TAG Oil Reports Strong Q1 Financial and Record Production Revenue

Vancouver, B.C. September 29, 2011 TAG Oil Ltd. (TSX: TAO) and (OTCQX: TAOIF) advises that the Company has filed its June 30, 2011 unaudited financial statements and Management Discussion and Analysis with the Canadian Securities Administrators for the first quarter of the March 31, 2012 fiscal year. Copies of these documents can be obtained electronically at www.sedar.com. For additional information, please visit TAG Oils website at http://www.tagoil.com/. June 30, 2011 Corporate and Financial Highlights (Q1 Fiscal 2012): Production revenue increased to $5,853,101 compared to $1,813,730 in Q1 2011. TAG produced 56,509 and sold 50,952 barrels of light oil at an average price of C$113 per barrel. Per barrel production costs were further reduced to $15 per barrel, compared to a production cost per barrel of $20 for fiscal 2011. A net profit of $2,178,499 was recorded before deducting $1.91 million for stock-based compensation. TAG announced farmout agreement with Apache on New Zealand Acreage in the East Coast Basin. TAG Oil has established a production capability in Taranaki of more than 5000 barrels of oil equivalent (Boe) per day. The oil discovery at Cheal-C1 significantly extends the known Mt. Messenger and Urenui oil field oil-saturation area. TAG graduates to Canadas senior stock exchange.

Taranaki Basin Operations TAG Oil has commenced a ten-well development drilling program following six straight successful wells achieved at TAGs Sidewinder and Cheal oil and gas fields, which established more than 5000 barrels of oil equivalent per day of production capability from the initial drilling program. This drilling campaign, now underway at Cheal, will continue to target the main producing Mt. Messenger (~1800m) and the shallower Urenui (~1400m) Formations. Once drilling is completed at Cheal, the drilling rig will be moved to the Sidewinder field to target the primary Sidewinder gas zone and the lower zone oil discovery also in the Mt. Messenger Formation. Cheal Oil and Gas Field - 100% Interest The Cheal field continues to perform strongly with low decline rates and is presently producing approximately 850 to 900 barrels of oil equivalent per day, with approximately 300 to 400 barrels of oil per day (bopd) of production remaining behind pipe, awaiting enhancements to Cheals hot-water artificial lifting system. This upgrade is expected to be fully operational in the next 90 days. In addition, testing of the Cheal-C1 well has confirmed an oil discovery in the Cheal C block area. This exploration success significantly extends the known Mt. Messenger and Urenui field boundary. Cheal-C1 intercepted oil-and-gas-bearing sands that produced substantial volumes of light oil during swab testing. A secondary Mt. Messenger zone also flowed gas at rates between 1.5 million to 3 million cubic feet per day.

The Cheal-C1 well also encountered strong oil shows within a 73-meter-thick section of sandstone within the deeper Moki Formation. The Moki zone was tested but commercial flow rates were not achieved. TAGs technical interpretation indicates that Cheal-C1 penetrated a transitional zone where oil migrated through the contacted zone into a large structural closure, updip from the Cheal-C1 penetration. Given the extensive oil shows recorded while drilling, coupled with the excellent reservoir quality interpreted from electric logs, TAG will plan a new well that directly targets the Moki Formation prospect, drilled from a more optimal location on the structure. In addition to the new round of drilling activity at Cheal, TAG is also conducting a number of optimization operations on certain historical Cheal wells. Included in these optimization operations is the deployment of Cheals first water flood to the A pool, a program forecast to cost-effectively increase recovery factors within the Cheal A sites oil reserves. Sidewinder Oil and Gas Field - 100% Interest After the successful drilling and testing of the Sidewinder-1 through 4 wells and the construction of the Sidewinder Production Facility and pipeline, TAG is now planning a multi-well drilling program within this lightly explored permit, following the Cheal drilling program currently underway. East Coast Basin Operations TAG recently entered into a farmout agreement with Apache Corporation to explore and potentially develop oil and natural gas resources in the East Coast Basin of New Zealand. Apache has agreed to conduct a multi-phased exploration, appraisal and potential development program within TAGs East Coast Basin Petroleum Exploration Permits PEP 38348, PEP 38349 and PEP 50940 (the Permits). Apache will be the Operator for all activities undertaken pursuant to the Agreement, excluding the initial four vertical wells of the work program that TAG will operate with Apaches assistance. Apache will spend up to $100 million upon completion of Phase 3 to earn a 50% interest in the Permits. At the end of Phase 3 operations TAG will remain as operator of the Permits. If Apache commits to Phase 4 operations, all costs will then be shared equally between Apache and TAG going forward. Liquidity and Financial Summary TAG ended the first quarter of fiscal 2012 in a very strong financial position: the Company remains debt free with net working capital as at June 30, 2011of $60.51 million. Production revenue was $5.85 million and the Company generated a net profit for the threemonth period of $2,178,499 before deducting $1.91 million for stock-based compensation. TAG produced 56,509 and sold 50,952 barrels of light oil at an average price of C$113 per barrel. Per barrel production cost was further reduced to $15 per barrel compared to a production cost per barrel of $20 for fiscal 2011. Expenditures on the Companys oil and gas properties during the quarter totaled $10.36 million primarily invested in the Companys Taranaki operations. TAGs near-term focus is to develop the shallow formations at Cheal and Sidewinder with a view to build near-term reserves and production revenue. At June 30, 2011 the Company had 50,001,062 common shares outstanding and 57,166,060 common shares outstanding on a fully diluted basis. TAG Oil Ltd. TAG Oil Ltd. (http://www.tagoil.com/) is a Canadian-based production and exploration company with operations focused exclusively in New Zealand. With 100% control over all its core assets,

including oil and gas production infrastructure, TAG is anticipating substantial oil and gas production and reserve growth through development of its light oil and gas discoveries. TAG is also actively drilling high-impact exploration prospects identified across more than 2,600 sections of land in the onshore Taranaki and East Coast Basins of New Zealands North Island. In the East Coast Basin, TAG, together with Apache Corporation is pursuing the significant unconventional resource potential estimated in the fractured shale source-rock formations. These oil-rich and naturally fractured formations have many similarities to North Americas Bakken Shale source-rock formation in the successful Williston Basin. Contact: Dan Brown or Garth Johnson TAG Oil Ltd., 1-604-682-6496 Important Information: BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Cautionary Note Regarding Anticipated Results and 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. These statements are based on certain factors and assumptions including: A. All estimates and statements that describe the Companys objectives, goals, or future plans relating to the seismic and drilling program related to the Agreement with Apache Corporation are forward-looking statements under applicable securities laws and necessarily involve risks and uncertainties including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, and changes in the regulatory and taxation environment. These forward-looking statements are based on certain factors and assumptions, including factors and assumptions regarding the managements views on the oil and gas potential in the Permits, the success of any individual phase of the Agreement, Apaches electing to commit to each phase of the Agreement, and the costs necessary to complete the various phases of the Agreement, and the Companys ability to share in any cost over-runs relating to each phase of the Agreement. B. Those relating to TAG Oils successful exploration and development of its oil and gas properties within the Cheal and Sidewinder project areas, the production and establishment of additional production of oil and gas in accordance with TAG Oils expectations at Cheal and Sidewinder, the increase of cash flow from new production, oil and gas price assumptions and fluctuations, foreign exchange rates, expected growth, results of operations, performance, prospects, evaluations and opportunities and effective income tax rates. While TAG Oil considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Actual results may vary materially from the information provided in this release, and 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. TAG Oil is involved in the exploration for and production of hydrocarbons, and its property holdingswith the exception of the Cheal Oil Field and Sidewinder project areaare in the grass roots or primary exploration stage. Exploration for hydrocarbons is a speculative venture necessarily involving substantial risk. There is no certainty that the expenditures incurred on TAG Oils exploration properties will result in discoveries of commercial quantities of hydrocarbons. TAG Oils future success in exploiting and increasing its current reserve base will depend on TAG Oils ability to develop its current properties and on its ability to discover and acquire properties or

prospects that are producing. But, there is no assurance that TAG Oils future exploration and development efforts will result in the discovery or development of additional commercial accumulations of oil and natural gas. Other factors could cause actual results to differ from those contained in the forward-looking statements related to upcoming operations, production forecast modeling and other items that are set forth in, but are not limited to, filings that TAG Oil and its independent evaluator have made, including the TAG Oils most recent reports in Canada under National Instrument 51-101.