Sidewinder hits target

Thursday, 30 September 2010 Neil Ritchie, New Zealand

NEW Zealand-focused Canadian junior TAG Oil has struck oil with its shallow Sidewinder-1 well, the companys first true exploration effort in onshore Taranaki for several years.
We have got a beauty that looks really encouraging, TAG chief operating officer Drew Cadenhead told PetroleumNews.net this morning. All the indications look very promising but we will not really celebrate until we perforate. Sidewinder-1, in TAG's 100%-controlled Broadside exploration lease PEP 38748, reached a target depth of 1601m on Tuesday morning, and logging indicated the well had encountered a 22m interval (gross) of oil-bearing sandstones across 50 metres of sandstones and shales.

The NRG Rover rig drilling TAG Oil's Sidewinder-1 well

Cadenhead, who has worked with the complex onshore Taranaki Basin geology for several years, said 14m of the pay in the Miocene-aged Mount Messenger sandstones should have movable oil and added the shows were among the best he had seen. Electric logs indicated excellent reservoir qualities, with average porosities of 22.5% and oil saturations of 60%. "We are extremely pleased to achieve oil pay in excess of what we had anticipated; these results also increase the likelihood of additional discoveries and the prospectivity of the Broadside permit," TAG chief executive Garth Johnson said from Vancouver. "TAG will now proceed to complete the Sidewinder-1 well for production, he added. Cadenhead declined to estimate likely recoverable reserves, though he did say that a production well at TAGs nearby 100%-owned Cheal oil field had flowed about 200,000 barrels of waxy light crude from a 4m interval and is still going strong. He said Sidewinder oil should be less waxy than that at Cheal we believe it should be similar to Ngatoro oil. The Mount Messenger sands at the Broadside lease are the same producing formation as those at the offsetting Ngatoro and Kaimiro oil and gas fields owned by private New Zealand company Greymouth Petroleum. Cadenhead said TAG had several options regarding transporting Sidewinder crude north to the Omata tank farm on the outskirts of New Plymouth for storage and later export from Port Taranaki. We will be looking at applying for a petroleum mining permit for Sidewinder ... and we see great potential for many more (discoveries) around this area based on the existing 3D seismic data we have. He said the Ensign 6 Rig, which last night started fraccing the Cheal-B3 well, should start production testing of Sidewinder-1 in 1-2 weeks, immediately following completion of the Cheal-B3 fracture stimulation program. The NRG Rover Rig, which drilled Sidewinder-1, would now move south to the Cheal field to start drilling the Cheal-BH-1 (MM) horizontal well. That well, with a total measured depth of 2325m, including a 600m horizontal section, would be drilled into the proven producing area of the Cheal A block, one of many TAG has identified within the mining lease. The well will target the widespread turbidite fan deposits identified in the Mt Messenger formation and will be completed with a multi-stage fracture treatment along the horizontal section.

Shares in the Vancouver-headquartered company yesterday traded at a high of $C3.46 on the Toronto Venture Exchange on news of the Sidewinder strike, before easing back to about $C3.27 at midday Wednesday. TAG stock has gained 37% over the past eight months.