Vancouver-headquartered TAG said the $NZ30 million ($A26 million) Cheal development was now almost complete, with production facilities fully commissioned and the field producing from four wells using a combination of temporary production facilities at the Cheal B site and permanent facilities at the Cheal A site.

TAG also said that during the June 2007 quarter it received $C893,499 (about $A1.036 million) from Cheal, with the field’s total production amounting to 36,434 barrels of oil. Its production costs and royalties paid to the New Zealand government were $C261,588 (about $A303,440) and $C40,738 (about $A47,256) respectively.

During that time daily production rates averaged only 400 barrels of oil gross per day.

The company spent about $C3.28 million (about $A3.8 million) during the June quarter, mainly related to capital expenditures on the Cheal development.

It also recorded a $C911,763 (about $A1.048 million) loss for the quarter.

Significant contributors to the loss included a foreign exchange loss of $C551,244 (about $A639,440) related to fluctuations of currency on hand and general exploration costs of $C340,810 (about $A395,340) that related to the remaining costs of certain New Zealand exploration permits that were written-off during the 2006-07 fiscal year.

“We are satisfied with the progress made at Cheal during the quarter and are looking forward to increases in production rates and efficiency now that the Cheal production station has been fully commissioned,” incoming chief executive Garth Johnson said.

“TAG faces a number of challenges that relate to costs of exploration and development and our reduced working capital balances resulting primarily from significantly higher than projected costs to develop the Cheal oil field.

“However, a number of opportunities remain available to TAG in New Zealand and we have taken steps to adapt to the challenges and to preserve our capital by reducing costs, adjusting our risk profile and by taking a hard look at our oil and gas interests to ensure any future development and exploration programs reflect our new risk profile.

“We are reviewing all the strategic alternatives available to TAG so we can maximise the value of Cheal and our other assets for our shareholders.”

The Cheal partners are operator Austral Pacific Energy (69.5%) and TAG Oil (30.5%).