Bro braus tagoil energy oct2015

YOUR PARTNER FOR THE FUTURE For over 35 years, the Tasman group have been a leading provider of equipment and services to the oshore, onshore and geothermal drilling markets.

C O M PA N Y O V E R V I E W Tasman Australia 27 Jackson Street Bassendean WA 6054 Ph: +61 8 9379 2100 infoau@tasmanoiltools.com

IN PARTNERSHIP WITH:

Tasman New Zealand 13 De Havilland Drive West Bell Block, New Plymouth 4312 Ph: +64 6 755 0443 infonz@tasmanoiltools.com

Tasman United Arab Emirates PO Box 262559 Jebel Ali Free Zone, Dubai Ph: +971 4 881 0705 infouae@tasmanoiltools.com

www.tasmanoiltools.com

Tag Oil

Acquiring success

With an established presence throughout New Zealand, TA growth. TAG Oil CEO Toby Pierce discusses how the comp through smart operations and strategic acquisitions.

Written by: Robert Spence Produced by: Vince Kielty

AG Oil is poised for pany plans to do so

Photo credits: Rob Tucker and Robert Earnest 3

C O M PA N Y N A M E

V

ancouver-based TAG Oil continues to thrive in New Zealand as a major gas and oil operator. With a strong production foundation and cashpositive assets, the company has positioned itself—financially and operationally—to deliver shareholder value despite the tough market conditions of the sector.

4 October 2015

With an established presence in New Zealand, TAG Oil is primed to continue its growth trend and begin exploring new possibilities in other territories.

Poised for growth The company’s success is clearly defined through its portfolio of assets in the region.

SECTOR

TAG owns 16 exploration and production permits in the Taranaki Basin, currently operating 10 of those, including its 40 percent interest in shallow water offshore Taranaki, and interests in the East Coast and Canterbury Basins.

“TAG’s East Coast prospects are in the early exploration stages, with vast potential once oil prices recover and

it makes sense to continue there,” said Toby Pierce, chief executive officer and director of TAG Oil. Undergoing more immediate activity is the company’s producing acreage in the main Taranaki production fairway. Assets include the 100 per cent-owned Cheal and Sidewinder oil and gas fields in the onshore Taranaki Basin, the Cardiff w w w. t a g o i l . c o m

5

www.ajg.com.au

“Founded in 1927, Arthur J. Gallagher is a global leader in insurance broking and risk management services, offering specialist expertise in the oil and gas sector both for Operators and Contractors alike.�

Specialist Insurance Brokers for the Oil and Gas Industry

Ryan Mansom National Practice Leader Australia / New Zealand

+61 417 348 091 ryan_mansom@ajg.com

TA G O I L

ENERGY

Deep gas discovery, and the Kaheru Offshore JV. Earlier this year, TAG underwent an extensive geotechnical and engineering review over the Taranaki development and exploration acreage to review the next round of drilling on the Company’s operated Cheal and Sidewinder Exploration and Development acreage.

“We’re still in the primary phase of production in Cheal,“ said Pierce, “despite producing a net daily average of 1,689 barrels of oil equivalent—73 per cent oil—this last quarter. We’re still finding new pockets of oil and gas, and there are many different aspects to implement, from optimizing recovery to infill drilling along known trends, and exploring through multiple producing formations.

There are opportunities for oil there and potential upside.”

SUPPLIER PROFILE

Alex Guidi Founder and Chairman

ARTHUR J. GALLAGHER (AJG)

Arthur J. Gallagher (AJG) is one of the world’s largest insurance brokers. Founded in the United States in 1927, it now employs over 23,000 people and is listed on the New York Stock Exchange. Globally, our insurance broking operation has a presence in over 140 countries.

In Australia and New Zealand, AJG has specialists in the Oil and Gas industry based in Perth providing a high level of expertise in this speciality field. Clients benefit from our ability to draw on international centres of excellence in London, Tokyo, Houston, Calgary and Singapore to access markets and enable us to meet the full range of client needs. Through our global reach and technical specialisation, our specialist team have access to bespoke and exclusive insurance solutions to assist clients.

Website: www.ajg.com.au w w w. t a g o i l . c o m

7

The original Sidewinder gas and oil discovery well drilled in the Taranaki Basin, targeting the Miocene-aged, Mt. Messenger formation. The well is located adjacent to the 60-million barrel Ngatoro/ Kaimiro oil field.

TA G O I L According to Pierce, a particularly prospective project is Cardiff—a deeper gas exploitation with potential to be a very large deposit. “It will likely take some time to approach while we’re being conservative with cash flow, but we could possibly consider bringing in a partner if the conditions were right,” he said.

Along with strong assets, TAG owns and operates a modern production infrastructure and associated pipeline network, linking the gas it produces to the main high capacity pipeline, ensuring direct access to thriving markets in the Taranaki region.

In what other ways can TAG Oil grow? “We have nice footprint in New Zealand, but it’s a relatively small place and we’d like to expand,” said Pierce.

And in a market plagued by high production costs coupled with low commodity prices, TAG Oil is well positioned to take advantage.

If the deal is right Unlike most junior oil and gas companies at the moment, TAG’s model for growth isn’t all through development, but rather through acquisitions as well.

ENERGY

Toby Pierce, Chief Executive Officer & Director

Max Murray, New Zealand Country Manager

“The benefit of growing through acquisitions is a larger and more diverse portfolio. It also provides more access to financing, giving us a wider range of deals to look at.” – CEO Toby Pierce w w w. t a g o i l . c o m

9

Working in partnership with our customers providing safe, efficient and cost effective crane and transport solutions Ian Roebuck Crane Hire Limited are proud to be associated with Tag Oil and Webster Drilling, supplying their crane & trucking requirements for the Drilling Programme throughout New Zealand.

24 HOURS 7 DAYS Office: (06) 758 7259 Fax: (06) 758 1827 105 Corbett Road, R.D. 3, Bell Block, New Plymouth 4312

0800 117 259

www.ianroebuckcranehire.co.nz

YOUR PARTNER FOR THE FUTURE For over 35 years, the Tasman group have been a leading provider of equipment and services to the oshore, onshore and geothermal drilling markets.

Tasman Australia 27 Jackson Street Bassendean WA 6054 Ph: +61 8 9379 2100 infoau@tasmanoiltools.com

Tasman New Zealand 13 De Havilland Drive West Bell Block, New Plymouth 4312 Ph: +64 6 755 0443 infonz@tasmanoiltools.com

Tasman United Arab Emirates PO Box 262559 Jebel Ali Free Zone, Dubai Ph: +971 4 881 0705 infouae@tasmanoiltools.com

www.tasmanoiltools.com

TA G O I L According to Pierce, at today’s oil price levels it can be a more sensible business decision to buy companies or substantial shares in companies, which can be cheaper than developing a new project.

“The way we look at it is with a larger production base, you’ll be self-sustaining cash flow-wise. You reduce your overall G&A; the team employs more individuals, and if you have a larger production base, you can carry a larger team. It gives you benefits and expertise.”

Pierce added, “The other benefit of growing through acquisitions is building a larger and more diverse

ENERGY

portfolio. It also provides more access to financing, giving us a wider range of deals to look at.”

TAG maintains a balanced approach to its portfolio of oil and gas assets, with conventional production as its core focus.

However, the company does consider opportunities wherever they may lie. “If the upside makes sense for us, it’s something we’ll consider,” said Pierce.

According to Pierce, the company’s competitive edge is in its clean balance sheet. “We have no debt, solid cash, and are producing assets with a skilled workforce.

w w w. t a g o i l . c o m

11

TA G O I L

TAG Oil tanks at its Sidewinder production facility in the Taranaki Basin

We’re active, we are aggressive, and in harmony,” said Pierce, “and who we’re looking at a number of things are self-starters. We’re a relatively at the moment.” flat organization, so we need a highly competent, seasoned team Right people in place with a who can keep us nimble. We’re also system that works a diverse, international group.”

Looking behind the scenes, one Another major component to TAG key to TAG’s success has been its Oil is safety. With the right team in workforce. place, the company is committed “We seek the very best skillsets to providing the safest working when recruiting new employees. We conditions along with the highest want people who can work together standard of training.

12 October 2015

ENERGY

“New Zealand has good programs in place for safety but we take it a step further with our safety culture,” said Pierce. “We’re very good on that end and we’re always working to improve. It’s our number one priority.”

Technology also plays a critical role in efficiency and safety. “We’re always looking for new ways to improve both safety and efficiency, and we’re quick to adopt proven technologies.”

One component of having the right people in place is meshing with the culture and community of TAG’s host country of New Zealand. The oil and gas producer strives to play an active but respectful role. “We’re a guest in New Zealand and it’s very important to us that we respect that and give back to our community,” said Pierce.

The company’s grassroots approach to community relations involve sponsoring activities that support safer and healthier communities, enhance the productivity in natural resources, and promote local education opportunities.

“We sponsor students to get actively engaged in science through field trips, educational programs and a scholarship. We also sponsor outdoor activities including swim meets and lifesaving, an annual kids’ athletic competition, a golf club, and the local rugby team,” said Pierce.

“It’s important to us to be part of the community, and these are things we really care about.”

The right pieces are in place, and TAG Oil thinks it’s their time to shine.

Company Information INDUSTRY

Oil & Gas HEADQUARTERS

885 West Georgia Street Suite 2040 Vancouver British Columbia Canada, V6C 3E8 FOUNDED

2002 EMPLOYEES

29 REVENUE

$53.7 million

w w w. t a g o i l . c o m

13

885 West Georgia Street Suite 2040, Vancouver, British Columbia, Canada

T: 1-604-682-6496 www.tagoil.com