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CONSULTING AGREEMENT

THIS AGREEMENT made effective August 15, 2005

AMONGST:

> TAG OIL LTD. a company incorporated under the
>         laws of Yukon Territory with business offices at 1407-1050 Burrard Street,
>         Vancouver, British Columbia, V6Z 2S3
>       (the Company)

AND:

> Brian Jones, of 4019 15 Street, SW, Calgary, Alberta,
>         T2T 4A8
>       (the Consultant)

WHEREAS the Company wishes to retain the Consultant to
provide certain services and the Consultant has agreed that he shall provide
such services to the Company.

NOW THEREFORE, in consideration of the mutual promises
and covenants as hereinafter set forth, the parties hereto agree as follows:

1.            
            PROVISION OF
SERVICES

1.1                
      The Company hereby retains the services of the
Consultant and the Consultant hereby agrees to provide such services upon the
terms and conditions set forth in this Agreement

2.                        
TERM

2.1                      
Term for Services. The term for the provision of services by the
Consultant to the Company will commence on August 15, 2005 and will continue for
twelve months (the Term) subject to earlier termination by either the
Consultant or the Company in accordance with the terms hereof. The Term may be
extended thereafter upon the mutual agreement of the parties by written request
given by either party providing such extension request is accepted by the other
party at least 30 days before the one-year anniversary of this Agreement.

2.2                      
Prior Agreements. This Agreement will continue in full force and effect
during the Term unless terminated in accordance with §6. This Agreement
supersedes any prior employment or consulting arrangements or agreements between
the Company and the Consultant, and the Consultant acknowledges that no money or
severance is owed by the Company to the Consultant as of the date hereof for the
previous services of the Consultant.

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3.                        
COMPENSATION

3.1                      
For services rendered by the Consultant pursuant to this Agreement the Company
will pay the Consultant consideration of CAD $84,000 per year. The Consultant
agrees to promptly pay all income taxes and CPP related to the remuneration and
benefits received in connection with this Agreement and to save harmless the
Company and its Officers and Directors in connection with this undertaking.

4.                        
DUTIES

4.1                      
The Consultant will act as the Companys Executive Vice President and will
provide services to assist in the development of Companys business by assisting
in executing the Companys business plan, participating in the Companys
financing objectives and shall perform such other duties and assignments as may
be from time to time determined by the Board of Directors (the Board)
of the Company. The Consultant shall work from and maintain the Companys
Calgary office of Suite 400-534 17th Avenue SW, Calgary, Alberta.

4.2                      
Expenses. The Company will reimburse the Consultant for reasonable
out-of-pocket business expenses incurred by the Consultant on behalf of the
Company.

5.                        
FULL TIME SERVICES

5.1                      
The Consultant will devote substantial full time attention, energies and best
efforts to the Company as may be reasonably required but may engage in other
business activity outside of normal business hours as long as such activity does
not unreasonably interfere, or in any way compete with or conflict with the
duties of the Consultant hereunder.

6.                        
TERMINATION

6.1                      
Termination With Cause. The Company may, at any time, without advance
notice to the Consultant, or payment of any compensation in lieu of notice,
forthwith terminate the services of the Consultant for cause. The term cause
means (i) a persistent breach of this Agreement by the Consultant and the
Consultant fails to cure the breach within 30 days following written notice of a
breach by the Company; or (ii) the existence or occurrence of malfeasance or
gross negligence entitling the Company to terminate the Consultant at common
law.

6.2                      
Termination Without Cause. The Company may at any time, upon 60 days
advance notice to the Consultant, forthwith terminate the services of the
Consultant other than for cause. In the case of termination other than for
cause, the Company will be liable to pay the Consultant an amount equal to
one-half his annual aggregate salary hereunder. This Agreement will terminate
upon the death or disability (incapacity for not less than 45 days) of the
Consultant, which termination will be deemed to be other than for cause.

6.3                      
Termination by the Consultant. The Consultant may terminate the provision
of its services under this Agreement on not less than 30 days notice to the
Company, in which case the obligations of the Company will be the same as though
the services were terminated for cause.

6.4                      
Other Claims. The Consultant acknowledges and agrees that the notice and
provisions for compensation on termination provided in this Section are fair and
reasonable and

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agrees that upon any termination of the Consultants services
by the Company, or upon any termination of this Agreement by the Consultant, the
Consultant will have no action, cause of action, claim or demand against the
Company or any other person as a consequence of such termination.

6.5                      
Resignation, Return of Company Records. On termination hereof for any
reason, the Consultant shall immediately resign from and shall return to the
Companys Secretary any records and documents pertaining to the Company, its
business, assets and prospects (including potential acquisitions) to the Company
immediately on termination hereof without retaining copies of such documents
except to the extent required by law. If any record copies are retained
Consultant shall identify these to the Board and shall keep them confidential.

7.                        
CONFIDENTIAL INFORMATION AND WORK PRODUCT

7.1                      
The Consultant will not, during the Term or at any time after the termination of
his services by the Company, use for himself or others, divulge or convey to
others, or aid or abet others to divulge or convey to others, any information or
knowledge relating to the properties, prospects and business of the Company, or
any of their affiliates, including information relating to financial aspects,
employees, properties or prospects and intellectual property in any way obtained
by him during his association with the Company or in any way obtained by other
employees of the Company, unless (i) such information, knowledge, data or
property is properly in the public domain other than through a breach of this
Agreement; (ii) the Consultant has received prior authorization by the Company
or such use divulgence or conveyance is reasonably necessary in the course of
the Consultants duties; or (iii) required by law. All intellectual property,
resource property prospects and work product conceived or developed by the
Consultant during the term hereof belongs to the Company absolutely.

7.2                      
Notwithstanding anything else in this Agreement, it is expressly acknowledged
and understood by the Consultant that all of the work product of the Consultant
while employed by the Company hereunder or holding any office in the Company
shall belong to the Company absolutely and notwithstanding the generality of the
foregoing, all documents, correspondence produced by the Consultant during the
term of employment hereunder shall be the exclusive property of the Company. The
Consultant further agrees to execute without delay or request for further
consideration any necessary documents and assurances as may be necessary to
transfer all rights to same to the Company. In the event of the termination of
the Consultant for any reason hereunder, the Consultant shall promptly turn over
to the Company any intellectual property which is evidenced by any physical
documentation (whether written, digital, magnetic, electronic or otherwise) or
any other of the Companys assets or property in his possession or under his
control.

8.                        
SURVIVAL OF COVENANTS

8.1                      
Except as otherwise specifically provided herein and notwithstanding the
termination of the services of the Consultant or termination of this Agreement,
the covenants, representations and warranties contained in §7, and §9 hereof
will survive such termination and will continue in force and effect for the
benefit of the Company for a time period unlimited in duration.

9.                        
NON-COMPETITION COVENANTS OF THE EXECUTIVE

9.1                      
Definitions. In this Section:

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Business means the
  business carried on by the Company and its affiliates relating to exploration
  for oil and gas;

Competitive Business
   means the direct oil and gas permits, properties or concessions in which
  the Company is active in the investigation, negotiation , exploration or production
  of at the time of termination hereof;

Customer means any
  person who has been a customer of the Company or its affiliates at any time
  within a period of one year prior to the date of termination or expiration of
  this Agreement;

Restricted Area means
  any claim, concession, prospect or property interest which fall within the definition
  of a Competitive Business; and

Restricted Period
  means 6 months from the date of termination of this Agreement whether by expiry
  or voluntary or involuntary termination.

9.2                      
  Non-Competition. The Consultant will not, during the Restricted Period
  and within the Restricted Area,

(a)      directly
  or indirectly carry on, engage in or participate in, any Competitive Business,
  as defined above, either alone or in partnership or jointly or in conjunction
  with any other person;

(b)      directly
  or indirectly assist (as principal, beneficiary, director, shareholder, partner,
  nominee, executor, trustee, agent, servant, employee, independent contractor,
  supplier, consultant, lender, guarantor, financier or in any other capacity
  whatever) any person to carry on, engage in or participate in, a Competitive
  Business or within the restricted Area ; and

(c)      
  have any direct or indirect interest or concern (as principal, beneficiary,
  director, shareholder, partner, nominee, executor, trustee, agent, servant,
  employee, consultant, independent contractor, supplier, creditor or in any other
  capacity whatever) in or with any person, if any part of the activities of such
  person consists of carrying on, engaging in or participating in a Competitive
  Business or within the Restricted Area except holding securities of a public
  company constituting less than 2% of its outstanding share capital;

9.3                      
  Non-Solicitation. During the Restricted Period and within the Restricted
  Area, the Consultant will not,

(a)      
  directly or indirectly solicit any Customer;

(b)      directly
  or indirectly assist (whether as principal, beneficiary, servant, director,
  shareholder, partner, nominee, executor, trustee, agent, employee, independent
  contractor, supplier, consultant, lender, financier or in any other capacity
  whatever) any person directly or indirectly to solicit any Customer; or

(c)      have
  any direct or indirect interest or concern (be it as principal, beneficiary,
  director, shareholder, partner, nominee, executor, trustee, agent, servant,
  employee,

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consultant, independent contractor,
  supplier, creditor or in any other capacity whatever) in or with any person
  if any of the activities of which person consists of soliciting any Customer
  except holding securities of a public company constituting less than 10% of
  its outstanding share capital;

if such solicitation would, directly or indirectly, be intended
to result in a sale of any product or service to such Customer and is directly
or indirectly competitive or potentially competitive with any product or service
then produced by the Business;.

9.4                      
Employees, etc.The Consultant will not during the Restricted Period,
directly or indirectly, induce any individual who to his knowledge is then
employed by the Company, or any of their subsidiaries, to leave the employ of
the Company, or any of their subsidiaries without the prior written consent of
the Company.

9.5                      
  Covenants Reasonable. The Consultant agrees that,

(a)      the
  covenants in this Agreement are reasonable in the circumstances and are necessary
  to protect the Company; and

(b)      the
  breach by him of any of the provisions of this Agreement would cause serious
  and irreparable harm to the Company, and their shareholders which could not
  adequately be compensated for in damages in the event of a breach by him of
  such provisions or an order of injunction being issued against him restraining
  him from any further breach of such provisions and agrees that such injunction
  may be issued against him without the necessity of an undertaking as to damages
  by the Company, or their shareholders; the provisions of this section shall
  not be construed so as to be in derogation of any other remedy which the Company,
  or any of their shareholders may have in the event of such a breach.

9.6                      
Covenants Independent. The existence of any claim or cause of action of
the Consultant against the Company, or any of their shareholders will not
constitute a defence to the enforcement by the Company, or any of their
shareholders of the provisions of this Agreement.

9.7                      
Invalidity. In the event that any term or provision of this Agreement
shall, to any extent, be invalid or unenforceable, the remaining terms and
provisions of this Agreement shall not be affected thereby and shall be valid
and enforceable to the fullest extent permitted by law.

9.8                      
Rights in Addition. The rights and remedies of the Company hereunder are
in addition to and not in substitution for any other rights of remedies which
they may have at any time against the Consultant, at law or in equity.

10.                        SUCCESSORS
AND ASSIGNS

10.1                     
This Agreement will inure to the benefit of, and be binding upon, the parties
hereto and their legal representatives, successors and permitted assigns except
that no claims may be asserted by the legal representatives, successors and
assignees of the Consultant in respect of compensation or other benefits for
periods following the death or total incapacity of the Consultant other than
those expressly provided for in this Agreement.

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11.                        NOTICES

11.1                     
Any notice required or permitted, to be given, under this Agreement will be
deemed to have been duly given only if such notice is in writing and is
delivered to addresses of the parties hereto first above written. A party may
change an address for notices at any time by notice duly given.

12.                       
GOVERNING LAW

12.1                     
This Agreement is and will be deemed to be made in British Columbia and for all
purposes will be governed exclusively by and construed and enforced in
accordance with the laws prevailing in British Columbia, and the rights and
remedies of the parties will be determined in accordance with those laws.

13.                        SEVERABILITY

13.1                     
If any provision of this Agreement is at any time unenforceable or invalid for
any reason it will be severable from the remainder of this Agreement and, in its
application at that time, this Agreement will be construed as though such
provision was not contained herein and the remainder will continue in full force
and effect and be construed as if this Agreement had been executed without the
invalid or unenforceable provision.

14.                        INDEPENDENT
LEGAL ADVICE

14.1                     
The parties hereto acknowledge that they have each received independent legal
advice in relation to the terms and conditions of this Agreement.

IN WITNESS WHEREOFthe parties hereto have duly executed
and delivered this Agreement as of the day and year first above written.

TAG OIL LTD.

|Per:            |                      | 
|--------------- | -------------------- | 
|                | Authorized Signatory | 
|                |                      | 
|                |                      | 
|THE CONSULTANT: |                     
|                |                      | 
|                |                      | 
|                |                      | 
|BRIAN JONES     |                     

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