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TAG OIL LTD. (the Company)

AUDIT COMMITTEE CHARTER

1.                          Mandate

The audit committee will assist the board of directors (the
Board) in fulfilling its financial oversight responsibilities. The audit
committee will review and consider in consultation with the auditors the
financial reporting process, the system of internal control and the audit
process. In performing its duties, the committee will maintain effective working
relationships with the Board, management, and the external auditors. To
effectively perform his or her role, each committee member must obtain an
understanding of the principal responsibilities of committee membership as well
and the companys business, operations and risks.

2.                          Composition

The Board will appoint from among their membership an audit
committee after each annual general meeting of the shareholders of the Company.
The audit committee will consist of a minimum of three directors.

*2.1******Independence*

A majority of the members of the audit committee must not be
officers, employees or control persons of the Company.

*2.2******Expertise
of Committee Members*

Each member of the audit committee must be financially literate
or must become financially literate within a reasonable period of time after his
or her appointment to the committee. At least one member of the committee must
have accounting or related financial management expertise. The Board shall
interpret the qualifications of financial literacy and financial management
expertise in its business judgment and shall conclude whether a director meets
these qualifications.

3.                          Meetings

The audit committee shall meet in accordance with a schedule
established each year by the Board, and at other times that the audit committee
may determine. The audit committee shall meet at least annually with the
Companys Chief Financial Officer and external auditors in separate executive
sessions.

4.                          Roles
and Responsibilities

The audit committee shall fulfill the following roles and
discharge the following responsibilities:

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*4.1******External
Audit*

The audit committee shall be directly responsible for overseeing
  the work of the external auditors in preparing or issuing the auditors
  report, including the resolution of disagreements between management and the
  external auditors regarding financial reporting and audit scope or procedures.
  In carrying out this duty, the audit committee shall:

(a)       
  recommend to the Board the external auditor to be nominated by the shareholders
  for the purpose of preparing or issuing an auditors report or performing
  other audit, review or attest services for the Company;

(b)       
  review (by discussion and enquiry) the external auditors proposed audit
  scope and approach;

(c)       
  review the performance of the external auditors and recommend to the Board the
  appointment or discharge of the external auditors;

(d)       
  review and recommend to the Board the compensation to be paid to the external
  auditors; and

(e)       
  review and confirm the independence of the external auditors by reviewing the
  non-audit services provided and the external auditors assertion of their
  independence in accordance with professional standards.

*4.2******Internal
Control*

The audit committee shall consider whether adequate controls
  are in place over annual and interim financial reporting as well as controls
  over assets, transactions and the creation of obligations, commitments and liabilities
  of the Company. In carrying out this duty, the audit committee shall:

(a)       
  evaluate the adequacy and effectiveness of managements system of internal
  controls over the accounting and financial reporting system within the Company;
  and

(b)       
  ensure that the external auditors discuss with the audit committee any event
  or matter which suggests the possibility of fraud, illegal acts or deficiencies
  in internal controls.

*4.3******Financial
Reporting*

The audit committee shall review the financial statements and
  financial information prior to its release to the public. In carrying out this
  duty, the audit committee shall:

General

(a)       
  review significant accounting and financial reporting issues, especially complex,
  unusual and related party transactions; and

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(b)       
  review and ensure that the accounting principles selected by management in preparing
  financial statements are appropriate.

Annual Financial Statements

(c)       
  review the draft annual financial statements and provide a recommendation to
  the Board with respect to the approval of the financial statements;

(d)       
  meet with management and the external auditors to review the financial statements
  and the results of the audit, including any difficulties encountered; and

(e)       
  review managements discussion & analysis respecting the annual reporting
  period prior to its release to the public.

Interim Financial Statements

(f)       
  review and approve the interim financial statements prior to their release to
  the public; and

(g)       
  review managements discussion & analysis respecting the interim reporting
  period prior to its release to the public.

Release of Financial Information

(h)       
  where reasonably possible, review and approve all public disclosure, including
  news releases, containing financial information, prior to its release to the
  public.

*4.4******Non-Audit
Services*

All non-audit services (being services other than services rendered
  for the audit and review of the financial statements or services that are normally
  provided by the external auditor in connection with statutory and regulatory
  filings or engagements) which are proposed to be provided by the external auditors
  to the Company or any subsidiary of the Company shall be subject to the prior
  approval of the audit committee.

Delegation of Authority

(a)       
  The audit committee may delegate to one or more independent members of the audit
  committee the authority to approve non-audit services, provided any non-audit
  services approved in this manner must be presented to the audit committee at
  its next scheduled meeting.

De-Minimis Non-Audit Services

(b)       
  The audit committee may satisfy the requirement for the pre-approval of non-audit
  services if:

(i)       
  the aggregate amount of all non-audit services that were not pre-approved is
  reasonably expected to constitute no more than five per cent of the total amount

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of fees paid by the Company and its
  subsidiaries to the external auditor during the fiscal year in which the services
  are provided; or

(ii)       the
  services are brought to the attention of the audit committee and approved, prior
  to the completion of the audit, by the audit committee or by one or more of
  its members to whom authority to grant such approvals has been delegated.

Pre-Approval Policies and Procedures

(c)       
  The audit committee may also satisfy the requirement for the pre-approval of
  non-audit services by adopting specific policies and procedures for the engagement
  of non-audit services, if:

(i)       
  the pre-approval policies and procedures are detailed as to the particular service;

(ii)       the
  audit committee is informed of each non-audit service; and

(iii)      the
  procedures do not include delegation of the audit committee's responsibilities
  to management.

*4.5******Other
Responsibilities*

The audit committee shall:

(a)       
  establish procedures for the receipt, retention and treatment of complaints
  received by the company regarding accounting, internal accounting controls,
  or auditing matters;

(b)       
  establish procedures for the confidential, anonymous submission by employees
  of the company of concerns regarding questionable accounting or auditing matters;

(c)       
  ensure that significant findings and recommendations made by management and
  external auditor are received and discussed on a timely basis;

(d)       
  review the policies and procedures in effect for considering officers
  expenses and perquisites;

(e)       
  perform other oversight functions as requested by the Board; and

(f)       
  review and update this Charter and receive approval of changes to this Charter
  from the Board.

*4.6******Reporting
Responsibilities*

The audit committee shall regularly update the Board about
committee activities and make appropriate recommendations.

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5.                          Resources
and Authority of the Audit Committee

The audit committee shall have the resources and the authority
  appropriate to discharge its responsibilities, including the authority to

(a)       
  engage independent counsel and other advisors as it determines necessary to
  carry out its duties;

(b)       
  set and pay the compensation for any advisors employed by the audit committee;
  and

(c)       
  communicate directly with the internal and external auditors.

6.                          Guidance
 Roles & Responsibilities

The following guidance is intended to provide the Audit
Committee members with additional guidance on fulfilment of their roles and
responsibilities on the committee:

*6.1******Internal
  Control*

(a)       
  evaluate whether management is setting the goal of high standards by communicating
  the importance of internal control and ensuring that all individuals possess
  an understanding of their roles and responsibilities;

(b)       
  focus on the extent to which external auditors review computer systems and applications,
  the security of such systems and applications, and the contingency plan for
  processing financial information in the event of an IT systems breakdown; and

(c)       
  gain an understanding of whether internal control recommendations made by external
  auditors have been implemented by management.

*6.2******Financial
  Reporting*

General

(a)       
  review significant accounting and reporting issues, including recent professional
  and regulatory pronouncements, and understand their impact on the financial
  statements; and

(b)       
  ask management and the external auditors about significant risks and exposures
  and the plans to minimize such risks; and

(c)       
  understand industry best practices and the Companys adoption of them.

Annual Financial Statements

(d)       
  review the annual financial statements and determine whether they are complete
  and consistent with the information known to committee members, and assess whether

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the financial statements reflect appropriate
  accounting principles in light of the jurisdictions in which the Company reports
  or trades its shares;

(e)       
  pay attention to complex and/or unusual transactions such as restructuring charges
  and derivative disclosures;

(f)       
  focus on judgmental areas such as those involving valuation of assets and liabilities,
  including, for example, the accounting for and disclosure of loan losses; warranty,
  professional liability; litigation reserves; and other commitments and contingencies;

(g)       
  consider managements handling of proposed audit adjustments identified
  by the external auditors; and

(h)       
  ensure that the external auditors communicate all required matters to the committee.

Interim Financial Statements

(i)       
  be briefed on how management develops and summarizes interim financial information,
  the extent to which the external auditors review interim financial information;

(j)       
  meet with management and the auditors, either telephonically or in person, to
  review the interim financial statements; and

(k)       
  to gain insight into the fairness of the interim statements and disclosures,
  obtain explanations from management on whether:

(i)       
  actual financial results for the quarter or interim period varied significantly
  from budgeted or projected results;

(ii)       changes
  in financial ratios and relationships of various balance sheet and operating
  statement figures in the interim financials statements are consistent with changes
  in the companys operations and financing practices;

(iii)      generally
  accepted accounting principles have been consistently applied;

(iv)       there
  are any actual or proposed changes in accounting or financial reporting practices;

(v)       
  there are any significant or unusual events or transactions;

(vi)      
  the Companys financial and operating controls are functioning effectively;

(vii)     the Company
  has complied with the terms of loan agreements, security indentures or other
  financial position or results dependent agreement; and

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(viii)     the
  interim financial statements contain adequate and appropriate disclosures.

*6.3******Compliance
  with Laws and Regulations*

(a)       
  periodically obtain updates from management regarding compliance with this policy
  and industry best practices;

(b)       
  be satisfied that all regulatory compliance matters have been considered in
  the preparation of the financial statements; and

(c)       
  review the findings of any examinations by securities regulatory authorities
  and stock exchanges.

*6.4******Other
  Responsibilities*

(a)       
  review, with the companys counsel, any legal matters that could have a
  significant impact on the companys financial statements.

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