Apache to develop TAG Oil’s New Zealand oil and gas permits

TAG Oil has entered a farm-out agreement with Apache Corporation to explore and develop oil and natural gas resources in the East Coast Basin of New Zealand.

Under the terms of the agreement, Apache will conduct a multiphased exploration, appraisal and potential development programme at the East Coast Basin’s onshore exploration permits PEP 38348, PEP 38349 and PEP 50940.

Apache will pay for a portion of TAG’s direct costs incurred to date and provide TAG with a full carry-on for three phases of operations to a maximum agreed cost in each phase.

Each phase will include 2D and 3D seismic and drilling, with Apache earning an increasing interest in the permits.

Apache will earn 50% of the permits under phase I, 25% phase II and 50% under phase III.

Seismic operations will begin later this year, with drilling expected to start in 2012.