New Zealand: Apache Enters into Deal with TAG Oil

Apache Corp. has entered into an agreement with oil and gas producer TAG Oil Ltd. to explore more than a million acres on New Zealand's North Island.

TAG holds a 100% working interest in more than 1.7 million acres in New Zealand's East Coast Basin. The company says its acreage potentially holds the equivalent of 1.7 billion barrels of oil in conventional reservoirs and could produce even more from deeply buried oil-bearing shale formations.

"We like the prospectivity and the opportunity," said Apache spokesman Patrick Cassidy. "It looks to be unconventional and we can bring value to those assets."

Apache will undertake two and three-dimensional seismic data as well as exploratory drilling if the seismic data suggests doing so.

The work, which will be done in three phases, could eventually yield Apache a 50% interest in the acreage, TAG said. If the exploration reaches that point, it will have cost Apache $100 million.

Exploration and development beyond that would then be shared equally by both companies, TAG said.

TAG said in a news release that the exploration work would be conducted over the next four years, with seismic operations beginning this month and drilling expected to start in early 2012.