(received from Cannacord August 31 )
Tag CEO Garth Johnson
DP: Production numbers are currently a lot less than some people had expected. Some of that has to do with wells not being on stream. But if you could give us an update on production numbers and what you foresee for the future…
We were actually quite close to meeting what analysts had projected for Q1 2013 production. We had some delays bringing Sidewinder compression online and this was combined with the need to get the planned artificial lift installation project completed for our Cheal-B5 and B7 wells. In the oil business, sometimes these things do take a little bit longer than anticipated, however if these projects had been completed when first thought we likely would have met or exceeded analyst production estimates in Q1. We have made some personnel changes on the ground recently to oversee these projects and I feel we have upgraded significantly in that regard. Over the past few days, we have produced anywhere from 1500 boepd to 2300 boepd including some flaring that is occurring at Cheal
DP: The reason many people are involved in TAG Oil is still the potential for the shale play. You have found an interesting ally in Apache who works everywhere around the world from Argentina to the United States to wherever, but they don’t expect to start that until next year. Any details about how soon next year?
GJ: We expect to be drilling in Q1 of the 2013 calendar year and we can’t wait. Some investors have asked “Why the delays?” but when you have an exploration play contained within our JV permits with Apache that is comprised of the most prospective lands in the East Coast Basin, a few months “delay” is not significant and the majority of our shareholders have been very supportive and encouraging. A large amount of work is ongoing to prepare for the JV’s activities in 2013 and I feel great about the results I am seeing from those efforts. I feel the work we have done as a JV in recent months will benefit us and all stakeholders for many once we prove the concept of the play in 2013.
DP: Any other items we should know about New Zealand…we know there are environmentalists that are everywhere these days, asking hard questions, but some people joke that the dairy farms create more of a mess than oil and gas ever would…
GJ: Environmentalists are everywhere and that is good as it helps get people engaged in the discussion, to ask questions and to get involved to make sure companies operate to best industry practices. The most vocal opponents of industry in New Zealand are a small group that are not willing to accept the available information related to our industry in order to have a balanced discussion nor are they readily willing to accept that we can’t just turn off the oil and gas taps tomorrow. We are all fully dependent on hydrocarbons in our society and that is not going to change overnight.
We are still enjoying Brent prices over $110 per barrel which is great as we have more oil production coming soon that will have the added benefit of being produced essentially with brand new, efficient infrastructure at Cheal and Sidewinder. We are all confident that oil prices will remain over $100 per barrel being so close to the Chinese economy, even if it’s looking a little weaker.
DP: If you could suggest one stock to watch or be nibbling at these days (other than your own) what would it be?
GJ: In our last interview I believe I picked Africa Oil when it was in or around the $2.00 range that now trades around $9.00 so this time it will have to be Coronado Resources as we wouldn’t have invested in the company if we didn’t think it would have some great growth potential.