New Zealand Energy Announces Second Quarter Results and Operational Update

New Zealand Energy Announces Second Quarter Results and Operational Update 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/29/13 -- New
Zealand Energy Corp. ("NZEC" or the "Company") (TSX
VENTURE:NZ)(OTCQX:NZERF) has released the results of its second
quarter ended June 30, 2013. Details of the Company's financial
results are described in the Unaudited Consolidated Financial
Statements and Management's Discussion and Analysis which, together
with further details on each of the Company's projects, will be
available on the Company's website at www.newzealandenergy.com and on
SEDAR at www.sedar.com. All amounts are in Canadian dollars unless
otherwise stated. 
HIGHLIGHTS 
Production and Development 


 
--  Announced development plans for the Taranaki Basin until the end of
    2014, forecasting exit production rates of 2,300 BOE/day (applying mid-
    case assumptions)(1) 
--  48,752 barrels of oil ("bbl") produced and 49,204 bbl sold during six-
    month period, generating pre-tax oil sales of $5.3 million 
--  Positive net cash flow from petroleum operations during six-month period
    of approximately $1.7 million 
--  Average field netback during six-month period of $35.10/bbl 
--  Substantial reduction to direct production costs at Copper Moki site
    during June 2013 as a result of the installation of permanent production
    facilities 
--  56,717 bbl produced and 59,623 bbl sold year to date (August 26, 2013),
    generating pre-tax oil sales of approximately $6.4 million 
--  Cumulative production of 264,938 bbl since commencement of production,
    generating pre-tax oil sales (including sales from pre-production
    testing) of approximately $28.5 million 
--  Initiated installation of artificial lift at Waitapu-2 well 
--  Received results of RPS reservoir study, providing the Company with a
    better understanding of Mt. Messenger reservoir characteristics and
    declines 
--  Lodged an application for a petroleum mining permit that will encompass
    the Company's Copper Moki, Waitapu, Arakamu and Wairere sites in the
    Eltham Permit (18.73 km2) 

 
Acquisition of TWN Licences and TWN Assets from Origin Energy 


 
--  Amended deal terms related to the acquisition, resulting in a simplified
    sale and reduced purchase price 
--  Entered into a binding letter agreement with L&M Energy ("L&M") to
    explore and operate the TWN Licences and TWN Assets, securing $18.25
    million from L&M to purchase a 50% interest in the assets 
--  Obtained an extension to secure remaining required funds ($9.25 million)
    until September 30, 2013 
--  Settled the HSBC operating line of credit 
--  Announced 2P reserves of 1.07 million BOE attributed to the TWN Licences
    (NZEC's interest)(2) 
 
(1) Barrels of oil equivalent (BOE) may be misleading, particularly if used 
 in isolation. The boe conversion ratio of 6 Mcf : 1 bbl is based on an     
 energy equivalency conversion method primarily applicable at the burner tip
 and does not represent a value equivalency at the wellhead. See Forward-   
 looking Information for assumptions associated with production forecast.   
(2) Reserves associated with the TWN Licences, as previously announced in an
 NZEC press release on June 17, 2013, will not be attributable to NZEC until
 the Company has completed the acquisition of assets from Origin and filed  
 an updated Reserve report under NI 51-101. NZEC's shares of the TWN        
 Reserves is 50%, as per the terms of the TWN Arrangement with L&M.         

 
FINANCIAL SNAPSHOT  


 
----------------------------------------------------------------------------
                     Six months   Three months     Six months  Three months 
                          ended          ended          ended         ended 
                  June 30, 2013  June 30, 2013  June 30, 2012 June 30, 2012 
----------------------------------------------------------------------------
Production           48,752 bbl     18,573 bbl     95,078 bbl    55,226 bbl 
Sales                49,204 bbl     21,958 bbl     93,611 bbl    58,952 bbl 
----------------------------------------------------------------------------
Price              107.27 $/bbl   100.96 $/bbl   109.97 $/bbl  105.28 $/bbl 
Production costs    67.23 $/bbl    73.62 $/bbl    22.19 $/bbl   22.14 $/bbl 
Royalties            4.94 $/bbl     4.88 $/bbl     5.07 $/bbl    5.02 $/bbl 
Field netback       35.10 $/bbl    22.46 $/bbl    82.71 $/bbl   78.12 $/bbl 
----------------------------------------------------------------------------
Revenue               5,034,958      2,109,700      9,819,676     5,910,993 
Pre-production                                                              
 recoveries       $         Nil  $         Nil  $   2,110,910 $     759,280 
Total                                                                       
 comprehensive                                                              
 income (loss)    $  (4,687,377) $  (6,000,775) $   2,116,947 $   1,317,915 
Net finance                                                                 
 expense (income) $     119,712  $     101,826  $    (155,334)$    (137,023)
(Loss) earnings                                                             
 per share - basic                                                          
 and diluted      $       (0.04) $       (0.02) $        0.01 $        0.01 
----------------------------------------------------------------------------
Current assets       43,176,858                    59,205,659               
Total assets      $ 127,318,182                 $  98,814,102               
Total long-term                                                             
 liabilities      $   3,180,348                 $     375,871               
Total liabilities $  36,839,464                 $   5,737,495               
Shareholders'                                                               
 equity           $  90,478,718                 $  93,076,607               
----------------------------------------------------------------------------

 
Note: The abbreviation bbl means barrel or barrels of oil. 
Six-month Operating Results  
During the six-month period ended June 30, 2013, the Company produced
48,752 barrels of oil and sold 49,204 barrels for total oil sales of
$5,277,878, with an average oil sale price of $107.27 per barrel.
Total recorded production revenue, net of a 5% royalty payable to the
New Zealand Government (an average of $4.94 per barrel), was
$5,034,958. Production costs during the six-month period ended June
30, 2013 totalled $3,307,876, or an average of $67.23 per barrel,
generating an average field netback of $35.10 per barrel during the
period. NZEC calculates the netback as the oil sale price less fixed
and variable production costs and a 5% royalty. The notable reduction
in netback during the six-month period ended June 30, 2013, is
predominantly the result of decreased oil production. As previously
announced, the Company had shut in the Waitapu-2 well during May 2013
in order to gather critical data for the Mt. Messenger reservoir
study (see Reservoir Study) and to evaluate and install artificial
lift.  
The Company undertook a number of reservoir and production tests with
the objective of optimizing oil production, and these tests have
added to production costs. During the six-month period ended June 30,
2013, fixed production costs represented approximately 84% of total
production costs. Installation of the Copper Moki surface facilities
was completed i
n May and, as expected, this resulted in a reduction
in production costs for the Copper Moki site during the month of June
2013, as discussed under June Operating Results - Copper Moki Site
Only. Although shutting in the Waitapu-2 well in May 2013 reduced
some of the fixed operating costs, the Company continues to incur
costs on that site.  
Three-month Operating Results  
During the three-month period ended June 30, 2013, the Company
produced 18,573 barrels of oil and sold 21,958 barrels for total oil
sales of $2,216,815, with an average oil sale price of $100.96 per
barrel. Total recorded production revenue, net of a 5% royalty
payable to the New Zealand Government (an average of $4.88 per
barrel), was $2,109,700. Production costs during the three-month
period ended June 30, 2013 totalled $1,616,471, or an average of
$73.62 per barrel, generating an average field netback of $22.46 per
barrel during the period. 
As demonstrated in Six-month Operating Results, reduced production
following the shut-in of Waitapu-2 greatly impacted the three-month
netback results, although this was partially offset by reduced
production costs related to the Copper Moki site following the
commissioning of surface facilities (see June Operating Results -
Copper Moki Site Only). 
June Operating Results - Copper Moki Site Only  
The Company is starting to see the positive effect on production
costs of installation of surface facilities as reflected in reduced
production costs related to the Copper Moki site during June 2013.
Following the commissioning of surface facilities on the Copper Moki
site in May 2013, the Company incurred direct production costs of
approximately $165,000 to produce 4,740 barrels of oil, which
amounted to $34.81 per barrel during the month of June 2013, a
significantly lower production cost per barrel than the quarterly
average of $73.62 per barrel. This is also comparable to management's
estimate of well-site production costs of NZ$40 per barrel as assumed
in management's forecast of cash flows from operations referenced in
the Company's August 6, 2013 press release.  
Considering the proportion of fixed production costs reported for the
quarter ended June 30, 2013, as well as netbacks reported in prior
periods, the direct production costs per barrel is reflective of the
economies of scale. Thus, further savings should arise from higher
production levels from future developments. 
At August 26, 2013, the Company had an estimated $4.6 million in net
working capital.  
ACQUISITION OF INTEREST IN UPSTREAM AND MIDSTREAM ASSETS 
As previously announced, the Company has entered into an agreement
with Origin Energy Resources NZ (TAWN) Limited ("Origin") to acquire
three (net) petroleum mining licences in the Taranaki Basin totalling
23,049 acres (93.3 km2) - the Tariki, Waihapa and Ngaere Licences
(the "TWN Licences") - as well as the Waihapa Production Station and
associated gathering and sales infrastructure (the "TWN Assets"). On
August 12, the Company announced that Origin had agreed to extend the
deadline for satisfying the financing condition precedent for the
acquisition from August 14, 2013 to September 30, 2013, and to extend
the deadline for obtaining the required government approvals from
September 13, 2013 to October 14, 2013. In exchange, the Company
agreed to increase its acquisition deposit to $6 million. 
L&M Letter Agreement to Form Joint Arrangement 
On July 30, 2013, the Company announced that it had entered into a
binding agreement (the "L&M Letter Agreement") with L&M Energy
("L&M") to form a 50/50 joint arrangement to explore, develop and
operate the TWN Licences and the TWN Assets. Once the joint
arrangement is completed, the Company and L&M will each own 50% of
the TWN Licences and will also hold a 50% interest in the TWN Assets
(the "TWN Joint Arrangement"). The reserves and resources estimated
for the TWN Licences, as announced on June 17, 2013, will be
attributable to NZEC on a 50% basis upon closing of the acquisition
and the TWN Joint Arrangement, and filing of an updated reserve
report. 
Under the terms of the L&M Letter Agreement, L&M will contribute
$18.25 million towards the approximately $33.5 million purchase
consideration agreed to under the Origin Sale and Purchase Agreement,
in order to obtain a 50% interest in the TWN Joint Arrangement. L&M
will also contribute 50% of all future development and operating
expenditures. 
The Company will become the operator of the TWN Joint Arrangement,
and decisions regarding exploration, development and operations of
the TWN Joint Arrangement will be made by management committees with
equal representation from both the Company and L&M. 
The Company will be responsible for funding the $15.25 million
balance of the $33.5 million purchase consideration agreed to under
the Origin Sale and Purchase Agreement. The Company has paid a $6
million acquisition deposit to Origin, leaving $9.25 million to be
funded to complete the acquisition. 
The concurrent completion of the acquisition and the L&M Letter
Agreement is subject to the Company placing the remainder of the
purchase price into an escrow account by September 30, 2013, Origin
and Contact consenting to L&M becoming a party to the definitive
agreements, as well as receiving the relevant government approvals. 
PROPERTY REVIEW  
Taranaki Basin 
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, with
total production of approximately 130,000 barrels of oil equivalent
per day ("boe/d") from 18 fields. Within the Taranaki Basin, NZEC
holds a 100% interest in the Eltham Permit, a 65% interest in the
Alton Permit in joint arrangement with L&M, and a 60% interest in the
Manaia Permit in joint arrangement with New Zealand Oil & Gas
("NZOG"). The Eltham Permit covers approximately 93,166 acres (377
km2) of which approximately 31,877 acres (129 km2) are offshore in
shallow water. The Alton Permit covers approximately 119,204 onshore
acres (482 km2). The Manaia Permit covers approximately 27,426
onshore acres (111 km2) and was granted to NZEC and NZOG in December
2012 as part of the annual New Zealand block offer for exploration
permits. 
NZEC also expects to acquire 50% of the three TWN Licences and to
hold a 50% interest in the TWN Assets upon completion of the
acquisition of assets from Origin, as outlined in Acquisition of
Interest in Upstream and Midstream Assets. 
Production  
At the date of this MD&A, three of the Company's four commercially
producing wells are in active production. The Waitapu-2 well is
currently shut in and installation of artificial lift and surface
facilities is underway. During the quarter, the Company also
temporarily shut-in its Copper Moki-3 well to replace the down-hole
pump, which seized as a result of fines settling in the pump during
commissioning of the Copper Moki surface facilities. The wells are
producing light oil that is trucked to the Shell-operated Omata Tank
Farm and sold at Brent pricing. Cumulatively, as of the date of this
report, the Company has produced approximately 264,938 barrels of
oil, with cumulative pre-tax oil sales of approximately $28.5
million, including sales from oil produced during testing (net
results of operations are discussed under Results of Operations). The
wells have consistently prod
uced between 123 bbl/d and 162 bbl/d
since July 1, 2013, with an average production rate of 144 bbl/d,
indicating that oil production from the Copper Moki wells appears to
have stabilized. Over 26 production days in August 2013, the wells
have collectively produced oil at an average rate of 139 bbl/d and
extracted gas at an average rate of 490 mcf/d. The Company is not yet
generating cash flows from extracted gas.  
Copper Moki-1 has been producing since December 10, 2011, Copper
Moki-2 since April 1, 2012 and Copper Moki-3 since July 2, 2012. All
three wells produce approx. 41 degrees API oil from the Mt. Messenger
formation and flowed from natural reservoir pressure until October
2012, when NZEC installed artificial lift (pump jacks) to stabilize
production rates.  
Waitapu-2 commenced production on December 20, 2012 and was shut-in
in May 2013 as described above. The well produces approx. 40 degrees
API oil from the Mt. Messenger formation and flowed from natural
reservoir pressure until shut-in. Installation of artificial lift is
currently underway. In addition to installation of artificial lift,
during the period the Company ran down-hole gauges into Waitapu-2
that measures the bottom hole temperature and pressure of the
reservoir. These data were critical to the recently completed Mt.
Messenger reservoir study (see below).  
Reservoir Study 
Production declines from the Copper Moki wells have been greater than
expected and this prompted the Company to initiate an independent
reservoir study through RPS Group PLC, a world leader in well
evaluation. The study provided the Company with a better
understanding of reservoir characteristics and declines, based on
data from Waitapu-2, the three Copper Moki wells, and other Mt.
Messenger wells in the region.  
The RPS study concluded that declines are not related to wax buildup
or mechanical issues. Information from the study and from a
proprietary database merging five 3D seismic surveys has allowed the
Company to refine its Mt. Messenger exploitation strategy, which
includes: 


 
--  Choosing optimally sized targets based on interpretation of the merged
    3D dataset, 
--  Reducing costs by drilling multiple wells from each pad, and 
--  Prioritization of targets close to the Waihapa Production Station to
    expedite tie-in. 

 
The Mt. Messenger formation remains an integral part of the Company's
development plans, as described in the Outlook section. These
development plans include the Horoi-1 well, which is expected to be
drilled later this year on the Alton Permit.  
Application for Eltham Petroleum Mining Permit 
During the quarter ended June 30, 2013, the Company lodged an
application for a petroleum mining permit that will have an initial
duration of 15 years. This petroleum mining permit will cover 18.73
km2 within the area currently included under the Company's Eltham
Permit and includes all sites on which the Company had previously
drilled its ten exploration wells (i.e. the Copper Moki site, Waitapu
site, Arakamu site, and the Wairere site). A successful application
for the petroleum mining permit will extend the duration that the
Company is able to operate within the area covered by the permit, and
will also reduce the surface area within the existing Eltham Permit
that will be subject to relinquishment in September 2013 when the
Eltham Permit is due for extension. 
East Coast Basin 
The East Coast Basin of New Zealand's North Island hosts two
prospective oil shale formations, the Waipawa and Whangai, which are
the source of more than 300 oil and gas seeps. Within the East Coast
Basin, NZEC holds a 100% interest in the Castlepoint Permit, which
covers approximately 551,042 onshore acres (2,230 km2), and a 100%
interest in the Ranui Permit, which covers approximately 223,087
onshore acres (903 km2) and is adjacent to the Castlepoint Permit.
NZEC is considering relinquishing the Ranui Permit but has not yet
made a definitive decision in this regard. On September 3, 2010, NZEC
applied to the Minister of Energy to obtain a 100% interest in the
East Cape Permit. The application is uncontested and the Company
expects the East Cape Permit to be granted to NZEC upon completion of
New Zealand Petroleum & Minerals' ("NZPAM") review of the
application. The East Cape Permit covers approximately 1,067,495
onshore acres (4,320 km2) on the northeast tip of the North Island.
In addition, NZEC has entered into a binding agreement with Westech
to acquire 80% ownership and become operator of the Wairoa Permit,
which covers approximately 267,862 onshore acres (1,084 km2) south of
the East Cape Permit. Preliminary approval of transfer of ownership
was obtained from NZPAM on December 20, 2012 and formation of a joint
arrangement with Westech is subject to final NZPAM approval.  
The Company has completed the coring of two test holes on the
Castlepoint Permit. The Orui (125 metres total depth) and Te Mai (195
metres total depth) collected core data across the Waipawa and
Whangai shales. NZEC also completed a test hole on the Ranui Permit.
Ranui-2 was drilled to 1,440 metres, coring the Whangai shale across
several intervals. In Q2-2012, NZEC completed 70 line km of 2D
seismic data across the Castlepoint and Ranui permits to further its
technical understanding of the area and identify targets for
exploration in 2013. 
The Wairoa Permit has been actively explored for many years, with
extensive 2D seismic data across the permit and log data from more
than 15 wells drilled on the property. Historical exploration focused
on the conventional Miocene sands. NZEC's technical team has
identified conventional opportunities as well as potential in the
unconventional oil shales that underlie the property. NZEC's team
knows the property well and provided extensive consulting services
(through the consulting company Ian R Brown Associates) to previous
permit holders, assisting with seismic acquisition and
interpretation, well-site geology and regional prospectivity
evaluation. In addition, NZEC's team assisted with permitting and
land access agreements and worked extensively with local district
council, local service providers, land owners and iwi groups,
allowing the team to establish an excellent relationship with local
communities. During Q1-2013 the Company completed a 50 km 2D seismic
program on the property, the results of which are currently being
processed and reviewed and will help to identify exploration targets
on the permit. 
OUTLOOK  
On August 6, 2013, the Company announced its updated plans to develop
its oil and gas assets in the Taranaki Basin, including its plans for
exploration and development of the TWN Licences and integration of
the TWN Assets. Completing the acquisition of the TWN Licences and
TWN Assets will be transformative for NZEC, resulting in a fully
integrated upstream/midstream company with the cash flow,
infrastructure and inventory to support long-term growth.  
Taranaki Basin 
Owning 50% of the TWN Assets and TWN Licences will allow NZEC to
optimize development of its existing permits. The gas supply that
NZEC has identified to reactivate gas lift and production from
existing Tikorangi wells on the TWN Licences will provide the
blending gas required to deliver NZEC's Copper Moki gas to market,
bringing additional cash flow to NZEC from the Copper Moki wells. The
Company also plans to build a pipeline to connect the Waitapu-2 well
to the Copper Moki site and is currently evaluating the economics of
this initiative. The pipeline would effectively tie in the Waitapu
gas production (and associated liquefied petroleum gas or "LPG") into
the Waihapa Production Station via the Copper Moki pipeline. 
As NZEC continues to explore the Eltham and Alton permits, the
Company will focus on drill targets that are close to the Waihapa
Production Station and associated pipelines, allowing for rapid and
cost effective tie-in of both oil and gas production. 
NZEC has prepared a detailed financial and production model outlining
the explorati
on and development program for its Taranaki assets that
has allowed the Company to forecast the impact of those activities on
its production and cash flow. NZEC's activities planned to the end of
2014 in the Taranaki Basin are outlined in the table below: 


 
----------------------------------------------------------------------------
  PLANNED POST ACQUISITION WORK PROGRAM     FORECAST IMPACT (Net to NZEC)   
----------------------------------------------------------------------------
                                                           Production Impact
Balance 2013                                   Capital           (Exit 2014)
----------------------------------------------------------------------------
Tikorangi well reactivations              $2.1 million      Included in 2014
-- Reactivate six existing Tikorangi                        production below
 wells with gas lift                                                        
-- High volume lift installation on two                                     
 initial wells                                                              
----------------------------------------------------------------------------
Mt. Messenger development                 $5.2 million      Included in 2014
-- Waitapu artificial lift and tie-inTwo                    production below
 Mt. Messenger uphole completions in                                        
 existing wells                                                             
-- Horoi exploration well (including                                        
 surface infrastructure)                                                    
----------------------------------------------------------------------------
Balance 2013 Total                        $7.3 million                      
----------------------------------------------------------------------------
2014                                                                        
----------------------------------------------------------------------------
Tikorangi Well Reactivations              $8.4 million           780 bbl/day
-- Increase water handling capacity at                                      
 Waihapa Production Station                                                 
-- High volume lift installation on four                                    
 remaining wells                                                            
----------------------------------------------------------------------------
New Tikorangi wells                       $7.9 million           490 bbl/day
-- Drill two new Tikorangi wells                                            
----------------------------------------------------------------------------
Mt. Messenger development                 $6.1 million           540 bbl/day
-- Three new Mt. Messenger wells                                            
 (including surface infrastructure)                                         
----------------------------------------------------------------------------
Kapuni development (cost to be funded by           ---           304 boe/day
 new JV partner)                                                            
-- Two new Kapuni wells                                                     
----------------------------------------------------------------------------
Seismic acquisition, G&G studies and      $2.0 million                   ---
 Other                                                                      
----------------------------------------------------------------------------
2014 Total                               $24.4 million    Exit 2,300 boe/day
                                                       (including production
                                                                        from
                                                             existing wells)
----------------------------------------------------------------------------

 
The forecast on which the above information is based reflects
management's mid-case production assumptions, while capital costs
indicate management's net share of the capital cost to be incurred by
the TWN Joint Arrangement. 
Development and operating costs in the first 12 months following the
date of this report are to be funded initially by existing working
capital and cash flows from production. However, in order to carry
out all of the planned development activities, the Company is
considering a number of options to increase its financial capacity.
These options include increasing cash flow from oil production,
additional joint arrangements, commercial arrangements or other
financing alternatives. For the assumptions related to the production
forecast, refer to the full Management's Discussion & Analysis filed
on the Company's website and on SEDAR. 
East Coast Basin  
NZEC has drilled two stratigraphic holes on its 100% working interest
Castlepoint Permit and one stratigraphic hole on its 100% working
interest Ranui Permit. These three stratigraphic test wells have
advanced NZEC's understanding of the Waipawa and Whangai formations.
A review of the geochemical and physical properties of the two shale
packages, coupled with information from seismic data, has focused
NZEC's exploration strategy for the area. The Company is actively
seeking a joint venture partner for its East Coast permits. The
Company is currently considering its plans for the Ranui Permit,
including possible relinquishment of the permit.  
NZEC has applied to NZPAM to extend the deadline for drilling the
exploration well on the Castlepoint Permit to Q2-2014, while the
Company continues to work towards obtaining the requisite consents
and land access agreements for the Castlepoint Permit drill
locations. The Company has met regularly with local communities to
discuss its exploration plans.  
NZEC completed a 50-km 2D seismic survey on the Wairoa Permit in
Q2-2013 and is currently processing the data. The Company will
finalize its exploration plans for the permit after reviewing all of
the seismic and well log data.  
The Company's application for the East Cape Permit is uncontested and
NZEC expects the permit to be granted upon completion of NZPAM's
review of the application. 
SUMMARY OF QUARTERLY RESULTS 


 
----------------------------------------------------------------------------
                             2013-Q2      2013-Q1      2012-Q4      2012-Q3 
                                   $            $            $            $ 
----------------------------------------------------------------------------
Total assets             127,318,182  129,545,992  116,059,939   98,882,087 
Exploration and                                                             
 evaluation assets        52,357,470   49,610,922   37,379,726   26,377,188 
Property, plant and                                                         
 equipment                26,135,651   25,793,089   23,867,758   16,293,123 
Working capital            9,517,742   17,533,636   28,293,845   45,204,695 
Revenues                   2,109,700    2,925,258    2,948,041    3,708,254 
Accumulated deficit      (24,616,053) (22,386,089) (19,992,243) (17,804,045)
Total comprehensive                                                         
 income (loss)            (6,000,775)   1,313,397   (1,333,805)  (2,018,634)
Basic (loss) earnings                                                       
 per share                     (0.02)       (0.02)       (0.02)       (0.02)
Diluted (loss) earnings                                                     
 per share                     (0.02)       (0.02)       (0.02)       (0.02)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                             2012-Q2      2012-Q1      2011-Q4      2011-Q3 
                                   $            $            $            $ 
----------------------------------------------------------------------------
Total as
sets              98,814,102   96,979,923   31,152,804   33,566,611 
Exploration and                                                             
 evaluation assets        25,373,718   12,103,712    6,052,699    9,509,095 
Property, plant and                                                         
 equipment                 8,674,152    8,150,802    5,509,511       63,421 
Working capital           53,844,035   70,401,191   18,030,398   18,699,022 
Revenues                   5,910,993    3,908,683      974,517            - 
Accumulated deficit      (15,613,594) (16,548,180) (16,911,070) (17,057,134)
Total comprehensive                                                         
 income (loss)             1,317,915      799,032   (1,258,314)  (4,279,538)
Basic (loss) earnings                                                       
 per share                      0.01         0.00         0.01        (0.04)
Diluted (loss) earnings                                                     
 per share                      0.01         0.00         0.01        (0.04)
----------------------------------------------------------------------------

 
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 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. 
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.  
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 "will", "intend", "objective", "become",
"transforming", "potential", "continuing", "pursue", "subject to",
"look forward", "unlocking" 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 and natural gas;
expectations regarding the Company's ability 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 Company's ability to raise capital on
appropriate terms, or at all; 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 to obtain the necessary approvals to
conclude the TWN Joint Arrangement 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. This document
includes references to management's forecasts of future development,
production and cash flows from such operations. The major assumptions
applied by management are outlined in the MD&A, published on the
Company's website and on SEDAR. 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 ESTIMATES 
The oil and gas reserves calculations and income 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. 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. 
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