TAG Initiating Coverage - 20111003 Casimir

October 3, 2011
TAG OIL LTD. (TAO-T, $6.10)

Recommendation: Speculative Buy; Target: $10.50
Analyst: Kevin Shaw, P.Eng. MBA (403) 835-3158 KShaw@casimircapital.ca Associate: Ryan Galloway, CMA (403) 613-8350 RGalloway@casimircapital.ca
Initiating Coverage: Prodn Behind Pipe to Double Cashflow at Taranaki; Apache-TAG Deal in NZ East Coast Shale a Huge Step Forward
Projected Total Return Market Data 52-Week Trading Range Median Weekly Volume Shares Outstanding, Basic (mm) Shares Outstanding, Diluted In-the-Money (mm) Market Capitalization ($mm) Estimated Net Debt (Cash) Q4/11 ($mm) Enterprise Value ($mm) Forecasts Fiscal Year End: Mar 31 Average Gas Production (mcf/d) Average Oil & Liquids (bbls/d) Average Total Production (boe/d) Percentage Oil Realized Gas Price ($/mcf) Realized Oil Price ($/bbl) Modeled Revenues ($mm) CF From Operations ($mm) Year-End Net Debt (Net Cash) ($mm) Capex (ex A&D) ($mm) Net Debt / Cashflow (x) Per Share ($) EPS ($, FDTSM) DACF/sh (FDTSM) P/E (x) EV/DACF (x) EV/(Avg Boe/d) Asset Values 1P Proved Reserves (2011) Probable Reserves (2011) 2P Proved Plus Probable Reserves (2011) Working Capital at 2012FYE Proceeds from Dilutive Securities Other Estimated Reserve Additions (2012) $ $ $ $ $ $ 72.1% $2.53 - $7.64 608,050 51.1 57.2 $348.7 $(47.2) $301.5
Massive 14B bbl unconventional and conventional oil potential with Apache
Combined AJM and Sproule estimates total 14 Bbbl TPIIP in New Zealands East Coast Basin held 100% by TAG. TAG entered into a farm-out agreement with Apache in September 2011 on 1.7mm acres & Apache will carry up to ~$100mm in exploration & appraisal costs for an initial 25% interest in 5,120 acres, growing to 50% WI across the entire acreage. Apache brings key unconventional shale experience from around the globe coupled with TAGs familiarity of NZ geology.
F2010A 323 323 100% 85.00 6.5 0.2 (8.5) (2.5) n/m $(0.07) $0.00 n/m 1,792.4x n/m
F2011A 606 413 514 80% 86.00 13.1 (1.2) (68.3) 15.6 n/m $(0.01) $(0.03) n/m n/m n/m
F2012E 9,143 859 2,383 36% 7.73 102.27 57.5 23.3 (49.3) 46.0 n/m $0.27 $0.43 22.8x 12.4x $126,554 (m m ) 24.07 29.94 54.01 49.28 22.15 $ $ $ $ $ $ $
F2013E 31,257 1,732 6,942 25% 7.80 102.04 153.5 67.4 (46.7) 70.0 n/m $0.97 $1.23 6.3x 4.3x $43,436 /sh 0.42 0.52 0.94 0.86 0.39 2.56
~2,800 boe/d today & ramping to 5,000+ boe/d with staged Sidewinder start-up
With ongoing Taranaki basin success at Cheal and Sidewinder over the past 10 months, TAG is nicely positioned to ramp big cash flows. Over the next two quarters, multiple wells are expected to start-up and tie-into newly upgraded facilities at Cheal & new facility infrastructure at Sidewinder.
$ 146.15
EMV of Exploration & Developm ent Projects - Taranaki Basin Gross Unrisked Recoverable Resource (mmboe) 55 Net Unrisked Recoverable Resource (mmboe) 42 Net Risked Recoverable Resource (mmboe) 18 EMV ($mm) Success $ 560 EMV ($mm) Risked $ 254 EMV of Exploration & Developm ent Projects - East Coast Basin Gross Unrisked Recoverable Resource (mmboe) 718 Net Unrisked Recoverable Resource (mmboe) 359 Net Risked Recoverable Resource (mmboe) 38 EMV ($mm) Success $ 3,129 EMV ($mm) Risked $ 339
Low to medium risk conventional drilling likely to offset decline & churn cash flow
$ $ 9.80 4.45
$ $
54.74 5.94
With a sizeable inventory of drilling locations, further development and lower risk exploration activities are expected to continue in Taranaki through 2012 onward. We estimate 10 additional Sidewinders and 5 Cheal locations to be drilled over the next 18 months.
Price
Volume (000s)
$10.00 $8.00 $6.00
2,000 1,500 1,000
Valuation Driven by Cashflow ramp at Taranaki & Long-term East Coast Potential
We value TAG based Core NAV of $4.75/sh plus risked EMV of the Taranaki Basin, and a partial inclusion of the true value we estimate in the East Coast Basin. We initiate coverage with a 12-month target of $10.50/sh.
$4.00 $2.00 $0.00 20-Sep-10 500 0 20-Sep-11
20-Jan-11
20-May-11
Source: ThomsonOne, Company Reports, Casimir Capital Ltd.
Casimir Capital Ltd., Member of IIROC and the CIPF Toronto, Ontario M5H 4E5, Canada 145 Adelaide St. W, Suite 200
Key Investment Highlights

14 billion barrel OGIP Farm-out to Apache Positions TAG to More Quickly Unlock the Huge Upside Potential of the E. Coast Basin Conventional & Unconventional
TAG & Apache plan to spend $100mm over the next four years exploring the Waipawa and Whangai oil shale deposits in TAGs East Coast Basin permits. These basins were estimated to have 12 billion barrels of OOIP unconventional (AJM) and 1.74 billion barrels conventional (Sproule). We estimate about 720 mmbbls recoverable based on their evaluation of less than 2000,000 acres of TAGs total acreage package. On a risked basis we believe these reserves could be worth ~$5.94 per share if fully included in our target, and in a success case, could add an astounding $55/share. TAG will be carried during this time for all costs (or 50/50 if costs exceed pre-specified limits). This valuable capital injection will accelerate TAGs ability to deliver on these projects and explore this huge land base with Apache, one of the worlds leading unconventional shale players. We look forward to the first East Coast basin vertical strat tests in 2012.
2X Production Ramp as Sidewinder and Cheal Wells Tied into Upgraded Facilities
Current production is estimated at around 2,800 bbls/d with the recent commissioning of the first well at Sidewinder, and this is set to increase to nearly 6,000 boe/d as significant gas & liquids production from a series of Sidewinder wells, and additional oil production (from 2 Cheal wells) are brought online. With upgraded facilities expected, these wells should be tied-in over the next two to three quarters.
At Taranaki, conventional onshore drilling to continue and supply solid cash flow
TAG plans to keep drilling the various conventional onshore prospects, including more Sidewinders and new Cheal wells targeting the Urenui, Mt. Messenger, and the exciting new Moki formations. Additional exploration activities are also planned in the Cardiff gas & condensate prospect, and the 20% non-op Kaheru prospect offshore. All of these projects supply an excellent cash flow given local gas prices of $7.00/mcf and oil above $100/bbl. Cheal C-2 spud in the last week and 4 additional Cheal wells are up afterward. An additional 5 wells are included in rig commitments but not yet finalized.
Cashed-Up with Large Acreage Positions, High Working Interest, and Key Strategic J.V. Partners to Accelerate Exploration at a Low Cost
TAG is estimated to have more than $55mm in working capital at the end of September, which is more than sufficient to fund the continued drilling of Sidewinder and Cheal wells. In addition, with the recent arrangement in the East Coast basin with Apache whereby TAG is essentially carried for a few years or up to $100 mm in exploration costs, TAG is uniquely positioned to utilize its very strong cash & cash flow from production positions to be opportunistic to potentially add additional growth assets to its portfolio by way of acquisitions.
Valuation
TAG is an exploration-oriented company which is quickly transitioning into a key producer within the New Zealand landscape. Currently our valuation is derived from the companys existing 2P reserves (which do not include SW 2, 3 or 4, and neither the Cheal B4ST nor Cheal C1 results) and the potential for success on future exploration and development projects. As a result, we value the company by using a risk-adjusted F2012E NAV of $4.75/share plus the EMV of incremental exploration & development upside in Taranaki at $4.45/share. We further only partially include 20% of the fully risked $5.94/share EMV of East Coast Basin projects, arriving at a target valuation for TAG of $10.50/share. Figure 1: Reserves and Forecast Net Asset Value
Volumes Proved Producing Proved Non-Producing Undeveloped Total Proved (1P) Total Probable Total Proved + Probable (2P) NPV ($mm) Proved Producing Proved Non-Producing Undeveloped Total Proved (1P) Total Probable Total Proved + Probable (2P) Oil mmbbl 0.4 0.1 0.5 1.0 1.6 Gas bcf 0.2 0.0 0.2 2.0 2.2 NGLs mmbbl Total mmboe 0.5 0.1 0.0 0.6 1.4 1.9 % of Total 23.7% 5.3% 0.0% 29.0% 71.0% 100.0%
0.0 0.0
21.5 2.6 0.0 0.0 0.0 0.0 0.0 0.0 24.1 29.9 54.0
39.8% 4.7% 0.0% 44.6% 55.4% 100.0%
Other NAV Components Value of Undeveloped Land Proceeds from Dilutive Securities Tax Credits Other Plus (Minus) Working Capital at Fiscal Year-End Estimated Core NAV ($mm) Estimated Core NAV (per Share)
$0.00 $22.15
$49.28 $125.45 $2.19
Forecast Changes to Reserves Proven Producing Non-Producing and Undeveloped Total Reserve Additions Estimated Reserve Deductions from Production Risk-Adjusted F2012E Reserves Risk-Adjusted F2012E Core Asset NAV ($mm) Risk-Adjusted F2012E NAV (per Share)
mmboe 4.0 2.0 5.9 0.9 7.0
NPV/boe $34.94 $24.46 $31.45 $46.74 $28.54
NPV (mm) $138.5 $48.5 $186.9 $40.8 $200.2 $271.60 $4.75
Source: Company Reports, Casimir Capital Ltd.
Figure 2: Risk Adjusted EMV of Upside in Taranaki Basin (100% Inclusion)

Region / Project Working Participatin Initial COS Capital/Exploration Interest g Interest (%) Cost ($mm) (%) (%) $0.00 $0.00 $10.00 $25.00 $35.00 65% 100.0% 40% 100.0% 30% 100.0% 10% 20.0% 100.0% 100.0% 100.0% 20.0% Gross Unrisked Recoverable Resource (mmboe) 14.3 11.6 12.1 17.4 55.5 Success Case NPV/boe $20.00 $20.00 $10.00 $16.00 NPV Time Value Adjustment 0.83 0.83 0.79 0.65 Success EMV ($mm) $236.8 $191.5 $95.6 $36.3 $560.2 Risked EMV ($mm) $153.9 $76.6 $23.2 $0.7 $254.4 EMV/sh EMV/sh ($) Success ($) Risked $4.14 $3.35 $1.67 $0.63 $9.80 $2.69 $1.34 $0.41 $0.01 $4.45
Cheal Oil Sidewinder Gas Cardiff Gas/Condensate Kaheru Offshore Total
Figure 3: Risk Adjusted EMV of Upside in East Coast Basin (20% Inclusion)
Region / Project Initial Working Participating Gross Unrisked COS Success Case NPV Time Value Success EMV Risked EMV EMV/sh ($) EMV/sh ($) Capital/Exploration Interest Interest Recoverable Resource (%) NPV/boe Adjustment ($mm) ($mm) Success Risked Cost ($mm) (%) (%) (mmboe) $10.00 $10.00 $40.00 $40.00 $100.00 15% 15% 10% 10% 50.0% 50.0% 50.0% 50.0% 0.0% 0.0% 0.0% 0.0% 50.1 35.5 260.4 372.4 718.4 $20.00 $20.00 $16.00 $16.00 0.62 0.62 0.51 0.51 $311.1 $220.4 $1,069.0 $1,528.6 $3,129.1 $46.7 $33.1 $106.9 $152.9 $339.5 $5.44 $3.86 $18.70 $26.74 $54.74 $0.82 $0.58 $1.87 $2.67 $5.94
Waitangi Hill Oil Boar Hill Oil Waipawa Black Oil Shale Whangai Oil Shale Total
Figure 4: Target Derivation
Valuation Method: Net Asset Value & EMV of Risked Upside

Value Estimated Core Asset NAV 2011 Estimated Risk-Adjusted NAV Additions this Fiscal Year Forecast Risk-Adjusted F2012E Core Asset NAV $2.19 $2.56 $4.75 Inclusion 100% 100% Valuation Build-Up $2.19 $2.56 $4.75
EMV of Risk-Adjusted Incremental Upside - Teranaki Basin EMV of Risk-Adjusted Incremental Upside - East Coast Basin Valuation
$4.45 $5.94
100% 20%
$4.45 $1.19 $10.39
Company Background
TAG Oil is a high-growth E&P with focus on onshore & offshore New Zealand properties. The company became active in the Taranaki basin of New Zealand in 2002, and proceeded to acquire acreage, data, and startup capital for initial exploration activities. It secured a listing on the TSX Venture in 2005 and continued to grow its asset base. By 2007 the company officially began producing from the Cheal discovery with less than 100 bbls/d and growing ever since. After carefully managing spending during the financial crisis of 2008, the company has begun to capitalize on new shale technologies to explore in new prolific basins.
The company has a short term strategy of maximizing the value of its discoveries at Cheal and Sidewinder and an increasing cash flow to allow future growth with minimal shareholder dilution. In the long term, the company seeks to leverage technological advances to drill unconventional oil shales in the East Coast Basin of New Zealand. The company graduated from the TSX Venture to the TSX in July 2011.
Asset Overview
TAG holds acreage in both the western Taranaki and the East Coast Basins of New Zealand. TAGs early entry into these basins gave it a strong first-mover advantage in the form of lower costs and some of the highest quality acreage throughout the New Zealand landscape. TAGs acreage in the Taranaki Basin is a current producer with 100 mmbbls OOIP and 500 bcf OGIP potential and a large cash flow provider to the company. The East Coast Basin has huge potential for exploration upside both conventionally and unconventionally. Figure 5: Geography of TAGs primary assets in Taranaki and East Coast New Zealand
Source: Company Reports
The company has a 100% working interest in most of its lands, and has identified hundreds of future exploration targets with relatively low-risk drilling. In total, the company possesses over 1.7 million prospective acres with both conventional and unconventional reservoirs. This position is estimated to have a potential resource of 14 billion barrels OOIP.
Figure 6: TAGs Asset Mix 100 mmboe conventional development-oriented Taranaki with 14 billion bbl potential in East Coast exploration
Taranaki Basin
The Taranaki Basin is situated around Mt. Taranaki on the western coast of New Zealand. The basin has proven reserves of 600 mmbbls and 7 tcf of natural gas. The area however is only lightly explored and offers significant exploration upside. TAG owns two permits in the area with a 100% WI and significant 3D seismic coverage. The company has 50+ drilling prospects, and we estimate production from this region by year-end approaching the 3,000 boe/d level with steady growth from behind-pipe production continuing into 2012. Figure 7: Overview of the Taranaki Basin
Figure 8: Production Past & Future up to 5,900 boe/d expected by calendar year-end
G a s R a te (mmc f/ d ) Sidewinder- 1 Sidewinder- 2 Sidewinder- 3 Sidewinder- 4 Cheal- B4ST Cheal- C1 * T ota l: 7.40 8.80 7.21 6.98 0.24 0.24 30.87 O il Ra te (bb ls/ d) 0 0 0 0 360 360 720 BO E Ra te (boe / d) 1,233 1,467 1,202 1,163 400 400 5,865 F ina l Dra wdown Ra te 28% 25% 40% 25% Ne t P a y Enc oun te re d 14 meters 47 meters 15 meters 19 meters 17 meters 15 meters
*Cheal- C1 has suc cessfully tested, but stabilized rates not yet published. Company expec ts flow rates similar to B4ST
Cheal Oil & Gas Field 100% W.I. Development Asset

The Cheal Oil & Gas Field is characterized by multiple stacked formations, primarily the Kiore, Urenui, Mt. Messenger, and Moki. The entire permit has 3D seismic coverage, and all wells drilled at Cheal are easily tied into a TAG-operated production facility. Upgrades are currently underway to increase the capacity of the Cheal facility to handle additional wells which have already been drilled, namely B4ST and Cheal C1 which were drilled earlier in 2011. We anticipate up to 10 additional vertical Cheal wells by 2013. The company is also eager to assess the Moki formation with upcoming wildcat targets. Figure 9: Overview of the lower-risk multi-stacked development at Cheal
Sidewinder Discovery (100% W.I.) A Cashflow Machine Just Recently Fired-up

TAG has had great success in 2011 from the Sidewinder discovery area with 4 successful gas wells, though all are still awaiting tie-in to facilities. The Sidewinder permit area is 7,910 acres, and directly offsets nearby Kaimiro and Ngatoro fields, which have 25 mmboe proven reserves. In March 2011, the company had identified numerous other drill locations, and we estimate up to 10 additional vertical development wells being drilled through March 2013. Figure 10: Sidewinder area - sizeable exploration upside, room to run & past success
Hellfire Natural Gas & Condensate Beneath Sidewinder (100% W.I.)

Recently, TAG has begun discussing a high-impact gas target in deeper reservoirs beneath the Sidewinder discovery. The aptly-named Hellfire prospect targets Kapuni level (3,0004,000m) deep gas, which is anticipated to be condensate rich. This exciting new regional prospect is likely to add value to the company, but at this time, the company has not released adequate details for us to create a risk-adjusted EMV.
Cardiff Natural Gas & Condensate (100% W.I.)

The Cardiff gas discovery is adjacent to the Cheal discovery in the Taranaki basin. The company is eager to explore this acreage, as it is offsetting the Shell / Todds Kapuni field, which was the first major discovery in New Zealand. With current gas prices creeping toward US$7.00/mcf, the economics of gas plays in New Zealand are highly attractive and much more lucrative than in places like North America where gas prices are currently depressed due to oversupply and less demand. Figure 11: Overview of Cardiff Discovery Near Cheal
The Cardiff pay has a depth of approximately 4,000 metres, and the company believes horizontal drilling into the tight sands could access up to 508 bcf of gas OGIP, plus condensates.
Kaheru Prospect 20% W.I. Joint Venture

The Kaheru prospect is one of several potential offshore locations in the Taranaki basin, in which the company has a 20% non-operated working interest with partner Roc Oil. Roc is a proven offshore exploration and development company and provides necessary offshore experience to TAG. A previous resource assessment of the area estimated a potential of up to 819 bcf and 21.4 mmbbls original resource in place.
Figure 12: The Kaheru Prospect Joint Venture with Roc Oil
East Coast Basin A Company Maker For Any Size of E&P

The East Coast Basin is a significantly under-explored basin in which TAG has over 1.7mm acres of 100% working interest land. AJM were hired for an independent resource assessment, and identified 12 billion barrels of potentially undiscovered unconventional resource at the P50 (mid-case) level on just 200,000 acres of this position. We estimate a 5% recovery factor at this time, which still yields a massive 720 mmbbls recoverable resource. The company has several shallow conventional targets and deep conventional targets, estimated by Sproule to be 1.74 billion bbls OOIP, and much larger unconventional oil shale ambitions. Figure 13: Overview of massive 1.7+ mm net acre position in the East Coast Basin
10
In September 2011, the company announced a farm-out agreement with Apache, in which Apache will gradually earn up to a 50% interest in most of the East Coast blocks, in exchange for carrying TAG on the initial upfront exploration costs, up to a cost cap, at which point both companies will pay their respective working interest portion of overages. Apache intends to spend up to $100mm to get the field into a pre-operations phase.
Waitangi Hill (Permit 38348) and Nicks Head (Permit 50940)

Waitangi Hill exploration drilling can potentially allow for rapid shallow oil development and additional oil cash-flow, while providing additional critical information about the viability of deeper oil shales in the Waipawa and Whangai. We assign a gross un-risked recoverable resource of 372 mmboe to this region. Figure 14: Waitangi Hill Acreage Overview
Boar Hill (Permit 38349)

The Boar Hill prospect has identified numerous Miocene sandstones with 20%+ porosities and at least 20 conventional drill sites across the acreage. Oil & gas seeps were noted in this area and TAG completed a 487m stratigraphic well in 2009, which identified progressively more oil rich readings as the well penetrated the Oligocene strata. Planning is underway for at least one 1,500-3,000m exploration well in the future, with potential for more. We assign a gross un-risked recoverable resource of 36 mmbbls to this area. Figure 15: Boar Hill Acreage Overview
11
Waipawa and Whangai Oil Shale

The W&W oil shales in TAGs acreage are comparable in organic carbon content and maturity levels to those seen in the Bakken and Liassic Shales. These shales are naturally fractured, with significant over-pressuring and 50 degree API oil. This quality, significantly better porosity, plus naturally occurring oil and gas seeps in the area provide confidence in the recoverability of resources at this early stage. We assign a gross un-risked recoverable resource of 260 mmbbls to Waipawa and 372 mmbbls to Whangai. Figure 16: Extremely Favorable Comparison between W&W and Bakken Shale
12
Appendix A: Management and Directors

Management
Garth Johnson, CEO
Mr. Johnson's perseverance, strategic planning skills, and ability to execute complex transactions have been key to TAG Oil's transformation from a start-up to prominent international production and development-stage company. Over the past 15 years, he has developed a deep expertise in New Zealand and Papua New Guinea oil and gas activities, as well as a wealth of diverse business experience in North America and Australasia. His strong leadership is critical to TAG's continued growth and success.
Drew Cadenhead, Chief Operating Officer

Mr. Cadenhead received world-class technical training and in-depth knowledge of the Western Canadian Sedimentary Basin during his 24 years based in Calgary. Thirteen of those years were with Canadian Hunter Exploration. He also worked in various leadership capacities for a number of other Canadian-based companies including Ulster Petroleum, Selkirk Energy and Summit Resources. At Summit he was responsible for identifying and leading the company into the Gunnell area of BC to test the Upper Devonian Jean Marie Formation where multi-TCF gas deposits were subsequently discovered. Mr. Cadenhead gained his New Zealand experience with Fletcher Challenge Energy Taranaki, leading a team of geoscientists, engineers and technical support staff into a successful multi-well drilling program and secondary recovery implementation before joining TAG Oil in 2003. Mr. Cadenhead holds a Bachelor of Science Degree in Geology from the University of Calgary, and is a member of APEGGA.
Blair Johnson, Chief Financial Officer

Mr. Johnson, who holds a Bachelor of Management Studies with First Class Honors in Accounting and Marketing, has worked with the Company for the last four years. His responsibilities have included corporate governance and accounting functions for TAGs New Zealand subsidiaries. He is a member of the Chartered Institute of Management Accountants (UK), and a member of the Institute of Chartered Accountants of New Zealand. Prior to joining TAG, Mr. Johnson was Finance Director for Bridge Petroleum Limited (NZ) and has an exceptional track record of managing operational risk in highly regulated industries.
13
Board of Directors
Alex P. Guidi, Director
Mr. Guidi is highly experienced international oil and gas entrepreneur and the founder of TAG Oil. Mr. Guidi began his journey into the oil business as a drilling roughneck in Alberta at age 18. Since then, he has founded and led a number of successful Canadian-based growth companies. Mr. Guidi has also led the funding, development and growth strategy of several companies that pioneered exploration onshore and offshore in Australasia and China throughout the early 1990s to the present, which has resulted in the discovery of several wildcat oil and gas discoveries in New Zealand and major gas reserves in Papua New Guinea's Foreland, key parts of which were recently acquired by Talisman Energy. In the 1980s, Mr. Guidi introduced new horizontal drilling technology to mature fields in South East Saskatchewan, transforming Walking Stick Oil and Gas Ltd. into a significant entity that later merged with Bonavista Petroleum.
Keith Hill, Director

Mr. Hill is the Chairman of Black Pearl Resources Inc. (TSX: PXX) and ShaMaran Petroleum Corp. (TSX-V: SNM), and is the CEO of Africa Oil Corp. (TSX-V: AOI). Prior to this, Mr. Hill was instrumental in developing Valkyries Petroleum Corp. and Tanganyika Oil Company Ltd., both highly successful international oil and gas producers which were acquired by major oil companies. Mr. Hill holds a Master of Science degree in Geology and Bachelor of Science degree in Geophysics from Michigan State University, as well as an MBA from the University of St. Thomas in Houston.
Ronald Bertuzzi, Director

Mr. Bertuzzi holds a Bachelor of Economics from the University of British Columbia and he has more than 20 years of executive, board and committee experience with US and Canadian junior listed companies focused primarily in the oil and gas industry doing business in Australasia. Mr. Bertuzzis experience covers various stages of company development beginning with initial start-up and initial public offerings, acquiring and exploring significant exploration acreages and ending in discovery, facility development and commercial production of oil and gas.
Giuseppe (Pino) Perone, Corporate Secretary/Treasurer

Mr. Perone is an active member of the Law Society of British Columbia and is currently practicing as a corporate lawyer for a group of public companies. He obtained a B.A. with distinction in Sociology from the University of Victoria in 2001 and an LL.B. from the University of Alberta in 2005, and has previously articled at the law firm of Lang Michener LLP in their Vancouver, British Columbia office.
Garth Johnson, Director As Above
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Company Name TAG Oil Ltd.
Disclosures None
Disclosure List
1. 2. 3. 4. 5. 6. 7. Within the last 12 months, Casimir or its affiliates have provided investment banking and/or related services for the subject issuer. Within the last 12 months, a director, officer, or analyst with Casimir has provided services for remuneration, other than investment advisory or trading services, to the subject issuer. The research analyst(s) or associate(s) or a member of the research analyst's(s) or associate's(s) household has a long position in the shares and/or is long calls/short put options of the subject issuer. Casimir or its affiliates is a market maker, or is associated with the specialist that makes a market in the securities of the subject issuer. Casimir or its affiliates collectively beneficially own 1% or more of any class of the issuers equity securities. An employee, officer, or director of Casimir is a member of the Board of Directors, Officer of, or an advisor to, the subject issuer. The research analyst(s) has viewed the material operations of the subject issuer.
Analyst Certification. Each analyst of Casimir Capital Ltd. whose name appears in this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analysts personal views about any and all of the securities or issuers discussed herein that are within the analysts coverage universe and (ii) no part of the research analysts compensation was, is, or will be, direct or indirectly related to the provision of specific recommendations or view expressed by the research analyst in the research report. The compensation of Research Analysts and Research Associates is intended to reflect the value of the services they provide to the clients of Casimir Capital. As with most other employees, the compensation of Research Analysts is impacted by the overall profitability of the firm, which may include revenues from investment banking activities of the firm's Corporate Finance department. Research Analysts' compensation is not, however, directly related to any specific corporate finance transactions. Distribution Policy. Casimir endeavours to make all reasonable efforts to disseminate research to all eligible clients in a timely manner through either physical or electronic distribution such as mail, fax, email, or by posting to Casimir proprietary websites. Disclaimer. This report has been prepared by Casimir Capital Ltd. (Casimir) Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information contained herein is for information purposes only and this report is not, and is not to be construed as, and offer to sell or a solicitation of an offer to buy any securities. The information and opinions contained herein have been compiled or derived from the sources believed reliable, but no representation or warranty, expressed or implied, is made to their accuracy or completeness. Neither Casimir nor its affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents. Casimir and/or its affiliates may have acted as financial adviser and/or underwriter for certain of the issuers mentioned herein and may have received remuneration for such services. Casimir, its affiliates and/other respective officers, directors and employees may from time to time acquire, hold or sell positions in the securities mentioned herein as principal or agent. Affiliate Related Disclosures: TAG Oil Ltd. (the subject company) is not a client of Casimir Capital L.P. and its affiliate Casimir Capital Ltd. and has been not been a client during the 12-month period preceding the date of distribution of this research report. During aforementioned period, Casimir Capital L.P. and its affiliate Casimir Capital Ltd. have not provided investment banking services to the subject company and have not received investment banking or non-investment banking related fee or compensation from the subject company. Casimir Capital L.P. and its affiliate Casimir Capital Ltd. intend to seek compensation for investment banking services from the subject company during the next 3 months. This report has been prepared by Casimir Capital Ltd., not Casimir Capital L.P. and is therefore deemed by Casimir Capital L.P. to be a Third-Party Research Report as per FINRA rules and regulations.
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Investment Ratings System

Casimirs system for rating oil & gas investment opportunities assumes that these securities have higher levels of risk than the broader stock market. As a result, our oil and gas research evaluates securities primarily on a return basis. In addition, due to a variety of factors including but not limited to market conditions, political risk, and news flow, we may at our discretion adjust our investment ratings to reflect short-term trading conditions that are different than our long-term view of the returns on specific securities. Below is a summary example of these investment ratings: Investment Rating Speculative Buy Rating Description A security, which at the time the rating is instituted and or reiterated, indicates an expectation of exceptionally strong returns but the risk of a significant loss is materially higher than other oil and gas companies. A security, which at the time the rating is instituted and/or reiterated, indicates that we expect it to significantly outperform the broader market. A security, which at the time the rating is instituted and/or reiterated, indicates that we expect it to modestly outperform the broader market. A security which at the time the rating is instituted and/or reiterated, indicates that we expect the security to perform at levels comparable to the broader market. A security which at the time the rating is instituted and/or reiterated, indicates that the security is likely to underperform the broader market. Casimir Capital Ltd. does not have an opinion or expectation as to the price of the security.
Strong Buy
Buy
Hold
Sell
Not Rated
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October 3, 2011

TAG OIL LTD. (TAO-T, $6.10)

$10.00 $8.00 $6.00

2,000 1,500 1,000

$4.00 $2.00 $0.00 20-Sep-10 500 0 20-Sep-11

Source: ThomsonOne, Company Reports, Casimir Capital Ltd.

Key Investment Highlights

39.8% 4.7% 0.0% 44.6% 55.4% 100.0%

$49.28 $125.45 $2.19

mmboe 4.0 2.0 5.9 0.9 7.0

NPV/boe $34.94 $24.46 $31.45 $46.74 $28.54

NPV (mm) $138.5 $48.5 $186.9 $40.8 $200.2 $271.60 $4.75

Source: Company Reports, Casimir Capital Ltd.

Figure 2: Risk Adjusted EMV of Upside in Taranaki Basin (100% Inclusion)

Cheal Oil Sidewinder Gas Cardiff Gas/Condensate Kaheru Offshore Total

Source: Company Reports, Casimir Capital Ltd.

Source: Company Reports, Casimir Capital Ltd.

Figure 4: Target Derivation

Valuation Method: Net Asset Value & EMV of Risked Upside

$4.45 $1.19 $10.39

Source: Company Reports, Casimir Capital Ltd.

Source: Company Reports

Source: Company Reports

Source: Company Reports

Source: Company Reports

Cheal Oil & Gas Field 100% W.I. Development Asset

Source: Company Reports

Sidewinder Discovery (100% W.I.) A Cashflow Machine Just Recently Fired-up

Source: Company Reports

Hellfire Natural Gas & Condensate Beneath Sidewinder (100% W.I.)

Cardiff Natural Gas & Condensate (100% W.I.)

Source: Company Reports

Kaheru Prospect 20% W.I. Joint Venture

Source: Company Reports

East Coast Basin A Company Maker For Any Size of E&P

Source: Company Reports

Waitangi Hill (Permit 38348) and Nicks Head (Permit 50940)

Source: Company Reports

Boar Hill (Permit 38349)

Source: Company Reports

Waipawa and Whangai Oil Shale

Source: Company Reports

Appendix A: Management and Directors

Drew Cadenhead, Chief Operating Officer

Blair Johnson, Chief Financial Officer

Keith Hill, Director

Ronald Bertuzzi, Director

Giuseppe (Pino) Perone, Corporate Secretary/Treasurer

Garth Johnson, Director As Above

Company Name TAG Oil Ltd.

Investment Ratings System

CASIMIR CAPITAL LTD.

MEMBER OF IIROC & CIPF

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