TAG Oil News Releases

07/31/09

TAG Oil Files 2009 Year-End Results and Provides Summary

Vancouver, British Columbia - July 31, 2009 -international oil and gas producer and explorer, TAG Oil Ltd. (TSX-V: TAO), announces the filing of its operating and financial results for the 2009 fiscal year ending March 31, 2009.

Financial and Operational Summary

Financial Results:
TAG recorded $4.9 million in production revenue for the year, which is a 19% increase when compared to the $4.1 million of production revenue recorded during the 2008 fiscal year. The net loss recorded for the year was $18.87 million, primarily as a result of a $19.27 million write-down to the Company's 30.5% owned Cheal oil discovery in the Taranaki Basin of New Zealand. The write-down at Cheal can be attributed to drilling results of the A6 and A6ST wells and the use of a more conservative recovery factor in reserve estimates. The Company ended the 2009 fiscal year debt-free, cash-flow positive and with $7.39 million in cash and $7.87 million in working capital.

TAG Oil CEO, Garth Johnson commented, "I am extremely pleased with the financial performance of TAG during the 2009 fiscal year, which has paved the way for our future growth. Some of the noteworthy financial achievements include an increase in working capital, increased production revenue for the second straight year and further cost-reduction activities, which include decreasing production costs per barrel sold and reducing general and administrative costs by more than $500,000. In addition, the Company bought back and cancelled 8% of the Company's stock."

New Zealand Production, Development, Exploration Activity
Gross daily production rates from the Cheal discovery for fiscal 2009 averaged 443 barrels of oil per day; currently the oil field is producing approximately 350 gross barrels of oil per day. During the 2009 fiscal year the Cheal field produced 161,713 gross barrels of oil; 174,558 gross barrels of oil were sold with oil prices averaging $92 per barrel. Royalty and production costs averaged $33 per barrel, resulting in a netback per barrel of approximately $59. An independent assessment of reserves conducted as of March 31, 2009 has assigned gross proved/probable reserves of 530,000 barrels of oil equivalent ("BOE") and a net present value of US$9.3 million (TAG 30.5% Share US$3 million) based on year-end oil prices and a 10% discount rate.

On June 17 and July 2, 2009 TAG signed binding agreements (subject to various approvals) to acquire the remaining 69.5% interest in the Cheal Mining Licence, oil production facilities and the remaining 66.67% interest in Petroleum Exploration Permit 38748, where a number of prospects are defined by 3D.

Mr. Johnson further commented, "I am very pleased with the acquisition of the remaining interest in Cheal and in PEP 38748. In my opinion, full development of the Cheal discovery and further exploration was held back by the financial difficulties of the previous operator and joint venture partner. Upon TAG taking over full control, we are poised to unlock the value of the acreage by initiating optimization and workover plans to the existing wells, reducing operating costs and planning our exploration drilling campaign."

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.

For further information please visit our website at http://www.tagoil.com/ and www.sedar.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 has made and estimates its independent evaluator has made, including the Company's most recent reports in Canada under National Instrument 51-102 and in the United States under Forms 20-F and 6K.

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.