TAG Oil Reports Increased Revenue in Q1 Results

VANCOUVER, Aug. 17, 2015

Changes in the economic climate and low oil prices over the last year have brought about a shift in TAG's near and long-term focus towards low-risk, low-expenditure, in-field production optimization opportunities that have been identified to increase production. As a result, TAG Oil continues to focus its operations on developing oil and gas production from its core Taranaki Basin fields, which have proven over an extended period of years to consistently generate solid production performance. The shallow Miocene oil development portion of this field has been substantially de-risked through extensive 3-D seismic coverage and the drilling of 36 wells to date.

TAG's focus on reducing costs also includes farming out higher risk prospective acreage or entering joint ventures where appropriate, to ensure TAG Oil remains financially strong and well positioned to navigate the current low oil price environment.

Toby Pierce, TAG Oil's CEO commented, "Despite a weak oil price market, our Q1 results were slightly ahead of expectations and we continue to maintain cash flow positive operations. Going forward, we expect Q2 revenues and cash flow to be below expectations due to lower oil prices, as well as some lower production numbers. The lower production is due to several wells that are offline, and we've shut in a moderate amount of production for safe operations while conducting our workover program."

Mr. Pierce continued, "As we focus on our workover program over the next several months we expect production to increase into Q3 and Q4. Further, Q2 pricing has been below our forecasted US$60 per barrel Brent price so we have made the decision to defer some of the larger capital expenditures until later in the year and/or until we see better oil pricing. Overall, TAG is in an excellent position to weather this downturn and I continue to gain confidence in both the strength of the assets and the recovery of the oil markets. Finally, I would like to take this opportunity to thank the TAG Oil team for their continued safe operations and hard work over the last quarter."

FIRST QUARTER FINANCIAL AND OPERATING HIGHLIGHTS

• TAG had $20.5 million in cash and cash equivalents and $26.1 million in working capital at June 30, 2015, with no debt and 62,314,052 common shares outstanding.
• Average net daily production decreased by 8% for the quarter to 1,689 BOE/d (73% oil) from 1,837 BOE/d (77% oil) for the previous quarter ended March 31, 2015.
• Total revenue increased by 7% for the quarter to $10.4 million from $9.7 million for the previous quarter ended March 31, 2015.
• Operating netbacks increased for the quarter to $35.61 per BOE from $33.46 per BOE for the quarter ended March 31, 2015.
• Cashflow provided from operating activities decreased by 38% for the quarter to $3.3 million from $5.3 million for the quarter ended March 31, 2015.
• On May 12, 2015, TAG announced the appointment of Mr. Frank Jacobs as its Chief Operating Officer.
• On May 16, 2015, the Cheal E to A pipeline was commissioned and exported gas to the market 29 days ahead of schedule. During the quarter the pipeline has moved an average of ~1.5 MMSCFD (1.1 MMSCFD net to TAG) of gas to Cheal A-Site for further processing and sales. The pipeline allows TAG to significantly reduce operating costs while generating additional revenues, giving TAG the ability to quickly monetize future oil and gas wells drilled in the Cheal E-Site development area.
• On June 1, 2015, TAG announced the appointment of Mr. Toby Pierce as its Chief Executive Officer and a Director.
• On June 16, 2015, TAG announced the appointment of Mr. Henrik Lundin as a Director.
• Capital expenditures totaled $2.9 million for the quarter compared to $10.5 million for the quarter ended March 31, 2015.

RECENT DEVELOPMENTS