Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Exhibit 4.8

S h a r e  P u r
c h a s e  A g r e e m e n t 

South Pacific Lease Operations
Limited 
Seller 

and 

TAG Oil (NZ) Limited

Purchaser 

and 

TAG Oil Limited 
TAG Oil

Date: 9 May 2006 

	Contents
    
	 
	1. 	Interpretation 	3 
	 	 	 
	2. 	Sale and purchase 	7 
	 	 	 
	3. 	Additional Agreements 	11 
	 	 	 
	4. 	Representations, Warranties and Indemnities
    	14 
	 	 	 
	5. 	Taxation 	18 
	 	 	 
	6. 	Conditions to Closing 	22 
	 	 	 
	7. 	Termination and effect of termination
    	23 
	 	 	 
	8. 	General Provisions 	25 
	 	 	 
	Schedule 1: 	Disclosure Schedule 	30 
	 	 	 
	Schedule 2: 	Purchaser Warranties 	33 
	 	 	 
	Schedule 3: 	Purchase Price Allocation 	36 
	 	 	 
	Schedule 4: 	Seller Warranties 	37 
	 	 	 
	Schedule 5: 	Mutual Consents 	46 
	 	 	 
	Schedule 6: 	Required Seller Consents and Approvals 	47 
	 	 	 
	Schedule 7: 	Required Purchaser Consents 	48 
	 	 	 
	Schedule 1: 	Disclosure Schedule 	31 
	 	 	 
	Schedule 2: 	Purchaser Warranties 	34 
	 	 	 
	Schedule 3: 	Purchase Price Allocation 	31 
	 	 	 
	Schedule 4: 	Seller Warranties 	32 
	 	 	 
	Schedule 5: 	Mutual Consents 	46 
	 	 	 
	Schedule 6: 	Required Seller Consents 	47 
	 	 	 
	 Schedule 7:
      
	 Required Purchaser Consents
        
	 48 

	 	 	 
	 Annexure 8.1(1) and (2): Disclosure
        Schedule to Share Purchase Agreement 
	 49 

1

	Annexure 8.2: Disclosure Schedule to Share Purchase
      Agreement 	50 

2

This Share Purchase Agreement is made on 9 May 2006 

	between 	(1) 	South Pacific Lease Operations Limited
      (Seller) 
	 	 	 
	and 	(2) 	TAG Oil (NZ) Limited (Purchaser)
    
	 	 	 
	and 	(3) 	TAG Oil Limited (TAG Oil)
  

Introduction

The Seller has agreed to sell all of the shares in each of
Cheal Petroleum Limited, PEP 38757 Limited, and PEP 38758 Limited to the
Purchaser, and the Purchaser has agreed to purchase those shares, for the
consideration (to be satisfied partly by the issue of shares in TAG Oil), and on
and subject to the terms and conditions, set out in this Agreement. 

It is agreed 

	1.
    	Interpretation 
	 	 
	1.1 	Definitions 

In this Agreement, unless the context
otherwise requires: 

Agreement means this Share
Purchase Agreement together with the schedules and annexures;

Assets means, in respect of each
Company, all assets owned by such Company as at the Closing Date;

Balance Date means 31 March
2005; 

Bill Rate means the average rate
(expressed as a percentage per annum) as quoted on Reuters page BKBM (or any
successor page displaying substantially the same information) under the heading
“FRA” for bank accepted bills having a term of 30 days as fixed at 10.45 am on
the first business day of the interest period in respect of which that rate is
to be calculated; 

Business, in respect of each
Company, means the business of holding its Assets and operating as a party to
the Joint Venture Agreements and as the holder of the relevant interest in the
Permits; 

Closing has the meaning set
forth in clause 2.4; 

Closing Date has the meaning set
forth in clause 2.4; 

Companies means Cheal Petroleum
Limited, PEP 38757 Limited and PEP 38758 Limited; Companies Act means the
Companies Act 1993; Conditions means the conditions to Closing set forth
in clause 6; 

Confidential Information means
the know-how, trade secrets, technical processes, information relating to
products, finances, contractual arrangements and other information 

3

relating to the Companies which by its
nature, or by the circumstances of its disclosure to the holder of the
information, is or could reasonably be expected to be regarded as confidential;

Confidentiality Agreement means
the confidentiality agreement between Calgary Petroleum Limited and the
Purchaser entered into by such persons in contemplation of the transactions
described herein; 

Consent means: 

	 	(a) 	
      any authorisation, approval, consent, licence, permit,
      franchise, permission, order, notification, filing, registration,
      lodgement, agreement, declaration or exemption from, by or with a Public
      Authority; and

	 	 	 
	 	(b) 	
      in relation to anything which will be prohibited or
      restricted in whole or part by law if a Public Authority intervenes or
      acts in any way within a specified period after lodgement, filing,
      registration, or notification, the expiry of such period without such
      intervention or action;

Default Rate means the Bill Rate
(calculated as at the first date on which the relevant default interest
commences to accrue and recalculated at intervals of 30 days after that date)
plus a margin of ten percentage points; 

Deposit means the meaning set
forth in clause 2.2(c); 

Disclosure Schedule means
schedule 1 hereto; 

Distribution has the meaning
specified in section 2(1) of the Companies Act; 

Environment has the meaning
specified in the Resource Management Act 1991; 

Environmental Law means any law,
and any regulations and documents with the force of regulations, relating to the
Environment (including the Resource Management Act 1991 and the Hazardous
Substances and New Organisms Act 1996); 

Financial Statements means: 

	 	(a) 	
      the consolidated audited statement of financial position
      of Calgary Petroleum Limited as at the Balance Date;

	 	 	 
	 	(b) 	
      the consolidated audited statement of financial
      performance of Calgary Petroleum Limited for the year ending on the
      Balance Date;

together with all notes and
information, and directors’ and auditor’s reports, relating to those
statements, all as contained in the Disclosure Schedule; 

Goodwill means the goodwill of
the Companies including, but not limited to, the benefit of all pending
contracts, orders and engagements relating to the Companies and the right to all
Intellectual Property Rights; 

GST means tax as defined in the
Goods and Services Tax Act 1985; 

Income Tax Act means the Income
Tax Act 2004; 

Intellectual Property Rights
means all trade marks, trade names, patents, designs, licences, inventions and
technical information (whether registered or not) and any copyright material,
the right to all lists of customers and suppliers of the Companies and all other
intellectual property rights and Confidential Information, used or owned by the
Companies; 

4

Interim Period means the period
commencing on the date of this Agreement and ending at Closing; 

IRD means the Inland Revenue
Department; 

Joint Venture Agreements has the
meaning set forth in section 10.2 of Schedule 1; 

NZ GAAP means generally accepted
accounting practice as defined in section 3 of the Financial Reporting Act 1993;

Overriding Royalty means the
overriding royalty on the interest held by Cheal Petroleum Limited in PEP38738
Deep, referred to in clause 2.2(a); 

Permits means the petroleum
exploration permits or petroleum mining permits, issued under the Crown Minerals
Act 1991, in which Cheal Petroleum Limited holds a participating interest or
other interest at the date of this Agreement, being PEP38738 Shallow and
PEP38738 Deep (which permits may have expired, and may be renewed or
substituted, with the Purchaser’s consent and therefore use of these
descriptions includes any new or substitute permits); 

Public Authority means: 

	 	(a) 	
      any government in any jurisdiction whether national,
      regional, territorial or local;

	 	 	 
	 	(b) 	
      any minister, department, office, commission, delegate,
      instrumentality, agency, board, authority or organisation of any
      government or any state-owned enterprise; and

	 	 	 
	 	(c) 	
      any court, tribunal, or similar body of competent
      jurisdiction;

Purchase Price has the meaning
set forth in clause 2.2(a); 

Purchase Price Bank Account
means the New Zealand dollar bank account with a registered bank in New Zealand
specified in a notice to the Purchaser from the Seller as being the "Purchase
Price Bank Account" no later than one business day prior to the due date of
payment; 

Purchaser Warranties means the
representations and warranties in Schedule 2; Related Company has the
meaning specified in section 2(3) of the Companies Act; Relief includes:

	 	(a) 	
      any relief, loss, allowance, credit, deduction, or
      set-off taken into account in computing, any tax liability, or any grant
      conferred on any person, or

	 	 	 
	 	(b) 	
      any right to repayment of tax (whether or not including
      interest) available to that person,

whether in New Zealand or elsewhere.

Seller Warranties means the
representations and warranties given by the Seller in Schedule 4, referenced in
clauses 4.1 and 8.2; 

5

Shares means:

	 	(i) 	
      1,000 fully paid ordinary shares in the capital of Cheal
      Petroleum Limited; and

	 	 	 
	 	(ii) 	
      1,000 fully paid ordinary shares in the capital of PEP
      38757 Limited; and

	 	 	 
	 	(iii) 	
      1,000 fully paid ordinary shares in the capital of PEP
      38758 Limited;

Tax Act means the Income Tax
Act, the Tax Administration Act 1994 and the Goods and Services Tax Act 1985;

Tax Authority means a Public
Authority that is responsible for administering or levying Tax, whether in New
Zealand or elsewhere, and in particular (but without limitation), the IRD, the
Customs Department, the Accident Rehabilitation and Compensation Insurance
Corporation in New Zealand and any overseas bodies with similar functions or
powers; 

Tax Indemnity means the
indemnity contained in clause 5; 

Tax Saving means a taxation
saving in any past, current or future income year and, without limiting the
generality of the term, 

	 	(a) 	
      includes, where the amount of a loss, liability, cost or
      expense suffered or incurred is wholly or partly deductible for income tax
      purposes, the amount of deduction to which the relevant person is entitled
      multiplied by the relevant taxation rate (and that deduction is to be
      treated as arising in the same tax year as the relevant loss, liability,
      cost or expense is suffered or incurred); and

	 	 	 
	 	(b) 	
      includes any recovery, credit or benefit obtained by the
      Purchaser or Company in respect of any taxation liability subject to a
      taxation claim; and

	 	 	 
	 	(c) 	
      includes the amount of any relevant GST input tax credit
      or other deduction from output tax;

Tax Warranties means the Seller
Warranties contained in paragraph 18 of Schedule 4; and 

Transactions means the
transactions contemplated by the Transaction Documents; 

Transaction Documents means this
Agreement, and each of the documents, instruments and agreements required to be
delivered by the parties in connection herewith and therewith. 

	1.2 	Construction of certain references
  

In this Agreement, unless the context
otherwise requires: 

an agreement includes a
contract, deed, licence, undertaking and other document or legally enforceable
arrangement (in each case, whether or not in writing, present and future) and
includes that document as amended, assigned, novated or substituted from time to
time; 

a business day means a day
(other than a Saturday or Sunday) on which registered banks are open for general
banking business in Wellington and, where payment is required in foreign
currency, banks are open for business in the required place of payment; 

costs incurred by a person
include all commissions, charges, losses, expenses (including legal fees on a
solicitor and own client basis) and taxes incurred by that person; 

6

a disposal of property includes:

	 	(a) 	
      assigning, leasing, lending, subordinating, parting with
      possession of, granting an option in respect of or otherwise dealing with
      that property;

	 	 	 
	 	(b) 	
      the payment of money or any distribution by way of
      dividend; and

	 	 	 
	 	(c) 	
      an agreement for any of these,

but excludes the creation of a security
interests; 

financial statements has the
meaning specified in section 8(1) of the Financial Reporting Act 1993; 

the liquidation of a person
includes the dissolution, winding-up and bankruptcy of that person and any
analogous procedure under the law of any jurisdiction in which that person is
incorporated, domiciled, carries on business or has property; 

a material adverse effect means
a material adverse effect on the consolidated financial condition or operations
of the Companies as a whole and references to material adverse change are
to be construed accordingly;

a person includes an individual,
body corporate, an association of persons (whether corporate or not), a trust, a
state, an agency of a state and any other entity (in each case, whether or not
having separate legal personality); 

property includes the whole and
any part of the relevant person’s business, assets, undertaking, revenues and
rights (in each case, present and future), and reference to any property
includes any legal or equitable interest in it; 

a security interest includes:

	 	(a) 	
      a mortgage, pledge, charge, lien, hypothecation,
      encumbrance, deferred purchase, title retention, finance lease,
      contractual right of set-off, flawed asset arrangement,
      sale-and-repurchase and sale-and-leaseback arrangement, order and other
      arrangement of any kind, the economic effect of which is to secure a
      creditor; and

	 	 	 
	 	(b) 	
      “security interests” as defined in section 17(1)(a) of
      the Personal Property Securities Act 1999 in respect of which the relevant
      person is the debtor,

but does not include: 

	 	(c) 	
      a lien arising solely by operation of law; or

	 	 	 
	 	(d) 	
      a security interest taken in collateral by a seller to
      the extent that it secures the obligation to pay all or part of the
      purchase price of that collateral, where that collateral is purchased in
      the ordinary course of business of the buyer and the purchase price is
      paid within 60 days of supply; or

	 	 	 
	 	(e) 	
      a netting or set-off arrangement entered into in the
      ordinary course of a person’s banking arrangements for the purpose of
      netting debit and credit balances;

tax includes: 

	 	(a) 	
      all forms of taxation (whether direct or indirect),
      duties, charges, dues, imposts, levies, rates or other governmental
      impositions of whatever nature, imposed in New Zealand or elsewhere and,
      in particular (but without limitation), income tax, withholding
    tax,,

7

	 		
      fringe benefit tax, stamp duty, GST, gift duty, customs
      or excise duties, regional or local taxes, municipal taxes and accident
      compensation levies; and

	 	 	 
	 	(b) 	
      all interest, penalties, additional tax, fines and
      expenses incidental and relating to, or arising in connection with, any
      such taxes –

	 	 	 
	 		
      and taxation has the same
  meaning;

taxation claim includes any
notice, demand, assessment, letter or other document issued, or action taken
(including an IRD audit), by or on behalf of any Tax Authority, whereby the
Purchaser or a Company may be, or be sought to be, placed under any or any
increased liability to Tax or may be deprived or sought to be deprived of any
Relief which might otherwise have been available; 

writing includes a facsimile
transmission, an email communication and any means of reproducing words in a
tangible and permanently visible form; 

a reference to a party,
clause, schedule or annexure is a reference to a party to,
clause of, schedule to or annexure to, this Agreement; 

the word including when
introducing an example does not limit the meaning of the words to which the
example relates; 

an agreement, representation or
undertaking given by a party in favour of two or more persons is for the benefit
of them jointly and each of them severally; 

a reference to any monetary amount is
to New Zealand currency, unless otherwise stated; a gender includes each other
gender; the singular includes the plural and vice versa; 

where a word or phrase is defined, its
other grammatical forms have a corresponding meaning; 

any legislation includes a modification
and re-enactment of, legislation enacted in substitution for, and a regulation,
order-in-council and other instrument from time to time issued or made under,
that legislation; and 

a party to this Agreement or another
agreement includes its successors and its permitted assignees and transferees.

Headings and the table of contents are
to be ignored in construing this Agreement. 

	1.3 	Seller’s knowledge 

A reference in this Agreement to the
knowledge, belief or awareness (or similar expression) of the Seller is a
reference to the actual knowledge, at the date of execution of this Agreement,
of the board of directors and senior management of the Seller and the Companies
only, and does not include any facts or circumstances of which any person has
constructive knowledge only. 

8

	2.
    	Sale and purchase 
	 	 
	2.1 	Agreement to sell Shares

On the Closing Date, the Seller shall
sell to the Purchaser and the Purchaser shall purchase from the Seller the
Shares free from encumbrances on the terms and conditions contained in this
Agreement. 

	2.2 	Purchase Price 

	 	(a) 	 Amount

	 	 	 	 	 
	 		 The aggregate consideration for the purchase
        of the Shares (the Purchase Price) shall be comprised of the following:

	 	 	 	 	 
	 		(i) 	 a cash payment of $18,542,857; and

	 	 	 	 	 
	 		(ii) 	 5,000,000 fully paid ordinary TAG Oil shares
        (the TAG Oil Shares).

	 	 	 	 	 
	 		 The Seller acknowledges that the TAG Oil
        Shares will be subject to a four month hold period under the TSX Venture
        Exchange requirements.

	 	 	 	 	 
	 		 In addition to the Purchase Price, with
        effect from Closing, the Purchaser shall grant, or procure the grant,
        to either the Seller or a specific trust established by, or a subsidiary
        of, the Seller, a 5% of 8/8 interest gross overriding royalty equal to
        0.755% on the 15.1% held by Cheal Petroleum Limited in PEP38738 Deep.
        Such royalty shall be calculated in the same manner as the Crown AVR,
        automatically calculated each year and audited by the Crown.

	 	 	 	 	 
	 	(b) 	 Purchase Price Allocation

	 	 	 	 	 
	 		 The Purchase Price (excluding the value of
        the Overriding Royalty) shall be allocated amongst the Assets in the manner
        set forth in Schedule 3.

	 	 	 	 	 
	 	(c) 	 Payment

	 	 	 	 	 
	 		 The Purchase Price shall be paid as follows:

	 	 	 	 	 
	 		(i) 	 a deposit of $1,000,000 (the Deposit)
        shall be paid by the Purchaser to the Purchase Price Bank Account on the
        date of this Agreement;

	 	 	 	 	 
	 		(ii) 	 a payment of $17,542,857 (the Closing Date
        Payment) shall be paid by the Purchaser on the Closing Date by:

	 	 	 	 	 
	 			(a) 	 a payment of $9,542,857 to the Purchase Price Bank Account;
        and

	 	 	 	 	 
	 			(b) 	 a payment of $8,000,000 to the Purchase Price Bank Account
        (the Retained Sum), which shall be held and dealt with solely in
        the manner outlined in clause 4.12; and

	 	 	 	 	 
	 		(iii) 	 TAG Oil shall issue the TAG Oil Shares to
        the Seller with effect from Closing on the Closing Date.

9

	2.3 	Closing 

Subject to the terms and conditions of
this Agreement, the sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the Closing) to be held at the
offices of Bell Gully in Wellington at 10:00 a.m. on the second business day
following the date on which the satisfaction or waiver of all conditions to the
obligations of the parties set forth in clause 6 occurs (other than those
conditions that, by their nature, are to be satisfied at Closing, but subject to
the satisfaction or waiver of those conditions) or at such other place or time
as may be agreed upon by the parties in writing (the day on which the Closing
takes place being the Closing Date).

	2.4 	Closing Deliveries by the Seller
  

At the Closing, the Seller shall
deliver to the Purchaser: 

	 	(a) 	
      Seller certificate:

	 	 	 
	 		
      an unqualified certificate executed by the Seller
      confirming that as at the Closing Date no Seller Warranty is untrue,
      misleading or has been breached and the Seller has complied with all
      covenants and conditions to be complied with by the Seller on or prior to
      the Closing Date;

	 	 	 
	 	(b) 	
      Share transfers and certificates:

	 	 	 
	 		
      registrable transfers of the Shares executed by the
      Seller in favour of the Purchaser, or the Purchaser’s designated nominee,
      together with the relevant share certificates or a certificate from a
      director of the relevant Company certifying that no share certificates
      have been issued, and a copy of a signed valid resolution of each of the
      Companies’ board of directors, certified by a director, approving the
      transfer of Shares and directing that the name of the Purchaser (or its
      nominee) be entered in each of the Companies’ share register;

	 	 	 
	 	(c) 	
      Waivers:

	 	 	 
	 		
      any waivers or consents under each Company’s
      constitution, which are required to enable the Purchaser or its nominee to
      be registered as the holder of the Shares, each waiver or consent to be in
      a form reasonably acceptable to the Purchaser;

	 	 	 
	 	(d) 	
      Resignations:

	 	 	 
	 		
      if the Seller or the Seller’s appointee or alternate
      occupies a position as a director of a Company, the written resignations
      of such Seller, appointee or alternate from their respective offices as
      director of the relevant Company with written confirmation that they are
      owed no money by the Company and have no claim against the Company, in a
      form reasonably acceptable to the Purchaser;

	 	 	 
	 	(e) 	
      Releases:

	 	 	 
	 		
      releases of any encumbrances over the Shares and releases
      of any guarantees or indemnities given by any Company in favour of the
      Seller or any Related Company of the Seller or any Associated Person or
      any of them (other than the Companies), in a form reasonably acceptable to
      the Purchaser;

	 	 	 
	 	(f) 	
      Repayment of debt:

	 	 	 
	 		
      evidence acceptable to the Purchaser that all moneys have
      been repaid or otherwise discharged under clause
3.2;

10

	 	(g) 	
      Termination of management agreement:

	 	 	 
	 		
      evidence acceptable to the Purchaser that the management
      agreement between Calgary Petroleum Limited and Cheal Petroleum Limited
      has been terminated and that there are no outstanding rights or
      obligations under it;

	 	 	 
	 	(h) 	
      Other records:

	 	 	 
	 		
      all documents, items or records as may reasonably be
      required by the Purchaser (and notified to the Seller) to implement this
      Agreement or in relation to the Companies or the Permits or other Assets
      and which are held by or under the control of the Seller (including all
      seismic data and other confidential information); and

	 	 	 
	 	(i) 	
      Transaction Documents:

	 	 	 
	 		
      counterparts of any Transaction Documents required to be
      executed by a Seller or a Company, in each case, duly executed by all such
      persons.

	2.5 	Closing Deliveries of Purchaser
  

At the Closing, the Purchaser shall
deliver to the Seller: 

	 	(a) 	
      Closing Payment:

	 	 	 	 
	 		
      the Closing Date Payment by wire transfer in immediately
      available funds to the Purchase Price Bank Account once the Seller has
      complied with clause 2.4;

	 	 	 	 
	 	(b) 	
      TAG Oil Resolution and Share
Certificates

	 	 	 	 
	 		a copy of such signed valid resolution or minutes
      of a meeting of the TAG Oil board or its shareholders authorising the
      issue of the TAG Oil Shares to the Purchaser and a TAG Oil share
      certificate certifying that TAG Oil has issued the TAG Oil Shares to the
      Seller;
	 	 	 	 
	 	(c) 	
      Overriding Royalty:

	 	 	 	 
	 		
      a document, duly executed by the Purchaser or Cheal
      Petroleum Limited, evidencing the Overriding Royalty, in a form previously
      approved by the Seller, such approval not to be unreasonably withheld
      (and, in the event of any dispute as to formal content, the document shall
      be as determined by an independent appropriately qualified lawyer, having
      regard to the principles of the Overriding Royalty);

	 	 	 	 
	 	(d) 	
      Transaction Documents

	 	 	 	 
	 		
      a counterpart of any document referred to in clause
      2.4(i) that is required to be executed by the Purchaser or TAG Oil, duly
      executed by such person; and

	 	 	 	 
	 	(e) 	
      Purchaser certificate

	 	 	 	 
	 		
      an unqualified certificate executed by the Purchaser
      confirming that as at the Closing Date no Purchaser Warranty is untrue,
      misleading or has been breached and the Seller has complied with all
      covenants and conditions to be complied with by the Purchaser on or prior
      to the Closing Date.

11

	2.6 	No capitalised interest (lowest price
      clause) 

For the purposes of the financial
arrangement rules in the Income Tax Act, the parties agree that: 

	 	(a) 	
      the Purchase Price is the lowest price (within the
      meaning of section EW 32(3) of the Income Tax Act) the parties would have
      agreed for the sale and purchase of the Shares, on the date this Agreement
      was entered into, if payment would have been required in full at the time
      the first right in the Shares was transferred; and

	 	 	 
	 	(b) 	
      the Purchase Price is the value of the Shares;
  and

	 	 	 
	 	(c) 	
      they will compute their taxable income for the relevant
      period on the basis that the Purchase Price includes no capitalised
      interest and will file their tax returns
accordingly.

	2.7 	Default Interest 

If any party fails to pay on the due
date any sum payable by it under or in accordance with this Agreement
(including, without limitation, the whole or any part of the Purchase Price),
that party is to pay interest on that sum at the Default Rate for the period
from the due date for payment until but excluding the day on which that sum (and
all interest on it) is paid in full. Any interest payable under this Agreement
is to be calculated on a daily basis and is to be capitalised every 30 days.

	2.8 	Payments 

Any payment made under this Agreement
shall be made in cleared immediately available funds before noon on the due date
for payment, unless another time for payment is specified in this
Agreement. 

	2.9 	Reduction of Purchase Price
  

Any monetary compensation received by
the Purchaser as a result of any breach by the Seller of any Seller Warranty is
to be in reduction and refund of the Retained Sum and the Purchase Price. 

	3.
    	Additional Agreements 
	 	 
	3.1 	Conduct prior to Closing

Between the date hereof and the Closing
the Seller shall and, where relevant, shall procure that each of the Companies
shall: 

	 	(a) 	
      Operate the Business:

	 	 	 
	 		
      ensure that each Company operates and conducts the
      Business in accordance with good business practice and in substantially
      the same manner as it has operated up to the date of this Agreement,
      including through compliance with the Crown Minerals Act 1991 and all
      Permit conditions and requirements;

	 	 	 
	 	(b) 	
      Maintain the Goodwill:

	 	 	 
	 		
      use all reasonable efforts to preserve intact the good
      name and reputation of the Companies, as well as their joint venture and
      supplier relationships;

12

	 	(c) 	
      Not acquire or dispose of Asset:

	 	 	 
	 		
      ensure that no Company acquires or disposes of any Assets
      without first obtaining the Purchaser’s consent;

	 	 	 
	 	(d) 	
      No security interests:

	 	 	 
	 		
      not create or permit any security interest to arise over
      any of the Assets;

	 	 	 
	 	(e) 	
      Liabilities:

	 	 	 
	 		
      not incur any financial obligation, whether direct,
      contingent, deferred or otherwise, or make any payment except in the
      ordinary course of business;

	 	 	 
	 	(f) 	
      Contracts:

	 	 	 
	 		
      not enter into any new contracts or arrangements or
      materially vary any existing contracts (other than in the ordinary course
      of business) without first obtaining the Purchaser's written
    consent;

	 	 	 
	 	(g) 	
      Claims:

	 	 	 
	 		
      promptly notify the Purchaser of any lawsuits, claims,
      proceedings, investigations or adverse events which may occur, be
      threatened, brought, asserted or commenced against it, or any of its
      officers or employees involving the Companies or the Assets in any way,
      and not admit, settle, compromise or otherwise deal with any such matter
      except with the Purchaser's prior written consent;

	 	 	 
	 	(h) 	
      Staff:

	 	 	 
	 		
      not employ any new employees, without first obtaining the
      Purchaser's written consent;

	 	 	 
	 	(i) 	
      Constitution:

	 	 	 
	 		
      not alter the Companies’ constitution without first
      obtaining the Purchaser's written consent;

	 	 	 
	 	(j) 	
      Distributions:

	 	 	 
	 		
      not authorise any dividends or make any Distributions
      (whether of income or capital) or returns of capital to its
      shareholders;

	 	 	 
	 	(k) 	
      Notify Purchaser:

	 	 	 
	 		
      promptly notify the Purchaser of any events which may be
      material to the Shares, the Business or to any Company;

	 	 	 
	 	(l) 	
      Rights attaching to shares:

	 	 	 
	 		
      ensure that (x) no Shares are transferred, disposed of or
      encumbered, and (y) no action is taken, or omitted to be taken, by any
      Company or the Seller or any other person which may adversely affect the
      rights attaching to the Shares;

13

	 	(m) 	
      Joint Venture Agreements:

	 	 	 
	 		
      not do anything which might breach any Joint Venture
      Agreement or other agreement or arrangement relevant to the Permits, and
      promptly upon receipt thereof, forward to the Purchaser copies of all
      communications received in connection with the Joint Venture
      Agreements;

	 	 	 
	 	(n) 	
      Transaction Documents:

	 	 	 
	 		
      ensure that the Seller, each Company, and each other
      party to a Transaction Document (other than the Purchaser) complies in all
      respects with the provisions of that Transaction Document and consummates
      all Transactions required to be consummated by such persons on or prior to
      the Closing Date; and

	 	 	 
	 	(o) 	
      Personal Information Form:

	 	 	 
	 		
      within 20 days of the date of this Agreement, complete
      and forward to the Purchaser a personal information form (and any other
      required information) from the TSX Venture Exchange (as provided by the
      Purchaser) to ensure any trading halt of the securities of TAG Oil on the
      TSX Venture Exchange can be released.

	3.2 	Repayment of advances

The following shall be repaid at or
before Closing: 

	 	(a) 	
      all money owed to any Company by Calgary Petroleum
      Limited, Cheal Petroleum Limited or any related company thereof;

	 	 	 
	 	(b) 	
      all money owed by any Company to the Seller or to Calgary
      Petroleum Limited or any related company thereof; and

	 	 	 
	 	(c) 	
      all money owed by any Company to any registered bank,
      financial institution or other lender.

	3.3 	Breach of Warranty 

The Seller undertakes with the
Purchaser that: 

	 	(a) 	
      it will disclose immediately in writing to the Purchaser
      any matter or circumstance which may arise or become known to it after the
      date of this Agreement and before Closing which constitutes a breach of
      any of the Seller Warranties or which has or may have a material adverse
      effect; and

	 	 	 
	 	(b) 	
      prior to Closing it will not do, or omit to do, or allow
      anything to be done, as a result of which any Seller Warranty is or may
      become untrue, misleading or inaccurate as at
Closing.

	3.4 	Required Approvals 

Each party to this Agreement shall:

	 	(a) 	
      use its reasonable efforts to obtain as promptly as
      practicable all required approvals and to make all filings with and
      notifications to all Public Authorities that may be or become necessary or
      desirable for its execution and delivery of, and the performance of its
      obligations under, this Agreement and the other Transaction
    Documents;

14

	 	(b) 	
      cooperate fully with the other parties to this Agreement
      in promptly seeking to obtain all such required approvals and to make all
      such filings and give such notifications;

	 	 	 
	 	(c) 	
      provide such other information to any Public Authority or
      other persons as such governmental authority or other persons may
      reasonably request;

	 	 	 
	 	(d) 	
      promptly notify the other parties when any required
      approval, filing or notice referred to in this clause 3.4 is obtained,
      taken, made, or given and of any communication it or any of its affiliates
      receives from any Public Authority relating to the matters that are the
      subject of this Agreement and permit the other parties to review in
      advance any proposed communication by such party to any Public Authority;
      and

	 	 	 
	 	(e) 	
      not agree to participate in any meeting with any Public
      Authority in respect of any filings, investigations or required approvals
      unless it consults with the other parties in advance and, to the extent
      permitted by such Public Authority, gives the other party the opportunity
      to attend and participate at such meeting.

	3.5 	Further Assurances 

Each party to this Agreement shall:

	 	(a) 	
      use all reasonable efforts and proceed diligently and in
      good faith to satisfy each condition to the obligations of the parties
      hereto contained in clause 6 and not take or fail to take any action that
      could reasonably be expected to result in the non-fulfilment of any such
      condition;

	 	 	 
	 	(b) 	
      sign, execute and deliver all deeds, schedules, acts,
      documents and things as may reasonably be required by any other party to
      carry out and give effect to the terms and intentions of the Transaction
      Documents, whether before or after Closing; and

	 	 	 
	 	(c) 	
      use all reasonable efforts and proceed diligently and in
      good faith to take, or cause to be taken, all other appropriate actions,
      do or cause to be done all other things necessary, proper or advisable
      under applicable law, and do and perform such other acts, as may be
      required to carry out the provisions of the Transaction Documents and to
      consummate and make effective the
Transactions.

	3.6 	Adjustment to Purchase Price
  

	 	(a) 	
      In the event that Cheal Petroleum Limited receives any
      request or demand for payment pursuant to the provisions of the Joint
      Venture Agreements (such request or demand being a Cash Call) in
      the Interim Period (other than those Cash Calls already received prior to
      the date hereof, and which are identified in section 8.1(2) of the
      Disclosure Schedule), the Seller shall forward such Cash Call to the
      Purchaser promptly upon receipt, together with a statement of the date on
      which such Cash Call is required to be paid pursuant to the applicable
      Joint Venture Agreement (the Due Date). Upon receipt of
      notification of a Cash Call, the Purchaser shall pay to the Seller the
      amount of the Cash Call prior to the Due Date, (in which case the Seller
      shall forward such amount in payment of the Cash Call), (a Cash Call
      Payment).

	 	 	 
	 	(b) 	
      Any Cash Call Payment made by the Purchaser in the
      Interim Period shall not reduce the Purchase Price hereunder. If this
      Agreement is terminated pursuant to clause 7.1 (other than pursuant to
      clause 7.1(a)), the amount of all Cash Call Payments shall be repaid or
      reimbursed to the Purchaser, within 6 months of the date of
      termination.

	 	 	 
	 	(c) 	
      The Purchaser shall not be entitled to terminate this
      Agreement, delay Closing or refuse to proceed to Closing or make any claim
      or exercise any other right or remedy (including without limitation, under
      clauses 4 or 5 of this Agreement) under, in

15

connection with, or with respect to
this Agreement by reason of, or to the extent arising out of or in connection
with any failure by the Seller to pay any Cash Call, which Cash Call has been
notified to the Purchaser pursuant to clause 3.6(a) . 

	4.
    	Representations, Warranties and Indemnities 
	 	 
	4.1 	Seller representations

	 	(a) 	
      The Seller represents and warrants to the Purchaser in
      the terms of the warranties set out in Schedule 4, in the knowledge that
      the Purchaser is entitled to rely on the truth of the statements contained
      in the Seller Warranties.

	 	 	 
	 	(b) 	
      The Seller Warranties are continuing representations and
      warranties and do not merge on Closing but remain in full force and effect
      notwithstanding Closing.

	4.2 	Seller Warranties qualified
  

Each of the Seller Warranties is given
subject to: 

	 	(a) 	
      Agreement

	 	 	 	 
	 		(i) 	
      any thing done, or omitted to be done, either under any
      express provision of this Agreement or after the date of this Agreement at
      the request in writing, or with the prior written approval, of the
      Purchaser; or

	 	 	 	 
	 		(ii) 	
      any exceptions expressly provided for under the terms of
      this Agreement;

	 	 	 	 
	 	(b) 	
      Disclosure

	 	 	 	 
	 		
      any matter to the extent that it is disclosed in the
      Disclosure Schedule or otherwise disclosed to the Purchaser prior to
      Closing;

	 	 	 	 
	 	(c) 	
      Knowledge

	 	 	 	 
	 		
      any fact, matter or circumstance within the actual
      knowledge of the Purchaser or which ought to have been known by the
      Purchaser having regard to its knowledge of the industry in which the
      Business is conducted and having regard to its opportunities to make
      enquiries of the Seller;

	 	 	 	 
	 	(d) 	
      Public register

	 	 	 	 
	 		
      any matter recorded in a public register held by any of
      the following bodies (and which would have been disclosed in a search of
      the public records of such body) in relation to a Company,
  namely:

	 	 	 	 
	 		(i) 	
      the Registrar of Companies;

	 	 	 	 
	 		(ii) 	
      Land Information New Zealand;

	 	 	 	 
	 		(iii) 	
      the Intellectual Property Office of New
Zealand;

	 	 	 	 
	 		(iv) 	
      Domainz; and

	 	 	 	 
	 		(v) 	
      the Personal Property Securities
  Register.

16

	4.3 	Exclusions from Warranty claims
  

	 	(a) 	
      The Seller will not be liable in respect of any claim
      under the Seller Warranties:

	 	 	 	 
	 		(i) 	
      if such a claim would not have arisen but for a change or
      changes in legislation made after the date of this Agreement (whether
      relating to taxation or otherwise) and whether or not such change or
      changes purport to be effective retrospectively in whole or in
  part;

	 	 	 	 
	 		(ii) 	
      to the extent such claim arises out of a failure to pay a
      Cash Call which Cash Call has been notified to the Purchaser pursuant to
      clause 3.6(a);

	 	 	 	 
	 		(iii) 	
      to the extent that such claim arises as a result of any
      changes made after the date of this Agreement in the accounting bases upon
      which the Purchaser values its assets or in the manner in which the
      Purchaser carries on the Business; or

	 	 	 	 
	 		(iv) 	
      to the extent that such claim arises as a result of an
      act or omission of the Purchaser or a Company after Closing.

	 	 	 	 
	 	(b) 	
      No Seller Warranty claim may be made in respect of
      taxation or taxation claims other than under the Tax
  Indemnity.

	4.4 	Seller's Indemnities

The Seller hereby indemnifies and keeps
indemnified and holds harmless the Purchaser and each Company (and their
respective officers, directors, employees and agents (collectively, the
Seller Indemnified Parties)) against any loss, damage, cost or expense
(including legal or other costs associated with the enforcement of this
Agreement) suffered or incurred by the Seller Indemnified Parties resulting
from, relating to, or arising out of or in connection with: 

	 	(a) 	
      the breach by the Seller of any Seller Warranty,
      covenant, or agreement contained in any Transaction Document;
and

	 	 	 
	 	(b) 	
      any claim by another party to the Joint Venture
      Agreements or Gas Supply Agreement referred to in Schedule 1 in respect of
      any breach by Cheal Petroleum Limited on or prior to Closing of any
      confidentiality provision of those agreements.

	4.5 	Limits on Claims

	 	(a) 	
      Period for Seller Warranty claims

	 	 	 
	 		
      The Purchaser may not make any claim under a Seller
      Warranty (other than a Tax Warranty) unless the Purchaser gives the Seller
      notice of the claim in accordance with this clause prior to the end of the
      period of six months following the date of this Agreement and, in any
      case, all Seller Warranty claims made by the Purchaser under this
      Agreement are to be in writing and delivered to the Seller within 30
      Business Days of the Purchaser or any Company becoming aware of the
      circumstances giving rise to the claim and any notice under this
      sub-clause is to specify in reasonable detail the matter which gives rise
      to the breach, the nature of the breach and the amount claimed.

	 	 	 
	 	(b) 	
      Seller Warranty Claim thresholds

	 	 	 
	 		
      No claim for breach of a Seller Warranty may be made by
      the Purchaser unless:

17

	 	(i) 	
      the resultant loss is in excess of $50,000 or, being less
      than $50,000, is one of a series of connected claims aggregating more than
      $50,000; and

	 	 	 
	 	(ii) 	
      the total of all Seller Warranty claims which have been
      made exceeds $100,000, in which event all Seller Warranty claims in excess
      of $100,000 may be made.

	 	(c) 	
      Maximum liability

	 	 	 
	 		
      The maximum aggregate amount for which the Seller can be
      liable to the Purchaser under or in relation to this Agreement on any
      account however arising is 50 per cent of the Purchase Price.

	 	 	 
	 	(d) 	
      Allowances

	 	 	 
	 		
      The liability of the Seller under any claim under clause
      4.4 will be assessed after taking into account the amount by which any
      taxation for which the Purchaser or any Company is or may be liable to be
      assessed or accountable is reduced or extinguished as a result of any such
      liability.

	 	 	 
	 	(e) 	
      No double claims

	 	 	 
	 		
      The Purchaser and each Company will only be entitled to
      make a claim against the Seller under clause 4.4 once in respect of the
      same or any inter-related factual circumstances where those circumstances,
      when reasonably considered, should form the basis of a single claim
      against the Seller, with the intent that the same loss should not be
      recovered more than once.

	4.6 	Recovery from Third Party

If the Seller makes any payment by way
of damages for breach of a Seller Warranty or otherwise or pursuant to any other
term or obligation under this Agreement (the Damages Payment) and the
Purchaser receives any financial benefit otherwise than from the Seller which
would not have been received but for the circumstance giving rise to the claim
in respect of which the Damages Payment was made, the Purchaser will, once it
has received such benefit, immediately pay to the Seller an amount equal to the
lesser of: 

	 	(a) 	
      the amount of such benefit after deduction of reasonable
      expenses incurred in connection with obtaining the financial benefit and
      any taxes that are payable in respect of it; and

	 	 	 
	 	(b) 	
      the Damages Payment.

	4.7 	Claims Procedures 

If any event occurs or any claim arises
against the Purchaser or a Company in respect of which the Purchaser may seek to
make a claim against the Seller under a Seller Warranty (other than a Tax
Warranty) the following provisions will apply: 

	 	(a) 	
      the Purchaser will within the relevant period specified
      in clause 4.5(a) give notice to the Seller and will ensure that the
      Purchaser does not make any payment or admission of any liability in
      respect of that event or claim, or take any other steps which may in any
      way prejudice its defence, without the prior written consent of the
      Seller, such consent not to be unreasonably withheld or delayed;

	 	 	 
	 	(b) 	
      the Seller may, if it accepts it is liable to the
      Purchaser, at its option, in the name of the Seller, but in full
      consultation at all times with the Purchaser so that the reputation
    of

18

	 		
      the Purchaser is not unfairly harmed, prosecute or defend
      at the Seller’s cost any proceedings relating to any such liability or
      claim and the Purchaser will make available to the Seller all such
      information, books and records and employees as the Seller may reasonably
      require for the purpose of such proceedings;

	 	 	 
	 	(c) 	
      subject to sub-clause (b) above, the Seller may deal with
      the claim or proceeding and its defence as it sees fit; and

	 	 	 
	 	(d) 	
      the Purchaser and each Company shall take all reasonable
      steps to mitigate its loss in respect of the matter the subject of the
      Seller Warranty claim.

	4.8 	Purchaser’s Reliance on own Judgment
  

The parties acknowledge that: 

	 	(a) 	
      in entering into this Agreement and in proceeding to
      Closing, the Purchaser does not rely on any representation, warranty,
      condition, information data, or other conduct which may have been made or
      provided by the Seller or any person purporting to act on behalf of the
      Seller, except the Seller Warranties; and

	 	 	 
	 	(b) 	
      subject to any law to the contrary and except as provided
      in the Seller Warranties and this Agreement, all terms, conditions,
      warranties and statements, whether express, implied, written, oral,
      collateral, statutory or otherwise, are excluded and the Seller disclaims
      all liability in relation to these to the maximum extent permitted by
      law.

	4.9 	Purchaser and TAG Oil Warranties
  

	 	(a) 	
      The Purchaser represents and warrants to the Seller in
      terms of sections 1 and 2 of the Purchaser Warranties in the knowledge
      that the Seller is entitled to rely on the truth of the statements
      contained in the Purchaser Warranties.

	 	 	 
	 	(b) 	
      TAG Oil represents and warrants to the Seller in terms of
      section 3 of the Purchaser Warranties in the knowledge that the Seller is
      entitled to rely on the truth of the statements contained in the Purchaser
      Warranties.

	 	 	 
	 	(c) 	
      The Purchaser Warranties are continuing representations
      and warranties and do not merge on Closing but remain in full force and
      effect notwithstanding Closing.

	4.10 	Purchaser’s Indemnity

The Purchaser hereby indemnifies and
keeps indemnified and holds harmless the Seller (and its officers, directors,
employees and agents (collectively, the Purchaser Indemnified
Parties) against any loss, damage, cost or expense (including legal or other
costs associated with the enforcement of this Agreement) suffered or incurred by
the Purchaser Indemnified Parties resulting from, relating to, or arising out of
or in connection with the breach by the Purchaser or TAG Oil of any Purchaser
Warranty, covenant or agreement contained in any Transaction Document . 

	4.11 	Exclusive Remedies 

The Seller and the Purchaser
acknowledge and agree that: 

	 	(a) 	
      following the Closing, the indemnification provisions of
      clause 4 and clause 5 shall be the sole and exclusive remedies of the
      Seller and the Purchaser, respectively, against each other for any breach
      by the other party of the representations and warranties in this Agreement
      and for any failure by the other party to perform and comply with
    any

19

	 		
      covenants and agreements that, by their terms, were to
      have been performed or complied with by such party prior to the
      Closing;

	 	 	 
	 	(b) 	
      no party hereto shall have any liability under any
      provision of this Agreement or otherwise for any punitive, consequential
      or indirect damages or for loss of profit.

	4.12 	Monies on Deposit 

From the Closing through to the end of
the period of six months following the date of this Agreement the Seller agrees
to keep the Retained Sum (less any amounts actually paid to the Purchaser under
clause 4.4) on deposit in a special purpose interest bearing account with a
registered bank in New Zealand solely for the purposes of satisfying amounts it
is required to pay to the Purchaser under clause 4.4.

	5.
    	Taxation 
	 	 
	5.1 	Tax Indemnity 

The Seller indemnifies the Purchaser
and undertakes to keep the Purchaser at all times fully and effectively
indemnified from and against any taxation suffered by a Company, which: 

	 	(a) 	
      Arising before Closing Date:

	 	 	 
	 		
      wholly or partly (in which case the liability of the
      Seller is limited to that part) relates to any period ending on or before
      the Closing Date; or

	 	 	 
	 	(b) 	
      Event before Closing Date:

	 	 	 
	 		
      is wholly or partly (in which case the liability of the
      Seller is limited to that part) attributable to any event occurring on or
      before the Closing Date and which arises as a result
of:

	 	(i) 	
      the disposal of items treated as capital assets in the
      Financial Statements, or

	 	 	 
	 	(ii) 	
      which does not arise in the ordinary course of business,
      or

	 	(c) 	
      Breach of Tax Warranty: would not have occurred
      but for a breach of a Tax Warranty,

except to the extent: 

	 	(d) 	
      Financial Statements:

	 	 	 
	 		
      reserve or provision (including by way of deferred
      taxation) is made for that liability in the Financial Statements;
  or

	 	 	 
	 	(e) 	
      Disclosure

	 	 	 
	 		
      that liability has been disclosed to the Purchaser in the
      Disclosure Schedule or otherwise prior to Closing; or

	 	 	 
	 	(f) 	
      After Balance Date

20

	 		
      the liability for taxation has been incurred after
      Balance Date in the ordinary course of business; or

	 	 	 
	 	(g) 	
      Relief:

	 	 	 
	 		
      there is Relief available to any Company or in relation
      to a period ended on or before Closing Date is able to relieve or mitigate
      that taxation liability (including where taxation in one Company is or
      will be offset by a reduced liability for taxation in another Company);
      or

	 	 	 
	 	(h) 	
      Change in law after the date of this
    Agreement:

	 	 	 
	 		
      the liability arises as a result of any change in law,
      including any increase in rates of taxation, announced after the date of
      this Agreement;

	 	 	 
	 	(i) 	
      Change in accounting principles or taxation
      treatment:

	 	 	 
	 		
      the liability arises or is increased as a result of any
      voluntary change in accounting principles or in the treatment of any item
      for taxation purposes made by a Company after Closing;

	 	 	 
	 	(j) 	
      Amended return:

	 	 	 
	 		
      the liability arises because any Company, without the
      written consent of the Seller, amends or requests an amendment to any
      return filed prior to Closing by the Company with the relevant Tax
      Authority.

The undertakings contained in this
clause 5.1 are (for the purposes of the Contracts (Privity) Act 1982) intended
to create a benefit in favour of and be enforceable by the Purchaser and each
Company. 

	5.2 	Payment for loss of relief

For the purposes of calculating the
Seller’s liability under the Tax Indemnity, to the extent that a taxation claim
will cause the Purchaser or a Company to suffer a loss of relief, the quantum of
the loss suffered by the Purchaser or the relevant Company as a result of the
taxation claim will be deemed to be (at the election of the Purchaser): 

	 	(a) 	Amount of liability for tax
  

an amount equal to the liability for
taxation arising as a result of the loss of relief, which amount will be payable
when such liability for taxation becomes payable by the Purchaser or the
relevant Company (as the case may be); or 

	 	(b) 	
      Net present value

	 	 	 
	 		
      an amount equal to the net present value of the liability
      for taxation arising from the loss of relief, calculated on the basis of
      the following assumptions:

	 	(i) 	
      the relevant rate of taxation will be that applying at
      the date of the loss of relief, unless a new rate of taxation has been
      enacted or announced, in which case that new rate will apply;

	 	 	 
	 	(ii) 	
      the discount rate will be five per cent. per annum;
      and

21

	 	(iii) 	
      each liability for taxation will be deemed to have arisen
      on the last day of each relevant period in which the liability for
      taxation is predicted by the Purchaser to arise,

provided that if any Company suffers a
loss of Relief in circumstances where the Seller would be liable under clause
5.1, the Seller is not liable to pay anything to the Purchaser until the loss of
Relief becomes an actual liability for the Company to pay taxation at which time
the Seller must pay the amount the Company has to pay and (for the avoidance of
doubt) any calculation as to the quantum of the loss under this sub-clause will
also be calculated at that time. 

	5.3 	Seller’s obligation to pay

Any payment the Seller is required to
make in relation to any claim under the Tax Indemnity:

	 	(a) 	
      Pay three days before tax due

	 	 	 
	 		
      if it relates to a taxation liability on which no use of
      money interest is accruing, is to be made at least three business days
      before the last date on which payment may be made by the Purchaser or the
      relevant Company of the relevant liability to the relevant taxation
      authority without incurring any liability to pay any late payment
      penalty;

	 	 	 
	 	(b) 	
      Otherwise on demand

	 	 	 
	 		
      otherwise is to be paid to the Purchaser on demand being
      made by the Purchaser; and

	 	 	 
	 	(c) 	
      Refund of Purchase Price

	 	 	 
	 		
      is to be made to the Purchaser in reduction and refund of
      the Purchase Price.

	5.4 	Dispute of taxation claim

If the Purchaser or a Company receives
a taxation claim which may give rise to a claim under the Tax Indemnity against
the Seller, the Purchaser will give notice of that taxation claim to the Seller
within five business days after receiving notice of the taxation claim. If so
requested by the Seller in writing and subject to receipt by the Purchaser from
the Seller of the full amount due under clause 5.3 the Purchaser will ensure
that: 

	 	(a) 	
      No prejudice of defence

	 	 	 
	 		
      no payment (except to the extent required by law) or
      admission of liability in respect of the taxation claim is made or other
      steps are taken which may in any way prejudice any challenge to it or
      defence to that claim without the prior written consent of the Seller
      which consent is not to be unreasonably withheld or delayed;

	 	 	 
	 	(b) 	
      Purchaser will defend

	 	 	 
	 		
      Subject to clause 5.5, the Purchaser
  will:

	 	(i) 	
      challenge the taxation claim or issue a notice of
      response or notice of proposed adjustment, as is appropriate;

	 	 	 
	 	(ii) 	
      refer the matter to a lawyer or accountant
      (Counsel) nominated by the Seller and approved by the Purchaser and
      experienced in tax matters for an opinion on the likelihood of a challenge
      being successful;

22

	 	(iii) 	
      request a case to be stated to a court, or prepare and
      file a challenge to the assessment in court, if the opinion of Counsel is
      that there is a reasonable prospect of the challenge being
    successful;

	 	 	 
	 	(iv) 	
      if the challenge or an appeal is decided against it,
      after notifying the Seller of the decision immediately after receipt by it
      of the written decision, subject to a recommendation by the Counsel,
      appeal the decision to any relevant appellate body (as the case may
      be);

	 	 	 
	 	(v) 	
      instruct Counsel to act and advise in the conduct of all
      such court proceedings and any related correspondence and negotiations;
      and

	 	(c) 	
      Repayment of tax refund

	 	 	 
	 		
      if the challenge or appeal (in respect of which the
      Purchaser has previously received a payment under clause 5.3) is
      ultimately successful in whole or in part and the Purchaser or a Company
      receives any tax credit or refund the Purchaser or relevant Company will
      promptly pay to the Seller (to the extent that it does not exceed that
      amount previously paid by the Seller) an amount equal to the amount of
      that tax, credit or refund together with any interest (net of tax) which
      the Purchaser or relevant Company has received from any revenue authority
      on such tax credit or refund.

	5.5 	Consultation 

The Purchaser will, at all times prior
to taking any action, act in consultation with the Seller and its professional
advisers in relation to the conduct and progress of all such objections,
challenges or court proceedings and any related correspondence and negotiations,
keep the Seller and its professional advisers fully informed on this progress
and provide the Seller and its professional advisers with copies of all relevant
documents, including drafts. The Purchaser, following such consultation, is to
take into account all reasonable concerns and issues raised by the Seller in all
action that is taken by the Purchaser following consultation. 

	5.6 	Expenses 

To the extent that costs and expenses
are properly incurred, pursuant to clauses 5.4 and 5.5, by the Purchaser or any
Company in connection with any consultation, objection, challenge or appeal on a
taxation claim, such costs and expenses, will be paid by the Seller. The Seller
undertakes to the Purchaser that the Seller will pay to the Purchaser such costs
and expenses on receipt of copies of the relevant invoices or other evidence of
incurrence of the costs and expenses by the Purchaser or the Company. 

	5.7 	Period for Tax Indemnity claims
  

The Purchaser may not make any claim
under the Tax Indemnity unless the Purchaser gives the Seller notice of the
claim prior to the end of the period of three months following the Closing Date.

	6. 	
      Conditions to Closing

	 	 
	6.1 	
      Conditions to Obligations of the
  Parties

The obligations of the parties to
consummate the transactions contemplated by this Agreement are subject to the
fulfilment or waiver, at or before the Closing, of each of the following
conditions: 

23

	 	(a) 	
      Mutual Consents

	 	 	 
	 		
      all Consents, if any, identified in Schedule 5 necessary
      to permit the parties to perform their respective obligations under this
      Agreement and to consummate the transactions contemplated hereby shall
      have been duly obtained, made, given or granted and shall be in full force
      and effect; and

	 	 	 
	 	(b) 	
      No Orders

	 	 	 
	 		
      since the date of this Agreement, no Public Authority
      shall have enacted, issued, promulgated, enforced or entered, and there
      shall not be pending, any law or order (whether temporary, preliminary or
      permanent) that has the effect of making the transactions contemplated by
      this Agreement illegal or otherwise restraining, enjoining or prohibiting
      the consummation of such transactions.

	6.2 	Conditions to Obligations of the Seller
    

The obligations of the Seller to
consummate the transactions contemplated by this Agreement are subject to the
fulfilment or waiver, at or before the Closing, of each of the following
conditions: 

	 	(a) 	
      Covenants

	 	 	 
	 		
      the covenants and agreements contained in this Agreement
      to be complied with by the Purchaser on or before the Closing Date shall
      have been complied with in all material respects and the Seller shall have
      received a certificate from the Purchaser to such effect signed by a duly
      authorised officer thereof;

	 	 	 
	 	(b) 	
      Purchaser Warranties

	 	 	 
	 		
      the Purchaser Warranties shall be true and correct as of
      the Closing Date and the Seller shall have received a certificate from the
      Purchaser to such effect signed by a duly authorised officer
    thereof;

	 	 	 
	 	(c) 	
      Required Seller Consents

	 	 	 
	 		
      receipt by the Seller of the consents and approvals (if
      any) set forth on Schedule 6 which shall remain in full force and
      effect.

	6.3 	Conditions to Obligations of the
      Purchaser 

The obligations of the Purchaser to
consummate the transactions contemplated by this Agreement are subject to the
fulfilment or waiver, at or before the Closing, of each of the following
conditions: 

	 	(a) 	
      Covenants

	 	 	 
	 		
      the covenants and agreements contained in this Agreement
      to be complied with by the Seller on or before the Closing Date shall have
      been complied with in all material respects and the Purchaser shall have
      received a certificate from the Seller to such effect signed by a duly
      authorised officer thereof;

	 	 	 
	 	(b) 	
      Seller Warranties

24

	 		
      the Seller Warranties shall be true and correct as of the
      Closing Date other than those that are made as of another date, in which
      case they shall be true and correct as of that date and the Purchaser
      shall have received a certificate from the Seller to such effect signed by
      a duly authorised officer thereof;

	 	 	 
	 	(c) 	
      Required Purchaser Consents

	 	 	 
	 		
      receipt by the Purchaser of the confirmations, consents
      and approvals set forth on Schedule 7 which shall remain in full force and
      effect;

	 	 	 
	 	(d) 	
      Completion of Financing

	 	 	 
	 		
      receipt by the Purchaser of sufficient proceeds from a
      financing approved by the TSX Venture Exchange, on or before 10 July
      2006.

	6.4 	Fulfilment of Conditions

The Seller and the Purchaser must
promptly notify each other in writing if any Condition is satisfied or cannot be
satisfied. 

	7. 	
      Termination and effect of termination

	 	 
	7.1 	
      Termination

This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time prior to the
Closing: 

	 	(a) 	
      at the election of the Seller, by notice to the
      Purchaser, in the event of a material breach of this Agreement by the
      Purchaser which if uncured would cause one or more of the conditions to
      Closing set forth in clause 6 hereof not to be satisfied and which remains
      uncured 10 days after notice thereof is given to the Purchaser;

	 	 	 
	 	(b) 	
      at the election of the Purchaser, by notice to the
      Seller, in the event of a material breach of this Agreement by the Seller
      which if uncured would cause one or more of the conditions to Closing set
      forth in clause 6 hereof not to be satisfied and which remains uncured 10
      days after notice thereof is given to the Seller;

	 	 	 
	 	(c) 	
      at the election of the Seller on or after 10 July 2006
      unless the Purchaser has notified it, no later than 10 July 2006, that the
      condition described in clause 6.3(d) has been satisfied;

	 	 	 
	 	(d) 	
      at the election of either the Purchaser or the Seller if
      the Closing shall not have occurred by 31 July 2006; provided that the
      right to terminate this Agreement under this clause 7.1(d) shall not be
      available to (i) any party whose failure to fulfil any obligation under
      this Agreement shall have been the cause of, or shall have resulted in,
      the failure of the Closing to occur on or prior to such date (ii) the
      Purchaser if the Closing shall not have occurred because the condition
      described in clause 6.3(d) has not been satisfied; and

	 	 	 
	 	(e) 	
      by mutual written consent of the Seller and the
      Purchaser.

If this Agreement so terminates, it
shall become null and void and have no further force or effect, and there shall
be no liability or obligation on the part of any party hereto except (i) as set
forth in clause 8, and (ii) that nothing herein shall relieve either party from
liability for any breach of this Agreement. This Agreement may not be terminated
or rescinded after 

25

Closing except by mutual written
consent of the Seller and the Purchaser and may not be terminated or cancelled
prior to the Closing other than in pursuant to this clause 7.1. 

	7.2 	Treatment of Deposit

	 	(a) 	
      The Deposit shall be held on interest bearing deposit by
      the Seller in a New Zealand bank account until the earlier to occur
    of:

	 	(i) 	
      Closing, in which case the Deposit shall be released to
      the Seller;

	 	 	 
	 	(ii) 	
      termination of this Agreement by the Seller pursuant to
      clause 7.1(a) or 7.1(c), in which case the Deposit shall be released to
      the Seller; and

	 	 	 
	 	(iii) 	
      termination of this Agreement by the Purchaser pursuant
      to clause 7.1(b), by any party under clause 7.1(d) (unless the Closing has
      not occurred due to the failure to satisfy the condition described in
      clause 6.3(d)), or by the parties pursuant to clause 7.1(e), in which case
      the Deposit shall be repaid to the Purchaser.

	 	(b) 	
      Interest and other amounts earned on the Deposit shall,
      if the Deposit is released to the Seller pursuant to clause 7.2(a)(i) or
      (ii), be for the account of the Seller and, if the Deposit is repaid
      pursuant to clause 7.2(a)(iii), be for the account of the
  Purchaser.

	 	 	 
	 	(c) 	
      Treatment of:

	 	(i) 	
      the Deposit in accordance with clause 7.2; and

	 	 	 
	 	(ii) 	
      any Cash Call amounts pursuant to clause
  3.6,

are liquidated damages, each being
genuine pre-estimate of the loss likely to be suffered by the party to which the
liquidated damages are due. 

	8.
    	General Provisions 
	 	 
	8.1 	Time of essence 

Time is of the essence in the
performance by the parties of their obligations under this Agreement. 

	8.2 	Exercise of rights and waivers
  

	 	(a) 	
      No delay, grant of time, release, compromise, forbearance
      (whether partial or otherwise) or other indulgence by one party in respect
      of any breach of any other party’s obligations under this Agreement is
      to:

	 	(i) 	
      operate as a waiver of or prevent the subsequent
      enforcement of that obligation; or

	 	 	 
	 	(ii) 	
      be deemed a delay, grant of time, release, compromise,
      forbearance (whether partial or otherwise) or other indulgence in respect
      of, or a waiver of, any subsequent or other
breach.

	 	(b) 	
      A party may exercise a right, power or remedy at its
      discretion, and separately or concurrently with another right, power or
      remedy it is entitled to exercise hereunder.

26

	 	(c) 	
      A single or partial exercise of a right, power or remedy
      by a party does not prevent a further exercise of that or of any other
      right, power or remedy.

	 	 	 
	 	(d) 	
      No waiver by any party of its rights under this Agreement
      will be effective unless it is in writing and signed by that
  party.

	8.3 	Severability 

If one or more of the provisions of
this Agreement is, or becomes, unenforceable, invalid or illegal for any reason,
the relevant provision will be deemed to be modified to the extent necessary to
remedy such unenforceability, invalidity or illegality, or if this is not
possible then that provision will be severed from this Agreement, without
affecting the enforceability, validity or legality of any other provision of
this Agreement. 

	8.4 	Non merger 

The obligations, warranties,
undertakings and indemnities undertaken or given pursuant to this Agreement, to
the extent not already performed at Closing, are not to merge on Closing, or on
the execution or delivery of any document pursuant to this Agreement, but are to
remain enforceable to the fullest extent and notwithstanding any rule of law to
the contrary. 

	8.5 	Confidentiality and announcements
  

	 	(a) 	
      Negotiations:

	 	 	 
	 		
      Each party must keep the existence of this Agreement, its
      terms and any confidential information about any other party to this
      Agreement that was obtained during the course of negotiations relating to
      this Agreement confidential and no party is to make any disclosure or
      announcement relating to this Agreement or its terms without the prior
      written consent of the other parties;

	 	 	 
	 	(b) 	
      Exceptions:

	 	 	 
	 		
      The obligations contained in clause 8.5(a) do not
      apply:

	 	(i) 	
      Requirements of law or stock exchange:

	 	 	 
	 		
      to the extent required by law or by the listing
      requirements of any relevant stock exchange; or

	 	 	 
	 	(ii) 	
      Public domain:

	 	 	 
	 		
      to the extent that such information is already in the
      public domain; or

	 	 	 
	 	(iii) 	
      Professional advice:

	 	 	 
	 		
      to the extent reasonably required to obtain professional
      advice.

The parties shall consult with each
other and use reasonable endeavours to agree on the form and timing of any
public announcements or disclosure referred to in this clause. 

27

	 	(c) 	
      Company’s information after Closing:

	 	 	 
	 		
      The Seller will not at any time after the Closing Date
      use or disclose, for its own benefit or that of any other person, any
      confidential information it possesses concerning the Company, the Assets,
      the Permits, the Joint Venture Agreements or any person having dealings
      with the Company except, in each case, to the extent required by law or
      for the purposes of receiving professional advice in the context of
      threatened or actual legal proceedings or claims or in accordance with
      good record- keeping practice.

	8.6 	Entire agreement 

This Agreement, the other Transaction
Documents and the agreements and instruments referred to herein and therein:

	 	(a) 	
      Entire understanding:

	 	 	 
	 		
      constitute the entire understanding and agreement of the
      parties relating to the transactions contemplated hereby and thereby and
      it is agreed that there are no representations, warranties, covenants or
      undertakings by any party except as expressly provided herein and therein;
      and

	 	 	 
	 	(b) 	
      Supersede prior agreements:

	 	 	 
	 		
      supersede and extinguish all prior agreements and
      understandings between the parties relating to the acquisition of the
      Shares including, without limitation, the Confidentiality
  Agreement.

	8.7 	Successors 

This Agreement is to be binding on and
enure for the benefit of the parties and their respective successors. 

	8.8 	No assignment 

A party may not assign or transfer all
or part of its respective rights or obligations under this Agreement without the
prior written consent of the other parties.

	8.9 	Notices 

	 	(a) 	
      Form of notice:

	 	 	 
	 		
      each notice or other communication under this Agreement
      is to be in writing, is to be made by facsimile, personal delivery or by
      post to the addressee at the facsimile number or address, and is to be
      marked for the attention of the person or office holder (if any), from
      time to time designated for the purpose by the addressee to the other
      parties. The initial facsimile number, address and relevant person or
      office holder of each party is set out under its name at the end of this
      Agreement;

	 	 	 
	 	(b) 	
      Notice effective:

	 	 	 
	 		
      no notice or other communication is to be effective until
      received. A notice or other communication is, however, deemed to be
      received by the addressee:

28

	 	(i) 	
      Facsimile:

	 	 	 
	 		
      in the case of a facsimile, on the business day on which
      it is sent or, if sent after 5 pm (in the place of receipt) on a business
      day or, if sent on a non-business day, on the next business day after the
      date of sending;

	 	 	 
	 	(ii) 	
      Personal delivery:

	 	 	 
	 		
      in the case of personal delivery, when delivered;
    and

	 	 	 
	 	(iii) 	
      Post:

	 	 	 
	 		
      in the case of a letter, on the third business day after
      posting by fastpost or by airmail.

	8.10 	Amendments 

No amendment to this Agreement is to be
effective unless it is in writing and signed by all the parties. 

	8.11 	Counterparts 

	 	(a) 	
      Number of counterparts:

	 	 	 
	 		
      this Agreement may be executed in any number of
      counterparts each of which is to be deemed an original, but all of which
      together are to constitute a single instrument. A party may enter into
      this Agreement by executing any counterpart; and

	 	 	 
	 	(b) 	
      Facsimile exchange:

	 	 	 
	 		
      this Agreement may be executed on the basis of an
      exchange of facsimile copies and execution of this Agreement by such means
      is to be a valid and sufficient execution.

	8.12 	Expenses 

Whether or not any of the transactions
contemplated by this Agreement are completed, unless otherwise specified in this
Agreement, each of the parties is to bear its own costs and other expenses
including expenses of counsel, financial advisors and accountants of and
incidental to the preparation, execution and Closing of this Agreement. 

	8.13 	Specific Performance

Each of the parties hereto acknowledges
and agrees that the parties hereto would be damaged irreparably in the event
that the Closing is not consummated in accordance with the terms and conditions
of this Agreement. Accordingly, each party hereto agrees that each other party
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in addition to any other remedy to which it may be
entitled pursuant hereto.

	8.14 	Contracts (Privity) Act 1982
  

The parties acknowledge and agree in
terms of the Contracts (Privity) Act 1982 that clause 4 is intended to be for
the benefit of each Seller Indemnified Party and each Purchaser Indemnified
Party and to be enforceable by such persons as well as by the parties
hereto.

29

	8.15 	Governing law 

This Agreement shall be governed by and
construed by the laws of New Zealand. 

Execution 

Executed as an agreement. 

South Pacific Lease Operations
Limited by 

	 	 	 	 
	Director 	Director 
	 	 
	 	 	 	 
	Print Name 	Print Name 
	 	 
	Address: 	P O Box 305-017 
	  	Triton Plaza 
	  	North Shore City 
	  	New Zealand 
	 	 
	Facsimile No.: 	64-9-415-8353 
	 	 
	Email Address: 	pault@spenergy.co.nz 
	 	 
	Contact person/position: 	Paul Twynham, CEO 
	  	  
	TAG Oil (NZ) Limited by 	  
	 	 
	  	 	  	 
	Director 	Director 
	 	 
	 	 	 	 
	Drew Cadenhead 	Garth Johnson 
	 	 
	Address:117 Powderham Street, PO Box 183, New
      Plymouth, NZ 
	 
	Facsimile No.: 64-6-769-6075 
	 
	Email Address: drew.cadenhead@tagoil.com 
	 
	Contact person/position: Drew Cadenhead, CEO
      & Director 

30

	TAG Oil Limited by 	  
	  	  
	 	 	 	 
	Director 	Director 
	 	 
	 	 	 	 
	Drew Cadenhead 	Garth Johnson 
	 	 
	Address: 534 17th Avenue SW, Suite
      400, Calgary, Alberta, Canada T2S 0B1 
	 
	Facsimile No.: 604-682-1174 	  
	 	 
	Email Address: drew.cadenhead@tagoil.com 	  
	 	 
	Contact person/position: Drew Cadenhead, CEO
      & Director 

31

	Schedule 1:
      Disclosure Schedule 

Certain matters set forth herein are included for informational
purposes only, notwithstanding the fact that, because they do not rise above
applicable materiality thresholds or otherwise, they would not be required to be
set forth herein by the terms of the Agreement. Disclosure of such matters shall
not be taken as an admission by the Seller or the Companies that such disclosure
is required to be made under the terms of the Agreement and in no event shall
the disclosure of such matters be deemed or interpreted to broaden or otherwise
amplify the representations, warranties and covenants contained in the
Agreement. 

The sections below correspond to the numbering in Schedule 4
(Seller’s Warranties). The disclosure of any matter in any section of
this Disclosure Schedule shall be deemed to be disclosed for all purposes of the
Agreement. 

Section 2.4 

The gas supply agreement between Rata Energy Limited, Cheal
Petroleum Limited, International Resource Management Corporation, Cardiff
Holdings No.1 Limited, Cardiff Holdings No.2 Limited, Austral Pacific Energy
(NZ) Limited, and Genesis Power Limited dated 2 July 2004 (the Gas Supply
Agreement) contains restrictions on changes of control in Cheal Petroleum
Limited without consent of the other parties. No such consent has been sought or
obtained from the other parties to the Gas Supply Agreement. 

Section 3.1 

The Seller holds the following ordinary shares in each of the
Companies: 

Cheal Petroleum Limited: 1,000 

PEP38757 Limited: 1,000

 PEP38758 Limited: 1,000 

Section 8.1 

(1) Since the Balance Date, Cheal Petroleum Limited has paid
the amounts set forth in Annexure 8.1(1) to the Disclosure Schedule in
connection with cash calls made under the Joint Venture Agreements described in
section 10.2: 

(2) Since the Balance Date, Cheal Petroleum Limited has
received the cash calls set forth in Annexure 8.1(2) to the Disclosure Schedule
made under the Joint Venture Agreements described in section 10.2, which have
not been paid: 

(3) Since the Balance Date the Companies have made
Distributions and repayment of advances to the Seller. 

(4) Cheal Petroleum Limited currently pays a management fee to
Calgary Petroleum Limited of $20,000 per month. This arrangement will be
terminated at Closing. 

Section 8.2 

(1) With currently available working capital it is possible
that Cheal Petroleum Limited will not be able to meet anticipated cash calls
under the Joint Venture Agreements without a sale of one of its assets or
issuing additional debt or equity. The anticipated cash calls, as at the date of
this Agreement, are set forth on Annexure 8.2 to the Disclosure Schedule. 

32

Section 9.1 

(1) The Joint Venture Agreements contain default and other
provisions entitling other parties to exercise rights with respect to a party’s
interest in the relevant joint venture. 

Section 10.1 

(1) See section 2.4 and section 13.2. 

(2) The Joint Venture Agreements and the Gas Supply Agreement
contain provisions which prevent disclosure of confidential information to
persons without the consent of all counterparties to those contracts. Consent
has not been received from all counterparties to these contracts for the
disclosure of information to prospective purchasers of the Shares and Assets.

(3) The Gas Supply Agreement contains a provision whereby any
direct or indirect change of control of a supplier, without the prior written
consent of each other counterparty (such approval not to be unreasonably
withheld), may give rise to a right of termination for the purchaser. This
consent has not been sought or obtained by Cheal Petroleum Limited. 

Section 10.2 

(1) The Companies have been funded from time to time by
advances from South Pacific Energy Limited, Calgary Petroleum Limited (the
parent company of the Seller) and by the Seller. These advances total
approximately $3,900,000 on the date of this Agreement and will be repaid or
released at or prior to Closing. 

(2) The following agreements contain provisions of the type
described in section 10.2 of Schedule 4 (Seller’s Warranties)
(collectively, the Joint Venture Agreements): 

	the joint venture agreement dated 16 December 2002, initially between PEP
    38716 Limited and Cheal Petroleum Limited, as amended on 2 July 2004, and
    including the coordination agreement in respect of PEP 38738 between Rata
    Energy Limited, Cheal Petroleum Limited, International Resource Management
    Corporation, Cardiff Holdings No. 1 Limited, Cardiff Holdings No. 2 Limited
    and Austral Pacific Energy (NZ) Limited dated 2 July 2004 (the Coordination
    Agreement) (together, the Shallow JVA) 

     
  
	the joint venture agreement between Rata Energy Limited, Cheal Petroleum
    Limited, International Resource Management Corporation, Cardiff Holdings No.
    1 Limited, Cardiff Holdings No. 2 Limited and Austral Pacific Energy (NZ)
    Limited dated 2 July 2004, and the Coordination Agreement (together, the Deep
    JVA). 

(3) See section 2.4, above. 

(4) The constitutions of the Companies each contain
indemnification and insurance provisions in favour of directors and employees of
the relevant Company to the same extent permitted by the Companies Act. The
Company has entered into deeds of indemnity with its current directors. 

(5) The Gas Supply Agreement. 

Section 12.2 

(1) PEP 38738 has expired. Pursuant to the Crown Minerals
regulations the permit rights of the Joint Venture participants remain in place
over PEP 38738 while the MED deliberates on the extension of the duration of the
permit area not including the Cheal and Cardiff discoveries and the details for
granting of a petroleum mining permit over the Cheal and Cardiff discoveries. No
mining permit has yet been issued. 

33

Section 13.2 

(1) From time to time, Cheal Petroleum Limited has disputed
actions taken by other parties to the Joint Venture Agreements including
disputing whether a “sole risk notice” delivered by the operator under a Joint
Venture Agreement had been validly given. 

(2) In connection with its proposed sale of the Companies, the
Seller has disclosed “Information” (as defined in the Joint Venture Agreements)
without receiving the consent to such disclosure from all parties to such Joint
Venture Agreements. 

Section 16.1 

(1) Cheal Petroleum Limited is party to the Joint Venture
Agreements. 

(2) PEP38757 Limited is party to a Deed of Assignment between
PEP38757 Limited (as assignor) and TAG Oil (NZ) Limited (as assignee) dated 9
November 2004 (the 757 ORR). The 757 ORR relates to the transfer
of 100% of Calgary Petroleum Limited’s interests in petroleum exploration permit
PEP 38757 to TAG Oil (NZ) Limited, under which PEP38757 Limited was granted a 5%
overriding royalty. 

(3) PEP38758 Limited is party to a Deed of Assignment between
PEP38758 Limited (as assignor) and TAG Oil (NZ) Limited (as assignee) dated 9
November 2004 (the 758 ORR). The 758 ORR relates to the transfer
of 100% of Calgary Petroleum Limited’s interests in petroleum exploration permit
PEP 38757 to TAG Oil (NZ) Limited, under which PEP38758 Limited was granted a 5%
overriding royalty. 

Section 18 

(1) The taxation returns for financial year ended 31 March 2005
were not filed by the due date at 31 March 2006. Late filing fees will be
levied. 

(2) No representation or warranty is made with respect to
taxation matters of the joint ventures or other parties to the Joint Venture
Agreements. 

34

	Schedule 2:
      Purchaser Warranties 

	1. 	
      The Purchaser

	 	 
	1.1 	
      Due incorporation

	 	 
		
      The Purchaser is duly incorporated and validly exists
      under the law of its place of incorporation.

	 	 
	1.2 	
      Solvency

	 	 
		
      The Purchaser is solvent and no receiver or receiver and
      manager has been appointed over any part of its Assets and no such
      appointment has been threatened.

	 	 
	1.3 	
      No liquidation

	 	 
		
      The Purchaser is not in liquidation or statutory
      management and no proceedings have been brought or threatened and no
      resolution has been passed or other step taken for the purposes of
      appointing a liquidator of the Purchaser or to declare the Purchaser at
      risk pursuant to the Corporations (Investigation & Management) Act
      1989 or placing it under statutory management pursuant to that
  Act.

	2.
    	Due
      authorisation 

	2.1 	
      Corporate authorisation

	 	 
		
      The execution and delivery of the Transaction Documents
      has been properly authorised by all necessary corporate action of the
      Purchaser.

	 	 
	2.2 	
      Corporate power

	 	 
		
      The Purchaser has full corporate power and lawful
      authority to execute and deliver the Transaction Documents and to
      consummate and perform or cause to be performed its obligations under the
      Transaction Documents.

	 	 
	2.3 	
      Legal and binding document

	 	 
		
      Each Transaction Document constitutes a legal, valid and
      binding obligation of the Purchaser enforceable in accordance with its
      terms by appropriate legal remedy.

	 	 
	2.4 	
      No adverse effect

	 	 
		
      This Agreement and Closing do not conflict with or result
      in a breach of or default under any provision of the constitution of the
      Purchaser or any material term or provision of any agreement or deed or
      any writ, order or injunction, judgment, law, rule or regulation to which
      it is a party or is subject or by which it is
bound.

35

	3.
    	TAG
      Oil Warranties 

	3.1 	
      Due incorporation

	 	 
		
      TAG Oil is duly incorporated and validly exists under the
      law of its place of incorporation.

	 	 
	3.2 	
      Solvency

	 	 
		
      TAG Oil is solvent and no receiver or receiver and
      manager has been appointed over any part of its Assets and no such
      appointment has been threatened.

	 	 
	3.3 	
      No liquidation

	 	 
		
      TAG Oil is not in liquidation, no proceedings have been
      brought or threatened and no resolution has been passed or other step
      taken for the purposes of appointing a liquidator of TAG Oil.

	 	 
	3.4 	
      Corporate authorisation

	 	 
		
      The execution and delivery of the Transaction Documents
      has been properly authorised by all necessary corporate action of TAG
      Oil.

	 	 
	3.5 	
      Corporate power

	 	 
		
      TAG Oil has full corporate power and lawful authority to
      execute and deliver the Transaction Documents and to consummate and
      perform or cause to be performed its obligations under the Transaction
      Documents.

	 	 
	3.6 	
      Legal and binding document

	 	 
		
      Each Transaction Document constitutes a legal, valid and
      binding obligation of TAG Oil enforceable in accordance with its terms by
      appropriate legal remedy.

	 	 
	3.7 	
      No adverse effect

	 	 
		
      This Agreement and Closing do not conflict with or result
      in a breach of or default under any provision of the constitution of TAG
      Oil or any material term or provision of any agreement or deed or any
      writ, order or injunction, judgment, law, rule or regulation to which it
      is a party or is subject or by which it is bound.

	 	 
	3.8 	
      Power

	 	 
		
      TAG Oil has all corporate power and lawful authority to
      issue the TAG Oil Shares to the Seller.

	 	 
	3.9 	
      Fully Paid and Transferable

	 	 
		
      The TAG Oil Shares to be issued under the Agreement will
      be fully paid and no money is owing in respect of them. The TAG Oil Shares
      to be issued under this Agreement will be able to be sold or transferred
      by the Seller, in whole or in part, without restriction, or otherwise over
      any exchange or facility on which TAG Oil securities are currently traded
      or quoted, four months following Closing.

36

	3.10 	
      No Security Interest

	 	 
		
      The TAG Oil Shares to be issued under the Agreement will
      be free of security interests.

	 	 
	3.11 	
      Capitalisation

	 	 
		
      There are 46,631,081 shares of common stock of TAG Oil
      issued and outstanding (Existing TAG Shares). There are 400,000
      warrants over shares of TAG Oil common stock (Warrants) and
      1,025,000 options over shares of TAG Oil common stock (Options).
      Each Option and Warrant held entitles the holder to one share of TAG Oil
      common stock upon payment of the applicable exercise price. Assuming all
      Warrants and Options are exercised 48,598,576 shares of common stock of
      TAG Oil would be issued and outstanding (excluding the TAG Oil Shares to
      be issued hereunder).

	 	 
		
      The Existing TAG Shares comprise all the issued shares in
      the capital of TAG Oil and the TAG Oil Shares to be issued hereunder will,
      upon issue, rank equally in all respects with the Existing TAG Shares.
      Except for the Existing TAG Shares, the Warrants and the Options there are
      no agreements, arrangements or understandings in force that call for the
      present or future issue or transfer of, or grant to any person the right
      at any time to require the issue or transfer of, any equity capital in TAG
      Oil.

37

	Schedule 3:
      Purchase Price Allocation1

	1. 	
      Cheal Petroleum Limited:

	 	 	 
		a. 	
      Shallow: $23,900,000

	 	 	 
		b. 	
      Deep: $2,300,000

	 	 	 
	2. 	
      PEP38757 Limited: $100,000

	 	 	 
	3. 	
      PEP38758 Limited: $100,000

 

____________________________________
1 Excludes
value of Overriding Royalty and assumes TAG Oil Shares valued at CDN$1.10 per
share. 

38

	Schedule 4:
      Seller Warranties 

	1. 	
      The Seller

	 	 
	1.1 	
      Due incorporation

	 	 
		
      The Seller is duly incorporated and validly exists under
      the law of its place of incorporation.

	 	 
	1.2 	
      Solvency

	 	 
		
      The Seller is solvent and no receiver or receiver and
      manager has been appointed over any part of its Assets and no such
      appointment has been threatened.

	 	 
	1.3 	
      No liquidation

	 	 
		
      The Seller is not in liquidation or statutory management
      and no proceedings have been brought or threatened and no resolution has
      been passed or other step taken for the purposes of appointing a
      liquidator of the Seller or to declare the Seller at risk pursuant to the
      Corporations (Investigation & Management) Act 1989 or placing it under
      statutory management pursuant to that Act.

	2.
    	Due
      authorisation 

	2.1 	
      Corporate authorisation

	 	 
		
      The execution and delivery of the Transaction Documents
      has been properly authorised by all necessary corporate action of the
      Seller.

	 	 
	2.2 	
      Corporate power

	 	 
		
      The Seller has full corporate power and lawful authority
      to execute and deliver the Transaction Documents and to consummate and
      perform or cause to be performed its obligations under the Transaction
      Documents.

	 	 
	2.3 	
      Legal and binding document

	 	 
		
      Each Transaction Document constitutes a legal, valid and
      binding obligation of the Seller enforceable in accordance with its terms
      by appropriate legal remedy.

	 	 
	2.4 	
      No adverse effect

	 	 
		
      This Agreement and Closing do not conflict with or result
      in a breach of or default under any provision of the constitution of the
      Seller or of any Company or any material term or provision of any
      agreement or deed or any writ, order or injunction, judgment, law, rule or
      regulation to which the Seller or any Company is a party or is subject or
      by which it is bound.

39

	3.
    	The
      Shares 

	3.1 	
      Title

	 	 	 
		
      The Seller has legal and beneficial title to the Shares,
      free of security interests.

	 	 	 
	3.2 	
      Power

	 	 	 
		
      The Seller has the right and power to sell the Shares on
      the terms set out in this Agreement without the consent of any other
      person and free of any pre-emptive rights or rights of first
    refusal.

	 	 	 
	3.3 	
      Fully paid

	 	 	 
		
      The Shares have been issued and are fully paid and no
      money is owing in respect of them.

	 	 	 
	3.4 	
      No other shares or rights

	 	 	 
		(a) 	
      The Shares comprise all the issued shares in the capital
      of each Company and immediately upon consummation of the transactions
      contemplated hereby, the Purchaser will own all of the issued shares of
      each Company.

	 	 	 
		(b) 	
      There are no agreements, arrangements or understandings
      in force that call for the present or future issue or transfer of, or
      grant to any person the right at any time to require the issue or transfer
      of, any equity capital or loan capital in any
Company.

	4.
    	Group Company constitutions 

	4.1 	
      Constitution

	 	 
		
      True and correct copies of the current constitutions of
      each Company have been delivered to the Purchaser. The affairs of each
      Company have been conducted in accordance with its constitution.

	 	 
	4.2 	
      Registration

	 	 
		
      Each Company is registered under the Companies
  Act.

	 	 
	4.3 	
      Corporate existence

	 	 
		
      Each Company has the power to own its Assets and to carry
      on its Business as it is now being conducted.

	5.
    	Material circumstances 

	5.1 	
      Solvency

	 	 
		
      Each Company is solvent and no receiver or receiver and
      manager has been appointed over any part of the Assets of any Company and
      no such appointment has been threatened.

40

	5.2 	
      No liquidation

	 	 
		
      No Company is in liquidation or statutory management and
      no proceedings have been brought or threatened and no resolution has been
      passed or other step taken for the purposes of appointing a liquidator of
      any Company or to declare any Company at risk pursuant to the Corporations
      (Investigation & Management) Act 1989 or placing it under statutory
      management pursuant to that Act.

	 	 
	5.3 	
      Power of attorney

	 	 
		
      No Company has granted any power of attorney which is
      still in force or conferred on any person, other than its directors and
      employees, or any subsisting authority to bind a Company in any
  way.

	6.
    	Due
      Diligence Material 

The material made available to the Purchaser and its advisors
in their due diligence review of the Assets, the Business and the Companies
(including the responses provided to the written due diligence questions
submitted by the Purchaser) was and is accurate and not misleading (whether by
omission or otherwise) in any material respect. 

	7.
    	Financial matters 

	7.1 	
      Accuracy of the Financial Statements

	 	 	 
		
      The Financial Statements:

	 	 	 
		(a) 	
      comply with the provisions of the Financial Reporting Act
      1993 and have been prepared under NZ GAAP, consistently applied, and are
      complete and accurate in all respects; and

	 	 	 
		(b) 	
      have been prepared on a basis consistent with the basis
      on which the financial statements of Calgary Petroleum Limited were
      prepared in respect of the preceding annual financial period.

	 	 	 
	7.2 	
      Financing

	 	 	 
		
      No Company has or is engaged in financing of a type which
      is not required to be shown or reflected in the Financial Statements or in
      any off-balance sheet arrangement.

	8.
    	Conduct of Business since Balance Date

	8.1 	
      Conduct of Business

	 	 	 
		
      Since the Balance Date, each Company has:

	 	 	 
		(a) 	
      conducted its Business in substantially the same manner
      as that in which it was conducted in the year preceding the Balance
      Date;

	 	 	 
		(b) 	
      not acquired or disposed of any Asset, other than Assets
      having a value of less than $10,000 individually or $30,000 in the
      aggregate, which are acquired or disposed of in the normal course of
      trading and on arm’s-length commercial terms other than,
  in

41

	 		
      each case, payment of professional fees and expenses by
      third party service providers and payment of management fees to Calgary
      Petroleum Limited;

	 	 	 	 
	 	(c) 	
      not entered into, varied or terminated any agreement or
      other commitment which:

	 	 	 	 
	 		(i) 	
      provided over its term for the payment or receipt of any
      amount exceeding $10,000; or

	 	 	 	 
	 		(ii) 	
      imposed obligations that continued for more than twelve
      months or provided over its term for the payment or receipt of any amount
      exceeding $10,000;

	 	 	 	 
	 	(d) 	
      not entered into any major transaction (as that term is
      defined in section 129 of the Companies Act);

	 	 	 	 
	 	(e) 	
      not:

	 	 	 	 
	 		(i) 	
      issued or purported to issue any shares, options or other
      securities;

	 	 	 	 
	 		(ii) 	
      declared or paid any Distribution;

	 	 	 	 
	 		(iii) 	
      effected any distribution of any Assets or made any loan
      or other payment to its shareholders or any other person (other than a
      payment in the ordinary course of business);

	 	 	 	 
	 		(iv) 	
      bought back any of its own shares;

	 	 	 	 
	 		(v) 	
      redeemed any shares;

	 	 	 	 
	 		(vi) 	
      transferred or purported to transfer any shares,
      including shares held as treasury stock;

	 	 	 	 
	 		(vii) 	
      altered or purported to alter the rights attaching to any
      shares; or

	 	 	 	 
	 		(viii) 	
      changed its name;

	 	 	 	 
	 	(f) 	
      not taken or omitted to take any action which may
      adversely affect any right attaching to the Shares;

	 	 	 	 
	 	(g) 	
      not:

	 	 	 	 
	 		(i) 	
      employed any person; or

	 	 	 	 
	 		(ii) 	
      made any employee redundant or otherwise terminated the
      employment of any person.

	8.2 	Material Adverse Effect

Since the Balance Date there has not
been any event or circumstance which might reasonably be expected to have a
material adverse effect. 

42

	9.
    	Assets 
	 	 
	9.1 	No security interests

Each Company has legal and beneficial
title to all of its Assets, free from security interests. No Company has
created, or agreed to create, any encumbrance in respect of any of its Assets.
No person, other than a Company, is entitled to possession of, or any interest
in, any Asset.

	9.2 	Fixed Assets 

No Company holds or owns any fixed
assets other than its rights to assets under the Joint Venture Agreements. 

	10. 	
      Material commitments

	 	 
	10.1 	
      Agreements

No Company is in default under any of
its agreements with third parties (including the Joint Venture Agreements) and
is not aware of any material default under such agreements by those third
parties.

	10.2 	Material commitments

No Company is party to any agreement
which: 

	 	(a) 	
      relates to the provision of financial accommodation to
      the Company;

	 	 	 
	 	(b) 	
      is outside the ordinary course of business;

	 	 	 
	 	(c) 	
      is incapable of performance in accordance with its terms
      within twelve months after the date on which it was entered into or
      undertaken;

	 	 	 
	 	(d) 	
      involves the supply of goods or services, the aggregate
      sales value of which will represent in excess of 10 per cent. of the
      turnover expected for the current financial year of the Company;

	 	 	 
	 	(e) 	
      requires authorisation under Part II of the Commerce Act
      1986 for its legality or validity;

	 	 	 
	 	(f) 	
      involves the Company giving a guarantee, indemnity or
      letter of comfort in respect of, or to be otherwise contingently liable
      for, the obligations of, any other person;

	 	 	 
	 	(g) 	
      is with any Related Company of the Company or of the
      Seller (other than another Company);

	 	 	 
	 	(h) 	
      restricts or prevents the Company from carrying on any
      activity or business in any area;

	 	 	 
	 	(i) 	
      confers on any person any rights as a consequence of a
      change in the shareholding in, or composition of the board of directors
      of, the Company;

43

	 	(j) 	
      is of an unusual, long term or onerous nature or cannot
      readily be performed by the Company without undue or unusual expenditure
      of money or effort; or

	 	 	 
	 	(k) 	
      is for any reason considered
material.

	11.
    	Properties 
	 	 
	11.1 	Complete list 

There is no land or building owned or
occupied by any Company. 

	12.
    	Compliance with laws 
	 	 
	12.1 	Compliance 

No Company is in breach of any statute,
order, by-law or regulation binding on or applicable to it where such breach
might reasonably be expected to have a material adverse effect and, to the
extent of its interest in the relevant Permit, is complying with the terms of
and conditions of that Permit. 

	12.2 	All Consents held 

The Companies have all Consents
required for carrying on the Business. In respect of each Consent: 

	 	(a) 	
      all fees due have been paid;

	 	 	 
	 	(b) 	
      all conditions have been fully complied with;

	 	 	 
	 	(c) 	
      to the Seller’s knowledge, there is no factor which might
      prejudice its continuance or renewal; and

	 	 	 
	 	(d) 	
      the Consent will not be prejudiced in any way by, or
      revoked as a consequence of, the entry into or performance of this
      Agreement.

	13. 	
      Legal proceedings

	 	 
	13.1 	
      No litigation

No Company is involved in any
investigation, prosecution, litigation, arbitration, proceedings or any other
form of mediation or dispute resolution or other legal proceedings (except as
plaintiff in normal debt collection proceedings) the result of which might
reasonably be expected to have a material adverse effect. 

	13.2 	No claims 

To the Seller’s knowledge, there are no
claims or disputes against or involving a Company or the Permits or the Joint
Venture Agreements, which are likely to give rise to any legal proceedings that
might reasonably be expected to have a material adverse effect. 

44

	13.3 	No proceedings 

There are no enquiries pending before
or, to the Seller’s knowledge, threatened by, any Public Authority, and in
particular no Company is involved in any dispute with the Commissioner of Inland
Revenue. 

	14. 	
      Statutory records

	 	 
	14.1 	
      All records kept

Each Company holds all accounting and
other records which it is required by law to retain either indefinitely or for a
particular period or periods and such records are properly and fully maintained.

	14.2 	Documents of title 

All documents of title, or documents
that otherwise evidence title, to the Assets are in the Companies' possession or
under their control. 

	15.
    	Employees 

No Company has employed any person
since its incorporation. 

	16.
    	Investments 
	 	 
	16.1 	No joint venture 

No Company is a party to any joint
venture, partnership, syndicate, consortium, or other body or association,
whether incorporated or not (other than a recognised trade association). 

	16.2 	No shares held 

No Company owns shares in the capital
of any company. 

	17. 	
      Environmental

	 	 
	17.1 	
      Compliance with Environmental Law and
    Consents

Each Company:

	 	(a) 	
      is not in breach of any Environmental Law; and

	 	 	 
	 	(b) 	
      holds and complies in all material respects with, and has
      always held and complied in all material respects with, all environmental
      consents required from time to time in relation to that Company or its
      Assets or the conduct of its business and, to the Seller’s knowledge,
      there is no matter that may result in the cancellation, suspension,
      limitation, review, variation or non-renewal of any of those environmental
      consents.

45

	18.
    	Taxation 
	 	 
	18.1 	All deductions made 

Each Company has: 

	 	(a) 	
      made all appropriate deductions from payments made by it
      and all consequent payments due as a result to the IRD or any other Tax
      Authority; and

	 	 	 
	 	(b) 	
      remitted the amount of these deductions to the IRD or any
      other Tax Authority.

	18.2 	All taxation paid 

Each Company has made and will make
payment in full when due to the IRD or any other Tax Authority for all taxes in
respect of periods commencing on or before Closing, including any terminal tax
and each instalment of provisional tax of the Company in respect of that period,
together with any civil penalty payable thereon. 

	18.3 	No taxation arising from sale of the
      Shares 

No taxation will become payable by a
Company because of the sale of the Shares under this Agreement. 

	18.4 	No taxation Relief refused

No transaction or event has occurred or
arrangement been entered into in consequence of which a Company: 

	 	(a) 	
      has or may be deprived of Relief otherwise available to
      it; or

	 	 	 
	 	(b) 	
      is or may be held liable for any taxation relating to any
      period up to Closing, including taxation primarily chargeable against some
      other company or person (whether by reason of any such other company being
      or having been a member of the same group of companies or
    otherwise),

for which provision has not been made
in the Financial statements or, if occurring or entered into after the Balance
Date, has been incurred otherwise than in the ordinary course of business. 

	18.5 	All returns made 

Each Company has made all returns and
supplied all information to the IRD, the Customs Department and other relevant
Tax Authorities as is required by law. All returns and information supplied were
correct and made on a proper basis and are not the subject of any dispute. Each
Company has kept and preserved those records as are required to be kept and
preserved for the purpose of taxation and any Tax Act. 

	18.6 	Binding rulings 

If a Company has obtained a binding
ruling under the Tax Administration Act 1994, that binding ruling has been
disclosed: 

	 	(a) 	
      to the IRD as required by that Act;
and

46

	 	(b) 	
      to the Purchaser.

	18.7 	Residence 

Each Company is tax resident in New
Zealand and not in any other country or jurisdiction and has and has had no
branch, agency, place of business or permanent establishment outside New Zealand
which may result in that Company being subject to tax in that other country.

	18.8 	Credit account balances

The imputation credit accounts,
dividend withholding payment accounts and any other similar memorandum accounts
(if any) maintained by the Companies for tax purposes will not have debit
balances on the Closing Date, calculated after taking into account any tax
refunds that the Companies might be entitled to that relate to any periods up to
the Closing Date. 

	18.9 	Registration 

Each Company:

	 	(a) 	
      is a registered person for the purposes of the Goods and
      Services Tax Act 1985;

	 	 	 
	 	(b) 	
      has complied in all respects with that Act; and

	 	 	 
	 	(c) 	
      is not in default of any obligation to make any payment
      or return or notification under that Act.

	18.10 	Accounting year 

Each Company has an accounting year for
New Zealand income tax purposes ending on 31 March of each year. 

47

	Schedule 5:
      Mutual Consents 

All consents required under the Crown Minerals Act 1991,
including any consent of the Minister of Energy required under section 41 of the
Crown Minerals Act 1991 (and including also consent to the Overriding Royalty).

48

	Schedule 6:
      Required Seller Consents and Approvals 

None. 

49

	Schedule 7:
      Required Purchaser Consents 

The Purchaser receiving confirmation from TAG Oil, that TAG Oil
has obtained all necessary corporate and other consents and approvals required
under, and otherwise complying with the requirements of, relevant Canadian
companies and securities laws, the rules of the TSX Venture Exchange and any
other relevant stock exchange, and its constitution to issue to TAG Oil Shares
pursuant to this Agreement. 

50Filed by Automated Filing Services Inc. (604) 609-0244 - TAG Oil Ltd. - Exhibit 4.9

EVALUATION OF THE P&NG RESERVES 

OF 

TAG OIL LTD. 

IN THE CHEAL AREA OF NEW ZEALAND 

(As of April 30, 2006) 

 

Geological and Petroleum Engineering Consultants 

Suite 900, North Tower, Sun Life Plaza, 140 – 4th Avenue S.W.

Calgary, Alberta, Canada T2P 3N3 
Tel: (403) 294-5500 Fax: (403) 294-5590
Fax: (403) 294-5580 

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

	Table of Contents
      — Page 1 

Table of Contents 

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

 

	Table of Contents
      — Page 2

 

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

 

	Table of Contents
      — Page 3

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

 

	Table of Contents
      — Page 4

 

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

 

	Table of Contents
      — Page 5

 

	 Appendices 	  
	  	  
	              
           Appendix A 	 Definitions 
	              
           Appendix B 	 Abbreviations 

 

	Introduction —
      Page 1 

 Introduction 

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

Field Operations 

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

Historical Data, Interests and Burdens 

	
1. 		
The operator of the property, Austral-Pacific Energy Limited, has provided data on behalf of the Company. All historical production, well data, revenue and expense data, product prices actually received, and other data that were
obtained from the operator of the property or from public sources were accepted as represented, without any further investigation by Sproule.

	
	 	 
	
2. 		
Property descriptions and details of interests held, as supplied by the Company, were accepted as represented. No investigation was made into either the legal titles held or any operating agreements in place relating to the
subject properties.

	
	 	 
	
3. 		
Lessor and overriding royalties and other burdens were obtained from the Company. No further investigation was undertaken by Sproule.

	

Evaluation Standards 

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

 

	Introduction —
      Page 2

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

Evaluation Procedures 

	
1. 		
The operator, on behalf of the Company, provided Sproule with recent revenue statements to determine certain economic parameters.

	
	 	 
	
2. 		
The forecasts of product prices used in this evaluation were based on Sproule’s April 30, 2006 price forecasts.

	
	 	 
	
3. 		
Well abandonment and disconnect costs were included in this report at the entity level for wells which have reserves assigned. No allowances for reclamation or salvage values were made.

	

Evaluation Results 

	
1. 		
The accuracy of reserves estimates and associated economic analysis is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data provided at
the time this report was prepared, the estimates presented herein are considered reasonable. However, they should be accepted with the understanding that reservoir and financial performance subsequent to the date of the estimates may necessitate
revision. These revisions may be material.

	
	 	 
	
2. 		
The net present values of the reserves presented in this report simply represent discounted future cash flow values at several discount rates. Though net present values form an integral part of fair market value estimations,
without consideration for other economic criteria, they are not to be construed as Sproule’s opinion of fair market value.

	
	 	 
	
3. 		
The dollar values presented throughout the report are in United States dollars, unless otherwise stated. An exchange rate of 0.6364 United States dollars per New Zealand dollar was used to convert budget information supplied by
the Company. This rate was based on the exchange rate for April 28, 2006, as obtained from the Bank of Canada website.

	
	 	 
	
4. 		
Due to rounding, certain totals may not be consistent from one presentation to the next.

	

 

	Introduction —
      Page 3

BOE Cautionary Statement 

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

Forward-Looking Statements 

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

Exclusivity 

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

 

	Introduction —
      Page 4

 

	Introduction —
      Page 5

 

	Introduction —
      Page 6

	Introduction —
      Page 7

 

	Introduction —
      Page 8

 

	Summary— Page
      1 

 Summary 

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

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

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

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

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

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

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

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

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

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

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

Table: S-1 

	  TAG OIL LTD.
	Summary of the Evaluation of the Company's P&NG
      Reserves 
	 In the Cheal Area of New Zealand
	  (As of April 30, 2006)
	  	Remaining Reserves 	Net Present Values 
	  	  	Company 	After Income Taxes (M$US) 
	  	Gross 	       Gross 	Net 	At 0% 	At 5.0% 	At 10.0% 	At 15.0% 
	Light/Medium Oil (Mbbl) 	  	  	  	  	  	  	  
	Proved Undeveloped 	1,417.0 	432.2 	371.9 	6,772 	5,290 	4,185 	3,340 
	   Total Proved 	1,417.0 	432.2 	371.9 	6,772 	5,290 	4,185 	3,340 
	   Total Probable 	1,603.0 	488.9 	406.3 	9,501 	7,009 	5,374 	4,250 
	   Total Possible 	1,385.5 	422.6 	350.4 	8,901 	6,287 	4,720 	3,711 
	   
           Total 	4,405.5 	1,343.7 	1,128.7 	25,174 	18,586 	14,279 	11,302 
	Solution Gas (MMcf) - values included with
      lt/med oil - 	  	  	  	  	  
	Proved Undeveloped 	1,036 	316 	272 	  	  	  	  
	   Total Proved 	1,036 	316 	272 	  	  	  	  
	   Total Probable 	1,362 	415 	346 	  	  	  	  
	   Total Possible 	1,242 	379 	315 	  	  	  	  
	   
           Total 	3,640 	1,110 	933 	 
    	 
    	 
    	 
    
	Corporate 	  	  	  	  	  	  	  
	Proved Undeveloped 	  	  	  	720 	680 	644 	612 
	   Total Proved 	  	  	  	720 	680 	644 	612 
	   
           Total 	 
    	 
    	 
    	720 	680 	644 	612 
	GRAND TOTAL (Mboe) 	  	  	  	  	  	  	  
	Proved Undeveloped 	1,589.7 	484.8 	417.3 	7,492 	5,970 	4,830 	3,952 
	   Total Proved 	1,589.7 	484.8 	417.3 	7,492 	5,970 	4,830 	3,952 
	   Total Probable 	1,830.0 	558.2 	464.0 	9,501 	7,009 	5,374 	4,250 
	   Total Possible 	1,592.5 	485.7 	402.9 	8,901 	6,287 	4,720 	3,711 
	   
           Total 	5,012.2 	1,528.7 	1,284.2 	25,894 	19,266 	14,923 	11,914 

Table: S-1A 

	  TAG OIL LTD.  
	Summary of the Evaluation of the Company's P&NG
      Reserves 
	 In the Cheal Area of New Zealand
	 (As of April 30, 2006)
	  	Remaining Reserves 	Net Present Values 
	  	  	Company 	Before Income Taxes (M$US)

	  	Gross 	Gross 	Net 	At 0% 	At 5.0% 	At 10.0% 	At 15.0% 
	Light/Medium Oil (Mbbl) 	  	  	  	  	  	  	  
	Proved Undeveloped 	1,417.0 	432.2 	371.9 	11,658 	9,497 	7,879 	6,633 
	   Total Proved 	1,417.0 	432.2 	371.9 	11,658 	9,497 	7,879 	6,633 
	   Total Probable 	1,603.0 	488.9 	406.3 	16,259 	12,124 	9,415 	7,552 
	   Total Possible 	1,385.5 	422.6 	350.4 	15,123 	10,704 	8,058 	6,356 
	   
           Total 	4,405.5 	1,343.7 	1,128.7 	43,039 	32,325 	25,351 	20,541 
	Solution Gas (MMcf) - values included with
      lt/med oil - 	  	  	  	  	  
	Proved Undeveloped 	1,036 	316 	272 	  	  	  	  
	   Total Proved 	1,036 	316 	272 	  	  	  	  
	   Total Probable 	1,362 	415 	346 	  	  	  	  
	   Total Possible 	1,242 	379 	315 	  	  	  	  
	   
           Total 	3,640 	1,110 	933 	 
    	 
    	 
    	 
    
	GRAND TOTAL (Mboe) 	  	  	  	  	  	  	  
	Proved Undeveloped 	1,589.7 	484.8 	417.3 	11,658 	9,497 	7,879 	6,633 
	   Total Proved 	1,589.7 	484.8 	417.3 	11,658 	9,497 	7,879 	6,633 
	   Total Probable 	1,830.0 	558.2 	464.0 	16,259 	12,124 	9,415 	7,552 
	   Total Possible 	1,592.5 	485.7 	402.9 	15,123 	10,704 	8,058 	6,356 
	   
           Total 	5,012.2 	1,528.7 	1,284.2 	43,039 	32,325 	25,351 	20,541 

 

	Summary— Page
      4

 

	Table S-2 
Summary of Price
      Forecasts 
(Effective April 30, 2006) 

	  	  	  	  
	  	WTI Cushinga	Cheal 	Inflation c 
	  	Oklahoma 	Natural Gas b 	Rate 
	Year 	($US/bbl) 	($US/Mcf) 	(%/Year) 
	  	  	  	  
	Historical 	  	  	  
	               
         2000 	30.30 	  	   1.5 
	               
         2001 	25.94 	  	   2.0 
	               
         2002 	26.09 	  	   2.7 
	               
         2003 	31.14 	  	   2.5 
	               
         2004 	41.42 	  	   1.3 
	               
         2005 	56.46 	  	   1.6 
	  	  	  	  
	Forecast 	  	  	  
	               
         2006 (8 mos) 	69.81 	2.70 	   2.3 
	               
         2007 	70.56 	2.70 	   2.5 
	               
         2008 	58.59 	2.70 	   2.5 
	               
         2009 	50.19 	2.74 	   2.5 
	               
         2010 	47.76 	2.78 	   1.5 
	               
         2011 	48.48 	2.82 	   1.5 
	               
         2012 	49.20 	2.86 	   1.5 
	               
         2013 	49.94 	2.91 	   1.5 
	               
         2014 	50.69 	2.95 	   1.5 
	               
         2015 	51.45 	3.00 	   1.5 
	               
         2016 	52.22 	3.04 	   1.5 
	               
         2017 	53.01 	3.09 	   1.5 
	Escalation rate of 1.5% thereafter  

Note: 

	a. 	 40 degrees API, 0.4% sulphur

	b. 	 Incorporates a heating value of 1,150 Btu’s per
        scf.

	c. 	 Inflation from 2008 dollars to 2009 dollars is 2.5 percent.

 

 

 

 

 

 Figure S-1

   

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

 FIGURE S-2

   

SPROULE INTERNATIONAL LIMITED

 FIGURE S-3

 

SPROULE INTERNATIONAL LIMITED

 FIGURE S-4

 

SPROULE INTERNATIONAL LIMITED

	 Discussion —
      Page 1 

 Discussion 

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

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

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

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

Geology 

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

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

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

	 Discussion —
      Page 2 

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

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

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

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

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

 

	 Discussion —
      Page 3

Reserves and Production Forecasts 

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

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

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

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

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

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

Pricing 

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

 

	 Discussion —
      Page 4

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

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

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

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

Operating and Capital Costs 

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

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

 

	 Discussion —
      Page 5

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

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

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

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

Capital Costs M$US 

  (2006 Dollars) 

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

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

	 Discussion —
      Page 6

Operating costs were estimated as follows: 

Operating Costs

  (2006 Dollars) 

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

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

Royalties

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

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

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

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

 

	 Discussion —
      Page 7

Taxes 

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

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

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

Canadian income taxes have not been considered in this report. 

Net Present Values 

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

	    Table
      1     
	   Cheal, New
      Zealand    
	 Volumetric Reservoir Data and Estimates of
      Reserves   
	   (As of April 30,
      2006)     
	  		  	  					Original 
	  	Drainage 	Net Pay 	Porosity 	 Water 	Oil 	Original Oil 	Recovery 	Recoverable 
	Pool/Location 	Area 	  	  	Saturation 	FVF 	In Place 	Factor 	Oil 
	  	(ac) 	(ft) 	(%) 	(%) 	RB/STB 	Mbbls 	% 	Mbbls 
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	Mt. Messenger 	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	     Proved Undeveloped 	  	  	  	  	  	  	  	  
	             Cheal-A3X
      & A4 	160 	50 	18 	50 	1.22 	4,580 	15 	687 
	             Cheal-5
      & 6 	320 	30 	18 	50 	1.22 	5,496 	15 	825 
	  	  	  	  	  	  	  	  	  
	     Probable 	  	  	  	  	  	  	  	  
	             Cheal-A3X
      & A4 	160 	50 	18 	50 	1.22 	4,580 	5 	229 
	             Cheal-5
      & 6 	320 	30 	18 	50 	1.22 	5,496 	5 	275 
	             Cheal-7
      & 8 	320 	30 	18 	50 	1.22 	5,496 	20 	1,099 
	  	  	  	  	  	  	  	  	  
	     Possible 	  	  	  	  	  	  	  	  
	             Cheal-A3X
      & A4 	160 	50 	18 	50 	1.22 	4,580 	5 	229 
	             Cheal-5
      & 6 	320 	30 	18 	50 	1.22 	5,496 	5 	275 
	             Cheal-7
      & 8 	320 	30 	18 	50 	1.22 	5,496 	5 	275 
	             Cheal-9 	160 	26.5 	18 	50 	1.22 	2,427 	25 	607 

	Table 2 
Cheal, New
      Zealand 
Estimates of Reserves and Net Present Values
      
(As of April 30, 2006) 
	Oil
      Reserves 
	

Pool/Location
      

	

      
Original
      
Oil In Place 

(Mbbls) 	

      
Recovery
      
Factor 

(%) 	

      Original
      
Recoverable 
Oil 

(Mbbls) 	

      Cumulative 

      Production to 

      April 30,
      2006

(Mbbls) 	

      Gross
      
Remaining Oil 
Reserves
      

(Mbbls) 	

      Company
      
Working 
Interest 

(%) 	

      Company
      
Gross 
Oil 
Reserves 

(Mbbls)
    	

      Lessor
      
Royalties 
and 
Burdens 

(%)
    	

      Company
      
Net 
Oil 
Reserves 

(Mbbls)
    	Net Present Values 

      Before Taxes 

      

      (M$US) 
	0% 	5% 	10% 	15% 	20% 
	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	Mt. Messenger 	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	Proved Undeveloped 	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Cheal-A3X & A4 	4,580 	15.0 	687 	95 	592 	  	  	  	  	  	  	  	  	  
	 Cheal-5 & 6 	5,496 	15.0 	825 	- 	825 	  	  	  	  	  	  	  	  	  
	Total, Proved 	  	  	1,512 	95 	1,417 	30.5 	432 	AVR/APR 	372 	11,658 	9,497 	7,879 	6,633 	5,650 
	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	Probable 	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Cheal-A3X & A4 	4,580 	5.0 	229 	- 	229 	  	  	  	  	  	  	  	  	  
	 Cheal-5 & 6 	5,496 	5.0 	275 	- 	275 	  	  	  	  	  	  	  	  	  
	 Cheal-7 & 8 	5,496 	20.0 	1,099 	- 	1,099 	  	  	  	  	  	  	  	  	  
	 Total, Probable 	  	  	1,603 	- 	1,603 	30.5 	489 	AVR/APR 	406 	16,259 	12,124 	9,415 	7,552 	6,217 
	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	Total, 2P 	  	  	3,115 	95 	3,020 	30.5 	921 	AVR/APR 	778 	27,917 	21,621 	17,294 	14,185 	11,867 
	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	Possible 	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	 Cheal-A3X & A4 	4,580 	5.0 	229 	- 	229 	  	  	  	  	  	  	  	  	  
	 Cheal-5 & 6 	5,496 	5.0 	275 	- 	275 	  	  	  	  	  	  	  	  	  
	 Cheal-7 & 8 	5,496 	5.0 	275 	- 	275 	  	  	  	  	  	  	  	  	  
	 Cheal-9 	2,427 	25.0 	607 	- 	607 	  	  	  	  	  	  	  	  	  
	 Total, Possible 	  	  	1,386 	- 	1,386 	30.5 	423 	AVR/APR 	350 	15,123 	10,704 	8,058 	6,356 	5,195 
	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	Total, 3P 	  	  	4,501 	95 	4,406 	30.5 	1,344 	AVR/APR 	1,129 	43,040 	32,325 	25,352 	20,541 	17,062 

	Table 2 
Cheal, New
      Zealand 
Estimates of Reserves and Net Present
      Values 
(As of April 30, 2006) 

	Gas
      Reserves 	  	  	  	  	  	  	  	  	  	  	  
	Pool/Location
    	Producing
      Gas Oil Ratio 

       
scf (sales) / bbl 	Gross Remaining Sales
      Gas Reserves 

       
(MMcf) 	Company Working Interest
      

       
(%) 	Company Gross Sales
      Gas Reserves 

       
(MMcf)
    	Lessor Royalties and
      Burdens 

       
(%) 	Company Net Sales Gas
      Reserves 

       
(MMcf) 	Net Present Values 

      Before US Taxes 

      

      (M$US)
	0%
    	5%
    	10% 	15% 	20% 
	  	  	  	  	  	  	  	 
	Mt.
      Messenger 	  	  	  	  	  	  	 
	  	  	  	  	  	  	  	 
	Proved Undeveloped 	  	  	  	  	  	  	 
	 Cheal-A3X & A4 	- Producing GOR of 525 	  	  	  	  	  	 
	 Cheal-5 & 6 	increasing to 1,125 scf 	  	  	  	  	  	 
	Total, Proved 	(sales) per barrel- 	1,036 	30.5 	316 	AVR/APR 	272 	- Values are included with Oil Reserves - 
	  	  	  	  	  	  	  	 
	Probable 	  	  	  	  	  	  	 
	 Cheal-A3X & A4 	  	  	  	  	  	  	 
	 Cheal-5 & 6 	- Producing GOR of 525 	  	  	  	  	  	 
	 Cheal-7 & 8 	increasing to 1,125 scf 	  	  	  	  	  	 
	 Total, Probable 	(sales) per barrel- 	1,362 	30.5 	415 	AVR/APR 	346 	- Values are included with Oil Reserves - 
	  	  	  	  	  	  	  	 
	Total, 2P 	  	2398 	30.5 	731 	AVR/APR 	618 	- Values are included with Oil Reserves - 
	  	  	  	  	  	  	  	 
	Possible 	  	  	  	  	  	  	 
	 Cheal-A3X & A4 	  	  	  	  	  	  	 
	 Cheal-5 & 6 	  	  	  	  	  	  	 
	 Cheal-7 & 8 	- Producing GOR of 525 	  	  	  	  	  	 
	 Cheal-9 	increasing to 1,125 scf 	  	  	  	  	  	 
	 Total, Possible 	(sales) per barrel- 	1,242 	30.5 	379 	AVR/APR 	315 	- Values are included with Oil Reserves - 
	  	  	  	  	  	  	  	 
	Total, 3P 	  	3,640 	30.5 	1,110 	AVR/APR 	933 	- Values are included with Oil Reserves - 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	Constant Prices and
      Costs — Page 1 

Constant Prices and Costs 

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

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

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

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

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

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

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

Table: C-1

	TAG OIL LTD. 

      Summary of the Evaluation of the Company's P&NG Reserves 

      In the Cheal Area of New Zealand 

      (As of April 30, 2006) 

	

      
	Remaining Reserves 	Net Present Values 

      After Income Taxes (M$US) 
	  	Company 
	Gross 	Gross 	Net 	At 0% 	At 5.0% 	At 10.0% 	At 15.0% 
	Light/Medium Oil (Mbbl) 	  	  	  	  	  	  	  
	Proved Undeveloped 	1,417.0 	432.2 	365.8 	10,343 	8,072 	6,412 	5,163 
	   Total Proved 	1,417.0 	432.2 	365.8 	10,343 	8,072 	6,412 	5,163 
	   Total Probable 	1,603.0 	488.9 	401.6 	14,028 	10,285 	7,852 	6,193 
	   Total Possible 	1,385.5 	422.6 	346.5 	12,733 	8,916 	6,639 	5,179 
	     
         Total 	4,405.5 	1,343.7 	1,113.9 	37,104 	27,273 	20,903 	16,535 
	Solution Gas (MMcf) - values included with lt/med
      oil - 	  	  	  	  	  
	Proved Undeveloped 	1,036 	316 	267 	  	  	  	  
	   Total Proved 	1,036 	316 	267 	  	  	  	  
	   Total Probable 	1,362 	415 	341 	  	  	  	  
	   Total Possible 	1,242 	379 	311 	  	  	  	  
	     
         Total 	3,640 	1,110 	919 	  	  	  	  
	Corporate 	  	  	  	  	  	  	  
	Proved Undeveloped 	  	  	  	711 	675 	642 	611 
	   Total Proved 	  	  	  	711 	675 	642 	611 
	   Total Probable 	  	  	  	9 	5 	3 	1 
	   Total Possible 	  	  	  	-11 	-4 	-1 	-1 
	     
         Total 	  	  	  	709 	676 	643 	612 
	GRAND TOTAL (Mboe) 	  	  	  	  	  	  	  
	Proved Undeveloped 	1,589.7 	484.8 	410.3 	11,054 	8,748 	7,054 	5,773 
	   Total Proved 	1,589.7 	484.8 	410.3 	11,054 	8,748 	7,054 	5,773 
	   Total Probable 	1,830.0 	558.2 	458.5 	14,037 	10,289 	7,855 	6,194 
	   Total Possible 	1,592.5 	485.7 	398.2 	12,722 	8,912 	6,638 	5,179 
	     
         Total 	5,012.2 	1,528.7 	1,267.0 	37,813 	27,949 	21,546 	17,146 

 

Table: C-1A 

	  TAG OIL LTD.    
    
	Summary of the Evaluation of the Company's P&NG
      Reserves  
	 In the Cheal Area of New Zealand   
    
	 (As of April 30, 2006)

	  	Remaining Reserves 	 Net Present Values 
	  	  	Company 	Before Income Taxes (M$US) 
	  	Gross 	Gross 	Net 	At
      0% 	At
      5.0% 	At
      10.0% 	At
      15.0% 
	Light/Medium Oil (Mbbl) 	  	  	  	  	  	  	  
	Proved Undeveloped 	1,417.0 	432.2 	365.8 	17,724 	14,222 	11,659 	9,726 
	   Total Proved 	1,417.0 	432.2 	365.8 	17,724 	14,222 	11,659 	9,726 
	   Total Probable 	1,603.0 	488.9 	401.6 	23,955 	17,689 	13,621 	10,845 
	   Total Possible 	1,385.5 	422.6 	346.5 	21,640 	15,174 	11,320 	8,851 
	     
         Total 	4,405.5 	1,343.7 	1,113.9 	63,319 	47,084 	36,600 	29,421 
	Solution Gas (MMcf) - values included with lt/med
      oil - 	  	  	  	  	  
	Proved Undeveloped 	1,036 	316 	267 	  	  	  	  
	   Total Proved 	1,036 	316 	267 	  	  	  	  
	   Total Probable 	1,362 	415 	341 	  	  	  	  
	   Total Possible 	1,242 	379 	311 	  	  	  	  
	     
         Total 	3,640 	1,110 	919 	  	  	  	  
	GRAND TOTAL (Mboe) 	  	  	  	  	  	  	  
	Proved Undeveloped 	1,589.7 	484.8 	410.3 	17,724 	14,222 	11,659 	9,726 
	   Total Proved 	1,589.7 	484.8 	410.3 	17,724 	14,222 	11,659 	9,726 
	   Total Probable 	1,830.0 	558.2 	458.5 	23,955 	17,689 	13,621 	10,845 
	   Total Possible 	1,592.5 	485.7 	398.2 	21,640 	15,174 	11,320 	8,851 
	     
         Total 	5,012.2 	1,528.7 	1,267.0 	63,319 	47,084 	36,600 	29,421 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	 National Instrument
      51-101 

 National Instrument 51-101 

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

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

Forecast Prices and Costs 

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

Constant Prices and Costs 

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

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

Form 51-101F2 

Report on Reserves Data

  by Independent Qualified Reserves Evaluator or Auditor 

Report on Reserves Data 

To the Board of Directors of TAG Oil Ltd. (the “Company”): 

	1. 	
      We have evaluated the Company’s Reserves Data as at April
      30, 2006. The reserves data consist of the following:

	 	 	 	 
		(a) 	
      (i) 
	proved, proved plus probable, and proved plus probable
      plus possible oil and solution gas reserves estimated as at April 30, 2006
      using forecast prices and costs; and
	 	 	 	 
			(ii) 	
      the related estimated future net revenue; and

	 	 	 	 
		(b) 	
      (i) 
	proved oil and solution gas reserves quantities were
      estimated as at April 30, 2006 using constant prices and costs; and
	 	 	 	 
			(ii) 	
      the related estimated future net revenue.

	 	 	 	 
	2. 	
      The Reserves Data are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on the Reserves
      Data based on our evaluation.

	 	 	 	 
		
      We carried out our evaluation in accordance with
      standards set out in the Canadian Oil and Gas Evaluation Handbook (the
      “COGE Handbook”), prepared jointly by the Society of Petroleum Evaluation
      Engineers (Calgary Chapter) and the Canadian Institute of Mining,
      Metallurgy & Petroleum (Petroleum
Society).

	TAG Oil Ltd. 	- 2
  
	Sproule International Limited 	  

	3. 	
      Those standards require that we plan and perform an
      evaluation to obtain reasonable assurance as to whether the reserves data
      are free of material misstatement. An evaluation also includes assessing
      whether the reserves data are in accordance with principles and
      definitions presented in the COGE Handbook.

	 	 
	4. 	
      The following table sets forth the estimated future net
      revenue attributed to proved plus probable reserves, estimated using
      forecast prices and costs on a before tax basis and calculated using a
      discount rate of 10%, included in the reserves data of the Company
      evaluated by us as of April 30, 2006, and identifies the respective
      portions thereof that we have audited, evaluated and reviewed and reported
      on to the Company’s management and Board of
Directors:

	Independent
      
Qualified 
Reserves 
Evaluator or
      
Auditor 	Description
      
and Preparation Date of 
Evaluation Report 	Location
      
of 
Reserves 
(Country) 	Net Present Value of
      Future Net Revenue 
(10% Discount Rate) 
	Audited 
(M$US)
	Evaluated 
(M$US)
    	Reviewed 
(M$US)
    	Total 
(M$US)
  
	  	  	  	  	  	  	  
	Sproule 	Evaluation of the P&NG 	New 	  	  	  	  
	  	Reserves of 	Zealand 	  	  	  	  
	  	TAG Oil Ltd. 	  	  	  	  	  
	  	in the Cheal Area 	  	  	  	  	  
	  	of New Zealand 	  	  	  	  	  
	  	as of April 30, 2006, 	  	  	  	  	  
	  	prepared May 2006 	  	  	  	  	  
	  	  	  	  	  	  	  
	Total 	 
    	 
    	Nil 	17,294 	Nil 	17,294 

	5. 	
      In our opinion, the reserves data evaluated by us have,
      in all material respects, been determined and are presented in accordance
      with the COGE Handbook.

	 	 
	6. 	
      We have no responsibility to update the report referred
      to in paragraph 4 for events and circumstances occurring after its
      preparation date.

	 	 
	7. 	
      Because the reserves data are based on judgments
      regarding future events, actual results will vary and the variations may
      be material.

	TAG Oil Ltd. 	- 3
	 Sproule International Limited 	  

 

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

	    Table
      1       
	   NI
      51-101      
	 Summary of Oil and Gas
      Reserves    
	   as of Apr 30,
      2006      
	  Forecast Prices and
      Costs     
	Reserves 
	

	Light and Medium Oil
    	Heavy Oil 	Natural Gas 

      (non-associated & 
associated) 	Coalbed Methane 	Natural Gas Liquids 
	Reserve Category 
	Gross
      

      (Mbbl) 	Net
      

      (Mbbl) 	Gross
      

      (Mbbl) 	Net
      

      (Mbbl) 	Gross
      

      (MMcf) 	Net
      

      (MMcf)
      	Gross
      

      (MMcf)
      	Net

      (MMcf) 	Gross

      (Mbbl) 	Net
      

      (Mbbl) 
	Proved 	  	  	  	  	  	  	  	  	  	  
	Developed Producing 	0 	0 	             0
    	             
         0 	0 	0 	0 	0 	0 	0 
	Developed Non-Producing 	0 	0 	             0
    	             
         0 	0 	0 	0 	0 	0 	0 
	Undeveloped 	432 	372 	             0
    	             
         0 	316 	272 	0 	0 	0 	0 
	Total Proved 	432 	372 	             0
    	             
         0 	316 	272 	0 	0 	0 	0 
	Probable 	489 	406 	             0
    	             
         0 	415 	346 	0 	0 	0 	0 
	Possible 	423
    	350
    	 
                 0 	 
                     0 	379
    	315
    	0
    	0
    	0
    	0
    
	Total Proved Plus 	1344 	1129 	             0
    	             
         0 	1110 	933 	0 	0 	 0 	0 
	Probable Plus
      Possible 	  	  	  	  	  	  	  	  	  	  

	   Table
      2       
	   NI
      51-101      
	  Summary of Net Present Values
      of     
	   Future Net
      Revenue      
	   as of Apr 30,
      2006      
	  Forecast Prices and
      Costs     
	  	Net Present Values of Future Net
      Revenue 
	  	Before Income Taxes 

      Discounted at (%/Year) 	After Income Taxes 

      Discounted at (%/Year) 
	Reserves Category 
	0 

      (M$US) 	5 

      (M$US)
    	10 

      (M$US) 	15 

      (M$US) 	20 

      (M$US) 	0 

      (M$US) 	5 

      (M$US) 	10 

      (M$US) 	15 

      (M$US) 	20 

      (M$US) 
	Proved 	  	  	  	 	  	  	  	  	  	  
	Developed Producing 	0 	0 	 0 	0	0 	0 	0 	0 	0 	0 
	Developed Non-Producing 	0 	0 	0 	0	0 	0 	0 	0 	0 	0 
	Undeveloped 	11,658 	9,497 	7,879 	6,633 	5,650 	7,492 	5,970 	4,830 	3,952 	3,262 
	Total Proved 	11,658 	9,497 	7,879 	6,633 	5,650 	7,492 	5,970 	4,830 	3,952 	3,262 
	Probable 	16,259 	12,124 	9,415 	7,552 	6,217 	9,501 	7,009 	5,374 	4,250 	3,447 
	Possble 	15,123 	10,704 	8,058 	6,356 	5,195 	8,901 	6,287 	4,720 	3,711 	3,022 
	Total Proved Plus 	43,039 	32,325 	25,351 	20,541 	17,063 	25,894 	19,266 	14,923 	11,914 	9,732 
	Probable Plus
      Possible 	  	  	  	 	  	  	  	  	  	  

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

Notes: 

	
      	

	
      NPV of FNR include all resource income:

		
      	

	
      Sale of oil, gas, by-product reserves

		
      	

	
      Processing third party reserves

		
      	

	
      Other income

	 	 	 
	
      	

	
      Income Taxes

		
      	

	
      Includes all resource income

		
      	

	
      Apply appropriate income tax calculations

		
      	

	
      Include prior tax pools

	   Table
      3     
	   NI
      51-101     
	  Total Future Net
      Revenue    
	   Undiscounted    
  
	  as of Apr 30,
      2006     
	  Forecast Prices and Costs   
    
	  	  	  	  	  	  	Future 	  	Future 
	  	  	  	  	  	  	Net 	  	Net 
	  	  	  	  	  	Well 	Revenue 	  	Revenue 
	  	  	  	Opera- 	Develop- 	Abandon- 	Before 	  	After 
	  	  	  	ting 	ment 	ment / 	Income 	Income 	Income 
	Reserves Category 	Revenue 	Royalties 	Costs 	Costs 	Other 	Taxes 	Taxes 	Taxes 
	  	(M$US) 	(M$US) 	(M$US) 	(M$US) 	Costs 	(M$US) 	(M$US) 	(M$US) 
	  	  	  	  	  	(M$US) 	  	  	  
	  	  	  	  	  	  	  	  	  
	Proved 	23,156 	3,146 	     4,517 	3,759 	76 	     11,658 	4,165 	7,492 
	  	  	  	  	  	  	  	  	  
	Proved Plus Probable 	48,450 	7,365 	     7,842 	5,205 	121 	     27,916 	10,923 	     16,993 
	  	  	  	  	  	  	  	  	  
	Proved Plus Probable 	  	  	  	  	  	  	  	  
	Plus Possible 	70,587 	11,097 	   10,707 	5,596 	147 	     43,039 	17,145 	     25,894 

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

	 Table 4  
	 NI 51-101  
	 Net Present Value of Future Net
      Revenue  
	 by Production Group  
	 as of Apr 30, 2006  
	 Forecast Prices and Costs  
	  	  	Future Net Revenue 
	  	  	Before Income Taxes 
	Reserves Category 	Production Group 	(Discounted at 
	  	  	10%/Year) 
	  	  	(M$US) 
	Proved 	Light and Medium Crude Oil (including solution gas and associated
      by-products) 	7,879 
	  	Heavy Oil (including solution gas and associated by-products)
    	0 
	  	Natural Gas (including associated by-products) 	0 
	  	Coalbed Methane (including
      associated by-products) 	0 
	  	  	  
	Proved Plus 	  	  
	Probable 	Light and Medium Crude Oil (including solution gas and associated
      by-products) 	17,294 
	  	Heavy Oil (including solution gas and associated by-products)
    	0 
	  	Natural Gas (including associated by-products) 	0 
	  	Coalbed Methane (including
      associated by-products) 	0 
	  	  	  
	Proved Plus 	  	  
	Probable Plus 	Light and Medium Crude Oil (including solution gas and associated
      by-products) 	25,351 
	Possible 	Heavy Oil (including solution gas and associated by-products)
    	0 
	  	Natural Gas (including associated by-products) 	0 
	  	Coalbed Methane (including associated by-products) 	0 

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

	Table 5 
 NI 51-101 
 Summary
      of Pricing and 
 Inflation Rate Assumptions 
 As of
      April 30, 2006 
 
 Forecast Prices and Costs 
	Year
      
	WTI Cushing a 
 Oklahoma
      
 ($US/bbl) 
	Cheal 
 Natural Gas b
      
 ($US/Mcf) 
	Inflation
      c 
 Rate 
 (%/Year) 

	 	Historical 	  	  	  	 
	             
           2000 	30.30 	  	   1.5 
	             
           2001 	25.94 	  	   2.0 
	             
           2002 	26.09 	  	   2.7 
	             
           2003 	31.14 	  	   2.5 
	             
           2004 	41.42 	  	   1.3 
	             
           2005 	56.46 	  	   1.6 
	  	  	  	  
	Forecast 	  	  	  
	             
           2006 (8 mos) 	69.81 	2.70 	   2.3 
	             
           2007 	70.56 	2.70 	   2.5 
	             
           2008 	58.59 	2.70 	   2.5 
	             
           2009 	50.19 	2.74 	   2.5 
	             
           2010 	47.76 	2.78 	   1.5 
	             
           2011 	48.48 	2.82 	   1.5 
	             
           2012 	49.20 	2.86 	   1.5 
	             
           2013 	49.94 	2.91 	   1.5 
	             
           2014 	50.69 	2.95 	   1.5 
	             
           2015 	51.45 	3.00 	   1.5 
	             
           2016 	52.22 	3.04 	   1.5 
	             
           2017 	53.01 	3.09 	   1.5 
	 Escalation rate of 1.5% thereafter  

Note: 

	a. 	
      40 degrees API, 0.4% sulphur

	b. 	
      Incorporates a heating value of 1,150 Btu’s per
    scf.

	c. 	
      Inflation from 2008 dollars to 2009 dollars is 2.5
      percent.

	Table 6 
 NI 51-101 

      Summary of Oil and Gas Reserves 
 as of Apr 30, 2006 

      Constant Prices and Costs 

	Reserves 	  	  	  	  	  	  	  	  	  	  
	  	Light and Medium 
 Oil
    	       Heavy Oil
    	Natural Gas 

      (non-associated & 
 associated) 	Coalbed Methane 	Natural Gas Liquids 
	Reserve Category 
	Gross 
 (Mbbl) 	Net 
 (Mbbl) 	Gross 
 (Mbbl) 	Net 
 (Mbbl) 	Gross 
 (MMcf) 	Net 
 (MMcf)	Gross 
 (MMcf)	Net 
 (MMcf) 	Gross 
 (Mbbl) 	Net 
 (Mbbl) 
	Proved 	  	  	  	  	  	  	  	  	  	  
	Developed Producing 	0 	0 	0 	0 	0 	0 	0 	0 	0 	0 
	Developed Non-Producing 	0 	0 	0 	0 	0 	0 	0 	0 	0 	0 
	Undeveloped 	432 	366 	0 	0 	316 	267 	0 	0 	0 	0 
	Total Proved 	432 	366 	0 	0 	316 	267 	0 	0 	0 	0 
	Probable 	489 	402 	0 	0 	415 	341 	0 	0 	0 	0 
	Possible 	423 	347 	0 	0 	379 	311 	0 	0 	0 	0 
	Total Proved Plus 	1344 	1114 	0 	0 	1110 	919 	0 	0 	0 	0 
	Probable Plus Possible
    	  	  	  	  	  	  	  	  	  	  

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

	    Table
      7      
	    NI
      51-101      
	  Summary of Net Present Values
      of    
	   Future Net
      Revenue     
	   as of Apr 30,
      2006     
	   Constant Prices and
      Costs     
	  	Net Present Values of Future Net
      Revenue 
	  	Before Income Taxes 

      Discounted at (%/Year) 	After Income Taxes 

      Discounted at (%/Year) 
	Reserves
    	0 	5 	10 	15	   20 	0 	5 	   10 	   15 	   20 
	Category
    	(M$US) 	(M$US) 	(M$US) 	(M$US)  	(M$US) 	(M$US) 	(M$US) 	(M$US) 	(M$US) 	(M$US) 
	Proved 	  	  	  	  	  	  	  	  	  	  
	Developed 	0 	0 	0 	0 	0 	0 	0 	0 	0 	0 
	Producing 	  	  	  	  	  	  	  	  	  	  
	Developed 	0 	0 	0 	0 	0 	0 	0 	0 	0 	0 
	Non-Producing 	  	  	  	  	  	  	  	  	  	  
	Undeveloped 	17,724 	14,222 	11,659 	9,726 	8,229 	11,054 	8,748 	7,054 	5,773 	4,781 
	Total Proved 	17,724 	14,222 	11,659 	9,726 	8,229 	11,054 	8,748 	7,054 	5,773 	4,781 
	Probable 	23,955 	17,689 	13,621 	10,845 	8,869 	14,037 	10,289 	7,855 	6,194 	5,013 
	Possible 	21,640 	15,174 	11,320 	8,851 	7,170 	12,722 	8,912 	6,638 	5,179 	4,185 
	Total Proved 	63,319 	47,084 	36,600 	29,421 	24,268 	37,813 	27,949 	21,546 	17,146 	13,980 
	Plus Probable 	  	  	  	  	  	  	  	  	  	  
	Plus Possible 	  	  	  	  	  	  	  	  	  	  

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

Notes: 

	
      	

	
      NPV of FNR include all resource income:

		
      	

	
      Sale of oil, gas, by-product reserves

		
      	

	
      Processing third party reserves

		
      	

	
      Other income

	 	 	 
	
      	

	
      Income Taxes

		
      	

	
      Includes all resource income

		
      	

	
      Apply appropriate income tax calculations

		
      	

	
      Include prior tax pools

	   Table
      8     
	   NI
      51-101     
	  Total Future Net
      Revenue    
	   Undiscounted    
  
	  as of Apr 30,
      2006     
	  Constant Prices and Costs   
    
	  	  	  	  	  	  	Future 	  	Future 
	  	  	  	  	  	  	Net 	  	Net 
	  	  	  	  	  	Well 	Revenue 	  	Revenue 
	  	  	  	Opera- 	Develop- 	Abandon- 	Before 	  	After 
	  	  	  	ting 	ment 	ment / 	Income 	Income 	Income 
	   Reserves Category 	Revenue 	Royalties 	Costs 	Costs 	Other 	Taxes 	Taxes 	Taxes 
	  	(M$US) 	(M$US) 	(M$US) 	(M$US) 	Costs 	(M$US) 	(M$US) 	(M$US) 
	  	  	  	  	  	(M$US) 	  	  	  
	  	  	  	  	  	  	  	  	  
	   Proved 	30,194 	4,641 	     4,009 	3,759 	61 	     17,724 	6,669 	     11,054    
	  	  	  	  	  	  	  	  	  
	   Proved Plus Probable 	64,508 	10,766 	     6,802 	5,170 	92 	     41,679 	16,587 	     25,092    
	  	  	  	  	  	  	  	  	  
	   Proved Plus Probable 	  	  	  	  	  	  	  	  
	   Plus Possible 	94,220 	16,118 	     9,126 	5,551 	107 	     63,319 	25,505 	     37,813    

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

	 Table 9  
	 NI 51-101  
	 Net Present Value of Future Net
      Revenue  
	 by Production Group  
	 as of Apr 30, 2006  
	 Constant Prices and Costs  
	  	  	Future Net Revenue 
	  	  	Before Income Taxes 
	Reserves Category 	Production Group 	(Discounted at 
	  	  	10%/Year) 
	  	  	(M$US) 
	Proved 	Light and Medium Crude Oil (including solution gas and associated
      by-products) 	11,659 
	  	Heavy Oil (including solution gas and associated by-products)
    	0 
	  	Natural Gas (including associated by-products) 	0 
	  	Coalbed Methane (including
      associated by-products) 	0 
	  	  	  
	Proved Plus 	  	  
	Probable 	Light and Medium Crude Oil (including solution gas and associated
      by-products) 	25,280 
	  	Heavy Oil (including solution gas and associated by-products)
    	0 
	  	Natural Gas (including associated by-products) 	0 
	  	Coalbed Methane (including
      associated by-products) 	0 
	  	  	  
	Proved Plus 	  	  
	Probable Plus 	Light and Medium Crude Oil (including solution gas and associated
      by-products) 	36,600 
	Possible 	Heavy Oil (including solution gas and associated by-products)
    	0 
	  	Natural Gas (including associated by-products) 	0 
	  	Coalbed Methane (including associated by-products) 	0 

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

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

Note: 

	a. 	 40 degrees API, 0.4% sulphur

	b. 	 Incorporates a heating value of 1,150 Btu’s per
        scf.

 Figure 1

 

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

 Figure 2

 

 Cheal Field – Mt. Messenger Time
  Structure

 Figure 3

   

 

 

    

 

 APPENDIX A 

 RESERVES DEFINITIONS 

	 Appendix A —
      Page 1 

Appendix A — Definitions 

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

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

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

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

	
1. 		
Proved Reserves

	
	 	 
		
Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

	
	 	 
	
2. 		
Probable Reserves

	
	 	 
		
Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated
proved plus probable reserves.

	
	 	 
	
3. 		
Possible Reserves

	
	 	 
		
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable
plus possible reserves.

	

	 Appendix A —
      Page 2 

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

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

	
4. 		
Developed Reserves

	
	 	 
		
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g., when compared to the cost
of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and non-producing.

	
	 	 
	
5. 		
Developed Producing Reserves

	
	 	 
		
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut in, they must have previously been
on production, and the date of resumption of production must be known with reasonable certainty.

	
	 	 
	
6. 		
Developed Non-Producing Reserves

	
	 	 
		
Developed non-producing reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.

	
	 	 
	
7. 		
Undeveloped Reserves

	
	 	 
		
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They
must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.

	
	 	 
		
In multi-well pools, it may be appropriate to allocate total pool reserves between the developed and undeveloped categories or to subdivide the developed reserves for the pool between developed producing and developed
non-producing. This allocation should be based on the estimator’s assessment as to the reserves that will be recovered from specific wells, facilities, and completion intervals in the pool and their respective development and production
status.

	

	8. 	
      Levels of Certainty for Reported
Reserves

	 	 	 
		
      The qualitative certainty levels contained in the
      definitions in Sections 1, 2 and 3 are applicable to individual reserves
      entities, which refers to the lowest level at which reserves estimates are
      made, and to reported reserves, which refers to the highest level sum of
      individual entity estimates for which reserve estimates are
made.

	 	 	 
		
      Reported total reserves estimated by deterministic or
      probabilistic methods, whether comprised of a single reserves entity or an
      aggregate estimate for multiple entities, should target the following
      levels of certainty under a specific set of economic conditions:

	 	 	 
		a. 	
      There is a 90% probability that at least the estimated
      proved reserves will be recovered.

	 	 	 
		b. 	
      There is a 50% probability that at least the sum of the
      estimated proved reserves plus probable reserves will be
  recovered.

	 	 	 
		c. 	
      There is a 10% probability that at least the sum of the
      estimated proved reserves plus probable reserves plus possible reserves
      will be recovered.

	 	 	 
		
      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 Reserves are gas reserves remaining
      after deducting surface losses due to process shrinkage and raw gas used
      as lease fuel.

	 	 	 
	10. 	
      Remaining Recoverable Reserves are the total
      remaining recoverable reserves associated with the acreage in which the
      Company has an interest.

	 	 	 
	11. 	
      Company Gross Reserves are the Company’s working
      interest share of the remaining reserves, before deduction of any
      royalties.

	
12. 		
Company Net Reserves are 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 Revenue is 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 Value is defined as the price at which a purchaser seeking an economic and commercial return on investment would be willing to buy, and a vendor would be willing to sell, where neither is under compulsion to buy
or sell and both are competent and have reasonable knowledge of the facts.

	
	 	 
	
15. 		
Barrels of Oil Equivalent (BOE) Reserves – BOE is the sum of the oil reserves, plus the gas reserves divided by a factor of 6, plus the natural gas liquid reserves, all expressed in barrels or thousands of barrels.

	

 APPENDIX B 

 ABBREVIATIONS, UNITS AND CONVERSION FACTORS 

	Appendix B —
      Page 1 

Appendix B — Abbreviations, Units and Conversion Factors

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

Abbreviations 

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

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

Imperial and Metric Units 

	Imperial Units
    	 	Metric Units 
	M (103 ) 	one thousand 	Prefixes 	k (103 ) 	one thousand 
	MM (106 ) 	Million 	  	M (106 ) 	million 
	B (109 ) 	one billion 	  	T (1012 ) 	one billion 
	T (1012 ) 	one trillion 	  	E (1018 ) 	one trillion 
	  	  	  	G (109
      ) 	one milliard
    
	in. 	Inches 	Length 	cm 	centimetres 
	ft 	Feet 	  	m 	metres 
	mi 	Mile 	  	km 	kilometres 
	ft2 	square feet 	Area 	m2 	square metres 
	ac 	Acres
    	  	ha 	hectares 
	cf or ft3 	cubic feet 	Volume 	m3 	cubic metres 
	scf 	Standard cubic feet 	  	  	  
	gal 	Gallons 	  	L 	litres 
	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 	  	m3 	cubic metre 
	Mbbl 	Thousand barrels 	  	  	  
	stb 	stock tank barrel 	  	stm3 	stock tank cubic metres 
	bbl/d 	barrels per day 	  	m3 /d 	cubic metre per day 
	bbl/mo
    	barrels per month 	  	  	  
	Btu 	British thermal units 	Energy 	J 	joules 
	  	  	  	MJ/m3 	megajoules per cubic metre (106 )
    
	  	  	  	TJ/d 	terajoule per day (1012 ) 
	oz 	ounce 	Mass 	g 	gram 
	lb 	pounds 	  	kg 	kilograms 
	ton 	ton 	  	t 	tonne 
	lt 	long tons 	  	  	  
	Mlt 	thousand long tons 	  	  	  
	psi 	pounds per square inch 	Pressure 	Pa 	pascals 
	  	  	  	kPa 	kilopascals (103 ) 
	psia 	pounds per square inch absolute 	  	  	  
	psig 	pounds
      per square inch gauge 	  	  	  
	°F 	degrees Fahrenheit 	Temperature 	°C 	degrees Celsius 
	°R 	  	  	  	  
	  	degrees Rankine 	  	K 	Kelvin
    
	M$ 	thousand dollars 	Dollars 	k$ 	thousand dollars 

Imperial and Metric Units (Cont’d) 

	Imperial Units
         	 
    	Metric Units
           
	sec 	second 	Time 	s 	second 
	min 	minute 	  	min 	minute 
	hr 	hour 	  	h 	hour 
	day 	day 	  	d 	day 
	wk 	week 	  	  	week 
	mo 	month 	  	  	month 
	yr 	year 	  	a 	annum
    

Conversion Tables 

	Conversion Factors
      — Metric to Imperial 
	  	  	  
	cubic metres (m3 ) (@ 15°C) 	x 6.29010 	= barrels (bbl) (@ 60°F), water 
	m3 (@ 15°C) 	x 6.3300 	= bbl (@ 60°F), Ethane 
	m3 (@ 15°C) 	x 6.30001 	= bbl (@ 60°F), Propane 
	m3 (@ 15°C) 	x 6.29683 	= bbl (@ 60°F), Butanes 
	m3 (@ 15°C)
    	x 6.29287
    	= bbl
      (@ 60°F), oil, Pentanes Plus 
	m3 (@ 101.325 kPaa, 15°C) 	x 0.0354937 	= thousands of cubic feet (Mcf) (@ 14.65 psia,
      60°F) 
	1,000 cubic metres (103 m3 ) (@ 101.325
      kPaa, 15°C) 	x 35.49373 	= Mcf (@ 14.65 psia, 60°F) 
	hectares (ha) 	x 2.4710541 	= acres 
	1,000 square metres (103 m2 ) 	x 0.2471054 	= acres 
	10,000 cubic metres
      (ha . m) 	x 8.107133
    	= acre
      feet (ac-ft) 
	m3 /103 m3 (@ 101.325 kPaa,
      15° C) 	x 0.0437809 	= Mcf/Ac.ft. (@ 14.65 psia, 60°F) 
	joules (j) 	x 0.000948213 	= Btu 
	megajoules per cubic metre (MJ/m3 ) (@ 101.325 kPaa,
    	x 26.714952 	= British thermal units per standard cubic foot
      (Btu/scf) 
	15°C) 	  	(@ 14.65 psia, 60°F) 
	dollars per gigajoule ($/GJ) 	x 1.054615 	= $/Mcf (1,000 Btu gas) 
	metres (m) 	x 3.28084
    	= feet
      (ft) 
	kilometres (km) 	x 0.6213712 	= miles (mi) 
	dollars per 1,000 cubic metres ($/103 m3 )
    	x 0.0288951 	= dollars per thousand cubic feet ($/Mcf) (@ 15.025
      psia) B.C. 
	($/103 m3 ) 	x 0.02817399 	= $/Mcf (@ 14.65 psia) Alta. 
	dollars per cubic metre ($/m3 ) 	x 0.158910 	= dollars per barrel ($/bbl) 
	gas/oil ratio (GOR)
      (m3 /m3 ) 	x 5.640309
    	= GOR
      (scf/bbl) 
	kilowatts (kW) 	x 1.341022 	= horsepower 
	kilopascals (kPa) 	x 0.145038 	= psi 
	tonnes (t) 	x 0.9842064 	= long tons (LT) 
	kilograms (kg) 	x 2.204624 	= pounds (lb) 
	litres (L) 	x 0.2199692
    	= gallons
      (Imperial) 
	litres (L) 	x 0.264172 	= gallons (U.S.) 
	cubic metres per million cubic metres (m3 /106
      m3 ) (C3 ) 	x 0.177496 	= barrels per million cubic feet (bbl/MMcf) (@
      14.65 psia) 
	m3 /106 m3 (C4
      ) 	x 0.1774069 	= bbl/MMcf (@ 14.65 psia) 
	m3 /106 m3 (C5+
      ) 	x 0.1772953 	= bbl/MMcf (@ 14.65 psia) 
	tonnes per million
      cubic metres (t/106 m3 ) (sulphur) 	x 0.0277290
    	= LT/MMcf
      (@ 14.65 psia) 
	millilitres per cubic meter (mL/m3 ) (C5+
      ) 	x 0.0061974 	= gallons (Imperial) per thousand cubic feet (gal
      (Imp)/Mcf) 
	(mL/m3 ) (C5+ ) 	x 0.0074428 	= gallons (U.S.) per thousand cubic feet (gal (U.S.)/Mcf)
    
	Kelvin (K) 	x 1.8 	= degrees Rankine (°R) 
	millipascal seconds
      (mPa . s) 	x 1.0
    	= centipoise
    

Conversion Tables (Cont’d) 

	Conversion Factors — Imperial to Metric 
	  	  	  
	barrels (bbl) (@ 60°F) 	x 0.15898 	= cubic metres (m3 ) (@ 15°C), water 
	bbl (@ 60°F) 	x 0.15798 	= m3 (@ 15°C), Ethane 
	bbl (@ 60°F) 	x 0.15873 	= m3 (@ 15°C), Propane 
	bbl (@ 60°F) 	x 0.15881 	= m3 (@ 15°C), Butanes 
	bbl (@ 60°F)
    	x 0.15891
    	= m3 (@
      15°C), oil, Pentanes Plus 
	thousands of cubic feet (Mcf) (@ 14.65 psia, 60°F) 	x 28.17399 	= m3 (@ 101.325 kPaa, 15°C) 
	Mcf (@ 14.65 psia, 60°F) 	x 0.02817399 	= 1,000 cubic metres (103 m3 ) (@ 101.325
      kPaa, 15°C) 
	acres 	x 0.4046856 	= hectares (ha) 
	acres 	x 4.046856 	= 1,000 square metres (103 m2 ) 
	acre feet (ac-ft)
    	x 0.123348
    	= 10,000 cubic metres
      (104 m3 ) (ha . m) 
	Mcf/ac-ft (@ 14.65 psia, 60°F) 	x 22.841028 	= 103 m3 /m3 (@ 101.325 kPaa,
      15°C) 
	Btu 	x 1054.615 	= joules (J) 
	British thermal units per standard cubic foot (Btu/Scf) (@
      14.65 psia, 	x 0.03743222 	= megajoules per cubic metre (MJ/m3 ) (@ 101.325
      kPaa, 
	60°F) 	  	15°C) 
	$/Mcf (1,000 Btu gas) 	x 0.9482133 	= dollars per gigajoule ($/GJ) 
	$/Mcf (@ 14.65 psia,
      60°F) Alta. 	x 35.49373
    	= $/103 m3
      (@ 101.325 kPaa, 15°C) 
	$/Mcf (@ 15.025 psia, 60°F), B.C. 	x 34.607860 	= $/103 m3 (@ 101.325 kPaa, 15°C)
    
	feet (ft) 	x 0.3048 	= metres (m) 
	miles (mi) 	x 1.609344 	= kilometres (km) 
	$/bbl 	x 6.29287 	= $/m3 (average for 30°-50° API) 
	GOR (scf/bbl) 	x 0.177295
    	= gas/oil ratio (GOR)
      (m3 /m3 ) 
	horsepower 	x 0.7456999 	= kilowatts (kW) 
	psi 	x 6.894757 	= kilopascals (kPa) 
	long tons (LT) 	x 1.016047 	= tonnes (t) 
	pounds (lb) 	x 0.453592 	= kilograms (kg) 
	gallons (Imperial)
    	x 4.54609
    	= litres (L) (.001
      m3 ) 
	gallons (U.S.) 	x 3.785412 	= litres (L) (.001 m3 ) 
	barrels per million cubic feet (bbl/MMcf) (@ 14.65 psia) (C3
      ) 	x 5.6339198 	= cubic metres per million cubic metres (m3 /106
      m3 ) 
	bbl/MMcf (C 4) 	x 5.6367593 	= (m3 /106 m3 ) 
	bbl/MMcf (C 5+) 	x 5.6403087 	= (m3 /106 m3 ) 
	LT/MMcf (sulphur)
    	x 36.063298
    	= tonnes per million
      cubic metres (t/106 m3 ) 
	gallons (Imperial) per thousand cubic feet (gal (Imp)/Mcf)
      (C 5+) 	x 161.3577 	= millilitres per cubic meter (mL/m3 ) 
	gallons (U.S.) per thousand cubic feet (gal (U.S.)/Mcf) (C5+
      ) 	x 134.3584 	= (mL/m3 ) 
	degrees Rankine (°R) 	x 0.555556 	= Kelvin (K) 
	centipoises 	x 1.0
    	= millipascal seconds
      (mPa . s)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]