TAG Oil Ltd's (TSE:TAO) shares shot up on the back of a positive update on its Pukatea-1 exploration well in New Zealand.
Pukatea-1 has encountered a potential oil pay in the well's secondary Mt Messenger target.
Electric log data analysis indicates that there is at least one potentially oil-charged zone with movable hydrocarbons, excellent porosity and permeability, TAG disclosed.
Maximum total gas reached 19.2%, good oil fluorescence was observed, and clean sand similar to the Puka-2 well was also observed by the well-site geologist.
Drilling on the Pukatea-1 well, located in TAG Oil's operated Puka permit in the Taranaki Basin, commenced on January 24.
Intermediate casing has been set and TAG Oil anticipates that it will take roughly seven to ten more days to reach the top of the primary deep Tikorangi Limestone formation target. The total current planned depth of the well is around 3,170 meters measured depth.
"We are very pleased so far with the results from the Mt Messenger sands,” said Toby Pierce, TAG Oil's chief executive officer.
“It is highly probable that we can produce from the Mt Messenger zone in this well in due course and, along with the shut-in Puka-2 well-bore, will allow us to monetize this asset at the appropriate time. Further, the well is currently on budget and schedule, and we are excited ahead of penetrating the primary Tikorangi target in approximately one week's time,” he added.
“Finally, TAG Oil expects to release its Q3/18 results on the morning of February 14, 2018, and will update the market immediately following definitive results from the primary Tikorangi exploration target in due course," Pierce said.
Shares in TAG were up 28% at C$0.435 in afternoon trading.