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Copies: TAG Oil Limited (5 copies)
Sproule International Limited (1 copy)
Electronic (1 copy)
Project No.: 3219.70535
Prepared For: Austral Pacific Energy Limited.
Authors: Sunday O. Edobor, P. Eng.
Douglas J. Carsted, P. Geol.Donald W. Wood, P. Eng
Exclusivity: This report has been prepared for the exclusive use of TAG Oil Limited., and
shall not be reproduced, distributed, or made available to any othercompany or person, regulatory body, or organization without the knowledge
and written consent of Sproule International Limited, and without the
complete contents of the report being made available to that party.
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Table of Contents Page 1
Table of Contents
Introduction
Field Operations
Historical Data, Interests and Burdens
Evaluation Standards
Evaluation Procedures
Evaluation Results
BOE Cautionary Statement
Forward-Looking Statements
Exclusivity
Certification
Permit to Practice
Certificates
Summary
Table S-1 Summary of the Evaluation of the P&NG Reserves
of Tag Oil Ltd. in the Cheal Area of New Zealand
(As of December 31, 2008),Before Income Tax
Table S-2 Summary of Selected Price Forecasts
(Effective December 31, 2008)
Table S-3 Summary of Reserves and Net Present Values
Total Proved Plus Probable Plus Possible ReservesBefore Income Tax
Table S-3A Summary of Reserves and Net Present Values
Total Proved Plus Probable Reserves
Before Income Tax
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Table of Contents Page 2
Figure S-1 Map of New Zealand Highlighting
Petroleum Exploration Permit (PEP) 38738
Figure S-2 Daily Company Gross Barrels of Oil Equivalent (BOE) Forecast
Figure S-3 Annual Cash Flow (Before Income Tax)
Figure S-4 Net Present Values (Before Income Tax)
Discussion
General
Geophysics
Geology
Estimation of Reserves and Production Forecasts
Pricing
Operating and Capital Costs
Royalties and TaxesNet Present Values
Table 1 Cheal, New Zealand, Volumetric Reservoir Data and
Estimates of Reserves
Table 2 Cheal, New Zealand, Estimates of Reserves and
Net Present Values
Table 3 Forecasts of Production and Net Revenue
Total Proved Plus Probable Plus Possible Reserves
Table 3A Forecasts of Production and Net Revenue
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Introduction Page 1
Introduction
This report was prepared by Sproule International Limited (Sproule) at the request of Mr.
Garth Johnson, CEO, CFO, Director, Corporate Secretary, Tag Oil Ltd. Tag Oil Ltd. is
hereinafter referred to as "the Company." The effective date of this report is December 31,
2008.
The report consists of an evaluation of the P&NG reserves associated with the Company's
interest in the Cheal Field, New Zealand. It was prepared during the months of December
through February for the purpose of evaluating the Companys P&NG reserves according to
Canadian Oil and Gas Evaluation Handbook (COGEH) reserve definitions that are consistent
with the standards of National Instrument 51-101. This report was prepared for the
Companys corporate purposes.
This one volume report consists of an Introduction, Summary, Discussion and Appendices.
The Introduction includes the summary of the evaluation standards and procedures and
pertinent author certificates; the Summary includes high-level summaries of the evaluation;
and the Discussion includes general commentaries pertaining to the evaluation of the P&NG
reserves. Reserves definitions, abbreviations, units, and conversion factors are included in
Appendices A and B.
Field Operations
In the preparation of this evaluation, a field inspection of the properties was not performed.
The relevant engineering data were made available by the Company or obtained from public
sources and the non-confidential files at Sproule. No material information regarding the
reserves evaluation would have been obtained by an on-site visit.
Historical Data, Interests and Burdens
1 All historical production well data test results capital budgets revenue and expense
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Introduction Page 3
Evaluation Results
1. The accuracy of reserves estimates and associated economic analysis is, in part, a
function of the quality and quantity of available data and of engineering and geological
interpretation and judgment. Given the data provided at the time this report was
prepared, the estimates presented herein are considered reasonable. However, they
should be accepted with the understanding that reservoir and financial performance
subsequent to the date of the estimates may necessitate revision. These revisions may
be material.
2. The net present values of the reserves presented in this report simply represent
discounted future cash flow values at several discount rates. Though net present values
form an integral part of fair market value estimations, without consideration for other
economic criteria, they are not to be construed as Sproules opinion of fair market value.
3. The dollar values presented throughout the report are in United States dollars, unless
otherwise stated.
4. Due to rounding, certain totals may not be consistent from one presentation to the next.
BOE Cautionary Statement
BOEs (or McfGEs or other applicable units of equivalency) may be misleading, particularlyif used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl (or An McfGE conversion ratio of 1
bbl:6 Mcf) is based on an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead.
Forward-Looking Statements
This report may contain forward-looking statements including expectations of future
production revenues and capital expenditures. Information concerning reserves may also be
deemed to be forward-looking as estimates involve the implied assessment that the
reserves described can be profitably produced in future. These statements are based on
current expectations that involve a number of risks and uncertainties, which could cause
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Introduction Page 4
projections relating to production; costs and expenses, and health, safety and
environmental factors), commodity price and exchange rate fluctuation.
Exclusivity
This report has been prepared for the exclusive use of Tag Oil Ltd. It may not be
reproduced, distributed, or made available to any other company or person, regulatory
body, or organization without the knowledge and written consent of Sproule InternationalLimited, and without the complete contents of the report being made available to that party.
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Introduction Page 5
/ /2009 dd/mm/yr
/ /2009 dd/mm/yr
/ /2009 dd/mm/yr
Certification
Report P reparation
The report entitled Evaluation of the P&NG Reserves of Tag Oil Ltd. in the Cheal Area of
New Zealand (As of December 31, 2008) was prepared by the following Sproule personnel:
___________________________________
Donald W. Woods, P.Eng.,Manager, Engineering
Project Leader
___________________________________Sunday O. Edobor, P.Eng.,
Senior Petroleum Engineer
___________________________________
Douglas J. Carsted, P.Geol.Vice-President, Geoscience
Sproule Executive Endorsement
This report has been reviewed and endorsed by the following Executive of Sproule:
___________________________________
John L.Chipperfield, P.Geol.
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Introduction Page 6
Permit to P ractice
Sproule International Limited is a member of the Association of Professional Engineers,
Geologists and Geophysicists of Alberta and our permit number is P6151.
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Introduction Page 7
Certificate
Donald W . Woods, B.Sc. Chemical Engineering, P. Eng.
I, Donald W. Woods, Manager, Engineering, at Sproule International Limited, 900, 140
Fourth Ave SW, Calgary, Alberta, declare the following:
1. I hold the following degrees:a B.Ed. (1973) University of Calgary, Calgary AB, Canada
b. B.Sc. Chemical Engineering (1980) University of Calgary, Calgary AB, Canada
2. I am a registered professional:
a. Professional Engineer (P.Eng.) Province of Alberta, Canada
3. I am a member of the following professional organizations:a. Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA)
b. Petroleum Society of Canadian (PetSoc)
c. Society of Petroleum Engineers (SPE)
d. Society of Petroleum Evaluation Engineers (SPEE)
4. I am a qualified evaluator and auditor as defined in National Instrument 51-101.
5. My contribution to the report entitled Evaluation of the P&NG Reserves of Tag Oil Ltd. in
the Cheal Area of New Zealand (As of December 31, 2008) is based on my engineering
knowledge and the data provided to me by the Company, from public sources, and from
the non-confidential files of Sproule International Limited. I did not undertake a field
inspection of the properties.
6. I have no interest, direct or indirect, nor do I expect to receive any interest, direct or
indirect, in the properties described in the above-named report or in the securities of
Tag Oil Ltd.
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Introduction Page 8
Certificate
Sunday Edobor, B.Sc., P.Eng.
I, Sunday Edobor, Senior Petroleum Engineer of Sproule International Limited, 900, 140
Fourth Ave SW, Calgary, Alberta, declare the following:
1. I hold the following degree:
a. B.Sc. Petroleum Engineering (1986), University of Ibadan, Nigeria
2. I am a registered professional:
a. Professional Engineer (P.Eng.) Province of Alberta, Canada
3. I am a member of the following professional organizations:a. Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA)
4. My contribution to the report entitled Evaluation of the P&NG Reserves of Tag Oil Ltd. in
the Cheal Area of New Zealand (As of December 31, 2008) is based on my engineering
knowledge and the data provided to me by the Company, from public sources, and from
the non-confidential files of Sproule International Limited. I did not undertake a field
inspection of the properties.
5. I have no interest, direct or indirect, nor do I expect to receive any interest, direct or
indirect, in the properties described in the above-named report or in the securities of
Tag Oil Ltd.
Sunday Edobor, P.Eng.
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Introduction Page 9
Certificate
Douglas J . Carsted, B.Sc., P.Geol.
I, Douglas J. Carsted, Vice-President, Geoscience, and Director at Sproule International
Limited, 900, 140 Fourth Ave SW, Calgary, Alberta, declare the following:
1. I hold the following degrees:
a. B.Sc. (Honours) Geology (1982) University of Manitoba, Winnipeg MB, Canada
b. B.Sc. Chemistry (1979) University of Winnipeg, Winnipeg MB, Canada
2. I am a registered professional:
a. Professional Geologist (P.Geol.) Province of Alberta, Canada
3. I am a member of the following professional organizations:
a. Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA)
b. Canadian Society of Petroleum Geologists (CSPG)
c. American Association of Petroleum Geologists (AAPG)
d. Petroleum Society of Canadian (PetSoc)
e. Canadian Well Logging Society (CWLS)
f. Indonesian Petroleum Association, Professional Division (IPA)
4. I am a qualified evaluator and auditor as defined in National Instrument 51-101.
5. My contribution to the report entitled Evaluation of the P&NG Reserves of Tag Oil Ltd. in
the Cheal Area of New Zealand (As of December 31, 2008) is based on my geological
knowledge and the data provided to me by the Company, from public sources, and from
the non-confidential files of Sproule International Limited. I did not undertake a field
inspection of the properties.
6. I have no interest, direct or indirect, nor do I expect to receive any interest, direct or
indirect, in the properties described in the above-named report or in the securities of
Tag Oil Ltd.
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Introduction Page 10
Certificate
John L. Chipperfield, B.Sc., P.Geol.
I, John L. Chipperfield, Senior Vice-President and Director of Sproule International Limited,
900, 140 Fourth Ave SW, Calgary, Alberta, declare the following:
1. I hold the following degree:a. B.Sc. (Honours) Geology (1972) University of Alberta, Edmonton AB, Canada
2. I am a registered professional:
a. Professional Geologist (P.Geol.) Province of Alberta, Canada
3. I am a member of the following professional organizations:
a. Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA)b. Canadian Society of Petroleum Geologists (CSPG)
c. American Association of Petroleum Geologists (AAPG)
d. Petroleum Society of Canadian (PetSoc)
e. Canadian Well Logging Society (CWLS)
f. Ontario Petroleum Institute (OPI)
4. I am a qualified evaluator and auditor as defined in National Instrument 51-101.
5. My contribution to the report entitled Evaluation of the P&NG Reserves of Tag Oil Ltd. in
the Cheal Area of New Zealand (As of December 31, 2008) is based on my geological
knowledge and the data provided to me by the Company, from public sources, and from
the non-confidential files of Sproule International Limited. I did not undertake a field
inspection of the properties.
6. I have no interest, direct or indirect, nor do I expect to receive any interest, direct or
indirect, in the properties described in the above-named report or in the securities of
Tag Oil Ltd.
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Summary - Page 1
Summary
Table S-1, on the following page, summarizes our evaluation of the P&NG reserves
associated with the Companys interest in the Cheal Field, New Zealand. The Company has
informed us that their tax pools exceed the forecasted taxable income from the Cheal
property and therefore, income taxes have not been deducted in this report. The effective
date of the evaluation is December 31, 2008. A map showing the location of the Companys
Petroleum Exploration Permit encompassing the Cheal property is included as Figure S-1.
The reserves were estimated deterministically for the proved, proved plus probable, and
proved plus probable plus possible reserves categories. The oil reserves are presented in
thousands of barrels, at stock tank conditions. The pipeline gas reserves are presented in
millions of cubic feet, at base conditions of 14.65 psia and 60 degrees Fahrenheit.
The reserves definitions and ownership classification used in this evaluation are in
accordance with the standards defined by COGEH reserves definitions and are consistent
with NI 51-101. The net present values of the reserves are presented in thousands of
United States dollars, and are based on annual projections of net revenue, which were
discounted at various rates using the mid-period discounting method. The price forecasts
that formed the basis for the revenue projections in the evaluation were based on Sproules
December 31, 2008 pricing model. Table S-2 presents a summary of the forecasts used.Operating and capital costs were escalated at 2 percent per year as set out in Table S-2.
Well abandonment and disconnect costs were included in this report for wells which have
reserves assigned. No allowances for reclamation or salvage values were made.
Summary forecasts of production and cash flow for the various reserves categories are
included as Tables S-3 through S-3B.
Figures S-2 through S-4 present the results of our evaluation in graphical form.
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Summary - Page 2
Table S-1
Austral Pacific Energy Ltd
Summary of the Evaluation of the Company's P&NG Reserves
In the Cheal Area of New Zealand
(As of December 31, 2008)
Remaining Reserves Net Present ValuesCompany Before Income Taxes (M$)
Gross Gross NetAt
0%
At
5.0%
At
10.0%
At
15.0%
Light/Medium Oil (Mbbl)
Proved 180 55 53 1,315 1,280 1,247 1,216
Probable 315 96 91 3,097 2,871 2,672 2,497
Total (2P) 495 151 144 4,412 4,151 3,919 3,713
Possible 412 126 112 5,415 4,907 4,472 4,096
Total (3P) 907 277 256 9,827 9,058 8,391 7,809
Solution Gas (MMcf) - values included with lt/med oil -
Proved
Probable 350 107 100
Total (2P) 350 107 100
Possible 340 103 92
Total (3P) 690 210 192
GRAND TOTAL (Mboe)
Total Proved 180 55 53 1,315 1,280 1,247 1,216
Total Probable 373 114 108 3,097 2,871 2,672 2,497
Total (2P) 553 169 161 4,412 4,151 3,919 3,713
Total Possible 469 143 127 5,415 4,907 4,472 4,096
Total (P3) 1,022 312 288 9,827 9,058 8,391 7,809
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Summary - Page 3
Table S-2
Summary of Selected Price Forecasts
and Inflation Rate Assumptions
(Effective December 31, 2008)
Year
TAPIS
Malaysia
($US/bbl)
Cheal
Natural Gas (2 )
($US/ Mcf)
Inflation Rate (2 )
(%/Yr)
Historical
2006 70.12 1.5
2007 77.26 22008 104.61 2
Forecast
2009 57.73 1.45 2
2010 67.49 1.45 2
2011 73.69 1.45 2
2012 83.84 1.45 2
2013 96.34 1.45 2
2014 98.26 1.45 2
2015 100.23 1.45 2
2016 102.23 1.45 2
2017 104.28 1.45 2
2018 106.36 1.45 2
2019 108.49 1.45 2
Escalation rate of 2.0% thereafter
(1) Inflation rates for forecasting prices and costs.(2) Gas price was provided by the company
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NZ Economic Summary (Company)TAG 3P (December 31, 2008)
(Nominal values)
NZ Company Economic Indicators::New Zealand R/T (1995)Disc. Rate BT NPV AT NPV BT PIR AT PIR
(%) (M$US) (M$US) (fraction) (fraction)
0 9,827 9,827 3.15 3.15
5.0 9,058 9,058 3.11 3.11
10.0 8,391 8,391 3.06 3.06
15.0 7,809 7,809 3.01 3.01
20.0 7,298 7,298 2.96 2.96
25.0 6,846 6,846 2.90 2.90
AT ROR (%) >800.00
AT Payout (yrs) 0.00
NZComp. Economics (per Unit)::New Zealand R/T (1995)(M$US) (%) ($US/BOE)
Net Revenue 17,763 100.00 61.60
Less:
Bonuses & Fees 0 0.00 0.00
Operating Costs 4,818 27.12 16.71
Tariffs 0 0.00 0.00
Prod & Asset Taxes 0 0.00 0.00
Capital Costs 3,118 17.55 10.81
Other Income/Expense 0 0.00 0.00
Before Tax Cash Flow 9,827 55.33 34.08
Less Income Tax 0 0.00 0.00
After Tax Cash Flow 9,827 55.33 34.08
NZ Prod Summary::New Zealand R/T (1995)
DateOil
/# Wells
Proj.Oil
Rate
Bbl/d
Proj.Oil
Volume
MSTB
Comp.Oil
Volume
MSTB
NetOil
Volume
MSTB
NetOil
Price
$US/Bbl
Proj.Sol'n Gas
Rate
mcf/d
Proj.Sol'n Gas
Volume
MMSCF
Comp.Sol'n Gas
Volume
MMSCF
NetSol'n Gas
Volume
MMSCF
NetSol'n Gas
Price
$US/mcf2009(12)
2010(12)
2011(12)
2012(12)
2013(12)
Total
6.3
8.0
9.0
9.0
9.0
---
751.5
954.9
473.9
215.8
105.0
---
274
349
173
79
32
907
84
106
53
24
10
277
79
101
45
21
10
256
57.73
67.49
73.69
83.84
96.34
---
504.4
763.9
379.1
172.7
84.0
---
184
279
138
63
26
690
56
85
42
19
8
210
52
80
35
17
8
192
1.45
1.48
1.51
1.54
1.57
---
NZ Comp Cash Flow::New Zealand R/T (1995)
DateWI
BOE Rate
BOE/d
WITotal
BOE Prod
MSTB
Price / BOE
$US/Bbl
SalesRevenue
Total
M$US
RoyaltyTotal
M$US
OperatingCosts
M$US
CapitalCosts
M$US
CapitalAband.
Total
M$US
Before TaxCash Flow
M$US
IncomeTaxes
M$US
After TaxCash Flow
M$US2009(12)
2010(12)
2011(12)
2012(12)
2013(12)
Total
255
330
164
75
36
---
93.0
120.5
59.8
27.3
11.0
311.6
52.10
60.74
66.23
75.21
86.26
---
4,922
7,318
3,960
2,054
952
19,205
246
366
591
239
0
1,442
1,102
1,245
978
839
654
4,818
1,761
821
0
0
0
2,583
0
0
0
0
535
535
1,813
4,886
2,390
976
-238
9,827
0
0
0
0
0
0
1,813
4,886
2,390
976
-238
9,827
Table S - 3
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NZ Economic Summary (Company)Tag 2P (December 31, 2008)
(Nominal values)
NZ Company Economic Indicators::New Zealand R/T (1995)Disc. Rate BT NPV AT NPV BT PIR AT PIR
(%) (M$US) (M$US) (fraction) (fraction)
0 4,412 4,412 2.50 2.50
5.0 4,151 4,151 2.48 2.48
10.0 3,919 3,919 2.45 2.45
15.0 3,713 3,713 2.42 2.42
20.0 3,527 3,527 2.39 2.39
25.0 3,360 3,360 2.36 2.36
AT ROR (%) >800.00AT Payout (yrs) 0.00
NZComp. Economics (per Unit)::New Zealand R/T (1995)(M$US) (%) ($US/BOE)
Net Revenue 9,479 100.00 59.10
Less:
Bonuses & Fees 0 0.00 0.00
Operating Costs 3,305 34.86 20.60
Tariffs 0 0.00 0.00
Prod & Asset Taxes 0 0.00 0.00
Capital Costs 1,763 18.59 10.99
Other Income/Expense 0 0.00 0.00
Before Tax Cash Flow 4,412 46.54 27.50
Less Income Tax 0 0.00 0.00
After Tax Cash Flow 4,412 46.54 27.50
NZ Prod Summary::New Zealand R/T (1995)
DateOil
/# Wells
Proj.Oil
Rate
Bbl/d
Proj.Oil
Volume
MSTB
Comp.Oil
Volume
MSTB
NetOil
Volume
MSTB
NetOil
Price
$US/Bbl
Proj.Sol'n Gas
Rate
mcf/d
Proj.Sol'n Gas
Volume
MMSCF
Comp.Sol'n Gas
Volume
MMSCF
NetSol'n Gas
Volume
MMSCF
NetSol'n Gas
Price
$US/mcf2009(12)
2010(12)
2011(12)
2012(12)
Total
6.3
7.6
8.0
8.0
---
623.5
465.1
199.3
101.2
---
228
170
73
25
495
69
52
22
8
151
66
49
21
8
144
57.73
67.49
73.69
83.84
---
374.0
372.1
159.4
81.0
---
137
136
58
20
350
42
41
18
6
107
38
39
17
6
100
1.45
1.45
1.45
1.45
---
NZ Comp Cash Flow::New Zealand R/T (1995)
DateWI
BOE Rate
BOE/d
WITotal
BOE Prod
MSTB
Price / BOE
$US/Bbl
SalesRevenue
Total
M$US
RoyaltyTotal
M$US
OperatingCosts
M$US
CapitalCosts
M$US
CapitalAband.
Total
M$US
Before TaxCash Flow
M$US
IncomeTaxes
M$US
After TaxCash Flow
M$US2009(12)
2010(12)
2011(12)
2012(12)
Total
209
161
69
35
---
76.4
58.7
25.1
8.5
168.7
52.10
60.72
66.18
75.13
---
4,076
3,563
1,664
641
9,944
204
178
83
0
465
1,027
954
812
512
3,305
1,359
0
0
0
1,359
0
0
200
204
404
1,486
2,431
569
-74
4,412
0
0
0
0
0
1,486
2,431
569
-74
4,412
Table S - 3A
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NZ Economic Summary (Company)Tag 1P (December 31, 2008)
(Nominal values)
NZ Company Economic Indicators::New Zealand R/T (1995)Disc. Rate BT NPV AT NPV BT PIR AT PIR
(%) (M$US) (M$US) (fraction) (fraction)
0 1,315 1,315 3.91 3.91
5.0 1,280 1,280 4.10 4.10
10.0 1,247 1,247 4.28 4.28
15.0 1,216 1,216 4.46 4.46
20.0 1,188 1,188 4.65 4.65
25.0 1,161 1,161 4.83 4.83
AT ROR (%) >800.00AT Payout (yrs) 0.00
NZComp. Economics (per Unit)::New Zealand R/T (1995)(M$US) (%) ($US/BOE)
Net Revenue 3,226 100.00 60.81
Less:
Bonuses & Fees 0 0.00 0.00
Operating Costs 1,575 48.81 29.68
Tariffs 0 0.00 0.00
Prod & Asset Taxes 0 0.00 0.00
Capital Costs 336 10.42 6.34
Other Income/Expense 0 0.00 0.00
Before Tax Cash Flow 1,315 40.77 24.80
Less Income Tax 0 0.00 0.00
After Tax Cash Flow 1,315 40.77 24.80
NZ Prod Summary::New Zealand R/T (1995)
DateOil
/# Wells
Proj.Oil
Rate
Bbl/d
Proj.Oil
Volume
MSTB
Comp.Oil
Volume
MSTB
NetOil
Volume
MSTB
NetOil
Price
$US/Bbl
Proj.Sol'n Gas
Rate
mcf/d
Proj.Sol'n Gas
Volume
MMSCF
Comp.Sol'n Gas
Volume
MMSCF
NetSol'n Gas
Volume
MMSCF
NetSol'n Gas
Price
$US/mcf2009(12)
2010(12)
Total
6.0
6.0
---
343.2
164.5
---
125
55
180
38
17
55
36
17
53
57.73
67.49
---
0.0
0.0
---
0
0
0
0
0
0
0
0
0
0.00
0.00
---
NZ Comp Cash Flow::New Zealand R/T (1995)
DateWI
BOE Rate
BOE/d
WITotal
BOE Prod
MSTB
Price / BOE
$US/Bbl
SalesRevenue
Total
M$US
RoyaltyTotal
M$US
OperatingCosts
M$US
CapitalCosts
M$US
CapitalAband.
Total
M$US
Before TaxCash Flow
M$US
IncomeTaxes
M$US
After TaxCash Flow
M$US2009(12)
2010(12)
Total
105
50
---
38.2
16.8
55.0
57.73
67.49
---
2,205
1,131
3,337
110
0
110
864
711
1,575
0
0
0
0
336
336
1,231
85
1,315
0
0
0
1,231
85
1,315
Table S - 3B
Figure S-1
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Figure S 1
2 0 50 0 00 2 1 00 0 00 2 1 50 0 00 2 2 00 0 00 2 2 50 0 00 2 3 00 0 00 2 3 50 0 00 2 4 00 0 00 2 4 50 0 00 2 5 00 0 00 2 5 50 0 00 2 6 00 0 00 2 6 50 0 00 2 7 00 0 00 2 7 50 0 00 2 8 00 0 00 2 8 50 0 00 2 9 00 0 00 2 9 50 0 00 3 0 00 0 00
5200000
5250000
5300000
5350000
5400000
5450000
5500000
5550000
5600000
5650000
5700000
5750000
5800000
5850000
5900000
5950000
6000000
6050000
6100000
6150000
6200000
6250000
6300000
6350000
6400000
6450000
6500000
6550000
6600000
6650000
6700000
Cardiff
Cheal
PEP 3873847.6 square miles
Figure S-2
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Figure S 2
0
50
100
150
200
250
300
350
2009 2010 2011 2012 2013
YEAR
Proved Plus Probable Plus Possile Proved Plus Probable Proved
DAILYEQUIVALENT(BOE)F
ORECASTboep
d
Figure S-3
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g
-1000
0
1000
2000
3000
4000
5000
2009 2010 2011 2012 2013
YEAR
Proved Plus Probable Plus Possile Proved Plus Probable Proved
ANNUAL
CASHFLOW
PROJE
CTIONSM$US
Figure S-4
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0
2000
4000
6000
8000
10000
5 10 15 20 25
DISCOUNT RATES (%)
NETP
RESENT
VAL
UE
-M$US
Proved Plus Probable Plus Possile Proved Plus Probable Proved
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Discussion - Page 1
Discussion
1.0 General
The Companys reserves are associated with the Cheal Field, New Zealand. The field is
located in the onshore portion of the Taranaki Basin, which lies along the west coast of the
North Island (Figure 1). The basin, which contains Cretaceous to Recent sediments, covers
an area of some 32,800 square miles, most of which lies offshore.
The Company owns a 30.5% working interest in the shallow rights of PEP 38738. The
shallow rights include all strata from Recent to base of Miocene, which encompasses the
Intra Urenui and Mt. Messenger reservoirs in the Cheal Field.
The Cheal structure has been penetrated by a total of nine wells, Cheal-1, 2, A3X, A4, A6,
A7, B1, B2 and B3. Eight of these wells encountered oil pay of which six are currently on
production with a cumulative oil volume of 429 Mbbl. The three wells drilled from the B-Padlocation were drilled in 2006 and put on production throughout 2007. An additional well,
Cheal B4, was drilled outside of the current pool boundaries; however, no reserves have
been assigned to this well. Two new wells, Cheal-A6 and A7, were drilled from the A-pad
location. The A6 well and the subsequent sidetrack A6ST1 did not encounter sufficient
reservoir quality sand to be productive and were abandoned. Well A7 intersected oil pay in
the Mt. Messenger 2 Sandstone and was cased as a future producer. Permanent facilities
and gathering systems have been installed and commissioned in the field.
No new data which would allow reserves to be assigned to the Urenui reservoir has been
provided at this time.
2.0 Geophysics
Data Control
Over the past year, no additional seismic data has been acquired over the Cheal Field. Data
from the two new wells resulted in minor changes to the structural interpretation. Figure 2
shows the outline of PEP 38738 and the location of the Cheal Field with respect to the 2D
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Discussion - Page 2
Geophysical Interpretation
Figure 3 presents a perspective view, looking west, of the depth structure on the top of the
Mt. Messenger Sandstone 3, showing the well penetrations and interpreted faults. The main
bounding fault on the western flank of the field is intersected by a series of SSW-NNE
trending splay faults in the vicinity of the field. The magenta colored fault in this figure can
be seen to separate the wells of the A Block (Cheal-1, 2, A3X, A4, A6, A6ST1, and A7) from
those of the B Block (Cheal-B1, B2 and B3).
A multi-layer depth conversion was conducted within Petrel to convert from time to depth
using the well control. Figure 4 shows the well tops and the depth structure at the Mt.
Messenger Sandstone 3. Depth structure maps on Sandstone 3 and Sandstone 2 are
provided in Figures 5 and 6, respectively.
3.0 Geology
Cheal-1 was drilled in 1995 by New Zealand Oil & Gas Services Ltd. Good oil and gas shows
led to the testing of the Urenui Formation. This formation was tested over a nine-day period
at a steady rate of 48 bopd, with gas declining from 2.7 MMscfd to 1.05 MMscfd. The Mt.
Messenger Formation was not tested in this well, although shows and petrophysical analysis
indicate approximately 16 feet of net pay. The Urenui Formation was further tested for 1.2
days in December 2005 at 0.14 MMscfd of gas, with no oil reported.
Cheal-2 was drilled in 1995 by New Zealand Oil & Gas Services Ltd. as a step-out to Cheal-
1. The well was tested over the Intra Urenui Sandstone for a period of 6 days and flowed at
initial rates of 1.8 MMscfd of gas with slugs of oil. The gas rates declined to 0.9 MMscfd
with oil rates of approximately 20 bopd. No water was produced during the test.
Petrophysical analysis indicates that the Mt. Messenger Sandstone is wet in this well and
defines the limits of the pool to the east. The Company plans to convert this well to water
disposal.
Cheal-A3X was drilled in April 2004 to test the hydrocarbon potential of the Intra Urenui and
Mt. Messenger sandstones in an updip position from the Cheal-1 and Cheal-2 wells. This
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Discussion - Page 3
tested from May to August 2005, at an average oil rate of 350 bopd with gas-oil ratios
increasing from 475 to 825 scf/bbl. Water-cuts were less than one percent.
The Company subsequently participated in the drilling of Cheal-A4 in October 2004 to
further evaluate the hydrocarbon potential of the Intra Urenui and Mt. Messenger
sandstones. This well was directionally drilled from the Cheal A pad toward the NE,
intersecting the target horizons approximately halfway between the Cheal A3X well and the
downdip Cheal-2 well. The well was completed in the uppermost Intra Urenui Formation and
the Mt. Messenger Formation. It was tested from the Mt. Messenger Formation fromNovember 2004 to May 2005 and from September 2005 to December 2005. Over this
period, oil production averaged 265 bopd with gas-oil ratios increasing from 500 to 730
scf/bbl. Water-cuts had increased to 24 percent by December 2005. The Urenui Formation
was also tested in April, May, October and November 2005 at gas rates of 0.1 to 1.1 MMscfd
with very little oil.
During October and November 2006, the Company participated in the drilling of three
deviated wells (Cheal-B1, B2 and B3) from the Cheal B pad, approximately 0.8 miles to the
north of the Cheal A pad. All three wells intersected the Mt. Messenger sandstones north of
the northeast-southwest trending fault that transects the field. From petrophysical analysis,
Cheal B-1 and Cheal B-3 intersected the thicker and better quality Mt. Messenger
sandstones. Cheal B-2 encountered only about 6 feet of net pay in the Mt. Messenger
Sandstone 3, but did encounter 16 feet of net pay in the Mt. Messenger Sandstone 2.
During 2008, the Company drilled two new wells, Cheal-A6 and A7. The A6 well did not
encounter reservoir quality sandstone within the Mt. Messenger. It was subsequently
sidetracked towards the south, however, the sidetrack also did not encounter sufficient net
pay to be productive. The A7 well, drilled to the north and east of A6, did encounter
productive Mt. Messenger sandstones. This new well data resulted in changes to the net pay
maps previously drawn using the well data available at the end of 2007, which resulted in a
decrease in OOIP for the field.
The oil-water contact established for the Mt. Messenger Sandstone 3 in the A pad wells is
4,605 feet subsea (-1404m), while the B fault block wells did not encounter an oil-water
contact but established an oil-down-to elevation of 4,592 feet subsea (-1400m). This oil-
Di i P 4
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Discussion - Page 4
reservoir has been classified as probable, because the reservoir has not been tested in the B
fault block, which contains the majority of the in-place oil volumes.
The net pay maps used to estimate the original oil-in-place were generated from a 3D
geological model and are displayed in Figures 7 and 8 for the Mt. Messenger Sandstones 3
and 2, respectively. The location of the Cheal B4 well, shown on Figure 7, is the projected
intersection of the well at the Mt. Messenger Sandstone 3 level. The well did not encounter
a Mt. Messenger 3 sandstone at this location.
4.0 Estimation of Reserves and Production Forecasts
Oil reserves were estimated volumetrically for the Mt. Messenger Formation using
volumetric data from Petrel model and net pay thicknesses based on well logs and seismic
interpretation. Reservoir porosity and water saturation were obtained from well logs.
Eight productive wells have been drilled in the Cheal Field. Six out of the eight wells are
currently on production, with cumulative production of 429 Mbbl. Proved, probable and
possible reserves were assigned to the producing wells. The company plans to fracture
stimulate all six producing wells and this is expected to result in improved oil rate and
incremental reserves. The incremental reserves associated with wells B1 and B3 were
booked as probable. The incremental reserves associated with wells B2, A1, A4 and A7 were
booked in the possible category since the fracturing of these wells depends on the success
of B1 and B3.
Probable and possible reserves were also assigned to two undrilled locations, B4 and B5. A
third location, B7, which will be drilled if B4 and B5 are successful, was assigned possible
reserves.
Recovery factors were estimated to be 8.5 percent in the proved (1P) case, 10 percent in
the proved plus probable (2P) case and 12 percent in the proved plus probable plus possible
(3P) case. These recovery factors are based on the production performance of the existing
wells in the field. These recovery factors are lower than those estimated previously, which
were based on analogue field data and early production results from the Cheal wells.
Discussion Page 5
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Discussion - Page 5
5.0 Pricing
Sproules short-term outlook for oil prices adopts the NYMEX futures market for the forecast
period ending December 31, 2011. The forecast used in this evaluation was derived as of
December 31, 2008, and reflects the arithmetic average of the futures market at the close
of trading each day, for the month prior to the Termination of Trading date for a January
2009 contract. The oil price forecasts are based on the NYMEX Division light, sweet (low-
sulphur) crude oil futures contract, which specifies the West Texas Intermediate crude as a
deliverable. Sproule then applies a historical offset to generate the Tapis forecast.
The NYMEX oil futures prices are the foundation of Sproules energy pricing models in the
early years. This data is combined with Sproules assumptions respecting long-term prices,
inflation rates, and exchange rates, together with estimates of transportation costs and
prices of competing fuels, to forecast wellhead prices for oil production. The following
paragraphs briefly describe some of the key considerations included in Sproules long-term
outlook for oil price forecasts.
In the long term, the price of oil will be governed by supply and demand, and the degree
that OPEC is able to manage supply will be a major determinant in establishing oil prices in
the future. Crude oil demand, world economy conditions and the cost of exploration and
development generally served to determine the price of crude oil throughout the world. In
recognition of these factors, Sproule's long-term forecast for Tapis has been set at $US 89
per barrel (2009 dollars).
The oil price forecasts are based on a forecast of prices for Tapis crude. The actual wellhead
price of oil will vary with the quality of the crude and the cost of the transportation from the
wellhead to the delivery point. The Company instructed us to use the Sproule Tapis
(Malaysia) crude price forecast in the evaluation without an offset for quality or
transportation.
Discussion - Page 6
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Discussion - Page 6
6.0 Operating and Capital Costs
The Company provided estimates of capital investments and operating expenses required to
continue development and operation of the field. A fixed costs of US$ 181,500 per month
and variable costs of US$ 5.24 per barrel, which include trucking, shipping and handling,
were used in the evaluation.
The capital costs used in the evaluation are summarized below. All wells are scheduled to be
fracture stimulated at a cost of US$ 220,000 per well. Three wells are scheduled to bedrilled and completed at a total cost of US$ 6.44MM.
Well abandonment and disconnect costs of US$ 180,000 per well was used. No allowances
for reclamation or salvage values were made.
Capital Costs US$M (2009 Dollars)
Probable Possible
Date FracNewDrill Frac
NewDrill Comments
March 2009 440 440 Frac B1 and B3
June 2009 1,595 1,595 Drill & tie in B4
July 2009 1,100
Frac A3, A4, A7, B2 andB4, if B1& B3 fracs are
successfulOctober 2009 2,420 2,420 Drill & tie in B5
November 2009 220 Frac B5
February 2010 2,420 Drill & tie in B6
March 2010 220 Frac B6
Total 440 4,015 1980 6,435
Operating and capital costs were escalated at 2.0 percent per year.
7.0 Royalties and Taxes
The Companys tax pool of 5 7 million US Dollars was included as input to this evaluation;
Discussion - Page 7
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Discussion Page 7
any given year. The AVR is calculated at five percent of the net sales price received. The
APR is a mechanism whereby the resource owner receives a share of profits once allsignificant costs have been recovered by the producer. It is payable on the net accumulated
accounting profit of production from a petroleum field. In calculating the accounting profit,
deductions are made and may include associated production costs, capital costs (exploration
costs, development costs, permit acquisition costs and feasibility costs), indirect costs,
abandonment costs, operating and capital overhead allowance, operating costs and capital
costs carried forward and abandonment costs carried back. The APR royalty was calculated
from forecasts of cash flow. A Net Allowable Deduction in the sum of 6.7 million US$ or 12New Zealand Dollars was carried forward from 2008. This deduction was used in the Royalty
calculations. This resulted in an AVR Royalty regime for the 1P, 2P and for the first two
years in the 3P case. The APR Royalty Regime was then applied for the third and fourth
year in the 3P case.
8.0 Net Present Values
The estimates of the P&NG reserves and their respective net present values, summarized by
reserves category, are presented in Tables 1 and 2. Detailed forecasts of production and
cash flow are presented in Tables 3 to 3B. Well abandonment and disconnect costs were
included for wells which have reserves assigned. No allowances for reclamation or salvage
values were made.
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(ac) (ft) (%) (%) RB/STB Mbbls % Mbbls
Cheal A Block*
Proved Lands
Mount Messenger 3
PDP 211 18.8 23 37 1.22 3,663
2P 211 18.8 23 37 1.22 3,663
3P 211 18.8 23 37 1.22 3,663
Mount Messenger 2
PDP 96 9.8 21 46 1.22 684
2P 96 9.8 21 46 1.22 684
3P 96 9.8 21 46 1.22 684
Cheal B Block**
Proved Lands
Mount Messenger 3
PDP 128 23.9 23 37 1.22 2,8232P 128 23.9 23 37 1.22 2,823
3P 128 23.9 23 37 1.22 2,823
Mount Messenger 2
PDP 85 9.5 21 46 1.22 551
2P 85 9.5 21 46 1.22 551
3P 85 9.5 21 46 1.22 551
Probable Lands
Mount Messenger 3
2P 88 22.57 23 37 1.22 1,830
3P 88 22.57 23 37 1.22 1,830Possible Lands
Mount Messenger 3
3P 86 17.89 23 37 1.22 1,422
Mount Messenger 2
3P 54 7.04 21 46 1.22 294
Field Total
Proved Developed Producing 520 16.90 22 40 1.22 7,720 8.5 656
Proved + Probable 608 17.70 22 40 1.22 9,550 10 955Proved + Probable + Possible 748 15.70 22 40 1.22 11,266 12 1,352
* Cheal A3, A4 and A7 producing wells, commingled in the MM2 and MM3 zones.
**Cheal B1, B2 and B3 producing wells, commingled in the MM2 and MM3 zones. Undriilled locations B4, B5 and B6.
Table 1
Cheal, New Zealand
Volumetric Reservoir Data and Estimates of Reserves
(As of December 31, 2008)
Pool/Location
Drainage
AreaNet Pay Porosity
Original
Recoverable Oil
Water
Saturation
Oil
FVF
Original Oil
In Place
Recovery
Factor
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Mbbls % Mbbls Mbbls Mbbls (%) Mbbls (%) Mbbls 0% 5% 10% 15% 20%
Cheal A Block*
Proved Lands
Mount Messenger 3
PDP 3,663
2P 3,663
3P 3,663
Mount Messenger 2
PDP 684
2P 684
3P 684
Cheal B Block**
Proved Lands
Mount Messenger 3
PDP 2,823
2P 2,823
3P 2,823
Mount Messenger 2
PDP 551
2P 551
3P 551
Probable Lands
Mount Messenger 3
2P 1,830
3P 1,830
Possible Lands
Mount Messenger 3
3P 1,422
Mount Messenger 2
3P 294
Field Total
Proved Developed Producing 7,720 8.5 656 429 227 180 69.5 55 AVR/APR 53 1,315 1,280 1,247 1,216 1,188
Proved + Probable 9,550 10 955 429 526 495 69.5 151 AVR/APR 144 4,412 4,151 3,919 3,713 3,527
Proved + Probable + Possible 11,266 12 1,352 429 923 907 69.5 277 AVR/APR 256 9,827 9,058 8,391 7,809 7,298
* Cheal A3, A4 and A7 producing wells, commingled in the MM2 and MM3 zones.
**Cheal B1, B2 and B3 producing wells, commingled in the MM2 and MM3 zones. Undriilled locations B4, B5 and B6.
Company
Net
OilRecoves
Recovery
Factor
Company
WorkingInterest
Company
Gross
(Economic)Oil Reserves
Lessor
Royaltiesand Burden
Total Field
Economic
Reserves(100%)
Original Oil
In Place
Net Present Values
Before Taxes(USM$)
Table 2Cheal, New Zealand
Estimates of Reserves and Net Present Values(As of December 31, 2008)
Cum Prod
Oil to Dec.31, 2008
Total Field
Technical
Reserves(100%Pool/Location
Original
RecoverableOil
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scf/bbl MMcf (%) MMcf (%) Mbbls 0% 5% 10% 15% 20%
Cheal A Block*
Proved Lands
Mount Messenger 3
PDP
2P
3P
Mount Messenger 2PDP
2P
3P
Cheal B Block**
Proved Lands
Mount Messenger 3
PDP
2P
3P
Mount Messenger 2
PDP
2P3P
Probable Lands
Mount Messenger 3
2P
3P
Possible Lands
Mount Messenger 3
3P
Mount Messenger 2
3P
Field Total
Proved Developed Producing No sales Gas booked for the PDP category
Proved + Probable 350 69.5 107 AVR/APR 100 Values included with Oil Reserves
Proved + Probable + Possible 690 69.5 210 AVR/APR 192 Values included with Oil Reserves
* Cheal A3, A4 and A7 producing wells, commingled in the MM2 and MM3 zones.
**Cheal B1, B2 and B3 producing wells, commingled in the MM2 and MM3 zones. Undriilled locations B4, B5 and B6.
Table 2Cheal, New Zealand
Estimates of Reserves and Net Present Values(As of December 31, 2008)
Net Present Values
Before TaxesPool/Location
Producing Gas
Oil Ratio
Tota Field
Economic GasReserves
(100%)
CompanyWorking
Interest
Producing
GORof 800
scf/bbl
CompanyEconomic Gas
Reserves
LessorRoyalties and
Burden
CompanyNet
Gas
Recoves
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NZ Economic Summary (Company)TAG 3P (December 31, 2008)
(Nominal values)
NZ Company Economic Indicators::New Zealand R/T (1995)Disc. Rate BT NPV AT NPV BT PIR AT PIR
(%) (M$US) (M$US) (fraction) (fraction)
0 9,827 9,827 3.15 3.15
5.0 9,058 9,058 3.11 3.11
10.0 8,391 8,391 3.06 3.06
15.0 7,809 7,809 3.01 3.01
20.0 7,298 7,298 2.96 2.96
25.0 6,846 6,846 2.90 2.90
AT ROR (%) >800.00AT Payout (yrs) 0.00
NZComp. Economics (per Unit)::New Zealand R/T (1995)(M$US) (%) ($US/BOE)
Net Revenue 17,763 100.00 61.60
Less:
Bonuses & Fees 0 0.00 0.00
Operating Costs 4,818 27.12 16.71
Tariffs 0 0.00 0.00
Prod & Asset Taxes 0 0.00 0.00
Capital Costs 3,118 17.55 10.81
Other Income/Expense 0 0.00 0.00
Before Tax Cash Flow 9,827 55.33 34.08
Less Income Tax 0 0.00 0.00
After Tax Cash Flow 9,827 55.33 34.08
NZ Prod Summary::New Zealand R/T (1995)
DateOil
/# Wells
Proj.Oil
Rate
Bbl/d
Proj.Oil
Volume
MSTB
Comp.Oil
Volume
MSTB
NetOil
Volume
MSTB
NetOil
Price
$US/Bbl
Proj.Sol'n Gas
Rate
mcf/d
Proj.Sol'n Gas
Volume
MMSCF
Comp.Sol'n Gas
Volume
MMSCF
NetSol'n Gas
Volume
MMSCF
NetSol'n Gas
Price
$US/mcf2009(12)
2010(12)
2011(12)
2012(12)
2013(12)
Total
6.3
8.0
9.0
9.0
9.0
---
751.5
954.9
473.9
215.8
105.0
---
274
349
173
79
32
907
84
106
53
24
10
277
79
101
45
21
10
256
57.73
67.49
73.69
83.84
96.34
---
504.4
763.9
379.1
172.7
84.0
---
184
279
138
63
26
690
56
85
42
19
8
210
52
80
35
17
8
192
1.45
1.48
1.51
1.54
1.57
---
NZ Comp Cash Flow::New Zealand R/T (1995)
DateWI
BOE Rate
BOE/d
WI
TotalBOE Prod
MSTB
Price / BOE
$US/Bbl
Sales
RevenueTotal
M$US
RoyaltyTotal
M$US
OperatingCosts
M$US
CapitalCosts
M$US
Capital
Aband.Total
M$US
Before TaxCash Flow
M$US
IncomeTaxes
M$US
After TaxCash Flow
M$US2009(12)
2010(12)
2011(12)
2012(12)
2013(12)
Total
255
330
164
75
36
---
93.0
120.5
59.8
27.3
11.0
311.6
52.10
60.74
66.23
75.21
86.26
---
4,922
7,318
3,960
2,054
952
19,205
246
366
591
239
0
1,442
1,102
1,245
978
839
654
4,818
1,761
821
0
0
0
2,583
0
0
0
0
535
535
1,813
4,886
2,390
976
-238
9,827
0
0
0
0
0
0
1,813
4,886
2,390
976
-238
9,827
Table 3
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NZ Economic Summary (Company)Tag 2P (December 31, 2008)
(Nominal values)
NZ Company Economic Indicators::New Zealand R/T (1995)Disc. Rate BT NPV AT NPV BT PIR AT PIR
(%) (M$US) (M$US) (fraction) (fraction)
0 4,412 4,412 2.50 2.50
5.0 4,151 4,151 2.48 2.48
10.0 3,919 3,919 2.45 2.45
15.0 3,713 3,713 2.42 2.42
20.0 3,527 3,527 2.39 2.39
25.0 3,360 3,360 2.36 2.36
AT ROR (%) >800.00AT Payout (yrs) 0.00
NZComp. Economics (per Unit)::New Zealand R/T (1995)(M$US) (%) ($US/BOE)
Net Revenue 9,479 100.00 59.10
Less:
Bonuses & Fees 0 0.00 0.00
Operating Costs 3,305 34.86 20.60
Tariffs 0 0.00 0.00
Prod & Asset Taxes 0 0.00 0.00
Capital Costs 1,763 18.59 10.99
Other Income/Expense 0 0.00 0.00
Before Tax Cash Flow 4,412 46.54 27.50
Less Income Tax 0 0.00 0.00
After Tax Cash Flow 4,412 46.54 27.50
NZ Prod Summary::New Zealand R/T (1995)
DateOil
/# Wells
Proj.Oil
Rate
Bbl/d
Proj.Oil
Volume
MSTB
Comp.Oil
Volume
MSTB
NetOil
Volume
MSTB
NetOil
Price
$US/Bbl
Proj.Sol'n Gas
Rate
mcf/d
Proj.Sol'n Gas
Volume
MMSCF
Comp.Sol'n Gas
Volume
MMSCF
NetSol'n Gas
Volume
MMSCF
NetSol'n Gas
Price
$US/mcf2009(12)
2010(12)
2011(12)
2012(12)
Total
6.3
7.6
8.0
8.0
---
623.5
465.1
199.3
101.2
---
228
170
73
25
495
69
52
22
8
151
66
49
21
8
144
57.73
67.49
73.69
83.84
---
374.0
372.1
159.4
81.0
---
137
136
58
20
350
42
41
18
6
107
38
39
17
6
100
1.45
1.45
1.45
1.45
---
NZ Comp Cash Flow::New Zealand R/T (1995)
Date
WI
BOE RateBOE/d
WITotal
BOE ProdMSTB
Price / BOE$US/Bbl
SalesRevenue
TotalM$US
Royalty
TotalM$US
Operating
CostsM$US
Capital
CostsM$US
CapitalAband.
TotalM$US
Before Tax
Cash FlowM$US
Income
TaxesM$US
After Tax
Cash FlowM$US
2009(12)
2010(12)
2011(12)
2012(12)
Total
209
161
69
35
---
76.4
58.7
25.1
8.5
168.7
52.10
60.72
66.18
75.13
---
4,076
3,563
1,664
641
9,944
204
178
83
0
465
1,027
954
812
512
3,305
1,359
0
0
0
1,359
0
0
200
204
404
1,486
2,431
569
-74
4,412
0
0
0
0
0
1,486
2,431
569
-74
4,412
Table 3A
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Comp Royalty TotalTag 2P (December 31, 2008)
(Nominal values)
DateRoyalty
AVR
M$US
RoyaltyAPR
M$US
RoyaltyTotal
(Max)
M$US
SalesRevSplit
Oil/Total
%
RoyaltyOil
M$US
SalesRevSplit
Gas/Total
%
RoyaltyGas
M$US
SalesRevSplit
NGL/Total
%
RoyaltyNGL
M$US2009(12)
2010(12)
2011(12)
2012(12)
Total
204
178
83
0
465
0
0
0
0
0
204
178
83
0
465
98.50
98.09
98.24
98.45
---
199
175
82
0
456
1.50
1.91
1.76
1.55
---
5
3
1
0
9
0.00
0.00
0.00
0.00
---
0
0
0
0
0
Table 3A
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NZ Economic Summary (Company)Tag 1P (December 31, 2008)
(Nominal values)
NZ Company Economic Indicators::New Zealand R/T (1995)Disc. Rate BT NPV AT NPV BT PIR AT PIR
(%) (M$US) (M$US) (fraction) (fraction)
0 1,315 1,315 3.91 3.91
5.0 1,280 1,280 4.10 4.10
10.0 1,247 1,247 4.28 4.28
15.0 1,216 1,216 4.46 4.46
20.0 1,188 1,188 4.65 4.65
25.0 1,161 1,161 4.83 4.83
AT ROR (%) >800.00AT Payout (yrs) 0.00
NZComp. Economics (per Unit)::New Zealand R/T (1995)(M$US) (%) ($US/BOE)
Net Revenue 3,226 100.00 60.81
Less:
Bonuses & Fees 0 0.00 0.00
Operating Costs 1,575 48.81 29.68
Tariffs 0 0.00 0.00
Prod & Asset Taxes 0 0.00 0.00
Capital Costs 336 10.42 6.34
Other Income/Expense 0 0.00 0.00
Before Tax Cash Flow 1,315 40.77 24.80
Less Income Tax 0 0.00 0.00
After Tax Cash Flow 1,315 40.77 24.80
NZ Prod Summary::New Zealand R/T (1995)
DateOil
/# Wells
Proj.Oil
Rate
Bbl/d
Proj.Oil
Volume
MSTB
Comp.Oil
Volume
MSTB
NetOil
Volume
MSTB
NetOil
Price
$US/Bbl
Proj.Sol'n Gas
Rate
mcf/d
Proj.Sol'n Gas
Volume
MMSCF
Comp.Sol'n Gas
Volume
MMSCF
NetSol'n Gas
Volume
MMSCF
NetSol'n Gas
Price
$US/mcf2009(12)2010(12)
Total
6.06.0
---
343.2164.5
---
12555
180
3817
55
3617
53
57.7367.49
---
0.00.0
---
00
0
00
0
00
0
0.000.00
---
NZ Comp Cash Flow::New Zealand R/T (1995)
DateWI
BOE Rate
BOE/d
WITotal
BOE Prod
MSTB
Price / BOE
$US/Bbl
SalesRevenue
Total
M$US
RoyaltyTotal
M$US
OperatingCosts
M$US
CapitalCosts
M$US
CapitalAband.
Total
M$US
Before TaxCash Flow
M$US
IncomeTaxes
M$US
After TaxCash Flow
M$US
2009(12)2010(12)
Total
10550
---
38.216.8
55.0
57.7367.49
---
2,2051,131
3,337
1100
110
864711
1,575
00
0
0336
336
1,23185
1,315
00
0
1,23185
1,315
Table 3B
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Figure 1
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2 0 50 0 00 2 1 00 0 00 2 1 50 0 00 2 2 00 0 00 2 2 50 0 00 2 3 00 0 00 2 3 50 0 00 2 4 00 0 00 2 4 50 0 00 2 5 00 0 00 2 5 50 0 00 2 6 00 0 00 2 6 50 0 00 2 7 00 0 00 2 7 50 0 00 2 8 00 0 00 2 8 50 0 00 2 9 00 0 00 2 9 50 0 00 3 0 00 0 00
5200000
5250000
5300000
5350000
5400000
5450000
5500000
5550000
5600000
5650000
5700000
5750000
5800000
5850000
5900000
5950000
6000000
6050000
6100000
6150000
6200000
6250000
6300000
6350000
6400000
6450000
6500000
6550000
6600000
6650000
6700000
Cardiff
Cheal
PEP 38738
47.6 square miles
Figure 2
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3D seismic
PEP 38738
Stratford-1 well
Cardiff Field
Cheal Field
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Figure
370535
Cheal Field-Depth Structure at Sandstone 3 with Fault Framework Interpreted by Sproule
Need updated graph
Block ABlock B
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Fig
ure
470535
Cheal Field-Depth Structure at Sandstone 3 with Well Tops
Need updated graph
Well
Tops
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Fig
ure
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Cheal Field Mt. Messenger Sandstone 3 Depth Structure Map
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Fig
ure
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Cheal Field Mt. Messenger Sandstone 2 Depth Structure Map
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Fig
ure
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Cheal Field Mt. Messenger Sandstone 3 Net pay Map
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Fig
ure
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Cheal Field Mt. Messenger Sandstone 2 Net pay Map
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Fig
ure
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Figu
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10
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Figu
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Figu
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