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Cheal Partners Inch towards First Production from Permanent Facilities Thursday, 30 November 2006

Neil Ritchie, New Zealand

Operator Austral Pacific Energy and partner TAG Oil are completing their third production well as part of the $NZ25 million ($A22 million) development on the small Cheal oil field in onshore Taranaki, New Zealand. TAG Oil, a Canadian-listed independent, today said the Cheal-B3 well in the licence PMP 38156-01 had reached a total depth of 1927m in shallow Mioceneaged sandstones. After evaluating the wireline logs, the joint venture had agreed to run production casing, to be followed by a program of completion testing after the remaining Cheal wells had been drilled, TAG said. "Cheal B3 looks like another winner, the logs show good-looking hydrocarbon zones in both the Urenui Sands and the main target Mount Messenger Sands," TAG president Drew Cadenhead said.

Drilling the Cheal 1 well, onshore Taranaki Basin, New Zealand.

Cheal-B3, the third of four step-out wells from the Cheal B wellsite, is being directionally drilled to target the Mt Messenger Formation that has already proven productive at the Cheal-A3X and A4 wells. After completing the B wells, the rig will move to the A site to drill two more development wells. First oil from permanent production facilities is expected to be about 1000 barrels of oil per day from early 2007, with full production of about 1900bopd achieved during the second quarter. Following the acquisition of New Zealand privately held company Arrowhead Energy, the Cheal partners' interests will be operator Austral (69.5%) and TAG (30.5%). TAG – in filing second quarter results to September 30 – said that quarter was the first in which it had recorded production revenue from Cheal. TAG's share of revenue amounted to $US234,916 from the sale of 3497 net bbl of oil. Total production for the quarter was 13,918bbl gross (4245bbl net to TAG) at an average of about 150bopd from the temporary production facilities. TAG recorded a $722,322 loss for the second quarter, which included interest income of $216,664 and $130,172 in foreign exchange losses. TAG is one of the largest holders of acreage in New Zealand, with exploration permits totalling 3.69 million gross acres in and around the Canterbury, Taranaki, and East Coast basins.

http://tagoil.com/pdf/2006-11-30-Permanent_PetroleumNews  

http://tagoil.com/pdf/2006-11-30-Permanent_PetroleumNews.pdf

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