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INDEMNITY AGREEMENT

THIS AGREEMENTdated for reference this 20th
day of July, 2007 (the Effective Date).

BETWEEN:

TAG OIL LTD., a company
incorporated under the laws of Canada and having an office at Suite 1407,
1050 Burrard Street, Vancouver, British Columbia V6Z 2S3

(the Company)

AND:

GIUSEPPE (PINO) PERONE,
residing at <>

(the Indemnitee)

(the Company and the Indemnitee may
collectively be referred to as the Parties and individually as a
Party).

WHEREAS:

(A)                    
The Company has requested the Indemnitee to assume the office of director of the
Company and/or a Subsidiary; and

(B)                    
The Indemnitee has agreed to assume such office on condition that this indemnity
is provided.

NOW THEREFORE,in consideration of the Indemnitee so
acting as a director of the Company, the Company hereby covenants and agrees
with the Indemnitee as follows:

Definitions

1.                     
In this Agreement, unless there is something in the subject matter or context
inconsistent therewith, the following terms will have the following meanings
respectively:

Act means the Business
Corporations Act(British Columbia),as amended from time to time;

Action means any suit, action
or proceeding, including any appeal, before any court or other tribunal in which
a Claim is made or advanced against the Indemnitee;

Claim means any claim,
liability, loss, damage, cost, charge, expense, fine or penalty;

Settlement means an agreement
to settle or compromise a Claim or an Action; and

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Subsidiary means a company
that is controlled by

| | (a) | the Company,                                         
| | --- | -----------------------------------------------------
| |     |                                                      
| | (b) | the Company and one or more other companies,         
| |     |                                                      
| | (c) | two or more companies controlled by the Company;
  or
| |     |                                                      
| | (d) | a subsidiary of a subsidiary of the
  Company.       

Interpretation

2.                     
For the purposes of this Agreement, references to other enterprises
include, without limitation, employee benefit plans; references to
fines include any excise taxes assessed on a person with respect to any
employee benefit plan; references to serving at the request of the
Company include, without limitation, any service as a director, employee or
agent of the Company which imposes duties on, or involves services by, such
director, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries.

Commencement

3.                    
 Notwithstanding its date of execution and delivery, the term of this
Agreement shall be conclusively deemed to commence on the date first above
written.

Confidential Information

4.                    
 The Indemnitee covenants and agrees that all records, material,
information and copies thereof concerning the business affairs of the Company
obtained by the Indemnitee, in the course of acting as a director or officer of
the Company, shall remain the exclusive property of the Company.

5.                     
During the term of this Agreement and following its termination, except to the
extent required by applicable law or order of any court or governmental
department, body, commission, board, bureau, agency or instrumentality, the
Indemnitee shall not divulge the contents of such records or any such material
or information to any person other than to the Company or its qualified
employees, agents and professional advisors and the Indemnitee shall not use the
contents of such records, material and information for any purpose whatsoever,
except to enable the Indemnitee to act as a director of the Company under this
Agreement, until such information is made public by the Company.

Indemnity

6.                     
The Company hereby irrevocably agrees, to the maximum extent permitted by
applicable law, to indemnify and save harmless the Indemnitee

(a)          
from and against any and all Claims and Actions, whether civil, criminal,
quasi-criminal or administrative, and whether actually instituted or threatened,
of every nature and kind whatsoever made or brought at any time against the
Indemnitee by reason

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that the Indemnitee is or was a
director, officer, or employee of the Company or a Subsidiary, whether made or
brought by the Company, by any shareholder or employee of the Company, by any
person, firm, company or government within or outside Canada, or by any
governmental department, body, commission, board, bureau, agency or
instrumentality, arising out of or in any way connected with any act or omission
by the Indemnitee, or of the Company or a Subsidiary or the management,
operation or existence of the Company or a Subsidiary including all proceedings
and prosecutions, whether civil, criminal, quasi-criminal or administrative, and

(b)          
from and against any and all liabilities, losses, damages, costs, charges,
expenses, fines and penalties which the Indemnitee sustains or incurs, including
any amount paid to settle a Claim, Action or prosecution or to satisfy a
judgment or verdict, by reason that the Indemnitee is or was a director, officer
or employee of the Company or a Subsidiary (including but not limited to
attorneys fees and amounts paid to settle any action, satisfy any judgment or
pay any fines or penalties, and including any costs, charges, expenses and
attorneys fees Indemnitee may incur in enforcing this Agreement (collectively
Expenses)).

Advances of Expenses

7.        
             To the
maximum extent permitted by applicable law, Expenses incurred by Indemnitee in
connection with any Claims and Actions shall be paid by the Company in advance
upon the final disposition of such Claims and Actions, provided that the Company
receives a written undertaking from the director to repay any amount to the
extent that it is ultimately determined that Indemnitee is not entitled to
indemnity therefor. It shall not be necessary for Indemnitee to pay such
Expenses and then seek reimbursement, but Indemnitee may provide bills and
statements of account to the Company for direct payment by the Company.

Notice of Claim

8.           
          Indemnitee shall notify
the Company in writing of any Claim or Action against him for which
indemnification will or could be sought under this Agreement at the address set
forth on the first page of this Agreement (or such other addresses as provided
by notice given as aforesaid). In addition, Indemnitee shall give the Company
such information and cooperation as it may reasonably require and as shall be
within Indemnitees power and at such times and places are convenient for
Indemnitee.

Defence

9.                    
 Any right to indemnification conferred by the Company pursuant to this
Agreement will include the right to be paid by the Company for the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that, if the Act requires, the payment of such expenses
incurred by the Indemnitee in his or her capacity as a director (and not in any
other capacity in which service was or is rendered by the Indemnitee while a
director, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, will be made only upon
delivery to the Company of an undertaking, by or on behalf of the Indemnitee, to
repay all amounts so advanced if it will

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ultimately be determined that the Indemnitee is not entitled to
be indemnified under this Agreement or otherwise. The Company will also
indemnify and hold harmless as aforesaid the Indemnitee by reason of the fact
that he is or was serving as an agent of the Company.

10.                    
With respect to a Claim or Action for which the Company is obligated to
indemnify the Indemnitee hereunder, the Company may conduct negotiations toward
the Settlement and, with the written consent of the Indemnitee, make such
Settlement as it deems expedient; provided, however, that the Indemnitee shall
not be required, as part of any post-Settlement, to admit liability or agree to
indemnify the Company in respect of, or make contribution to, any compensation
or other payment for which provision is made under the Settlement. The Company
shall pay any compensation or other payment for which provision is made by such
Settlement.

11.                    
With respect to a Claim or Action for which the Company is obliged to indemnify
the Indemnitee hereunder, if the Indemnitee shall fail to give his/her consent
to the terms of a proposed Settlement which is otherwise acceptable to the
Company and the claimant and which otherwise meets the requirements of Section
10, the Company may require the Indemnitee to negotiate or defend the Claim or
Action independently of the Company and in such event any amount recovered by
such claimant in excess of the amount for which Settlement could have been made
by the Company will not be recoverable under this Agreement, it being further
agreed by the Parties that the Company will only be responsible for legal fees
and costs up to the time at which such Settlement could have been made.

Tax Gross Up

12.                    
If the Canada Customs and Revenue Agency or any provincial taxing authority, or
the United States Internal Revenue Service or any state taxing authority,
assesses the Indemnitee on the basis that any indemnity payment received must be
included in computing the Indemnitees income for tax purposes, then, unless the
Company elects to dispute such assessment at its expense and is successful in
reversing the assessment, the Company will make an additional payment or
payments from time to time, at such times in such amounts as will ensure the
Indemnitee is not out-of-pocket, to the Indemnitee to fully ensure that, taking
into account any income inclusion required in respect of any indemnity payment
or such additional payment or payments, the Indemnitee is after receiving such
additional payment or payments, fully compensated for any actual tax liability
(including any interest or penalty), or for the use of losses, deductions,
credits or similar amounts used in offsetting an income inclusion or other
assessed amounts relating to any indemnity payment or to any additional payment
made under this Agreement.

Enforcement of Claim

13.                    
If any claim arising from any right to indemnification conferred by the Company
pursuant to §6, §7 and §9 is not paid in full by the Company within 30 days
after a written claim has been received by the Company, the Indemnitee may, at
any time thereafter, bring suit against the Company to recover the unpaid amount
of the claim and, if successful in whole or in part, the Indemnitee will be
entitled to be paid also the expense of prosecuting such claim.

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14.                    
The Company will have no obligation to indemnify or save harmless the Indemnitee
in respect of any liability for which he/she is entitled to be indemnified
pursuant to any valid and collectible policy of insurance. Where partial
indemnity is provided by such policy, the obligation of the Company under §6, §7
and §9 will be limited to that portion of the liability for which
indemnification is not provided by such policy. The foregoing notwithstanding,
to the extent that the Indemnitee has purchased any such insurance and has not
been reimbursed therefor by any person, the obligation of the Company hereunder
shall be primary to such insurance.

Insurance

15.                    
The Company may, but is not required, to maintain insurance, at its expense, to
protect itself and the Indemnitee against any expense, liability or loss
referred to in this Agreement, whether or not the Company would have the power
to indemnify the Indemnitee against such expense, liability or loss under the
Act.

Indemnification Deemed a Contract

16.                    
All rights to indemnification under this Agreement will be deemed to be a
contract between the Company and the Indemnitee pursuant to which the Company
and the Indemnitee intend to be legally bound. The Company hereby agrees that it
will not amend its Articles or By-laws in any way that will be inconsistent with
this Agreement.

Amplification of Rights

17.                    
The provisions of this Agreement are in amplification of or in addition to, and
not by way of limitation of or substitution for, any rights, immunities or
protection conferred on any director, employee or agent of the Company by the
Act or any other applicable law or statute, the Articles of the Company, or
otherwise.

Survival; Heirs and Successors

18.                    
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Agreement will continue if the Indemnitee ceases to be a director,
employee or agent of the Company for any Claims or Actions arising out of
Indemnitees relationship with the Company and notwithstanding a Claim is made
or Action filed or threatened after the Indemnity terminates such relationship
and will enure to the benefit of the heirs, executors and administrators of the
Indemnitee.

Resignations Will Not Be Prevented

19.                    
Nothing contained in this Agreement shall prevent the Indemnitee from resigning
at any time from any office that the Indemnitee holds with the Company or
otherwise holds at the request of the Company.

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Amendments and Modifications

20.                    
No amendment, modification, supplement, termination or waiver of any provision
of this Agreement will be effective unless in writing signed by the Parties and
then only in the specific instance and for the specific purpose given.

Governing Law; Dispute Resolution; Burden of Proof

|21. | (a)          
      This Agreement shall be construed and interpreted in accordance with and
      governed by the laws of the Province of British Columbia, Canada and the
      federal laws of Canada applicable therein.                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (b)          
      In the event of any dispute regarding the application or interpretation or
      enforcement of this Agreement, the parties hereby submit to the
      non-exclusive jurisdiction of the courts located in the Province of
      British Columbia in respect of any suit, action, proceeding or
      counterclaim. Any costs of such litigation, including attorneys fees and
      expenses for Indemnitee and the Company shall be paid by the
Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | (c)          
      If there is any dispute as to whether Indemnitee is entitled to indemnity
      for any amount hereunder, the parties agree that the Company shall be
      required to assume the burden of proof that Indemnitee is not entitled to
      indemnity hereunder.                                                                                                                                                                                          

Severability

22.                    
Each provision of this Agreement is intended to be severable, and the
unenforceability or invalidity of any provision under any applicable law will
not affect the enforceability or validity of the remainder of this Agreement in
so far as such law is applicable, or of this entire Agreement in so far as such
law is not applicable.

Notice

23.                    
Any notice, request, direction or other instrument required or permitted to be
given hereunder by any Party to the other will be deemed to be well and
sufficiently given if in writing and delivered by registered mail or by hand
(including commercial courier service) to the applicable Party at the applicable
address set out in the first page of this Agreement or to such other address as
is specified by the particular Partys notice to the other Party.

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Counterparts

24.                    
This Agreement may be executed in several counterparts, each of which when so
executed shall be deemed to be an original and such counterparts shall
constitute one and the same instrument and notwithstanding the date of execution
shall be deemed to bear that date as first written above. A facsimile copy of
this Agreement signed by any Party in counterpart, shall be deemed to be and
shall constitute a properly executed, delivered and binding document of the
Parties so signing, notwithstanding the actual date of execution. Each of the
Parties further agrees to promptly return an original, duly executed counterpart
of this Agreement following the delivery of the facsimile copy thereof.

IN WITNESS WHEREOF,this Agreement has been executed by
the Parties as of the day and year first above written.

TAG OIL LTD.

Per:    /s/ Garth
Johnson           Garth
Johnson, Director and CFO

|SIGNED, SEALED AND DELIVERED by            | ) |                          
|------------------------------------------ | - | -------------------------
|Giuseppe (Pino) Perone in the presence of: | ) |                          
|                                           | ) |                          
|                                           | ) |                          
|/s/Dan Brown                               | ) | /s/Giuseppe (Pino) Perone
|Witness                                    | ) | Giuseppe (Pino) Perone   
|                                           | ) |                          
|                                           | ) |                          
|Name                                       | ) |                          
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|Address                                    | ) |                          
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