Robert McWhirter Tag Oil Ltd. TAO-T TOP PICK Apr 18, 2012

Ranks very well in his models. Stock has pulled back as people are waiting for insight into discovery, particularly the joint venture they have with Apache (APA-N). That program has been pushed out a little but is still expected to go ahead. If they are successful, it should be quite interesting for them. Also, you should be watching the vague comparable company, New Zealand Energy (NZ-X) which is in the same area. Expected to earn $0.43 in 2013 versus $0.36.

Long Tag Oil (TAO-T) and Short Imperial Oil (IMO-T). A Pairs trade. Very positive on this name which is 100% exposed to New Zealand which has a very favourable royalty regime and very favourable pricing. Last quarter they earned $109 per barrel versus Western Canada where they will be lucky to get $65. Also, earns high premiums for natural gas. Ended the fiscal year with 1500 barrels but they had a lot “behind the barrel”. With their high paraffin content in their oil, they have to treat it and process it before they can send it onto the market. Very cheap at less than 3X price to cash flow.

Very much a play on oil but New Zealand government is very supportive of increasing oil exploration. Have a number of different good properties that it is currently drilling. Early indications are quite good.

Looks like it broke the downtrend. Around $4.50, he would take some off the table.

Small short position. Would look attractive to go long at $3 but that is not how he invests. The trend is down so he is short.

Have a very significant oil property in onshore New Zealand. Spent the last year building infrastructure to tie all the production in and now that is happening. A negative that surfaced this past year is the loss of Apache, a joint venture partner, off the East Coast of New Zealand, but they did stick around and pay the bills for the 1^st phase of that project. Expect they will be getting a new partner. Thinks this company has lots of upside based on the onshore activity they are doing.

(A Top Pick April 23/13. Down 36.52%.) Had 4 wells that were behind the pipe (drilled, connected and just waiting for the processing facility to be built). When the facility was built and they brought them online, they were surprised at the decline rates.

He stuck with it. He thinks there is potential in New Zealand. There is a lot of drilling this year and hopefully less glitches.

Really looking for elephant country in terms of targets they have been going for. The size of the prize is quite large and they are doing some development as well. Feels that management has learned some things from the past as they were probably overpromising and under delivered. Not a bad story, but not one that he is looking for on a risk/reward basis.

(A Top Pick April 23/13. Long Tag Oil (TAO-T) and Short Imperial Oil (IMO-T). Down 42.51%.) Did an equity issue last fall at about $4.40, which the Street didn’t like. This is a New Zealand oil/gas play and they have about 5 or 6 catalysts coming up in terms of major wells.