Tag Oil Ltd.

Tag Oil Ltd.

October 15th, 2010

Mr. Brian Herman
Para Services Inc.
Suite #1, 4620 — Manila Rd S.E. Calgary, Alberta T2G 4B7
Canada

Dear Brian,

RE: Enercat performance in New Zealand

This letter is intended to give you an update on the Enercat tool performance in our waxy oil wells in the Taranaki Basin, New Zealand. We have now run varying numbers of Enercat tools, dependent on flow predictions, in five different wells. We are impressed with the results in all our wells to date.

Our producing zone is approximately 1600-1800m depth, and has reservoir temperatures between 40 — 50C. Our paraffinic oil has a pour point of approximately 35C. This oil had no chance of making it to surface in a liquid state without some sort of downhole intervention. Previous attempts to employ other technologies such as downhole heat, magnetic tools, etc have either proven totally ineffective, or uneconomic. The Enercat tools have proven a cost effective, easily deployed method to control our wax issues.

Our longest running well to date is in the Cheal Field in central Taranaki. This well required wax-cutting every 25-30 days for the first 2 years of production. Downtime plus wireline costs were reducing the profit margin from this 75-100 b/d well significantly. We ran Enercat tools after a recent workover. After approximately 60 days, I was having a hard time believing the tools could be so effective, and although the well had not declined during those 60 days, we ran wireline just to check. We had no wax build-up to HUD. That well has now been on continuous production for over 150 days, and still no sign of wax. I calculated the increased revenues plus wax-cut savings, paid for the tools in just over a month.

Our other wells have not been on stream with Enercats as long as the above example, but 2 of them are now over 100 days each, with no signs of wax to date. Needless to say, we will be running Enercats on all our new wells and whenever we have a workover on an existing well, send me some more!

Yours Truly,

Drew Cadenhead, C.O.O.

TAG Oil Ltd.



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