Tag Oil previously announced that they had a 20% interest in the Kaheru Offshore prospect.
The Ownership previously broke down to:
ROC Oil 50%,
TAG Oil 20%
L&M Energy 15%
On March 16, 2012, NZOG agreed to purchase their 15% stake in the Kaheru prospect for $3 million dollars.
Today, March 23, ROC Oil limited the operator of the Kaheru prospect notifies partners that it intends to pull out of the project. link
The reason given was to balance "expenditures and risk profiles". The are also currently raising money and reallocating resources. They recently pulled out of Africa selling assets to raise money and have gotten new Malaysia contracts. They are also expanding in China.
Roc Oil last year had sales of $256 million and an after tax profit of $28 million. (The first annual profit since 2005). They had about $40 million in cash some of it raised by selling assets. They have production of about 7,500 boe/d and are predicting declines of several hundred boe/d in 2012. My take - ROC simply can't afford to expand everywhere they have some drilling commitments and decided to focus on an area in Asia.
The Kaheru Prospect has mean potential reserves of 366 bcf and 9.4 mmbbls of oil or 80 mmbbls of oil if the reserves were primarily oil. This is a fairly "rough" estimate given the lack of drilling and actual resources might be much different - larger or smaller.
My question at this point is what happens now with the prospect? Will Tag Oil pick up additional interest and who will be the new operator? I would guess that Tag Oil's current investment in the Kaheru prospect is probably from $3 to $5 million dollars.