TAG Oil News Releases

06/17/09

TAG Oil to Acquire Remaining Interest in Cheal Oil and Gas Field

Vancouver, British Columbia - June 17, 2009 - TAG Oil Ltd. (TSX-V: TAO), is pleased to announce that the Company has executed a binding agreement to acquire the remaining 69.5% interest in PMP 38156-S ("Cheal") and PEP 38738-01 ("Greater Cheal") in the Taranaki Basin, New Zealand. TAG's offer to purchase these assets has been accepted by the Receivers appointed to Austral Pacific Energy Ltd. Upon completion of this transaction TAG will own 100% interest in the Cheal Oil and Gas field including the recently completed Cheal Production Station.

At March 31, 2009 an independent reserves evaluation completed for TAG by Sproule International Limited, has assigned 530,000 remaining proved plus probable BOE's to the Cheal pool, calculated using a conversion ratio of 6MCF: 1bbl, with an associated NPV-10 amounting to US$9.4 million.

The consideration to be paid by TAG for these assets includes:

• US$2,000,000 in cash;
• an initial 25% overriding royalty on net oil sale revenue per barrel on PMP 38156-S and PEP 38738-01 for the first 500,000 barrels of shallow oil produced (reduced to 7.5% for the life of the field after 500,000 barrels of oil have been produced);
• certain permit work commitments that include optimization and drilling operations to be completed in the next 30 months;
• at completion TAG will grant a first ranking security interest over all oil produced and the proceeds of all oil produced from PMP 38156-S and PEP 38738-01 to secure royalty payments and performance of certain permit work commitments.

The binding offer also contains certain price adjustments that relate to net operating profits earned and capital expenditures paid at Cheal between the May 31, 2009 effective date and the completion date of the transaction.

The agreement is subject to certain conditions precedent being satisfied, including TSX Venture Exchange approval and other such standard conditions for a transaction of this nature.

About TAG Oil Ltd.
TAG Oil Ltd. is a Canadian based oil and gas producer and explorer with assets in the onshore Taranaki Basin of New Zealand. TAG is poised to build significant shareholder value through profitability, acquisition, development and exploration. TAG remains in a strong financial position, with sufficient working capital to fund operations and meet all commitments for the foreseeable future. For further information please visit our website at http://www.tagoil.com/.

Contact: Garth Johnson, CEO 1-604-609-3350
Website: http://www.tagoil.com/

Forward Looking Statements:
Statements contained in this news release that are not historical facts are forward-looking statements that involve various risks and uncertainty affecting the business of TAG Oil. Actual results may vary materially from the information provided in this release. As a result there is no representation by TAG Oil that the actual results realized in the future will be the same in whole or in part as those presented herein. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Factors that could cause actual results to differ from those contained in the forward-looking statements, are set forth in, but are not limited to, filings that the Company and its independent evaluator have made, including the Company's most recent reports in Canada under National Instrument 51-102.

BOE Cautionary Statement

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1bbl is based on an energy equivalency at the burner tip and does not represent a value equivalency at the wellhead.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.