Australasia-focused oil and gas producer TAG Oil Ltd (TSE:TAO) revealed it had a good first quarter operationally, which saw revenue gush higher by 53% along with a 67% increase in operating netbacks.
Operating netbacks for the three months to end June went up by 67% to C$44.16 per boe (barrel of oil equivalent) compared with C$26.42 per boe for the quarter ended March 31 this year.
Meanwhile, revenue generated from oil and gas sales increased by 53% for the quarter to C$9.1mln from C$5.9mln for the preceding quarter.
As at the end of June, the company had C$4.8 million (March 31: C$1.8 million) in cash and cash equivalents and C$5.8mln (March 31: C$3.4 mln) in working capital.
In April, the firm secured a revolving credit facility for 12 months of up to US$10mln with a large New Zealand based lender, secured against TAG's producing Taranaki Basin assets.
Toby Pierce, TAG Oil's chief executive, told investors: "Operationally, TAG Oil had a very good quarter with over C$5.1mln in cash flow from operating activities and a working capital position of C$5.8mln at the end of Q1/2019.
"The company commenced a campaign in July that will involve multiple workovers and water injector conversions, which may have a positive impact on our production in upcoming quarters," he added.
The junior oiler's boss said the group continued to focus on growing its cash flow, increasing its production and strengthening its balance sheet over the near to medium term.
As part of the above credit facility, TAG will hedge around 400 bbl/d (barrels per day) for 12 months, using a collar with a US$60 per barrel floor and a US$75 per barrel cap.
Completion of the 2D seismic at PEP 57065 (Waitoriki) occurred in April this year and final processed data was received in July. Interpretation of the new 2D seismic and 3D seismic reprocessed extension is currently underway, the company added.
At the Cheal-E field, as part of the overall waterflood development project, the previously shut-in Cheal-E4 well was identified as a future water injector.
Injection conversion has been completed with additional perforations added to the MM4 zone.
Water injection began this month (August) at 400 bbl/d (barrels per day) and the conversion is expected to sweep oil towards the Cheal-E1 well, potentially resulting in additional oil recovery and extending the Cheal-E site's field life, TAG added.
TAG shares in Toronto added 10.45% to C$0.37.
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