New Zealand Energy Corp. Operational Update
New Zealand Energy Corp. Operational Update
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/17/12 -- New Zealand Energy Corp. (TSX VENTURE:NZ)(OTCQX:NZERF) ("NZEC" or "the Company") is pleased to provide an operational update on the Company's production and exploration activities in the Taranaki Basin of New Zealand's North Island.
-- Copper Moki total production to date of more than 175,000 barrels of oil with cumulative revenue exceeding US$19 million -- Well optimization underway for Copper Moki wells with installation of artificial lift -- Objective of increasing and stabilizing oil production rates -- Eight well drilling program underway and expected to be complete in Q1- 2013 -- Waitapu-1 completion ongoing, perforating across 18 metres in two additional intervals -- Waitapu-2 well expected to reach target depth this week -- 3,000 boe/d(1) guidance shifted to Q1-2013 to coincide with completion of current eight-well program -- Interpretation of 3D seismic survey across 50 km2 of Eltham permit further defining prospects in Mt. Messenger, Moki, Tikorangi and Kapuni formations -- Progressing toward Q1-2013 close of Taranaki upstream and midstream asset acquisition
Copper Moki Oil Production Update
To optimize production rates from its three Copper Moki wells, NZEC has commenced the installation of artificial lift (pump jacks). The Copper Moki-3 artificial lift is installed and pumping rates will be varied over the coming week to identify the optimal production rate for the well. Installation of the Copper Moki-2 artificial lift is underway and should be complete this week. The Copper Moki-1 artificial lift will be installed immediately after production commences at Copper Moki-2. NZEC expects oil production rates to increase and stabilize with the addition of these artificial lift systems.
Copper Moki-1 has been flowing from natural reservoir pressure since December 10, 2011 and has produced more than 92,568 barrels of oil since it was first tested in August 2011. Copper Moki-2 has been flowing from natural reservoir pressure since April 1, 2012 and has produced more than 60,213 barrels of oil since it was first tested in February 2012. Copper Moki-3 commenced conti nuous production on July 2, 2012 and has produced more than 22,715 barrels of oil from natural reservoir pressure since it was first tested in May 2012. The three Copper Moki wells have produced a total of more than 175,000 barrels of oil to date with cumulative revenue exceeding US$19 million.
Once artificial lift installation is complete, raw natural gas from all three wells will be delivered through NZEC's existing gas pipeline to the Waihapa Production Station.
Eight-well Exploration Program Underway
Waitapu-1 was drilled through the Urenui formation into the Mt. Messenger formation with a measured depth of 2,213 metres and true vertical depth of 1,925 metres. Open hole logs showed approximately 30 metres of gross pay in the Mt. Messenger formation, as well as oil and gas shows in the shallower Urenui formation. NZEC initially perforated 12 metres across four intervals and, based on preliminary results, will perforate an additional 18 metres across two intervals and then shut the well in for pressure build-up. The Company expects to report results from Waitapu-1 by the end of October.
Drilling of Waitapu-2 is proceeding to plan and NZEC expects to reach target depth in the Mt. Messenger formation this week.
Wellsite construction is underway at NZEC's Arakamu site, located approximately 3.8 km southwest of Copper Moki and 2.5 km south of Waitapu. NZEC's technical team has identified two primary targets on the site - one Mt. Messenger and one Moki - and may drill a third well with a Moki focus contingent on results from the first Moki well.
NZEC expects to complete its current eight well drill program in Q1-2013, an extension from original guidance of year-end 2012, and reiterates its 3,000 boe/d guidance related to cumulative production at the conclusion of the eight-well program.
3D Seismic Review Defining New Targets
NZEC's technical team is interpreting seismic data collected in the 100 km2 3D seismic program completed across the Eltham and Alton permits. Data collected across 50 km2 of the Eltham permit are being interpreted first, and have revealed sizable prospects in the Mt. Messenger, Moki, Tikorangi and Kapuni formations. One identified Moki prospect is estimated to cover an area of 1km by 2km and has become a priority drill target for NZEC's 2013 exploration campaign.
Origin Asset Acquisition Update
NZEC continues to review seismic and well log data from the four TAWN Petroleum Mining Licenses, which are part of the asset acquisition from a subsidiary of Origin Energy Limited ("Origin") as announced in May 2012, and has identified an additional four Mt. Messenger prospects, bringing the total number of 3D-defined prospects on the TAWN properties to 18. In addition, the team believes that six of the previously drilled wells have uphole completion potential in NZEC's target formations. As evaluation proceeds, NZEC is compiling a priority list of targets on the TAWN properties to be accessed when NZEC acquires the properties.
Preparation for closing of the acquisition continues, with the four conditions precedent being well advanced. Conditional approval for the acquisition has been received from the TSX Venture Exchange. The agreement requires two New Zealand government approvals, from the Overseas Investment Office and from New Zealand Petroleum & Minerals. Both applications have been submitted. NZEC is working closely with Origin and Contact Energy to finalize agreements in order to close the acquisition, now targeted for Q1-2013.
One of the conditions of the acquisition is for Origin to recommission the TAWN LPG plant. The plant is now fully certified and NZEC's raw natural gas will be processed at the Waihapa Production Station once artificial lift installation for the Copper Moki wells is complete. The Waihapa Production Station requires sufficient gas to be fully operational. Arrangements are being finalized with various third parties to provide continuous supply to the plant, at which point NZEC can commence sales of its natural gas and liquid petroleum gas.
Taranaki Block Offer
NZEC has lodged bids for new exploration properties as part of the annual New Zealand Block Offer. The properties were chosen based on a prospectivity review using NZEC's 3D seismic database and synergies with NZEC's existing properties and the Waihapa Production Station. The blocks will be awarded in December following a review of the bids by New Zealand Petroleum & Minerals.
On behalf of the Board of Directors
Bruce McIntyre, Executive 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 approximately 2.25 million acres (including pending permits) 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 e xploration 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 "objective of", "expect", "expected", "expects", "progressing toward", "will", "will be", "should be", "may", "estimated", "has identified", "believes", "to 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 ability of NZEC to progress through the conditions precedent to conclude the Origin Agreement on schedule, or at all; the speculative nature of exploration, appraisal and development of oil and natural gas properties; changes in the cost of exploration and development of oil and gas properties, 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; the need to obtain government approval of work programs before exploring or developing the TAWN Petroleum Mining Licenses; 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; 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.
(1) Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
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.
Contacts: New Zealand Energy Corp. Bruce McIntyre Executive Director North American toll-free: 1-855-630-8997
New Zealand Energy Corp. John Proust Chief Executive Officer & Director North American toll-free: 1-855-630-8997
New Zealand Energy Corp. Rhylin Bailie Vice President Communications & Investor Relations North American toll-free: 1-855-630-8997 firstname.lastname@example.org www.newzealandenergy.com