October 3, 2011
TAG OIL LTD. (TAO-T, $6.10) Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158
KShaw@casimircapital.ca
Associate: Ryan Galloway, CMA (403) 613-8350
Recommendation: Speculative Buy; Target: $10.50 RGalloway@casimircapital.ca
Initiating Coverage: Prod’n “Behind Pipe” to Double Cashflow at
Taranaki; Apache-TAG Deal in NZ East Coast Shale a Huge Step Forward
Projected Total Return 72.1%
Market Data
Massive 14B bbl unconventional and
52-Week Trading Range $2.53 - $7.64
Median Weekly Volume 608,050 conventional oil potential with Apache
Shares Outstanding, Basic (mm) 51.1
Shares Outstanding, Diluted In-the-Money (mm) 57.2
Market Capitalization ($mm) $348.7 Combined AJM and Sproule estimates total 14 Bbbl
Estimated Net Debt (Cash) Q4/11 ($mm) $(47.2)
Enterprise Value ($mm) $301.5
TPIIP in New Zealand’s East Coast Basin held 100% by
Forecasts
TAG. TAG entered into a farm-out agreement with
Fiscal Year End: Mar 31 F2010A F2011A F2012E F2013E
Apache in September 2011 on 1.7mm acres & Apache
Average Gas Production (mcf/d) - 606 9,143 31,257
Average Oil & Liquids (bbls/d) 323 413 859 1,732 will carry up to ~$100mm in exploration & appraisal
Average Total Production (boe/d) 323 514 2,383 6,942
Percentage Oil 100% 80% 36% 25% costs for an initial 25% interest in 5,120 acres, growing
Realized Gas Price ($/mcf) - - 7.73 7.80 to 50% WI across the entire acreage. Apache brings key
Realized Oil Price ($/bbl) 85.00 86.00 102.27 102.04
Modeled Revenues ($mm) 6.5 13.1 57.5 153.5 unconventional shale experience from around the
CF From Operations ($mm) 0.2 (1.2) 23.3 67.4
Year-End Net Debt (Net Cash) ($mm) (8.5) (68.3) (49.3) (46.7) globe coupled with TAG’s familiarity of NZ geology.
Capex (ex A&D) ($mm) (2.5) 15.6 46.0 70.0
Net Debt / Cashflow (x)
Per Share ($)
n/m n/m n/m n/m
~2,800 boe/d today & ramping to 5,000+
EPS ($, FDTSM)
DACF/sh (FDTSM)
$(0.07)
$0.00
$(0.01)
$(0.03)
$0.27
$0.43
$0.97
$1.23
boe/d with staged Sidewinder start-up
P/E (x) n/m n/m 22.8x 6.3x
EV/DACF (x) 1,792.4x n/m 12.4x 4.3x With ongoing Taranaki basin success at Cheal and
EV/(Avg Boe/d) n/m n/m $126,554 $43,436
Asset Values
Sidewinder over the past 10 months, TAG is nicely
(m m ) /sh
1P Proved Reserves (2011) $ 24.07 $ 0.42 positioned to ramp big cash flows. Over the next two
Probable Reserves (2011) $ 29.94 $ 0.52
2P Proved Plus Probable Reserves (2011) $ 54.01 $ 0.94 quarters, multiple wells are expected to start-up and
Working Capital at 2012FYE $ 49.28 $ 0.86 tie-into newly upgraded facilities at Cheal & new
Proceeds from Dilutive Securities $ 22.15 $ 0.39
Other $ - $ - facility infrastructure at Sidewinder.
Estimated Reserve Additions (2012) $ 146.15 $ 2.56
EMV of Exploration & Developm ent Projects - Taranaki Basin
Gross Unrisked Recoverable Resource (mmboe) 55
Low to medium risk conventional drilling
Net Unrisked Recoverable Resource (mmboe)
Net Risked Recoverable Resource (mmboe)
42
18
likely to offset decline & churn cash flow
EMV ($mm) Success $ 560 $ 9.80
EMV ($mm) Risked $ 254 $ 4.45 With a sizeable inventory of drilling locations, further
EMV of Exploration & Developm ent Projects - East Coast Basin
Gross Unrisked Recoverable Resource (mmboe) 718 development and lower risk exploration activities are
Net Unrisked Recoverable Resource (mmboe) 359
Net Risked Recoverable Resource (mmboe) 38 expected to continue in Taranaki through 2012
EMV ($mm) Success
EMV ($mm) Risked
$ 3,129
$ 339
$
$
54.74
5.94
onward. We estimate 10 additional Sidewinders and 5
Cheal locations to be drilled over the next 18 months.
Price Volume (000s)
$10.00 2,000
Valuation Driven by Cashflow ramp at
$8.00
1,500
$6.00
Taranaki & Long-term East Coast Potential
1,000
$4.00 We value TAG based Core NAV of $4.75/sh plus risked
500
$2.00 EMV of the Taranaki Basin, and a partial inclusion of
$0.00 0 the true value we estimate in the East Coast Basin. We
20-Sep-10 20-Jan-11 20-May-11 20-Sep-11
Source: ThomsonOne, Company Reports, Casimir Capital Ltd.
initiate coverage with a 12-month target of $10.50/sh.
© Casimir Capital Ltd., Member of IIROC and the CIPF
Toronto, Ontario M5H 4E5, Canada
145 Adelaide St. W, Suite 200
Key Investment Highlights
14 billion barrel OGIP Farm-out to Apache Positions TAG to More Quickly Unlock
the Huge Upside Potential of the E. Coast Basin – Conventional & Unconventional
TAG & Apache plan to spend $100mm over the next four years exploring the Waipawa and
Whangai oil shale deposits in TAG’s East Coast Basin permits. These basins were estimated
to have 12 billion barrels of OOIP unconventional (AJM) and 1.74 billion barrels conventional
(Sproule). We estimate about 720 mmbbls recoverable based on their evaluation of less than
2000,000 acres of TAG’s total acreage package. On a risked basis we believe these reserves
could be worth ~$5.94 per share if fully included in our target, and in a success case, could
add an astounding $55/share. TAG will be carried during this time for all costs (or 50/50 if
costs exceed pre-specified limits). This valuable capital injection will accelerate TAG’s ability
to deliver on these projects and explore this huge land base with Apache, one of the world’s
leading unconventional shale players. We look forward to the first East Coast basin vertical
strat “tests” in 2012.
2X Production Ramp as Sidewinder and Cheal Wells Tied into Upgraded Facilities
Current production is estimated at around 2,800 bbls/d with the recent commissioning of
the first well at Sidewinder, and this is set to increase to nearly 6,000 boe/d as significant gas
& liquids production from a series of Sidewinder wells, and additional oil production (from 2
Cheal wells) are brought online. With upgraded facilities expected, these wells should be
tied-in over the next two to three quarters.
At Taranaki, conventional onshore drilling to continue and supply solid cash flow
TAG plans to keep drilling the various conventional onshore prospects, including more
Sidewinders and new Cheal wells targeting the Urenui, Mt. Messenger, and the exciting new
Moki formations. Additional exploration activities are also planned in the Cardiff gas &
condensate prospect, and the 20% non-op Kaheru prospect offshore. All of these projects
supply an excellent cash flow given local gas prices of $7.00/mcf and oil above $100/bbl.
Cheal C-2 spud in the last week and 4 additional Cheal wells are up afterward. An additional
5 wells are included in rig commitments but not yet finalized.
Cashed-Up with Large Acreage Positions, High Working Interest, and Key Strategic
J.V. Partners to Accelerate Exploration at a Low Cost
TAG is estimated to have more than $55mm in working capital at the end of September,
which is more than sufficient to fund the continued drilling of Sidewinder and Cheal wells. In
addition, with the recent arrangement in the East Coast basin with Apache whereby TAG is
essentially carried for a few years or up to $100 mm in exploration costs, TAG is uniquely
positioned to utilize its very strong cash & cash flow from production positions to be
opportunistic to potentially add additional growth assets to its portfolio by way of
acquisitions.
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 2
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Valuation
TAG is an exploration-oriented company which is quickly transitioning into a key producer
within the New Zealand landscape. Currently our valuation is derived from the company’s
existing 2P reserves (which do not include SW 2, 3 or 4, and neither the Cheal B4ST nor Cheal
C1 results) and the potential for success on future exploration and development projects. As
a result, we value the company by using a risk-adjusted F2012E NAV of $4.75/share plus the
EMV of incremental exploration & development upside in Taranaki at $4.45/share. We
further only partially include 20% of the fully risked $5.94/share EMV of East Coast Basin
projects, arriving at a target valuation for TAG of $10.50/share.
Figure 1: Reserves and Forecast Net Asset Value
Oil Gas NGLs Total % of
Volumes mmbbl bcf mmbbl mmboe Total
Proved Producing 0.4 0.2 0.5 23.7%
Proved Non-Producing 0.1 0.0 0.1 5.3%
Undeveloped 0.0 0.0%
Total Proved (1P) 0.5 0.2 0.0 0.6 29.0%
Total Probable 1.0 2.0 1.4 71.0%
Total Proved + Probable (2P) 1.6 2.2 0.0 1.9 100.0%
NPV ($mm)
Proved Producing 21.5 39.8%
Proved Non-Producing 2.6 4.7%
Undeveloped 0.0%
Total Proved (1P) 0.0 0.0 0.0 24.1 44.6%
Total Probable 29.9 55.4%
Total Proved + Probable (2P) 0.0 0.0 0.0 54.0 100.0%
Other NAV Components
Value of Undeveloped Land $0.00
Proceeds from Dilutive Securities $22.15
Tax Credits
Other
Plus (Minus) Working Capital at Fiscal Year-End $49.28
Estimated Core NAV ($mm) $125.45
Estimated Core NAV (per Share) $2.19
Forecast Changes to Reserves mmboe NPV/boe NPV (mm)
Proven Producing 4.0 $34.94 $138.5
Non-Producing and Undeveloped 2.0 $24.46 $48.5
Total Reserve Additions 5.9 $31.45 $186.9
Estimated Reserve Deductions from Production 0.9 $46.74 $40.8
Risk-Adjusted F2012E Reserves 7.0 $28.54 $200.2
Risk-Adjusted F2012E Core Asset NAV ($mm) $271.60
Risk-Adjusted F2012E NAV (per Share) $4.75
Source: Company Reports, Casimir Capital Ltd.
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 3
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Figure 2: Risk Adjusted EMV of Upside in Taranaki Basin (100% Inclusion)
Initial Working Participatin Gross Unrisked Success NPV Time Risked
COS Success EMV/sh EMV/sh
Region / Project Capital/Exploration Interest g Interest Recoverable Case Value EMV
(%) EMV ($mm) ($) Success ($) Risked
Cost ($mm) (%) (%) Resource (mmboe) NPV/boe Adjustment ($mm)
Cheal Oil $0.00 65% 100.0% 100.0% 14.3 $20.00 0.83 $236.8 $153.9 $4.14 $2.69
Sidewinder Gas $0.00 40% 100.0% 100.0% 11.6 $20.00 0.83 $191.5 $76.6 $3.35 $1.34
Cardiff Gas/Condensate $10.00 30% 100.0% 100.0% 12.1 $10.00 0.79 $95.6 $23.2 $1.67 $0.41
Kaheru Offshore $25.00 10% 20.0% 20.0% 17.4 $16.00 0.65 $36.3 $0.7 $0.63 $0.01
Total $35.00 55.5 $560.2 $254.4 $9.80 $4.45
Source: Company Reports, Casimir Capital Ltd.
Figure 3: Risk Adjusted EMV of Upside in East Coast Basin (20% Inclusion)
Initial Working Participating Gross Unrisked
COS Success Case NPV Time Value Success EMV Risked EMV EMV/sh ($) EMV/sh ($)
Region / Project Capital/Exploration Interest Interest Recoverable Resource
(%) NPV/boe Adjustment ($mm) ($mm) Success Risked
Cost ($mm) (%) (%) (mmboe)
Waitangi Hill Oil $10.00 15% 50.0% 0.0% 50.1 $20.00 0.62 $311.1 $46.7 $5.44 $0.82
Boar Hill Oil $10.00 15% 50.0% 0.0% 35.5 $20.00 0.62 $220.4 $33.1 $3.86 $0.58
Waipawa Black Oil Shale $40.00 10% 50.0% 0.0% 260.4 $16.00 0.51 $1,069.0 $106.9 $18.70 $1.87
Whangai Oil Shale $40.00 10% 50.0% 0.0% 372.4 $16.00 0.51 $1,528.6 $152.9 $26.74 $2.67
Total $100.00 718.4 $3,129.1 $339.5 $54.74 $5.94
Source: Company Reports, Casimir Capital Ltd.
Figure 4: Target Derivation
Valuation Method: Net Asset Value & EMV of Risked Upside
Valuation
Value Inclusion
Build-Up
Estimated Core Asset NAV 2011 $2.19 100% $2.19
Estimated Risk-Adjusted NAV Additions this Fiscal Year $2.56 100% $2.56
Forecast Risk-Adjusted F2012E Core Asset NAV $4.75 $4.75
EMV of Risk-Adjusted Incremental Upside - Teranaki Basin $4.45 100% $4.45
EMV of Risk-Adjusted Incremental Upside - East Coast Basin $5.94 20% $1.19
Valuation $10.39
Source: Company Reports, Casimir Capital Ltd.
Company Background
TAG Oil is a high-growth E&P with focus on onshore & offshore New Zealand properties. The
company became active in the Taranaki basin of New Zealand in 2002, and proceeded to
acquire acreage, data, and startup capital for initial exploration activities. It secured a listing
on the TSX Venture in 2005 and continued to grow its asset base. By 2007 the company
officially began producing from the Cheal discovery with less than 100 bbls/d and growing
ever since. After carefully managing spending during the financial crisis of 2008, the
company has begun to capitalize on new shale technologies to explore in new prolific basins.
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 4
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
The company has a short term strategy of maximizing the value of its discoveries at Cheal
and Sidewinder and an increasing cash flow to allow future growth with minimal shareholder
dilution. In the long term, the company seeks to leverage technological advances to drill
unconventional oil shales in the East Coast Basin of New Zealand. The company graduated
from the TSX Venture to the TSX in July 2011.
Asset Overview
TAG holds acreage in both the western Taranaki and the East Coast Basins of New Zealand.
TAG’s early entry into these basins gave it a strong first-mover advantage in the form of
lower costs and some of the highest quality acreage throughout the New Zealand landscape.
TAG’s acreage in the Taranaki Basin is a current producer with 100 mmbbls OOIP and 500 bcf
OGIP potential and a large cash flow provider to the company. The East Coast Basin has huge
potential for exploration upside both conventionally and unconventionally.
Figure 5: Geography of TAGs primary assets in Taranaki and East Coast New Zealand
Source: Company Reports
The company has a 100% working interest in most of its lands, and has identified hundreds
of future exploration targets with relatively low-risk drilling. In total, the company possesses
over 1.7 million prospective acres with both conventional and unconventional reservoirs.
This position is estimated to have a potential resource of 14 billion barrels OOIP.
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 5
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Figure 6: TAG’s Asset Mix – 100 mmboe conventional ‘development-oriented’ Taranaki
with 14 billion bbl potential in East Coast exploration
Source: Company Reports
Taranaki Basin
The Taranaki Basin is situated around Mt. Taranaki on the western coast of New Zealand.
The basin has proven reserves of 600 mmbbls and 7 tcf of natural gas. The area however is
only lightly explored and offers significant exploration upside. TAG owns two permits in the
area with a 100% WI and significant 3D seismic coverage. The company has 50+ drilling
prospects, and we estimate production from this region by year-end approaching the 3,000
boe/d level with steady growth from behind-pipe production continuing into 2012.
Figure 7: Overview of the Taranaki Basin
Source: Company Reports
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 6
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Figure 8: Production Past & Future – up to 5,900 boe/d expected by calendar year-end
F ina l
G a s R a te O il Ra te BO E Ra te Dra wdown Ne t P a y
(mmc f/ d ) (bb ls/ d) (boe / d) Ra te Enc oun te re d
Sidewinder- 1 7.40 0 1,233 28% 14 meters
Sidewinder- 2 8.80 0 1,467 25% 47 meters
Sidewinder- 3 7.21 0 1,202 40% 15 meters
Sidewinder- 4 6.98 0 1,163 25% 19 meters
Cheal- B4ST 0.24 360 400 – 17 meters
Cheal- C1 * 0.24 360 400 – 15 meters
T ota l: 30.87 720 5,865
*Cheal- C1 has suc cessfully tested, but stabilized rates not yet published. Company expec ts
flow rates similar to B4ST
Source: Company Reports
Cheal Oil & Gas Field – 100% W.I. Development Asset
The Cheal Oil & Gas Field is characterized by multiple stacked formations, primarily the
Kiore, Urenui, Mt. Messenger, and Moki. The entire permit has 3D seismic coverage, and all
wells drilled at Cheal are easily tied into a TAG-operated production facility. Upgrades are
currently underway to increase the capacity of the Cheal facility to handle additional wells
which have already been drilled, namely B4ST and Cheal C1 which were drilled earlier in
2011. We anticipate up to 10 additional vertical Cheal wells by 2013.
The company is also eager to assess the Moki formation with upcoming wildcat targets.
Figure 9: Overview of the lower-risk multi-stacked development at Cheal
Source: Company Reports
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 7
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Sidewinder Discovery (100% W.I.) – A Cashflow Machine Just Recently “Fired-up”
TAG has had great success in 2011 from the Sidewinder discovery area with 4 successful gas
wells, though all are still awaiting tie-in to facilities. The Sidewinder permit area is 7,910
acres, and directly offsets nearby Kaimiro and Ngatoro fields, which have 25 mmboe proven
reserves. In March 2011, the company had identified numerous other drill locations, and we
estimate up to 10 additional vertical development wells being drilled through March 2013.
Figure 10: Sidewinder area - sizeable exploration upside, room to run & past success
Source: Company Reports
Hellfire Natural Gas & Condensate Beneath Sidewinder (100% W.I.)
Recently, TAG has begun discussing a high-impact gas target in deeper reservoirs beneath
the Sidewinder discovery. The aptly-named Hellfire prospect targets Kapuni level (3,000-
4,000m) deep gas, which is anticipated to be condensate rich. This exciting new regional
prospect is likely to add value to the company, but at this time, the company has not
released adequate details for us to create a risk-adjusted EMV.
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 8
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Cardiff Natural Gas & Condensate (100% W.I.)
The Cardiff gas discovery is adjacent to the Cheal discovery in the Taranaki basin. The
company is eager to explore this acreage, as it is offsetting the Shell / Todd’s Kapuni field,
which was the first major discovery in New Zealand. With current gas prices creeping
toward US$7.00/mcf, the economics of gas plays in New Zealand are highly attractive and
much more lucrative than in places like North America where gas prices are currently
depressed due to oversupply and less demand.
Figure 11: Overview of Cardiff Discovery Near Cheal
Source: Company Reports
The Cardiff pay has a depth of approximately 4,000 metres, and the company believes
horizontal drilling into the tight sands could access up to 508 bcf of gas OGIP, plus
condensates.
Kaheru Prospect – 20% W.I. Joint Venture
The Kaheru prospect is one of several potential offshore locations in the Taranaki basin, in
which the company has a 20% non-operated working interest with partner Roc Oil. Roc is a
proven offshore exploration and development company and provides necessary offshore
experience to TAG. A previous resource assessment of the area estimated a potential of up
to 819 bcf and 21.4 mmbbls original resource in place.
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 9
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Figure 12: The Kaheru Prospect Joint Venture with Roc Oil
Source: Company Reports
East Coast Basin – A “Company Maker” For Any Size of E&P
The East Coast Basin is a significantly under-explored basin in which TAG has over 1.7mm
acres of 100% working interest land. AJM were hired for an independent resource
assessment, and identified 12 billion barrels of potentially undiscovered unconventional
resource at the P50 (mid-case) level on just 200,000 acres of this position. We estimate a 5%
recovery factor at this time, which still yields a massive 720 mmbbls recoverable resource.
The company has several shallow conventional targets and deep conventional targets,
estimated by Sproule to be 1.74 billion bbls OOIP, and much larger unconventional oil shale
ambitions.
Figure 13: Overview of massive 1.7+ mm net acre position in the East Coast Basin
Source: Company Reports
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 10
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
In September 2011, the company announced a farm-out agreement with Apache, in which
Apache will gradually earn up to a 50% interest in most of the East Coast blocks, in exchange
for carrying TAG on the initial upfront exploration costs, up to a cost cap, at which point both
companies will pay their respective working interest portion of overages. Apache intends to
spend up to $100mm to get the field into a ‘pre-operations’ phase.
Waitangi Hill (Permit 38348) and Nicks Head (Permit 50940)
Waitangi Hill exploration drilling can potentially allow for rapid shallow oil development and
additional oil cash-flow, while providing additional critical information about the viability of
deeper oil shales in the Waipawa and Whangai. We assign a gross un-risked recoverable
resource of 372 mmboe to this region.
Figure 14: Waitangi Hill Acreage Overview
Source: Company Reports
Boar Hill (Permit 38349)
The Boar Hill prospect has identified numerous Miocene sandstones with 20%+ porosities
and at least 20 conventional drill sites across the acreage. Oil & gas seeps were noted in this
area and TAG completed a 487m stratigraphic well in 2009, which identified progressively
more oil rich readings as the well penetrated the Oligocene strata. Planning is underway for
at least one 1,500-3,000m exploration well in the future, with potential for more. We assign
a gross un-risked recoverable resource of 36 mmbbls to this area.
Figure 15: Boar Hill Acreage Overview
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 11
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Source: Company Reports
Waipawa and Whangai Oil Shale
The W&W oil shales in TAG’s acreage are comparable in organic carbon content and
maturity levels to those seen in the Bakken and Liassic Shales. These shales are naturally
fractured, with significant over-pressuring and 50 degree API oil. This quality, significantly
better porosity, plus naturally occurring oil and gas seeps in the area provide confidence in
the recoverability of resources at this early stage. We assign a gross un-risked recoverable
resource of 260 mmbbls to Waipawa and 372 mmbbls to Whangai.
Figure 16: Extremely Favorable Comparison between W&W and Bakken Shale
Source: Company Reports
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 12
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Appendix A: Management and Directors
Management
Garth Johnson, CEO
Mr. Johnson's perseverance, strategic planning skills, and ability to execute complex
transactions have been key to TAG Oil's transformation from a start-up to prominent
international production and development-stage company. Over the past 15 years, he has
developed a deep expertise in New Zealand and Papua New Guinea oil and gas activities, as
well as a wealth of diverse business experience in North America and Australasia. His strong
leadership is critical to TAG's continued growth and success.
Drew Cadenhead, Chief Operating Officer
Mr. Cadenhead received world-class technical training and in-depth knowledge of the
Western Canadian Sedimentary Basin during his 24 years based in Calgary. Thirteen of those
years were with Canadian Hunter Exploration. He also worked in various leadership
capacities for a number of other Canadian-based companies including Ulster Petroleum,
Selkirk Energy and Summit Resources. At Summit he was responsible for identifying and
leading the company into the Gunnell area of BC to test the Upper Devonian Jean Marie
Formation where multi-TCF gas deposits were subsequently discovered. Mr. Cadenhead
gained his New Zealand experience with Fletcher Challenge Energy Taranaki, leading a team
of geoscientists, engineers and technical support staff into a successful multi-well drilling
program and secondary recovery implementation before joining TAG Oil in 2003. Mr.
Cadenhead holds a Bachelor of Science Degree in Geology from the University of Calgary,
and is a member of APEGGA.
Blair Johnson, Chief Financial Officer
Mr. Johnson, who holds a Bachelor of Management Studies with First Class Honors in
Accounting and Marketing, has worked with the Company for the last four years. His
responsibilities have included corporate governance and accounting functions for TAG’s New
Zealand subsidiaries. He is a member of the Chartered Institute of Management Accountants
(UK), and a member of the Institute of Chartered Accountants of New Zealand. Prior to
joining TAG, Mr. Johnson was Finance Director for Bridge Petroleum Limited (NZ) and has an
exceptional track record of managing operational risk in highly regulated industries.
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 13
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Board of Directors
Alex P. Guidi, Director
Mr. Guidi is highly experienced international oil and gas entrepreneur and the founder of
TAG Oil. Mr. Guidi began his journey into the oil business as a drilling roughneck in Alberta at
age 18. Since then, he has founded and led a number of successful Canadian-based growth
companies. Mr. Guidi has also led the funding, development and growth strategy of several
companies that pioneered exploration onshore and offshore in Australasia and China
throughout the early 1990s to the present, which has resulted in the discovery of several
wildcat oil and gas discoveries in New Zealand and major gas reserves in Papua New
Guinea's Foreland, key parts of which were recently acquired by Talisman Energy. In the
1980s, Mr. Guidi introduced new horizontal drilling technology to mature fields in South East
Saskatchewan, transforming Walking Stick Oil and Gas Ltd. into a significant entity that later
merged with Bonavista Petroleum.
Keith Hill, Director
Mr. Hill is the Chairman of Black Pearl Resources Inc. (TSX: PXX) and ShaMaran Petroleum
Corp. (TSX-V: SNM), and is the CEO of Africa Oil Corp. (TSX-V: AOI). Prior to this, Mr. Hill was
instrumental in developing Valkyries Petroleum Corp. and Tanganyika Oil Company Ltd.,
both highly successful international oil and gas producers which were acquired by major oil
companies. Mr. Hill holds a Master of Science degree in Geology and Bachelor of Science
degree in Geophysics from Michigan State University, as well as an MBA from the University
of St. Thomas in Houston.
Ronald Bertuzzi, Director
Mr. Bertuzzi holds a Bachelor of Economics from the University of British Columbia and he
has more than 20 years of executive, board and committee experience with US and
Canadian junior listed companies focused primarily in the oil and gas industry doing business
in Australasia. Mr. Bertuzzi’s experience covers various stages of company development
beginning with initial start-up and initial public offerings, acquiring and exploring significant
exploration acreages and ending in discovery, facility development and commercial
production of oil and gas.
Giuseppe (Pino) Perone, Corporate Secretary/Treasurer
Mr. Perone is an active member of the Law Society of British Columbia and is currently
practicing as a corporate lawyer for a group of public companies. He obtained a B.A. with
distinction in Sociology from the University of Victoria in 2001 and an LL.B. from the
University of Alberta in 2005, and has previously articled at the law firm of Lang Michener
LLP in their Vancouver, British Columbia office.
Garth Johnson, Director – As Above
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 14
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Company Name Disclosures
TAG Oil Ltd. None
Disclosure List
1. Within the last 12 months, Casimir or its affiliates have provided investment banking and/or related services for the subject issuer.
2. Within the last 12 months, a director, officer, or analyst with Casimir has provided services for remuneration, other than investment
advisory or trading services, to the subject issuer.
3. The research analyst(s) or associate(s) or a member of the research analyst's(s) or associate's(s) household has a long position in the
shares and/or is long calls/short put options of the subject issuer.
4. Casimir or its affiliates is a market maker, or is associated with the specialist that makes a market in the securities of the subject
issuer.
5. Casimir or its affiliates collectively beneficially own 1% or more of any class of the issuer’s equity securities.
6. An employee, officer, or director of Casimir is a member of the Board of Directors, Officer of, or an advisor to, the subject issuer.
7. The research analyst(s) has viewed the material operations of the subject issuer.
Analyst Certification. Each analyst of Casimir Capital Ltd. whose name appears in this research report hereby certifies that (i) the
recommendations and opinions expressed in the research report accurately reflect the research analyst’s personal views about any and all of the
securities or issuers discussed herein that are within the analyst’s coverage universe and (ii) no part of the research analyst’s compensation was,
is, or will be, direct or indirectly related to the provision of specific recommendations or view expressed by the research analyst in the research
report.
The compensation of Research Analysts and Research Associates is intended to reflect the value of the services they provide to the clients of
Casimir Capital. As with most other employees, the compensation of Research Analysts is impacted by the overall profitability of the firm, which
may include revenues from investment banking activities of the firm's Corporate Finance department. Research Analysts' compensation is not,
however, directly related to any specific corporate finance transactions.
Distribution Policy. Casimir endeavours to make all reasonable efforts to disseminate research to all eligible clients in a timely manner through
either physical or electronic distribution such as mail, fax, email, or by posting to Casimir proprietary websites.
Disclaimer. This report has been prepared by Casimir Capital Ltd. (“Casimir”)
Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The
information contained herein is for information purposes only and this report is not, and is not to be construed as, and offer to sell or a
solicitation of an offer to buy any securities. The information and opinions contained herein have been compiled or derived from the sources
believed reliable, but no representation or warranty, expressed or implied, is made to their accuracy or completeness. Neither Casimir nor its
affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents.
Casimir and/or its affiliates may have acted as financial adviser and/or underwriter for certain of the issuers mentioned herein and may have
received remuneration for such services. Casimir, its affiliates and/other respective officers, directors and employees may from time to time
acquire, hold or sell positions in the securities mentioned herein as principal or agent.
Affiliate Related Disclosures: TAG Oil Ltd. (the “subject company”) is not a client of Casimir Capital L.P. and its affiliate Casimir Capital Ltd. and
has been not been a client during the 12-month period preceding the date of distribution of this research report. During aforementioned period,
Casimir Capital L.P. and its affiliate Casimir Capital Ltd. have not provided investment banking services to the subject company and have not
received investment banking or non-investment banking related fee or compensation from the subject company. Casimir Capital L.P. and its
affiliate Casimir Capital Ltd. intend to seek compensation for investment banking services from the subject company during the next 3 months.
This report has been prepared by Casimir Capital Ltd., not Casimir Capital L.P. and is therefore deemed by Casimir Capital L.P. to be a Third-Party
Research Report as per FINRA rules and regulations.
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 15
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
Investment Ratings System
Casimir’s system for rating oil & gas investment opportunities assumes that these securities have higher levels of risk than the broader stock
market. As a result, our oil and gas research evaluates securities primarily on a return basis. In addition, due to a variety of factors including but
not limited to market conditions, political risk, and news flow, we may at our discretion adjust our investment ratings to reflect short-term
trading conditions that are different than our long-term view of the returns on specific securities.
Below is a summary example of these investment ratings:
Investment Rating Rating Description
Speculative Buy A security, which at the time the rating is instituted and or reiterated, indicates an expectation of exceptionally
strong returns but the risk of a significant loss is materially higher than other oil and gas companies.
Strong Buy A security, which at the time the rating is instituted and/or reiterated, indicates that we expect it to significantly
outperform the broader market.
Buy A security, which at the time the rating is instituted and/or reiterated, indicates that we expect it to modestly
outperform the broader market.
Hold A security which at the time the rating is instituted and/or reiterated, indicates that we expect the security to
perform at levels comparable to the broader market.
Sell A security which at the time the rating is instituted and/or reiterated, indicates that the security is likely to
underperform the broader market.
Not Rated Casimir Capital Ltd. does not have an opinion or expectation as to the price of the security.
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 16
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca
CASIMIR CAPITAL LTD.
145 Adelaide St. W, Suite 200
Toronto, Ontario
M5H 4E5, Canada
MEMBER OF IIROC & CIPF
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 © Casimir Capital Ltd., Member of IIROC and the CIPF
KShaw@casimircapital.ca Toronto, Ontario M5H 4E5, Canada 17
Associate: Ryan Galloway, CMA (403) 613-8350 145 Adelaide St. W, Suite 200
RGalloway@casimircapital.ca