EXPLORATION WORLD
“ 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 .
“ 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
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