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TAG Oil shares tick higher after positive Pukatea-1 well flow test

Last updated: 15:19 26 Mar 2018 EDT, First published: 10:19 26 Mar 2018 EDT

A TAG Oil tank
Pictured is a TAG oil tank

TAG Oil Ltd (TSE:TAO) has unveiled details of a "very encouraging" flow test at the Pukatea-1 well in New Zealand.

Shares in the oil group added over 6% in Toronto to C$0.35.

The test was carried out at the Mount Messenger formation, where 12.9 metres of oil-and-gas-bearing sands were perforated, the company said.

"Over a 12-hour test period using a 24/64ths-inch choke setting, the well flowed at a stabilized rate of approximately 276 barrels of oil equivalent per day (74 per cent oil) without the need for artificial lift," it added in the regulatory filing.

 "This very encouraging flow test paves the way for another potential TAG Oil-operated, high-netback oil field development in New Zealand," said Toby Pierce, Tag's chief executive.

"With TAG Oil's current daily net production at [approximately] 1,297 barrels of oil equivalent and with Brent Oil prices currently over $68 per barrel, we continue to realize solid cash flows as we optimize our Taranaki operations with a view to increase production within our core operating areas."

Pukatea-1 lies in the  Taranaki basin in onshore petroleum exploration permit 51153, in which Tag owns 70%.

The permit also contains the shut-in Puka-2 oil well, which could be monetized upon field development.

The oil produced during the Pukatea-1 flow test has been combined with other oil produced in the area and sold to the market at Brent oil prices, the firm added.

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