New Zealand Energy Amends Deal Terms, Finalizes Sale and Purchase Agreement Related to the Acquisition of Assets from Origin

New Zealand Energy Amends Deal Terms, Finalizes Sale and Purchase Agreement 
Related to the Acquisition of Assets from Origin Energy,
Identifies Substantial Oil and Gas Reserves and Resources 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 06/17/13 -- New
Zealand Energy Corp. (TSX VENTURE:NZ)(OTCQX:NZERF) ("NZEC" or the
"Company") is pleased to announce that it has finalized the Sale and
Purchase Agreement ("SPA") to acquire strategic upstream and
midstream assets (the "Acquisition") from Origin Energy Resources NZ
(TAWN) Limited, a wholly-owned subsidiary of Origin Energy Limited
(ASX:ORG) (collectively "Origin"), subject to meeting the financing
condition precedent by August 14 and the government approval
condition precedent by September 13, in order to close the
Acquisition by September 20, 2013. The assets being acquired include
three net Petroleum Mining Licences totaling 23,049 acres in the main
Taranaki Basin production fairway (the "TWN Licences") as well as the
Waihapa Production Station and associated gathering and sales
infrastructure. All amounts are stated in Canadian dollars unless
otherwise noted. More information regarding the Acquisition is
available in the Company's Annual Information Form for the year ended
December 31, 2012, which was filed today on SEDAR at www.sedar.com. 
In conjunction with the Acquisition, NZEC commissioned Deloitte LLP
("Deloitte") to prepare an independent assessment of reserves and
resources attributable to the TWN Licences. Proved and Probable
Reserves(1) are estimated at 1,852,700 barrels of oil, 1.45 billion
cubic feet of natural gas and 50,700 barrels of natural gas liquids,
collectively 2,144,700 barrels of oil equivalent(2) ("boe"),
estimated by Deloitte to have a before tax net present value ("NPV")
of $62.9 million (assuming a 10% discount rate). Contingent
Resources(1) are estimated at 1,162,000 boe, with Prospective
Resources(1) estimated at 23,541,000 boe. These reserves and
resources will not be attributed to the Company until the Acquisition
is complete and NZEC files an updated NI 51-101 reserve report. 
Highlights 


 
--  Revised purchase price to $33.5 million with no additional adjustments
    (from original purchase price in May 2012 of $42 million plus
    adjustments, estimated by NZEC to be $9 million) 
--  Purchase price comprises $30 million in cash plus a 9% royalty on net
    revenues, both payable to Origin, and a $3.5 million cash payment to
    Contact Energy Limited (NZX:CEN) ("Contact") 
--  NZEC purchases the Tariki, Waihapa and Ngaere petroleum licences
    totaling 23,049 acres (93.3 km2) 
--  NZEC retains 100% of production from all existing and new wells on the
    TWN Licences in all formations, subject to the 9% royalty payable to
    Origin 
--  Origin relinquishes all other rights and encumbrances on the TWN
    Licences, other than the royalty 
--  Reserve and resource estimate attributable to the TWN Licences, prepared
    by Deloitte LLP 
    --  Proved and Probable Reserves(1) of 2,144,700 boe 
    --  Before tax NPV (10% discount) for 2P Reserves of $62.9 million(1) 
    --  Contingent Resources(1) (best estimate) of 1,162,000 boe 
    --  Prospective Resources(1) (best estimate) of 23,541,000 boe 
--  Waihapa Production Station 
    --  Facility ready for gas processing, oil handling and water disposal 
    --  10 TJ/day(3) gas supply identified to operate the gas plant and
        reactivate gas lift system on Tikorangi wells 

 
"Negotiations over the past year have resulted in a revised purchase
price and a simplified sale agreement," said John Proust, Chief
Executive Officer and Director of NZEC. "The additional time for
review has ultimately proved beneficial to NZEC and its shareholders.
The extended technical review of the TWN Licences has identified
reserves that will more than quadruple NZEC's reserve base, plus
significant oil and gas resources, that together underscore the
prospectivity of the petroleum licences. 
"We have developed a business plan to deliver our liquid-rich gas
production to market, activate the gas lift to recommence oil and gas
production from existing Tikorangi wells located on the TWN Licences,
and establish new business opportunities for the Waihapa Production
Station. 
"We appreciate the patience of our shareholders. With these
negotiations behind us, we are focused entirely on closing the
acquisition and executing our exploration and business plans to
demonstrate the value of this acquisition for NZEC's shareholders."  
(1) Reserve and resource estimates for the TWN Licences prepared by
Deloitte LLP, with an effective date of April 30, 2013. See detailed
reserve and resource tables and Cautionary Note Regarding Reserve and
Resource Estimates. 
(2) Barrels of oil equivalent (boe) calculated using a conversion
rate of 6 Mcf : 1 bbl. 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 
(3) A TerraJoule (TJ) is a measure of energy and is equivalent to
approximately 1 MMcf of natural gas. 
Waihapa Reserves and Resources 
During this period of review and renegotiation, NZEC commissioned
Deloitte LLP (formerly AJM Deloitte) to prepare a reserve estimate
and economic evaluation for the Tikorangi formation on the TWN
Licences, along with a resource evaluation for the Urenui, Mt.
Messenger, Moki and Kapuni formations. The estimates and evaluations
were prepared in accordance with National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities with an effective
date of April 30, 2013. These reserves and resources will not be
attributed to the Company until the Acquisition is complete and NZEC
files an updated NI 51-101 reserve report. Upon closing of the
Acquisition, the Waihapa reserves and resources will increase NZEC's
2P Reserves (Proved + Probable) by 303% and increase the net present
value (10% discount, before tax) of NZEC's 2P reserves to $85.5
million.  


 
     Marketable Oil and Gas Reserves Attributable to the TWN Licences     
                           As at April 30, 2013                           
                         Forecast Prices and Costs                        
                                                                          
--------------------------------------------------------------------------
                                                               Barrels Oil
                  Light & Medium  Natural Gas     Natural Gas   Equivalent
Reserves Category      Oil (Mbbl)       (MMcf)  Liquids (Mbbl)       (Mboe)
--------------------------------------------------------------------------
Proved Developed           983.7        762.0            26.7      1,137.4
Proved Undeveloped         258.1        206.5             7.2        299.8
Total Proved             1,241.8        968.5            33.9      1,437.1
Probable                   610.9        479.3            16.8        707.6
Proved + Probable        1,852.7      1,447.8            50.7      2,144.7
--------------------------------------------------------------------------
 
Notes: 
 
1.  Estimated by Deloitte LLP. These reserves will not be attributed to the
    Company until the Acquisition is complete. 
2.  Reserves are presented before the deduction of royalty obligations
    payable to Origin and to the New Zealand government. 
3.  Mbbl - thousand barrels. MMcf - million cubic feet. 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. 
4.  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. See Cautionary
    Note Regarding Reserve and Resource Estimates. 
 
 
          Net Present Value of Future Net Revenue Attributable to 
                           TWN Licences Reserves                      
                                Before Tax                                
                           As at April 30, 2013                           
                         Forecast Prices and Costs                        
                                                                          
--------------------------------------------------------------------------
                 Net Present Value of Future Net Revenues                 
                   Before Tax, Discounted at % per year                   
--------------------------------------------------------------------------
                                                                      Unit
                                                                     Value
                        0%      5%      8%     10%     15%     20%     10%
Reserves Category   ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($/boe)
--------------------------------------------------------------------------
Proved Developed    54,432  43,656  38,848  36,142  30,677  26,554   31.65
Proved Undeveloped  11,874   9,168   7,990   7,340   6,058   5,115   24.34
Total Proved        66,306  52,824  46,838  43,482  36,735  31,669   30.12
Probable            44,522  27,897  22,201  19,393  14,496  11,400   27.32
Proved + Probable  110,828  80,721  69,039  62,875  51,231  43,069   29.20
--------------------------------------------------------------------------
                                                                          
            Oil and Gas Resources Attributable to TWN Licences            
                           As at April 30, 2013                           
                                                                          
                                      ------------------------------------
                                                         Mboe             
--------------------------------------------------------------------------
Resource Category                            Low         Best         High
--------------------------------------------------------------------------
Contingent Resources                         567        1,162        2,426
--------------------------------------------------------------------------
Prospective Resources                     10,825       23,541       54,368
--------------------------------------------------------------------------
Discovered Petroleum Initially in                                         
 Place (PIIP)                              1,529        2,976        5,889
--------------------------------------------------------------------------
Undiscovered Petroleum Initially in                                       
 Place (PIIP)                             31,145       63,955      138,781
--------------------------------------------------------------------------
 
Notes: 
 
1.  Estimated by Deloitte LLP. These resources will not be attributed to the
    Company until the Acquisition is complete. Estimates assume 9 to 14%
    recovery for oil resources and 50% for gas resources. See Cautionary
    Note Regarding Reserve and Resource Estimates. 
2.  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. 

 
Terms of the Acquisition 
The final purchase price for the Acquisition comprises $33.5 million
in cash ($30 million payable to Origin and $3.5 million payable to
Contact). NZEC paid a $5 million deposit to Origin for the
Acquisition in June 2012. The remaining $28.5 million will be payable
upon closing of the Acquisition. The Company is considering a number
of options to increase its financial capacity to carry out the
Acquisition and other anticipated activities. In addition, NZEC will
pay Origin a 9% net revenue royalty. The Company can reduce the
Origin Royalty at any time by as much as 4% by paying Origin $4.25
million per percentage point. The TWN Licences are also subject to a
"grandfathered" New Zealand Petroleum & Minerals 10% net revenue
royalty. The royalty regime allows for the deduction of specified
portions of operating costs when calculating royalties payable. 
Other than the 9% royalty, Origin has relinquished all rights to the
TWN Licences and the Waihapa Production Station, and to production
from existing and future wells in all formations.  
As one of the conditions of the transaction, NZEC has entered into an
agreement with Contact regarding Contact's Ahuroa Gas Storage
Facility ("AGS") located in the Contact-owned permit adjacent to the
TWN Licences and the Waihapa Production Station. Contact, owned 53.1%
by Origin, is one of New Zealand's leading energy generators and
retailers, providing electricity, natural gas and LPG to customers in
New Zealand. NZEC will transfer ownership of the Ahuroa Licence
(3,857 acres, 15.6 km2) to Contact upon closing of the transaction.
NZEC's technical review of the Ahuroa Licence did not identify
significant accessible prospectivity. In exchange for transfer of the
Ahuroa Licence to Contact, NZEC will receive a compressor capable of
handling 10 MMcf/d of natural gas. NZEC will act as operator of AGS,
for which Contact will pay NZEC a monthly operating fee of
NZ$200,000.  
Two final conditions are required to close the Acquisition: deposit
of the remaining $28.5 million of the purchase price into an escrow
account, and government approval. The New Zealand Government has
voiced its approval for the transaction. NZEC will proceed to lodge
the SPA and other agreements with the New Zealand Government for
final approval. The TSX Venture Exchange has provided conditional
approval for the transaction. 
TWN Mining Licences 
Upon closing of the Acquisition and after transferring the Ahuroa
Permit to Contact, NZEC will own the Tariki, Waihapa and Ngaere
Licences ("TWN Licences") in the main production fairway of the
Taranaki Basin, contiguous with the northern border of NZEC's
existing Eltham and Alton permits (Figure 1). Totalling 23,049 acres
(93.3 km2), the TWN Licences offer multi-zone potential from the
Urenui, Mt. Messenger, Moki, Kapuni and Tikorangi formations and will
bring NZEC's Taranaki Basin acreage to 210,153 acres (850.5 km2). The
TWN Licences are permitted and renewable without relinquishment,
subject to government approval. Included are 16 established drill
pads with gathering systems in place, which will allow for timely
tie-in to the Waihapa Production Station upon exploration and
completion success.  
The Acquisition includes 3D seismic data covering approximately 50%
of the TWN Licences as well as 585 km of 2D seismic data. NZEC has
access to extensive information from 27 previously drilled wells,
offering the necessary well control to expedite exploration cycle
time and reduce drilling risk. NZEC's review to date of the 3D
seismic and well log data has identified exploration leads in all of
the formations, significantly expanding NZEC's drilling inventory in
the Taranaki Basin.  
Upon closing of the Acquisition, NZEC plans to reactivate an
established gas lift system for six existing wells on the TWN
Licences to recommence oil and gas production from the Tikorangi
formation, which is estimated to have remaining Proved and Probable
Reserves of 2,144,700 boe. NZEC has also determined that six wells
that previously produced from the Tikorangi formation have uphole
completion potential in the shallower Moki, Mt. Messenger and Urenui
formations. Reactivation and uphole completion of these wells would
be significantly less expensive and faster than drilling new wells,
and economic discoveries could be quickly tied in to the Waihapa
Production Station using existing oil and gas gathering pipelines.
Both the reactivations and uphole completions could bring near-term,
low-cost production and cash flow to the Company.  
NZEC's technical team has also identified five high-priority Mt.
Messenger targets on the Waihapa and Ngaere permits of the TWN
Licences. NZEC has completed permitting for a new site to access
these targets, called the Waipapa site.  
Longer-term exploration plans on the TWN Licences include accessing
Mt. Messenger targets from 16 existing drill pads with gathering
systems in place, which offer lower-cost exploration potential and
can be tied-in to the Waihapa Production Station on an expedited
basis. The resource evaluation also confirmed the prospectivity of
the deeper Moki and Kapuni formations on the TWN Licences.
Discoveries by other companies on offsetting permits have
demonstrated significant flow rates and long-term production from
reservoirs in these deeper formations. 
Production and Infrastructure Assets 
Owning the Waihapa Production Station (Figure 2) will give NZEC
strategic control over gathering, processing and sales infrastructure
in the Taranaki Basin and provide NZEC with the ability to quickly
bring on near-term production additions, reduce full-cycle
development lead times and execute on longer-term growth plans. In
addition, as the only open-access midstream facility in the Taranaki
Basin, the Waihapa Production Station offers business opportunities
for processing third-party gas, liquids, oil and water. The Waihapa
Production Station is central to NZEC's producing wells and inventory
of exploration prospects, thereby reducing transportation and
processing costs for NZEC's oil and gas production.  
The Waihapa Production Station and associated infrastructure
includes: 


 
--  45 MMcf/d gas processing, gas compression and LPG extraction facility; 
--  51 km 8-inch gas sales pipeline from the Waihapa Production Station to
    the Stratford Gas Power Generation Plant then terminating in New
    Plymouth; 
--  59 km of oil/gas mixed product pipelines including gas lift lines; 
--  25,000 bbl/d oil processing facility; 
--  49 km oil sales pipeline from the Waihapa Production Station to the
    Omata Tank Farm, capable of transporting up to 15,500 bbl/d; and 
--  18,000 bbl/d water disposal processing system. 

 
Since initiating the Acquisition in 2012, NZEC has recruited industry
professionals with expertise in operating a full-cycle production
facility. When the Acquisition closes, Mike Oakes, NZEC's General
Manager Upstream Operations, will assume responsibility for the
Waihapa Production Station. 
Contact Agreement 
As part of the Acquisition, Contact and NZEC have agreed to undertake
a joint study that is expected to lead to the commencement of a
six-month gas looping trial in Q4-2013. NZEC intends to loop a
minimum of 10 TJ/day3 through the Waihapa Production Station, shipped
from the existing gas network through the Contact pipeline. A volume
of 10 TJ/day will be adequate to commence operations at the Waihapa
Production Station, allowing NZEC to process gas produced from its
own wells. During the trial, gas will be used to reactivate the
existing gas lift system on the TWN Licences to lift oil and gas from
reserves in the Tikorangi formation. The trial will also determine
the economics of stripping natural gas liquids ("NGLs") from the
liquids-rich gas. Any NGLs that are recovered during the trial will
be the property of NZEC and can be sold at market prices. NZEC will
sell any additional gas produced through this process to Contact at
an estimated price of NZ$4.75/mcf.  
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 2.27 million acres (including permits and acquisitions
pending) 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. 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. 
To view Figures 1 and 2 please click on the following link:
http://file.marketwire.com/release/NZ0617.pdf  
FORWARD-LOOKING INFORMATION 
This document 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 "being", "will", "until", "estimate",
"will be", "is considering", "will proceed", "plans", "reactivate",
"recommence", "would be", "could be", "will bring", "could bring",
"expected", 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. Such forward-looking statements should
not be unduly relied upon. The Company 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. This document contains forward-looking statements and
assumptions pertaining to the following: business strategy, strength
and focus; the granting of regulatory approvals; the timing for
receipt of regulatory approvals; geological and engineering estimates
relating to the resource potential of the Properties; the estimated
quantity and quality of the Company's oil and natural gas resources;
supply and demand for oil and natural gas and the Company's ability
to market crude oil, natural gas and; expectations regarding the
ability to raise capital and to continually add to reserves and
resources through acquisitions and development; the Company's ability
to obtain qualified staff and equipment in a timely and
cost-efficient manner; the ability of the Company to obtain the
necessary approvals and secure the necessary financing to conclude
the acquisition of assets from Origin on schedule, or at all; 
the ability of the Company's subsidiaries to obtain mining permits
and access rights in respect of land and resource and environmental
consents; the recoverability of the Company's crude oil, natural gas
reserves and resources; and future capital expenditures to be made by
the Company. Actual results could differ materially from those
anticipated in these forward-looking statements as a result of the
risk factors set forth below and elsewhere in the document, such as
the speculative nature of exploration, appraisal and development of
oil and natural gas properties; uncertainties associated with
estimating oil and natural gas resources; 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; operating hazards and risks inherent in oil
and natural gas operations; volatility in market prices for oil and
natural gas; 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. Readers are cautioned that the
foregoing list of factors is not exhaustive. Statements relating to
"reserves and resources" are deemed to be forward-looking statements,
as they involve the implied assessment, based on certain estimates
and assumptions, that the resources described can be profitably
produced in the future. The forward-looking statements contained in
the document are expressly qualified by this cautionary statement.
These statements speak only as of the date of this document and the
Company does not undertake to update any forward-looking statements
that are contained in this document, except in accordance with
applicable securities laws. 
CAUTIONARY NOTE REGARDING RESERVE AND RESOURCE ESTIMATES 
The oil and gas reserve and resource calculations and net present
value projections 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 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 do not necessarily represent the fair market
value of the reserves evaluated. 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. Contingent resources are those
quantities of oil and gas estimated on a given date to be potentially
recoverable from known accumulations using established technology or
technology under development, but which are not currently considered
to be commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal,
environmental, political and regulatory matters, or a lack of
markets. Prospective resources are those quantities of oil and gas
estimated on a given date to be potentially recoverable from
undiscovered accumulations. Undiscovered resources means those
quantities of oil and gas estimated on a given date to be contained
in accumulations yet to be discovered. The resources reported are
estimates only and there is no certainty that any portion of the
reported resources will be discovered and that, if discovered, it
will be economically viable or technically feasible to produce. 
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 
New Zealand Energy Corp.
Chris Bush
New Zealand Country Manager
New Zealand: 64-6-757-4470
info@newzealandenergy.com
www.newzealandenergy.com
 
 
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