Tag Oil's latest Taranaki well has an encouraging amount of oil
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A Canada-based oil and gas exploration company is hailing its latest Taranaki well as an "enormous" success.
TAG Oil's 2000 metre deep Cheal-E8 well in Urenui, North Taranaki, flowed at an average rate of 318 barrel of oil equivalents (boe/d) per day during a recent four day observation.
Chief operation officer Henrik Lundin said that was significantly better than the average flow rate at its other wells, which are between 50 to 120 boe/d.
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"So this well is very encouraging."
Lundin said the discovery was an enormous success for the company as exploration could be risky.
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"There's only a 22 per cent to 30 per cent chance of success when drilling," he said.
It was also the first exploration well at Cheal in almost three years as the price of oil had deterred investments, TAG CEO Toby Pierce said.
"During that time TAG Oil has focused on reducing its commitments and stabilising production from its existing fields while we managed through the period of lower oil prices," he said.
The company said it has a break-even point of US$34 a barrel. The price is currently US$54.
"We are now looking forward to growing aggressively through the drill bit with at least five exploration wells planned for the next 12 months," Pierce said.
The company announced last month an investment of $25.7 million for exploration within Taranaki.
The Cheal-E8 discovery comes three months after a failed drill attempt in Waitoriki at well Supplejack-A2X in February.
"We had no success. It was a dry one," Lundin said