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Tag plans Taranaki spending spree

Canadian company Tag Oil has announced a C$66 million (US$66 million) capital expenditure program to boost reserves and production at its Cheal and Sidewinder fields in New Zealand’s onshore Taranaki basin.

Tag said the money would be spent to continue exploration and development drilling on the fields, targeting shallow oil prone zones at about 2000 metres and deeper liquids-rich gas prospects at about 4000 metres.

It also plans to carry out workover operations to existing wells and expand production infrastructure to allow additional output from new discoveries to be brought onstream.

“Tag's substantial growth over the past year has prompted this new capital expenditure program, which is the largest in the history of our company,” chief executive Garth Johnson said.

“Our excellent drilling success has surpassed our infrastructure capabilities and the investment into expanding our infrastructure will allow us to bring all of our current production on stream, as well as provide commercialization of all future discoveries without delay.”

The company is expecting to spud 11 shallow wells across both the Cheal and Sidewinder fields  between now and the end of March next year.

Tag said it had also identified two deep liquids-rich gas targets in the Kapuni formation using existing 3D data which had an undiscovered resources potential of about 500 billion cubic feet of gas and roughly 20 million barrels of condensate.

The Canadian company plans to drill a well targeting the Hellfire prospect on the Sidewinder field in the second half of the year.

Hellfire is a structural high in the Kapuni formation and covers a 10 square kilometre area on a broad regional trend that runs directly beneath Tag's new Sidewinder production facility.

On the second prospect, Cardiff, Tag plans to re-enter the Cardiff-2A well which flowed both gas and condensate during testing.

The company will drill a new horizontal whipstock section which it said would use the top hole section of the historical Cardiff wellbore and provide “hundreds of meters of potential pay zone penetration”, compared to the roughly 20 meters of vertical gas and condensate pay in the original well.

Tag said its capital expenditure program would be funded from existing working capital and revenue from current production.