Way Bigger than Bakken
Back in April I wrote about Tag Oil drilling a new well on their North Island East Coast Basin project in New Zealand named the Ngapaeuru-1 well. In May, Tag released the results from the hole showing a 155-meter intercept. In early July the COO of Tag, Drew Cadenhead made some comments in a conference call that were quite interesting.
Drew on the East Coast Basin...
"The results of this first well were encouraging, to say the least. In order to keep that over pressuring in check, we took no chances and used extremely heavy mud weights while drilling. Despite that, we went from over 1,000 meters of zero oil and gas shows through the over burden to instantaneous strong shows once we entered our target zone. Those shows continued unabated for 155 meters before they instantly disappeared to absolutely no shows again until TD, and that tells us a couple of things.
Number one, the seal looks to be working as no shows were seen above the zone. The zone itself definitely has hydrocarbons in it, but of course that
was expected. We knew these source rocks were working from the quality and quantity of oil and gas seeps in this basin, but probably most important is
that there seems to be permeability associated with the zone. That's the only way we would see the shows we did even given the high mud weights we were
In 2008, TransOrient (now Tag Oil) completed a report based on eight samples from the Whangai shale on their ground. One of the eight samples showed a porosity of 16.3% but the report concludes it was anomalous. If you take the seven similar samples and average them, they show an average porosity of 26.44. The report was submitted to the NZ government and was kept confidential for a period of five years. It was released to the public only last month.
Porosity is a measure of capacity of rock to absorb oil. The more porous a rock is, the more oil it has potential for. In comparison, the Bakken is between 8% and 12%. The well-known Barnett shale in Texas is a mere 4-5%. While the New Zealand East Coast Basin is far thicker than the Bakken or Barnett, it is deeper and will cost more to drill. The Bakken is 10-50 meters thick, the Barnett 1-40 meters thick and the Whangai 300-600 meters thick.
Marauder sent me a copy of their internal figures. They are not yet 51-101 but they are working on that. Marauder did just finish reprocessing 275 square km of 2D seismic. Their internal numbers indicate an average shale thickness of 125 meters over 57,000 acres. Using a figure of 25% porosity, Marauder's OOIP should be about 13 billion barrels of oil.
AJM Petroleum Consultants did a resource calculation for Tag and they concluded Tag had 12.65 billion barrels OOIP based on only 10% of Tag's holdings in the East Coast Basin so Marauder's numbers are in line with that of Tag.
Based on the purchase by PetroChina paid for EnCana in Western Alberta in December 2012, PetroChina paid $2.2 billion for 50% of the 9 billion barrels OOIP EnCana shows on their website. The EnCana numbers are based on a proven play. The New Zealand East Coast Basin is still unproven. Tag's analyst, Casimir Capital states that the exploratory value for $/bbl OOIP can be multiplied by 5.6 once proved.
In simple terms, that means Marauder's 13 billion barrels OOIP "COULD" be worth $1.15 billion in the exploration phase and $6.5 billion unrisked once proved.
At today's market prices, Tag is worth some $267 million but it has production and there is no obvious value given to their North Island East Coast basin projects. They have $10 billion dollar potential should the East Coast Basin shale become popular. Marauder has a tiny $4.3 million dollar market cap and great potential for higher values as Tag advances their projects.
I own Marauder and they are an advertiser. I am biased. I encourage readers to do their own due diligence. Pay attention to what Tag reports. Marauder's ground in right in between that of Tag in the East Coast Basin. A hit by Tag is a hit for Marauder.
Marauder Resources East Coast
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January 18th, 2020
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