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TAG Oil Reports FY2016 ResultsCanada NewsWire VANCOUVER, June 29, 2016 VANCOUVER, June 29, 2016 /CNW/ - TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF) is pleased to report the results for the fiscal year ending March 31, 2016, in which the Company has successfully implemented and adjusted its growth strategy in light of low oil pricing. TAG has preserved capital, reduced costs, substantially strengthened its technical and operating capability, while also maintaining consistent revenue and stable production with a focus on low cost field optimizations. Capital expenditures for FY2016 were cut back significantly as TAG Oil focused on its core producing operations, deferred the majority of its exploration focused capital program, and relinquished several existing permits that had either large commitments or were no longer pertinent to TAG's strategy. Meanwhile, oil and gas production remains relatively stable and above guidance with a current net daily average rate of 1,252 BOE/d (79% Oil) over the previous five days. TAG Oil CEO Toby Pierce commented, "Having completed the first year as TAG's CEO, I am pleased with the milestones we've achieved within our operations responding to a low price environment. During this reporting period, we've scaled back on capital expenditures, withdrawn from high-risk exploration, and focused on de-risking and preserving the long-term value of our core Taranaki Basin assets. Near term operational focus will be on our water-flood implementation program and prioritizing which opportunities to pursue as oil prices improve, such as the development of our recently acquired 70% interest in the Puka permit. We also look forward to TAG's new COO, Henrik Lundin, guiding our operations through the next phase of growth, and bringing strong operational leadership to the Company as we strategically expand. One thing remains unchanged: the hard work and dedication that our staff has shown throughout the year. It's a testament to their character and a strong indication that TAG is in an excellent position for the fiscal 2017 year and beyond. A heartfelt thanks to them, as always." FY2016 FINANCIAL AND OPERATING HIGHLIGHTS
FY2017 OUTLOOK AND GUIDANCE TAG's near-term focus is on low-expenditure, in-field production optimization opportunities, and other necessary activities core to increasing production. In addition, the Company has identified opportunities through an extensive geotechnical and engineering review of TAG's Taranaki development and exploration acreage with a view to initiate further drilling on the Cheal and Sidewinder acreage later in the 2017 fiscal year. TAG's capital budget for FY2017 is CDN$7.6 million, which will be fully funded by forecasted cash flow and existing working capital. The capital budget may be revised to include an additional CDN$4.6 million of discretionary activity that is being continuously reviewed and revised, depending on the results of activities below, economic analysis, and changing economic conditions if oil prices improve materially. The FY2017 capital budget will focus on the following activities:
LOOKING AHEAD TAG's premium pricing for its oil (Brent benchmark), combined with low operating costs, allows for high netbacks, which often results in higher cash flow from production operations than what can be achieved by North American producers. Further, given the excellent fiscal terms in New Zealand, TAG often generates higher operating margins versus some of its international peers. TAG is estimating FY2017 cash flow from operations will be approximately $7.5 million, with production averaging approximately 1,200 barrels of oil equivalent per day (BOE/d: 83% oil). This guidance is based on TAG's planned shallow development wells and existing production; additional success on the Company's current and ongoing exploration programs could have a positive impact on this guidance. This guidance also assumes commodity prices of US$45 per bbl based on Brent pricing and NZ$4.75 per GJ for natural gas. Exchange rates of CDN$1.35 to US$1.00 and CDN$0.91 to NZ$1.00 are assumed. TAG believes that a properly executed development plan, combined with a moderate amount of exploration drilling, will allow for an increase in daily production rates, cash flow, reserves and reserve values during FY2017. Maintaining a high working interest and ownership of all facilities and associated pipeline infrastructure in the Taranaki Basin on TAG's operated Cheal and Sidewinder oil and gas fields ensures the Company can commercialize further discoveries and developments expeditiously, as well as potentially offer third party processing to other companies in the basin. "TAG has established a very strong oil and gas platform for long-term growth, and I'm happy to report that our organization has been notably strengthened corporate wide, financially, technically, and operationally this year, while at the same time, substantially reducing costs across all areas of the business. This makes TAG a much more capital efficient and technically capable company," commented Alex P. Guidi, founder and Chairman of TAG Oil Ltd. "TAG is in a unique position relative to its peers, wielding a strong balance sheet and a low cost production base, allowing us to pursue a "land and expand" strategy, capitalizing on distressed asset sales during low oil prices." "Furthermore, TAG is poised to ramp up production in a higher price environment with a large inventory of de-risked field development locations, step out drilling and attractive high impact exploration prospects in a lightly explored and prolific oil discovery trend. We'll pursue these opportunities as appropriate – and with greater intensity – in an oil price recovery." FY2016 Conference Call Reminder TAG Oil will host a discussion of its Q4 fiscal 2016 financial results on Tuesday, July 5, 2016, at 1:00 pm Pacific Daylight Time. Please call in ten minutes before the conference call starts and stay on the line (an operator will be available to assist you should you have questions of management during the call). In addition, questions can be forwarded by e-mail in advance to info@tagoil.com. Interested parties may access the conference call using the information below:
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