Apache will conduct a multi-phased exploration, appraisal and potential development program within Tag’s East Coast Basin exploration permits PEP 38348, PEP 38349 and PEP 50940.
According to Tag, the permits comprise in excess of one million prospective acres of onshore oil and gas opportunities located on the southeast portion of the North Island.
Apache will pay for a portion of Tag’s direct costs incurred to date, as well as providing the company a full carry on three phases of operations to a maximum agreed cost in each phase.
If the agreed cost is exceeded in any phase, or if additional operations are conducted, Apache will pay a majority share of any drilling or seismic costs in the specified percentages set out in the deal.
Each phase of operations will include an aggressive program of both 2D/3D seismic and drilling with Apache earning an increasing interest in the permits.
In Phase 1, Apache will earn a 50% interest in 5,120 acres of the permits after operations are conducted and by committing to Phase 2.
Apache will earn a 25% interest in the permits in Phase 2 after operations are conducted and by committing to Phase 3.
In Phase 3, the company will earn a 50% interest in the permits after operations are conducted and by committing to Phase 4 operations.
Apache will be the operator for all activities undertaken pursuant to the agreement, excluding the initial four vertical wells of the work program that Tag will operate with Apache’s assistance.
The company will spend up to $100m upon completion of Phase 3 to earn a 50% interest in the permits.
At the end of Phase 3 operations, Tag will remain as operator of the permits, and if Apache commits to Phase 4 operations, all costs will then be shared equally between Apache and Tag going forward.
