TAG is beginning the next phase of its Taranaki program, including exploratory and horizontal development drilling, and various workover operations including multi-stage fracture treatments. This program is within TAG's 100% controlled, 15,400-acre (24 Section) Broadside exploration and Cheal oil discovery acreage in the Taranaki Basin.

The prime objective of this program is to build TAG's oil and gas revenue in Taranaki, where the Company has already established high netback oil production from its 100%-owned and operated Cheal Production Facility. The impact of this operation is anticipated to materially increase reserves, as well as the 420 barrels of oil and 400 mcf gas currently produced per day.

Operations are moving forward on the basis of successful pilot testing of downhole recovery technologies and recently completed fracturing programs. The results of this three-well workover program have shown to accelerate and increase reserve recovery, and to lower overall operating costs.

In the Broadside Exploration Permit PEP 38748, TAG is scheduled to spud the Sidewinder-1 exploration well on September 15, 2010. The well is scheduled to reach a total measured depth of 1457m in approximately 10 drilling days to test this Miocene-aged prospect.

Sidewinder is one of several exploration prospects identified on permit-wide 3D seismic. TAG will have the option to immediately drill one or more additional follow-on exploration prospects from the same surface location, dependent on results. The Sidewinder-1 exploration well will target the Mt. Messenger Formation, the same producing formation as the offsetting Ngatoro and Kaimiro oil and gas fields.

Upon completion of this drilling operation, the rig will move to the Cheal production permit PMP 38156-S to commence drilling the Cheal-BH-1 horizontal well.

This development well, with a total measured depth of 2325m, including a 600m horizontal section, will be drilled into the proven producing area of the Cheal A block and target the widespread turbidite fan deposits in the Mt. Messenger Formation mapped over the Cheal permit area.

The Cheal-BH-1 well will be completed with a multi-stage fracture treatment along the horizontal section, using completion technology proven in North America and globally, but not yet deployed in New Zealand.

Simultaneously, a service rig will begin further optimization work on two wells within the Cheal Mining Permit. Cheal B-3 will receive a fracture stimulation treatment followed by installation of additional recovery technology

Tags: TAG Oil Ltd.