testing of the BED 1-7 vertical well in Egypt produced strong results, reported Research Capital Corp. analyst Bill Newman in a June 19 research note.
"The successful fracture stimulation of the Abu Roash F formation and the production test results are encouraging, and TAG will apply its learnings to the design of the new BED4-T100 (T100) horizontal well," Newman wrote.
93% Possible Return
Accordingly, Research Capital maintained its Speculative Buy rating and CA$1.35 price target on TAG, currently trading at about CA$0.70 per share, noted Newman.
This price difference implies a significant potential upside for investors of 93%.
Results Post Production Restart
The Canadian oil and gas company restarted production testing of BED 1-7 on May 19 after tubing and a downhole electric submersible pump were installed.
Upon recommencing, the well flowed 150–200 barrels per day (150–200 bbl/d) of fluid. As the well continued to produce the remaining fracture fluid, the oil cuts gradually increased over the first week.
"Over the past two weeks, production stabilized at an average rate of 140 bbl/d of oil, with about a 5% water cut, through a 10/64-inch choke," Newman reported.
To date, BED 1-7 has produced 4,000 barrels of 23-degree API oil. TAG will continue to monitor it, on production, for the next 30–60 days.
Horizontal Well Could Be a Catalyst
Next, TAG plans to spud its first multi-stage fracture stimulation horizontal well, T100. This is slated to happen once the rig, already secured, is mobilized to the site. The rig is estimated to be there and ready in about mid-July. Drilling of the well start shortly thereafter.
In designing this well, the company considered two sets of results, from the BED 1-7 well and from the recent three-dimensional seismic survey.
"The T100 horizontal well should have between 15 and 20 fracture stages and, based upon the performance of the BED 1-7 vertical well, a test of over 1,500 bbl/d, which we believe could be a major catalyst for the stock," Newman wrote.
|Want to be the first to know about interesting Oil & Gas - Exploration & Production investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter.||Subscribe|
- Tag Oil Ltd. billboard sponsor(s) of Streetwise Reports and has paid SWR a sponsorship fee between US$3,000 and US$5,000.
- 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.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
For additional disclosures, please click here.
Disclosures for Research Capital Corp., Tag Oil Ltd., June 19, 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).