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TAG Oil hails another successful operating quarter as it looks to Australian opportunities after Tamarind sale

The most important news, however, is the company's proposed sale of the New Zealand operations, said the CEO

Tag Oil recently announced the planned disposal of its New Zealand assets

Shares in Tag Oil Ltd (TSE:TAO) nudged higher Wednesday as it reported a positive set of second quarter results, which saw net daily output increase by 14%.

The junior oiler "had another successful operating quarter with production up from last quarter and supported by strong commodity prices with Brent Oil averaging over US$75/bbl", noted Toby Pierce, the company's chief executive.

WATCH: Ed Stacey discusses the sale of TAG Oil's New Zealand assets

The most important news, however, was the company's proposed sale of the New Zealand operations, which "provides shareholders with a substantial cash premium above TAG's current value".

"Furthermore, this transaction places TAG in a better position to pursue and focus its attention on other attractive opportunities within its Australian portfolio," he said.

Last week, Tag revealed that it would sell its assets and operations in New Zealand’s Taranaki Basin to Australia-based Tamarind Resources for US$30 million, plus a share of royalties and benchmark payments. The deal is expected to close on March 31 next year.

The average net daily production from across the group assets in the latest three months increased by 14% for the quarter to 1,195 boe/d (80% oil) compared to 1,048 boe/d (79% oil) for the June quarter.

Operating netbacks increased by 7% to C$47.08 per boe (barrel of oil equivalent) compared with $44.16 per boe for the quarter to June 30.

Revenues from oil and gas sales decreased by 13% to $7.9 million from $9.1 million in the previous quarter.

The decline was put down to a decrease in total sales volumes due to high oil inventory levels in the prior quarter, resulting in additional volumes lifted in the first quarter compared to the second in the current financial year.

The firm spent $3 million in the quarter, compared to $1.1 million for the previous quarter.

The company had $3.2 million as at September 30 in cash, compared to $4.8 million as at June 30 and $2.4 million (June 30, 2018: $5.8 million) in working capital.

READ: TAG Oil shares up as it produces 1,311 boepd in August; completes first phase at Cheal

Among the operational highlights of the quarter just gone, the second phase of the planned workover program at the Cheal field began in October this year.

The Cheal-A7 well will be converted to a water injector in the Cheal A pool, which will target the Urenui and Mt. Messenger intervals

There has also been a positive response from the Cheal E waterflood program, with both production and pressure increases having been observed.

TAG is also nearing completion of stage three of its Waitoriki license work commitments.

Interpretation of the recently acquired 20 sq km Waitoriki 2D and 15 sq km 3D merge extension is complete, resulting in the confirmation of structural closure over both Kapuni group prospects.

The sale of TAG's New Zealand assets includes 100% working interests in licenses Cheal and Cardiff, Sidewinder, Supplejack, Puka, Waitoriki and its 70% interest in Cheal East and Cheal East.

Tag Oil shares nudged up 1.37% in Toronto to $0.37.

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