New Zealand Energy Announces 97% Increase in Oil Reserves

New Zealand Energy Announces 97% Increase in Oil Reserves Estimate 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/24/12 -- New
Zealand Energy Corp. (TSX VENTURE:NZ)(OTCQX:NZERF) ("NZEC" or the
"Company") has updated its reserve and resource estimation and
economic evaluation based on a report (the "Report") prepared by
Deloitte & Touche LLP ("AJM Deloitte"), resulting in a 97% increase
to Proved + Probable + Possible ("3P") oil reserves and a 172%
increase to 3P natural gas reserves. The before-tax net present value
of 3P reserves at a 10% discount rate increased by 64%.  
NZEC commissioned AJM Deloitte to prepare an interim reserve estimate
and economic evaluation to include data from wells that commenced
continuous production in 2012. The interim reserve and resource
estimation and economic evaluation was prepared in accordance with
National Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities. Regulatory filings associated with the Report are
available for review on SEDAR at www.sedar.com. All values are
reported in C$ unless otherwise noted. 
The interim reserve estimate and economic evaluation was confined to
NZEC's 100% working interest Eltham Permit (PEP 51150) and based on
reservoir and production data from the Copper Moki-1, Copper Moki-2
and Copper Moki-3 wells, with an effective date of September 30,
2012. Proved developing producing reserves were assigned based on
volumetric calculation and the wells' performance to date. Oil
analyses indicate an average oil gravity of 40 API. No reserves will
be assigned to the Copper Moki-4 well until the well demonstrates
commercial production rates.  
Daily production data were used to predict the production profiles
and recovery factors. NZEC is currently installing artificial lift
systems (pump jacks) on all three wells. AJM Deloitte forecast an
increase in production rates under the proved undeveloped case to
account for artificial lift. An updated reserve estimate, coinciding
with NZEC's financial year-end of December 31, will incorporate data
from artificial lift production rates. 


 
                      Marketable Oil and Gas Reserves                       
                          As at September 30, 2012                          
                          Forecast Prices and Costs                         
                                                                            
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                            Light &      Natural   Natural Gas   Barrels Oil
                         Medium Oil          Gas       Liquids    Equivalent
Reserves Category            (Mbbl)       (MMcf)        (Mbbl)        (Mboe)
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Proved Developed                                                            
 Producing                    203.8        493.1          32.0         318.1
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Proved Undeveloped             95.8        202.8          13.2         142.7
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Total Proved                  299.6        695.9          45.2         460.8
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Probable                      150.8        409.0          26.6         245.5
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Proved + Probable             450.4      1,104.9          71.8         706.4
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Possible                      175.2        446.3          29.0         278.6
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Proved + Probable +                                                         
 Possible                     625.6      1,551.2         100.8         985.0
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Notes: Mbbl - thousand barrels of oil. MMcf - million cubic feet of natural 
 gas. Mboe - thousand barrels of oil equivalent using a conversion ratio of 
 6 Mcf : 1 bbl. Barrels of oil equivalent (boe) may be misleading,          
 particularly if used in isolation. The boe conversion ratio is based on an 
 energy equivalency conversion method primarily applicable at the burner tip
 and does not represent a value equivalency at the wellhead. Possible       
 reserves are those additional reserves that are less certain to be         
 recovered than probable reserves. There is a 10% probability that the      
 quantities actually recovered will equal or exceed the sum of proved plus  
 probable plus possible reserves. See Cautionary Note Regarding Reserve     
 Estimates.                                                                 
                                                                            
                   Net Present Value of Future Net Revenue                  
                                 Before Tax                                 
                          As at September 30, 2012                          
                          Forecast Prices and Costs                         
                                                                            
         -------------------------------------------------------------------
         -------------------------------------------------------------------
                       Net Present Value of Future Net Revenues             
                           Before Tax, Discounted at %/year                 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                        Unit
                                                                       Value
Reserves        0%        5%        8%       10%       15%       20%     10%
Category      (M$)      (M$)      (M$)      (M$)      (M$)      (M$) ($/boe)
----------------------------------------------------------------------------
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Proved                                                                     
Developed                                                         
Producing  8,978.2   8,236.0   7,841.0   7,596.5   7,043.9   6,563.9    23.9
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Proved                                                                      
Undevel-                                                                  
oped       6,378.1   6,005.0   5,795.8   5,662.3   5,349.1   5,063.7    39.7
----------------------------------------------------------------------------
Total                                                                       
Proved    15,356.3  14,241.0  13,636.8  13,258.8  12,393.0  11,627.6    28.8
----------------------------------------------------------------------------
Probable  10,448.2   8,789.8   7,977.6   7,499.0   6,484.5   5,677.4    30.5
----------------------------------------------------------------------------
Proved +                                                                    
Probable  25,804.6  23,030.8  21,614.4  20,757.8  18,877.5  17,305.0    29.4
----------------------------------------------------------------------------
Possible  12,307.5   9,550.0   8,313.7   7,621.4   6,243.1   5,233.3    27.4
----------------------------------------------------------------------------
Proved +                                                                    
Probable +                                                                 
Possible  38,112.1  32,580.8  29,928.1  28,379.2  25,120.6  22,538.3    28.8
----------------------------------------------------------------------------

 
Reservoir Parameters 
AJM Deloitte audited the reservoir parameters by reviewing the well
logs and petrophysical analyses provided by NZEC. A petrophysical
analysis was performed on the Mt. Messenger Formation in the Copper
Moki-2 and Copper Moki-3 wells to determine net pay, average porosity
and water saturation values for use in volumetric calculations of
original oil in place. The Copper Moki-1 and Copper Moki-4 wells were
not analyzed as no conventional well logs were available over the Mt.
Messenger interval. 
The net pay was accumulated applying a 15 percent density porosity
cut-off. Density porosity was computed using a 2,710 kg/m3 matrix
grain density which is equivalent to a limestone matrix. A limestone
matrix was taken from the cross plot of core porosity versus grain
density supplied by NZEC. The Mt. Messenger formation is reported to
be a laminated "shaly" sand with lithic rock fragments. The lithic
fragments are responsible for the higher matrix density, greater than
the conventional 2,650 kg/m3 commonly used to compute porosity in
sandstones. Log computed density porosities seem to be in good
agreement with the core porosity so that a shale correction was not
applied to the density porosity. Water saturation (Sw) was computed
using both the Simandoux and dual water models; little difference was
noted between the two techniques, and the dual water model values
were used for volumetric calculations. A formation water resistivity
(Rw) of 0.11 ohm(i)m at a formation temperature of 53 degrees C and a
shale resistivity of 5 ohm(i)m were used as constants in the
calculations. 
AJM Deloitte also reviewed the seismic mapping presented by NZEC and
agrees that this data is likely indicative of the higher permeability
regions targeted by the wells but is not conclusive relative to the
total extent of the reservoirs. 
Economic Parameters 
Fixed and variable operating costs for the Copper Moki wells were
estimated based on December 2011 to August 2012 lease operating
statements provided by NZEC. The wells are currently using temporary
facilities; therefore, operating costs are higher than anticipated
for the future. 
Capital required to install artificial lift systems on the wells has
been included as provided by NZEC. NZEC has indicated that future
capital will be spent on installing heating and separating facilities
and continuing to produce to tanks until sufficient production exists
in the field to justify building a pipeline. The estimated $1,900,000
cost for additional site facilities is expected to be incurred in
November 2012. Fixed operating costs were assumed to decrease by over
75 percent commencing with the first quarter of 2013, following
completion of these operations.  
NZEC has a contract with Shell (Petroleum Mining) Company Limited to
purchase the oil on a Brent price basis. The Brent price is forecast
in USD; however, the forecast exchange rate from USD to CAD is 1.0 so
these prices can be assumed to be in CAD. The purchase price is
subject to a number of price adjustments, with a total oil price
offset of $3.90/bbl applied based on a comparison of the price
received during the Q1-Q2 2012 accounting period to the actual spot
prices for the same period using the Brent price as a reference. 
NZEC expects that pentanes will be sold as oil at the oil pricing
discussed above. Netback prices for the other NGL products (propane
and butane) are expected to average approximately $28/bbl in the
first year. Gas is expected to be sold at a price of approximately
$3.25/Mcf in the first year. 
The royalty regime in New Zealand requires payment of either an ad
valorem royalty (five percent of net revenues from sale of petroleum
products) or an accounting profits royalty (20 percent of the
accounting profit of petroleum production), whichever is greater in a
given royalty period. The accounting profit is calculated after
deduction of various prescribed costs, which can include operating,
capital, abandonment, and overhead. 
The New Zealand income tax rate for companies is 28% of taxable
income. Taxable income is calculated after applying certain
deductions against assessable income. The New Zealand petroleum
mining income tax regime treats all income resulting from petroleum
production as assessable income. Allowable deductions include
exploration and development expenditures, as well as costs incurred
on removal or restoration operations (such as abandonment and
reclamation costs). 
On behalf of the Board of Directors 
John Proust, Chief Executive Officer & 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 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
info@newzealandenergy.com.  
Forward-looking Statements 
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", "will be", "forecast", "predict",
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. Information concerning reserves may also be deemed to be
forward looking as estimates imply that the reserves described can be
profitably produced in the future. 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.  
Cautionary Note Regarding Reserve Estimates 
The oil and gas reserves calculations and income projections, upon
which the Report was based, were estimated in accordance with the
Canadian Oil and Gas Evaluation Handbook ("COGEH") and National
Instrument 51-101 ("NI 51-101"). The term barrels of oil equivalent
("boe") may be misleading, particularly if used in isolation. A boe
conversion ratio of six Mcf: one bbl was used by NZEC. This
conversion ratio is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.  
Reserves are estimated remaining quantities of oil and natural gas
and related substances anticipated to be recoverable from known
accumulations, as of a given date, based on: the analysis of
drilling, geological, geophysical, and engineering data; the use of
established technology; and specified economic conditions, which are
generally accepted as being reasonable. Reserves are classified
according to the degree of certainty associated with the estimates.
Proved Reserves are those reserves that can be estimated with a high
degree of certainty to be recoverable. It is likely that the actual
remaining quantities recovered will exceed the estimated proved
reserves. Probable Reserves are those additional reserves that are
less certain to be recovered than proved reserves. It is equally
likely that the actual remaining quantities recovered will be greater
or less than the sum of the estimated proved plus probable reserves.
Possible Reserves are those additional reserves that are less certain
to be recovered than probable reserves. There is a 10% probability
that the actual remaining quantities recovered will exceed the sum of
the estimated proved plus probable plus possible reserves.  
Revenue projections presented in the Report are based in part on
forecasts of market prices, current exchange rates, inflation, market
demand and government policy which are subject to uncertainties and
may in future differ materially from the forecasts above. Present
values of future net revenues documented in the Report do not
necessarily represent the fair market value of the reserves evaluated
in the Report. 
The Report also contains forward-looking statements including
expectations of future production and capital expenditures.
Information concerning reserves may also be deemed to be forward
looking as estimates imply that the reserves described can be
profitably produced in the future. These statements are based on
current expectations that involve a number of risks and
uncertainties, which could cause the actual results to differ from
those anticipated.  
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
John Proust
Chief Executive Officer & Director
North American toll-free: 1-855-630-8997 
New Zealand Energy Corp
Bruce McIntyre
Executive 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
info@newzealandenergy.com
www.newzealandenergy.com