Dear Reader, Below is one of my regular reports that I provide to my subscribers on high growth oil and gas stocks

in Canada and the US. And heres why you want to read this report...I cant make the incredible opportunity any clearer to oil and gas investors than this: The industry can now profitably get oil out of rock. For the last 125 years, since the age of oil began, oil and gas have come from underground sand formations. This new revolution means there will be dozens and dozens and dozens of highly profitable new discoveries around the world. I have found one junior producer with millions of acres covering a shale oil formation that is proven to have oil in fact, independent estimates suggest several billion recoverable barrels are there for the taking! No analysts follow this undiscovered gem yet just yours truly. If this producer hits what I expect them to, my math says the company could be a 25-bagger! Thank you for signing up to receive the following in-depth, 9 page report that sifts through the pros and cons of this investment opportunity. Also, towards the end of this report you will find a 25% off subscription offer to the Oil & Gas Investments Bulletin, for a limited time only. I hope you find my research valuable and profitable!

ORIGINALLY PUBLISHED AS ISSUE # 13 JANUARY 27 2010 UPDATED APRIL 6 2010 TAG OIL TAO-TSXv
The premise for this investment is simple: Tag Oil has a 100% working interest (WI) over 2.4 million acres that covers a highly prospective shale oil formation in New Zealand. It has similar characteristics to the prolific Bakken shale play in North Dakota and Saskatchewan (except the NZ formations are much thicker and more porous!).

www.oilandgas-investments.com

Page 1

Management will likely test it in Q3 2010. An independent geological consultant has estimated it may hold up to 12 billion barrels of original oil in place (OOIP). This large shale oil play is a drill punt, but there is a lot of geological evidence backing it up. Tag Oil also has other, existing production - 350 barrels of oil per day (bopd) of light oil. Other positives include $10 million net cash, and management owns 11,000,000 of the 30,000,000 shares out. With a tight share structure and massive land position, the capital gains potential here is huge. I know of two oil & gas stocks that went from $1 - $100 per share: Niko (NKO-TSX) and Ultra Petroleum (UP-AMEX). As my math will show, I believe Tag Oil has that kind of potential. Trading Symbols: Share Price Current Production: Shares Outstanding: Fully Diluted: Market Cap: Net CASH: Enterprise Value: www.tagoil.com TAO-TSXv $2.74 (Apr 6) 317 bopd 29,879,445 --Insider shares (32%): 9,641,501 31,767,515 $81,869,679.3 $10 million $71,869,679.3

POSITIVES
2.4 million acres in a shale formation that is similar to the prolific Bakken oil shale that straddles the North Dakota/Saskatchewan border It has independent report estimating it could contain as much as 12 billion barrels OOIP Tight share structure (= leverage) Undiscovered company no research I am early; before Bay Street or Wall Street Their 320 bopd is now in a development stage field (Cheal) that can grow to over 2000 bopd with low risk Just valuing the potential reserves at $20/bbl at Cheal supports the current stock price Good cash position New Zealand has Anglo Saxon rule of law

NEGATIVES
The two shale formations are drill punts and even if it is oil bearing, theres no guarantee the chemistry will allow for economic completion (i.e. proper fracking may take a long time to figure out) Illiquid stock will make for volatile trading The first horizontals might not get drilled until Q4 this year or Q1 2011

www.oilandgas-investments.com

Page 2

Management does not have any big discoveries or stock market wins under their belt yet

PROPERTIES
The Shale Formations - Waipawa and Whangai shales, East Coast Basin
Im starting here not with the production at Cheal - because this is the big prize if it works. An independent technical report dated September 2008 by AJM Petroleum Consultants written in remarkably simple English (as is the whole website) - states the potential for this property. (All emphasis, in underlines and bolding, is mine-KS.)

The Waipawa shale lies overtop of the Whangai shale, on the east coast of the north island of New Zealand. Three historical wells have been drilled one in 1967 hit 734 m of Whangai shale at 1469 metres depth. Another well in 1985 hit 392 m of Whangai shale at 1990 m. A well in 2001 hit 323 m Whangai shale at 2764 m. The overlying Waipawa appears to be only 30-70 m thick. From independent AJM report: The Waipawa and Whangai shales represent an unconventional development similar to that of the Bakken Formation within the Willesden Basin in southern Saskatchewan and North Dakota. The area has several oil and natural gas seeps that clearly indicate the area is prospective for hydrocarbons. Prior to any defined development, additional drilling, sampling and testing will be required to further quantify the hydrocarbon potential in the area.

www.oilandgas-investments.com

Page 3

The company has plans to drill an exploratory well on each of the permits. The cost of the each well is estimated to be $CDN 1,500,000. This capital will allow for the drilling of a 1,500 m vertical test that will recover significant core. In addition, each well will have a modern well log suite run to allow for the optimal review and characterization of the shale zones. As per the exploration permit requirements, these wells should be drilled and tested by the end of the third quarter of 2009. AJMs long term forecast for light oil is $US 100.00/bb WTI. New Zealand has an active market for petroleum products, and the exploration permits are close to a major ocean port in Napier. As a result, it is expected that any future development in the area will have access to markets and transportation infrastructure. Below is the chart from the AJM report that estimates Original Hydrocarbons in Place:

The best estimate (P50) hydrocarbon in place volume of 12.6 billion barrels is the total available volume. Things like recovery factor (how much of that oil they could actually produce) are still unknown. (Though the report estimates 180 million recoverable barrels!) The company makes a case, and the independent report echoes this, that it is very similar to the Bakken and Barnett shales (which is a bit promotional, as in my non-technical mind the Bakken and Barnett are quite different). Here is a chart from the Tag Oil website:
www.oilandgas-investments.com Page 4

While there is a lot of initial data that supports this theory, the reality is that it could take months or years on a property that size to find an economic zone or determine an economic fracking completion technology. Or it could happen on the first hole! At first blush, Whangai has been independently verified to be thick enough and porous enough to get me very excited that management could create unbelievably large economic resource. But I do want to say again, it might not be economic.

East Coast Basin

Throughout much of the 2.4 million acres is an even shallower potential oil zone at only 200 metres - the Miocene, that management is testing now with three wells. This is oil that has seeped up from the shales, and management will test if they can find it in shallower reservoir traps above. This is essentially a free play for investors; if it doesnt hit, it doesnt really affect the big shale oil target beneath it; it just means that not enough oil has seeped out to make a low cost shallow play above it. Drilling in the early 1900s reported ongoing production from this shallow Miocene zone of high quality (50 degree API) crude oil. This is early stage, but with low costs of $400,000 per well, even at 20 bopd per well, production could yield a highly profitable oil field (think of the shallow and cheap heavy oil wells in western Canada that produce only 35-40 bopd and have very high recycle ratios between 6 and 11; recycle ratios being the profit per barrel divided over cost to get it out of the ground)

Cheal
Tag has two adjoining properties at Cheal, on the west side of the north island of New Zealand, totalling 23 sections. There are currently 6 wells producing a total of 350-400 bopd of 50 degree API oil; very light oil that receives a premium to WTI, or West Texas Intermediate, the global benchmark pricing.
www.oilandgas-investments.com Page 5

Cheal represents a fairly small opportunity compared to the shale play on the east coast, but management says they can get 4 wells per section, which would make 92 potential wells. The oil is shallow and finding costs are low so far about $19/bbl. They bought the remaining 69% of the 2000 bopd processing facility at Cheal it didnt own in 2009 for $2 million cash and a 25% royalty on the first 500,000 bbl production there, going down to 7.5% after that. The facility cost US$36 million. Management at Tag Oil believe they can optimize the wells to increase both production and overall recovery. If they can prove this to be so over the coming quarters, I think the stock would respond positively, and quickly. It is a relatively low risk, low cost play that will get paid out of ongoing cash flow. Infrastructure is already set to take increased production.

FINANCIALS
The latest financials report $9.445 million cash and $11.7 million working capital, which is up from $6.5 million at September 30. Expenses are up, mostly in shareholder communications which is working as the stock has gone from 15 cents to $3. In October 2009 they completed the purchase of the Cheal facility, which clearly had a positive impact on cash flow. The financials released at the end of February are the first out since the merger. Tag Oil merged with another public company, Trans-Orient, in 2009 there were common shareholders with properties in the same area and it just did not make sense for them to have two companies. Trans-Orient shareholders received 1 TAG share for every 2.8 Trans-Orient. Before that, early in 2009, Tag Oil did a 5:1 rollback, or reverse split of its shares.

VALUATION
There are several ways to potentially value Tag Oil. One of the easiest ones I use is price per flowing barrel, dividing the company enterprise value (market cap + debt or market cap cash) over production per day. Generally, for companies as small as Tag, thats not always the best way, but it would be $71.8 million / 320 boed=$224,375 per flowing boe. The average valuation for international junior or intermediate producers is $60,000 - $70,000 (and they vary widely). But we need a valuation model that fits the speculative nature of this investment. So consider this:

www.oilandgas-investments.com

Page 6

The independent report comes up with a recoverable oil resource of just over 180 million barrels (By the way, the report is on their website, free and open for everyone to review). Even valuing this resource at $3 per recoverable barrel in the ground ($3/bbl), this is how my math works: $3/bbl x 180 M bbl =$540,000,000 / 30,000,000 shares = $18/share A more realistic version would be a $12/bbl valuation $12/bbl x 180 M bbl=$2.16 Billion / 30 M shares=$72/share Long time subscribers know that when I do valuations, I try to keep one foot firmly planted in the air. So an optimistic valuation (but realistic, especially if oil is $80/bbl as production draws near) is $20 per recoverable barrel in the ground. North American producers get this valuation, and New Zealand is a Western country, so this asset could quite easily get this valuation in a bull market: $20 x 180 M = $3.6 B / 30 m shares = $120/sh. Thats the perfect world scenario.

STOCK CHART

www.oilandgas-investments.com

Page 7

Tag Oil stock is now consolidating after a powerful run up from 15 cents to $3 per share. Technically speaking, the chart is in no-mans land, with no clear direction. In the spring of 2010 I expect drilling results from both the Cheal workovers in the west side of the North Island, and the shallow Miocene drilling on the East Coast Basin.

CONCLUSION
In my public speeches and in the website, I have repeated many times that the dynamic duo technologies of horizontal drilling and fracking originally used to crack open North American shale gas plays will spread around the globe over the next decade, creating dozens and dozens of lucrative investment opportunities for investors. This is one of them, and potentially a huge one. With drilling and completion success, I think there is an excellent opportunity for this stock to be $75 a share. There is definitely oil in the shales, its just a question if chemistry and completion techniques can make it economic. As drilling on the shales wont happen until the Q4 2010 timeframe, there is a lot of time for a (larger) speculative premium to balloon into the stock. That could offer me the potential to get my investment cost out before results on the shale wells are known. Plus, the first two wells are likely to be lower cost vertical wells, just to get a sense of the chemistry and composition of the shale. The first horizontals might not get drilled until Q4 this year or even Q1 next year. So I could be a bit early here. At this price level, the low risk development of the Cheal field, and cashed up treasury give me some downside protection. Should the Cheal workovers not meet expectations I would likely reduce my position, despite the shale potential. I own 30,000 shares at $2.35 average, making it the largest investment ever for the subscriber portfolio. www.tagoil.com

These are the types of energy companies I find for subscribers...and there are several more current portfolio stocks that are enjoying exploration success and being rewarded by the market. Become an Oil & Gas Investments Bulletin subscriber today for 25% off our regular rates (LIMITED TIME OFFER) and feel secure in the value of your investments, and enjoy the profit potential that current subscribers have experienced. There is a 60-day money back guarantee, no questions asked, if you decide my service is not for you.

www.oilandgas-investments.com

Page 8

CLICK HERE TO ACCESS OUR DISCOUNTED RATES: http://oilandgas-investments.com/discountsubscriptions-limited-time-offer/

About Oil & Gas Investments Bulletin Keith Schaefer, Editor and Publisher of Oil & Gas Investments Bulletin, writes on oil and natural gas markets - and stocks - in a simple, easy to read manner. He uses research reports and trade magazines, interviews industry experts and executives to identify trends in the oil and gas industry - and writes about them in a public blog. He then finds investments that make money based on that information. Company information is shared only with Oil & Gas Investments subscribers in the Bulletin - they see what hes buying, when he buys it, and why. The Oil & Gas Investments Bulletin subscription service finds, researches and profiles fast growing oil and gas companies. The Oil and Gas Investments Bulletin is a completely independent service, written to build subscriber loyalty. Companies do not pay in any way to be profiled. For more information about the Bulletin or to subscribe, please visit: www.oilandgas-investments.com.

www.oilandgas-investments.com

Page 9