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Groundbreaking Drilling To Commence in Egypt

Source: Bill Newman

 

April 10, 2023 (Investorideas.com Newswire) The oil and gas company working in Egypt is set to spud T100 in mid-2023 with stabilized flow rates in Q4 of this year, according to a Research Capital report.


TAG Oil Ltd. (TAO:TSX.V; TAOIF:OTCQX) is expected to begin fracture stimulation in the BED 1-7 vertical well of the Abu Roash "F" reservoirs in the Badr Oil Field, with initial flow rates anticipated to commence in late April 2023, according to Market Analyst Bill Newman, in a March 30, 2023 research note.

The company focuses on oil and gas exploration, drilling, and development in the Middle East and has invested its capital in a promising section of Egypt.

While the TAG is still completing an active exploration program of the land, Newman points out that "During recompletion operations, oil from the ARF was recovered to surface and the formation was close to original reservoir pressures."

Review of Results

Newman presented the key points of TAG Oil's latest reports.

The company has multiple catalysts coming up in 2023 with the expectation of BED-7 vertical well flow test results coming in late April. TAG Oil also anticipates the spud of T100, the company's horizontal well - sometime in the summer of 2023 and plans to release the results of this test in Q4 of this year.

Recompletion operations by the company included the installation of a new well head on the initial site, removal of outdated production tubing, and isolation of previously drilled zones of the Abu Roash "F" formations. Newman notes that "the BED 1-7 well previously tested up to 418 bbl/d, unstimulated, and produced 20,000 barrels over a one-year period."

TAG intends to release the initial flow-back results of the upper third of the pay zone in late April.

Potential Risks

Despite initial promising drill results, Newman maintains the company as a Speculative Buy, with a target price of CA$1.35 due to a few main risks.

The first potential issue is that, while Tag has conducted a detailed analysis of the drilling zone, there is yet to be a guarantee of the commerciality of the shale oil play. In the financial sector of the company, there is also a possibility that the company may run into issues scaling up production to the necessary level to work independently, as it is currently running on working capital.

As an international company working out of Egypt, TAG must also take on the risk of fluctuations in international currency as well as the political risks of working in a foreign nation whose laws can change at any time. Egypt extensively regulates foreign drilling operations and can interrupt production activities while enacting pricing, tax, and royalty changes and implementing export restrictions. TAG's success will greatly rely on the Egyptian Government's goodwill.

Structure and Predictions

TAG Oil is working with capital from previously held assets located in both New Zealand and Australia, holding 2.5% and 3% royalty rates with each respectively.

Newman's research report shares recent rating and target price information as well as current market data on the company:

  • Rating: Speculative Buy
  • Price: CA$0.61, with a 52-week range of CA$0.79-CA$0.20
  • Price Target: CA$1.35
  • Market Cap: CA$94.60 million
  • Projected Return: 121.31%

The company carries an enterprise value of CA$70.6 million and a net debt of CA$24 million. TAG Oil's share structure breaks down to 155 million basic shares and 169.9 million fully diluted shares.

Disclosures:

1) Cori Rupe wrote this article for Streetwise Reports LLC as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: TAG Oil Ltd. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with: None. Please click here for more information.

3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of TAG Oil Ltd., a company mentioned in this article.

Disclosures for Research Capital Corp., Tag Oil Ltd., March 30, 2023

Analyst Certification I, Bill Newman, CFA, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report.

Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at www.researchcapital.com or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst's personal views and (ii) no part of the research analyst's compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

Relevant Disclosures Applicable to Companies Under Coverage: Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our website at www.researchcapital.ca.

General Disclosures:The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents. Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions.

Company Specific Disclosures: Within the past 12 months, Research Capital has provided investment banking services to the issuer.

Potential Conflicts of Interest: All Research Capital Corporation ("RCC") Analysts are compensated based in part on the overall revenues of RCC, a portion of which are generated by investment banking activities. RCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our Research Reports as principal or agent. RCC makes every effort possible to avoid conflicts of interest, however readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.

RC USA INC.: Information about Research Capital Corporation's Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at www.researchcapital.com. The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients - Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker - Dealer registered with the Financial Industry Regulatory Authority (FINRA).

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