TAG Oil Ltd. (TAO:TSX.V; TAOIF:OTCQX) pushed back starting well recompletion in the Abu Roash "F" reservoir in Egypt's Badr Field "to secure the best service equipment and accommodate other logistics, that should help reduce the risk of cost overruns," reported Research Capital Corp. analyst Bill Newman in a Jan. 13 research note.
"Despite the delay, we expect TAG will have a string of event-driven press releases in 2023, that could provide a catalyst for the stock," Newman wrote.
Thus, Research Capital maintained its Speculative Buy rating and CA$1.35 per share price target on TAG. Given its current share price is about CA$0.55, the target reflects a significant upside from here. The projected return for investors is about 145%.
New Estimated Timeline
Newman relayed the oil and gas firm now expects to commence vertical operations in Abu Roash "F" in the BED-1 block in mid-January after the ideal rig for the work becomes available.
"TAG is proceeding with caution to ensure it has the right equipment for the job and that costs are controlled," he added.
In this reservoir, the British Columbia-headquartered firm has chosen to re-enter, recomplete and fracture stimulate the previously unstimulated BED 1-7 well that produced 20,000 barrels in a year's time before it was shut in.
"It will be interesting to see how the well flows after a 100-ton frac," Newman commented.
If the recompletion program kicks off as expected mid-month then the first flow tests from this vertical well should be ready in March 2023.
Horizontal Well Work on the Horizon
As for TAG's first horizontal well, the company expects to spud it this year, too, in May or June, once it receives the necessary drilling and environmental permits for which it applied. After spudding, initial test results would be released, likely in August or September 2023.
"If the vertical well re-entry and horizontal well program proves successful, a significant portion of the 2C contingent resource could be converted into Proven and Probable reserves, which could be a major catalyst for the stock," highlighted Newman.
Additionally, the analyst pointed out that TAG is looking into possible acquisitions in Egypt that could also provide company growth.
|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|
1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports 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) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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.
Important Disclaimers for Research Capital Corp., Tag Oil Ltd., January 13, 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.
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.
RCC USA: 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.ca. 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).