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Co. Restarts Drilling of Well in Egypt

Source: Bill Newman


November 17, 2023 ( Newswire) This event follows a month-long delay in drilling due to a mechanical issue and creating a new operational plan, noted a Research Capital Corp. report.

TAG Oil Ltd. (TAO:TSX.V; TAOIF:OTCQX) began drilling the BED4-T100 (T100) horizontal well in the BED-1 field in Egypt but encountered a mechanical issue, postponing the work by one month, reported Research Capital Corp. analyst Bill Newman in a November 15 research note. The energy company has since restarted drilling but is approaching it differently.

Initial drill results were positive.

"The well encountered good oil shows and good fracture porosity in the initial lateral section of the well," Newman wrote.

Significant Gain Projected

Despite the hiccough, Research Capital reiterated its Speculative Buy rating and CA$1.25 per share target price on the Canadian oil and gas firm. In comparison, it is now trading at about CA$0.53 per share.

From this price, the return to target implies a substantial return for investors of TAG of 136%.

Problem and Solution

Newman described what TAG experienced while drilling the T100 well and how it chose to rectify the situation.

The company had drilled about 300 meters (300m) of the 1,000m planned for the lateral section in the Abu Roash F target reservoir when a directional drilling motor broke free and could not be retrieved.

Instead of trying to navigate around the part, TAG opted to drill a new lateral from the intermediate casing at 2,800m.

This strategic decision put drilling on hold for a month and increased the well cost by about US$1 million, Newman relayed, but it should minimize risks when the well is fracture stimulated.

Revised Timeline

Frac stim of T100 is slated to be done right after the well is completed, now expected in December.

Also, initial drill results will be released then, and they could catalyze TAG's stock price.

More Info: Newswire

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