New Zealand Energy Announces Production Test of Copper Moki-2 Well, Commences Drilling of Copper Moki-3 Well and Enters Into Agreement to Increase Interest in the Alton Permit
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New Zealand Energy Corp. (TSX VENTURE: NZ)(OTCQX: NZERF) ("NZEC" or the "Company") has initiated an extended production test of its Copper Moki-2 ("CM-2") well and commenced drilling Copper Moki-3 ("CM-3"), its third well in the Taranaki Basin of New Zealand's North Island. In addition, NZEC is pleased to announce that the Company has entered into a farm-in agreement with L&M Energy Limited pursuant to which the Company will earn an additional 15% in the Alton Permit, increasing NZEC's interest to 65%. Taranaki Basin Update The CM-2 well commenced flowing on February 15, 2012. CM-2 is producing 42.0 degrees API oil and is currently flowing at a rate of 1,000 barrels of oil per day and 820 thousand cubic feet ("mcf") of natural gas per day through a 24/64th inch choke.
In the last five days CM-2 has produced 5,318 barrels of oil and 4,158 mcf of natural gas. CM-2 is tied in to the Copper Moki-1 ("CM-1") production facilities. Produced oil is trucked to the Shell-operated Omata Tank Farm, approximately 45 km north of the Copper Moki site. The oil sells at a premium to Brent and earns a top-tier operating netback of approximately US$90 per barrel. NZEC calculates the netback as the oil sale price less fixed and variable operating costs and a 5% royalty. The Company has also advanced its plans to build a natural gas pipeline, upon completion of which NZEC expects to begin marketing its natural gas production.
NZEC has continued to flow CM-1 while drilling and completing CM-2. The CM-1 well was first tested in August 2011 and has been flowing from natural reservoir pressure since December 10, 2011, producing more than 44,000 barrels of oil since the August test. The well has flowed through a 20/64th inch choke until February 17, when the choke was increased to 24/64th inches. CM-1 production has averaged 500 barrels of 41.8 degrees API oil per day and 860 mcf of natural gas per day since December 10, 2011, and has produced an average of 434 barrels of oil per day and 1,045 mcf of natural gas per day over the last 30 days of production.
The CM-2 well was drilled to a total depth of 2,080 metres, encountering approximately 12 metres of net pay in the Mt. Messenger Formation, a thick sequence of turbidite sandstones in New Zealand's Taranaki Basin. NZEC also collected logs from the shallower Urenui Formation while drilling CM-2. The Company's analysis of the Urenui Formation is consistent with earlier tests demonstrating that the formation shows the potential for oil and gas production. NZEC is evaluating opportunities to drill a well later in 2012 that will target the Urenui Formation.
NZEC has commenced drilling CM-3, with the expectation of releasing well results by the end of March 2012. CM-3 will be NZEC's first well to target the deeper Moki formation, and the Company will collect information from both the Urenui and Mt. Messenger formations as CM-3 drilling proceeds. Immediately following the conclusion of CM-3 drilling, NZEC anticipates commencing drilling of the Copper-Moki-4 well from the same drilling pad. Alton Permit Farm-In
The Alton Permit covers 119,200 acres in the Taranaki Basin of New Zealand's North Island, with an estimated resource base of 760 million barrels OOIP(1) and prospective recoverable resources of 69 million barrels of oil.(2,3) NZEC will earn the additional 15% by funding the collection and processing of 3D seismic data over approximately 50 km2 of the permit. NZEC is the operator of the Alton Permit.
Earning the additional 15% interest will increase NZEC's prospective recoverable resource base in the Taranaki Basin to 77 million barrels of oil(2,3) and increase NZEC's net Taranaki Basin acreage to 169,949 acres, a 16% and 12% increase, respectively. Notes:
1. Net undiscovered petroleum initially in place.
2. Assuming a 9% recovery rate.
3. As estimated by AJM Petroleum Consultants, effective February 1, 2011. A prospective resource is defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
On behalf of the Board of Directors
Bruce McIntyre, President & Director
About New Zealand Energy Corp.
NZEC is an oil and natural gas company engaged in the production, development and exploration of petroleum and natural gas assets in New Zealand. NZEC's property portfolio collectively covers nearly two million acres of conventional and unconventional prospects in the Taranaki Basin and East Coast Basin of New Zealand's North Island. The Company's management team has extensive experience exploring and developing oil and natural gas fields in New Zealand and Canada, and takes a multi-disciplinary approach to value creation with a track record of successful discoveries. NZEC plans to add shareholder value by executing a technically disciplined exploration and development program focused on the onshore and offshore oil and natural gas resources in the politically and fiscally stable country of New Zealand. NZEC is listed on the TSX Venture Exchange under the symbol NZ and on the OTCQX International under the symbol NZERF. More information is available at www.newzealandenergy.com or by emailing email@example.com.
This news release contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively "forward-looking statements"). The use of any of the words "will", "advance", "expect", "begin", "evaluate", "anticipate", "commence" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements, including without limitation, the speculative nature of exploration, appraisal and development of oil and natural gas properties; uncertainties associated with estimating oil and natural gas resources; uncertainties in both daily and long-term production rates and resulting cash flow; volatility in market prices for oil and natural gas; changes in the cost of operations, including costs of extracting and delivering oil and natural gas to market, that affect potential profitability of oil and natural gas exploration; the need to obtain various approvals before exploring and producing oil and natural gas resources; uncertainty in the timing of receipt of permits and the Company's ability to extend the permits if required; exploration hazards and risks inherent in oil and natural gas exploration; operating hazards and risks inherent in oil and natural gas operations; market conditions that prevent the Company from raising the funds necessary for exploration and development on acceptable terms or at all; global financial market events that cause significant volatility in commodity prices; unexpected costs or liabilities for environmental matters; competition for, among other things, capital, acquisitions of resources, skilled personnel, and access to equipment and services required for exploration, development and production; changes in exchange rates, laws of New Zealand or laws of Canada affecting foreign trade, taxation and investment; failure to realize the anticipated benefits of acquisitions; and other factors as disclosed in documents released by NZEC as part of its continuous disclosure obligations. NZEC believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release and NZEC does not undertake to update any forward-looking statements that are contained in this news release, except in accordance with applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
New Zealand Energy Corp.
President & Director
North American toll-free: 1-855-601-2010
New Zealand Energy Corp.
Chief Executive Officer & Director
North American toll-free: 1-855-601-2010
SOURCE: New Zealand Energy Corp.