VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 11, 2012) - New Zealand Energy Corp. ("NZEC" or the "Company") (TSX VENTURE:NZ)(OTCQX:NZERF) is pleased to provide an operational update on production and exploration activities on its 100%-owned Eltham Permit in the Taranaki Basin of New Zealand's North Island.
- Current production is 1,000 barrels of oil per day ("bbl/d") from the Mt. Messenger formation, with an additional 341 barrels of oil equivalent per day ("boe/d") of natural gas plus associated liquids to be tied in by the end of Q2-20121
- Management reiterates guidance of 3,000 boe/d production by year end
- Copper Moki-1 well ("CM-1") has produced more than 62,000 barrels of oil to date
- Copper Moki-2 well ("CM-2") is currently producing ~700 bbl/d and ~850 thousand cubic feet of natural gas per day ("mcf/d")1
- Copper Moki-3 well ("CM-3") encountered 12 metres of net pay in the Mt. Messenger formation and 15 metres of net pay in the Moki formation; NZEC plans to complete and flow test both formations
- Copper Moki-4 ("CM-4") has been drilled to target depth of 2,125 metres
- 100 km2 3D seismic survey underway across the Eltham and Alton permits
Copper Moki Production Update
CM-1 has been flowing from natural reservoir pressure since December 10, 2011 and has produced more than 62,000 barrels of oil since it was first tested in August 2011. Production rates have averaged 452 bbl/d and 1,052 mcf/d1 since commencing continuous production in December 2011. Over the last 30 days, CM-1 has produced at an average rate of 377 bbl/d and 1,410 mcf/d1 through a 24/64th inch choke.
CM-2 flowed 14,825 barrels of oil and 15,352 mcf of natural gas1 during a 16-day flow test in February and was subsequently shut-in for pressure build-up. NZEC initiated continuous production from CM-2 on April 1, 2012. The well is currently producing from natural reservoir pressure out of the Mt. Messenger formation at an average rate of 700 bbl/d and 850 mcf/d1 through a 22/64th inch choke. The CM-2 well encountered 12 metres of net pay in the Mt. Messenger formation, which is comparable to CM-1.
Current Company production is ~1,000 bbl/d and ~2,050 mcf/d1, exclusively from CM-1 and CM-2. The wells are producing 41.8° oil that is trucked to the Shell-operated Omata tank farm and sold at Brent pricing, resulting in a field netback of ~US$90/barrel. Natural gas and associated natural gas liquids are currently being flared until the Company completes a 2.6-km pipeline and associated production and sales agreements, with the pipeline scheduled for completion by the end of Q2-2012. NZEC has chosen to choke back its production wells to conserve the value of its natural gas and associated natural gas liquids.
1 Natural gas and associated natural gas liquids are currently being flared until the Company completes a 2.6-km pipeline and associated production and sales agreements, with the pipeline scheduled for completion by the end of Q2-2012.
CM-3 reached target depth at 3,167 metres in mid-March and is the Company's first well drilled through to NZEC's deeper exploration target, the Moki formation. After evaluation, the Company identified 12 metres of net pay within the Mt. Messenger formation and 15 metres of net pay within the Moki formation.
NZEC commenced drilling CM-4 on March 28, 2012 from the Copper Moki pad, targeting both the Urenui and Mt. Messenger formations. NZEC reached target depth of 2,125 metres on April 10, 2012, and is currently evaluating open hole logs.
The Company elected not to evaluate CM-3 with the drilling rig in order to exercise the option under the rig contract to drill CM-4 within the allotted period of time. A service rig is available and is expected to commence completion of CM-3 within the next two weeks, once the drill rig on CM-4 is removed. Since CM-3 is NZEC's first well to be drilled to the Moki formation, the Company plans to thoroughly evaluate the characteristics of the formation in order to guide its exploration strategy for future Moki targets. Upon perforation, NZEC's technical team will determine if the formation flows naturally. If further stimulation is required, additional time will be needed to allow for a comprehensive evaluation of the Moki formation. Once the Moki formation is fully evaluated the Company will determine whether the Mt. Messenger formation will be tested in CM-3 or evaluated through an additional well.
NZEC reiterates corporate production guidance of 3,000 boe/d by year-end 2012.
The Company had previously allocated funds to drill six Mt. Messenger exploration wells in the Taranaki Basin in the second half of 2012. NZEC will provide additional details regarding its 2012 capital program for both the Taranaki Basin and the East Coast Basin, including plans to accelerate its exploration activities, with the release of the Company's Q4-2011 financial statements at the end of April.
The Taranaki Basin offers multi-zone potential and NZEC's exploration strategy is to prioritize wells identified on 3D seismic that have well-defined, lower-risk Mt. Messenger targets coupled with additional exploration potential from the Urenui, Moki or Kapuni formations. The Company is completing a 100-km2 3D seismic survey toward the north end of its Taranaki permits that will further define existing targets and reduce drilling risk while potentially identifying new exploration targets and expanding NZEC's inventory of drill-ready locations.
The Taranaki Basin is currently New Zealand's only oil and gas producing basin, producing approximately 130,000 boe/d from 18 fields. Within the Taranaki Basin, NZEC holds and is the operator of two permits covering 169,949 net acres2. The permits are on trend with numerous oil and gas producing fields, some of which have been producing for decades, including the Kapuni gas field producing from the deeper Kapuni formation, the Waihapa/Ngaere oil field producing from the Kapuni and Tikorangi formations, and the Cheal oil field producing from the Urenui and Mt. Messenger formations.
On behalf of the Board of Directors
Bruce McIntyre, President & Director
2 Assumes NZEC completes the requirements to increase its interest in the Alton permit from 50% to 65%, as per an agreement with L&M Energy Limited.
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 nearly two million acres of conventional and unconventional prospects in the Taranaki Basin and East Coast Basin of New Zealand's North Island. The Company's management team has extensive experience exploring and developing oil and natural gas fields in New Zealand and Canada, and takes a multi-disciplinary approach to value creation with a track record of successful discoveries. NZEC plans to add shareholder value by executing a technically disciplined exploration and development program focused on the onshore and offshore oil and natural gas resources in the politically and fiscally stable country of New Zealand. NZEC is listed on the TSX Venture Exchange under the symbol NZ and on the OTCQX International under the symbol NZERF. More information is available at www.newzealandenergy.com or by emailing email@example.com.
This news release contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively "forward-looking statements"). The use of any of the words "to be", "guidance", "plans", "scheduled", "will", "will be", "completing", expects", "expected", "plans", "planning", "allow", "advance" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements, including without limitation, the speculative nature of exploration, appraisal and development of oil and natural gas properties; uncertainties associated with estimating oil and natural gas resources; uncertainties in both daily and long-term production rates and resulting cash flow; volatility in market prices for oil and natural gas; changes in the cost of operations, including costs of extracting and delivering oil and natural gas to market, that affect potential profitability of oil and natural gas exploration; the need to obtain various approvals before exploring and producing oil and natural gas resources; uncertainty in the timing of receipt of permits and the Company's ability to extend the permits if required; exploration hazards and risks inherent in oil and natural gas exploration; operating hazards and risks inherent in oil and natural gas operations; market conditions that prevent the Company from raising the funds necessary for exploration and development on acceptable terms or at all; global financial market events that cause significant volatility in commodity prices; unexpected costs or liabilities for environmental matters; competition for, among other things, capital, acquisitions of resources, skilled personnel, and access to equipment and services required for exploration, development and production; changes in exchange rates, laws of New Zealand or laws of Canada affecting foreign trade, taxation and investment; failure to realize the anticipated benefits of acquisitions; and other factors as disclosed in documents released by NZEC as part of its continuous disclosure obligations. NZEC believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release and NZEC does not undertake to update any forward-looking statements that are contained in this news release, except in accordance with applicable securities laws.
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