
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(5,721)
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(5,706)
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(4,653)
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(4,800)
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(4,965)
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(4,056)
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Foreign
exchange
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(344)
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1,206
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(312)
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2,246
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(167)
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(1,012)
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146
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426
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Stock based
compensation
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(586)
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(356)
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(44)
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(175)
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(377)
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(559)
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(938)
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(1,276)
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Other
costs
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(6,490)
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(5,669)
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(5,804)
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(4,562)
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(4,771)
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(7,102)
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(5,420)
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(7,375)
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Net income (loss)
before tax
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(944)
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5,147
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3,690
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5,828
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2,971
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2,412
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3,521
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17
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Basic income
(loss) $ per share (BT)
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(0.01)
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0.08
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0.06
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0.09
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0.05
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0.04
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0.06
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0.00
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Diluted income
(loss) $ per share (BT)
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(0.01)
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0.08
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0.06
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0.09
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0.05
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0.04
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0.06
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0.00
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Capital
expenditures
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16,655
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11,126
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11,370
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22,767
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20,959
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14,466
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12,349
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20,032
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Operating cash
flow (1)
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3,968
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9,702
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7,715
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6,774
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6,101
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8,562
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8,468
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18,136
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(1)
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Operating cash
flow is a non-GAAP measure. It represents cash flow from operating
activities before changes in working capital
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Net Oil and Natural Gas Production, Pricing and
Revenue
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2015
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2015
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2014
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Nine months
ended
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Daily production
volumes (1)
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Q3
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Q2
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Q3
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2015
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2014
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Oil
(bbls/d)
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1,543
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1,437
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1,069
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1,426
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1,118
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Natural gas
(boe/d)
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448
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408
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458
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437
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874
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Combined
(boe/d)
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1,991
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1,845
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1,527
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1,863
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1,992
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% of oil
production
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77%
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78%
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70%
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77%
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56%
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Daily sales volumes
(1)
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Oil
(bbls/d)
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1,536
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1,447
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1,061
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1,422
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1,114
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Natural gas
(boe/d)
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208
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176
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351
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195
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747
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Combined
(boe/d)
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1,744
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1,623
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1,412
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1,617
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1,861
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Natural gas
(mmcf/d)
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1,248
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1,056
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2,106
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1,172
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4,482
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Product
pricing
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Oil
($/bbl)
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77.29
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110.09
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112.74
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100.36
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110.57
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Natural gas
($mcf)
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3.60
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5.32
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5.43
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4.55
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5.50
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Oil and natural gas
revenues (3) - gross
($000s)
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11,333
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15,008
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12,058
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40,717
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40,659
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Oil & natural gas
royalties (2)
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(1,070)
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(1,361)
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(1,398)
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(3,706)
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(4,505)
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Oil and natural gas
revenues - net ($000s)
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10,263
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13,647
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10,660
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37,011
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36,154
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(1)
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Natural gas
production converted at 6 Mcf:1BOE (for BOE figures)
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(2)
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Relates to
government royalties and includes an ORR of 7.5% royalty related to
the acquisition of a 69.5% interest in the Cheal
field
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(3)
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Oil and Gas
Revenue excludes electricity revenue related to Coronado
Resources
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To view a chart of average monthly production broken down by oil
and gas, please go to: http://www.tagoil.com/investors/
Financial Outlook
TAG is a low cost, high netback oil producer that maintains a
strong financial position. The Company anticipates moderate growth
of the company's cash position, production and reserve additions
over the coming quarters as it funds a conservative development
drilling program over its core producing properties. At the
end of the quarter, TAG had a cash position of $31 million with no debt and there are currently
62,597,852 shares outstanding.
TAG Oil: Per
Barrel Operating Netback (CDN$/BOE)
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Q3 Ended
Dec 31,
2014
(actual)
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Q2 Ended
Sept 30, 2014
(actual)
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US$45 Brent oil
pricing case
(estimate)**
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US$55 Brent oil
pricing case
(estimate)**
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US$65 Brent oil
pricing case
(estimate)**
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Revenue
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$71
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$101
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$52
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$63
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$74
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RTSP*
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$30
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$34
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$29
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$30
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$31
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Netback
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$41
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$67
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$23
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$33
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$43
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**
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Brent oil converted
to CDN$ using a foreign exchange rate of
1.1923
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*
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Royalty,
transportation, storage and production costs
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Over many years now, TAG has invested a considerable amount of
capital into high-risk / high-reward exploration expenditure
outside of the Company's Taranaki oil and gas field development
acreage in search of a large new field or major unconventional
frontier discovery. Given that commercial success has not as of yet
been achieved from these capital-intensive exploration efforts, to
adapt to the new oil price environment, TAG anticipates scaling
back the exploration activities that do not meet its risk
tolerance.
As announced in November 2014,
TAG's capital budget for fiscal year 2015 was reduced to
$43 million, however further
reductions are being considered as part of the ongoing review of
capital programs. As recorded in TAG's MD&A, the Company has
capital commitments of just under $76
million over the next twelve months with capital spending
previously budgeted of approximately $85.5
million over the next eighteen months. The capital
expenditure budget has now been amended as follows:
Revised Capital Program (CDN$)
Operation
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Budgeted
commitments*
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Revised
commitments**
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Description of
Revision
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Sidewinder
operations
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$ 4,500,000
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$
Nil
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Partner or
relinquish
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Cheal Development
drilling
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18,000,000
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14,500,000
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Postpone some
work
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Completions and
side-tracks
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Nil
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3,000,000
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In lieu of planned
drilling
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East Coast Basin
drilling
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19,000,000
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Nil
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Partner or
relinquish
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Seismic and other
technical
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5,000,000
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Nil
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Partner or
relinquish
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Kaheru-1
drilling
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20,300,000
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Nil
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Postpone
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Deep Well
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15,700,000
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Nil
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Partner or
relinquish
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Cardiff uphole
test
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3,000,000
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Nil
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Postpone
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Total
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$ 85,500,000
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$ 17,500,000
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**
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The Company has
applied for necessary approvals to alter and/or extend commitments
on certain exploration
properties and in some cases, if approvals are not granted and
suitable joint –venture partnerships are not
concluded, the Company may choose to relinquish the exploration
permit.
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*
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Budgeted commitments
assumes meeting all planned exploration commitments combined with
drilling six
non-committed Taranaki development wells per year.
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Corporate Update
TAG Oil is also pleased to announce that Mr. Brad Holland, a highly experienced oil and gas
engineer, will join the Board of Directors of the Company on
March 1, 2015. He will replace Dr.
Douglas Ellenor whose resignation
for personal reasons will become effective on that date as
well.
Mr. Holland holds a B.Sc. Chemical Engineering degree from the
University of Alberta and has more than
thirty years of experience and expertise in the planning, design
and project management of oil and gas industry projects, which
includes eighteen years as Senior Project Engineer for Saudi
Aramco, a global leader in oil and gas. Over the course of his
career, Mr. Holland has been responsible for the design and
management of multiple oil and gas large diameter pipeline projects
around the world, and he will be an integral addition to TAG Oil's
Board as the Company embarks on the next phase of development.
Effective March 1, 2015, TAG Oil's
Board will consist of Alex Guidi,
Keith Hill, Ken Vidalin and Brad
Holland.
Mr. Guidi commented, "I wish to personally thank Douglas Ellenor for his short but valuable
contribution to TAG, and his positive technical view of TAG's
Taranaki Basin operations. I also welcome Mr. Holland's extensive
engineering and production infrastructure expertise. Along with our
other Board members, we collectively bring many years of oil and
gas, corporate and entrepreneurial experience to TAG.
"Additionally, I would like to note that TAG's outgoing
management, Messrs. Johnson and Cadenhead were integral in
transforming TAG from an exploration-centric company to a
well-heeled development-stage producing company, with a qualified
technical and operational team in place capable of exploiting the
substantial upside potential from TAG's oil and gas assets, which
has left the Company in a favourable position during this current
down cycle to be able to consider new opportunities and strategies
for shareholder growth."
TAG Oil Ltd
TAG Oil Ltd. (http://www.tagoil.com/) is a Canadian-based
development-stage oil and gas company with extensive operations in
New Zealand. With 100% ownership
over its core producing assets, including production infrastructure
and associated pipeline, TAG is managing organic growth and
shareholder value creation through development of its oil and gas
discoveries. As New Zealand's
leading explorer, TAG is focused on increasing reserves and high
netback oil production from low-risk oil field development and
exploration prospects prospective for oil and gas discovery in the
Taranaki region of New
Zealand.
Netbacks:
TAG Oil's netback is the operating margin that it receives from
each BOE sold. The method of calculation that was used to determine
the netbacks that are disclosed in this release were calculated by
subtracting TAG Oil's royalty, transportation, storage and
production costs from its revenues.
BOEs:
TAG Oil has adopted the standard of six thousand cubic feet of
gas to equal one barrel of oil when converting natural gas to
"BOEs." BOEs may be misleading, particularly if used in isolation.
A BOE conversion ratio of 6Mcf: 1 Bbl is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
Cautionary Note Regarding Forward-Looking Statements:
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. Such
statements can be generally, but not always, be identified by words
such as "expects", "plans", "anticipates", "intends", "estimates",
"forecasts", "guidance", "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 objectives, goals, forecasts, guidance,
production rates, test rates, optimization, timing of operations,
increased pace of drilling, statements regarding prospects being
drill ready and/or future plans with respect to the drilling and
field optimization work in the Taranaki Basin are forward-looking
statements under applicable securities laws and necessarily involve
risks and uncertainties including, without limitation: risks
associated with oil and gas exploration, development, exploitation
and production, geological risks, marketing and transportation,
availability of adequate funding, volatility of commodity prices,
environmental risks, competition from other producers, and changes
in the regulatory and taxation environment. 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 would 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 and its independent evaluator have made, including
TAG's most recently filed reports in Canada under NI 51-101, which can be found
under TAG's SEDAR profile at www.sedar.com. TAG 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.
SOURCE TAG Oil Ltd.