TAG Oil Ltd. announces that the Gisborne District Council has granted TAG consent to drill the Waitangi Valley-1 well (TAG 100%), located in Petroleum Exploration Permit 38348 in the East Coast Basin, New Zealand. Earthwork activities are already underway to build an access road and drilling pad, with construction expected to be fully complete and drilling rig mobilized to the site by the end of June. Waitangi Valley-1 will be drilled to a total depth of 3600 meters, with the well targeting the naturally fractured Waipawa Black Shale and Whangai source rock formations.
The Waipawa and Whangai formations are regarded as high-quality source rocks that compare technically to successful commercial tight-oil plays in North America, such as the Bakken Shale and Eagle Ford discoveries. The potential oil resource in the source rocks on TAG's acreage is significant by world standards, with independent assessments on TAG-controlled lands estimated at an undiscovered resource potential of approximately 14 billion barrels of oil initially-in-place. The mid-range P50 assessment considers approximately 20% of TAG's total land holdings, while the source rocks are interpreted to be widespread and, more importantly, accessible on a much greater area of the Company's 1.5 million acres. The Waitangi Valley-1 well also has significant conventional discovery potential within multiple Miocene-aged formations in an area where oil has already been discovered under significant pressure.
Waitangi Valley-1 will be the first modern deep exploration well drilled in the Waitangi Hill area: The historical Waitangi-1 oil discovery in 1912 produced 50 degree API sweet light crude from an oil reservoir at approximately 300 meters depth1. Geotechnical work done on oil samples taken from the Waitangi-1 well, which still produces live oil to surface today, and nearby oil seeps and oil samples from the five shallow Waitangi Hill wells TAG drilled in 2011, conclusively confirmed the "oil kitchen" is working and the underlying Waipawa and Whangai Formations are the source of this high-quality, movable oil making these naturally fractured oil and gas source rocks a prime unconventional exploration target.
"We are extremely pleased to receive this consent and we thank the Gisborne District Council for their diligence leading to this decision," said Garth Johnson, TAG Oil Ltd. Chief Executive Officer. "The Waitangi Valley well is one of TAG's high priority exploration prospects which was technically validated through work in our previous joint venture with Apache, and therefore we are very excited to drill this well. It is our vision to establish the country's first unconventional oil production and prove commerciality of this potentially very large resource."