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EVALUATION OF THE P&NG RESERVES

OF

TAG OIL LTD.

IN THE CHEAL AREA OF NEW ZEALAND

(As ofMarch 31, 2007)



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|Copies:       | TAG Oil Ltd. (5 copies)                                                                                                                                                                                                                                                                                                                                                                        
|------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              | Sproule International Limited (1 copy)                                                                                                                                                                                                                                                                                                                                                         
|              | Electronic (1)                                                                                                                                                                                                                                                                                                                                                                                 
|              |                                                                                                                                                                                                                                                                                                                                                                                                
|Project No.:  | 3219.70414                                                                                                                                                                                                                                                                                                                                                                                     
|              |                                                                                                                                                                                                                                                                                                                                                                                                
|Prepared For: | TAG Oil Ltd.                                                                                                                                                                                                                                                                                                                                                                                   
|              |                                                                                                                                                                                                                                                                                                                                                                                                
|Authors:      | Douglas J. Carsted, P.Geol., Project Leader                                                                                                                                                                                                                                                                                                                                                    
|              | Jeff Duer, P. Eng.                                                                                                                                                                                                                                                                                                                                                                             
|              | Barrie F. Jose, P.Geoph.                                                                                                                                                                                                                                                                                                                                                                       
|              |                                                                                                                                                                                                                                                                                                                                                                                                
|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 being made available to that
      party.

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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 March 31, 2007),                                  
|             |            | Before Income Tax                                        
|             |            |                                                          
|             | Table S-2  | Summary of Selected Price Forecasts                      
|             |            | (Effective March 31, 2007)                               
|             |            |                                                          
|             | Table S-3  | Summary of Reserves and Net Present Values               
|             |            | Total Proved Plus Probable Plus Possible
      Reserves 
|             |            | Before Income Tax                                        
|             |            |                                                          
|             | Table S-3A | Summary of Reserves and Net Present Values               
|             |            | Total Proved Plus Probable Reserves                     
|             |            | Before Income Tax                                        
|             |            |                                                          
|             | Table S-3B | Summary of Reserves and Net Present Values               
|             |            | Total Proved Undeveloped                                
|             |            | Before Income Tax                                        



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

|               | Table S-3C | Summary of Reserves and Net Present Values     
|-------------- | ---------- | -----------------------------------------------
|               |            | Total Probable Undeveloped Reserves           
|               |            | Before Income Tax                              
|               |            |                                                
|               | Table S-3D | Summary of Reserves and Net Present Values     
|               |            | Total Possible Undeveloped Reserves           
|               |            | Before Income Tax                              
|               |            |                                                
|               | 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 (Before Income Tax)           
|               |            |                                                
|               | Figure S-4 | Net Present Values (Before Income Tax)         
|               |            |                                                
|               |            |                                                
|**Discussion** |            |                                                
|               |            |                                                
|               |            | General                                        
|               |            | Geophysics                                     
|               |            | Geology                                        
|               |            | Estimation of Reserves and Production Forecasts
|               |            | Pricing                                        
|               |            | Operating and Capital Costs                    
|               |            | Royalties and
  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 
|--------------------------
|                          
|                          
|                          
|                          
|                          
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|                          
|                          
|                          
|National Instrument 51-101
|                          
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|Table of Contents
       Page 4
|--------------------------------

|        | Table 6  | Summary of Oil and Gas Reserves                              
|------- | -------- | -------------------------------------------------------------
|        |          | as of March 31, 2007                                        
|        |          | Constant Prices and Costs                                    
|        |          |                                                              
|        | Table 7  | Summary of Net Present Values of                             
|        |          | Future Net Revenue,                                          
|        |          | as of March 31, 2007                                        
|        |          | Constant Prices and Costs                                    
|        |          |                                                              
|        | Table 8  | Total Future Net Revenue (Undiscounted),                     
|        |          | as of March 31, 2007                                        
|        |          | Constant Prices and Costs                                    
|        |          |                                                              
|        | Table 9  | Net Present Value of Future Net                              
|        |          | Revenue by Production Group,                                 
|        |          | as of March 31, 2007                                        
|        |          | Constant Prices and Costs                                    
|        |          |                                                              
|        | Table 10 | Summary of Pricing and Inflation Rate                        
|        |          | Assumptions as of March 31, 2007                             
|        |          | Constant Prices and Costs                                    
|        |          |                                                              
|Figures |         
|        |          |                                                              
|        | Figure 1 | Map of New Zealand highlighting                              
|        |          | Petroleum Exploration Permit (PEP) 38738                     
|        |          |                                                              
|        | Figure 2 | Seismic Control & PEP 38738                                  
|        |          |                                                              
|        | Figure 3 | 3D Perspective View of Interpreted Horizon Data              
|        |          | Provided by Company                                          
|        |          |                                                              
|        | Figure 4 | 3D Perspective View of Fault Sticks Provided by
      Company
|        |          |                                                              
|        | Figure 5 | Faults Re-interpreted by Sproule                             
|        |          |                                                              
|        | Figure 6 | Time Structure Interpreted by Sproule                        



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

|           | Figure 7   | Depth Structure at Sandstone #3
      and Fault Framework Interpreted
|---------- | ---------- | ---------------------------------------------------------------------
|           |            | by Sproule                                                           
|           |            |                                                                      
|           | Figure 8   | Depth Structure on Sandstone #3
      with Well Tops                 
|           |            |                                                                      
|           | Figure 9   | Mt. Messenger Sandstone #3 Depth
      Structure Map                 
|           |            |                                                                      
|           | Figure 10  | Mt. Messenger Sandstone #2 Depth
      Structure Map                 
|           |            |                                                                      
|           | Figure 11  | Scaled-up Porosity from Well Logs
      within Petrel Model          
|           |            |                                                                      
|           | Figure 12  | Petrophysical Model of Porosity
      for Sandstone #3               
|           |            |                                                                      
|           | Figure 13  | Mt. Messenger Sandstone #3 Net Pay
      Map                         
|           |            |                                                                      
|           | Figure 14  | Mt. Messenger Sandstone #2 Net Pay
      Map                         
|           |            |                                                                      
|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 March 31, 2007.

The report consists of an evaluation of the P&NG reserves
associated with the Company's interest in the Cheal Field, New Zealand. It was
prepared during the months of May and June 2007, for the purpose of evaluating
the Companys P&NG reserves according to Canadian Oil and Gas Evaluation
Handbook (COGEH) reserve definitions that are consistent with the standards of
National Instrument 51-101. This report was prepared for the Companys corporate
purposes.

This report is included in one volume, which consists of an
Introduction, Summary, Discussion, Constant Prices and Costs, National
Instrument 51-101, and Appendices. The Introduction includes the summary of the
evaluation standards and procedures and pertinent author certificates; the
Summary includes high-level summaries of the evaluation; and the Discussion
includes general commentaries pertaining to the evaluation of the P&NG
reserves. The Constant Prices and Costs section shows the Companys total
reserves and cash flows under the assumption of constant prices and costs. The
National Instrument 51-101 section presents Form 51-101 F2Report on Reserves
Data by Independent Qualified Reserves Evaluator or Auditor, Tables 1 to 5 using
Forecast Prices and Costs, Tables 6 to 10 using Constant Prices and Costs.
Reserves definitions, abbreviations, units, and conversion factors are included
in Appendices A and B.

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.



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

Historical Data, Interests and Burdens

|1. | All historical production, well data, revenue and expense
      data, product prices actually received, and other data that were obtained
      from the Company 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). 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 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 March 31, 2007 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.



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

Evaluation Results

|1. | The analysis of individual properties as reported herein
      was conducted with the context and scope of an evaluation of a unique
      group of properties in aggregate. Use of this report outside of this scope
      may not be appropriate.                                                                                                                                                                                                                                                                                                                           
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | 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.                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | The dollar values presented throughout the report are in
      United States dollars, unless otherwise stated. An exchange rate of 0.7157
      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 March 30, 2007, as obtained from the Bank of Canada
    website.                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5. | Due to rounding, certain totals may not be consistent
      from one presentation to the next.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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:1 bbl (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



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

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 being made available to that party.



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|Introduction 
      Page 5
|---------------------------

|Certification                                                                                                                                            
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         
|Report Preparation                                                                                                                                       
|                                                                                                                                                         
|The report entitled Evaluation of the P&NG Reserves
      of TAG Oil Ltd.(As of March 31, 2007), was prepared by the following
      Sproule personnel:
|                                                                                                                                                         

| | Original signed by Michael W.
      Maughan, C.P.G., P.Geol.
| | ------------------------------------------------------------
| |                                                             
| | for                                                         
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             
| |                                                             



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|Introduction 
      Page 6
|---------------------------

Sproule Executive Endorsement

This report has been reviewed and endorsed by the following
Executive of Sproule:

| |     | Original signed by Robert N. Johnson, P.Eng.
| | --- | --------------------------------------------
| | for | John L. Chipperfield, P.Geol.               
| |     | Senior Vice-President                       
| |     | 15 /06/2007dd/mm/yr                         

Permit to Practice

Sproule International Limited is a member of the Association of
Professional Engineers, Geologists and Geophysicists of Alberta and our permit
number is P6151.



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|Introduction 
      Page 7
|---------------------------

Certificate

Jeff Duer, B.Sc., P.Eng.

I, Jeff Duer, Reservoir Engineer at Sproule International
Limited, 900, 140 Fourth Ave SW, Calgary, Alberta, declare the following:

|1. | I hold the following degree:                                                                                                                                                                                                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|2. | I am a registered professional:                                                                                                                                                                                                                                                                                                                                                   
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|3. | I am a member of the following professional
      organizations:                                                                                                                                                                                                                                                                                                                  
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   | b.                                                                                                                                                                                                                                                                                                                                                                                
|   | c.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|4. | My contribution to the report entitled Evaluation of the
      P&NG Reserves of TAG Oil Ltd.(As of March 31, 2007) is based on my
      engineering knowledge and the data provided to me by the Company, from
      public sources, and from the non-confidential files of Sproule
      International Limited. I did not undertake a field inspection of the
      properties.
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|5. | I have no interest, direct or indirect, nor do I expect
      to receive any interest, direct or indirect, in the properties described
      in the above-named report or in the securities of TAG Oil
  Ltd.                                                                                                                                                                     

| | Original signed by Jeff Duer
| | ----------------------------
| | Jeff Duer, P.Eng.           



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|Introduction 
      Page 8
|---------------------------

Certificate

Douglas J. Carsted, B.Sc., P.Geol.

I, Douglas J. Carsted, Vice-President, Geoscience, and Director
at Sproule International Limited, 900, 140 Fourth Ave SW, Calgary, Alberta,
declare the following:

|1. | I hold the following degrees:                                                                                                                                                                                                                                                                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | a.                                                                                                                                                                                                                                                                                                                                                                               
|   | b.                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                  
|2. | I am a registered professional:                                                                                                                                                                                                                                                                                                                                                  
|   | a.                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                  
|3. | I am a member of the following professional
      organizations:                                                                                                                                                                                                                                                                                                                 
|   | a.                                                                                                                                                                                                                                                                                                                                                                               
|   | b.                                                                                                                                                                                                                                                                                                                                                                               
|   | c.                                                                                                                                                                                                                                                                                                                                                                               
|   | d.                                                                                                                                                                                                                                                                                                                                                                               
|   | e.                                                                                                                                                                                                                                                                                                                                                                               
|   | f.                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                  
|4. | I am a qualified evaluator and auditor as defined in
      National Instrument 51-101.                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                  
|5. | My contribution to the report entitled Evaluation of the
      P&NG Reserves of TAG Oil Ltd.(As of March 31, 2007) is based on my
      geological knowledge and the data provided to me by the Company, from
      public sources, and from the non-confidential files of Sproule
      International Limited. I did not undertake a field inspection of the
      properties.
|   |                                                                                                                                                                                                                                                                                                                                                                                  
|6. | I have no interest, direct or indirect, nor do I expect
      to receive any interest, direct or indirect, in the properties described
      in the above-named report or in the securities of TAG Oil
  Ltd.                                                                                                                                                                    

| |                            
| | ---------------------------
| | Douglas J. Carsted, P.Geol.



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|Introduction 
      Page 9
|---------------------------

Certificate

Barrie F. Jose, M.Sc., P.Geoph.

I, Barrie F. Jose, Manager, Geoscience, and Associate at
Sproule International Limited, 900, 140 Fourth Ave SW, Calgary, Alberta, declare
the following:

|1. | I hold the following degrees:                                                                                                                                                                                                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   | b.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|2. | I am a registered professional:                                                                                                                                                                                                                                                                                                                                                   
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|3. | I am a member of the following professional
      organizations:                                                                                                                                                                                                                                                                                                                  
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   | (APEGGA )                                                                                                                                                                                                                                                                                                                                                                         
|   | b.                                                                                                                                                                                                                                                                                                                                                                                
|   | c.                                                                                                                                                                                                                                                                                                                                                                                
|   | d.                                                                                                                                                                                                                                                                                                                                                                                
|   | e.                                                                                                                                                                                                                                                                                                                                                                                
|   | f.                                                                                                                                                                                                                                                                                                                                                                                
|   | g.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|4. | I am a qualified evaluator and auditor as defined in
      National Instrument 51-101.                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|5. | My contribution to the report entitled Evaluation of the
      P&NG Reserves of TAG Oil Ltd.(As of March 31, 2007) is based on my
      geophysical knowledge and the data provided to me by the Company, from
      public sources, and from the non-confidential files of Sproule
      International Limited. I did not undertake a field inspection of the
      properties.
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|6. | I have no interest, direct or indirect, nor do I expect
      to receive any interest, direct or indirect, in the properties described
      in the above-named report or in the securities of TAG Oil
  Ltd.                                                                                                                                                                     

| | Original signed by Barrie F. Jose
| | ---------------------------------
| | Barrie F. Jose, P.Geoph.         



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|Introduction 
      Page 10
|----------------------------

Certificate

John L. Chipperfield, B.Sc., P.Geol.

I, John L. Chipperfield, Senior Vice-President and Director of
Sproule Associates Limited, 900, 140 Fourth Ave SW, Calgary, Alberta, declare
the following:

|1. | I hold the following degree:                                                                                                                                                                                                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|2. | I am a registered professional:                                                                                                                                                                                                                                                                                                                                                   
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|3. | I am a member of the following professional
      organizations:                                                                                                                                                                                                                                                                                                                  
|   | a.                                                                                                                                                                                                                                                                                                                                                                                
|   | b.                                                                                                                                                                                                                                                                                                                                                                                
|   | c.                                                                                                                                                                                                                                                                                                                                                                                
|   | d.                                                                                                                                                                                                                                                                                                                                                                                
|   | e.                                                                                                                                                                                                                                                                                                                                                                                
|   | f.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|4. | I am a qualified evaluator and auditor as defined in
      National Instrument 51-101.                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|5. | My contribution to the report entitled Evaluation of the
      P&NG Reserves of TAG Oil Ltd.(As of March 31, 2007) is based on my
      geophysical knowledge and the data provided to me by the Company, from
      public sources, and from the non-confidential files of Sproule
      International Limited. I did not undertake a field inspection of the
      properties.
|   |                                                                                                                                                                                                                                                                                                                                                                                   
|6. | I have no interest, direct or indirect, nor do I expect
      to receive any interest, direct or indirect, in the properties described
      in the above-named report or in the securities of TAG Oil
  Ltd.                                                                                                                                                                     

| |                              
| | -----------------------------
| | John L. Chipperfield, P.Geol.



---

|Summary  Page 1
|----------------

Summary

Table S-1, on the following page, summarizes our evaluation of
the P&NG reserves associated with the Companys interest in the Cheal Field,
New Zealand. The Company has informed us that their tax pools exceed the
forecasted taxable income from the Cheal property and therefore, income taxes
have not been deducted in this report. The effective date of the evaluation is
March 31, 2007. A map showing the location of the Companys Petroleum
Exploration Permit encompassing the Cheal property is included as Figure S-1.

The reserves were estimated deterministically for the proved,
proved plus probable, and proved plus probable plus possible 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. The price forecasts that formed the basis for
the revenue projections in the evaluation were based on Sproules March 31, 2007
pricing model. Table S-2 presents a summary of the forecasts used. Operating and
capital costs were escalated at 5 percent per for the first year, 4 percent the
second year, 3 percent the third year, and 2.0 percent per year thereafter as
set out in Table S-2.

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.

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.



---

|2007/06/15
      13:59:30 TAGO.70414 SPROULE\LyndaV
|---------------------------------------------------

Table S-1

|Tag Oil
      Ltd.                                            
|--------------------------------------------------------------
|Summary of the Evaluation of the Company's
      P&NG Reserves
|(As of March 31,
      2007)                                  
|                                                              
|                                                              
|                                                              
|Light/Medium Oil
      (Mbbl)                                 
|Proved Undeveloped                                            
|Total Proved                                                  
|Probable Undeveloped                                          
|Total Probable                                                
|Possible Undeveloped                                          
|Total Possible                                                
|Total                                                         
|Solution Gas (MMcf) - values included with lt/med oil -       
|Proved Undeveloped                                            
|Total Proved                                                  
|Probable Undeveloped                                          
|Total Probable                                                
|Possible Undeveloped                                          
|Total Possible                                                
|Total                                                         
|GRAND TOTAL
      (Mboe)                                      
|Proved Undeveloped                                            
|Total Proved                                                  
|Probable Undeveloped                                          
|Total Probable                                                
|Possible Undeveloped                                          
|Total Possible                                                
|Total                                                         



---

|Summary  Page 3
|----------------

|Table S-2                                                               
|------------------------------------------------------------------------
|Summary of Selected Price Forecasts and Inflation Rate
      Assumptions
|(Effective March 31, 2007)                                              
|                                                                        
|                                                                        
|                                                                        
|Year                                                                    
|                                                                        
|Historical                                                              
|2000                                                                    
|2001                                                                    
|2002                                                                    
|2003                                                                    
|2004                                                                    
|2005                                                                    
|2006                                                                    
|                                                                        
|Forecast                                                                
|2007                                                                    
|2008                                                                    
|2009                                                                    
|2010                                                                    
|2011                                                                    
|2012                                                                    
|2013                                                                    
|2014                                                                    
|2015                                                                    
|2016                                                                    
|2017                                                                    
|                                                                        

Notes:

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



---



---



---



---



---



---



---



---



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---

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

Discussion

|1.0 | General
|--- | -------

The Companys reserves are located in the Cheal Field, 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% working interest in the shallow rights
of PEP 38738. The shallow rights include all strata from Recent to base of
Miocene, which encompasses the Intra Urenui and Mt. Messenger reservoirs in the
Cheal Field.

The Cheal structure has been penetrated by a total of seven
wells, Cheal-1, 2, A3X, A4, B1, B2 and B3. The three wells drilled from the
B-Pad location were drilled in the last year and represent new data that has
been incorporated into our evaluation. The new well log data has been useful in
re-evaluating the sandstones of the Mt. Messenger Formation. In addition, the
Company recently acquired a 45 km23D seismic survey that covers the
Cheal Field. The outline of the 3D seismic coverage is shown in blue in Figure
2, while the older 2D seismic coverage is shown in green. The acquisition of the
3D seismic has been a very positive development, as it has greatly clarified the
position of primary and secondary faults and the distribution of the horizons
within each fault block.

|2.0 | Geophysics
|--- | ----------

Data Control

The Company provided a recently acquired 3D seismic program of
approximately 45 km2 shot over the Cheal Field in industry standard
SEGY format. This data was loaded into the Petrel 3D seismic and
geological visualization/interpretation software program. In addition, the
Companys seismic horizon picks, interpreted fault sticks, well deviation
trajectories, available digital well logs and well tops were also loaded into
the 3D model (Figure 3). The Petrel software allows for the rapid
animation and review of 3D seismic volumes and the auditing of the picked
horizon and faults.



---

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

Following editing by Sproule, this data was used to build a 3D
structural model which was subsequently populated with petrophysical parameters
from Sproules petrophysical analysis to produce the 3D geological model used in
the volumetric calculations.

Geophysical Interpretation

The Companys seismic horizon interpretation, as received by
Sproule, was picked on approximately every fifth inline and crossline over the
portion of the 3D survey that covers the main Cheal structure (Figure 3). In the
attached figures, the green arrow, shown in the lower left of the 3D perspective
views, always points northwards. From these horizon and fault picks, surfaces
were gridded and contoured to enable better initial viewing of the data. In
order to review the horizon and fault picks and associated surfaces in
comparison to the seismic reflections, the 3D seismic volume was animated in
both the inline and crossline directions.

The fault sticks for each of the seven faults supplied by
Company were picked at inline, cross-line and time slices, respectively, by
Sproule in order to refine or re-interpret the fault sticks. This was necessary
to produce cleaner fault planes (Figure 5) to generate the 3D structural model
within Petrel (Figures 6 and 7).

The main bounding fault on the western flank of the field is
intersected by a series of SSW-NNE trending splay faults in the vicinity of the
field (Figure 7). The magenta coloured fault in this figure can be seen to
separate the wells of the A Block (Cheal-1, 2, A3X and A4) from those of the B
Block (Cheal-B1, B2 and B3).

A multi-layer depth conversion was conducted within
Petrel. Figure 8 shows the well tops and the depth structure at the Mt.
Messenger Sandstone #3. Depth structure maps on Sandstone #3 and Sandstone #2
are provided in Figures 9 and 10.

|3.0 | Geology
|--- | -------

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 formation was tested over a nine-day period at a steady rate of 48 bopd
with gas declining from 2.7 MMscfd to 1.05 MMscfd. The Mt. Messenger Formation
was not tested in this well, although shows and petrophysical analysis indicate
approximately 16 feet of net pay. The Urenui Formation was further tested for
1.2 days in December 2005 at 0.14 MMscfd of gas, with no oil reported.



---

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

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 and flowed at initial rates of 1.8
MMscfd of gas with slugs of oil. The gas rates declined to 0.9 MMscfd with oil
rates of approximately 20 bopd. No water was produced during the test.
Petrophysical analysis indicates that the Mt. Messenger Sandstone is wet in this
well and defines the limits of the pool to the east. The Company plans to
convert this well to water disposal.

The Company, 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.
This well was directionally drilled from the Cheal A wellsite toward the NNE,
intersecting the Intra Urenui Sandstones between 4,603 and 4,737 feetMD and the
Mt. Messenger Sandstone between 5,800 and 5,863 feetMD. 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. Water-cuts were less than one percent.

The Company subsequently drilled Cheal-A4 in October 2004 to
further evaluate the hydrocarbon potential of the Intra Urenui and Mt. Messenger
sandstones. This well was directionally drilled from the Cheal A wellsite
toward the NE, intersecting the target horizons approximately halfway between
the Cheal A3X well and the downdip 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. Over this period, oil production averaged 265
bopd with gas-oil ratios increasing from 500 to 730 scf per barrel. Water-cuts
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 MMscfd with
very little oil.

During October and November 2006, the Company drilled three
deviated wells (Cheal-B1, B2 and B3) from the Cheal B Pad surface location,
approximately 0.8 miles to the north of the Cheal A Pad surface location. All
three wells intersected the Mt. Messenger sandstones north of the
northeast-southwest trending fault that transects the field. From petrophysical
analysis, Cheal B-1 and Cheal B-3 intersected the thicker and better quality Mt.
Messenger sandstones. Cheal B-2 encountered only about 6 feet of net pay in the
Mt. Messenger #3 sandstone, but did encounter 16 feet of net pay in the Mt.
Messenger #2 sandstone.

The oil-water contact established for the Mt. Messenger
Sandstone #3 in the A Pad wells is 4605 feet subsea (-1404m), while the B fault
block wells did not encounter an oil-water contact but established an oil-down
to elevation of 4592 feet subsea (-1400m). There is the possibility



---

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

that the two fault block share the same oil-water contact but
that is yet to be established (Figure 9). For the oil-in-place volumetric
calculation for the B fault block, the oil-down-to elevation was used to
define the proved oil volume and the elevation half way between the
oil-down-to elevation and the elevation of the oil-water contact in the A
fault block was used to calculate an additional probable oil-in-place volume.

For the Mt. Messenger Sandstone #2, which is the deeper
oil-bearing sand, an oil-water contact of 4625 feet subsea (-1410m) was
established (Figure 10). The oil-in-place volume calculated for this reservoir
has been classified as probable, because this reservoir has not been tested in
the B fault block, which contains the majority of the in-place oil volumes.

Petrophysical Modelling

The new well log data for the three B Pad wells was loaded into
the Prizm petrophysical analysis software package. The new data showed
that, in our previous evaluation, we had over-estimated the shale content of the
Mt. Messenger, which resulted in a lower average effective porosity value for
the field and, correspondingly, a higher average water saturation. Our new
estimate of average porosity is 23 percent, compared to our previous estimate of
18 percent. Similarly, as the porosity value increased, the corresponding
average water saturation decreased from an estimated 50 percent to 37 percent.
These values are considered reasonable, given the data available.

The well log data from the petrophysical evaluation was loaded
into Petrel and was up-scaled (Figure 11) and distributed within the 3D
geological model (Figure 12) for both porosity and water saturation.

Net pay maps were generated from the 3D model and displayed as
2D maps in Figures 13 and 14 for the Mt. Messenger Sandstones #3 and #2,
respectively. These maps were then used to estimate the drainage areas for the
various proved, probable and possible portions of the reservoir. The location of
the Cheal B-4 well shown on Figure 13 is the projected intersection of the well
at the Mt. Messenger Sandstone #3 level, based on the well prognosis. As of
March 31, 2007, the well had not finished drilling.



---

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

|4.0 | Estimation of Reserves and Production
      Forecasts
|--- | -----------------------------------------------------

Oil reserves were estimated volumetrically for the Mt.
Messenger Formation using drainage areas assignments (Figures 13 and 14) and net
pay based on well logs and seismic interpretation. Reservoir porosity and water
saturation were obtained from well logs.

Proved undeveloped, probable and possible reserves were
assigned to the A3X, A4, A5, B1, B2, and B3 wells. As the costs for the site
work and development facilities are significant, the proved reserves assigned to
the A3X, A4, A5, B1, B2, and B3 wells were categorized as undeveloped. A3X and
A4 were produced one well at a time in test mode throughout 2004 -2006, with
combined cumulative production of 140,790 barrels of oil prior to March 31,
2007. The testing was done through rental equipment . All but two of the wells
are currently shut-in, waiting on site work and the installation of production
facilities. The B2 and B3 wells are currently producing to temporary testing
facilities and are expected to continue to produce until June at a combined rate
of 500 bopd.

Commissioning of the A site should start in July, 2007, with
the A3 and A4 wells; however, the combined production will be limited to 600
bopd. The total production limit is expected to increase to 1000 bopd by
September, 2007, from the four producing wells plus the B1 well. The A5 and A6
wells are forecast to be drilled and on production in January, 2008, with an
increased total production limit of 1350 bopd. Upon drilling and completion of
the B5, B6, B7 wells, all of the wells will be put on production by July, 2008,
with an initial peak rate of 1900 bopd.

Proved undeveloped, probable and possible reserves were
assigned to the three undrilled locations, A5, B6 and B7. Probable and possible
reserves were assigned to the two undrilled locations, A6 and B5.

Recovery factors were estimated to be 15 percent in the proved
(1P) case, 20 percent in the proved plus probable (2P) case and 25 percent in
the proved plus probable plus possible (3P) case. These recovery factors are
consistent with primary recoveries reported for the Ngatoro Field, which is the
offsetting analog field to Cheal. Water-flooding has not been considered in this
report.

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



---

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

|5.0 | Pricing
|--- | -------

Sproules short-term outlook for oil prices adopts the NYMEX
futures market for the forecast period ending December 31, 2009. The forecast
used in this evaluation was derived as of March 31, 2007 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 January contract. The
oil price forecasts 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 $51.00 per barrel (2007
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
positive differential of $US 4.00 per barrel was used.

The Company is expecting to receive a gas price of $NZ 3.30 per
gigajoule ($US 2.44 per MMbtu). The heating value for the solution gas was
estimated at 1,150 Btu per Scf, resulting in a gas price of $US 2.81 per Mcf.
This price is escalated two percent per year.

|6.0 | 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 during long-term production.

The planned site facilities will be run off electricity
generated by an on-site 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



---

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

electricity to the local power grid would be equivalent in
value to selling the gas through the LTS pipeline or Waihapa treatment
station.

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

The oil/condensate /pour point depressant mix is expected to be
trucked to the Omata tank farm in New Plymouth. A trucking cost of $1.40 per
barrel and a processing fee of $US 0.20  0.78 per barrel were used, as outlined
in the table below.

The capital costs used in the evaluation were based on
estimates prepared by the Company, and are summarized below. An exchange rate of
0.72 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 March 31, 2007, as obtained from the Bank of Canada website.

Capital Costs M$US (2007 Dollars)

Item
    Total 1P Case A3X, A4, A5, B1, B2,
      B3, B6, B7
    Total 2P Case A3X, A4, A5, A 6, B1,
      B2, B3, B5, B6, B7
    Total 3P Case A3X, A4, A5, A 6, B1,
      B2, B3, B5, B6, B7Site Work and
      Facilities
    13,631
    13,631
    13,631Workovers
    1,379
    1,379
    1,379Gas Pipeline and
      Compression
    5,565
    5,565
    5,565Drilling and
      Completion (Dec 07)
    2,173
    4,346
    4,346Drilling and
      Completion (June 08)
    4,346
    6,519
    6,519Total
    27,094
    31,440
    31,440


Well abandonment and disconnect costs of US$ 216,000 per well
were used. No allowances for reclamation or salvage values were made.



---

|Discussion - Page
      8
|-------------------------

Operating costs were estimated as follows:

Operating Costs (2007 Dollars)

Dates
    Operational Description Temporary
      production,
    Fixed per well US$ / Month
    Variable oil US$ / bbl
    Variable gas US$ / bbl
    Trucking US$ / bbl
    Marketing & sales US$ / bblMarch 07 - June
      07
    2
      wells B2 and B3
    $134,661
    0.51
    0.04
    1.40
    5.76July 07 - August
      07
    Commissioning A site
    $130,688
    0.42
    0.04
    1.40
    5.76Sept 07 - Dec 07
    Production Phase 1
    $38,280
    0.78
    0.24
    1.40
    1.94Jan 08 - June 08
    Production Phase 2
    $18,663
    0.60
    0.14
    1.40
    1.94July 08 onward
    Production Phase 3
    $15,595
    0.20
    0.06
    1.40
    1.94


Operating and capital costs were escalated at 5 percent the
first year, 4 percent the second year, 3 percent the third year, and 2.0 percent
per year thereafter.

|7.0 | Royalties and Taxes
|--- | -------------------

The Company has informed us that their tax pools exceed the
forecasted taxable income from the Cheal property; consequently, income taxes
have not been deducted in this report.

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,



---

|Discussion - Page
      9
|-------------------------

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 first quarter of 2009.

|8.0 | 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 March 31,
      2007)                                
|Pool/Location                                               
|                                                            
|                                                            
|Mt. Messenger 3                                             
|                                                            
|Proved Undeveloped                                          
|Cheal-A3X
      & A4                                        
|Cheal-B1, B2, & B3                                          
|Cheal-A5                                                    
|Cheal-B6 & B7                                               
|                                                            
|Proved + Probable                                           
|Cheal-A3X
      & A4                                        
|Cheal-B1, B2, & B3                                          
|Cheal-B6
      & B7                                         
|Cheal-A5                                                    
|Cheal-A6                                                    
|Cheal-B5                                                    
|                                                            
|Proved +
      Probable + Possible                          
|Cheal-A3X
      & A4                                        
|Cheal-B1, B2, & B3                                          
|Cheal-B6
      & B7                                         
|Cheal-A5                                                    
|Cheal-A6                                                    
|Cheal-B5                                                    
|                                                            
|                                                            
|Mt. Messenger 2                                             
|                                                            
|Probable (No Proved
      Reserves for this zone)           
|Cheal-SS2 compl.                                            
|                                                            
|Probable +
      Possible (No Proved Reserves for this zone)
|Cheal-SS2
      compl.                                      
|                                                            
|Field Totals                                                
|                                                            
|Proved Undeveloped                                          
|Total                                                       
|                                                            
|Proved + Probable                                           
|Total                                                       
|                                                            
|Proved + Probable + Possible                                
|Total                                                       



---

|Table
      2                                     
|--------------------------------------------------
|Cheal, New
      Zealand                          
|Estimates of Reserves
      and Net Present Values
|(As of
      March 31, 2007)                      
|Oil Reserves                                      
|Pool/Location                                     
|0%                                                
|                                                  
|                                                  
|Mt. Messenger 3                                   
|Proved Undeveloped                                
|Cheal-A3X & A4                                    
|Cheal-B1, B2, & B3                                
|Cheal-A5                                          
|Cheal-B6 & B7                                     
|Total Proved                                      
|                                                  
|Probable                                          
|Cheal-A3X & A4                                    
|Cheal-B1, B2, & B3                                
|Cheal-B6 & B7                                     
|Cheal-A5                                          
|Cheal-A6                                          
|Cheal-B5                                          
|Total, Probable                                   
|Proved + Probable                                 
|                                                  
|Possible                                          
|Cheal-A3X & A4                                    
|Cheal-B1, B2, & B3                                
|Cheal-B6 & B7                                     
|Cheal-A5                                          
|Cheal-A6                                          
|Cheal-B5                                          
|Total, Possible                                   
|Proved + Probable +
      Possible                
|                                                  
|Mt. Messenger 2                                   
|                                                  
|Probable                                          
|Cheal-SS2 compl.                                  
|                                                  
|Probable + Possible                               
|Cheal-SS2 compl.                                  
|                                                  
|                                                  
|Field Totals                                      
|                                                  
|Total Proved                                      
|                                                  
|Proved + Probable                                 
|                                                  
|Proved + Probable + Possible                      



---

|Table 2cont'd                                     
|--------------------------------------------------
|Cheal, New Zealand                                
|Estimates of Reserves and Net Present
      Values
|(As of March 31, 2007)                            
|Gas Reserves                                      
|Pool/Location                                     
|0%                                                
|                                                  
|Mt. Messenger 2 & 3                               
|                                                  
|Proved Undeveloped                                
|Cheal-A3X & A4                                    
|Cheal-B1, B2, & B3                                
|Cheal-A5                                          
|Cheal-B6 & B7                                     
|Total Proved                                      
|                                                  
|Probable                                          
|Cheal-A3X & A4                                    
|Cheal-B1, B2, & B3                                
|Cheal-B6 & B7                                     
|Cheal-A5                                          
|                                                  
|Cheal-A6                                          
|Cheal-B5                                          
|Cheal-SS2 compl.                                  
|Total, Probable                                   
|                                                  
|Proved + Probable                                 
|                                                  
|Possible                                          
|Cheal-A3X & A4                                    
|Cheal-B1, B2, & B3                                
|Cheal-B6 & B7                                     
|Cheal-A5                                          
|                                                  
|Cheal-A6                                          
|Cheal-B5                                          
|Cheal-SS2 compl.                                  
|Total, Possible                                   
|                                                  
|Proved + Probable + Possible                      



---



---



---



---



---



---



---



---



---



---



---



---



---



---



---



---

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

Constant Prices and Costs

Table C-1, presented on the following page, summarizes our
evaluation of the P&NG reserves of TAG Oil Ltd., as of March 31, 2007, based
on constant prices and costs. 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 March 31, 2007 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 65.98 per barrel
| | ---------------------------------- | --------------------
| |                                    |                     
| | Natural Gas:                       | $US 2.81 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 constant natural gas price quoted above 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.



---

|2007/06/15
      15:55:26 TAGO.70414 SPROULE\LyndaV
|---------------------------------------------------

Table: C-1

|Tag Oil
      Ltd.                                            
|--------------------------------------------------------------
|Summary of the Evaluation of the Company's
      P&NG Reserves
|(As of March 31,
      2007)                                  
|                                                              
|                                                              
|                                                              
|Light/Medium Oil
      (Mbbl)                                 
|Proved Undeveloped                                            
|Total Proved                                                  
|Probable Undeveloped                                          
|Total Probable                                                
|Possible Undeveloped                                          
|Total Possible                                                
|Total                                                         
|Solution Gas (MMcf) - values included with lt/med oil -       
|Proved Undeveloped                                            
|Total Proved                                                  
|Probable Undeveloped                                          
|Total Probable                                                
|Possible Undeveloped                                          
|Total Possible                                                
|Total                                                         
|GRAND TOTAL
      (Mboe)                                      
|Proved Undeveloped                                            
|Total Proved                                                  
|Probable Undeveloped                                          
|Total Probable                                                
|Possible Undeveloped                                          
|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 March 31, 2007.

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. 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. 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 March
      31, 2007. 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 March 31, 2007, 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:

| |                    |                         |           | Net Present Value of Future Net
      Revenue
| | ------------------ | ----------------------- | --------- | ---------------------------------------------
| | Independent        |                         |           | (10% Discount Rate)                          
| | Qualified          |                         | Location  |                                              
| | Reserves           | Description             | of        |                                              
| | Evaluator
      or | and Preparation Date of | Reserves  | Audited                                      
| | Auditor            | Evaluation Report       | (Country) | (M$US)                                       
| | Sproule            | Evaluation of the P&NG  | New       |                                              
| |                    | Reserves of             | Zealand   |                                              
| |                    | TAG OIL LTD as of       |           |                                              
| |                    | March 31, 2007,         |           |                                              
| |                    | prepared May to June    |           |                                              
| |                    | 2007                    |           |                                              
| | 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 |      

Executed as to our report referred to above:

|Sproule International Limited
|-----------------------------
|Calgary, Alberta             
|June 15,
      2007          

| |       | Original signed by Jeff Duer                          
| | ----- | ------------------------------------------------------
| |       | Jeff Duer, P.Eng.                                     
| |       | Reservoir Engineer                                    
| |       |                                                       
| |       |                                                       
| |       |                                                       
| |       | Original signed by Michael W. Maughan, C.P.G., P.Geol.
| | for   | Douglas J. Carsted, P.Geol.                           
| |       | Vice-President, Geoscience                            
| |       |                                                       
| |       |                                                       
| |       |                                                       
| |       |                                                       
| |       | Original signed by Barrie F. Jose                     
| |       | Barrie F. Jose, P.Geoph.                              
| |       | Manager, Geoscience                                   
| |       |                                                       
| |       |                                                       
| |       |                                                       
| |       |                                                       
| |       | Original signed by Robert N. Johnson, P.Eng.          
| | *for* | John L. Chipperfield, P.Geol.                         
| |       | Senior Vice-President                                 

---

|2007/06/15
      14:09:25 - 70414 | National Instrument 51-101
|--------------------------------- | --------------------------

|Table
      1                        
|-------------------------------------
|NI
      51-101                      
|Summary of Oil and Gas
      Reserves
|as of March 31,
      2007           
|Forecast Prices and
      Costs      
|Reserves                             
|                                     
|                                     
|                                     
|                                     
|Reserve
      Category               
|                                     
|Proved                               
|Developed Producing                  
|Developed
      Non-Producing        
|Undeveloped                          
|Total Proved                         
|Probable                             
|Total Proved
      Plus              
|Probable                             
|Possible                             
|Total Proved
      Plus              
|Probable Plus Possible               

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

---

|2007/06/15
      14:09:25 - 70414 | National Instrument 51-101
|--------------------------------- | --------------------------

|Table
      2                         
|--------------------------------------
|NI
      51-101                       
|Summary of Net Present Values
      of
|Future Net
      Revenue              
|as of March 31,
      2007            
|Forecast Prices and
      Costs       
|                                      
|                                      
|                                      
|                                      
|Reserves
      Category               
|                                      
|Proved                                
|Developed Producing                   
|Developed
      Non-Producing         
|Undeveloped                           
|Total Proved                          
|Probable                              
|Total Proved +
      Probable         
|Possible                              
|Total Proved +
      Probable         
|+ Possible                            

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

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

---

|2007/06/15
      14:09:25 - 70414 | National Instrument 51-101
|--------------------------------- | --------------------------

|Table
      3                  
|-------------------------------
|NI
      51-101                
|Total Future Net
      Revenue 
|Undiscounted                   
|as of March 31,
      2007     
|Forecast Prices and
      Costs
|                               
|                               
|                               
|                               
|                               
|Reserves
      Category        
|                               
|                               
|                               
|Proved                         
|                               
|Proved Plus Probable           
|                               
|Proved + Prob. + Poss.         

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

---

|2007/06/15
      14:09:25 - 70414 | National Instrument 51-101
|--------------------------------- | --------------------------

|Table 4                                      
|---------------------------------------------
|NI 51-101                                    
|Net Present Value of Future Net
      Revenue
|by Production Group                          
|as of March 31, 2007                         
|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

---

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

|Table 5                    
|---------------------------
|NI 51-101                  
|Summary of Pricing and     
|Inflation Rates Assumptions
|as of March 31, 2007       
|Forecast Prices and Costs  
|                           
|                           
|                           
|Year                       
|                           
|Historical                 
|2000                       
|2001                       
|2002                       
|2003                       
|2004                       
|2005                       
|2006                       
|                           
|Forecast                   
|2007                       
|2008                       
|2009                       
|2010                       
|2011                       
|2012                       
|2013                       
|2014                       
|2015                       
|2016                       
|2017                       
|                           

(1) Inflation rates for forecasting prices and costs.

Notes:This summary table identifies benchmark
reference oil pricing schedules that might apply to a reporting issuer.
Product sale prices will reflect these reference prices with further
adjustments for quality and transportation to point of sale.



---

|2007/06/15
      15:58:11 - 70414 | National Instrument 51-101
|--------------------------------- | --------------------------

|Table
      6                        
|-------------------------------------
|NI
      51-101                      
|Summary of Oil and Gas
      Reserves
|as of March 31,
      2007           
|Constant Prices and
      Costs      
|Reserves                             
|                                     
|                                     
|                                     
|                                     
|Reserve
      Category               
|                                     
|Proved                               
|Developed Producing                  
|Developed
      Non-Producing        
|Undeveloped                          
|Total Proved                         
|Probable                             
|Total Proved
      Plus              
|Probable                             
|Possible                             
|Total Proved
      Plus              
|Probable Plus Possible               

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

---

|2007/06/15
      15:58:11 - 70414 | National Instrument 51-101
|--------------------------------- | --------------------------

|Table
      7                         
|--------------------------------------
|NI
      51-101                       
|Summary of Net Present Values
      of
|Future Net
      Revenue              
|as of March 31,
      2007            
|Constant Prices and
      Costs       
|                                      
|                                      
|                                      
|                                      
|Reserves
      Category               
|                                      
|Proved                                
|Developed Producing                   
|Developed
      Non-Producing         
|Undeveloped                           
|Total Proved                          
|Probable                              
|Total Proved +
      Probable         
|Possible                              
|Total Proved +
      Probable         
|+ Possible                            

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

Notes:

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

---

|2007/06/15
      15:58:11 - 70414 | National Instrument 51-101
|--------------------------------- | --------------------------

|Table
      8                  
|-------------------------------
|NI
      51-101                
|Total Future Net
      Revenue 
|Undiscounted                   
|as of March 31,
      2007     
|Constant Prices and
      Costs
|                               
|                               
|                               
|                               
|                               
|Reserves Category              
|                               
|                               
|                               
|Proved                         
|                               
|Proved Plus Probable           
|                               
|Proved + Prob. + Poss.         

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

---

|2007/07/19
      11:06:38 - 70414 | National Instrument 51-101
|--------------------------------- | --------------------------

|Table 9                                      
|---------------------------------------------
|NI 51-101                                    
|Net Present Value of Future Net
      Revenue
|by Production Group                          
|as of March 31, 2007                         
|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

---

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

|Table 10                      
|------------------------------
|NI 51-101                     
|Summary of Pricing Assumptions
|as of March 31, 2007          
|Constant Prices and Costs     
|                              
|                              
|                              
|**Year**                      
|                              
|                              
|Historical                    
|Dec. 31, 2001                 
|Dec. 31, 2002                 
|Dec. 31, 2003                 
|Dec. 31, 2004                 
|Dec. 31, 2005                 
|Dec. 31, 2006                 
|                              
|Forecast                      
|March. 31, 2007               

Notes:This summary table identifies benchmark
reference oil pricing schedules that might apply to a reporting issuer.
Product sale prices will reflect these reference prices with further
adjustments for quality and transportation to point of sale.



---

|CHEAL,
      NZ                                               
|--------------------------------------------------------------
|Summary of the Evaluation of the Company's
      P&NG Reserves
|(As of March 31,
      2007)                                  
|                                                              
|                                                              
|                                                              
|Light/Medium Oil
      (Mbbl)                                 
|Proved Undeveloped                                            
|Total Proved                                                  
|Probable Undeveloped                                          
|Total Probable                                                
|Possible Undeveloped                                          
|Total Possible                                                
|Total                                                         
|Solution Gas (MMcf) - values included with lt/med oil -       
|Proved Undeveloped                                            
|Total Proved                                                  
|Probable Undeveloped                                          
|Total Probable                                                
|Possible Undeveloped                                          
|Total Possible                                                
|Total                                                         
|GRAND TOTAL
      (Mboe)                                      
|Proved Undeveloped                                            
|Total Proved                                                  
|Probable Undeveloped                                          
|Total Probable                                                
|Possible Undeveloped                                          
|Total Possible                                                
|Total                                                         

ESCALATED CASE: Using NZ pricing at Mar 31, 2007.

---



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|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.



---

|Appendix A  Page
      3
|-------------------------

|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.                                                                                                                                                                                                                                                                                                  



---

|Appendix A  Page
      4
|-------------------------

|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  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                               
|BBg  | gas formation volume factor                 
|BBo  | 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                     



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|Appendix B  Page
      2
|-------------------------

|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)



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|Appendix B  Page
      3
|-------------------------

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     



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|Appendix B  Page
      4
|-------------------------

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   |             




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|Appendix B  Page
      5
|-------------------------

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) (C )
|3                                                          
|m3/106m3(C )                                               
|4                                                          
|m3/106m3(C )                                               
|5+                                                         
|tonnes per million cubic metres (t/106m3) (sulphur)        
|millilitres per
      cubic meter (mL/m3) (C )             
|5+                                                         
|(mL/m3)
      (C )                                         
|5+                                                         
|Kelvin (K)                                                 
|millipascal seconds (mPa . s)                              




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|Appendix B  Page
      6
|-------------------------

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) (C )         
|3                                                                           
|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) (C )          
|5+                                                                          
|degrees Rankine (°R)                                                        
|centipoises                                                                 



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