Oil Company Overcomes Obstacles in Egypt's Western Desert

TAG Oil Ltd. (TAO:TSX.V; TAOIF:OTCQX) announced in a press release on January 3, 2023, that it is ready to move forward after overcoming obstacles with its BED4-T100 well in Egypt's Western Desert.

Analyst Bill Newman with Research Capital reviewed the company's drill program in light of this news and stated, "TAG is hopeful that with the upgrades to the drilling rig and using an oil-based mud system, the company should have drilling success with the third lateral."

The company announced that it had continued drilling on the Abu-Roash F but that drilling in the Abu-Roash E was complicated by mechanical and geological obstacles. The company reported that it resolved this problem by plugging this section of drilling and repairing sections of the rig while adjusting the drilling protocol.

According to the press release, the company will drill a separate path for that section of the well to isolate the geological complications.

The company also announced that it held a conference call on January 4, 2023, and that a replay of the call will be available on its website at www.tagoil.com.

Oil Looking at Rally in 2024

Jeff Siegel with Energy and Capital provided an analysis of the oil market on December 29, 2023. Siegel concluded that oil is likely about to enter a significant bull market that could send prices back above US$100 per barrel.

Siegel believes that the factors driving the oil market towards this high point may not have much to do with OPEC but rather everything to do with indicators on the Dow Jones and the Nasdaq that mirror oil's bull market from two decades ago.

In October of 2023, Larry Elliott with The Guardian also predicted that oil prices could reach record peaks as a result of conflict in the Middle East.

According to Elliott, "Oil prices could soar to a record high of more than US$150 a barrel if the war between Israel and Hamas leads to a repeat of the full-scale conflict in the Middle East witnessed 50 years ago." Elliott predicts that the market could see a repeat of the oil crisis of the 1970s, where prices skyrocketed.

Potential 163% Return

On January 3, 2024, Bill Newman rated the company as a "Speculative Buy" with a target share price of CA$1.00, representing a potential return on investment of 163.2%. Newman cited several factors in his assessment of the company, including the company's drilling on the Abu-Roash reservoir.

Newman had previously reviewed the company in November of 2023 and rated it as a "Speculative Buy" with a target share price of CA$1.25 and an estimated return of 136%. Newman made this rating on the anticipated drill results that were expected in the next month.

In June of 2023, Chen Lin included TAG Oil in a list of stocks he favored and commented on the consequences for the world oil market if TAG becomes a major oil producer in Egypt. Chen predicted that "They would change politics forever."

The company's investor presentation reports a number of catalysts, including three to four additional horizontal well sites planned for 2024. The concession period for the BED-1 lasts until 2032, with the possibility to extend it until 2042, and while Phase 1 involves an evaluation period and pilot development phase with a US$6 million commitment, Phase 2 will involve a commercial development stage with a US$6 million commitment. 

Ownership and Share Structure

Reuters provided a breakdown of the company's ownership and share structure, where management and insiders own approximately 29.48% of the company. According to Reuters, Director Askar Alshinbayev owns 18.78% of the company with 29.99 million shares, Director Shawn Reynolds owns 3.76% of the company with 6.01 million shares, Executive Chairman Abdel Fattah Z. Badwi owns 3.36% of the company with 5.38 million shares, CEO Toby Robert Pierce owns 1.02% of the company with 1.63 million shares, Vice President and COO Suneel Gupta owns 0.99% of the company with 1.59 million shares, CFO Barry MacNeil owns 0.85% of the company with 1.36 million shares, and Gavin Hugh Lothian Wilson owns 0.72% of the company with 1.15 million shares.

Reuters reports that institutions owns approximately 11.07% of the company, as YF Finance, Ltd., owns 8.14% of the company with 13.01 million shares, Purpose Investments Inc. owns 2.29% of the company with 3.65 million shares, and Novum Asset Management AG owns 0.64% of the company with 1.02 million shares.

According to Reuters, there are 159.74 million shares outstanding with 98.9 million free float traded shares, while the company has a market cap of CA$40.67 million and trades in the 52-week period between CA$0.34 and CA$0.79.

Important Disclosures:

1. TAG Oil Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. Amanda Duvall wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
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