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EVALUATION OF THE P&NG RESERVES

OF

TAG OIL LTD.

IN THE CHEAL AREA OF NEW ZEALAND

(As of April 30, 2006)



Geological and Petroleum Engineering Consultants

Suite 900, North Tower, Sun Life Plaza, 140  4th Avenue S.W.
Calgary, Alberta, Canada T2P 3N3 Tel: (403) 294-5500 Fax: (403) 294-5590
Fax: (403) 294-5580

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|Copies:       | TAG Oil Ltd. (5 copies)                                                                                                                                                                                                                                                                                                                               
|------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              | Sproule International Limited (1 copy)                                                                                                                                                                                                                                                                                                                
|              | Electronic (5)                                                                                                                                                                                                                                                                                                                                        
|              |                                                                                                                                                                                                                                                                                                                                                       
|Project No.:  | 3129.70367                                                                                                                                                                                                                                                                                                                                            
|              |                                                                                                                                                                                                                                                                                                                                                       
|Prepared For: | TAG Oil Ltd.                                                                                                                                                                                                                                                                                                                                          
|              |                                                                                                                                                                                                                                                                                                                                                       
|Authors:      | Greg D. Robinson, P.Eng., Project Leader                                                                                                                                                                                                                                                                                                              
|              | Douglas J. Carsted, P.Geol.                                                                                                                                                                                                                                                                                                                           
|              |                                                                                                                                                                                                                                                                                                                                                       
|Exclusivity:  | This report has been prepared for the exclusive use of TAG
      Oil Ltd., and shall not be reproduced, distributed, or made available to
      any other company or person, regulatory body, or organization without the
      knowledge and written consent of Sproule International Limited, and without
      the complete contents of the report.

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|Table of Contents
       Page 1
|--------------------------------

Table of Contents

|Introduction |                                                    
|------------ | ---------------------------------------------------
|             |                                                    
|             | Field Operations                                   
|             | Historical Data, Interests and Burdens             
|             | Evaluation Standards                               
|             | Evaluation Procedures                              
|             | Evaluation Results                                 
|             | BOE Cautionary Statement                           
|             | Forward-Looking Statements                         
|             | Exclusivity                                        
|             | Certification                                      
|             | Permit to Practice                                 
|             | Certificates                                       
|             |                                                    
|             |                                                    
|Summary      |                                                    
|             |                                                    
|Table S-1    | Summary of the Evaluation of the P&NG Reserves     
|             | of TAG Oil Ltd. in the Cheal Area of New Zealand   
|             | (As of April 30, 2006),                            
|             | After Income Tax                                   
|             |                                                    
|Table S-1A   | Summary of the Evaluation of the P&NG Reserves     
|             | of TAG Oil Ltd. in the Cheal Area of New Zealand   
|             | (As of April 30, 2006),                            
|             | Before Income Tax                                  
|             |                                                    
|Table S-2    | Summary of Price Forecasts                         
|             | (Effective April 30, 2006)                         
|             |                                                    
|Table S-3    | Summary of Reserves and Net Present Values         
|             | Total Proved Plus Probable Plus Possible Reserves 
|             | Before and After Income Taxes                      
|             |                                                    
|Table S-3A   | Summary of Reserves and Net Present Values         
|             | Total Proved Plus Probable Reserves               
|             | Before and After Income Taxes                      

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|Table of Contents
       Page 2
|--------------------------------

|Table S-3B | Summary of Reserves and Net Present Values   
|---------- | ---------------------------------------------
|           | Total Proved Undeveloped Reserves           
|           | Before and After Income Taxes                
|           |                                              
|Table S-3C | Summary of Reserves and Net Present Values   
|           | Total Probable Undeveloped Reserves         
|           | Before and After Income Taxes                
|           |                                              
|Table S-3D | Summary of Reserves and Net Present Values   
|           | Total Possible Undeveloped Reserves         
|           | Before and After Income Taxes                
|           |                                              
|Figure S-1 | Map of New Zealand Highlighting Petroleum    
|           | Exploration Permit (PEP) 38738               
|           |                                              
|Figure S-2 | Daily Company Gross Barrels of Oil Equivalent
|           | (BOE) Forecast                               
|           |                                              
|Figure S-3 | Annual Cash Flow (After Income Tax)          
|           |                                              
|Figure S-4 | Net Present Values (After Income Tax)        
|           |                                              
|           |                                              
|Discussion |                                              
|           |                                              
|           | Geology                                      
|           | Reserves and Production Forecasts            
|           | Pricing                                      
|           | Operating and Capital Costs                  
|           | Royalties                                    
|           | Taxes                                        
|           | Net Present Values                           
|           |                                              
|Table 1    | Cheal, New Zealand, Volumetric Reservoir Data
|           | And Estimates of Reserves                    
|           |                                              
|Table 2    | Cheal, New Zealand, Estimates of Reserves    
|           | and Net Present Values                       
|           |                                              
|Table 3    | Cheal, New Zealand, Forecasts of Production  
|           | and Net Revenue                              

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|Table of Contents
       Page 3
|--------------------------------

|Constant Prices and Costs  |                                                 
|-------------------------- | ------------------------------------------------
|                           |                                                 
|Table C-1                  | Summary of the Evaluation of the P&NG Reserves  
|                           | of TAG Oil Ltd. in the Cheal Area of New Zealand
|                           | (As of April 30, 2006),                         
|                           | Constant Prices and Costs, After Income Tax     
|                           |                                                 
|Table C-1A                 | Summary of the Evaluation of the P&NG Reserves  
|                           | of TAG Oil Ltd. in the Cheal Area of New Zealand
|                           | (As of April 30, 2006),                         
|                           | Constant Prices and Costs, Before Income Tax    
|                           |                                                 
|Table C-2                  | Forecasts of Production and Net Revenue         
|                           | Constant Prices and Costs                       
|                           |                                                 
|                           |                                                 
|National Instrument 51-101
|                           |                                                 
|                           | Forecast Prices and Costs                       
|                           | Constant Prices and Costs                       
|                           |                                                 
|Form 51-101F2              |                                                 
|                           |                                                 
|Table 1                    | Summary of Oil and Gas Reserves,                
|                           | as of April 30, 2006                           
|                           | Forecast Prices and Costs                       
|                           |                                                 
|Table 2                    | Summary of Net Present Values                   
|                           | of Future Net Revenue,                          
|                           | as of April 30, 2006                           
|                           | Forecast Prices and Costs                       
|                           |                                                 
|Table 3                    | Total Future Net Revenue (Undiscounted),        
|                           | as of April 30, 2006                           
|                           | Forecast Prices and Costs                       
|                           |                                                 
|Table 4                    | Net Present Value of Future Net                 
|                           | Revenue by Production Group,                    
|                           | as of April 30, 2006                           

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       Page 4
|--------------------------------

|              | Forecast Prices and Costs                                   
|------------- | ------------------------------------------------------------
|              |                                                             
|Table 5       | Summary of Pricing and Inflation Rate                       
|              | Assumptions, as of April 30, 2006                          
|              | Forecast Prices and Costs                                   
|              |                                                             
|Table 6       | Summary of Oil and Gas Reserves                             
|              | as of April 30, 2006                                       
|              | Constant Prices and Costs                                   
|              |                                                             
|Table 7       | Summary of Net Present Values of                            
|              | Future Net Revenue,                                         
|              | as of April 30, 2006                                       
|              | Constant Prices and Costs                                   
|              |                                                             
|Table 8       | Total Future Net Revenue (Undiscounted),                    
|              | as of April 30, 2006                                       
|              | Constant Prices and Costs                                   
|              |                                                             
|Table 9       | Net Present Value of Future Net                             
|              | Revenue by Production Group,                                
|              | as of April 30, 2006                                       
|              | Constant Prices and Costs                                   
|              |                                                             
|Table 10      | Summary of Pricing                                          
|              | Assumptions as of April 30, 2006                           
|              | Constant Prices and Costs                                   
|              |                                                             
|              |                                                             
|Figures       |                                                             
|              |                                                             
|Figure 1      | Map of New Zealand highlighting                             
|              | Petroleum Exploration Permit (PEP) 38738                    
|              |                                                             
|Figure 2      | Cheal Field  Mt. Messenger Time Structure                  
|              |                                                             
|Figure 3      | Cheal Oil Field  Mt. Messenger DSU Reserve
      Assignment
|              |                                                             
|Figure 4 to 7 | Production Curves                                           

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|Table of Contents
       Page 5
|--------------------------------

|Appendices |              
|---------- | -------------
|           |              
|Appendix A | Definitions  
|Appendix B | Abbreviations

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|Introduction 
      Page 1
|---------------------------

Introduction

This report was prepared by Sproule International Limited (Sproule) at the request of Mr. Drew Cadenhead, President and Chief Executive Officer, TAG Oil Ltd. TAG Oil Ltd. is hereinafter referred to as "the Company." The effective date of
this report is April 30, 2006, and it consists of an evaluation of the P&NG reserves associated with the Company's interest in the Cheal Field, New Zealand. This report was prepared in May 2006 for the Companys corporate purposes.

Field Operations

In the preparation of this evaluation, a field inspection of the properties was not performed by Sproule. The relevant engineering data were made available by the Company or obtained from public sources and the non-confidential files at Sproule. No
material information regarding the reserves evaluation would have been obtained by an on-site visit.

Historical Data, Interests and Burdens

|1. | The operator of the property, Austral-Pacific Energy Limited, has provided data on behalf of the Company. All historical production, well data, revenue and expense data, product prices actually received, and other data that were
obtained from the operator of the property or from public sources were accepted as represented, without any further investigation by Sproule.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|2. | Property descriptions and details of interests held, as supplied by the Company, were accepted as represented. No investigation was made into either the legal titles held or any operating agreements in place relating to the
subject properties.                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|3. | Lessor and overriding royalties and other burdens were obtained from the Company. No further investigation was undertaken by Sproule.                                                                                                                                                                                                                                             

Evaluation Standards

This report has been prepared by Sproule using current geological and engineering knowledge, techniques and computer software. It has been prepared within the Code of Ethics of the Association of Professional Engineers, Geologists and Geophysicists
of Alberta (APEGGA).

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|Introduction 
      Page 2
|---------------------------

This report adheres in all material aspects to the best practices recommended in the COGE Handbook, which are in accordance with principles and definitions established by the Calgary Chapter of the Society of Petroleum Evaluation
Engineers. The COGE Handbook is incorporated by reference in National Instrument 51-101.

Evaluation Procedures

|1. | The operator, on behalf of the Company, provided Sproule with recent revenue statements to determine certain economic parameters.                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                          
|2. | The forecasts of product prices used in this evaluation were based on Sproules April 30, 2006 price forecasts.                                                                          
|   |                                                                                                                                                                                          
|3. | Well abandonment and disconnect costs were included in this report at the entity level for wells which have reserves assigned. No allowances for reclamation or salvage values were made.

Evaluation Results

|1. | The accuracy of reserves estimates and associated economic analysis is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data provided at
the time this report was prepared, the estimates presented herein are considered reasonable. However, they should be accepted with the understanding that reservoir and financial performance subsequent to the date of the estimates may necessitate
revision. These revisions may be material.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | The net present values of the reserves presented in this report simply represent discounted future cash flow values at several discount rates. Though net present values form an integral part of fair market value estimations,
without consideration for other economic criteria, they are not to be construed as Sproules opinion of fair market value.                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3. | The dollar values presented throughout the report are in United States dollars, unless otherwise stated. An exchange rate of 0.6364 United States dollars per New Zealand dollar was used to convert budget information supplied by
the Company. This rate was based on the exchange rate for April 28, 2006, as obtained from the Bank of Canada website.                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4. | Due to rounding, certain totals may not be consistent from one presentation to the next.                                                                                                                                                                                                                                                                                                                                                                                                                                            

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|Introduction 
      Page 3
|---------------------------

BOE Cautionary Statement

BOEs (or McfGEs or other applicable units of equivalency) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1bbl (or An McfGE conversion ratio of 1 bbl:6 Mcf) is based on an
energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Forward-Looking Statements

This report may contain forward-looking statements including expectations of future production revenues and capital expenditures. Information concerning reserves may also be deemed to be forward-looking as estimates involve the implied assessment
that the reserves described can be profitably produced in future. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks
include, but are not limited to: the underlying risks of the oil and gas industry (i.e., operational risks in development, exploration and production; potential delays or changes in plans with respect to exploration or development projects or
capital expenditures; the uncertainty of reserves estimations; the uncertainty of estimates and projections relating to production; costs and expenses, and health, safety and environmental factors), commodity price and exchange rate fluctuation.

Exclusivity

This report has been prepared for the exclusive use of TAG Oil Ltd., and shall not be reproduced, distributed, or made available to any other company or person, regulatory body, or organization without the knowledge and written consent of Sproule
International Limited, and without the complete contents of the report.

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|Introduction 
      Page 4
|---------------------------

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|Introduction 
      Page 5
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|Introduction 
      Page 6
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|Introduction 
      Page 7
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|Introduction 
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|Summary Page
      1
|---------------------

Summary

Tables S-1 and S-1A, on the following pages, summarize our evaluation of the P&NG reserves associated with the Companys interest in the Cheal Field of New Zealand, after and before New Zealand income taxes. The effective date of the
evaluation is April 30, 2006.

Oil and solution gas reserves were assigned to the Mt. Messenger Formation in the Cheal-A3X and A4 wells and five undrilled locations. The reserves were estimated deterministically for the proved (1P), proved plus probable (2P) and proved plus
probable plus possible (3P) reserves categories. The oil reserves are presented in thousands of barrels, at stock tank conditions. The pipeline gas reserves are presented in millions of cubic feet, at base conditions of 14.65 psia and 60 degrees
Fahrenheit.

The reserves definitions and ownership classification used in this evaluation are in accordance with the standards defined by COGEH reserves definitions and are consistent with NI 51-101.

The net present values of the reserves are presented in thousands of United States dollars, and are based on annual projections of net revenue, which were discounted at various rates using the mid-period discounting method.

A map showing the location of the Companys Petroleum Exploration Permit encompassing the Cheal property is included as Figure S-1.

The price forecasts that formed the basis for the revenue projections in the evaluation were based on Sproules April 30, 2006 pricing model. Table S-2 presents a summary of the forecasts used.

Operating and capital costs were escalated at 2.5 percent per year to 2009 and at 1.5 percent per year thereafter.

Well abandonment and disconnect costs were included in this report for wells which have reserves assigned. No allowances for reclamation or salvage values were made.

The Company has provided us with their outstanding New Zealand tax pools. Canadian income taxes have not been considered in this report.

Summary forecasts of production and cash flow for the various reserves categories are included as Tables S-3 through S-3D.

Figures S-2 through S-4 present the results of our evaluation in graphical form.

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Table: S-1

|TAG OIL LTD.                                                  
|--------------------------------------------------------------
|Summary of the Evaluation of the Company's P&NG
      Reserves
|In the Cheal Area of New Zealand                              
|(As of April 30, 2006)                                        
|                                                              
|                                                              
|                                                              
|Light/Medium Oil (Mbbl)                                       
|Proved Undeveloped                                            
|Total Proved                                                  
|Total Probable                                                
|Total Possible                                                
|Total                                                         
|Solution Gas (MMcf) - values included with
      lt/med oil - 
|Proved Undeveloped                                            
|Total Proved                                                  
|Total Probable                                                
|Total Possible                                                
|Total                                                         
|Corporate                                                     
|Proved Undeveloped                                            
|Total Proved                                                  
|Total                                                         
|GRAND TOTAL (Mboe)                                            
|Proved Undeveloped                                            
|Total Proved                                                  
|Total Probable                                                
|Total Possible                                                
|Total                                                         

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Table: S-1A

|TAG OIL LTD.                                                  
|--------------------------------------------------------------
|Summary of the Evaluation of the Company's P&NG
      Reserves
|In the Cheal Area of New Zealand                              
|(As of April 30, 2006)                                        
|                                                              
|                                                              
|                                                              
|Light/Medium Oil (Mbbl)                                       
|Proved Undeveloped                                            
|Total Proved                                                  
|Total Probable                                                
|Total Possible                                                
|Total                                                         
|Solution Gas (MMcf) - values included with
      lt/med oil - 
|Proved Undeveloped                                            
|Total Proved                                                  
|Total Probable                                                
|Total Possible                                                
|Total                                                         
|GRAND TOTAL (Mboe)                                            
|Proved Undeveloped                                            
|Total Proved                                                  
|Total Probable                                                
|Total Possible                                                
|Total                                                         

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|Summary Page
      4
|---------------------

|Table S-2 Summary of Price
      Forecasts (Effective April 30, 2006)
|---------------------------------------------------------------------
|
|
|                                                                     
|                                                                     
|                                                                     
|Year                                                                 
|                                                                     
|Historical                                                           
|2000                                                                 
|2001                                                                 
|2002                                                                 
|2003                                                                 
|2004                                                                 
|2005                                                                 
|                                                                     
|Forecast                                                             
|2006 (8 mos)                                                         
|2007                                                                 
|2008                                                                 
|2009                                                                 
|2010                                                                 
|2011                                                                 
|2012                                                                 
|2013                                                                 
|2014                                                                 
|2015                                                                 
|2016                                                                 
|2017                                                                 
|Escalation rate of 1.5% thereafter                                   

Note:

|a. | 40 degrees API, 0.4% sulphur                                
|-- | ------------------------------------------------------------
|b. | Incorporates a heating value of 1,150 Btus per
        scf.
|c. | Inflation from 2008 dollars to 2009 dollars is 2.5 percent. 

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Figure S-1




Map of New Zealand highlighting Petroleum Exploration Permit
  (PEP) 38738

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FIGURE S-2




SPROULE INTERNATIONAL LIMITED

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FIGURE S-3




SPROULE INTERNATIONAL LIMITED

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FIGURE S-4



SPROULE INTERNATIONAL LIMITED

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|Discussion 
      Page 1
|-------------------------

Discussion

The Companys reserves are located in the Cheal Field of New Zealand. The field is located in the onshore portion of the Taranaki Basin, which lies along the west coast of the North Island (Figure 1). The basin, which contains Cretaceous to
recent sediments, covers an area of some 32,800 square miles, most of which lies offshore.

The Company owns a 30.5 percent working interest in the shallow rights of PEP 38738. The shallow rights include all strata from recent to base of Miocene, which encompass the Intra Urenui and Mt. Messenger reservoirs in the Cheal Field.

The Cheal structure has been penetrated by a total of four wells, Cheal-1, 2, A3X and A4. Oil and solution gas reserves were assigned to the Mt. Messenger Formation in the Cheal-A3X and A4 wells and five undrilled locations. The reserves were
estimated deterministically for the proved, probable and possible reserves categories.

Recent test data for the Urenui Formation yielded gas with minor amounts of oil. Very little information was supplied regarding the recent tests, and development of this zone was not included in the Companys development plan provided to us. As
a result, reserves have not been considered for this zone.

Geology

The operator provided 2D seismic lines covering the Cheal structure. The 2D seismic data were loaded into a seismic interpretation workstation with well and deviation data and interpreted using Paradigm Geophysicals SeisX interpretation
software. A petrophysical analysis was also carried out on the raw well log data for the four Cheal wells, which encountered the Mt. Messenger Formation at a drilled depth of approximately 5,350 feet.

Our estimates for average porosity, water saturation and net pay thickness for each of the Cheal wells were used in conjunction with the seismic closure of the structure to make the estimates of the original oil in place.

Figure 2 shows the Cheal structure, which is associated with a series of antithetic faults on the lowside hanging wall of a major east-dipping listric fault that sets up a fault-dependent closure at the Mt. Messenger level. Although the current 2D
seismic control provides a 0.5  1 km grid over the Cheal structure, these antithetic faults produce a complex closure at the Mt. Messenger

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|Discussion 
      Page 2
|-------------------------

level that is not well imaged. The mapping would likely change with 3D seismic control. The current closure at the Mt. Messenger level is estimated to be 1,086 acres.

Cheal-1 was drilled in 1995 by New Zealand Oil & Gas Services Ltd. Good oil and gas shows led to the testing of the Urenui Formation. This zone was tested over a nine-day period at a steady rate of 48 bopd with gas declining from 2.7 MMcfd to
1.05 MMcfd. The Mt. Messenger Formation was not tested in this well although shows and petrophysical analysis indicate approximately 16 ft of net pay. The Urenui Formation was further tested for 1.17 days in December 2005 at 0.14 MMcfd of gas, with
no oil reported (Figure 4).

Cheal-2 was drilled in 1995 by New Zealand Oil & Gas Services Ltd. as a step-out to Cheal-1. The well was tested over the Intra Urenui Sandstone for a period of 6 days. The well was flowed at initial rates of 1.8 MMcfd of gas with slugs of oil.
The gas rates declined to 0.9 MMcfd with oil rates of approximately 20 bopd. No water was produced during the test. The petrophysical analysis indicates that the Mt. Messenger Sandstone is wet in this well and defines the limits of the pool to the
east. Plans are to convert this well to water disposal.

Austral-Pacific Energy Limited, as operator of a joint venture, drilled Cheal-A3X in April 2004 to test the hydrocarbon potential of the Intra Urenui and Mt. Messenger sandstones in an updip position from the Cheal-1 and Cheal-2 wells. The well was
directionally drilled from the Cheal A well site toward the NNE, intersecting the Intra Urenui Sandstones between 4,603 - 4,737 ftMD and the Mt. Messenger Sandstone between 5,800 - 5,863 ftMD. Good oil and gas shows were noted over the
two target intervals. The Mt. Messenger Sandstone produced a total of 6,900 bbls of oil on test in June and July of 2004 and was then shut-in until May 2005. The Mt. Messenger was further tested from May to August 2005, at an average oil rate of 350
bopd with gas-oil ratios increasing from 475 to 825 scf per barrel (Figure 5). Watercuts were less than one percent.

The Cheal-A4 well was subsequently drilled in October 2004 to further evaluate the hydrocarbon potential of the Intra Urenui and Mt. Messenger sandstones. The well was directionally drilled from the Cheal A well site toward the NE,
intersecting the target horizons approximately half way between the Cheal A3X well and the Cheal-2 well. The well was completed in the uppermost Intra Urenui Formation and the Mt. Messenger Formation. The well was tested from the Mt. Messenger
Formation from November 2004 to May 2005 and from September 2005 to December 2005. Oil production over this period averaged 265 bopd with gas-oil ratios increasing from 500 to 730 scf per barrel (Figure 6). Watercuts had increased to 24 percent by
December 2005. The Urenui was also tested in April, May, October and November 2005 at gas rates of 0.1 to 1.1 MMcfd with very little oil (Figure 7).

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|Discussion 
      Page 3
|-------------------------

Reserves and Production Forecasts

Oil reserves were estimated volumetrically for the Mt. Messenger Formation using assigned drainage areas (Figure 3) and net pay based on well logs and seismic interpretation. Reservoir porosity and water saturation were obtained from well logs.

Proved, probable and possible undeveloped reserves were assigned to the A3X and A4 wells. These wells have produced one well at a time in test mode in 2004 and 2005, and produced a total of 95,000 barrels of oil prior to the end of 2005. The testing
was done through rental equipment. The wells are currently shut-in waiting on site work and the installation of development facilities. It is expected that the wells will be returned to production by January 1, 2007. As the costs for the site work
and development facilities is significant, the reserves assigned to the A3X and A4 wells were categorized as undeveloped.

Proved, probable and possible undeveloped reserves were assigned to the two undrilled locations, A5 and A6. Probable and possible undeveloped reserves were assigned to the two undrilled locations, Cheal -7 and 8. Possible undeveloped reserves were
assigned to the undrilled location Cheal-9.

Recovery factors were estimated at 15 percent in the proved case, 20 percent in the 2P case and 25 percent in the 3P case. The recovery factors are consistent with primary recoveries reported for the Ngatoro Field, which is the offsetting analog
field to Cheal. Waterflooding has not been considered in this report.

The A3X and A4 wells were scheduled to commence production from the reconstructed site on January 1, 2007, at 250 bopd per well. Production from the undrilled locations, Cheal A5 and A6, was scheduled to commence May 1, 2007. Production from the
undrilled locations, Cheal 7, 8 and 9, was scheduled to commence August 1, 2007. Initial production from the undrilled wells was forecast at 250, 275 and 300 bopd per well for the 1P, 2P and 3P cases, respectively.

The solution gas reserves were estimated based on gas-oil ratios (GORs) of 700 scf per barrel increasing to 1,500 scf per barrel. A surface loss of 25 percent was included for fuel usage.

Pricing

Sproules short-term outlook for oil prices adopts the NYMEX futures market for the forecast period ending April 30, 2008. The forecast used in this evaluation was derived as of April 30, 2006, and reflects the arithmetic average of the futures
market at the close of trading each day, for the month prior to the Termination of Trading date for a May contract. The oil price forecasts

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|Discussion 
      Page 4
|-------------------------

are based on the NYMEX Division light, sweet (low-sulphur) crude oil futures contract, which specifies the West Texas Intermediate crude as a deliverable.

In the long term, the price of oil will be governed by supply and demand, and the degree that OPEC is able to manage supply will be a major determinant in establishing oil prices for the next ten years. The long-term oil price forecast, presented
earlier as Table S-2, was based on a supply forecast that falls in between a fully competitive market and a market controlled by an effective OPEC production quota system. Price stability that promotes a steady growth in demand is therefore in the
best interest of the OPEC nations. Sproule's long-term forecast for WTI has been capped at $45.00 per barrel (2006 dollars) in recognition of the economic hurdle rate of alternative supplies and the increase in global demand for crude oil.

The oil price forecasts are based on a forecast of prices for West Texas Intermediate crude at Cushing, Oklahoma. The price of this marker crude is expected to directly reflect world oil prices over the forecast period. The actual wellhead price of
oil will vary with the quality of the crude and the cost of the transportation from the wellhead to the trading hub. At Cheal a differential of -$US 4.00 per barrel was used.

The Company is expecting to receive a gas price of $NZ 3.50 per gigajoule ($US 2.35 per MMbtu). The heating value for the solution gas was estimated at 1,150 btu per scf, resulting in a gas price of $US 2.70 per mcf. This price was held
constant until January 1, 2009 and then escalated at 1.5 percent per year.

Operating and Capital Costs

The Cheal A3X and A4 wells were produced one well at a time in test mode through rental equipment. The wells are currently shut-in and the site is to be reconstructed to allow production of these and future wells simultaneously. Solution gas, which
was previously flared as test production, will be conserved in long-term production.

The planned site facilities will be run off electricity generated by an onsite generator using an engine fuelled by solution gas. Gas sales are expected through the LTS pipeline to the west or the Waihapa treatment station to the east. The Company
also has a contract in place to export electricity to the local power grid. In this evaluation it was assumed that gas used to provide electricity to the local power grid would be equivalent in value to selling the gas through the LTS pipeline or
Waihapa treatment station.

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|Discussion 
      Page 5
|-------------------------

The wells will be produced through jet pumps. Hot water will be
circulated to address the wax problem; however, it is expected that it will be
necessary to mobilize a crane to the site regularly to deep wax cut by
wireline.

With the previous rental equipment it was not possible to use
condensate/pour point depressants as jet pump power fluid. The electric
centrifugal pumps to be installed in the reconstruction will be capable of
handling condensate / pour point depressants as the power fluid, which is
expected to reduce the need for deep wax cuts.

The oil/condensate /pour point depressant mix is expected to be
trucked to the Omata tank farm in New Plymouth. A trucking cost of $US 1.30 per
barrel and a processing fee of $US 1.50 per barrel were used.

The capital costs used were based on estimates prepared by the
Company, and are summarized below. An exchange rate of 0.6364 United States
dollars per New Zealand dollar was used to convert the capital budget
information supplied by the Company. This rate was based on the exchange rate
for April 28, 2006, as obtained from the Bank of Canada website.

Capital Costs M$US 
  (2006 Dollars)

|                                     | Total Proved   | Total 2P Case  | Total 3P Case 
|------------------------------------ | -------------- | -------------- | --------------
|Item                                 | Case           | A3X, A4, 5, 6, | A3X, A4, 5, 6,
|                                     | A3X, A4, 5 & 6 | 7 & 8          | 7, 8 & 9      
|Site Work and Facilities             | 6,275          | 8,300          | 8,300         
|Convert Cheal-2 to Water Disposal    | 400            | 400            | 400           
|Gas Pipeline and Compression         | 2,250          | 2,250          | 2,250         
|Drilling and Completion, 2 Workovers | 3,400          | 6,000          | 7,250         
|Total                                | 12,325         | 16,950         | 18,200        

Well abandonment and disconnect costs of US$ 50,000 per well
were used. No allowances for reclamation or salvage values were made.

---

|Discussion 
      Page 6
|-------------------------

Operating costs were estimated as follows:

Operating Costs
  (2006 Dollars)

|                                      | Total Proved   | Total 2P Case  | Total 3P Case 
|------------------------------------- | -------------- | -------------- | --------------
|Item                                  | Case           | A3X, A4, 5, 6, | A3X, A4, 5, 6,
|                                      | A3X, A4, 5 & 6 | 7 & 8          | 7, 8 & 9      
|Fixed, M$US per year                  | 750            | 850            | 900           
|Variable Oil, $US per barrel          | 1.50           | 1.50           | 1.50          
|Trucking, $US per barrel              | 1.30           | 1.30           | 1.30          
|Variable Gas, $US
      per Mcf (raw) | .25            | .25            | .25           

Operating and capital costs were escalated to the dates
incurred at 2.5 percent per year to 2009 and at 1.5 percent per year
thereafter.

Royalties

The New Zealand royalty regime stipulates the payment of either
a 5 percent ad valorem royalty (AVR) or a 20 percent accounting profits royalty
(APR), whichever is the greater in any given year.

The AVR is calculated at 5 percent of the net sales price
received.

The APR is a mechanism whereby the resource owner receives a
share of profits once all significant costs have been recovered by the producer.
It is payable on the net accumulated accounting profit of production from a
petroleum field. In calculating the accounting profit, deductions are made and
may include associated production costs, capital costs (exploration costs,
development costs, permit acquisition costs and feasibility costs), indirect
costs, abandonment costs, operating and capital overhead allowance, operating
costs and capital costs carried forward and abandonment costs carried back.

The APR royalty was calculated from our forecasts of cash flow
to take effect in the last quarter of 2007.

---

|Discussion 
      Page 7
|-------------------------

Taxes

The New Zealand tax rate is 33 percent. Deductions are allowed for operating expenses and exploration and depreciated development costs, with an unlimited loss carry forward.

The Company has supplied us with their tax pool, which will be available to offset revenue from Cheal. At April 30, 2006, this tax pool was estimated to be $US 2.18 million. This pool relates to exploration costs and are eligible to be written
off at 100 percent.

Future development costs were depreciated for income tax purposes on a seven year straight- line from the later of the year in which commercial production starts or that in which the relevant expenditure is incurred.

Canadian income taxes have not been considered in this report.

Net Present Values

The estimates of the P&NG reserves and their respective net present values, summarized by reserves category, are presented in Tables 1 and 2. Detailed forecasts of production and cash flow are presented in Table 3. Well abandonment and
disconnect costs were included for wells which have reserves assigned. No allowances for reclamation or salvage values were made.

---

|Table
      1                                            
|---------------------------------------------------------
|Cheal, New
      Zealand                                 
|Volumetric Reservoir Data and Estimates of
      Reserves
|(As of April 30,
      2006)                             
|                                                         
|                                                         
|Pool/Location                                            
|                                                         
|                                                         
|                                                         
|Mt. Messenger                                            
|                                                         
|Proved Undeveloped                                       
|Cheal-A3X
      & A4                                     
|Cheal-5
      & 6                                        
|                                                         
|Probable                                                 
|Cheal-A3X
      & A4                                     
|Cheal-5
      & 6                                        
|Cheal-7
      & 8                                        
|                                                         
|Possible                                                 
|Cheal-A3X
      & A4                                     
|Cheal-5
      & 6                                        
|Cheal-7
      & 8                                        
|Cheal-9                                                  

---

|Table 2 Cheal, New
      Zealand Estimates of Reserves and Net Present Values
      (As of April 30, 2006)
|----------------------------------------------------------------------------------------------------------
|Oil
      Reserves                                                                                        
|Pool/Location                                                                                             
|0%                                                                                                        
|                                                                                                          
|                                                                                                          
|                                                                                                          
|Mt. Messenger                                                                                             
|                                                                                                          
|Proved Undeveloped                                                                                        
|Cheal-A3X & A4                                                                                            
|Cheal-5 & 6                                                                                               
|Total, Proved                                                                                             
|                                                                                                          
|Probable                                                                                                  
|Cheal-A3X & A4                                                                                            
|Cheal-5 & 6                                                                                               
|Cheal-7 & 8                                                                                               
|Total, Probable                                                                                           
|                                                                                                          
|Total, 2P                                                                                                 
|                                                                                                          
|Possible                                                                                                  
|Cheal-A3X & A4                                                                                            
|Cheal-5 & 6                                                                                               
|Cheal-7 & 8                                                                                               
|Cheal-9                                                                                                   
|Total, Possible                                                                                           
|                                                                                                          
|Total, 3P                                                                                                 

---

|Table 2 Cheal, New
      Zealand **Estimates of Reserves and Net Present
      Values** (As of April 30, 2006)
|--------------------------------------------------------------------------------------------------------------
|
|
|
|Gas
      Reserves                                                                                            
|Pool/Location                                                                                                 
|0%                                                                                                            
|                                                                                                              
|Mt.
      Messenger                                                                                           
|                                                                                                              
|Proved Undeveloped                                                                                            
|Cheal-A3X & A4                                                                                                
|Cheal-5 & 6                                                                                                   
|Total, Proved                                                                                                 
|                                                                                                              
|Probable                                                                                                      
|Cheal-A3X & A4                                                                                                
|Cheal-5 & 6                                                                                                   
|Cheal-7 & 8                                                                                                   
|Total, Probable                                                                                               
|                                                                                                              
|Total, 2P                                                                                                     
|                                                                                                              
|Possible                                                                                                      
|Cheal-A3X & A4                                                                                                
|Cheal-5 & 6                                                                                                   
|Cheal-7 & 8                                                                                                   
|Cheal-9                                                                                                       
|Total, Possible                                                                                               
|                                                                                                              
|Total, 3P                                                                                                     

---



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---

|Constant Prices and
      Costs  Page 1
|----------------------------------------

Constant Prices and Costs

Tables C-1, on the following page, summarizes our evaluation
based on constant prices and costs, of the P&NG reserves of TAG Oil Ltd., as
of April 30, 2006. The values of the solution gas reserves have been included in
the values of the oil reserves.

Forecasts of cash flow for the constant price case are included
as Table C-2.

The constant prices used in this specific evaluation are based
on the April 30, 2006 actual posted oil price for WTI, as determined by Sproule
International Limited, and the expected initial gas price for solution gas. The
constant prices used in this report are as follows:

|Oil: West Texas Intermediate (WTI) | $US 71.89 per barrel
|---------------------------------- | --------------------
|                                   |                     
|Natural Gas:                       | $US 2.70 per Mcf    

Appropriate adjustments have been made to the constant crude
oil price in the forecasts of cash flow to account for quality and
transportation. The above constant natural gas price has been adjusted for
heating value.

The remaining assumptions relating to the calculation and
evaluation of the reserves in the constant case are the same as those presented
in the forecast prices and costs case.

The values of the reserves presented in this constant price and
cost evaluation should not be taken out of context. They were prepared under the
guidelines of National Instrument 51-101 Constant Prices and Costs, and do not
reflect our opinion of the market value of these reserves.

---

Table: C-1

|TAG OIL LTD. Summary of the Evaluation of the Company's P&NG Reserves In the Cheal Area of New Zealand (As of April 30, 2006)
|-----------------------------------------------------------------------------------------------------------------------------
|
|
|
|                                                                                                                             
|                                                                                                                             
|Gross                                                                                                                        
|Light/Medium Oil (Mbbl)                                                                                                      
|Proved Undeveloped                                                                                                           
|Total Proved                                                                                                                 
|Total Probable                                                                                                               
|Total Possible                                                                                                               
|Total                                                                                                                        
|Solution Gas (MMcf) - values included with lt/med
      oil -                                                                
|Proved Undeveloped                                                                                                           
|Total Proved                                                                                                                 
|Total Probable                                                                                                               
|Total Possible                                                                                                               
|Total                                                                                                                        
|Corporate                                                                                                                    
|Proved Undeveloped                                                                                                           
|Total Proved                                                                                                                 
|Total Probable                                                                                                               
|Total Possible                                                                                                               
|Total                                                                                                                        
|GRAND TOTAL (Mboe)                                                                                                           
|Proved Undeveloped                                                                                                           
|Total Proved                                                                                                                 
|Total Probable                                                                                                               
|Total Possible                                                                                                               
|Total                                                                                                                        



---

Table: C-1A

|TAG OIL LTD.                                                  
|--------------------------------------------------------------
|Summary of the Evaluation of the Company's P&NG
      Reserves
|In the Cheal Area of New Zealand                              
|(As of April 30, 2006)                                        
|                                                              
|                                                              
|                                                              
|Light/Medium Oil (Mbbl)                                       
|Proved Undeveloped                                            
|Total Proved                                                  
|Total Probable                                                
|Total Possible                                                
|Total                                                         
|Solution Gas (MMcf) - values included with lt/med
      oil - 
|Proved Undeveloped                                            
|Total Proved                                                  
|Total Probable                                                
|Total Possible                                                
|Total                                                         
|GRAND TOTAL (Mboe)                                            
|Proved Undeveloped                                            
|Total Proved                                                  
|Total Probable                                                
|Total Possible                                                
|Total                                                         

---



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|National Instrument
      51-101
|--------------------------------

National Instrument 51-101

This report was prepared for the purpose of evaluating the Companys P&NG reserves in accordance with Canadian Oil and Gas Evaluation Handbook (COGEH) reserve definitions and standards, which is compliant with National Instrument 51-101 (NI
51-101). In accordance with these standards, and by reference in NI 51-101, certain tables are presented for both forecast and constant prices and costs, which summarize the reserves and net present values, as of April 30, 2006.

Form 51-101F2, which follows, presents a Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor.

Forecast Prices and Costs

Table 1 presents a summary of reserves for the various reserves categories. Table 2 presents a summary of net present values of future net revenue, before and after income taxes. Table 3 presents the total future net revenue (undiscounted) for the
total proved (1P), total proved plus probable (2P), and total proved plus probable plus possible (3P) reserves categories. Table 4 presents the net present value, discounted at 10 percent per year, of future net revenue by production group for the
1P, 2P and 3P reserves categories. Table 5 presents a summary of pricing and inflation rate assumptions.

Constant Prices and Costs

Constant Prices and Costs are defined in National Instrument 51-101 as the reporting issuers prices and costs as at the evaluation effective date. The reporting issuers prices and costs are defined as the actual posted price for oil,
natural gas and natural gas by-products, after historical adjustments for transportation, gravity and other factors.

Table 6 presents a summary of reserves for the various reserves categories. Table 7 presents a summary of net present values of future net revenue, before and after income taxes. Table 8 presents the total future net revenue (undiscounted) for the
total proved and total proved plus probable reserves categories. Table 9 presents the net present value, discounted at 10 percent per year, of future net revenue by production group for the total proved and total proved plus probable reserves
categories. Table 10 presents the summary of pricing assumptions for constant prices and costs.

---

Form 51-101F2

Report on Reserves Data
  by Independent Qualified Reserves Evaluator or Auditor

Report on Reserves Data

To the Board of Directors of TAG Oil Ltd. (the Company):

|1. | We have evaluated the Companys Reserves Data as at April
      30, 2006. The reserves data consist of the following:                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                        
|   | (a)                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                        
|   | (b)                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                        
|2. | The Reserves Data are the responsibility of the Companys
      management. Our responsibility is to express an opinion on the Reserves
      Data based on our evaluation.                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                        
|   | We carried out our evaluation in accordance with
      standards set out in the Canadian Oil and Gas Evaluation Handbook (the
      COGE Handbook), prepared jointly by the Society of Petroleum Evaluation
      Engineers (Calgary Chapter) and the Canadian Institute of Mining,
      Metallurgy & Petroleum (Petroleum
Society).

---

|TAG Oil Ltd.                  | - 2
|----------------------------- | ---
|Sproule International Limited |    

|3. | Those standards require that we plan and perform an
      evaluation to obtain reasonable assurance as to whether the reserves data
      are free of material misstatement. An evaluation also includes assessing
      whether the reserves data are in accordance with principles and
      definitions presented in the COGE Handbook.                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4. | The following table sets forth the estimated future net
      revenue attributed to proved plus probable reserves, estimated using
      forecast prices and costs on a before tax basis and calculated using a
      discount rate of 10%, included in the reserves data of the Company
      evaluated by us as of April 30, 2006, and identifies the respective
      portions thereof that we have audited, evaluated and reviewed and reported
      on to the Companys management and Board of
Directors:

|Independent
      Qualified Reserves Evaluator or
      Auditor | Description
      and Preparation Date of Evaluation Report | Location
      of Reserves (Country) | Net Present Value of
      Future Net Revenue (10% Discount Rate)
|--------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------------------ | -----------------------------------------------------------------
|Audited (M$US)                                                  | Evaluated (M$US)                                            | Reviewed (M$US)                      | Total (M$US)                                                     
|                                                                |                                                             |                                      |                                                                  
|Sproule                                                         | Evaluation of the P&NG                                      | New                                  |                                                                  
|                                                                | Reserves of                                                 | Zealand                              |                                                                  
|                                                                | TAG Oil Ltd.                                                |                                      |                                                                  
|                                                                | in the Cheal Area                                           |                                      |                                                                  
|                                                                | of New Zealand                                              |                                      |                                                                  
|                                                                | as of April 30, 2006,                                       |                                      |                                                                  
|                                                                | prepared May 2006                                           |                                      |                                                                  
|                                                                |                                                             |                                      |                                                                  
|Total                                                           |                                                             |                                      | Nil                                                              

|5. | In our opinion, the reserves data evaluated by us have,
      in all material respects, been determined and are presented in accordance
      with the COGE Handbook.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                      
|6. | We have no responsibility to update the report referred
      to in paragraph 4 for events and circumstances occurring after its
      preparation date.             
|   |                                                                                                                                                                      
|7. | Because the reserves data are based on judgments
      regarding future events, actual results will vary and the variations may
      be material.                   

---

|TAG Oil Ltd.                  | - 3
|----------------------------- | ---
|Sproule International Limited |    



---

|2006/05/29
      10:53:21 - 70367 | National Instrument 51-101
|--------------------------------- | --------------------------

|Table
      1                        
|-------------------------------------
|NI
      51-101                      
|Summary of Oil and Gas
      Reserves
|as of Apr 30,
      2006             
|Forecast Prices and
      Costs      
|Reserves                             
|                                     
|Reserve Category                     
|Proved                               
|Developed Producing                  
|Developed Non-Producing              
|Undeveloped                          
|Total Proved                         
|Probable                             
|Possible                             
|Total Proved Plus                    
|Probable Plus
      Possible         

---

|Table
      2                         
|--------------------------------------
|NI
      51-101                       
|Summary of Net Present Values
      of
|Future Net
      Revenue              
|as of Apr 30,
      2006              
|Forecast Prices and
      Costs       
|                                      
|                                      
|Reserves Category                     
|Proved                                
|Developed Producing                   
|Developed Non-Producing               
|Undeveloped                           
|Total Proved                          
|Probable                              
|Possble                               
|Total Proved Plus                     
|Probable Plus
      Possible          

Reference Item 2.2(2) of Form 51-101F1

Notes:

| | NPV of FNR include all resource income:
| | ---------------------------------------
| |                                        
| |                                        
| |                                        
| |                                        
| | Income Taxes                           
| |                                        
| |                                        
| |                                        

---

|Table
      3                 
|------------------------------
|NI
      51-101               
|Total Future Net
      Revenue
|Undiscounted                  
|as of Apr 30,
      2006      
|Forecast Prices and Costs     
|                              
|                              
|                              
|                              
|                              
|Reserves Category             
|                              
|                              
|                              
|Proved                        
|                              
|Proved Plus Probable          
|                              
|Proved Plus Probable          
|Plus Possible                 

Reference Item 2.2(3)(b) of Form 51-101F1

---

|Table 4                                      
|---------------------------------------------
|NI 51-101                                    
|Net Present Value of Future Net
      Revenue
|by Production Group                          
|as of Apr 30, 2006                           
|Forecast Prices and Costs                    
|                                             
|                                             
|Reserves Category                            
|                                             
|                                             
|Proved                                       
|                                             
|                                             
|                                             
|                                             
|Proved Plus                                  
|Probable                                     
|                                             
|                                             
|                                             
|                                             
|Proved Plus                                  
|Probable Plus                                
|Possible                                     
|                                             
|                                             

Reference Item 2.1(3)(c) of Form 51-101F1

---

|Table 5 NI 51-101 Summary
      of Pricing and Inflation Rate Assumptions As of
      April 30, 2006 Forecast Prices and Costs
|------------------------------------------------------------------------------------------------------------------------------
|Year                                                                                                                          
|                                                                                                                              
|2000                                                                                                                          
|2001                                                                                                                          
|2002                                                                                                                          
|2003                                                                                                                          
|2004                                                                                                                          
|2005                                                                                                                          
|                                                                                                                              
|Forecast                                                                                                                      
|2006 (8 mos)                                                                                                                  
|2007                                                                                                                          
|2008                                                                                                                          
|2009                                                                                                                          
|2010                                                                                                                          
|2011                                                                                                                          
|2012                                                                                                                          
|2013                                                                                                                          
|2014                                                                                                                          
|2015                                                                                                                          
|2016                                                                                                                          
|2017                                                                                                                          
|Escalation rate of 1.5% thereafter                                                                                            

Note:

|a. | 40 degrees API, 0.4% sulphur                                     
|-- | -----------------------------------------------------------------
|b. | Incorporates a heating value of 1,150 Btus per
    scf.         
|c. | Inflation from 2008 dollars to 2009 dollars is 2.5
      percent.

---

|Table 6 NI 51-101 Summary of Oil and Gas Reserves as of Apr 30, 2006 Constant Prices and Costs
|----------------------------------------------------------------------------------------------
|
|
|
|
|Reserves                                                                                      
|                                                                                              
|Reserve Category                                                                              
|Proved                                                                                        
|Developed Producing                                                                           
|Developed Non-Producing                                                                       
|Undeveloped                                                                                   
|Total Proved                                                                                  
|Probable                                                                                      
|Possible                                                                                      
|Total Proved Plus                                                                             
|Probable Plus Possible                                                                        

Reference: Item 2.2(1) of Form 51-101F1

---

|Table
      7                         
|--------------------------------------
|NI
      51-101                       
|Summary of Net Present Values
      of
|Future Net
      Revenue              
|as of Apr 30,
      2006              
|Constant Prices and
      Costs       
|                                      
|                                      
|Reserves                              
|Category                              
|Proved                                
|Developed                             
|Producing                             
|Developed                             
|Non-Producing                         
|Undeveloped                           
|Total Proved                          
|Probable                              
|Possible                              
|Total Proved                          
|Plus Probable                         
|Plus Possible                         

Reference Item 2.2(2) of Form 51-101F1

Notes:

| | NPV of FNR include all resource income:
| | ---------------------------------------
| |                                        
| |                                        
| |                                        
| |                                        
| | Income Taxes                           
| |                                        
| |                                        
| |                                        

---

|Table
      8                 
|------------------------------
|NI
      51-101               
|Total Future Net
      Revenue
|Undiscounted                  
|as of Apr 30,
      2006      
|Constant Prices and Costs     
|                              
|                              
|                              
|                              
|                              
|Reserves Category             
|                              
|                              
|                              
|Proved                        
|                              
|Proved Plus Probable          
|                              
|Proved Plus Probable          
|Plus Possible                 

Reference Item 2.2(3)(b) of Form 51-101F1

---

|Table 9                                      
|---------------------------------------------
|NI 51-101                                    
|Net Present Value of Future Net
      Revenue
|by Production Group                          
|as of Apr 30, 2006                           
|Constant Prices and Costs                    
|                                             
|                                             
|Reserves Category                            
|                                             
|                                             
|Proved                                       
|                                             
|                                             
|                                             
|                                             
|Proved Plus                                  
|Probable                                     
|                                             
|                                             
|                                             
|                                             
|Proved Plus                                  
|Probable Plus                                
|Possible                                     
|                                             
|                                             

Reference Item 2.1(3)(c) of Form 51-101F1

---

|               | Table 10                       |             
|-------------- | ------------------------------ | ------------
|               | NI 51-101                      |             
|               | Summary of Pricing Assumptions |             
|               | As of April 30, 2006           |             
|               |                                |             
|               | Constant Prices and Costs      |             
|               |                                |             
|               | WTICushinga                    | Cheal       
|               | Oklahoma                       | NaturalGas b
|Year           | ($US/bbl)                      | ($US/Mcf)   
|               |                                |             
|Historical     |                                |             
|Dec. 31, 2001  | 19.78                          |             
|Dec. 31, 2002  | 31.23                          |             
|Dec. 31, 2003  | 32.56                          |             
|Dec. 31, 2004  | 44.04                          |             
|Dec. 31, 2005  | 61.04                          |             
|               |                                |             
|Forecast       |                                |             
|April 30, 2005 | 71.89                          | 2.70        

Note:

|a. | 40 degrees API, 0.4% sulphur                                
|-- | ------------------------------------------------------------
|b. | Incorporates a heating value of 1,150 Btus per
        scf.

---

Figure 1




Map of New Zealand highlighting Petroleum Exploration Permit
  (PEP) 38738

---

Figure 2




**Cheal Field  Mt. Messenger Time
  Structure**

---

Figure 3




---



---



---




---



---

APPENDIX A

RESERVES DEFINITIONS

---

|Appendix A 
      Page 1
|-------------------------

Appendix A  Definitions

The following definitions form the basis of our classification of reserves and values presented in this report. They have been prepared by the Standing Committee on Reserves Definitions of the Petroleum Society of the CIM (CIM),
incorporated in the Society of Petroleum Evaluation Engineers (SPEE) Canadian Oil and Gas Evaluation Handbook (COGE Handbook) and specified by National Instrument 51-101 (NI 51-101).

Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on:

- analysis of drilling, geological, geophysical and engineering data;
- the use of established technology;
- specified economic conditions, which are generally accepted as being reasonable, and shall be disclosed; and
- a remaining reserve life of 50 years.

Reserves are classified according to the degree of certainty associated with the estimates.

|1. | Proved Reserves                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                     
|   | Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.                                                  
|   |                                                                                                                                                                                                                                                                     
|2. | Probable Reserves                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                     
|   | Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated
proved plus probable reserves.
|   |                                                                                                                                                                                                                                                                     
|3. | Possible Reserves                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                     
|   | Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable
plus possible reserves.       

---

|Appendix A 
      Page 2
|-------------------------

Other criteria that must also be met for the categorization of reserves are provided in Section 5.5 of the COGE Handbook.

Each of the reserves categories (proved, probable, and possible) may be divided into developed or undeveloped categories.

|4. | Developed Reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g., when compared to the cost
of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and non-producing.                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5. | Developed Producing Reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut in, they must have previously been
on production, and the date of resumption of production must be known with reasonable certainty.                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|6. | Developed Non-Producing Reserves                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Developed non-producing reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|7. | Undeveloped Reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They
must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In multi-well pools, it may be appropriate to allocate total pool reserves between the developed and undeveloped categories or to subdivide the developed reserves for the pool between developed producing and developed
non-producing. This allocation should be based on the estimators assessment as to the reserves that will be recovered from specific wells, facilities, and completion intervals in the pool and their respective development and production
status.

---

|8.  | Levels of Certainty for Reported
Reserves                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The qualitative certainty levels contained in the
      definitions in Sections 1, 2 and 3 are applicable to individual reserves
      entities, which refers to the lowest level at which reserves estimates are
      made, and to reported reserves, which refers to the highest level sum of
      individual entity estimates for which reserve estimates are
made.                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Reported total reserves estimated by deterministic or
      probabilistic methods, whether comprised of a single reserves entity or an
      aggregate estimate for multiple entities, should target the following
      levels of certainty under a specific set of economic conditions:                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | a.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | b.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | c.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | A quantitative measure of the probability associated with
      a reserves estimate is generated only when a probabilistic estimate is
      conducted. The majority of reserves estimates will be performed using
      deterministic methods that do not provide a quantitative measure of
      probability. In principle, there should be no difference between estimates
      prepared using probabilistic or deterministic methods.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Additional clarification of certainty levels associated
      with reserves estimates and the effect of aggregation is provided in
      Section 5.5.3 of the COGE Handbook. Whether deterministic or probabilistic
      methods are used, evaluators are expressing their professional judgement
      as to what are reasonable estimates.                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|9.  | Pipeline Gas Reservesare gas reserves remaining
      after deducting surface losses due to process shrinkage and raw gas used
      as lease fuel.                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10. | Remaining Recoverable Reservesare the total
      remaining recoverable reserves associated with the acreage in which the
      Company has an interest.                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|11. | Company Gross Reservesare the Companys working
      interest share of the remaining reserves, before deduction of any
      royalties.                                                                                                                                                                                                                                                                                                  

---

|12. | Company Net Reservesare the gross remaining reserves of the properties in which the Company has an interest, less all Crown, freehold, and overriding royalties and interests owned by others.                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                          
|13. | Net Production Revenueis income derived from the sale of net reserves of oil, pipeline gas, and gas by-products, less all capital and operating costs.                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                          
|14. | Fair Market Valueis defined as the price at which a purchaser seeking an economic and commercial return on investment would be willing to buy, and a vendor would be willing to sell, where neither is under compulsion to buy
or sell and both are competent and have reasonable knowledge of the facts.
|    |                                                                                                                                                                                                                                                                                                          
|15. | Barrels of Oil Equivalent (BOE) Reserves BOE is the sum of the oil reserves, plus the gas reserves divided by a factor of 6, plus the natural gas liquid reserves, all expressed in barrels or thousands of barrels.                                                                                    

---

APPENDIX B

ABBREVIATIONS, UNITS AND CONVERSION FACTORS

---

|Appendix B 
      Page 1
|-------------------------

Appendix B  Abbreviations, Units and Conversion Factors

This appendix contains a list of abbreviations found in Sproule
reports, a table comparing Imperial and Metric units, and conversion tables used
to prepare this report.

Abbreviations

|AFE  | authority for expenditure                   
|---- | --------------------------------------------
|AOF  | absolute open flow                          
|APO  | after pay out                               
|Bg   | gas formation volume factor                 
|Bo   | oil formation volume factor                 
|bopd | barrels of oil per day                      
|bfpd | barrels of fluid per day                    
|BPO  | before pay out                              
|BS&W | basic sediment and water                    
|BTU  | British thermal unit                        
|bwpd | barrels of water per day                    
|CF   | casing flange                               
|CGR  | condensate gas ratio                        
|D&A  | dry and abandoned                           
|DCQ  | daily contract quantity                     
|DSU  | drilling spacing unit                       
|DST  | drill stem test                             
|EOR  | enhanced oil recovery                       
|EPSA | exploration and production sharing agreement
|FVF  | formation volume factor                     
|GOR  | gas-oil ratio                               
|GORR | gross overriding royalty                    
|GWC  | gas-water-contact                           
|HCPV | hydrocarbon pore volume                     
|ID   | inside diameter                             
|IOR  | improved oil recovery                       
|IPR  | inflow performance relationship             
|IRR  | internal rate of return                     
|k    | permeability                                
|KB   | kelly bushing                               
|LKH  | lowest known hydrocarbons                   
|LNG  | liquefied natural gas                       
|LPG  | liquefied petroleum gas                     

---

|md   | millidarcies                              
|---- | ------------------------------------------
|MDT  | modular formation dynamics tester         
|MPR  | maximum permissive rate                   
|MRL  | maximum rate limitation                   
|NGL  | natural gas liquids                       
|NORR | net overriding royalty                    
|NPI  | net profits interest                      
|NPV  | net present value                         
|OD   | outside diameter                          
|OGIP | original gas in place                     
|OOIP | original oil in place                     
|ORRI | overriding royalty interest               
|OWC  | oil-water-contact                         
|P1   | proved                                    
|P2   | probable                                  
|P3   | possible                                  
|P&NG | petroleum and natural gas                 
|PI   | productivity index                        
|ppm  | parts per million                         
|PSU  | production spacing unit                   
|PSA  | production sharing agreement              
|PSC  | production sharing contract               
|PVT  | pressure-volume-temperature               
|RFT  | repeat formation tester                   
|RT   | rotary table                              
|SCAL | special core analysis                     
|SS   | subsea                                    
|TVD  | true vertical depth                       
|WGR  | water gas ratio                           
|WI   | working interest                          
|WOR  | water oil ratio                           
|2D   | two-dimensional                           
|3D   | three-dimensional                         
|4D   | four-dimensional                          
|1P   | proved                                    
|2P   | proved plus probable                      
|3P   | proved plus probable plus possible        
|oAPI | degrees API (American Petroleum Institute)

---

Imperial and Metric Units

|Imperial Units |                                    | Metric Units
|-------------- | ---------------------------------- | ------------
|M (103)        | one thousand                       | Prefixes    
|MM (106)       | Million                            |             
|B (109)        | one billion                        |             
|T (1012)       | one trillion                       |             
|               |                                    |             
|in.            | Inches                             | Length      
|ft             | Feet                               |             
|mi             | Mile                               |             
|ft2            | square feet                        | Area        
|ac             | Acres                              |             
|cf or ft3      | cubic feet                         | Volume      
|scf            | Standard cubic feet                |             
|gal            | Gallons                            |             
|Mcf            | Thousand cubic feet                |             
|Mcfpd          | Thousand cubic feet per day        |             
|MMcf           | million cubic feet                 |             
|MMcfpd         | million cubic feet per day         |             
|Bcf            | billion cubic feet (109)           |             
|bbl            | Barrels                            |             
|Mbbl           | Thousand barrels                   |             
|stb            | stock tank barrel                  |             
|bbl/d          | barrels per day                    |             
|bbl/mo         | barrels per month                  |             
|Btu            | British thermal units              | Energy      
|               |                                    |             
|               |                                    |             
|oz             | ounce                              | Mass        
|lb             | pounds                             |             
|ton            | ton                                |             
|lt             | long tons                          |             
|Mlt            | thousand long tons                 |             
|psi            | pounds per square inch             | Pressure    
|               |                                    |             
|psia           | pounds per square inch absolute    |             
|psig           | pounds
      per square inch gauge |             
|°F             | degrees Fahrenheit                 | Temperature 
|°R             |                                    |             
|               | degrees Rankine                    |             
|M$             | thousand dollars                   | Dollars     

---

Imperial and Metric Units (Contd)

|Imperial Units |        | Metric Units
|-------------- | ------ | ------------
|sec            | second | Time        
|min            | minute |             
|hr             | hour   |             
|day            | day    |             
|wk             | week   |             
|mo             | month  |             
|yr             | year   |             

---

Conversion Tables

|Conversion Factors
       Metric to Imperial            
|---------------------------------------------------------
|                                                         
|cubic metres (m3) (@ 15°C)                               
|m3(@ 15°C)                                               
|m3(@ 15°C)                                               
|m3(@ 15°C)                                               
|m3(@ 15°C)                                               
|m3(@ 101.325 kPaa, 15°C)                                 
|1,000 cubic metres (103m3) (@ 101.325
      kPaa, 15°C)  
|hectares (ha)                                            
|1,000 square metres (103m2)                              
|10,000 cubic metres
      (ha . m)                       
|m3/103m3(@ 101.325 kPaa,
      15° C)                    
|joules (j)                                               
|megajoules per cubic metre (MJ/m3) (@ 101.325 kPaa,      
|15°C)                                                    
|dollars per gigajoule ($/GJ)                             
|metres (m)                                               
|kilometres (km)                                          
|dollars per 1,000 cubic metres ($/103m3)                 
|($/103m3)                                                
|dollars per cubic metre ($/m3)                           
|gas/oil ratio (GOR)
      (m3/m3)                        
|kilowatts (kW)                                           
|kilopascals (kPa)                                        
|tonnes (t)                                               
|kilograms (kg)                                           
|litres (L)                                               
|litres (L)                                               
|cubic metres per million cubic metres (m3/106m3) (C3 )   
|m3/106m3(C4
      )                                      
|m3/106m3(C5+
      )                                     
|tonnes per million
      cubic metres (t/106m3) (sulphur)
|millilitres per cubic meter (mL/m3) (C5+
      )         
|(mL/m3) (C5+ )                                           
|Kelvin (K)                                               
|millipascal seconds
      (mPa . s)                      

---

Conversion Tables (Contd)

|Conversion Factors  Imperial to Metric                                     
|----------------------------------------------------------------------------
|                                                                            
|barrels (bbl) (@ 60°F)                                                      
|bbl (@ 60°F)                                                                
|bbl (@ 60°F)                                                                
|bbl (@ 60°F)                                                                
|bbl (@ 60°F)                                                                
|thousands of cubic feet (Mcf) (@ 14.65 psia, 60°F)                          
|Mcf (@ 14.65 psia, 60°F)                                                    
|acres                                                                       
|acres                                                                       
|acre feet (ac-ft)                                                           
|Mcf/ac-ft (@ 14.65 psia, 60°F)                                              
|Btu                                                                         
|British thermal units per standard cubic foot (Btu/Scf) (@
      14.65 psia,
|60°F)                                                                       
|$/Mcf (1,000 Btu gas)                                                       
|$/Mcf (@ 14.65 psia,
      60°F) Alta.                                      
|$/Mcf (@ 15.025 psia, 60°F), B.C.                                           
|feet (ft)                                                                   
|miles (mi)                                                                  
|$/bbl                                                                       
|GOR (scf/bbl)                                                               
|horsepower                                                                  
|psi                                                                         
|long tons (LT)                                                              
|pounds (lb)                                                                 
|gallons (Imperial)                                                          
|gallons (U.S.)                                                              
|barrels per million cubic feet (bbl/MMcf) (@ 14.65 psia) (C3
      )        
|bbl/MMcf (C 4)                                                              
|bbl/MMcf (C 5+)                                                             
|LT/MMcf (sulphur)                                                           
|gallons (Imperial) per thousand cubic feet (gal (Imp)/Mcf)
      (C 5+)     
|gallons (U.S.) per thousand cubic feet (gal (U.S.)/Mcf) (C5+
      )        
|degrees Rankine (°R)                                                        
|centipoises                                                                 

---