Company begins controversial programme to seek oil and gas from "unconventional" shale rock formations.

Drilling is scheduled for March or April this year.

The merger of two Canadian oil companies with interests in New Zealand indicate the country's major discovery potential.

TAG Oil has merged with Trans-Orient Petroleum Ltd in a major expansion of New Zealand interests, the company says. Trans-Orient Petroleum Ltd shareholders approved the move in September.

The company holds exploration and production rights covering a large area of the East Coast Basin offshore from Taranaki.