TAG Oil Ltd. provided the following exploration and development drilling update in both the shallow and deeper targets within the Taranaki Basin. As TAG enters calendar year 2014, the Company will be maintaining its strategy of deploying capital to high impact exploration targets while developing shallow reservoirs to provide sustainable capital for continuous exploration activities. TAG announced the Cardiff-3 well targeting the Eocene-aged Kapuni Formation reached Total Depth of 4,863 meters in December, fully penetrating and evaluating all three deep target zones as planned; the well took longer to drill than anticipated due to encountering thick coal sections in the Eocene-aged Mangahewa Formation.

Condensate-rich gas shows were recorded in all three target zones within the Kapuni Formation and as a result TAG is casing the well to total depth and will pursue a completion and testing program. Evaluation will begin with perforation and, if necessary, hydraulic stimulation of the deepest targeted prospect, the Kapuni K3E zone. Following evaluation of the K3E zone, the shallower K1A and Mckee Sand zones will be evaluated and a decision will then be made on an overall production strategy.

In total TAG encountered over 230 meters of potential net pay over the three target zones to be evaluated. TAG successfully completed its initial five well drilling program at the Cheal-E Site in mid-December. Cheal-E1 has been naturally flowing through a 17/64" choke, for 44 days and has produced at an average of 547 BOE/d (88% oil) while Cheal-E4 has been naturally flowing through a 10/64" choke for 7 days and has produced an average of 315 boe/d (87% oil).

In aggregate Cheal-E1 and Cheal-E4 have produced more than 23,100 barrels of oil (26,400 BOEs) to January 7, 2014. Following perforation, Cheal-E2 and Cheal-E3 tested oil naturally to surface and will require artificial lift to maximize production as expected. This work, as well as the perforation and completion of Cheal-E5 will be initiated in the second half of January as equipment becomes available.

As required work is completed, Cheal-E Site wells will be tied in for permanent production at TAG's recently commissioned Cheal-E Site separation facilities. Results of the Cheal-E drilling program have significantly extended the known oil and gas saturated area within TAG's 100% owned Cheal Mining Permit discovery through to E-Site. Pending completion of the outstanding activities at E-Site and further analysis of all results, TAG feels there is potential for 15 -- 20 follow-up locations in the newly awarded areas.