Cheal has 450pc more oil and gas than thought: Tag

Vancouver-based driller Tag Oil Ltd says its Cheal field in Taranaki holds 450 per cent more oil and gas than it had thought.

Last night it told the Toronto Stock Exchange that an independent assessment of reserves on the Cheal permit, at March 31, had assigned net proved and probable reserves remaining of 651,000 barrels of oil, plus associated gas of 258 million cu ft, resulting in a net present value of US$29.43 million ($41.4 million).

The Cheal oil pool at present produces solely from the Mt Messenger formation at an approximate depth of 1800m and the company said in a statement that the increase in value and reserves was based on a number of factors: increased recovery, revised projected future well performance and revised oil price forecast.

The report was completed by Sproule International Limited, one of Canada's largest petroleum engineering consulting companies, and Tag Oil chief executive Garth Johnson said he was pleased with the early increase in proved and probable reserves, given Tag acquired 100 per cent control of the Cheal mining permit only in October 2009.

"More importantly, the strong performance after the fracture treatment of the Cheal A-7 well clearly demonstrates that further increases to flow rates and reserves are possible within ... the Mt Messenger formation."

- NZPA