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.
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Important Disclaimers for Research Capital Corp., Tag Oil Ltd., January 13, 2023
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