TAG Oil Awarded Petroleum Services Agreement for Development of Abu Roash "F" Reservoir in Southeast Ras Qattara Concession

Executive Summary

• TAG Oil received approval to enter a PSA with Egypt’s ENPEDCO for development of the unconventional Abu Roash “F” (ARF) reservoir in the 2,000 km² SERQ concession.
• The agreement obligates TAG Oil to fund 100 % of capital and operating costs while receiving a sliding‑scale service fee of 55 %–48 % of gross project revenue, payable by ENPEDCO.
• Development will proceed in two phases: a two‑year pilot (DFIT testing and well re‑entry/drilling) followed by an optional full‑scale commercial phase contingent on pilot results.

Key Details

• Agreement Scope: PSA grants TAG Oil rights to develop the ARF reservoir; ENPEDCO retains conventional production from deeper formations.
• Performance Guarantee: US$100,000 performance letter required before PSA becomes effective.
• Reservoir Characteristics: Low‑permeability carbonate formation; development strategy based on proven horizontal drilling and hydraulic fracturing (similar to TAG’s Badr Oil Field, Canada’s Montney, and Eagle Ford).
• Phase 1 – Firm Commitment Evaluation (2 years):
• Re‑enter one or more existing vertical wells for Diagnostic Fracture Injection Testing (DFIT).
• Drill a new vertical well or sidetrack an existing well (vertical or horizontal) with potential hydraulic fracture stimulation.
• Phase 2 – Optional Development: Full commercial development of ARF contingent on Phase 1 results and mutually agreed economic terms.
• Commercial Terms:
• Service fee to TAG Oil = 55 %–48 % of gross project revenue, sliding scale based on production volumes.
• ENPEDCO funds all capital & operating expenditures for ARF development.
• Royalties and taxes payable by the Egyptian General Petroleum Corporation on behalf of TAG Oil.
• Independent Evaluation: An independent technical evaluation of the ARF reservoir has been completed; results to be released next month.
• Strategic Significance: Expands TAG Oil’s footprint in Egypt, leveraging existing subsurface data (3‑D seismic, shut‑in wells) and low‑cost re‑entry opportunities.

Notable Quotes

“We are very pleased to have received this approval, which represents another significant step in expanding TAG Oil's footprint in Egypt. While the initial phase focuses on piloting the development concept, the reservoir characteristics and our proposed strategy are based on proven technologies that have consistently delivered successful outcomes in similar projects across North America.” – Abby Badwi, Executive Chairman & CEO, TAG Oil Ltd.