Disclosure: The following represents my opinions only. I am long TAO.V (Image credit to Daniela Turcanu on Unsplash)
Tag Oil (TAO.V, last at $0.68) gave an update on operations at its vertical BED 1-7 well in the Badr oilfield this morning and, while it’s still early days, there was nothing not to like. The company reported that 500 barrels of 23-degree API oil and 1600 barrels of frack fluid (40% of the 4000 that was injected) was recovered in the initial clean up phase, which was likely over just a one or two-day period. That means the well was flowing at a total fluid rate of something like 1000-2000 barrels per day. Notably, the well flowed that volume of oil and frack fluid to surface without the assistance of a pump, and the oil appears to have shown up pretty early in the initial flowback. When the well is brought on production and the rest of the frack fluid is recovered from the well (you only usually get around 75% of it back), the well would be expected to be flowing clean oil as the water saturation in the ARF horizon is negligible. But remember that this is not about flashy flow rates — the vertical test was/is designed to prove that fracture stimulation of the ARF could be carried out successfully using modern fracture stimulation techniques, and that the resulting increase in connected reservoir volume would increase well productivity and recoverable oil. So far, so good… show me ~200 bopd as an IP30 on the vertical test and I’ll be quite content in my views below in terms of where I think TAO could be heading value-wise.