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TAG Oil Ltd.COMPENSATION COMMITTEE
CHARTER

1. PURPOSE: RESPONSIBILITIES AND AUTHORITY.

The Compensation Committee shall assist the Board of Directors
in carrying out its responsibilities relating to executive and director
compensation. In furtherance of this purpose, the Committee shall have the
following responsibilities and authority:

a)      Compensation policy.The
  Committee shall develop an overall strategy for the Companys competitive
  positioning with its comparative group and the make-up of that group for approval
  by the Board of Directors.

This policy shall be used as a reference point by the Committee
in all of its deliberations.

In determining the amount of compensation, the Committee will
also consider the Companys performance and relative shareholder return.

b)      Director compensation.The
  Committee shall recommend to the Board of Directors the form and amount of compensation
  to be paid by the Company to directors for service on the Board and on Board
  committees. The Committee shall review director compensation at least annually.

c)      Compensation structure.The
  Committee shall recommend to the Board of Directors the structure of the Companys
  compensation programs, both for management and staff, including base salaries,
  perquisites, long and short term incentive compensation, including stock options.

Individual grants will be made within the context of this
structure. The Committee shall review this structure on an annual basis.

d)      Annual review.The Committee,
  with input from the CEO and CFO of the Company, shall annually review the Companys
  base compensation structure and recommend changes in or additions to such compensation
  to the Board of Directors as needed.

The Committee shall recommend to the Board of Directors the
annual base compensation of the Company's executive officers and senior managers
(collectively the "Officers").

The Committee shall recommend to the Board of Directors the
annual base compensation for non-Officer personnel providing services to the
Company or, if the number of staff warrants, the range of increase or decrease
in the annual base compensation for such staff.

e)      Short term incentives.The
  Committee shall evaluate the performance of Officers and recommend to the Board
  of Directors incentive compensation payable to Officers under any such incentive
  compensation plan.

The Committee shall provide oversight of the performance
evaluation and incentive compensation of non-Officer personnel providing
services to the Company.

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f)      Long term incentives.
  The Committee, with the help of the CFO as necessary, shall administer the Company's
  stock option and other equity based compensation plans and recommend annual
  or other grants of stock options and other equity based compensation.

The Chief Executive Officer of the Company shall not be
present during any vote or other deliberation of the Committee regarding the
compensation or performance of the Chief Executive Officer.

|**2.** | **STRUCTURE AND MEMBERSHIP**                                                                                                                                                                                                             
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|a)     | Number.The Committee shall consist of at least
        two persons unless the Board should from time to time otherwise determine.                                                                                                        
|       |                                                                                                                                                                                                                                          
|b)     | Membership.The Committee shall recommend to
        the Board of Directors the qualifications and criteria for membership
        on the Committee.                                                                                      
|       |                                                                                                                                                                                                                                          
|c)     | Selection and Removal.Members of the Committee
        shall be appointed by the Board. The Board may remove members of the Committee
        at any time with or without cause.                                                         
|       |                                                                                                                                                                                                                                          
|d)     | Independence.The majority of the members of
        the Committee shall be independent as determined under the Companys
        Corporate Governance Guidelines.                                                                        
|       |                                                                                                                                                                                                                                          
|e)     | Chair.Unless the Board appoints a Chair of the
        Committee, the Committee shall elect a Chair by majority vote.                                                                                                                    
|       |                                                                                                                                                                                                                                          
|f)     | Compensation.The compensation of the Committee
        shall be as determined by the Board.                                                                                                                                              
|       |                                                                                                                                                                                                                                          
|g)     | Term.Members of the Committee shall be appointed
        for one-year terms. Each member shall serve until his or her replacement
        is appointed, or until he or she resigns or is removed from the Board
        or the Committee.

|**3.** | **PROCEDURES AND ADMINISTRATION**                                                                                                                                                                                                                                                                                                       
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|       |                                                                                                                                                                                                                                                                                                                                         
|a)     | Meetings.The Committee shall meet as often as
        it deems necessary in order to perform its responsibilities. The Committee
        shall keep minutes of its meetings and any other records as it deems appropriate.                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                         
|b)     | Subcommittees.The Committee may form and delegate
        authority to one or more subcommittees, consisting of at least two members,
        as it deems appropriate from time to time under the circumstances.                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                         
|c)     | Reports to the Board.The Committee shall report
        (orally or otherwise) regularly to the Board following meetings of the
        Committee with respect to such matters as are relevant to the Committees
        discharge of its responsibilities, and shall report in writing on request
        of the Chairman of the Board.

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|d) | Reports to Shareholders.The Committee, with the
      help of the Companys CFO, shall prepare and publish the annual executive
      compensation report in the Companys annual information form or
      information circular, as required by applicable securities
    legislation.                                                                                                                                                    
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|e) | Charter.The Committee shall, at least annually,
      review and reassess the adequacy of this Charter and recommend any
      proposed changes to the Board for approval.                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|f) | Independent Advisors.The Committee shall have the
      authority to engage such independent legal and other advisors as it deems
      or appropriate to carry out its responsibilities. Such independent
      advisors may be regular advisors to the Company. The Committee is
      empowered, without further action by the Board, to cause the Company to
      pay appropriate compensation to advisors engaged by the
  Committee.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|g) | Investigations.The Committee shall have the
      authority to conduct or authorize investigations into any matters within
      the scope of its responsibilities as it deems appropriate, including the
      authority to request any Officer or other person to meet with the
      Committee.                                                                                                                                         
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|h) | Annual Self-Evaluation.The Committee shall
      evaluate its own performance at least annually.                                                                                                                                                                                                                                                                                                                                           

ADDITIONAL POWERS

The Committee shall have such other duties as may be delegated
from time to time by the Board of Directors.

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