TAG Oil Ltd. (TSXV: TAO, OTCQX: TAOIF, FSE: T0P) has taken another step in its ongoing transformation, completing the sale of its Australian royalty interests to Cypress Petroleum Pty Ltd., a subsidiary of Omega Oil and Gas Limited. The deal, which closed on June 6, 2025, brings in $1 million for TAG Oil and marks a clear shift in the company’s geographic and strategic priorities.
The royalty interests sold relate to a 3% gross overriding royalty on future production revenue from exploration permits PL 17, ATP 2037, and ATP 2038 in Australia’s Surat Basin. TAG Oil’s decision to divest these royalties follows its earlier sale of direct operating interests in the same region, signaling a full exit from its Australian assets. The company described the transaction as “arm’s length,” with no finder’s fee paid, and the cash proceeds provide immediate liquidity.
Omega Oil and Gas, through its subsidiary Cypress Petroleum, now holds these royalty rights as it continues to advance exploration in the Surat Basin, a region known for its substantial gas and liquids potential. Omega’s acreage is located close to major infrastructure and export pipelines, and the company has plans to drill new wells, aiming to tap into the basin’s estimated 3 trillion cubic feet of gas and 233 million barrels of associated liquids.
Abby Badwi, TAG Oil’s Executive Chairman and CEO, commented that the sale is a strategic move to enhance financial flexibility and strengthen the balance sheet, allowing the company to direct more capital toward its core business operations in Egypt. “This transaction enables us to allocate additional capital toward our core business operations in Egypt,” Badwi said, underlining TAG Oil’s commitment to its Middle East and North Africa (MENA) focus.
TAG Oil has been steadily increasing its presence in Egypt, particularly in the Badr Oil Field (BED-1) in the Western Desert. The company is targeting the unconventional Abu Roash “F” (ARF) formation, which is believed to hold more than 500 million barrels of oil in place. TAG Oil is leveraging its expertise in enhanced oil recovery techniques developed in Canada to unlock value in these challenging reservoirs.
The $1 million from the royalty sale adds to TAG Oil’s already healthy balance sheet. As of March 31, 2025, the company reported $5 million in working capital and no debt, with recent quarterly oil production averaging 130 barrels per day from its Egyptian assets. The additional cash provides TAG Oil with more flexibility to pursue new exploration and development opportunities in Egypt and potentially elsewhere in the MENA region.
TAG Oil’s evolution from an Australasian producer to a focused MENA explorer and developer is now nearly complete. The company maintains some royalty interests in New Zealand, but its operational energy is firmly directed toward Egypt, where it believes there is significant untapped potential.
The sale of the Australian royalty interests is a clear signal that TAG Oil is concentrating its resources where it sees the highest returns. The move also reflects a broader trend among international oil and gas companies to rationalize portfolios and double down on core regions with the best growth prospects.
With the Australian chapter closed, TAG Oil is positioned to accelerate its strategy in Egypt, where it aims to apply proven technologies to underdeveloped reservoirs. The company’s latest transaction provides both the capital and the clarity of purpose to pursue its next phase of growth.
