NZERF/NZ.V... TARANAKI BASIN UPDATE
New Zealand Energy Corp. ("NZEC" or the "Company") (TSX VENTURE:NZ)(OTCQX:NZERF) is pleased to provide an operational update on its production and exploration activities on New Zealand's North Island.
-- Copper Moki-1 ("CM-1") has produced an average of 550 barrels of oil per
day over the first 30 days of long-term production
-- CM-1 cumulative production of 29,000 barrels of oil to date with
operating netbacks of approx. US$90 per barrel
-- Commenced drilling of Copper Moki-2 ("CM-2"), targeting the Mt.
Messenger and Urenui formations
-- Will commence drilling of Copper Moki-3 ("CM-3") in Q1-2012
-- Services and consents in place for a total of four wells from the Copper
East Coast Basin
-- Commenced drilling of Ranui-2 core well targeting the Whangai Shale
-- Completed the coring of two holes testing the Waipawa and Whangai Shales
TARANAKI BASIN UPDATE
The CM-1 well has been flowing from natural reservoir pressure since December 10, 2011 at an average rate of 550 barrels of 41.8 API oil per day and 685 thousand cubic feet of natural gas per day through a 20/64th inch choke. CM-1 has produced over 29,000 barrels of oil since it was first tested in August 2011 with operating netbacks 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.
NZEC has commenced drilling of CM-2, its second exploration well in New Zealand's Taranaki Basin. The Company expects to finish drilling the CM-2 well by the end of January, targeting the Mt. Messenger and Urenui formations. NZEC will continue to produce CM-1 as CM-2 is drilled and will bring CM-2 on-stream using existing production facilities if the well is successful.
NZEC plans to drill CM-3 upon completion of CM-2, targeting the Mt. Messenger, Urenui and deeper Moki formations. While the Company had originally planned to drill CM-3 from a separate pad south of CM-1, the decision to drill from the CM-1 pad will allow NZEC to bring CM-3 on-stream using existing production facilities and eliminates the infrastructure costs associated with a separate pad.
NZEC's rig contract includes the option to drill a fourth well from the CM-1 pad. NZEC's consents for the CM-1 pad allow for multiple wells and construction of permanent surface facilities. The Company has installed surface facilities to accommodate production of up to 1,000 barrels of oil per day, and can expand the facilities to handle production from additional wells. NZEC anticipates establishing permanent facilities by mid-2012 that will accommodate production from an estimated four wells. The permanent facilities will include a gas pipeline to allow the Company to market its natural gas production.
The Taranaki Basin is situated on the west coast of the North Island and is currently New Zealand's only oil and gas producing basin, producing approx. 130,000 boe/day from 18 fields. Within the Taranaki Basin, NZEC holds and is the operator of two permits covering 152,066 net acres. The Taranaki Basin offers multi-zone potential, and NZEC's exploration strategy is to prioritize wells identified on 3D seismic that have a well-defined, lower-risk Mt. Messenger target coupled with deeper exploration targets such as the Moki and Kapuni formations.
EAST COAST BASIN UPDATE
The East Coast Basin of New Zealand's North Island hosts two prospective shale formations, the Waipawa and Whangai, which are the source of more than 300 oil and gas seeps. NZEC has two granted permits and one pending permit in the East Coast Basin, collectively covering more than 1.8 million acres. NZEC's Ranui permit acquisition included the Ranui-1 well, drilled by the previous permit holder in 2008. The Ranui-1 well encountered 224 metres of prospective Whangai Shale but did not penetrate the base of the shale before reaching total depth of 1,134 metres.
The Ranui-2 well on NZEC's 100% working interest Ranui Permit will core the Whangai Shale across several intervals and will drill through the base of the Whangai Shale and into the underlying conventional reservoir sands, with a planned depth of approximately 1,500 metres. Ranui-2 drilling commenced on January 14, with drilling and coring expected to take approximately three weeks. NZEC is planning to cut up to four cores in the Whangai Formation and will run a full suite of open hole logs to assist in determining the reservoir characteristics of the shale.
In Q4-2011, NZEC completed the coring of two test holes on its 100% working interest Castlepoint Permit. The Orui (125 metres total depth) and Te Mai (195 metres total depth) test holes cored and tested the Waipawa and Whangai shales. Analysis of the core is ongoing.
These three stratigraphic test wells will advance NZEC's understanding of the Waipawa and Whangai formations. A review of the geochemical and physical properties of the two shale packages will help focus NZEC's exploration strategy for the East Coast shales. In addition, NZEC's technical team will reprocess existing East Coast Basin seismic data and plans to shoot approximately 50 kilometres of 2D seismic in 2012 and complete additional technical studies to advance the properties.
EXPANDED MANAGEMENT TEAM
NZEC has expanded its in-country management team to support the Company's exploration, development and production efforts, with the appointments of a Manager Exploration, Manager Land and Group Financial Controller. NZEC has granted 523,000 options to officers and employees with a five-year term and an exercise price of $1.30, with 25% vesting six months after the option grant date and 25% vesting every six months thereafter.
NZEC currently employs, directly and indirectly, approximately 60 people from local communities to support production and exploration activities in the Copper Moki area, with an additional 10 employees and consultants in its Wellington corporate office. NZEC currently employs, directly and indirectly, eight people from local communities to support exploration activities in the East Coast Basin.
June Cahill is a geologist with 32 years of experience working in applied earth science, and previously held the position of senior geologist with NZEC. As Manager Exploration, Ms. Cahill will manage the Wellington based team of geologists and geophysicists. Ms. Cahill has extensive knowledge and experience with New Zealand sedimentary basin geology and the management of geological and geophysical databases. Her early professional experience was with the New Zealand Geological Survey division of the Department of Scientific and Industrial Research. From 1993 through to joining NZEC, she was a senior geologist with the consulting company Ian R Brown Associates Ltd. Ms. Cahill has a Bachelor of Science in geology from Victoria University of Wellington, and a Bachelor of Applied Economics from Massey University.
Tokatumoana (Toka) Walden has joined NZEC as Manager Land, responsible for the Company's land access activities including negotiating access provisions and managing the resource consent application process. Mr. Walden will also have an important role as the Company continues to build a strong relationship with iwi groups across all operational areas. Mr. Walden started his career as a teacher; before joining NZEC he was a senior manager with New Zealand's Department of Conservation. Mr. Walden is also a director of Parininihi Ki Waitotara Inc., Taranaki's largest corporate dairy farmer.
John Hudson has been working with NZEC as a consultant since October 2011 and has joined the Company full time as Group Financial Controller. Mr. Hudson has a Bachelor of Business Studies in accounting from Massey University and is a Chartered Accountant with more than 15 years of experience covering a range of accounting responsibilities. Mr. Hudson joined NZEC after nearly four years as the Financial Controller of Weatherford New Zealand Ltd., an international company providing well construction and intervention services to the oil and gas industry. Prior to that Mr. Hudson held a number of positions including Finance Manager with Parker Drilling and Chartered Accountant with Ernst & Young. As Group Controller, Mr. Hudson will be responsible for all New Zealand accounting and financial reporting.
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 firstname.lastname@example.org.
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", "expects", "expected", "plans", "planning", "allow", "advance" 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