Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Exhibit 4.6

THESE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR
THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (AS DEFINED IN
REGULATION S UNDER THE U.S. SECURITIES ACT) UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. 

TAG OIL LTD.
SUBSCRIPTION AGREEMENT FOR COMMON
SHARES
(U.S. Subscription Agreement) 

	TO: 	TAG OIL LTD. 
	 	 
	AND TO: 	CANACCORD CAPITAL CORPORATION (the
      “Underwriter”) 
	 	 
	AND TO: 	CANACCORD CAPITAL CORPORATION (USA), INC.
      (the “U.S. Agent”) 

The undersigned (the “Subscriber”) hereby irrevocably
subscribes for and agrees to purchase through the U.S. Agent from TAG Oil Ltd.
(the “Corporation”) that number of Common Shares of the Corporation (the
“Common Shares”) set out on page 2 at a price of $0.75 per Common Share
(the “Subscription Price”) for the aggregate subscription price (the
“Aggregate Subscription Price”) set out on page 2. The Subscriber agrees
to be bound by the terms and conditions set forth in the attached “Terms and
Conditions of Subscription for Common Shares” including without limitation the
representations, warranties and covenants set forth in the applicable schedules
attached thereto. The Subscriber further agrees, without limitation, that the
Corporation, the Underwriter, the U.S. Agent and their respective counsel may
rely upon the Subscriber’s representations, warranties and covenants contained
in such documents. 

Please make sure that your subscription
includes: 

	 	1. 	
      one (1) signed copy of this Subscription Agreement
      with the information on pages 2, 3 and 4 completed;

	 	 	 
	 	2. 	
      a certified cheque or bank draft in an amount equal to
      the Aggregate Subscription Price, payable in Canadian funds to
      “Canaccord Capital Corporation” unless other acceptable payment
      arrangements have been made;

	 	 	 
	 	3. 	
      a properly completed and duly executed copy of the U.S.
      Accredited Investor Certificate in the form attached to this Subscription
      Agreement as Schedule “B”, and

	 	 	 
	 	4. 	
      if applicable, a properly completed and duly executed
      TSX-V Form 4C Corporate Placee Registration Form in the form attached to
      this Subscription Agreement as Schedule “D”.

Please deliver your subscription to: 

Canaccord Capital Corporation (USA), Inc.
Suite 3000, 161 Bay
Street
Toronto, ON M5J 2S1 

Attention: Jennifer Leung
Fax: (416) 869-7706 

2 

SUBSCRIPTION AND SUBSCRIBER INFORMATION
Please
print all information (other than signatures), as applicable, in the space
provided below

 

3 

OTHER INFORMATION TO BE COMPLETED BY EACH SUBSCRIBER 

	A. 	Corporate Placee or Investment Portfolio Manager
      Registration Form (Schedule “D”) 
	  	The Subscriber, if not an individual (i.e., a natural
      person), either [CHECK WHERE APPROPRIATE]: 
	  	
	 	
      has previously filed with the TSX Venture Exchange (the
      “TSX-V”) a Form 4C, Corporate Placee Registration Form, and represents and
      warrants that there has been no change to any of the information in the
      Corporate Placee Registration Form previously filed with the TSX-V up to
      the date of this Agreement; or 

	  	
	  	hereby delivers to the Corporation a completed
      Form 4C, Corporate Placee Registration Form, in the form attached hereto
      for filing with the TSX-V; and
	  	
       

	  	  
	B. 	Present Ownership of Securities of the Corporation
    
	  	The Subscriber either [CHECK APPROPRIATE ITEM]:
    
	  	  
	 	
      does not own, directly or indirectly, or exercise control
      or direction over, any common shares in the capital of the Corporation or
      securities convertible into common shares in the capital of the
      Corporation (excluding the Common Shares subscribed for herein); or
  

	  	 
	 	owns directly or indirectly, or exercises control
      or direction over, common shares in the capital of the Corporation and options,
      warrants and convertible securities entitling the Subscriber to acquire
      an additional common shares in the capital of the Corporation (excluding
      the Common Shares subscribed for herein). 
	  	
	C. 	Insider Status 
	  	The Subscriber either [CHECK IF APPROPRIATE]:
    
	  	  
	  	is NOT an “Insider” of the Corporation
      as defined in the Securities Act (British Columbia); 
	  	  
	  	is an “Insider” of the Corporation as
      defined in the Securities Act (British Columbia), namely: 

(a) a director or senior officer of the
Corporation; 
(b) a director or senior officer of a person that is itself an
insider or subsidiary of the Corporation; 
(c) a person that has 

(i) direct or indirect beneficial ownership
  of; 

  (ii) control or direction over; or 

  (iii) a combination of direct or indirect beneficial ownership of and of control
  or direction over

  securities of the Corporation carrying more than 10% of the voting rights attached
  to all the Corporation’s outstanding voting securities, excluding, for
  the purpose of the calculation of the percentage held, any securities held by
  the person as underwriter in the course of a distribution, or 

(d) the Corporation itself, if it has
purchased, redeemed or otherwise acquired any securities of its own issue, for
so long as it continues to hold those securities. 

4 

D. Member of “Pro Group”

The Subscriber either [CHECK IF APPROPRIATE]: 

	 	 is NOT a Member of the “Pro Group” as defined in the
      Rules of the TSX-V; or 
	 	 
	 	is a Member of the “Pro Group” as defined in the Rules of the
      TSX-V, namely:

1. Subject to subparagraphs (2), (3)
and (4), “Pro Group” includes, either individually or as a group: 

	 	(a) 	
      the member (i.e. a member of the TSX-V under its
      requirements);

	 	(b) 	
      employees of the member;

	 	(c) 	
      partners, officers and directors of the member;

	 	(d) 	
      affiliates of the member; and

	 	(e) 	
      associates of any parties referred to in subparagraphs
      (a) through (d).

2. The TSX-V may, in its discretion,
include a person or party in the Pro Group for the purposes of a particular
calculation where the TSX-V determines that the person is not acting at arm’s
length of the member; 

3. The TSX-V may, in its discretion,
exclude a person from the Pro Group for the purposes of a particular calculation
where the TSX-V determines that the person is acting at arm’s length to the
member; and 

4. The member may deem a person who would
  otherwise be included in the Pro Group pursuant to subparagraph (1) to be excluded
  from the Pro Group where the member determines that: (a) the person is an affiliate
  or associate of the member acting at arm’s length to the member; (b) the
  associate or affiliate has a separate corporate and reporting structure; (c)
  there are sufficient controls on information flowing between the member and
  the associate or affiliate; and (d) the member maintains a list of such excluded
  persons. 

(a) the person is an affiliate or associate
  of the member acting at arm’s length to the member; 

  (b) the associate or affiliate has a separate corporate and reporting structure;
  

  (c) there are sufficient controls on information flowing between the member
  and the associate or affiliate; and 

  (d) the member maintains a list of such excluded persons

5

TERMS AND CONDITIONS OF SUBSCRIPTION FOR
COMMON SHARES

PART 1 - INTERPRETATION 

	1.1 	Definitions 

     Whenever used in this
Subscription Agreement, unless there is something in the subject matter or
context inconsistent therewith, the following words and phrases shall have the
respective meanings ascribed to them as follows: 

“Accredited Investor” means an “accredited investor” as
defined in Rule 501(a) of Regulation D under the U.S. Securities Act. 

“Aggregate Subscription Price” has the meaning ascribed
to such term on the front page of this Agreement. 

“Business Day” means a day other than a Saturday, Sunday
or any other day on which the principal chartered banks located in Toronto or
Vancouver are not open for business. 

“Closing” shall have the meaning ascribed to such term
in Section 4.1. 

“Closing Date” shall have the meaning ascribed to such
term in Section 4.1. 

“Closing Time” shall have the meaning ascribed to such
term in Section 4.1. 

“Common Share” means a common share in the capital of
the Corporation as constituted as at the Closing Date. 

“Control Person” means a person, company or combination
of persons or companies described in clause (c) of the definition of
“distribution” in subsection 1(1) of the Securities Act (British
Columbia). 

“Corporation” means TAG Oil Ltd. and includes any
successor corporation to or of the Corporation. 

“Directed Selling Efforts” means “directed selling
efforts” as that term in defined in Regulation S adopted pursuant to the U.S.
Securities Act. Without limiting the foregoing, but for greater clarity, it
includes, subject to the exclusions from the definition of directed selling
efforts contained in Regulation S, any activity undertaken for the purpose of,
or that could reasonably be expected to have the effect of, conditioning the
market in the United States for the Common Shares, and includes the placement of
any advertisement in a publication with a general circulation in the United
States that refers to the offering of the Common Shares. 

“Foreign Private Issuer” shall have the meaning ascribed
to the term “foreign private issuer” as defined in Rule 405 of Regulation C
under the U.S. Securities Act. 

“Institutional Accredited Investor” means an Accredited
Investor that meets the criteria set forth in Rule 501(a)(1), (2), (3) and (7)
of Regulation D under the U.S. Securities Act. 

“Offering” means the offering of Common Shares pursuant
to this Subscription Agreement and the Underwriting Agreement. 

6

“person” means any individual (whether acting as an
executor, trustee, administrator, legal representative or otherwise),
corporation, firm, partnership, sole proprietorship, syndicate, joint venture,
trustee, trust, unincorporated organization or association, and pronouns have a
similar extended meaning. 

“Securities Laws” means, as applicable, the securities
laws, regulations, rules, rulings and orders in the United States and each of
the states of the United States, and each of the provinces and territories of
Canada, the applicable policy statements issued by the securities regulators in
the United States and each of the states of the United States and each of the
provinces of Canada, and the rules of the TSX-V. 

“Subscriber” means the subscriber for Common Shares as
set out on page 2 of this Subscription Agreement. 

“Subscription Agreement” means this subscription
agreement (including any schedules hereto) and any instrument amending this
Subscription Agreement; “hereof”, “hereto”, “hereunder”,
“herein” and similar expressions mean and refer to this Subscription
Agreement and not to a particular Part or Section; and the expression “Part” or
“Section” followed by a number means and refers to the specified Part or Section
of this Subscription Agreement. 

“Subscription Price” shall have the meaning ascribed to
such term on the front page of this Subscription Agreement. 

“Term Sheet” means the term sheet delivered to potential
purchasers of Common Shares, a copy of which is attached hereto as Schedule “A”.

“TSX-V” means the TSX Venture Exchange. 

“Underwriting Agreement” means the Underwriting
Agreement effective as of May 12, 2006 entered into between the Underwriter and
the Corporation in respect of the Offering. 

“Underwriter” means Canaccord Capital Corporation.

“United States” means the United States of America, its
territories and possessions, any State of the United States and the District of
Columbia. 

“U.S. Agent” means Canaccord Capital Corporation (USA),
Inc. 

“U.S. Person” means “U.S. person” as that term is
defined in Rule 902(k) of Regulation S under the U.S. Securities Act. 

“U.S. Securities Act” means the United States Securities
Act of 1933, as amended. 

	1.2 	Gender and Number 

     Words importing the singular
number only shall include the plural and vice versa, words importing the
masculine gender shall include the feminine gender. 

	1.3 	Currency 

     Unless otherwise specified, all
dollar amounts in this Subscription Agreement, including the symbol “$”,
are expressed in Canadian dollars. 

7 

	1.4 	Subdivisions, Headings and Table of
      Contents 

     The division of this Subscription
Agreement into Parts, Sections, Schedules and other subdivisions, the inclusion
of headings and the provision of a table of contents are for convenience of
reference only and shall not affect the construction or interpretation of this
Subscription Agreement. The headings in this Subscription Agreement are not
intended to be full or precise descriptions of the text to which they refer.
Unless something in the subject matter or context is inconsistent therewith,
references herein to an Part, Section, Subsection, paragraph, clause or Schedule
are to the applicable part, section, subsection, paragraph, clause or schedule
of this Subscription Agreement. 

PART 2 - SCHEDULES 

	2.1 	Description of Schedules

     The following are the Schedules
attached to and incorporated in this Subscription Agreement by reference and
deemed to be a part hereof: 

Schedule “A” Term Sheet
Schedule
“B” U.S. Accredited Investor Certificate
Schedule “C” Form of Declaration for
Removal of Legend
Schedule “D” Form 4C Corporate Placee Registration
Form
Schedule “E” Acknowledgment – Personal Information 

PART 3 - SUBSCRIPTION AND DESCRIPTION OF
COMMON SHARES

	3.1 	Subscription for the Common Shares
  

     The Subscriber hereby confirms
its irrevocable subscription for the number of Common Shares set out on page 2
hereof from the Corporation, on and subject to the terms and conditions set out
in this Subscription Agreement, for the Aggregate Subscription Price which is
payable as described in Part 4. 

	3.2 	Acceptance and Rejection of Subscription by
      the Corporation 

     The Subscriber acknowledges and
agrees that the Corporation reserves the right, in its sole absolute discretion,
to reject this subscription for Common Shares, in whole or in part, at any time
prior to the Closing Time. If this subscription is rejected in whole, any
cheques or other forms of payment delivered to the U.S. Agent representing the
Aggregate Subscription Price will be promptly returned to the Subscriber without
interest or deduction. If this subscription is accepted only in part, a cheque
representing any refund of the Aggregate Subscription Price for that portion of
the subscription for the Common Shares which is not accepted, will be promptly
delivered to the Subscriber without interest or deduction.

8 

PART 4 - CLOSING 

	4.1 	Closing 

     Delivery and sale of the Common
Shares and payment of the Aggregate Subscription Price will be completed (the
“Closing”) at the offices of the Underwriter’s counsel, Bennett Jones LLP, 4500
Bankers Hall East, 855 2nd Street SW, Calgary, Alberta T2P 4K7 at
8:00 a.m. (Calgary time) (the “Closing Time”) on June 1, 2006 or such
other place or date or time as the Corporation and the Underwriter may agree
(the “Closing Date”). If, prior to the Closing Time, the terms and
conditions contained in this Subscription Agreement and the Underwriting
Agreement have been complied with to the satisfaction of the Underwriter, or
waived by it, the Underwriter and the U.S. Agent shall deliver to the
Corporation all completed Subscription Agreements and payment of the Aggregate
Subscription Price for all of the Common Shares sold pursuant to the
Underwriting Agreement against delivery by the Corporation of certificates
representing the Common Shares and such other documentation as may be required
pursuant to this Subscription Agreement and the Underwriting Agreement. 

	4.2 	Authorization of the Underwriter and the
      U.S. Agent 

     The Subscriber irrevocably
authorizes the Underwriter and the U.S. Agent in their sole and absolute
discretion, to act as the Subscriber’s representative at the Closing, and hereby
appoints the Underwriter, with full power of substitution, as its true and
lawful attorney with full power and authority in the Subscriber’s place and
stead: 

(a) to receive certificates
representing the Common Shares, to execute in the Subscriber’s name and on its
behalf all closing receipts and required documents, to complete and correct any
errors or omissions in any form or document provided by the Subscriber in
connection with the subscription for the Common Shares and to exercise any
rights of termination contained in the Underwriting Agreement; 

(b) to extend such time periods and to
waive, in whole or in part, any representations, warranties, covenants or
conditions for the Subscriber’s benefit contained in this Subscription
Agreement, the Underwriting Agreement or any ancillary or related document; 

(c) to terminate this Subscription
Agreement if any condition precedent is not satisfied, in such manner and on
such terms and conditions as the Underwriter in its sole discretion may
determine; and 

(d) without limiting the generality of
the foregoing, to negotiate, settle, execute, deliver and amend the Underwriting
Agreement. 

PART 5 - REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

	5.1 	Representations and Warranties of the
      Corporation 

(a) By execution of this Subscription
Agreement, the Corporation hereby agrees with the Subscriber that the Subscriber
shall have the benefit of the representations and warranties made by the
Corporation to the Underwriter and the U.S. Agent as set forth in the
Underwriting Agreement. Such representations and warranties shall form an
integral part of this Subscription Agreement and shall survive the closing of
the purchase and sale of the Common Shares and shall 

9 

continue in full force and effect for
the benefit of the Subscriber in accordance with the Underwriting Agreement and
the Subscription Agreement. 

(b) The Corporation is a Foreign
Private Issuer. 

(c) No form of general solicitation or
general advertising (including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or
broadcast over radio or television or any seminar or meeting whose attendees had
been invited by general solicitation or general advertising) was used by the
Corporation or, to the best of its knowledge, any other person acting on behalf
of the Corporation, in respect of or in connection with the offer and sale of
the Common Shares in the United States or elsewhere or to citizens or residents
of the United States or elsewhere. Neither the Corporation nor any person
authorized to act on its behalf has sold or offered for sale any Common Shares,
or solicited any offers to buy any Common Shares thereby so as to cause the
issuance or sale of any of the Common Shares to be in violation of Section 5 of
the U.S. Securities Act, Canadian or other securities laws. The transactions
contemplated hereby, and conducted by the Underwriter and the U.S. Agent in
accordance with the terms and conditions of the Underwriting Agreement, are
exempt from the registration requirements of the U.S. Securities Act and all
other applicable securities laws, including Canadian securities laws, such
exemptions being based in part on the representations, warranties, statements,
and agreements contained herein and those of other subscribers contained in
similar agreements. None of the Corporation, its subsidiaries or any persons
acting on its or their behalf has engaged or will engage in any Directed Selling
Efforts. 

(d) The Corporation is not an open-end
investment company, closed-end investment company, unit investment or
face-amount certificate company that is or is required to be registered under
Section 8 of the United States Investment Company Act of 1940, as
amended. 

PART 6 - ACKNOWLEDGEMENTS, COVENANTS, REPRESENTATIONS
AND
WARRANTIES OF THE SUBSCRIBER 

	6.1 	Acknowledgements, Representations,
      Warranties and Covenants of the Subscriber 

     The Subscriber, on its own behalf
and, if applicable, on behalf of others for whom it is acting hereunder, hereby
represents and warrants, and covenants with, the Corporation, the U.S. Agent and
the Underwriter (and acknowledges that the Corporation, the U.S. Agent and the
Underwriter and their respective counsel are relying thereon) as follows: 

(a) The Subscriber is an Accredited
Investor (other than an Institutional Accredited Investor) acquiring the Common
Shares for its own account or an Institutional Accredited Investor acquiring the
Common Shares for its own account or for the account of another Accredited
Investor over which the Subscriber exercises sole investment discretion and as
to which the Subscriber has the authority to make the statements set forth in
this Subscription Agreement, in each case not with a view to, or for offer or
sale in connection with, any resale, distribution or other disposition of the
Common Shares in any transaction that would be in violation of the U.S.
Securities Act or applicable state securities laws. 

(b) The Common Shares have not been and
will not be registered under the U.S. Securities Act or any applicable state
securities laws, and the offer and sale of the Common Shares to the Subscriber
is being made in reliance on the exemption from registration provided by
sections 4(2) 

10 

and 4(6) of the U.S. Securities Act and
by Rule 506 of Regulation D promulgated under the U.S. Securities Act, and
exemptions from registration under applicable state securities laws. 

(c) The Subscriber has properly
completed, executed and delivered to the Corporation a U.S. Accredited Investor
Certificate in the form set forth in Schedule “B” and the information contained
therein is true and correct. 

(d) The Subscriber is aware that the
Common Shares have not been and will not be registered under the U.S. Securities
Act, or the securities legislation of any state and that the Common Shares may
not be offered or sold, directly or indirectly, in the United States without
registration under the U.S. Securities Act or compliance with the requirements
of an exemption from registration and it acknowledges that the Corporation has
no obligation to file, and no present intention of filing, a registration
statement under the U.S. Securities Act in respect of the Common Shares. 

(e) The execution and delivery of this
Subscription Agreement, the performance and compliance with the terms hereof,
the subscription for the Common Shares and the completion of the transactions
described herein by the Subscriber will not result in any breach of, or be in
conflict with or constitute a default under, or create a state of facts which,
after notice or lapse of time, or both, would constitute a default under any
term or provision of the constating documents, by-laws or resolutions of the
Subscriber, the Securities Laws or any other laws applicable to the Subscriber,
any agreement to which the Subscriber is a party or by which it is bound, or any
judgment, decree, order, statute, rule or regulation applicable to the
Subscriber. 

(f) If the Subscriber is not
subscribing for the Common Shares as principal, it acknowledges that the
Corporation may be required by law to disclose to certain regulatory authorities
the identity of each beneficial purchaser for the Common Shares for whom it is
acting. 

(g) In the case of a subscription for
the Common Shares by the Subscriber acting as trustee or agent (including, for
greater certainty, a portfolio manager or comparable adviser) for a principal,
the Subscriber is duly authorized to execute and deliver this Subscription
Agreement and all other necessary documentation in connection with such
subscription on behalf of each such beneficial person, each of whom is
subscribing as principal for its own account, not for the benefit of any other
person, for investment only and not with a view to the resale or distribution of
the Common Shares, and this Subscription Agreement has been duly authorized,
executed and delivered by or on behalf of and constitutes a legal, valid and
binding obligation of, such principal. 

(h) In the case of a subscription for
the Common Shares by the Subscriber acting as principal, this Subscription
Agreement has been duly authorized, executed and delivered by, and constitutes a
legal, valid and binding obligation of, the Subscriber. This Subscription
Agreement is enforceable in accordance with its terms against the Subscriber and
any beneficial purchasers on whose behalf the Subscriber is acting. 

(i) If the Subscriber, or (if
applicable) any beneficial purchaser for whom the Subscriber is contracting
hereunder, is: 

(i) a corporation, the Subscriber has
been duly incorporated and is validly subsisting under the laws of its
jurisdiction of incorporation and has all requisite legal and corporate power
and authority to execute and deliver this Subscription Agreement, to subscribe
for the Common Shares as contemplated herein and to carry out and perform its
obligations 

11 

under the terms of this Subscription
Agreement and has obtained all necessary approvals in respect thereof; or 

(ii) a partnership, syndicate or other
form of unincorporated organization, the Subscriber has the necessary power and
authority to execute and deliver this Subscription Agreement and to observe and
perform its covenants and obligations hereunder and has obtained all necessary
approvals in respect thereof. 

(j) Other than the Underwriter and the
U.S. Agent, there is no person acting or purporting to act in connection with
the transactions contemplated herein who is entitled to any brokerage or
finder’s fee. If any person establishes a claim that any fee or other
compensation is payable in connection with this subscription for the Common
Shares, the Subscriber covenants to indemnify and hold harmless the Corporation,
the Underwriter and the U.S. Agent with respect thereto and with respect to all
costs reasonably incurred in the defense thereof. 

(k) The Subscriber is not, with respect
to the Corporation or any of its affiliates, a Control Person. 

(l) If required by applicable
securities legislation, policy, order or the Corporation, the Subscriber will
execute, deliver and file or assist the Corporation in filing such reports,
undertakings and other documents with respect to the issue of the Common Shares
as may be required by any securities commission, stock exchange or other
regulatory authority. 

(m) The Subscriber, and each beneficial
person for whom it is contracting hereunder, have been advised to consult their
own legal advisors with respect to trading in the Common Shares and with respect
to the resale restrictions imposed by the Securities Laws of the state in which
the Subscriber was offered, and agreed to purchase, the Common Shares, the U.S.
Securities Act and the rules and regulations thereunder, and the Subscriber is
solely responsible (and neither the Corporation nor the Underwriter are in any
way responsible) for compliance with applicable resale restrictions and the
Subscriber is aware that it (or beneficial persons for whom it is contracting
hereunder) may not be able to resell such securities except in accordance with
limited exemptions under the Securities Laws and other applicable securities
laws. 

(n) The Subscriber has not received or
been provided with a prospectus or offering memorandum within the meaning of the
Securities Laws, or any sales or advertising literature in connection with the
Offering and the Subscriber’s decision to subscribe for the Common Shares was
not based upon, and the Subscriber has not relied upon, any verbal or written
representations as to fact made by or on behalf of the Corporation or the
Underwriter. The Subscriber’s decision to subscribe for the Common Shares was
based solely upon this Subscription Agreement, the Term Sheet attached hereto as
Schedule “A” and information about the Corporation which is publicly available
(any such information having been obtained by the Subscriber without independent
investigation or verification by the Underwriter). 

(o) The Subscriber is not purchasing
the Common Shares with knowledge of material information concerning the
Corporation, which has not been generally disclosed. 

(p) No person has made any written or
oral representations: 

(i) that any person will resell or
repurchase the Common Shares; 

(ii) that any person will refund the
Aggregate Subscription Price; or 

12 

(iii) as to the future price or value
of the Common Shares. 

(q) The Subscriber was not solicited
through, and did not subscribe for or purchase the Common Shares as a result of,
any general solicitation or general advertising (as those terms are used in
Regulation D in the U.S. Securities Act), including advertisements, articles,
notices or other communications published in any newspaper, magazine, or any
press release. 

(r) The Subscriber consents to the
Corporation making a notation on its records or giving instructions to the
registrar and transfer agent of the Corporation in order to implement the
restrictions on transfer set forth and described herein. 

(s) The address at which the Subscriber
received and accepted the offer to purchase the Common Shares is the address
listed on the signature page of the Subscription Agreement. 

(t) There are risks associated with the
purchase of and investment in the Common Shares and the Subscriber, and any
beneficial person for whom it is contracting hereunder, is knowledgeable,
sophisticated and experienced in business and financial matters and is capable
of evaluating the merits and risks of an investment in the Common Shares fully
understands the restrictions on resale of the Common Shares and is able to bear
the economic risk of the loss of its entire investment in the Common Shares.

(u) The Subscriber has not been formed
solely for the purpose of entering into the transactions described herein. 

(v) The Subscriber has not and does not
presently intend to enter into any contract, undertaking, agreement or
arrangement with any person or entity to sell, transfer or pledge the Common
Shares. 

(w) Neither the Subscriber nor any
party on whose behalf it is acting is an investment club. 

(x) Except as disclosed in writing to
the Corporation, the Subscriber does not act jointly or in concert with any
other person for the purposes of acquiring securities of the Corporation. 

	6.2 	Acknowledgments of the Subscriber
  

     The Subscriber, on its own behalf
and, if applicable, on behalf of any beneficial purchaser for whom it is acting
hereunder, acknowledges and agrees as follows: 

(a) The Subscriber has received a copy
of the Term Sheet setting out the principal terms of the Offering. 

(b) No securities commission, agency,
governmental authority, regulatory body, stock exchange or similar regulatory
authority has reviewed or passed on the merits of the Common Shares. 

(c) There is no government or other
insurance covering the Common Shares. 

(d) There are risks associated with the
purchase of the Common Shares. 

13 

(e) There are restrictions on the
Subscriber’s ability to resell the Common Shares and it is the responsibility of
the Subscriber to determine what those restrictions are and to comply with them
before selling the Common Shares. 

(f) The Corporation has advised the
Subscriber that the Corporation is relying on an exemption from the requirements
to provide the Subscriber with a prospectus and, as a consequence of acquiring
Common Shares pursuant to this exemption, certain protections, rights and
remedies provided by the Securities Laws, including statutory rights of
rescission or damages, may not be available to the Subscriber. The Subscriber
may not receive information that would otherwise be required to be provided to
it under Securities Laws and the Corporation is relieved from certain
obligations that would otherwise apply under Securities Laws.

(g) The Common Shares shall be subject
to statutory resale restrictions under the Securities Laws of the Province of
British Columbia and the State in which the Subscriber purchased the Common
Shares, under the U.S. Securities Act and the rules and regulations thereunder,
and any other applicable securities laws, and the Subscriber covenants that it
will not resell the Common Shares except in compliance with such laws and the
Subscriber acknowledges it is solely responsible (and neither the Corporation
nor the Underwriter, nor the U.S. Agent is responsible) for such compliance. The
Corporation has no obligation or present intention of filing a registration
statement under the U.S. Securities Act in respect of the Common Shares. 

(h) The certificates representing the
Common Shares will bear, as of the Closing Date, legends substantially in the
following form and with the necessary information inserted: 

“Unless permitted under securities
legislation, the holder of the securities shall not trade the securities before
[insert date that is four (4) months and one (1) day after the Closing Date].”

Without prior written approval of
the TSX-V Venture Exchange and compliance with all applicable securities
legislation, the securities represented by this certificate may not be sold,
transferred, hypothecated or otherwise traded on or through the facilities of
the TSX-V Venture Exchange or otherwise in Canada or to or for the benefit of a
Canadian resident until [insert that date which is four months and a day from
the Closing Date.]” 

(i) The Subscriber understands and
acknowledges: 

(i) that if it decides to offer, sell
or otherwise transfer any of the Common Shares, such securities may be offered,
sold or otherwise transferred only (A) to the Corporation, (B) outside the
United States in compliance with Rule 903 or Rule 904 of Regulation S under the
U.S. Securities Act and in compliance with applicable local laws and
regulations, (C) in compliance with the exemption from registration under the
U.S. Securities Act provided by Rule 144 or Rule 144A thereunder, if available,
and in compliance with any applicable state securities laws, or (D) in a
transaction that otherwise does not require registration under the U.S.
Securities Act or applicable state securities laws. The Subscriber acknowledges
that the Corporation or its registrar and transfer agent may, if reasonable
under the circumstances, require an opinion from counsel of recognized standing
reasonably satisfactory to the Corporation that registration under the U.S.
Securities Act is not required prior to transfer; and 

14 

(ii) that each certificate
representing the Common Shares originally issued to the Subscriber, as well as
all certificates issued in exchange for or in substitution of the foregoing
securities and until such time as the same is no longer required under
applicable requirements of the U.S. Securities Act or applicable state
securities laws, shall bear a legend to the following effect: 

“The securities represented hereby
have not been registered under the United States Securities Act of 1933, as
amended (the “U.S. Securities Act”) or under any state securities laws. The
holder hereof, by purchasing such securities, agrees for the benefit of the
Corporation that such securities may be offered, sold or otherwise transferred
only (a) to the Corporation, (b) outside the United States in compliance with
Rule 903 or 904 of Regulation S under the U.S. Securities Act, (c) in compliance
with the exemption from registration under the U.S. Securities Act provided by
Rule 144 or Rule 144A, if available, and in compliance with any applicable state
securities laws, or (d) in a transaction that otherwise does not require
registration under the U.S. Securities Act or applicable state securities laws.
The Corporation may require an opinion of counsel of recognized standing
reasonably satisfactory to it that registration under the U.S. Securities Act is
not required prior to transfer.” 

provided, that if at a time the
Corporation is a Foreign Private Issuer any such securities are being sold in
compliance with the requirements of Rule 904 of Regulation S under the U.S.
Securities Act and in compliance with Canadian local laws and regulations, the
legend may be removed by providing a declaration to the Corporation's registrar
and transfer agent to the effect set forth in Schedule “C” hereto or such other
evidence as the Corporation or its registrar and transfer agent may prescribe
from time to time, which may include an opinion of counsel; and provided,
further, that, if any such securities are being sold pursuant to Rule 144 of the
U.S. Securities Act or a transaction that does not require registration under
the U.S. Securities Act or applicable state securities laws, the legend may be
removed by delivery to the registrar and transfer agent of the Corporation of an
opinion of counsel, of recognized standing reasonably satisfactory to the
Corporation, to the effect that such legend is no longer required under
applicable requirements of the U.S. Securities Act or state securities laws.

(j) The Underwriter, the U.S. Agent
and/or their respective directors, officers, employees, agents and
representatives assume no responsibility or liability of any nature whatsoever
for the accuracy or adequacy of any publicly available information concerning
the Corporation, or as to whether all information concerning the Corporation
that is required to be disclosed or filed by the Corporation under the
Securities Laws has been so disclosed or filed. 

(k) The Corporation, the Underwriter,
the U.S. Agent and their respective legal counsel are relying on the
representations, warranties and covenants contained herein and in the U.S.
Accredited Investor Certificate attached hereto as Schedule “B” to determine the
Subscriber’s eligibility to subscribe for Common Shares under applicable
Securities Laws and the Subscriber agrees to indemnify the Corporation, the
Underwriter, the U.S. Agent, their respective legal counsel and each of their
directors and officers against all losses, claims, costs, expenses, damages or
liabilities which any of them may suffer or incur as a result of or arising from
reliance thereon. The Subscriber undertakes to immediately notify the
Corporation, the Underwriter and the U.S. Agent of any change in any statement
or other information relating to the Subscriber set 

15 

forth in the U.S. Accredited Investor
Certificate” attached hereto as Schedule “B” which takes place prior to the
Closing Time. 

(l) The Subscriber understands and
agrees that there may be material tax consequences to the Subscriber of an
acquisition, holding, or disposition of the Common Shares. The Corporation, the
Underwriter and the U.S. Agent give no opinion and make no representation with
respect to the tax consequences to the Subscriber under the tax laws of Canada
or any Province of Canada or under United States federal, state, or local tax
law or any other tax law of the Subscriber’s acquisition, holding or disposition
of such securities. In particular, no determination has been made whether the
Corporation will be a “passive foreign investment company” (“PFIC”) within the
meaning of Section 1291 of the United States Internal Revenue Code. Nothing in
this Subscription Agreement (or any document referenced herein) is intended or
written by the Corporation or any of its advisors to be used, and it cannot be
used, by the Subscriber or other person for the purpose of avoiding penalties
that may be imposed under U.S. federal income tax law. Any discussion of the
impact of U.S. income tax laws contained in this Subscription Agreement (or any
document referenced herein) or otherwise provided to the Subscriber has been or
will be provided solely to support the promotion or marketing of an investment
in the Corporation and other matters addressed in this Subscription Agreement
(and any document referenced herein). 

(m) The Subscriber understands and
agrees that the financial statements of the Corporation have been prepared in
accordance with Canadian generally accepted accounting principles, which differ
in some respects from United States generally accepted accounting principles,
and thus may not be comparable to financial statements of United States
companies. The Corporation is organized under the laws of the Yukon Territory
and the majority of its directors or officers are either citizens or residents
of Canada. The Corporation is domiciled outside of the United States, and
substantially all of the assets of the Corporation are located outside of the
United States. As a result, it may be difficult for the Subscriber to effect
service of process within the United States upon the Corporation. There is
uncertainty as to the enforceability: 

(i) in an original action in Canadian
courts of liabilities predicated solely upon United States federal securities
laws; or

(ii) judgments of United States courts
obtained in actions predicated upon the civil liability provisions of United
States securities laws in Canadian courts. 

(n) The Subscriber, and each beneficial
person for whom it is contracting hereunder, is responsible for obtaining such
legal and tax advice as it considers appropriate in connection with the
execution, delivery and performance of this Subscription Agreement and the
transactions contemplated under this Subscription Agreement. 

(o) The Corporation has provided to the
Subscriber the opportunity to ask questions and receive answers concerning the
terms and conditions of the offering and it has had access to such information
concerning the Corporation as it has considered necessary or appropriate in
connection with its investment decision to acquire the Common Shares. 

(p) The funds representing the
Aggregate Subscription Price which will be advanced by the Subscriber to the
Underwriter hereunder will not represent proceeds of crime for the purposes of
the Proceeds of Crime (Money Laundering) and Terrorist Financing Act
(Canada) (the “PCMLFTA”) and the Subscriber acknowledges that the
Corporation may in the future be required by law to disclose the Subscriber’s
name and other information relating to this 

16 

Subscription Agreement and the
Subscriber’s subscription hereunder, on a confidential basis, pursuant to the
PCMLFTA. To the best of its knowledge (a) none of the subscription funds to be
provided by the Subscriber (i) have been or will be derived from or related to
any activity that is deemed criminal under the law of Canada, the United States
of America, or any other jurisdiction, or (ii) are being tendered on behalf of a
person or entity who has not been identified to the Subscriber, and (b) the
Subscriber shall promptly notify the Corporation if the Subscriber discovers
that any of such representations ceases to be true, and to provide the
Corporation with appropriate information in connection therewith.

PART 7 - SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS 

	7.1 	Survival of Representations, Warranties and
      Covenants of the Corporation 

     The representations, warranties
and covenants of the Corporation contained in this Subscription Agreement shall
survive the Closing and the purchase of the Common Shares by the Subscriber and,
notwithstanding such Closing or any investigation made by or on behalf of the
Subscriber with respect thereto, shall continue in full force and effect for the
benefit of the Subscriber, the Underwriter and the U.S. Agent (as provided
herein) as if they had been made by the Corporation at the Closing Time and
shall continue in full force and effect notwithstanding any subsequent
disposition by the Subscriber of any of the Common Shares. 

	7.2 	Survival of Representations, Warranties and
      Covenants of the Subscriber 

     The representations, warranties
and covenants of the Subscriber contained in this Subscription Agreement shall
survive the Closing and the purchase of the Common Shares by the Subscriber and,
notwithstanding such Closing or any investigation made by or on behalf of the
Corporation, the Underwriter or the U.S. Agent with respect thereto, shall
continue in full force and effect for the benefit of the Corporation, the
Underwriter and the U.S. Agent as if they had been made by the Subscriber at the
Closing Time, and shall continue in full force and effect notwithstanding any
subsequent disposition by the Subscriber of any of the Common Shares. 

PART 8 - MISCELLANEOUS 

	8.1 	Further Assurances 

     The Subscriber, upon the request
of the Corporation, whether before or after the Closing Time, shall do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may reasonably be necessary or
desirable to complete the transactions contemplated herein. 

	8.2 	Collection of Personal Information
  

     The Subscriber acknowledges and
consents to the fact that the Corporation, the Underwriter and the U.S. Agent
are collecting the Subscriber’s (and any beneficial purchaser’s) personal
information (as that term is defined under applicable privacy legislation,
including, without limitation, the 

Personal Information Protection and Electronic Documents
Act (Canada) and any other applicable similar replacement or supplemental
provincial or federal legislation or laws in effect from time to time) for the
purpose of completing the Subscriber’s subscription. The Subscriber acknowledges
and consents 

17 

to the Corporation, the Underwriter and the U.S. Agent
retaining the personal information for so long as permitted or required by
applicable law or business practices. The Subscriber further acknowledges and
consents to the fact that the Corporation, the Underwriter or the U.S. Agent may
be required by United States or Canadian Securities Laws, stock exchange rules
and/or Investment Dealers Association of Canada or National Association of
Securities Dealers rules to provide regulatory authorities any personal
information provided by the Subscriber respecting itself (and any beneficial
purchaser for which the Subscriber is contracting hereunder). The Subscriber
represents and warrants that it has the authority to provide the consents and
acknowledgements set out in this paragraph on behalf of all beneficial
purchasers for which the Subscriber is contracting hereunder. In addition to the
foregoing, the Subscriber agrees and acknowledges that the Corporation, the
Underwriter or the U.S. Agent, as the case may be, may use and disclose the
Subscriber’s personal information, or that of each beneficial purchaser for whom
the Subscriber are contracting hereunder, as follows: 

(a) for internal use with respect to
managing the relationships between and contractual obligations of the
Corporation, the Underwriter, the U.S. Agent and the Subscriber or any
beneficial purchaser for whom the Subscriber is contracting hereunder; 

(b) for use and disclosure to the
Corporation’s transfer agent and registrar; 

(c) for use and disclosure for income
tax related purposes, including without limitation, where required by law,
disclosure to Canada Revenue Agency;

(d) disclosure to securities regulatory
authorities (including the TSX-V) and other regulatory bodies with jurisdiction
with respect to reports of trade and similar regulatory filings; 

(e) disclosure to a governmental or
other authority (including the TSX-V) to which the disclosure is required by
court order or subpoena compelling such disclosure and where there is no
reasonable alternative to such disclosure; 

(f) disclosure to professional advisers
of the Corporation, the Underwriter or the U.S. Agent in connection with the
performance of their professional services; 

(g) disclosure to any person where such
disclosure is necessary for legitimate business reasons and is made with the
Subscriber’s prior written consent;

(h) disclosure to a court determining
the rights of the parties under this Subscription Agreement; or 

(i) for use and disclosure as otherwise
required or permitted by law. 

The Subscriber further acknowledges and agrees that the TSX-V
collects personal information in forms submitted by the Corporation. The
Subscriber further agrees that the TSX-V may use this information in the manner
provided for in Appendix 6A to the TSX-V Corporate Finance Manual, a copy of
which is attached as Schedule “E” to this Subscription Agreement. 

	8.3 	Notices 

(a) Any notice, direction or other
instrument required or permitted to be given to any party hereto shall be in
writing and shall be sufficiently given if delivered personally, or transmitted
by facsimile tested prior to transmission to such party, as follows: 

18 

(i) in the case of the Corporation,
to: 

TAG Oil Ltd.
Suite 400, 534 –
17th Avenue SW
Calgary, Alberta T2S 0B1 

Attention: Drew
Cadenhead
                  
President and Chief Executive Officer
Fax: (403) 770-1935

with a copy to : 

Blake, Cassels & Graydon
LLP
2600 – 595 Burrard Street
Vancouver, British Columbia V7X 1L3 

Attention: Peter
Kalbfleisch
Fax: (604) 631-3377 

(ii) in the case of the Subscriber, at
the address specified on the face page hereof, with a copy to the Underwriter
at: 

Canaccord Capital Corporation
Suite
2200 – 450 1st Street SW
Calgary, Alberta T2P 5P8 

Attention: Richard Cawkwell
Fax:
(403) 508-3866 

with a copy to : 

Bennett Jones LLP
855
2nd Street SW, Suite 4500
Calgary, Alberta T2P 4K7 

Attention: John Kousinioris
Fax:
(403) 265-7219 

(b) Any such notice, direction or other
instrument, if delivered personally, shall be deemed to have been given and
received on the day on which it was delivered, provided that if such day is not
a Business Day then the notice, direction or other instrument shall be deemed to
have been given and received on the first Business Day next following such day
and if transmitted by fax, shall be deemed to have been given and received on
the day of its transmission, provided that if such day is not a Business Day or
if it is transmitted or received after the end of normal business hours then the
notice, direction or other instrument shall be deemed to have been given and
received on the first Business Day next following the day of such transmission.

(c) A party hereto may change its
address for service from time to time by notice given to the other party hereto
in accordance with the foregoing provisions. 

19 

	8.4 	Time of the Essence 

Time shall be of the essence of this Subscription Agreement and
every part hereof. 

	8.5 	Costs and Expenses 

     All costs and expenses
(including, without limitation, the fees and disbursements of legal counsel)
incurred in connection with this Subscription Agreement and the transactions
herein contemplated shall be paid and borne by the party incurring such costs
and expenses. 

	8.6 	Applicable Law 

     This Subscription Agreement shall
be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the laws of the Province of British Columbia and the laws
of Canada applicable therein. Any and all disputes arising under this
Subscription Agreement, whether as to interpretation, performance or otherwise,
shall be subject to the non-exclusive jurisdiction of the courts of the Province
of British Columbia and each of the parties hereto hereby irrevocably attorns to
the jurisdiction of the courts of such Province. 

	8.7 	Entire Agreement 

     This Subscription Agreement,
including the Schedules hereto, constitutes the entire agreement between the
parties with respect to the transactions contemplated herein and cancels and
supersedes any prior understandings, agreements, negotiations and discussions
between the parties. There are no representations, warranties, terms,
conditions, undertakings or collateral agreements or understandings, express or
implied, between the parties hereto other than those expressly set forth in this
Subscription Agreement or in any such agreement, certificate, affidavit,
statutory declaration or other document as aforesaid.

	8.8 	Amendment 

     This Subscription Agreement may
not be amended or modified in any respect except by written instrument executed
by each of the parties hereto. 

	8.9 	Counterparts 

     This Subscription Agreement may
be executed in one or more counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and the same
Subscription Agreement. Counterparts may be delivered either in original or
faxed form and the parties adopt any signature received by a receiving fax
machine as original signatures of the parties. 

	8.10 	Assignment 

     This Subscription Agreement may
not be assigned by either party except with the prior written consent of the
other party hereto. 

	8.11 	Severability 

     The invalidity or
unenforceability of any particular provision of this Subscription Agreement
shall not affect or limit the validity or enforceability of the remaining
provisions of this Subscription Agreement. 

20 

	8.12 	Enurement 

     This Subscription Agreement shall
enure to the benefit of and be binding upon the parties hereto and their
respective heirs, executors, successors (including any successor by reason of
the amalgamation or merger of any party), administrators and permitted assigns.

	8.13 	Language 

     Each of the Corporation and the Subscriber hereby
acknowledges that it has consented and requested that all documents evidencing
or relating in any way to the Common Shares and this Subscription Agreement be
drawn up in the English language only. La Société et le souscripteur
reconnaissent par les présentes avoir consenti et demandé que tous les documents
faisant foi ou se rapportant de quelque manière aux bons spéciaux et la présente
convention de souscription soient rédigés en anglais seulement.

The Corporation hereby accepts the subscription for Common Shares as set
forth on the face page of this Subscription Agreement on the terms and
conditions contained in this Subscription Agreement (including all applicable
schedules) this ___________ day of June, 2006.

TAG OIL LTD. 

Per:
___________________________________
      
Authorized Signing Officer 

SCHEDULE “A” 

TAG OIL LTD. 
Terms of Issue 

	Issue: 	
      40,000,000 Common Shares 

	 	
       

	Issue Price: 	
      $0.75 per Common Share 

	 	
       

	Amount of Issue: 	
      $30,000,000 

	 	
       

	Selling Jurisdictions: 	
      The Common Shares will be eligible for sale in Alberta,
      British Columbia, and Ontario (the "Selling Provinces") and such other
      provinces as the Corporation and Canaccord agree. The Common Shares may be
      offered or sold in the United States only by the Corporation to Accredited
      Investors by way of private placement pursuant to Sections 4(2) and 4(6)
      of the U.S. Securities Act and Regulation D promulgated thereunder or by
      the Underwriter pursuant to Rule 144A under the U.S. Securities Act and in
      other eligible foreign jurisdictions pursuant to applicable registration
      exemptions. 

	  	
	Private Placement: 	
      The Common Shares will be sold, on a bought deal basis,
      in the Selling Provinces pursuant to applicable prospectus exemptions.
    

	 	 
		
	Use of Proceeds: 	
      Net proceeds of the bought deal will be used to complete
      the acquisition of Cheal Petroleum Ltd., PEP 38757 Ltd., PEP 38758 Ltd.,
      participate in the development of the Cheal oil field and continue the
      Corporation’s exploration, drilling and seismic surveys in New Zealand as
      well as for working capital. 

	  	
	Hold Period 	
      The Common Shares will be subject to a four month hold
      period under Canadian securities laws and Common Shares sold to purchasers
      that are in the United States or who are U.S. persons will be “restricted
      securities” as defined in Rule 144 under the U.S. Securities Act and,
      accordingly, may be transferred only if registered under the U.S.
      Securities Act and applicable state securities laws, in compliance with
      Rule 903 or Rule 904 under the U.S. Securities Act, or pursuant to an
      exemption from registration thereunder. 

	  	
       

	Underwriter: 	
      Canaccord Capital Corporation 100% 

	 	
       

	Commission: 	
      Canaccord Capital will be entitled to a commission of
      6.0% of the total gross proceeds payable upon Closing of the Offering.
    

	  	
	Due Diligence: 	
      Canaccord Capital will have the right to conduct adequate
      due diligence, inquiries and investigations and obtain satisfactory
      results therefrom, including satisfactory due diligence with the
      Corporation's auditors. The Corporation will use its reasonable commercial
      efforts to have its auditors and independent engineers attend any and all
      oral diligence sessions. 

	  	
	Closing: 	
      On or about June 1, 2006, or such other date as mutually
      agreed upon by the Corporation and Canaccord. 

SCHEDULE “B” 

U.S. ACCREDITED INVESTOR CERTIFICATE 

This certificate is given in connection with the subscription
for Common Shares of TAG Oil Ltd. pursuant to the attached Subscription
Agreement. Unless the context otherwise requires, all capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the
attached Subscription Agreement.

The Subscriber hereby represents, warrants and covenants that
the Subscriber (and any beneficial purchaser for whose account Subscriber is
purchasing the Common Shares) is an “accredited investor” as defined in Rule
501(a) of Regulation D by virtue of satisfying one or more of the categories
indicated below (please place the letter S on the appropriate line(s))
applicable to that Subscriber and the letters BP on the appropriate lines
applicable to a beneficial purchaser (if any): 

	________	Category 1. 	A bank, as defined in Section 3(a)(2) of the U.S. Securities
      Act, whether acting in its individual or fiduciary capacity; or 
	  	  	
	________	Category 2. 	
      A savings and loan association or other institution as
      defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting
      in its individual or fiduciary capacity; or 

	  	  	
       

	________	Category 3. 	
      A broker or dealer registered pursuant to Section 15 of
      the Securities Exchange Act of 1934; or 

	  	  	
	________	Category 4. 	
      An insurance company as defined in Section 2(13) of the
      U.S. Securities Act; or

	  	  	
       

	________	Category 5. 	
      An investment company registered under the Investment
      Issuer Act of 1940; or 

	  	  	
	________	Category 6. 	
      A business development company as defined in Section
      2(a)(48) of the Investment Issuer Act of 1940; or 

	  	  	
	________	Category 7. 	
      A small business investment company licensed by the U.S.
      Small Business Administration under Section 301(c) or (d) of the Small
      Business Investment Act of 1958; or 

	  	  	
	________	Category 8. 	
      A plan established and maintained by a state, its
      political subdivision or any agency or instrumentality of a state or its
      political subdivisions, for the benefit of its employees, with assets in
      excess of US$5,000,000; or 

	  	  	
	________	Category 9. 	
      An employee benefit plan within the meaning of the
      Employee Retirement Income Security Act of 1974 in which
      the investment decision is made by a plan fiduciary, as defined in Section
      3(21) of such Act, which is either a bank, savings and loan association,
      insurance company or registered investment advisor, or an employee benefit
      plan with total assets in excess of US$5,000,000 or, if a self-directed
      plan, the investment decisions are made solely by persons who are
      accredited investors; or 

2 

	________	Category 10. 	
      A private business development company as defined in
      Section 202(a)(22) of the Investment Advisors Act of 1940; or
    

	  	  	
      

	________	Category 11. 	
      An organization described in Section 501(c)(3) of the
      Internal Revenue Code, a corporation, a Massachusetts or
      similar business trust, or a partnership, not formed for the specific
      purpose of acquiring the Shares, with total assets in excess of
      US$5,000,000; or 

	  	  	
	________	Category 12. 	
      A director, executive officer or general partner of the
      Corporation; or

	  	  	
       

	  	  	
      

	________	Category 13. 	
      A natural person whose individual net worth, or joint net
      worth with that person’s spouse, at the time of this purchase exceeds
      US$1,000,000; or 

	  	  	
	________	Category 14. 	
      A natural person who had an individual income in excess
      of US$200,000 in each year of the two most recent years or joint income
      with that person’s spouse in excess of US$300,000 in each of those years
      and has a reasonable expectation of reaching the same income level in the
      current year; or

	  	  	
       

	________	Category 15. 	
      A trust, with total assets in excess of US$5,000,000, not
      formed for the specific purpose of acquiring the securities offered, whose
      purchase is directed by a sophisticated person as described in SEC Rule
      506(b)(2)(ii); or 

	  	  	
	________	Category 16. 	
      An entity in which each of the equity owners meets the
      requirements of one of the above categories. 

Note: Subscribers purchasing for the account of a beneficial
purchaser must qualify under one or more of the categories 1 through 11 or
category 15. 

__________________________________

  Date

__________________________________

__________________________________

  (Print name of Investor)

By:

__________________________________

It's:

__________________________________

SCHEDULE “C” 

FORM OF DECLARATION FOR REMOVAL OF LEGEND 

	TO: 	Computershare Trust Company of Canada 
	  	as registrar and transfer agent 
	  	for the Common Shares of TAG Oil Ltd. 
	  	Calgary, Alberta 

The undersigned (a) acknowledges that the sale of the
securities of TAG Oil Ltd. (the “Corporation”) to which this declaration relates
is being made in reliance on Rule 904 of Regulation S under the United States
Securities Act of 1933, as amended (the “U.S. Securities Act”), and (b)
certifies that (1) the undersigned is not an affiliate of the Corporation as
that term is defined in Rule 405 under the U.S. Securities Act, (2) the offer of
such securities was not made to a person in the United States and either (A) at
the time the buy order was originated, the buyer was outside the United States,
or the seller and any person acting on its behalf reasonably believed that the
buyer was outside the United States, or (B) the transaction was executed in, on
or through the facilities of the Toronto Stock Exchange or the TSX-V Venture
Exchange or any other Designated Offshore Securities Market as defined in
Regulation S under the U.S. Securities Act and neither the seller nor any person
acting on its behalf knows that the transaction has been prearranged with a
buyer in the United States, (3) neither the seller nor any affiliate of the
seller nor any person acting on any of their behalf has engaged or will engage
in any “directed selling efforts” in connection with the offer and sale of such
securities (4) the sale is bona fide and not for the purpose of “washing off”
the resale restrictions imposed because the securities are “restricted
securities” (as such term is defined in Rule 144(a)(3) under the U.S. Securities
Act) and (5) the contemplated sale is not a transaction, or part of a series of
transactions which, although in technical compliance with Regulation S, is part
of a plan or scheme to evade the registration provisions of the U.S. Securities
Act. Terms used herein have the meanings given to them by Regulation S under the
U.S. Securities Act. 

	 Dated: __________________________		 ________________________________
	 	 	 Name of Seller
	 	  	 
	 	  	 
	 	By: 	 ________________________________
	 	 	 Name:
	 		 Title:

SCHEDULE "D" 

FORM 4C
CORPORATE PLACEE REGISTRATION
FORM 

Where subscribers to a Private Placement are not individuals,
the following information about the placee must be provided. This Form will
remain on file with the Exchange. The corporation, trust, portfolio manager or
other entity (the “Placee”) need only file it on one time basis, and it will be
referenced for all subsequent Private Placements in which it participates. If
any of the information provided in this Form changes, the Placee must notify the
Exchange prior to participating in further placements with Exchange listed
companies. If as a result of the Private Placement, the Placee becomes an
Insider of the Issuer, Insiders of the Placee are reminded that they must file a
Personal Information Form (2A) or, if applicable, Declarations, with the
Exchange.

	1. 	Placee Information: 
	  	(a) 	Name:
      ________________________________________________________________________________________
	 	 	 
	  	(b) 	Complete Address:
      ______________________________________________________________________________
	  	  	  
	  	(c) 	Jurisdiction of Incorporation or Creation:
      ______________________________________________________________ 
	 	 	 
	2. 	(a) 	Is the Placee purchasing securities as a
      portfolio manager (Yes/No)?
_________________________________________
	 	 	 
	  	(b) 	Is the Placee carrying on business as a
      portfolio manager outside of Canada (Yes/No)?
    ___________________________
	  	  	  
	3. 	If the answer to 2(b) above was
      “Yes”, the undersigned certifies that: 
	 	 
	  	(a) 	
      It is purchasing securities of an Issuer on behalf of
      managed accounts for which it is making the investment decision to
      purchase the securities and has full discretion to purchase or sell
      securities for such accounts without requiring the client’s express
      consent to a transaction; 

	  	  	
	  	(b) 	
      it carries on the business of managing the investment
      portfolios of clients through discretionary authority granted by those
      clients (a “portfolio manager” business) in ______________[jurisdiction],
      and it is permitted by law to carry on a portfolio manager business in
      that jurisdiction;

	  	  	 
	  	(c) 	it was not created solely or primarily for the
      purpose of purchasing securities of the Issuer; 
	  	  	
	  	(d) 	the total asset value of the investment
      portfolios it manages on behalf of clients is not less than $20,000,000;
      and 
	  	  	
	  	(e) 	it has no reasonable grounds to believe, that
      any of the directors, senior officers and other insiders of the Issuer,
      and the persons that carry on investor relations activities for the Issuer
      has a beneficial interest in any of the managed accounts for which it is
      purchasing. 

	50519642.7 	 
	 
  
	FORM 4C 	CORPORATE PLACEE REGISTRATION FORM 	Page 1 
	(as at March 11, 2004) 	  	  

	4. 	
      If the answer to 2(a) above was “No”, please provide the
      names and addresses of control persons of the
Placee:

	Name 	City 	Province or State 	Country 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

The undersigned acknowledges that it is bound by the provisions
of applicable Securities Law, including provisions concerning the filing of
insider reports and reports of acquisitions (See for example, sections 87 and
111 of the Securities Act (British Columbia) and sections 176 and 182 of
the Securities Act (Alberta). 

Acknowledgement - Personal Information 

“Personal Information” means any information about an
identifiable individual, and includes information contained in sections 1, 2 and
4, as applicable, of this Form. 

The undersigned hereby acknowledges and agrees that it has
obtained the express written consent of each individual to: 

	(a) 	
      the disclosure of Personal Information by the undersigned
      to the Exchange (as defined in Appendix 6B) pursuant to this Form;
    and

	 	 
	(b) 	
      the collection, use and disclosure of Personal
      Information by the Exchange for the purposes described in Appendix 6B or
      as otherwise identified by the Exchange, from time to
  time.

Dated at __________________on ___. 

_________________________________
(Name of Purchaser - please
print)

_________________________________
(Authorized Signature)

_________________________________
(Official Capacity - please
print) 

_________________________________
(please print name of
individual whose 
signature appears above) 

THIS IS NOT A PUBLIC DOCUMENT

	50519642.7 	 
	 
  
	FORM 4C 	CORPORATE PLACEE REGISTRATION FORM 	Page 2 
	(as at March 11, 2004) 	  	  

 

SCHEDULE “E” 

ACKNOWLEDGEMENT – PERSONAL INFORMATION 

TSX-V Venture Exchange Inc. and its affiliates, authorized
agents, subsidiaries and divisions, including the TSX-V Venture Exchange
(collectively referred to as “the Exchange”) collect Personal Information in
certain Forms that are submitted by the individual and/or by an Issuer or
Applicant and use it for the following purposes: 

to conduct background checks, to verify the Personal Information
  that has been provided about each individual,

  to consider the suitability of the individual to act as an officer, director,
  insider, promoter, investor relations provider or, as applicable, an employee
  or consultant, of the Issuer or Applicant,

  to consider the eligibility of the Issuer or Applicant to list on the Exchange,
  

  to provide disclosure to market participants as to the security holdings of
  directors, officers, other insiders and promoters of the Issuer, or its associates
  or affiliates, 

  to conduct enforcement proceedings, and 

  to perform other investigations as required by and to ensure compliance with
  all applicable rules, policies, rulings and regulations of the Exchange, securities
  legislation and other legal and regulatory requirements governing the conduct
  and protection of the public markets in Canada. 

As part of this process, the Exchange also collects additional
Personal Information from other sources, including but not limited to,
securities regulatory authorities in Canada or elsewhere, investigative, law
enforcement or self-regulatory organizations, regulations services providers and
each of their subsidiaries, affiliates, regulators and authorized agents, to
ensure that the purposes set out above can be accomplished.

The Personal Information the Exchange collects may also be
disclosed: 

to the agencies and organizations in the preceding paragraph,
or as otherwise permitted or required by law, and they may use it in their own
investigations for the purposes described above; and on the Exchange’s website
or through printed materials published by or pursuant to the directions of the
Exchange. 

The Exchange may from time to time use third parties to process
information and/or provide other administrative services. In this regard, the
Exchange may share the information with such third party service providers.

	50519642.7
    	 
    
	  	  
	APPENDIX 6A ACKNOWLEDGEMENT – PERSONAL INFORMATION
    	Page 1 
	(as at March 11, 2004)Filed by Automated Filing Services Inc. (604) 609-0244 - TAG Oil Ltd. - Exhibit 4.7

UNDERWRITING AGREEMENT

Effective as of May 12, 2006

TAG Oil Ltd.
Suite 400, 534 – 17th Avenue
S.W.
Calgary, Alberta T2S 0B1

Attention: Drew Cadenhead, President and Chief Executive
Officer

Dear Sir:

Re:             
Private Placement of Common Shares of TAG Oil Ltd.

                   
Canaccord Capital Corporation ("Canaccord" or the "Underwriter")
understands that TAG Oil Ltd. (the "Corporation") proposes to issue and
sell 40,000,000 common shares in the capital of the Corporation (the "Offered
Shares") by way of private placement (the "Offering").

                   
The Offered Shares will be offered to purchasers resident in the Selling
Jurisdictions and such other provinces or territories of Canada as may be agreed
to by the Underwriter and the Corporation, as evidenced by the Corporation's
acceptance of a subscription agreement with respect thereto, on a private
placement basis pursuant to exemptions from prospectus, registration and
equivalent requirements.

                   
Subject to the terms and conditions hereof, the Underwriter hereby agrees to act
as, and the Corporation hereby appoints the Underwriter as, the sole exclusive
agent of the Corporation to offer the Offered Shares for sale on the Closing
Date, at a price of $0.75 per Offered Share, provided that in the event that
less than all of the Offered Shares are sold by the Underwriter as agent, the
Underwriter hereby agrees to purchase the Offered Shares from the Corporation,
and the Corporation hereby agrees to issue and sell to the Underwriter, subject
to Section 16 hereof, all but not less than all of the Offered Shares for an
aggregate consideration of $30,000,000. The Corporation shall be entitled to
provide to the Underwriter a president's list of subscribers for up to 6,666,666
Offered Shares, which subscribers shall be afforded an opportunity to
participate in the Offering upon the due execution of a Subscription Agreement
and the fulfillment of the terms thereof.

                   
Although this offer is made by the Underwriter, as purchaser, the Underwriter
will endeavour, prior to the Closing Date, to arrange for qualified purchasers
(which, together with the Underwriter, are sometimes collectively referred to
herein as the "Subscribers") who will subscribe for the Offered Shares
directly from the Corporation on a "private placement" basis.

                   
It is understood and agreed that the obligations of the Underwriter hereunder
will not be discharged or reduced by any substitution of Subscribers as
purchasers except in respect of payment of the purchase price for the Offered
Shares and then only to the extent that the Subscribers pay at the Closing the
purchase price for each Offered Share subscribed for by them. The Underwriter
agrees that each Subscriber:

	 	(a) 	
      resident in a Selling Province or otherwise subject to
      the Applicable Securities Laws of a Selling Province, will be eligible to
      and will purchase the Offered Shares under applicable prospectus and
      registration exemptions of the Applicable Securities Laws of such Selling
      Province;

- 2 -

	 	(b) 	
      who is resident in the United States or is a U.S. Person
      or purchasing the Offered Shares for the account or benefit of a U.S.
      Person, will be eligible to purchase and will purchase the Offered Shares
      pursuant to an exemption from registration provided by Section 4(2) of the
      U.S. Securities Act and Rule 506 of Regulation D promulgated thereunder
      for offerings to accredited investors; and

	 	 	 
	 	(c) 	
      resident in any other jurisdiction or otherwise subject
      to the securities laws of any other jurisdiction, will be eligible to and
      will purchase Offered Shares on a basis which does not require the filing
      of a prospectus, registration statement or similar document in such
      jurisdiction.

                   
If the Underwriter purchases any Offered Shares pursuant to this Agreement, the
Underwriter may not offer or sell such Offered Shares except in compliance with
Rule 903 of Regulation S or Rule 144A under the U.S. Securities Act, and in each
case in compliance with Schedule "A" hereto.

                   
The Underwriter shall be entitled, in connection with the offering and sale of
the Offered Shares, to retain as sub-underwriter other registered investment
dealers or brokers to participate in the solicitation of offers to purchase the
Offered Shares and may receive (for delivery to the Corporation at the Closing
Time) subscriptions for Offered Shares from other registered investment dealers
or brokers. The Underwriter will have the exclusive right to select such
sub-underwriter and the fees payable to such sub-underwriter shall be for the
account of the Underwriter.

                   
In consideration for its service hereunder, the Underwriter shall be entitled to
the compensation provided for in accordance with Section 2 hereof. For greater
certainty, the services provided by the Underwriter in connection herewith will
not be subject to the Goods and Services Tax provided for in the Excise Tax
Act (Canada) and any taxable supplies provided will be incidental to the
exempt financial services provided.

	1. 	
      Definitions

	 	 	 
	1.1 	
      In this Agreement:

	 	 	 
		(a) 	
      "Acquired Assets" means all of the assets of Cheal
      Petroleum Ltd., PEP 38757 Ltd and PEP 38758 Ltd. to be acquired pursuant
      to the Acquisition;

	 	 	 
		(b) 	
      "Acquisition" means the proposed acquisition by
      the Corporation of all of the issued and outstanding shares of Cheal
      Petroleum Limited, PEP 38757 Ltd. and PEP 38758 Ltd.;

	 	 	 
		(c) 	
      "Agreement" means this agreement and not any
      particular Section or other portion except as may be specified, and words
      such as "hereto", "herein" and "hereby" refer to this
      Agreement as the context requires;

	 	 	 
		(d) 	
      "Applicable Securities Laws" includes, without
      limitation, all applicable securities and corporate laws, rules,
      regulations, instruments, notices, blanket orders, statements, procedures
      and policies in effect as of the date hereof in the Selling
      Jurisdictions;

	 	 	 
		(e) 	
      "Business Day" means a day which is not a
      Saturday, Sunday or legal holiday in the City of Calgary, Alberta or the
      City of Vancouver, British Columbia;

	 	 	 
		(f) 	
      "Closing Date" means June 6, 2006, or such other
      date or dates as the Underwriter and the Corporation may agree to in
      writing;

- 3 -

	 	(g) 	
      "Closing Time" means 8:00 a.m. (Calgary time) or
      such other time, on the Closing Date, as the Underwriter and the
      Corporation may agree;

	 	 	 	 
	 	(h) 	
      "Common Shares" means the common shares in the
      capital of the Corporation;

	 	 	 	 
	 	(i) 	
      "Corporation Documents" shall have the meaning
      assigned thereto in Section 5(ggg) hereof;

	 	 	 	 
	 	(j) 	
      "Corporation's counsel" means Blake, Cassels &
      Graydon LLP or such other legal counsel as the Corporation may
    appoint;

	 	 	 	 
	 	(k) 	
      "Corporation’s U.S. counsel" means Davis Wright
      Tremaine LLP, or such other legal counsel as the Corporation may
      appoint;

	 	 	 	 
	 	(l) 	
      "Documents" means, collectively:

	 	 	 	 
	 		(i) 	
      the Financial Statements;

	 	 	 	 
	 		(ii) 	
      the revised annual report of the Corporation on Form 20-F
      dated September 30, 2005;

	 	 	 	 
	 		(iii) 	
      the management information circular of the Corporation
      dated July 15, 2005;

	 	 	 	 
	 		(iv) 	
      all press releases of the Corporation since March 31,
      2005; and

	 	 	 	 
	 		(v) 	
      all material change reports of the Corporation since
      March 31, 2005;

	 	 	 	 
	 	(m) 	
      "Due Diligence Session" shall have the meaning set
      forth in Section 3(g) of this Agreement;

	 	 	 	 
	 	(n) 	
      "Environmental Laws" shall have the meaning set
      forth in Section 5(gg) of this Agreement;

	 	 	 	 
	 	(o) 	
      "Exchange" means the TSX Venture
  Exchange;

	 	 	 	 
	 	(p) 	
      "FCPA" shall have the meaning set forth in Section
      5(iii) of this Agreement;

	 	 	 	 
	 	(q) 	
      "Financial Statements" means, collectively: (i)
      the unaudited interim consolidated financial statements of the Corporation
      for the nine months ended December 31, 2005, together with the notes and
      management's discussion and analysis relating thereto; (ii) the unaudited
      interim consolidated financial statements of the Corporation for the six
      months ended September 30, 2005, together with the notes and management's
      discussion and analysis relating thereto; (iii) the unaudited interim
      consolidated financial statements of the Corporation for the three months
      ended June 30, 2005, together with the notes and management's discussion
      and analysis relating thereto; and (iv) the audited consolidated financial
      statements of the Corporation for the year ended March 31, 2005, together
      with the notes and management's discussion and analysis relating thereto
      and the auditors' report thereon;

	 	 	 	 
	 	(r) 	
      "Financing" shall have the meaning set forth in
      Section 12 of this Agreement;

- 4 -

	 	(s) 	
      "Hazardous Substances" shall have the meaning set
      forth in Section 5(gg) of this Agreement;

	 	 	 
	 	(t) 	
      "Indemnified Parties" shall have the meaning set
      forth in Section 6(a) of this Agreement;

	 	 	 
	 	(u) 	
      "Interests" shall have the meaning set forth in
      Section 5(bb) of this Agreement;

	 	 	 
	 	(v) 	
      "Material Agreements" means, collectively, this
      Agreement, the Subscription Agreements and the Purchase and Sale
      Agreement;

	 	 	 
	 	(w) 	
      "Material Contracts" shall have the meaning set
      forth in Section 5(kk) of this Agreement;

	 	 	 
	 	(x) 	
      "PEP 38738" means permit number 38738 issued by
      the Ministry of Economic Development of New Zealand;

	 	 	 
	 	(y) 	
      "Public Record" means all information filed with
      the Securities Commissions, including without limitation, the Documents
      and any other information filed with any such securities commission or
      similar regulatory authority in compliance, or intended compliance, with
      any Applicable Securities Laws;

	 	 	 
	 	(z) 	
      "Purchase and Sale Agreement" means the purchase
      and sale agreement dated May 9, 2006 between the Corporation, TAG Oil (NZ)
      Limited and South Pacific Lease Operations Ltd. in respect of the
      Acquisition;

	 	 	 
	 	(aa) 	
      "Regulation S" means Regulation S under the U.S.
      Securities Act;

	 	 	 
	 	(bb) 	
      "Responses" shall have the meaning set forth in
      Section 3(g) of this Agreement;

	 	 	 
	 	(cc) 	
      "SEC" means the United States Securities and
      Exchange Commission;

	 	 	 
	 	(dd) 	
      "Securities Commissions" means, collectively, the
      securities commissions or similar regulatory authorities in the Selling
      Provinces and "Securities Commission" means any one of
  them;

	 	 	 
	 	(ee) 	
      "Selling Dealer Group" means the dealers and
      brokers other than the Underwriter who participate in the offer and sale
      of the Offered Shares pursuant to this Agreement;

	 	 	 
	 	(ff) 	
      "Selling Jurisdictions" means the Selling
      Provinces and, to the extent permitted by this Agreement, offshore and in
      the United States;

	 	 	 
	 	(gg) 	
      "Selling Provinces" means the Provinces of British
      Columbia, Alberta and Ontario;

	 	 	 
	 	(hh) 	
      "Subscriber" means any person or entity who
      executes a Subscription Agreement which is accepted by the
    Corporation;

	 	 	 
	 	(ii) 	
      "Subscription Agreements" means the agreements to
      be entered into at the Closing Time between the Corporation and each of
      the Subscribers setting out the contractual relationship between the
      Corporation and the Subscribers, in form and substance satisfactory to the
      Corporation and the Underwriter;

- 5 -

	 	(jj) 	
      "Subsidiaries" means TAG Oil (NZ) Limited, TAG Oil
      (Canterbury) Limited and Durum Energy (PNG) Limited;

	 	 	 
	 	(kk) 	
      "Transfer Agent" means Computershare Trust Company
      of Canada;

	 	 	 
	 	(ll) 	
      "Underwriter's counsel" means Bennett Jones LLP or
      such other legal counsel as the Underwriter may appoint;

	 	 	 
	 	(mm) 	
      "Underwriter's U.S. counsel" means Dorsey &
      Whitney LLP or such other legal counsel as the Underwriter may
    appoint;

	 	 	 
	 	(nn) 	
      "Underwriter's Fee" shall have the meaning set
      forth in Section 2(a) of this Agreement;

	 	 	 
	 	(oo) 	
      "United States" means the United States of
      America, its territories and possessions, any State of the United States
      and the District of Columbia;

	 	 	 
	 	(pp) 	
      "U.S. Exchange Act" means the United States
      Securities Exchange Act of 1934, as amended;

	 	 	 
	 	(qq) 	
      "U.S. Person" shall have the meaning set forth in
      Schedule "A" hereto; and

	 	 	 
	 	(rr) 	
      "U.S. Securities Act" means the United States
      Securities Act of 1933, as amended.

1.2               In
  this Agreement, "affiliated", "misrepresentation", "material change", "material
  fact" and "subsidiary" have the meanings ascribed thereto under the Applicable
  Securities Laws of the Selling Provinces, and "distribution" means "distribution"
  or "distribution to the public", as the case may be, as defined under the Applicable
  Securities Laws of the Selling Provinces, and "distribute" has a corresponding
  meaning.

	2.  	Commission

                   
In consideration for its services hereunder, including underwriting the
Offering, the Corporation agrees that on the Closing Date in respect of each
Offered Share issued hereunder, it shall pay to the Underwriter a fee of 6% of
the aggregate gross proceeds received by the Corporation on the sale of the
Offered Shares, including any Offered Shares sold to a Subscriber included on
the president's list forwarded by the Corporation, being an amount equal to
$0.045 per Offered Share or $1,800,000 in the aggregate for the Offered Shares
(the "Underwriter's Fee").

	3. 	
      The Offering

	 	 	 
		
      The Corporation agrees that:

	 	 	 
		
      Offered Shares

	 	 	 
		(a) 	
      upon receiving full payment for the Offered Shares, the
      Offered Shares will be issued as fully paid and non-assessable Common
      Shares;

	 	 	 
		
      Material Agreements

	 	 	 
		(b) 	
      it will comply with all covenants of the Corporation set
      forth in the Material Agreements and duly, punctually and faithfully
      perform all the obligations to be performed by it under the Material
      Agreements;

- 6 -

Conduct of the Private
Placement

	 	(c) 	
      as soon as reasonably possible, and in any event by the
      Closing Date, the Corporation shall take all such steps as may reasonably
      be necessary to enable the Offered Shares to be offered for sale and sold
      on a private placement basis in the Selling Jurisdictions, through the
      Underwriter in the manner contemplated herein by way of the exemptions
      from the prospectus requirements set forth in the Applicable Securities
      Laws, and the Corporation shall not take any action that would prevent the
      Corporation and the Underwriter from relying upon the exemptions from the
      prospectus requirements of Applicable Securities Laws in connection with
      the Offering;

Regulatory Approvals

	 	(d) 	
      it will use its best efforts to obtain, prior to the
      Closing Time, all necessary regulatory approvals for the distribution of
      the Offered Shares and the listing of the Offered Shares on the
      Exchange;

Status as Reporting Issuer and
Listing

	 	(e) 	
      it shall (subject to any corporate reorganization in
      which the successor corporation maintains such status), use its reasonable
      best efforts to maintain its status as a reporting issuer (or equivalent)
      not in default of any Applicable Securities Laws until the first
      anniversary of the Closing Date;

	 	 	 
	 	(f) 	
      it shall (subject to any corporate reorganization in
      which the successor corporation maintains such status), use its best
      efforts to maintain the listing of its Common Shares on the Exchange (or
      the Toronto Stock Exchange if it obtains a listing thereon subsequent to
      the date hereof) until the first anniversary of the Closing
  Date;

Diligence Review

	 	(g) 	
      prior to the Closing Time, the Corporation shall allow
      the Underwriter (and its counsel and consultants) to conduct all due
      diligence inquiries and investigations which the Underwriter may
      reasonably require or consider necessary or appropriate in order to
      fulfill the Underwriter's obligations as a registrant to complete the
      Offering as provided herein. The Corporation will provide to the
      Underwriter (and its counsel and consultants) reasonable access to the
      Corporation's and the Subsidiaries' properties (if any), senior management
      personnel and corporate, financial and other records, for the purposes of
      conducting such due diligence. Without limiting the scope of the due
      diligence inquiry, the Underwriter (or its counsel and consultants) may
      conduct, the Corporation shall also make available its directors and
      senior management to answer any questions which the Underwriter may have
      and to participate in one or more due diligence sessions to be held prior
      to the Closing Date (the "Due Diligence Session"). The Underwriter
      shall distribute a list of written questions to be answered in advance of
      such Due Diligence Session and the Corporation shall provide written
      responses to such questions and shall use its best efforts to have its
      audit committee, auditors and independent engineers provide written
      responses to such questions in advance of the Due Diligence Session (the
      "Responses"). The Underwriter shall have the option to terminate
      this Agreement prior to the Closing Time if its due diligence inquiries or
      investigations identify a material adverse
circumstance;

- 7 -

Issuance of Share
Certificates

	 	(h) 	
      it shall cause the Transfer Agent to make all necessary
      arrangements for the issuance (at the sole cost and expense of the
      Corporation) of the definitive certificates representing the Offered
      Shares delivered for certificates representing, in the aggregate, the same
      number of Common Shares in such denominations, registered in such name and
      to be released at such of the offices of the Transfer Agent as the
      Underwriter may direct at any time and from time to time, but not less
      than twenty-four (24) hours prior to the Closing Time, provided such
      issuances are pursuant to exempt trades under the Applicable Securities
      Laws; and

Documents

	 	(i) 	
      the Corporation shall cause to be provided to the
      Underwriter such number of copies of the Documents as the Underwriter may
      reasonably request and such delivery shall constitute the Corporation's
      authorization to use the Documents in connection with the sale of the
      Offered Shares.

	4. 	 Corporation's Covenants as to Changes

	 	 	 	 	 
		 The Corporation agrees that:

	 	 	 	 	 
		(a) 	 during the period commencing on the date hereof
        and ending on the Closing Date, the Corporation will promptly inform the
        Underwriter in writing of the full particulars of:

	 	 	 	 	 
			(i) 	 any material change (actual, anticipated or
        threatened) in the business, operations, capital or condition (financial
        or otherwise) of the Corporation, the Subsidiaries or their respective
        properties or assets;

	 	 	 	 	 
			(ii) 	 any change in any material fact contained
        or referred to in the Public Record; and

	 	 	 	 	 
			(iii) 	 the occurrence of a material fact or event,
        which, in any such case, is, or may be, of such a nature as to:

	 	 	 	 	 
				(A) 	 render any portion of the Public Record or the Responses
        untrue, false or misleading in a material respect;

	 	 	 	 	 
				(B) 	 result in a misrepresentation in the Public Record;
        or

	 	 	 	 	 
				(C) 	 result in the Public Record not complying with the Applicable
        Securities Laws;

	 	 	 
	 	 	provided that if the Corporation is uncertain as to whether
      a material change, change in a material fact, occurrence of a material fact
      or event of the nature referred to in this Section 4(a) has occurred, the
      Corporation shall promptly inform the Underwriter of the full particulars
      of the occurrence giving rise to the uncertainty and shall consult with
      the Underwriter as to whether the occurrence is of such nature;
	 	 	 
	 	(b)	during the period commencing with the date hereof and ending
      on the Closing Date, the Corporation will promptly inform the Underwriter
      of the full particulars of:

- 8 -

		(i) 	any request of any Securities Commission, other
      securities commission, similar regulatory authority, the Exchange or other
      competent authority for any amendment to the Public Record or for any
      information which may be material to the distribution of the Offered
      Shares; 
	 	  	  
		(ii) 	the issuance by any Securities Commission,
      other securities commission, similar regulatory authority, the Exchange or
      other competent authority of any order to cease or suspend trading of any
      securities of the Corporation (including the Offered Shares) or of the
      institution or threat of institution of any proceedings for that purpose;
      or 
	 	  	  
		(iii) 	the receipt by the Corporation of any
      communication from any Securities Commission, other securities commission,
      similar regulatory authority, the Exchange or other competent authority
      relating to any part of the Public Record or the distribution of the
      Offered Shares; 
	 	  	  
		and except as otherwise agreed by the
      Underwriter, the Corporation will use its reasonable commercial efforts to
      prevent the issuance of any such cease trading order or suspension order
      and, if issued, to obtain the withdrawal thereof as soon as possible;
  

	 	(c) 	
      it will promptly comply, to the reasonable satisfaction
      of the Underwriter and the Underwriter's counsel, with the Applicable
      Securities Laws with respect to any material change, change of a material
      fact, occurrence or event of the nature referred to in Sections 4(a) and
      (b) above;

	 	 	 
	 	(d) 	
      until the Closing Date, the Corporation will promptly
      provide to the Underwriter, for review and comment by Underwriter and the
      Underwriter's counsel, prior to the publication, filing or issuance
      thereof, any document that will, when filed or issued, constitute part of
      the Public Record or press release or other communication to the public or
      to the Corporation's securityholders;

	 	 	 
	 	(e) 	
      it will promptly advise the Underwriter if it becomes
      aware that any of the representations and warranties of any parties to the
      Purchase and Sale Agreement cease to be true and correct in any material
      respect or if the Corporation becomes aware of a material fact or event or
      that there is any change of any material fact or event which is, or may
      become of such a nature as to render any such representations and
      warranties or any information provided to the Underwriter in respect of
      the Acquisition, untrue, false or misleading in any material respect;
      and

	 	 	 
	 	(f) 	
      it will promptly inform the Underwriter in writing if the
      Purchase and Sale Agreement is terminated or the Corporation determines it
      will not be proceeding with the Acquisition.

	 	 	 
	5.	Representations and Warranties of the
      Corporation

                    
  The Corporation represents and warrants to the Underwriter, as at the date hereof
  and at the Closing Time, and acknowledges that the Underwriter is relying upon
  such representations and warranties, that:

- 9 -

Corporate Matters

	 	(a) 	
      each of the Corporation and the Subsidiaries has been
      duly incorporated, continued or amalgamated and organized and is validly
      existing under the laws of the jurisdiction of its incorporation,
      continuation or amalgamation and has all requisite corporate authority and
      power to carry on its business, as now conducted and as presently proposed
      to be conducted by it, and to own, lease and operate its properties and
      assets;

	 	 	 
	 	(b) 	
      each of the Corporation and the Subsidiaries is duly
      registered and qualified to carry on business and is validly subsisting
      under the laws of each jurisdiction in which it carries on its
      business;

	 	 	 
	 	(c) 	
      the Corporation has no subsidiaries other than TAG Oil
      (NZ) Limited, TAG Oil (Canterbury) Limited and Durum Energy (PNG) Limited
      and, other than the Subsidiaries, the Corporation is not affiliated with,
      nor is it a holding corporation of, any other body corporate, nor is it a
      partner of any partnership nor does it own any securities of any other
      entity;

	 	 	 
	 	(d) 	
      other than TAG Oil (NZ) Limited and TAG Oil (Canterbury)
      Limited, none of the Subsidiaries conducts any active business
      operations;

	 	 	 
	 	(e) 	
      the minute book of the Corporation and each of the
      Subsidiaries contains full, true and correct copies of the articles and
      by-laws or other constating documents of the Corporation and each of the
      Subsidiaries and, on or before the Closing Time, will contain copies of
      all minutes of all meetings and all consent resolutions of the directors,
      committees of directors and shareholders of the Corporation and all such
      meetings were duly called and properly held and all such resolutions were
      properly adopted except to the extent that any such failure could not
      reasonably be expected to have a material adverse effect on the
      Corporation or any of the Subsidiaries;

Issuance of Securities

	 	(f) 	
      the Offered Shares will be duly and validly authorized
      and issued as fully paid and non-assessable Common Shares at the Closing
      Time;

	 	 	 
	 	(g) 	
      at the Closing Time, the form and terms of the definitive
      certificates representing the Common Shares will have been duly approved
      and adopted by the Corporation and comply with all legal requirements
      relating thereto, including the requirements of the
  Exchange;

No Breach

	 	(h) 	
      neither the Corporation nor any of the Subsidiaries is in
      default or breach or violation of, and the execution and delivery of, and
      the performance and compliance with the terms of any of the Material
      Agreements and the Offering do not and will not:

	 	 	 	 
	 		(i) 	
      result in any breach of, or constitute a default under,
      and do not and will not create a state of facts which, after notice or
      lapse of time or both, would result in a breach of or constitute a default
      under, any term or provision of the articles, by-laws or resolutions of
      the Corporation or any of the Subsidiaries, or any indenture, mortgage,
      note, contract, agreement (written or oral), instrument,
  lease

- 10 -

or other document to which the
Corporation or any of the Subsidiaries is a party or by which it is bound, or
any judgment, decree, order, statute, rule or regulation applicable to the
Corporation or any of the Subsidiaries, which default or breach might reasonably
be expected to materially adversely affect the assets, liabilities, business,
operations, capital or condition (financial or otherwise) of the Corporation or
the properties or assets of the Corporation together with the Subsidiaries
(taken as a whole);

	 	(ii) 	
      create a right for any other party to terminate,
      accelerate or in any way alter any other rights existing under any
      indenture, mortgage, note, contract, agreement (written or oral),
      instrument, lease or other document to which the Corporation or any of the
      Subsidiaries is a party or by which any of them is bound which, upon
      exercise of such right, might reasonably be expected to materially
      adversely affect the assets, liabilities, business, operations, capital or
      condition (financial or otherwise) of the Corporation together with the
      Subsidiaries (taken as a whole) or the properties or assets of the
      Corporation together with the Subsidiaries (taken as a
  whole);

Corporate Authority and
Effect

	 	(i) 	
      the Corporation has full corporate power and authority to
      enter into the Material Agreements and to perform its obligations set out
      herein and therein, and this Agreement and the Purchase and Sale Agreement
      have been and the Subscription Agreements, when entered into, shall be
      duly authorized, executed and delivered by the Corporation, and this
      Agreement and the Purchase and Sale Agreement are, and the Subscription
      Agreements, when entered into, shall be, legal, valid and binding
      obligations of the Corporation enforceable against the Corporation in
      accordance with their respective terms subject to the general
      qualifications that:

	 	 	 	 
	 		(i) 	
      enforceability may be limited by bankruptcy, insolvency
      or other laws affecting creditors' rights generally;

	 	 	 	 
	 		(ii) 	
      equitable remedies, including the remedies of specific
      performance and injunctive relief, are available only in the discretion of
      the applicable court; and

	 	 	 	 
	 		(iii) 	
      rights to indemnify and contribution hereunder may be
      limited by applicable law;

	 	 	 	 
	 	(j) 	
      the representations and warranties made by the
      Corporation in the Material Agreements are, or will be, correct as of the
      date they are made;

No Change

	 	(k) 	
      there has not been any adverse material change in the
      capital, assets, liabilities or obligations (absolute, accrued, contingent
      or otherwise) of the Corporation and the Subsidiaries (taken as a whole),
      from the position set forth in the Financial Statements or as otherwise
      disclosed in the Public Record and there has not been any adverse material
      change in the business, operations, capital or condition (financial or
      otherwise) or results of the operations of the Corporation since March 31,
      2005, which have not been disclosed in the Public
Record;

- 11 -

	 	(l) 	
      since March 31, 2005, there have been no material facts,
      transactions, events or occurrences which could materially adversely
      affect the capital, assets, liabilities (absolute, accrued, contingent or
      otherwise), business, operations or condition (financial or otherwise) or
      results of the operations of the Corporation and the Subsidiaries (taken
      as a whole), which have not been disclosed in the Public Record;

	 	 	 
	 	(m) 	
      the Corporation and each Subsidiary has not entered into
      any transaction which is or may be material to the Corporation and the
      Subsidiaries (taken as a whole) and is not in the ordinary course of
      business, which have not been disclosed in the Public
  Record;

Share Capital

	 	(n) 	
      the authorized capital of the Corporation consists of an
      unlimited number of Common Shares, of which as of the Closing Date
      (without giving effect to the Offering or the Acquisition), there will be
      46,631,081 Common Shares issued and outstanding as fully paid and
      non-assessable shares;

	 	 	 
	 	(o) 	
      other than pursuant to the provisions of this Agreement,
      there are no outstanding securities convertible or exchangeable into any
      securities of the Corporation or the Subsidiaries or any agreement,
      warrant, option, right or privilege being or capable of becoming an
      agreement, warrant, option or right for the purchase of any unissued
      securities of the Corporation or the Subsidiaries, except for 1,125,000
      Common Shares reserved for issuance upon the exercise of stock options
      currently issued pursuant to the Corporation's stock option plan, 200,000
      Common Shares to be reserved for issuance upon the exercise of stock
      options to be issued upon the Corporation graduating to Tier 1 of the
      Exchange and 400,000 Common Shares reserved for issuance upon the exercise
      of Common Share purchase warrants of the Corporation;

	 	 	 
	 	(p) 	
      the Corporation is the beneficial owner and holder of
      record of all of the issued and outstanding securities in the capital of
      each of the Subsidiaries, with good and valid title to all such
      securities, free and clear of all liens and
encumbrances;

General Tax Matters

	 	(q) 	
      each of the Corporation and the Subsidiaries has duly
      filed all tax returns required to be filed by it, has paid all taxes due
      and payable by it and has paid all assessments and re-assessments and all
      other taxes, governmental charges, penalties, interest and other fines due
      and payable by it and which are claimed by any governmental authority to
      be due and owing and adequate provision has been made for taxes payable
      for any completed fiscal period for which tax returns are not yet required
      and there are no agreements, waivers, or other arrangements providing for
      an extension of time with respect to the filing of any tax return or
      payment of any tax, governmental charge or deficiency by the Corporation
      or the Subsidiaries and there are no actions, suits, proceedings,
      investigations or claims threatened or pending against the Corporation or
      the Subsidiaries in respect of taxes, governmental charges or assessments
      or any matters under discussion with any governmental authority relating
      to taxes, governmental charges or assessments asserted by any such
      authority;

- 12 -

Legal Compliance

	 	(r) 	
      there are no actions, suits, proceedings or inquiries
      pending or threatened against or involving or affecting the Corporation or
      the Subsidiaries, at law or in equity or before or by any federal,
      provincial, state, county, municipal or other governmental department,
      commission, board, bureau, agency or instrumentality which in any way
      materially adversely affect, or may in any way materially adversely
      affect, the assets, liabilities, business, operations, capital or
      condition (financial or otherwise) of the Corporation together with the
      Subsidiaries (taken as a whole) or the properties or assets of the
      Corporation together with the Subsidiaries (taken as a whole) or which
      affect or may affect the distribution of the Offered Shares or which would
      impair the ability of the Corporation to consummate the transactions
      contemplated hereby or to duly observe and perform any of its covenants or
      obligations contained in the Material Agreements and the Corporation is
      not aware of any existing ground on which such action, suit, proceeding or
      inquiry might be commenced with any reasonable likelihood of
    success;

	 	 	 
	 	(s) 	
      the Corporation and the Subsidiaries have conducted and
      are conducting their business in compliance in all material respects with
      all applicable laws, rules and regulations and are fully licensed,
      registered or qualified to transact business and are in good standing in
      all jurisdictions in which the conduct of its business requires such
      qualification except to the extent that the failure to so comply or to be
      so licensed, registered or qualified would not have a material adverse
      effect on the Corporation or the Subsidiaries (taken as a whole), all such
      licenses, registrations or qualifications which are material are valid and
      existing in good standing, and the Corporation is not aware of any
      legislation, regulation, rule or lawful requirements presently in force or
      proposed to be brought into force which the Corporation anticipates that
      the Corporation or the Subsidiaries will be unable to comply with without
      materially adversely affecting the Corporation and the Subsidiaries (taken
      as a whole);

	 	 	 
	 	(t) 	
      to the best of the knowledge of the Corporation, no other
      party is in default in the observance or performance of any term or
      obligation to be performed by it under any contract to which the
      Corporation or the Subsidiaries is a party or by which any of them is
      bound which is material to the business of the Corporation and the
      Subsidiaries (taken as a whole);

	 	 	 
	 	(u) 	
      no event has occurred which after notice or lapse of time
      or both would directly or indirectly constitute such a default, in any
      such case which default or event would reasonably be expected to have a
      material adverse effect on the assets or properties, business, results of
      operations, prospects or condition (financial or otherwise) of the
      Corporation and the Subsidiaries (taken as a
whole);

Securities Compliance
Matters

	 	(v) 	
      none of the Securities Commissions, other securities
      commission, similar regulatory authority, the Exchange or other competent
      authority has issued any order which is currently outstanding preventing
      or suspending trading in any securities of the Corporation, no such
      proceeding is, to the knowledge of the Corporation, pending, contemplated
      or threatened, the Corporation is not in default of any requirement of
      Applicable Securities Laws which would have a material adverse effect on
      the Offering or the Corporation or any of the
  Subsidiaries;

- 13 -

	 	(w) 	
      other than the conditional approval of the Exchange with
      respect to the Offering, no authorization, approval or consent of any
      court or governmental authority or agency is required to be obtained by
      the Corporation in connection with the sale and delivery of the Offered
      Shares;

	 	 	 
	 	(x) 	
      the Corporation is a "reporting issuer" not in default of
      Applicable Securities Laws in the Provinces of British Columbia and
      Alberta;

	 	 	 
	 	(y) 	
      the Corporation has taken or will take prior to the
      Closing Date all such steps as may be necessary to comply with such
      requirements of Applicable Securities Laws such that the Offered Shares
      may, in accordance with Applicable Securities Laws, be offered for sale
      and sold on a private placement basis in the Selling Jurisdictions through
      the Underwriter by way of the exemptions from the prospectus
      requirements;

	 	 	 
	 	(z) 	
      the Corporation’s Common Shares are registered under
      Section 12 of the U.S. Exchange Act and the Corporation has filed with or
      furnished to the SEC all reports and other information required to be
      filed or furnished pursuant to the U.S. Exchange
Act;

Exchange Compliance

	 	(aa) 	
      the issued and outstanding Common Shares of the
      Corporation are listed and posted for trading on the Exchange and the
      Corporation is in compliance with the bylaws, rules and regulations of the
      Exchange;

Oil & Gas Operations

	 	(bb) 	
      although it does not warrant title, the Corporation does
      not have reason to believe that each of the Corporation and the
      Subsidiaries does not have good and marketable title to or the irrevocable
      right to produce and sell its petroleum, natural gas and related
      hydrocarbons (for the purposes of this clause, the foregoing are referred
      to as the "Interests") and does represent and warrant that the
      Interests are free and clear of all liens, charges, encumbrances,
      restrictions or adverse claims created by, through or under the
      Corporation or any of the Subsidiaries, except as disclosed in the Public
      Record or those arising in the ordinary course of business, which are not
      material in the aggregate;

	 	 	 	 
	 	(cc) 	
      the Corporation is not aware of any defects, failures or
      impairments in the title of the Corporation or the Subsidiaries to their
      respective oil and natural gas properties, whether or not an action, suit,
      proceeding or inquiry is pending or threatened or whether or not
      discovered by any third party which, in aggregate, could have a material
      adverse effect on the value of the Corporation's or each Subsidiary's
      interests in such property or their ability to exploit such interests or
      property;

	 	 	 	 
	 	(dd) 	
      in respect of the assets and properties of the
      Corporation and the Subsidiaries that are operated by the Corporation or
      any of the Subsidiaries:

	 	 	 	 
	 		(i) 	
      the Corporation and the Subsidiaries hold all valid
      licenses, registrations, permits authorizations and qualifications that
      are required and necessary under applicable law to operate the assets and
      properties of the Corporation and the Subsidiaries as presently
      operated;

- 14 -

	 	 	(ii) 	 all such licenses, registrations, permits, authorizations
        and qualifications are valid and existing and in good standing and none
        of such licenses, registrations, permits, authorizations or qualifications
        contains any burdensome term, provision, condition or limitations which
        has or is likely to have a material adverse effect on the business of
        the Corporation or the Subsidiaries (taken as a whole) as now conducted,
        or as proposed to be conducted; and

	 	 	 	 
	 	 	(iii) 	 the Corporation and the Subsidiaries have not received
        notice of any proceedings relating to the revocation or modification of
        any such licenses, registrations, permits, authorizations or qualifications
        which, if the subject of an unfavourable decision, ruling or finding,
        would materially adversely affect the business, operations, financial
        condition or prospects of the Corporation and the Subsidiaries (taken
        as a whole);

	 	(ee) 	
      all filings by the Corporation and the Subsidiaries
      pursuant to which the Corporation and the Subsidiaries have received, or
      are entitled to receive, government incentives have been made in
      accordance, in all material respects, with all applicable laws and contain
      no misrepresentations of material fact or omit to state any material fact
      which could cause any amount previously paid to the Corporation or the
      Subsidiaries, or previously accrued on the accounts thereof to be
      recovered or disallowed;

	 	 	 
	 	(ff) 	
      any and all operations of the Corporation and the
      Subsidiaries and, to the best of the Corporation's knowledge, any and all
      operations by third parties, on or in respect of the assets and properties
      of the Corporation and the Subsidiaries, have been conducted in accordance
      with good oil and gas industry practices applicable in the jurisdictions
      which such operations occur and in material compliance with applicable
      laws, rules, regulations, orders and directions of government and other
      competent authorities;

Environmental Compliance

	 	(gg) 	
      each of the Corporation and the Subsidiaries has
      conducted, and is conducting, its business in compliance in all material
      respects with all legislation, regulations or by-laws or other lawful
      requirements of any governmental or regulatory bodies ("Environmental
      Laws") of each jurisdiction in which it carries on business relating
      to the protection of the environment, occupational health and safety or
      the processing, use, treatment, storage, disposal, discharge, transport or
      handling of any pollutants, contaminants, chemicals or industrial, toxic
      or hazardous wastes or substance ("Hazardous Substances") or the
      licensing thereof;

	 	 	 	 
	 	(hh) 	
      The Corporation and each of the Subsidiaries:

	 	 	 	 
	 		(i) 	
      has not received any notice of, or been prosecuted for,
      an offence alleging non-compliance with any Environmental Laws;

	 	 	 	 
	 		(ii) 	
      has not settled any allegation of non-compliance short of
      prosecution; and

	 	 	 	 
	 		(iii) 	
      has not received notice of any orders or directions
      relating to environmental matters requiring any work, repairs,
      construction or capital expenditures to be made with respect to any of its
      assets;

- 15 -

	 	(ii) 	
      to the knowledge of the Corporation (after inquiry that
      is consistent with sound environmental practices for businesses engaged in
      exploration for, and production of, oil & gas in the applicable
      jurisdictions) there has not occurred any material spills, emissions or
      pollution of any property of the Corporation or the Subsidiaries, or for
      which the Corporation or the Subsidiaries is or may be responsible, nor is
      the Corporation or the Subsidiaries the subject of any outstanding stop
      orders, control orders, clean-up orders or reclamation orders under
      applicable environmental laws and regulations;

Disclosure and Records

	 	(jj) 	
      the books of account and other records of the Corporation
      and the Subsidiaries, whether of a financial or accounting nature or
      otherwise, have been maintained in accordance with prudent business
      practices;

	 	 	 
	 	(kk) 	
      the Corporation has provided the Underwriter and its
      advisors with true and complete copies of all indentures, mortgages,
      notes, contracts, agreements (written or oral), instruments, leases or
      other documents to which each of the Corporation or the Subsidiaries is a
      party that can reasonably be regarded as presently material to the
      Corporation or the Subsidiaries (collectively, the "Material
      Contracts") and each of the Material Contracts constitutes a legal,
      valid and binding obligation of the Corporation and the Subsidiaries, as
      applicable, enforceable in accordance with their respective terms and, to
      the best of the knowledge of the Corporation, no party thereto is in
      default thereunder;

	 	 	 
	 	(ll) 	
      the information in respect of the assets, liabilities,
      business, operations and capital of the Corporation and the Subsidiaries
      provided by the Corporation and its representatives to the Underwriter or
      its representatives is true and correct in all material respects, as at
      the respective dates thereof and as at the date hereof and does not omit
      any data or information necessary to make the data and information
      provided, taken as a whole, not misleading in any material
  respect;

	 	 	 
	 	(mm) 	
      the description of the assets and liabilities of the
      Corporation and the Subsidiaries (taken as a whole) set forth in the
      Financial Statements fairly presents, in accordance with generally
      accepted accounting principles in Canada, the financial position and
      condition of the Corporation and the Subsidiaries on a consolidated basis
      as at the dates thereof and reflects all material liabilities (absolute,
      accrued, contingent or otherwise) of the Corporation and the Subsidiaries
      as at the dates thereof required to be disclosed in accordance with
      generally accepted accounting principles in Canada;

	 	 	 
	 	(nn) 	
      the information and statements set forth in the Public
      Record were true, correct, and complete and did not contain any
      misrepresentation, as of the date of such information or statements and no
      material change has occurred in relation to the Corporation and the
      Subsidiaries (taken as a whole) which is not disclosed in the Public
      Record, and the Corporation has not filed any confidential material change
      reports which continue to be confidential;

Registrar and Transfer Agent

	 	(oo) 	
      Computershare Trust Company of Canada at its principal
      office in the cities of Calgary and Vancouver is the duly appointed
      registrar and transfer agent of the Corporation with respect to its Common
      Shares;

- 16 -

Other Liabilities

	 	(pp) 	
      other than as provided for in this Agreement, the
      Corporation has not incurred any obligation or liability, contingent or
      otherwise, for brokerage fees, finder's fees, Underwriter's commission or
      other similar forms of compensation with respect to the
Offering;

	 	 	 
	 	(qq) 	
      the Corporation and the Subsidiaries are not a party to
      or bound by any agreement of guarantee, indemnification (other than an
      indemnification of directors and officers in accordance with the by-laws
      of the Corporation and applicable laws and indemnities arising in the
      ordinary course including pursuant to industry agreements such as
      operating agreements and indemnification provisions in favour of trustees
      under warrant indentures and similar agreements, registrar and transfer
      agency agreements and agency and underwriting agreements and similar
      arrangements which, taken together, do not have a material adverse effect
      on the Corporation and the Subsidiaries (taken as a whole)) or any other
      like commitment of the obligations, liabilities (contingent or otherwise)
      or indebtedness of any other person;

	 	 	 
	 	(rr) 	
      except as set forth in the Documents, the Corporation
      does not have any loans or other indebtedness outstanding which have been
      made to or from any of its shareholders, officers, directors or employees
      or any other person not dealing at arm's length with the Corporation or
      the Subsidiaries that are currently outstanding;

	 	 	 
	 	(ss) 	
      no director, officer or other non-arm's length party to
      the Corporation or the Subsidiaries is entitled to receive any royalties,
      net profits interest or other payments or has any other rights based on
      production from properties or assets in which the Corporation or the
      Subsidiaries has an interest;

Acquisition Related

	 	(tt) 	
      assuming all required approvals and consents are obtained
      and all other conditions to completing the Acquisition are satisfied or
      waived, the completion of the Acquisition is scheduled to occur on or
      about June 16, 2006, and the Corporation has no reason to believe that the
      Acquisition will not be completed in accordance with the terms and
      conditions of the Purchase and Sale Agreement;

	 	 	 
	 	(uu) 	
      in the course of the due diligence conducted to date by
      the Corporation in respect of the Acquisition (which the Corporation
      believes is in scope consistent with sound industry practice and
      transactions of a similar value and which has been substantially
      completed), other than with respect to PEP 38738, which has been disclosed
      to the Underwriter, no matters have arisen from such review which
      constitutes something that has (or would reasonably be expected, given the
      present knowledge of the Corporation regarding the assets to be acquired
      pursuant to the Acquisition, to have) a material adverse effect on the
      value of the Acquired Assets or constitute a basis or reason for the
      Corporation not completing the Acquisition;

	 	 	 
	 	(vv) 	
      there have been no amendments to the Purchase and Sale
      Agreement nor any waivers of any material covenants or agreements
      contained therein;

	 	 	 
	 	(ww) 	
      the representations and the warranties of the Corporation
      in the Purchase and Sale Agreement, a true copy of which has been provided
      to the Underwriter, are true and

- 17 -

correct as of the date hereof, except
as such would not have a material adverse effect on the business, operations,
capital, properties, assets, liabilities (absolute, accrued, contingent or
otherwise), condition (financial or otherwise) or results of operations of the
Corporation;

	 	(xx) 	
      the Corporation has no reason to believe that the
      representations and warranties of South Pacific Lease Operations Ltd. in
      the Purchase and Sale Agreement are not true and correct as of the date
      hereof or that South Pacific Lease Operations Ltd. is in breach of any of
      its covenants in the Purchase and Sale Agreement, except such as would not
      have a material adverse effect on the business, operations, capital,
      properties, assets, liabilities (absolute, accrued, contingent or
      otherwise) or results of the operations of Cheal Petroleum Limited, PEP
      38757 Ltd., PEP 38758 or the Corporation;

	 	 	 
	 	(yy) 	
      except in respect of PEP 38738, the Corporation is not
      aware of any defects, failures or impairments in the title of Cheal
      Petroleum Limited, PEP 38757 Ltd., PEP 38758, or any of their
      subsidiaries, to the Acquired Assets, whether or not an action, suit,
      proceeding or inquiry is pending or threatened or whether or not
      discovered by any third party which in aggregate could have a material
      adverse effect on: (A) the quantity and pre-tax present worth values of
      the Acquired Assets; (B) the current production volumes of the Acquired
      Assets; or (C) the current cash flow of the Acquired Assets;

	 	 	 
	 	(zz) 	
      the Corporation believes that the report prepared by
      Sproule International Limited and dated May 2006 reasonably presents the
      quantity and pre-tax present worth values of oil and gas reserves of the
      Acquired Assets as at April 30, 2006 based upon the assumptions as to
      commodity prices and costs contained therein and the Corporation has no
      knowledge of any material adverse change in any of the information set
      forth in the report prepared by Sproule International
  Limited;

Other

	 	(aaa) 	
      to the knowledge of the Corporation, as at the date of
      this Agreement, no insider (as the term is defined in the Securities
      Act (Alberta)) of the Corporation or the Subsidiaries has the present
      intention to sell any securities of the Corporation;

	 	 	 
	 	(bbb) 	
      to the knowledge of the Corporation, none of its
      directors or officers, are now, or have ever been, subject to an order or
      ruling of any securities regulatory authority or stock exchange
      prohibiting such individual from acting as a director or officer of a
      public company or of a company listed on a particular stock
    exchange;

	 	 	 
	 	(ccc) 	
      the Corporation and each of its Subsidiaries maintain a
      system of internal accounting controls sufficient to provide reasonable
      assurance that (i) transactions are executed in accordance with
      management's general or specific authorizations, (ii) transactions are
      recorded as necessary to permit preparation of financial statements in
      conformity with generally accepted accounting principles and to maintain
      asset accountability, (iii) access to assets is permitted only in
      accordance with management's general or specific authorization and (iv)
      the recorded accountability for assets is compared with the existing
      assets at reasonable intervals and appropriate action is taken with
      respect to any differences;

	 	 	 
	 	(ddd) 	
      since the date of the Corporation's latest audited
      financial statements, there has been no change in the Corporation's
      internal controls over financial reporting that has
  materially

- 18 -

affected, or is reasonably likely to
materially affect, the Corporation's internal controls over financial
reporting;

	 	(eee) 	
      the Corporation has established and maintains disclosure
      controls and procedures (as such term is defined in Rule 13a-15(e) under
      the U.S. Exchange Act), (ii) such disclosure controls and procedures are
      designed to ensure that information required to be disclosed by the
      Corporation in the reports that the Corporation will file or furnish under
      the U.S. Exchange Act is recorded, processed, summarized and reported,
      within the time periods specified in the SEC's rules and forms, and are
      designed to ensure that information required to be disclosed by the
      Corporation in the reports that it will file or furnish under the Exchange
      Act is accumulated and communicated to the Corporation's management,
      including the Corporation's principal executive and principal financial
      officers, or persons performing similar functions, as appropriate to allow
      timely decisions regarding required disclosure, and (iii) such disclosure
      controls and procedures are effective in all material respects to perform
      the functions for which they were established;

	 	 	 
	 	(fff) 	
      the Corporation is in compliance in all material respects
      with all applicable provisions of the Sarbanes-Oxley Act of 2002
      (including, without limitation, the provisions of Sections 302 and 906
      thereof concerning certification and Section 402 thereof concerning loans)
      and the rules and regulations of the SEC that pertain thereto that are
      effective, and is actively taking steps to ensure that it will be in
      compliance in all material respects with other applicable provisions of
      the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC
      that pertain thereto upon the effectiveness of such provisions;

	 	 	 
	 	(ggg) 	
      all forms, reports, schedules, prospectuses, circulars,
      statements and other documents (together with any amendments thereto)
      filed by the Corporation with or furnished by it to any of the Securities
      Commissions, the SEC and the Exchange since December 31, 2003 and any
      correspondence related thereto (such forms, reports, schedules,
      prospectuses, circulars, statements and other documents, including any
      financial statements or other documents, including any schedules included
      therein, are referred to as the "Corporation Documents"), at the
      time filed or furnished (and if amended or superseded by a filing or
      furnishing of another Corporation Document prior to the date of this
      Agreement then, on the date of such filing or furnishing), (i) did not
      contain any misrepresentation of a material fact (as defined in Applicable
      Securities Laws of the Selling Provinces), did not at the time they were
      filed contain any untrue statement of a material fact or omit to state a
      material fact required to be stated therein or necessary in order to make
      the statements therein, in light of the circumstances under which they
      were made not misleading and (ii) complied in all material respects with
      the requirements of Applicable Securities Laws;

	 	 	 
	 	(hhh) 	
      the Corporation has not filed any confidential material
      change report with the Securities Commissions, the SEC or any other
      securities authority or regulator or any stock exchange or other
      self-regulatory authority, which as of the date hereof remains
      confidential. None of the Subsidiaries is required to file any reports or
      other documents with any of the Securities Commissions, the SEC or the
      Exchange; and

	 	 	 
	 	(iii) 	
      neither the Corporation nor any of the Subsidiaries is
      aware of or has taken any action, directly or indirectly, that would
      result in a violation by such persons of the U.S. Foreign Corrupt
      Practices Act of 1977 (the "FCPA"), including, without limitation,
      making use of the mails or any means or instrumentality of interstate
      commerce corruptly in furtherance of an offer, payment, promise to pay or
      authorization of the payment of any

- 19 -

money, or other property, gift, promise
to give, or authorization of the giving of anything of value to any "foreign
official" (as such term is defined in the FCPA) or any foreign political party
or official thereof or any candidate for foreign political office, in
contravention of the FCPA, and neither the Corporation nor any of the
Subsidiaries is aware of or has taken any action, directly or indirectly, that
has involved the payment of any bribe, kickback, or other unlawful payment to
any person. The Corporation and the Subsidiaries have conducted their businesses
in compliance with the FCPA, and have instituted and maintained policies and
procedures designed to ensure, and which are reasonably expected to ensure
continued compliance therewith.

                   
It is further agreed by the Corporation that all representations and warranties
in this Section 5 made by the Corporation to the Underwriter shall also be
deemed to be made for the benefit of the Subscribers as if the Subscribers were
also parties hereto (it being agreed that the Underwriter is acting for and on
behalf of the Subscribers for this purpose).

	6. 	
      Indemnity

	 	 	 	 
		(a) 	
      Effective from and after May 12, 2006, the Corporation
      shall indemnify and save the Underwriter, and the Underwriter's affiliates
      and each of their agents, advisors, directors, officers, employees,
      partners, shareholders and each other person, if any, controlling the
      Underwriter or any of its affiliates (collectively, the "Indemnified
      Parties"), harmless against and from all liabilities, claims, demands,
      losses (other than losses of profit) costs, damages and expenses to which
      the Indemnified Parties may be subject or may suffer or incur, whether
      under the provisions of any statute or otherwise, in any way caused by, or
      arising directly or indirectly from or in consequence of:

	 	 	 	 
			(i) 	
      any information or statement contained in the Public
      Record (other than any information or statement relating solely to the
      Underwriter and furnished to the Corporation by the Underwriter or the
      Underwriter's counsel expressly for inclusion in the Public Record) which
      is (or is alleged to be) untrue or any omission (or alleged omission) to
      provide any information or state any fact the omission of which makes or
      is alleged to make any such information or statement untrue or misleading
      in light of the circumstances in which it was made;

	 	 	 	 
			(ii) 	
      any misrepresentation or alleged misrepresentation
      (except a misrepresentation which is based upon information relating
      solely to the Underwriter and furnished to the Corporation by the
      Underwriter or the Underwriter's counsel expressly for inclusion in the
      Public Record) contained in the Public Record;

	 	 	 	 
			(iii) 	
      any prohibition or restriction of trading in the
      securities of the Corporation or any prohibition or restriction affecting
      the distribution of the Offered Shares (not based upon the activities or
      the alleged activities of the Underwriter or any member of the Selling
      Dealer Group, if any) imposed by any competent authority if such
      prohibition or restriction is based on any misrepresentation or alleged
      misrepresentation of a kind referred to in Section 6(a)(ii);

	 	 	 	 
			(iv) 	
      any order made or any inquiry, investigation (whether
      formal or informal) or other proceeding commenced or threatened by any one
      or more competent authorities (not based solely upon the activities or the
      alleged activities of the Underwriter or any member of the Selling Dealer
      Group, if any) relating to or materially affecting the trading or
      distribution of the Offered Shares;

- 20 -

	 	(v) 	
      any misrepresentation contained herein or any breach of,
      default under or non-compliance by the Corporation with any
      representation, warranty, term or condition of the Material Agreements or
      any requirement of Applicable Securities Laws; or

	 	 	 
	 	(vi) 	
      the exercise by any Subscriber of any contractual or
      statutory right of rescission in connection with the purchase of the
      Offered Shares;

provided that in the event and to the
extent that a court of competent jurisdiction in a final judgment from which no
appeal can be made or regulatory authority in a final ruling from which no
appeal can be made shall determine that any proceedings or liabilities in
respect of which indemnity may be sought resulted solely from the gross
negligence, fraud or willful misconduct of any party entitled to indemnity
hereunder, this indemnity shall not apply (provided that, for greater certainty,
the foregoing shall not disentitle the Underwriter from claiming indemnification
hereunder to the extent that gross negligence, if any, relates to the failure of
the Underwriter to conduct adequate "due diligence").

	 	(b) 	
      The Underwriter shall be entitled, as trustee, to enforce
      the obligations contained herein on behalf of any other party entitled to
      indemnity or contribution hereunder.

	 	 	 
	 	(c) 	
      The Corporation agrees that in case any legal proceedings
      or investigation shall be brought against or initiated against the
      Corporation by any securities commission, regulatory authority, stock
      exchange, court, or other entity having regulatory authority, and any
      representative of the Underwriter shall be required to testify in
      connection therewith or shall be required to respond to procedures
      designed to discover information regarding, in connection with, or by
      reason of the performance of professional services rendered to the
      Corporation by the Underwriter, the Corporation shall pay the Underwriter
      the reasonable costs thereof (including an amount to reimburse the
      Underwriter for time spent by its personnel in connection therewith on
      such individuals' usual per diem rates and out-of-pocket expenses incurred
      by their personnel in connection therewith), as they occur provided such
      legal proceedings or investigations do not arise solely as the result of
      the gross negligence, fraud or willful misconduct of any Indemnified
      Party.

	 	 	 
	 	(d) 	
      If any claim contemplated by Section 6(a) shall be
      asserted against any of the Indemnified Parties, such person shall notify
      the Corporation, in writing, as soon as possible of the nature of such
      claim (provided that any failure to so notify shall not relieve the
      Corporation from liability, except and only to the extent that the failure
      materially prejudices the Corporation) and the Corporation shall be
      entitled (but not required) to assume the defense of any suit brought to
      enforce such claim, provided however, that the defence shall be through
      legal counsel selected by the Corporation and acceptable to the
      Indemnified Party, acting reasonably. If the Corporation assumes conduct
      of the defence for an Indemnified Party, the Indemnified Party shall fully
      cooperate in the defence, including, without limitation, the provision of
      documents, appropriate officers and employees to give witness statements,
      attend examinations for discovery, make affidavits, meet with counsel,
      testify and divulge all information reasonably required to defend or
      prosecute the proceedings. The Indemnified Party shall have the right to
      retain its own counsel in any proceeding relating to a claim contemplated
      by Section 6(a) if:

- 21 -

	 	(i) 	
      the Indemnified Party has been advised by counsel that
      there may be a reasonable legal defence available to the Indemnified Party
      which is different from or additional to a defence available to the
      Corporation (in which case the Corporation shall not have the right to
      assume the defence of such proceedings on the Indemnified Party's
      behalf);

	 	 	 
	 	(ii) 	
      the Corporation shall not have taken the defence of such
      proceedings and employed counsel within ten (10) days after receiving
      notice of such proceedings; or

	 	 	 
	 	(iii) 	
      the employment of such counsel has been authorized by the
      Corporation in connection with the defence of such
  proceeding;

and, in any such event, the reasonable
fees and expenses of such Indemnified Party's counsel (on a solicitor and his
client basis) shall be paid by the Corporation, provided that the Corporation
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate law firm (in addition to any local counsel) for all such
Indemnified Parties.

	 	(e) 	
      No admission of liability and no settlement of any
      proceeding shall be made without the consent of the Indemnified Parties
      affected, such consent not to be unreasonably withheld. No admission of
      liability shall be made by an Indemnified Party without the consent of the
      Corporation, such consent not to be unreasonably withheld, and the
      Corporation shall not be liable for any settlement of any proceeding made
      without its consent, such consent not to be unreasonably
  withheld.

	 7.  	Contribution

                   
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in this Agreement is due in accordance
with its terms but is (in whole or in part), for any reason, held by a court to
be unavailable from the Corporation on grounds of policy or otherwise, each of
the Corporation and the party or parties seeking indemnification shall
contribute to the aggregate liabilities, claims, demands, losses (other than
losses of profit), costs, damages and expenses (including legal or other
expenses reasonably incurred in connection with investigation or defence of the
same) to which they may be subject or which they may suffer or incur:

	 	(a) 	
      in such proportion as is appropriate to reflect the
      relative benefit received by the Corporation on the one hand, and by the
      party or parties seeking indemnity on the other hand, from the Offering;
      or

	 	 	 
	 	(b) 	
      if the allocation provided by Section 7(a) above is not
      permitted by applicable law, in such proportion as is appropriate to
      reflect not only the relative benefits referred to in Section 7(a) above
      but also to reflect the relative fault of the party or parties seeking
      indemnity, on the one hand, and the parties from whom indemnity is sought,
      on the other hand, in connection with the statements, commissions or
      omissions or other matters which resulted in such liabilities, claims,
      demands, losses, costs, damages or expenses as well as any other relevant
      equitable considerations.

                   
The relative benefits received by the Corporation, on the one hand, and the
Underwriter, on the other hand, shall be deemed to be in the same proportion
that the total proceeds of the Offering received

- 22 -

by the Corporation (net of fees but before deducting expenses)
bear to the fees received by the Underwriter.

                   
The Corporation agrees that it would not be just and equitable if contributions
pursuant to this Agreement were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraphs. The rights
to contribution provided in this Section 7 shall be in addition to, and without
prejudice to, any other right to contribution which the Underwriter may
have.

                   
Any liability of the Underwriter under this Section 7 shall be limited to the
amount payable to the Underwriter under Section 2(a).

                   
The rights to indemnity and the right of contribution provided in the foregoing
paragraphs shall be in addition to and not in derogation of any other right to
contribution which the Indemnified Parties may have by statute or otherwise at
law or in equity. The Corporation waives all rights of contribution that it may
have against any Indemnified Party relating to any liability in respect of which
the Corporation has agreed to indemnify the Indemnified Parties hereunder.

                   
The obligations under the indemnity and right of contribution provided herein
shall apply whether or not the transactions contemplated by this Agreement are
completed and shall survive the completion of the transactions contemplated
under this Agreement and the termination of this Agreement.

	8.	Expenses

                   
Whether or not the transactions contemplated herein shall be completed, all
costs and expenses of or incidental to the creation, issuance and distribution
of the Offered Shares, shall be borne by the Corporation, including, without
limitation, the fees payable to the Exchange, the fees payable pursuant to the
Applicable Securities Laws, the fees and expenses of the Corporation's counsel,
the reasonable fees and expenses of local counsel retained by the Corporation's
counsel, the fees and expenses of the Corporation's auditors, the Transfer
Agent, engineers, specialists and other outside consultants, the reasonable fees
and expenses of the Underwriter's counsel, the reasonable fees and expenses of
the Underwriter's U.S. counsel and the other reasonable out-of-pocket expenses
of the Underwriter relating to this transaction, including the fees of any
consultants and specialists, if required.

	9. 	
      Termination

	 	 	 	 
		(a) 	
      In addition to any other remedies which may be available
      to the Underwriter, the Underwriter may terminate its obligations
      hereunder, by written notice to the Corporation, in the event that after
      the date hereof and at or prior to the Closing Time:

	 	 	 	 
			(i) 	
      any order to cease or suspend trading in any securities
      of the Corporation, or prohibiting or restricting the distribution of the
      Offered Shares, is made, or proceedings are announced, commenced or
      threatened for the making of any such order, by any securities commission,
      similar regulatory authority, the Exchange or other competent authority,
      and has not been rescinded, revoked or withdrawn prior to the Closing
      Time;

	 	 	 	 
			(ii) 	
      any inquiry, investigation (whether formal or informal)
      or other proceeding in relation to the Corporation or the Subsidiaries or
      any of their respective directors or senior officers is announced,
      commenced or threatened by any securities commission, similar regulatory
      authority, the Exchange or other competent

- 23 -

authority if, in the reasonable
opinion of the Underwriter, the announcement, commencement or threatening
thereof materially adversely affects or may materially adversely affect the
trading or distribution of the Offered Shares;

	 	(iii) 	
      there shall have occurred any adverse material change
      (actual, contemplated or threatened) or any change in a material fact or
      occurrence of a material fact or event or event of the nature described in
      Section 4(a), as determined by the Underwriter in its sole discretion,
      acting reasonably, that could reasonably be expected to have a material
      adverse effect on the assets, liabilities, business, operations, capital
      or condition (financial or otherwise) of the Corporation and the
      Subsidiaries (taken as a whole);

	 	 	 
	 	(iv) 	
      there should develop, occur or come into effect or
      existence any event, action, state, condition or financial occurrence, or
      any catastrophe of national or international consequence, any law or
      regulation, or any other occurrence of any nature whatsoever, which, in
      the sole opinion of the Underwriter, acting reasonably, materially
      adversely affects, or involves, or will materially adversely affect, or
      involve, the financial markets or the business, operations or affairs of
      the Corporation and the Subsidiaries (taken as a whole);

	 	 	 
	 	(v) 	
      the state of the financial markets or of the oil and gas
      industry is such that the Offered Shares cannot, in the sole opinion of
      the Underwriter, acting reasonably, be marketed successfully or
      profitably;

	 	 	 
	 	(vi) 	
      the Corporation shall be in breach of, default under or
      non-compliance with, in any material respect, any representation,
      warranty, covenant, term or condition of the Material Agreements;
  or

	 	 	 
	 	(vii) 	
      the Underwriter shall become aware, as a result of its
      due diligence review or otherwise, of any adverse material change with
      respect to the Corporation (in the sole opinion of the Underwriter, acting
      reasonably) which has not been disclosed to the Underwriter or disclosed
      to the public prior to the date hereof.

	 	(b) 	
      The Underwriter may exercise any or all of the rights
      provided for in Section 9(a), 10 and 14(a) notwithstanding any adverse
      material change, change, event or state of facts and notwithstanding any
      act or thing taken or done by the Underwriter or any inaction by the
      Underwriter, whether before or after the occurrence of any adverse
      material change, change, event or state of facts including, without
      limitation, any act of the Underwriter related to the Offering and the
      Underwriter shall only be considered to have waived or be estopped from
      exercising or relying upon any of such rights if such waiver or estoppel
      is in writing and specifically waives or estoppes such exercise or
      reliance.

	 	 	 
	 	(c) 	
      Any termination pursuant to the terms of this Agreement
      shall be effected by notice in writing delivered to the Corporation,
      provided that no termination shall discharge or otherwise affect any
      obligation of the Corporation under Sections 6, 7, 8 or 15 herein. The
      right the Underwriter to terminate its obligations hereunder are in
      addition to, and without prejudice to, any other remedies it may
    have.

- 24 -

	10. 	
      Closing Documents

                    The
obligations of the Underwriter hereunder shall be conditional upon the
Underwriter receiving, and the Underwriter shall have the right on the Closing
Date on behalf of the Subscribers to withdraw all Subscription Agreements
delivered and not previously withdrawn by Subscribers unless the Underwriter
receives, on the Closing Date:

Legal Opinion

	 	(a) 	
      A legal opinion of the Corporation's counsel addressed to
      the Underwriter and the Subscribers, in form and substance reasonably
      satisfactory to the Underwriter and the Underwriter's counsel, with
      respect to such matters as the Underwriter and the Underwriter's counsel
      may reasonably request relating to the Offered Shares, including, without
      limitation, that:

	 	 	 	 
	 		(i) 	
      the Corporation has been duly incorporated, is validly
      subsisting and has all requisite corporate power and authority to carry on
      its business as now conducted by it and to own its properties and
      assets;

	 	 	 	 
	 		(ii) 	
      the Corporation has full corporate power and authority to
      enter into the Material Agreements, and to perform its obligations set out
      herein and therein, and the Material Agreements have been duly authorized,
      executed and delivered by the Corporation and constitute legal, valid and
      binding obligations of the Corporation enforceable against the Corporation
      in accordance with their terms subject to laws relating to creditors'
      rights generally and except that rights to indemnity and contribution may
      be limited or unavailable by applicable law;

	 	 	 	 
	 		(iii) 	
      the execution and delivery of the Material Agreements and
      the fulfillment of the terms hereof and thereof by the Corporation, and
      the performance of and compliance with the terms of the Material
      Agreements by the Corporation, does not and will not result in a breach
      of, or constitute a default under, and does not and will not create a
      state of facts which, after notice or lapse of time or both, will result
      in a breach of or constitute a default under, any applicable laws of the
      Province of Alberta or any term or provision of the articles or by-laws of
      the Corporation, or, of which counsel is aware, resolutions of the
      directors or shareholders of the Corporation, or any mortgage, note,
      indenture, contract, agreement (written or oral), instrument, lease or
      other document to which the Corporation is a party or by which it is bound
      on the Closing Date, of which such counsel is aware, which might
      reasonably be expected to materially adversely affect the business,
      operations, capital or condition (financial or otherwise) of the
      Corporation;

	 	 	 	 
	 		(iv) 	
      the Offered Shares have been reserved and allotted for
      issuance and when issued, they will be validly issued as fully-paid and
      non-assessable Common Shares;

	 	 	 	 
	 		(v) 	
      the offering, sale, and issuance of the Offered Shares by
      the Corporation to the Subscribers in the Selling Provinces in accordance
      with the Subscription Agreements are exempt, either by statute, regulation
      or order, from the prospectus requirements of the Applicable Securities
      Laws in the Selling Provinces and no prospectus will be required and no
      other document is required to be filed, no proceedings are required to be
      taken and no approvals, permits,

- 25 -

consents or authorizations are
required to be obtained in any of the Selling Provinces to permit such offering,
sale and issuance of the Offered Shares by the Corporation to the Subscribers in
the Selling Provinces, except for the filing by the Corporation, within the
prescribed time periods, of the required reports of such sale and the payment by
the Corporation of applicable fees relating thereto; and

	 	(vi) 	
      the first trade in the Offered Shares may be completed in
      certain circumstances after holding the Offered Shares for four
    months;

It is understood that the
Corporation's counsel may rely on the opinions of local counsel acceptable to
them as to matters governed by the laws of jurisdictions other than British
Columbia, Alberta and Ontario and on certificates of public officials, of
officers of the Corporation and of the Transfer Agent for the Offered Shares as
to relevant matters of fact.

	 	(b) 	
      A legal opinion of the Corporation's U.S. counsel
      addressed to the Underwriter and the Subscribers, in form and substance
      reasonably satisfactory to the Underwriter and the Underwriter's U.S.
      counsel, to the effect that the Offered Shares are not required to be
      registered under the U.S. Securities Act, and with respect to such other
      matters as the Underwriters and the Underwriter’s U.S. counsel may
      reasonably request.

Certificate

	 	(c) 	
      A certificate of the Corporation dated the Closing Date,
      addressed to the Underwriter and signed on the Corporation's behalf by any
      two senior officers or the Corporation, certifying that:

	 	 	 	 
	 		(i) 	
      the Corporation has complied with and satisfied all terms
      and conditions of the Material Agreements on its part to be complied with
      or satisfied at or prior to the Closing Time;

	 	 	 	 
	 		(ii) 	
      the representations and warranties of the Corporation set
      forth herein are true and correct at the Closing Time, as if made at such
      time;

	 	 	 	 
	 		(iii) 	
      no event of a nature referred to in Section 9(a)(i),
      (ii), (iii) or (vi) has occurred or to the knowledge of such officers is
      pending, contemplated or threatened, excluding (with respect to Section
      9(a)(ii) or (iii)) any obligation to make a determination as to the
      Underwriter's opinion;

	 	 	 	 
	 		(iv) 	
      no order, ruling or determination having the effect of
      ceasing or suspending trading in any securities of the Corporation, or
      prohibiting or restricting the distribution of the Offered Shares, has
      been made, or proceedings have been announced, commenced or threatened for
      the making of any such order, ruling or determination by any securities
      commission, similar regulatory authority, the Exchange or by any other
      competent authority, and, to the knowledge of such officers, no
      proceedings for such purpose are pending, contemplated or
    threatened;

	 	 	 	 
	 		(v) 	
      the Corporation has made and/or obtained, on or prior to
      the Closing Time, all necessary filings, approvals, consents and
      acceptances of applicable regulatory

- 26 -

authorities and under any applicable
agreement or document to which the Corporation is a party or by which it is
bound in respect of the execution and delivery of the Material Agreements, the
offering and sale of the Offered Shares and the consummation of the transactions
contemplated hereby (subject to completion of filings with certain regulatory
authorities following the Closing Date);

	 	(vi) 	
      the Corporation has no reason to believe that the
      Acquisition will not be completed in accordance with the terms of the
      Purchase and Sale Agreement on or about June 16, 2006; and

	 	 	 
	 	(vii) 	
      the Purchase and Sale Agreement has not been amended nor
      have any terms and conditions thereof been waived, other than as disclosed
      to the Underwriter.

Other

	 	(d) 	
      Executed copies of the Subscription Agreements in form
      and substance reasonably satisfactory to the Underwriter and the
      Underwriter's counsel.

	 	 	 	 
	 	(e) 	
      Evidence satisfactory to the Underwriter and the
      Underwriter's counsel that the Corporation has obtained all necessary
      approvals from the Exchange for:

	 	 	 	 
	 		(i) 	
      the issuance of the Offered Shares; and

	 	 	 	 
	 		(ii) 	
      the listing of the Offered Shares,

	 	 	 	 
	 			
      subject only to the filing of documents which may be
      required by the Exchange.

	 	 	 	 
	 	(f) 	
      Evidence that the Corporation is a reporting issuer in
      British Columbia and Alberta.

	 	 	 	 
	 	(g) 	
      Confirmation of additional representations and warranties
      as may be reasonably requested by the Underwriter to address issues
      uncovered during the course of the Underwriter's due diligence review of
      the Corporation.

	 	 	 	 
	 	(h) 	
      The Underwriter's Fee provided for in Section
  2.

 

	 11.	Deliveries

                    The
sale of the Offered Shares shall be completed at the Closing Time at the offices
of the Underwriter's counsel in Calgary, Alberta or at such other place as the
Corporation and the Underwriter may agree. Subject to the conditions set forth
in this Agreement, the Underwriter, on the Closing Date, shall deliver to the
Corporation:

	 	(a) 	
      all completed Subscription Agreements and where
      applicable, all completed forms required by the Applicable Securities Laws
      and the Exchange; and

	 	 	 
	 	(b) 	
      a wire transfer in an amount equal to the aggregate
      amount of all the subscriptions for the Offered Shares minus the cash
      portion of the Underwriter's Fee provided for in Section
  2;

against delivery by the Corporation to the Underwriter of:

		(c) 	the opinions, certificates and documents referred to in
      Section 10 above;

- 27 -

	 	(d) 	
      definitive certificates representing, in the aggregate,
      all of the Offered Shares subscribed for in the name of Canaccord Capital
      Corporation or in such name or names as the Underwriter shall notify the
      Corporation in writing not less than 48 hours prior to the Closing Time
      provided such certificates registered in such names may, subject to
      receipt by the Corporation of a satisfactory indemnity, be delivered in
      advance of the Closing Date to the Underwriter or the Underwriter's agent
      or other parties in such locations as the Underwriter may direct and the
      Underwriter and the Corporation may agree upon;

	 	 	 
	 	(e) 	
      such further documentation as may be contemplated by this
      Agreement or that may reasonably be requested by Underwriters'
    counsel.

                    The
Corporation may not reject any properly completed Subscription Agreement from a
Subscriber resident in the Selling Jurisdictions, unless the number of Offered
Shares subscribed for pursuant to all Subscription Agreements tendered by the
Underwriters exceeds the maximum number of Offered Shares to be sold under this
Agreement, in which case Subscription Agreements representing the over-allotment
shall, in consultation with the Underwriters, be rejected, or unless the
acceptance of such Subscription Agreement may breach or violate any Applicable
Securities Laws.

	12.	Restrictions on
Offerings

                    The
Corporation agrees that, from the date hereof to the date that is 120 days after
the Closing Date, it shall not issue or announce any intention to issue or enter
into any agreements to issue any Common Shares or securities, convertible or
exchangeable into Common Shares without the consent of the Underwriter such
consent not to be unreasonably withheld. These restrictions do not apply to
currently outstanding stock options, options issued pursuant to the existing
stock option plan (so long as they do not exceed 10% of the outstanding number
of Common Shares) and the warrants described herein that are outstanding on the
Closing Date.

                    The
Corporation hereby irrevocably grants to the Underwriter a right of first
refusal to act as the Corporation's lead agent or underwriter, as the case may
be, in any public or private financing of the Corporation which involves an
agent or underwriter (a "Financing") for a period of 12 months from the
Closing Date. If the Corporation wishes to effect a Financing during such
period, it shall provide the Underwriter with written notice thereof setting
forth the proposed terms thereof, including the proposed terms and conditions
relative to the compensation of the agent or underwriter, as the case may be,
and the Underwriter shall have five Business Days after receipt of such notice
within which to notify the Corporation of its election to exercise its rights
hereunder.

                    If
the Underwriter elects not to exercise its rights hereunder (and the failure of
the Underwriter to notify the Corporation of its election to exercise its right
hereunder within such five Business Days will be deemed to be an election not to
exercise its right hereunder) or the Corporation and the Underwriter are unable
to agree to the terms of a proposed Financing within such period, then the
Corporation may proceed with the Financing through any other agent or
underwriter, as the case may be, and without the Underwriter's participation
provided that the terms and conditions of such Financing are not less favourable
to the Corporation and the terms and conditions relative to the compensation of
the agent or underwriter, as the case may be, are not more favourable, to such
agent or underwriter, as the case may be, than the terms and conditions proposed
by the Corporation to the Underwriter. If the Financing is completed, the right
of first refusal granted under this Section 12 shall expire.

- 28 -

	13. 	
      Notices

                    Any
notice or other communication to be given hereunder shall, in the case of notice
to be given to the Corporation, be addressed to the Corporation, Attention: Drew
Cadenhead, President and Chief Executive Officer, at the above address with a
copy to:

Blake, Cassels & Graydon
LLP
Suite 2600, Three Bentall Centre
595 Burrard Street
Vancouver,
British Columbia V7X 1L3
Attention: Michael J. Johnson

  Fax No.: (604) 631-3317

and, in the case of notice to be given to the Underwriter, be
addressed to:

Canaccord Capital
Corporation
TransCanada Tower, Suite 2200
450 – 1st Street
SW
Calgary, Alberta T2P 5P8
Attention: Richard Cawkwell

  Fax No.: (403) 508-3866

with a copy to:

Bennett Jones LLP
4500, 855 –
2nd Street S.W.
Calgary, Alberta T2P 4K7
Attention: Mark
Paslawski

  Fax No.: (403) 265-7219

or to such other address as the party may designate by notice
given to the other. Each communication shall be personally delivered to the
addressee or sent by fax transmission to the addressee, and:

	 	(a) 	
      a communication which is personally delivered shall, if
      delivered before 5:00 p.m. (local time) on a Business Day, be deemed to be
      given and received on that day and, in any other case be deemed to be
      given and received on the first Business Day following the day on which it
      is delivered; and

	 	 	 
	 	(b) 	
      a communication which is sent by fax transmission shall,
      if sent on a Business Day before 5:00 p.m. (local time), be deemed to be
      given and received on that day and, in any other case, be deemed to be
      given and received on the first Business Day following the day on which it
      is sent.

	14. 	
      Conditions

	 	 	 
		(a) 	
      All terms and conditions of this Agreement to be
      performed by the Corporation shall be construed as conditions, and any
      breach or failure to comply with any material terms and conditions shall
      entitle the Underwriter to terminate its obligations hereunder by written
      notice to that effect given to the Corporation prior to the Closing Date.
      The Underwriter may waive in whole or in part any breach of, default under
      or non-compliance with any representation, warranty, term or condition
      hereof, or extend the time for compliance

- 29 -

therewith, without prejudice to its
rights in respect of any other representation, warranty, term or condition
hereof or any other breach of, default under or non-compliance with any other
representation, warranty, term or condition hereof, provided that any such
waiver or extension shall be binding on the Underwriter only if the same is in
writing.

	 	(b) 	
      All terms and conditions of this Agreement to be
      performed by the Underwriter shall be construed as conditions, and any
      breach or failure to comply with any material terms and conditions shall
      entitle the Corporation to terminate its obligations to sell the Offered
      Shares by written notice to that effect given to the Underwriter prior to
      the Closing Date. The Corporation may waive in whole or in part any breach
      of, default under or non-compliance with any representation, warranty,
      term or condition hereof, or extend the time for compliance therewith,
      without prejudice to its rights in respect of any other representation,
      warranty, term or condition hereof or any other breach of, default under
      or non-compliance with any other representation, warranty, term or
      condition hereof, provided that any such waiver or extension shall be
      binding on the Corporation only if the same is in
  writing.

	15. 	
      Survival of Representations and
  Warranties

                    All
representations, warranties, terms, conditions and covenants herein or contained
in certificates or documents submitted pursuant to or in connection with the
transactions contemplated herein shall survive the payment by the Underwriter
for the Offered Shares, if any, and the distribution of the Offered Shares and
shall continue in full force and effect for the benefit of the Underwriter and
the Corporation regardless of any investigation by or on behalf of the
Underwriter with respect thereto.

	16. 	
      Underwriter's Covenants

	 	 	 
		
      The Underwriter covenants and agrees with the Corporation
      that it will:

	 	 	 
		(a) 	
      conduct activities in connection with the proposed offer
      and sale of the Offered Shares in compliance with all Applicable
      Securities Laws and cause a similar covenant to be contained in any
      agreement entered into with any Selling Dealer Group established in
      connection with the distribution of the Offered Shares;

	 	 	 
		(b) 	
      not advertise the proposed offering or sale of the
      Offered Shares in the printed media of general and regular paid
      circulation, radio, television or telecommunications including electronic
      display nor provide or make available to prospective purchasers of the
      Offered Shares any document or material which would constitute an offering
      memorandum as defined under Applicable Securities Laws;

	 	 	 
		(c) 	
      not solicit subscriptions for the Offered Shares, trade
      in the Offered Shares or otherwise do any act in furtherance of a trade of
      the Offered Shares outside of the Selling Jurisdictions except in
      compliance with the applicable securities laws thereof and provided that
      the Underwriter may so solicit, trade or act within such jurisdiction only
      if such solicitation, trade or act is in compliance with applicable
      securities laws in such jurisdiction and does not: (i) obligate the
      Corporation to take any action to qualify any of its securities or any
      trade of any of its securities; (ii) obligate the Corporation to establish
      or maintain any office or director or officer in such jurisdiction; or
      (iii) subject the Corporation to any reporting or other requirement in
      such jurisdiction;

- 30 -

	 	(d) 	
      obtain from each Subscriber a properly completed and
      executed Subscription Agreement and all applicable undertakings,
      questionnaires and other forms required under Applicable Securities Laws
      and by the Exchange and supplied to the Underwriter for completion in
      connection with the distribution of the Offered Shares;

	 	 	 
	 	(e) 	
      keep confidential the Responses unless: (i) such
      information is already in the public domain (through no fault of the
      Underwriter); (ii) disclosure of such information is required by law or
      pursuant to a legal proceeding; or (iii) such information is disclosed to
      the Underwriter by another party who is not subject to an obligation of
      confidentiality; and

	 	 	 
	 	(f) 	
      provide to the Corporation all necessary information in
      respect of the Underwriter and the Subscribers to allow the Corporation to
      file, with the Securities Commissions, if required, reports of the trades
      of the Offered Shares in accordance with Applicable Securities Laws within
      ten (10) days of the Closing Date.

	17. 	
      U.S. Offers

                    In
order to permit the offer and sale of the Offered Shares in the United States in
compliance with exemptions from registration under the U.S. Securities Act and
applicable state securities laws:

	 	(a) 	
      the Underwriter makes the representatives, warranties and
      covenants in Schedule "A" hereto and agrees on its own behalf and on
      behalf of its United States affiliate, for the benefit of the Corporation,
      to comply with the selling restrictions set forth in Schedule "A" hereto,
      which forms part of this Agreement; and

	 	 	 
	 	(b) 	
      the Corporation makes the representations, warranties and
      covenants set forth in Schedule "A" hereto for the benefit of the
      Underwriter, and agrees to comply with the selling restrictions set forth
      in Schedule "A" hereto, which forms part of this
  Agreement.

	18. 	
      Severability

                    If
one or more of the provisions contained herein shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein.

	19. 	
      Relationship Between the Corporation and the
      Underwriter

	 	 	 
		
      The Corporation:

	 	 	 
		(a) 	
      acknowledges and agrees that the Underwriter and its
      affiliates may have certain statutory obligations as a registrant under
      the Applicable Securities Laws and may have fiduciary relationships with
      its clients;

	 	 	 
		(b) 	
      acknowledges and agrees that the Underwriter is not a
      fiduciary of the Corporation; and

	 	 	 
		(c) 	
      consents to the Underwriter acting hereunder while
      continuing to act for its clients.

To the extent that the Underwriter's (or its affiliates)
statutory obligations as a registrant under the Applicable Securities Laws or
fiduciary relationships with its clients (if any) conflict with its
obligations

- 31 -

hereunder, the Underwriter (or its affiliates) shall be
entitled to fulfill its statutory obligations as a registrant under the
Applicable Securities Laws and its duties to its clients. Nothing in this
Agreement shall be interpreted to prevent the Underwriter (or its affiliates)
from fulfilling its statutory obligations as a registrant under the Applicable
Securities Laws or to act as a fiduciary of its clients.

	20. 	
      Ability to Enforce

                    The
Corporation authorizes the Underwriter to enforce the representations,
warranties and covenants of the Corporation to the Subscribers set forth in the
Material Agreements on behalf of the Subscribers and to seek damages suffered by
them on their behalf (or any other applicable remedy) for any breach of such
representations, warranties and covenants. Such action may be brought by the
Underwriter at its sole discretion (which need not be exercised reasonably) and
there is no obligation of the Underwriter to bring such action.

	21. 	
      Governing Law

                    This
Agreement shall be governed by and construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable therein, and each of the
parties hereto irrevocably attorns to the jurisdiction of the courts of the
Province of Alberta.

	22. 	
      Time of the Essence

	 	 
		
      Time shall be of the essence of this Agreement.

	 	 
	23. 	
      Counterpart Execution

                    This
Agreement may be executed in one or more counterparts, in original or facsimile
form, and each of which so executed shall constitute an original and all of
which together shall constitute one and the same agreement.

	24.	
      Entire Agreement

                    This
Agreement represents the entire agreement of the parties hereto relating to the
subject matter hereof and there are no representations, warranties, covenants or
other agreements relating to the subject matter hereof except as stated or
referred to herein. This Agreement shall not be amended or varied in its terms
by oral agreement or by representations or otherwise except by instrument in
writing executed by the duly authorized representatives of the parties hereto or
their respective successors or assigns. It is understood that the terms and
conditions of this Agreement supersede any previous verbal or written agreement
between the Underwriter and the Corporation including the letter agreement dated
May 11, 2006.

- 32 -

                    If
the foregoing is in accordance with your understanding and is agreed to by you,
please confirm your acceptance by signing the enclosed copies of this letter at
the place indicated and by returning the same to the Underwriter.

	 	CANACCORD CAPITAL CORPORATION
    
	 	  
	 	  
	 	Per: 	 	 
	 	                         	Name: 
	 	                         	Tile: 

	ACCEPTED AND AGREED to as of this
      12th day 
	of May, 2006. 
	  
	TAG OIL LTD. 
	  
	  
	Per: 	 	 
	                   
    	Name:
	                   	Title: 

SCHEDULE A

Terms and Conditions for United States Offers and
Sales
and Compliance with U.S. Securities Laws

This is Schedule A to the Underwriting Agreement (the
"Underwriting Agreement") between TAG Oil Ltd. (the
"Corporation") and Canaccord Capital Corporation (the
"Underwriter") dated effective as May 12, 2006. All
capitalized terms that are used in this Schedule and not otherwise defined shall
have the meaning ascribed thereto in the Underwriting Agreement.

For the purpose of this Schedule "A", the following terms shall
have the meanings indicated:

	"Accredited Investor" 	means an "accredited investor", as that term is
      defined in Rule 501(a) of Regulation D; 
	  	  
	"affiliate" 	means an "affiliate" as that term is defined in
      Rule 405 under the U.S. Securities Act; 
	  	  
	"Directed Selling Efforts" 	means "directed selling efforts" as that term
      is defined in Regulation S. Without limiting the foregoing, but for
      greater clarity in this Schedule "A", it means, subject to the exclusions
      from the definition of "directed selling efforts" contained in Regulation
      S, any activity undertaken for the purpose of, or that could reasonably be
      expected to have the effect of, conditioning the market in the United
      States for the Securities, and includes the placement of any advertisement
      in a publication with a general circulation in the United States that
      refers to the offering of any of the Securities; 
	  	  
	"Foreign Issuer" 	means a "foreign issuer" as that term is
      defined in Regulation S; 
	  	  
	"General Solicitation or
General
      Advertising" 	means "general solicitation or general
      advertising", as used under Rule 502(c) under the U.S. Securities Act,
      including without limitation any advertisements, articles, notices or
      other communications published in any newspaper, magazine or similar media
      or broadcast over radio or television, or any seminar or meeting whose
      attendees had been invited by general solicitation or general advertising;
    
	  	  
	"Institutional Accredited
      Investor" 	means an Accredited Investor that satisfies the
      requirements of Rule 501(a)(1), (2), (3) or (7) of Regulation D; 
	  	  
	"Offering Material" 	means the disclosure and subscription documents
      (including any term sheet, or copies of news releases issued by the
      Corporation in the United States) prepared and provided by the Corporation
      to the Underwriter; 
	  	  
	"Qualified Institutional Buyer" 	means "qualified institutional buyer" as
      defined in Rule 144A; 
	  	  
	"Regulation D" 	means Regulation D under the U.S. Securities
      Act; 

	"Regulation S" 	means Regulation S under the U.S. Securities
      Act; 
	 	 
	"Rule 144A" 	means Rule 144A under the U.S. Securities Act;
    
	 	 
	"SEC" 	means the United States Securities and Exchange
      Commission; 
	 	 
	"Securities" 	means the Offered Shares; 
	 	 
	"Substantial U.S. Market Interest" 	means "substantial U.S. market interest" as
      that term is defined in Regulation S; 
	 	 
	"United States" 	means the United States of America, its
      territories and possessions, 
	 	 
	"U.S. Affiliate" 	any state of the United States, and the
      District of Columbia; means a U.S. registered broker-dealer affiliate of
      the Underwriter; 
	 	 
	"U.S. Exchange Act" 	means the United States Securities Exchange Act
      of 1934, as amended; 
	 	 
	"U.S. Person" 	means "U.S. person" as defined in Regulation S;
    
	 	 
	"U.S. Purchaser" 	means an Accredited Investor designated by the
      Underwriter to purchase the Securities directly from the Corporation
      pursuant to an executed Subscription Agreement, or a Qualified
      Institutional Buyer purchasing Securities from an Underwriter; and 
	 	 
	"U.S. Securities Act" 	means the United States Securities Act of 1933,
      as amended. 

	A. 	
      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
      UNDERWRITER

The Underwriter acknowledges that the Securities have not been
and will not be registered under the U.S. Securities Act or the securities laws
of any state and may not be offered or sold except in compliance with Rule 903
of Regulation S or pursuant to an exemption from the registration requirements
of the U.S. Securities Act and any applicable state securities laws.
Accordingly, the Underwriter represents, warrants and covenants to the
Corporation that:

	1. 	
      Except for offers and sales of Securities as permitted in
      Sections A.4 through A.12 of this Schedule "A", neither the Underwriter,
      its affiliates nor any persons acting on its or their behalf, has engaged
      or will engage in: (i) any offer to sell or any solicitation of an offer
      to buy, any Securities forming part of its allotment (including any
      Securities purchased by it pursuant to the Underwriting Agreement) to any
      person in the United States or to a U.S. Person, or a person that is
      purchasing for the account or benefit of a U.S. Person; (ii) any sale of
      Securities forming part of its allotment (including any Securities
      purchased by it pursuant to the Underwriting Agreement) to any purchaser
      unless, at the time the buy order was or will have been originated, the
      purchaser was outside the United States and not a U.S. Person, and was not
      purchasing the Securities for the account or benefit of a U.S. Person, or
      the Underwriter, its affiliates or persons acting on its behalf reasonably
      believed that such purchaser was outside the United States and not a U.S.
      Person, and was not purchasing the Securities for the account or benefit
      of a U.S. Person; or (iii) any Directed Selling Efforts during the
      distribution of the Securities. For the purpose of this Schedule A, a
      person that is not a U.S. person by virtue of Rule 902(k)(2)(i) of
      Regulation S

		
      shall be deemed to be outside the United States, and the
      Underwriter may make offers and sales to such persons pursuant to Rule 903
      of Regulation S.

	 	 
	2. 	
      It will not offer or sell the Securities in the United
      States or to U.S. Persons or persons purchasing for the account or benefit
      of U.S. Persons, except that it may offer or sell Securities to Purchasers
      that are U.S. Purchasers in the manner permitted by Section A.4 through
      A.12 of this Schedule "A".

	 	 
	3. 	
      It has not entered and will not enter into any
      contractual arrangement with respect to the distribution of the
      Securities, except with its U.S. Affiliates or members of the Selling
      Dealer Group, without the prior written consent of the
  Corporation.

	 	 
	4. 	
      All offers of Securities in the United States or to or
      for the account or benefit of U.S. Persons have been and will be made
      through the Underwriter's U.S. Affiliate and all sales of the Securities
      in the United States or to or for the account or benefit of U.S. Persons
      or persons in the United States shall be made by the Corporation to
      Purchasers designated by the Underwriter's U.S. Affiliate. The U.S.
      Affiliate participating in this offering is duly registered as a broker or
      dealer pursuant to Section 15(b) of the U.S. Exchange Act and under the
      securities laws of each state in which such offers and sales are to be
      made (unless exempted from the respective state's broker- dealer
      registration requirements) and is a member in good standing with the
      National Association of Securities Dealers, Inc. It shall ensure that each
      U.S. Affiliate complies with the same provisions of Schedule "A" as apply
      to the Underwriter as if such provisions applied to such U.S.
      Affiliate.

	 	 
	5. 	
      It and its affiliates have not, either directly or
      through a person acting on its or their behalf, solicited and will not
      solicit offers for, and have not offered to sell and will not offer to
      sell, Securities in the United States or to or for the account or benefit
      of U.S. Persons by any form of General Solicitation or General Advertising
      or in any manner involving a public offering within the meaning of Section
      4(2) of the U.S. Securities Act.

	 	 
	6. 	
      Any offer, sale or solicitation of an offer to buy
      Securities that has been made or will be made in the United States or to
      or for the account or benefit of U.S. Persons was or will be made only (i)
      to Accredited Investors or Institutional Accredited Investors with which
      the Underwriter has a pre-existing relationship and who will purchase the
      Securities directly from the Corporation in compliance with Section 4(2)
      of the U.S. Securities Act and/or Rule 506 of Regulation D or (ii) to
      Qualified Institutional Buyers, who will purchase Securities from the
      Underwriter or its U.S. Affiliate (acting as principal) in compliance with
      Rule 144A, and in each case in compliance with any applicable state
      securities laws and in accordance with any applicable U.S. federal or
      state laws or regulations governing the registration or conduct of
      securities brokers or dealers.

	 	 
	7. 	
      (i) 
	 Immediately prior to soliciting offerees that are in the United
      States or U.S. Persons or who are purchasing for the account or benefit of
      a U.S. Person, the Underwriter, its affiliates and any person acting on
      its or their behalf had reasonable grounds to believe and did believe that
      each such offeree was (i) an Accredited Investor, (ii) an Institutional
      Accredited Investor, or (iii) a Qualified Institutional Buyer; and 
	 	 
	 	(ii) 	at the time of completion of each sale to a person in the United
      States or to or for the account or benefit of a U.S. Person, the
      Underwriter, its affiliates, and any person acting on its or their behalf
      will have reasonable grounds to believe and will believe, that (i) any
      purchaser designated by the Underwriter or its U.S. Affiliate to purchase
      Securities from the Corporation as a U.S. Purchaser is an Accredited
      Investor purchasing the Securities

for its own account or is an
Institutional Accredited Investor purchasing the Securities for its own account
or for the account of an Accredited Investor over which it exercises sole
investment discretion, and in each case, with which the Underwriter or its U.S.
Affiliate had a pre-existing relationship; or (ii) any purchaser purchasing
securities from the Underwriter or its U.S. Affiliate (acting as principal) is a
Qualified Institutional Buyer purchasing the Securities for its own account or
for the account of another Qualified Institutional Buyer over which it exercises
sole investment discretion.

	8. 	
      Each Underwriter will inform, or will cause its U.S.
      Affiliate and any person acting on its or their behalf to inform each U.S.
      Purchaser of the Securities that neither the Securities or any of the
      Securities have been, nor will any of them be, registered under the
      Securities Act or any applicable state securities laws and that the
      Securities are being sold to them without registration under the
      Securities Act in reliance on Section 4(2) of the U.S. Securities Act
      and/or Rule 506 of Regulation D or Rule 144A (as the case may be) and
      exemptions from registration under applicable state securities
  laws.

	 	 
	9. 	
      Each U.S. Purchaser from the Corporation pursuant to
      Section 4(2) of the U.S. Securities Act and/or Rule 506 of Regulation D
      will be required, prior to the time of purchase of any Securities, to
      execute and deliver a U.S. Subscription Agreement. Each such purchaser
      shall also acknowledge that it understands and acknowledges that it is
      making the representations, warranties and agreements contained therein
      with the intent that it may be relied upon by the Corporation and the
      Underwriter in determining its eligibility to purchase the
    Securities.

	 	 
	10. 	
      None of it, any of its affiliates or any person acting on
      its or their behalf has used or will use any Offering Material or other
      document or had made or issued or will make or issue any advertisement in
      connection with the offer or sale of Securities that does not comply with
      Section B.6 of this Schedule "A".

	 	 
	11. 	
      None of it, any of its affiliates or any person acting on
      any of their behalf has taken or will take, directly or indirectly, any
      action in violation of Regulation M under the U.S. Exchange Act in
      connection with the offer and sale of the Securities.

	 	 
	12. 	
      At the Closing, the Underwriter (together with its U.S.
      Affiliate) will provide a certificate, substantially in the form of
      Exhibit 1 to this Schedule "A", relating to the manner of the offer
      and sale of the Securities. The failure of the Underwriter to deliver such
      a certificate shall be deemed a representation to the Corporation that the
      Underwriter did not offer or sell and will not offer or sell any
      Securities in the United States or to or for the account or benefit of a
      U.S. Person and (b) the name and address of all U.S. Subscribers so as to
      enable the Corporation to comply with its obligations under paragraph B.9
      hereunder.

	
      B. 
	
      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
      CORPORATION

The Corporation represents, warrants, covenants and agrees
that:

	1. 	
      The Corporation is a Foreign Issuer with no Substantial
      U.S. Market Interest in the common shares of the Corporation.

	 	 
	2. 	
      Except as permitted herein, neither the Corporation, its
      affiliates nor any persons acting on its or their behalf (other than the
      Underwriter, its affiliates, members of the Selling Dealers Group or any
      person acting on their behalf, in respect of which no representation is
      made), has engaged or will engage in: (i) any offer to sell or any
      solicitation of an offer to buy, any Securities to
any

		
person in the United States or to a U.S. Person, or a person that is purchasing for the account or benefit of a U.S. Person; (ii) any sale of Securities to any purchaser unless, at the time the buy order was or will have been
originated, the purchaser was outside the United States and not a U.S. Person, and was not purchasing for the account or benefit of a U.S. Person, or the Corporation, its affiliates and any persons acting on its or their behalf reasonably believed
that such purchaser was outside the United States and not a U.S. Person, and was not purchasing for the account or benefit of a U.S. Person; or (iii) any Directed Selling Efforts with respect to any of the Securities.

	
	 	 
	
3. 		
Neither it nor any of its affiliates, nor any person acting on its or their behalf (other than the Underwriter, its U.S. affiliates, members of the Selling Dealer Group or any person acting on their behalf, in respect of which no
representation is made), during the period in which the Securities are offered for sale, has taken or will take any action that would cause the exemptions afforded by Section 4(2) of the U.S. Securities Act and/or Rule 506 of Regulation D to be
unavailable for offers and sales of Securities in the United States in accordance with this Schedule "A", or the exclusion from registration afforded by Rule 903 of Regulation S to be unavailable for offers and sales of the Securities outside the
United States in accordance with the Underwriting Agreement.

	
	 	 
	
4. 		
None of the Corporation, any of its affiliates or any person acting on its or their behalf (other than the Underwriter, its affiliates, members of the Selling Dealer Group or any person acting on their behalf, in respect of which
no representation is made) has offered or will offer to sell, or has solicited or will solicit offers to buy, the Securities in the United States by means of any form of General Solicitation or General Advertising or in any manner involving a public
offering within the meaning of Section 4(2) of the U.S. Securities Act.

	
	 	 
	
5. 		
The Corporation has not, since the date that is six months prior to the commencement of the offering of Securities, sold, offered for sale or solicited any offer to buy any of its securities in the United States or to or for the
account or benefit of a U.S. Person, and will not after the date hereof sell, offer for sale or solicit any offer to buy any of its securities in the United States or to or for the account or benefit of a U.S. Person, in a manner that would be
integrated with the offer and sale of the Securities and would cause the exemption from registration set forth in Section 4(2) of the U.S. Securities Act and/or Rule 506 of Regulation D to become unavailable with respect to the offer and sale of the
Securities.

	
	 	 
	
6. 		
None of the Corporation, any of its affiliates or any person acting on any of their behalf (other than the Underwriter, its affiliates, members of the Selling Dealer Group or any person acting on any of their behalf, in respect of
which no representation is made) has taken or will take, directly or indirectly, any action in violation of Regulation M under the U.S. Exchange Act in connection with the offer and sale of the Securities.

	
	 	 
	
7. 		
None of the Corporation or any of its predecessors or affiliates have been subject to any order, judgment, or decree of any court of competent jurisdiction temporarily, preliminarily or permanently enjoining such person for
failure to comply with Rule 503 of Regulation D.

	
	 	 
	
8. 		
The Corporation is not, and as a result of the sale of the Securities contemplated hereby will not be, an "investment company" as defined in the United States Investment Company Act of 1940, as amended.

	
	 	 
	
9. 		
The Corporation will duly prepare and file a notice on Form D within 15 days after the first sale of Securities in reliance on Rule 506 of Regulation D, and any notice filings required by applicable state securities laws.

	

Exhibit 1

  to Schedule A

Underwriters' Certificate

                    In
connection with the private placement in the United States of Securities (the
"Securities") of TAG Oil Ltd. ("Corporation") pursuant to the
Underwriting Agreement effective as of May 12, 2006 (the "Underwriting
Agreement") between the Corporation and Canaccord Capital Corporation (the
"Underwriter"), the undersigned do hereby certify as follows:

	 	(i) 	
      the Securities have been offered and sold in the United
      States only by the U.S. Affiliate, which was on the dates of such offers
      and sales, and is on the date hereof, a duly registered broker or dealer
      pursuant to Section 15(b) of the U.S. Exchange Act and under the
      securities laws of each state in which such offers and sales were made
      (unless exempted from the respective state's broker-dealer registration
      requirements) and was and is a member in good standing with the National
      Association of Securities Dealers, Inc.;

	 	 	 	 
	 	(ii) 	
      all offers and sales of Securities in the United States
      have been effected in accordance with all applicable United States federal
      and state laws and regulations governing the registration and conduct of
      securities brokers and dealers;

	 	 	 	 
	 	(iii) 	
      immediately prior to offering the Securities to offerees
      that are in the United States or U. S. Persons, or acting for the account
      or benefit of U.S. Persons, we had reasonable grounds to believe and did
      believe that each such offeree was either (i) an Accredited Investor
      purchasing for its own account or an Institutional Accredited Investor
      purchasing for its own account or for the account of an Accredited
      Investor over which it exercises sole investment discretion, or (ii) a
      Qualified Institutional Buyer acting for its own account or the account of
      another Qualified Institutional Buyer over which it exercises sole
      investment discretion, and, on the date hereof, we have reasonable grounds
      to believe and do believe that (i) each person in the United States or
      that is a U.S. Person or is purchasing for the account or benefit of a
      U.S. Person that we have arranged to purchase Securities from the
      Corporation as a U.S. Purchaser is an Accredited Investor purchasing the
      Securities for its own account or Institutional Accredited Investor
      purchasing for its own account or for the account of an Accredited
      Investor over which it exercises sole investment discretion, and (ii) each
      person in the United States or that is a U. S. Person or is purchasing for
      the account or benefit of a U.S. Person that is purchasing Securities from
      the Underwriter or the U.S. Affiliate (acting as principal) is a Qualified
      Institutional Buyer purchasing the Securities for its own account or the
      account of another Qualified Institutional Buyer over which it exercises
      sole investment discretion;

	 	(iv) 	
      no form of General Solicitation or General Advertising
      was used by us in connection with the offer or sale of the Securities in
      the United States nor have we or our affiliates, either directly or
      through a person acting on our or their behalf, solicited offers for, and
      have not offered to sell, the Securities in the United States in any
      manner involving a public offering within the meaning of Section 4(2) of
      the U.S. Securities Act;

	 	 	 
	 	(v) 	
      neither we, our affiliates nor anyone acting on our
      behalf has engaged in any Directed Selling Efforts with respect to the
      Securities nor will any such person engage in any Directed Selling Efforts
      with respect to Securities;

	 	(vi) 	
      all offers for the Securities have been solicited only
      from, and all sales of such Securities have been made only to persons in
      the United States or U.S. Persons that have been informed that that the
      Securities have not been and will not be registered under the U.S.
      Securities Act or any applicable state securities laws and are being sold
      to them without registration under the U.S. Securities Act in reliance on
      Section 4(2) of the U.S. Securities Act and/or Rule 506 of Regulation D or
      Rule 144A under the U.S. Securities Act, as the case may be, and
      exemptions from any applicable state securities laws;

	 	 	 
	 	(vii) 	
      prior to the time of sale of any Securities in the United
      States or to or for the account or benefit of a U.S. Person or person in
      the United States, we caused each such purchaser purchasing from the
      Corporation as a U.S. Purchaser in reliance on Rule 506 of Regulation D,
      to execute and deliver a U.S. Subscription Agreement;

	 	 	 
	 	(viii) 	
      if we purchase any Securities pursuant to the
      Underwriting Agreement, we will resell those Securities only in compliance
      with the Underwriting Agreement, including Schedule "A" thereto, and, we
      will not resell those Securities in the United States or to or for the
      account or benefit of a U.S. Person except in compliance with Rule 144A
      (if available at the time of resale) or another exemption from
      registration under the U.S. Securities Act and in compliance with
      applicable state securities laws;

	 	 	 
	 	(ix) 	
      the offering of the Securities has been conducted and
      will be conducted in accordance with the terms of the Underwriting
      Agreement, including Schedule "A" thereto.

                    All
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Underwriting Agreement, including Schedule "A" thereto. 

                    Dated
this ______ day of June, 2006

	Canaccord Capital Corporation 	 	Canaccord Capital Corporation (USA), Inc.
    
	  	  	 	  
	  	  	 	  
	Per: 	  	 	Per: 	 
	           	Name:	 	                   	 Name: 
	                 
    	Title: 	 	                   	 Title:

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