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 in 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 produced 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
exploration 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 assets 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
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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