Vancouver-based driller Tag Oil Ltd says it has made a new oil strike in Taranaki, at its Sidewinder-1 exploration well north of Stratford.
Sidewinder-1 was drilled to a total depth of 1601m, and encountered 14m net (22m gross) oil-bearing sandstones in the Mt Messenger formation. The well is in the 3201 hectares Broadside exploration permit PEP 38748.
"Electric logs indicate excellent reservoir qualities, with average porosities of 22.5% and oil saturations of 60%," the company told the Toronto Venture Exchange, where its shares have gained 37% since January, when the company bought acreage covering Kawakawa oil shale in New Zealand.
"We are extremely pleased to achieve oil pay in excess of what we had anticipated; these results also increase the likelihood of additional discoveries and the prospectivity of the Broadside permit," said the company's chief executive, Garth Johnson.
Tag will now prepare Sidewinder-1 for production, and start testing immediately after "fracking" the Cheal B-3 well.
Tag said in July that its Cheal field in Taranaki holds 450% more oil and gas than it had thought: net proved and probable reserves remaining of 651,000 barrels of oil, plus associated gas of 258 million cubic feet, resulting in a net present value of US$29.43 million ($NZ41.4 million).
The Cheal oil pool produces from an approximate depth of 1800m in the Mt Messenger formation -- the same producing formation as the offsetting Ngatoro and Kaimiro oil and gas fields.
Tag acquired 100% control of the Cheal mining permit only in October 2009, but has been using North American techniques, such as hydraulic fracture stimulation (fracking) and horizontal drilling through reservoir rocks to boost potential yields.
The drill rig will now move to the Cheal permit to start drilling of the Cheal-BH-1 horizontal well, with a total measured depth of 2325m, including a 600m horizontal section which will receive a multi-stage fracture treatment.
On the other side of the North Island, in the East Coast Basin, Tag has said it is pursuing "unconventional" resource potential in the Waipawa black shale and Whangai shale source-rock formations, which it compares favourably to fractured shale formations such as the bakken shale in Montana and North Dakota, and liassic shale in France's Paris Basin.