TAG Oil is currently horizontal drilling.
With flow results not far off from its first hz well, TAG is entering an exciting and potentially transformative Q4 for itself and its investors.
tl;dr:
TAG Oil is currently drilling out its first ever horizontal well in its pursuit of potentially more than 500 million P50 ooip barrels. With flow rates and initial data coming as soon as November, TAG is on the precipice of a potentially transformative moment for the Company.
(TAO.V; TAOIF)
Intro
I always hesitate to call TAG an exploration company because it really isn’t in the traditional sense. We already know there is oil down there – potentially more than 500+mmb ooip (P50 volumes) of it in just the initial Field Development Plan. The question that remains is if it can be economically extracted. So, let’s agree to call TAG more of a prospective developer.
Regardless though of what you put on the label, what you find in the tin with TAG is awfully exciting. Head over to my introductory article on TAG, or my most recent update on them, to get a more detailed sense of what that all is. Suffice it to say, it is my opinion that TAG is a smart pick to come good on their current exploration and development plans in their BED-1 concession in the Egyptian Western Desert.
Part of the reason I like TAG is their steady approach to the work to be done. The numbers they build their project assumptions on seem conservative in nature. In the Company’s literature and media, they prefer to tout the knowns of their project over hyping its considerable potential. TAG’s CEO, Toby Pierce, similarly is a sharp executive who speaks straightly. TAG has had its nose down working to get BED-1 to this point for over a year. Now, we get to see in the next month or so the results of all that work.
This is because as of Sept. 27, TAG has officially begun drilling the horizontal leg of its first ever hz well - BED-T100. It is expected to take about 3 weeks and extend about 1000 meters. This means, if you account for completing the well, fraccing, and flow testing, there’s a good chance that we might see initial flow rates before the end of the year, or within early Q1 2024.
As TAG advances towards completion of this exciting maiden well (discounting their vertical test), I wanted to give a brief recap of TAG’s recent by highlighting below a few select news updates from the past few weeks:
Note: Substack and X/Twitter are still squabbling so I don’t get properly to embed Tweets. I’ve managed a workaround: You can click through all of the below screengrabs to get to the actual tweet.
1. Sept. 15: FAQ Session Highlight - What’s the biggest risk of the hz well?
TAG shared out a highlight from a recent investor FAQ work from Toby. As you might expect, the primary risk is geological as Toby explains, but there are two little details I think are worth noting:
Toby writes that “we’re likely at around 90% of where I thought the oil deliverability would come at.” Getting oil to surface at a strong rate is the key remaining risk here. 90% of expectations to me signals that TAG has a good chance to deliver on their pre-drill expectations.
The second quote from Toby that caught my eye was when he mentioned that TAG “anticipate[s] natural flow deliverability, which might allow us to exceed what RPS has guided us on the low side.” Again, it is early days here still, but so far, TAG is reporting that they are on track for T100 to meet predrill expectations if things continue successfully.
And if you ask me, that’s an awfully positive sign.
2. Sept. 21: Operations Update - Completion of Vertical Pilot & More
On Sept. 21, Toby provided a live operations update for TAG on Twitter/X. The following are some relevant notes from the less than 10 minute recording.
They have completed the vertical pilot well as of this date and were pulling back to prepare the hz.
T100 remains on time. Will be fraccing T100 by Nov. 1 +/- a week.
No serious issues. A few small mechanical issues.
All geos and drillers are onsite and will have a live operations room.
Expect 3-4 weeks from Sept. 21 (~Oct. 12-19 to be able to provide more guidance).
3. Sept. 27: TAG Commences Horizontal Drilling
6 days after the previous operations update, TAG announced that it had officially “commenced drilling the horizontal section of the T100 well”.
The following is an excerpt from the short news release (emphasis my own):
The open hole logs showed very similar results to those completed over nearby offset wellbores in BED-1. The ARF section was approximately 50 meters in thickness and was very close to the structural elevation anticipated. The horizontal portion of the T100 well will target oil in the ARF unconventional tight, carbonate reservoir. The lateral section of the horizontal well is expected to take approximately three weeks to drill and extend over 1,000 meters. TAG Oil will then move to complete the T100 well and remains on track to be completed and begin flow back testing during November 2023. TAG Oil will provide detailed drilling and completion updates in due course.
So, in point form:
Logs showed very similar results to nearby wells. (This is good.)
The time scale (3 weeks) and size of the hz (1000m+) remain the same. (This is also good.)
The expectation that flow back testing will begin in November.
Which, again, means that we are not long now from results that will give investors a clear picture of just how much potential TAG Oil has in hand with this project.
Conclusion
As I have been harping on lately, timing your entry points is one of the most important skills in this sector. To that end, TAG has had some share price weakness of late (absent of any news) and has entered my own personal buying zone the last couple of days. I like the odds here, especially considering the short turn around to potentially transformative news.
That’s all she wrote for me for today for TAG. Like I say - this one is a favourite. Things just keep progressing. Smart team. Smart project. Lots of upward running room if things go well. Which I believe they will. And not long to find out from here.
Thanks again,
JRI
HI JRI, just wondering if you have any update on this? The stock price has good momentum now, and I believe we're due some news in early May. Still as bullish?