TAG Oil Ltd., Vancouver, (TSX: TAO; OTCQX: TAOIF) has reported continued positive drilling results at the Cheal field, with the completion of the first two wells of a ten-well drilling campaign.

Electric log analysis of these wells indicates high-quality oil pay in the targeted Mt. Messenger and Urenui Formations. A pumping unit is currently being mobilized to the field for extended well testing. The Company is also pleased to announce the spudding of the Cheal-B5 appraisal/development well which will target the same reservoir horizons.

Cheal-C2, the first well in TAG's current ten-well Taranaki drilling program, targeted the Mt. Messenger Formation and was drilled to a depth of ~2,130 meters from the Cheal C drilling pad. This well encountered "free oil" and the highest mudlog gas peak ever recorded at Cheal from multiple sandstone intervals. Cheal-C2 was a "step-out" from the Cheal-C1 oil discovery announced on June 6, 2011.

In addition, TAG has recently completed drilling of the Cheal-A8 well, the second well in the ten-well drilling campaign, which targeted the Urenui Formation from the Cheal A drilling pad. The well was drilled and cased to a depth of ~1,585 meters with "free oil" encountered from multiple sandstone intervals.

Garth Johnson, TAG Oil CEO, comments, "We are very pleased at the results to date in our current Taranaki drilling program with both wells exhibiting what appears to be excellent oil pay in several intervals. We are also undergoing a field optimization project including water flooding and workover / recompletion of existing older wells to enhance the field productivity."

The Cheal oil and gas field, 100%-controlled by TAG Oil, is located in Petroleum Mining Permit 38156 in the onshore Taranaki Basin, New Zealand.