Apache has agreed to conduct a multi-phased exploration, appraisal and potential development program within TAG's East Coast Basin exploration permits PEP 38348, PEP 38349 and PEP 50940 ("the Permits"). The Permits comprise in excess of one million prospective acres of onshore oil and gas opportunities located on the southeast portion of the North Island. TAG currently holds a 100% working interest in the properties.
East Coast Basin Map Apache has agreed to pay for a portion of TAG’s direct costs incurred to date, as well as providing TAG a full carry on three phases of operations to a maximum agreed cost in each phase. If the agreed cost is exceeded in any phase, or if additional operations are conducted, Apache will pay a majority share of any drilling or seismic costs in the specified percentages set out in the Agreement.
Each phase of operations will include an aggressive program of both 2D / 3D seismic and drilling with Apache earning an increasing interest in the Permits as follows:
Phase 1: Apache will earn a 50% interest in 5,120 acres of the Permits after operations are conducted and by committing to Phase 2.
Phase 2: Apache will earn a 25% interest in the Permits after operations are conducted and by committing to Phase 3.
Phase 3: Apache will earn a 50% interest in the Permits after operations are conducted and by committing to Phase 4 operations.
Subject to certain conditions, the planned exploration work program will be conducted over the next four years. Seismic operations will start in 2011 with drilling to commence in 2012.
Apache will be the Operator for all activities undertaken pursuant to the Agreement, excluding the initial four vertical wells of the work program that TAG will operate with Apache’s assistance. Apache will spend up to $100 million upon completion of Phase 3 to earn a 50% interest in the Permits. At the end of Phase 3 operations TAG will remain as operator of the Permits. If Apache commits to Phase 4 operations, all costs will then be shared equally between Apache and TAG going forward.
TAG Oil CEO, Garth Johnson, commented,"TAG Oil is excited and honored to partner with Apache in the East Coast Basin to achieve a common goal of converting the potential of the East Coast Basin to proven reserves with integrity, respect and excellence in a safe and environmentally responsible manner. We are planning an aggressive exploration program with Apache with a starting date of September 2011 to initiate seismic acquisition with drilling to begin in early 2012".
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Canadian securities laws. All statements contained in this news release that are not historical facts are forward-looking statements. Forward-looking statements typically contain statements with words such as “anticipate”,“believe”,“plan”,“will”,“may”,“should” or other similar words suggesting future outcomes. In particular, in this press release, all estimates and statements that describe the Company's objectives, goals, or future plans relating to the seismic and drilling program related to the Agreement 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, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, and changes in the regulatory and taxation environment. These forward-looking statements are based on certain factors and assumptions, including factors and assumptions regarding the management’s views on the oil and gas potential in the Permits, the success of any individual phase of the Agreement, Apache’s electing to commit to each phase of the Agreement, and the costs necessary to complete the various phases of the Agreement, and the Company’s ability to share in any cost over-runs relating to each phase of the Agreement. Consequently, the Company's actual results may vary materially from the information provided in this release and there is no representation by TAG Oil (tagoil.com) that actual results realized in the future would be the same in whole or in part as those presented herein.
Additional risk factors and uncertainties that could cause actual results to differ from those contained in the forward-looking statements are set forth in, but are not limited to, filings that the Company and its independent evaluator have made, including the Company's Annual Information Form and its most recent reports in Canada under National Instrument 51-101.
The forward-looking statements contained in this press release are made as of the date hereof and the Company disclaims any obligation to update or revise such statements, except as required by applicable law.