VANCOUVER, BRITISH COLUMBIA — (Marketwire) — 08/30/11 — New Zealand Energy Corp. (“NZEC” or the “Company”), an oil and natural gas company with exploration and development prospects in New Zealand, has released the results of its second quarter ended June 30, 2011. 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, are available on the Company–s website at and on SEDAR at . All amounts are in Canadian dollars unless otherwise stated.
NZEC has completed a number of significant milestones and we are moving quickly toward our objective of becoming New Zealand–s next oil and natural gas producer. In early August we completed our initial public offering and commenced trading on the TSX Venture Exchange. The $20 million raised in the IPO has left us well positioned to complete our first discovery well and execute an aggressive exploration strategy, with four more wells planned by year end.
The Copper Moki-1 well, NZEC–s first discovery well, was production tested earlier in August over a 48-hour period and flowed 41.8 API oil at a consistent rate of 1,100 barrels per day along with 855 mcf per day of natural gas. The well will be placed on an extended production test to determine the reservoir size and flow conditions and NZEC has entered into a contract to sell its test volumes of oil at a premium to the Brent reference price . NZEC–s in-country team has initiated the steps to obtain a mining permit to achieve long-term production, and is actively engaging with local communities as the project advances.
The Copper Moki-1 well was completed in three sands over an interval of 12.2 metres within the Mt. Messenger Formation in New Zealand–s Taranaki Basin. The Taranaki Basin currently produces all of New Zealand–s oil and gas, producing approximately 55,000 barrels of crude oil per day and 460 million cubic feet per day of natural gas. NZEC has identified additional prospective zones within the Copper Moki-1 area and plans to drill three additional wells in the Taranaki Basin by year end.
On its East Coast Basin properties, NZEC will re-enter the Ranui-1 well in Q4-2011 to deepen the well through the Whangai Formation oil shale and collect core for analysis. Originally drilled by the previous owner in 2008 to a depth of 1,135 metres, Ranui-1 encountered 224 metres of prospective Whangai Shale. On the company–s Castlepoint Permit, NZEC will core two test holes to determine the thickness and reservoir characteristics of the two prospective oil shale formations, the Waipawa and the Whangai. NZEC plans to explore this area using modern North American technology that has proven highly successful in developing North America–s shale targets, such as the Bakken Formation. There are 300 known oil and natural gas seeps in the East Coast Basin that have been proven to originate from the oil shale formations in the area.
With nearly two million acres of exploration permits, an extensive database of exploration data compiled over more than 25 years and an exceptional technical team, NZEC is well positioned to become a significant player in the oil and gas industry. We look forward to reporting progress to our shareholders as the projects advance.
FINANCIAL SNAPSHOT
RECENT DEVELOPMENTS
PROPERTY REVIEW
Within the Taranaki Basin, the following PEPs have been, or are in the process of being, acquired:
Within the East Coast Basin, located on the east coast of New Zealand–s North Island, the following PEPs have been, or are in the process of being, acquired:
PETROLEUM PROPERTY ACTIVITIES, OPERATIONS AND CAPITAL EXPENDITURES FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2011
Taranaki Basin
During the six-month period ended June 30, 2011, the Corporation incurred $3,413,195 in capitalized exploration and development costs relating to the Eltham Permit. Of the costs incurred during the period, $110,131 related to asset retirement costs, $353,172 was recorded for consulting services and $2,716,191 for well development. As a result of funding and drilling the Copper Moki-1 discovery well, reprocessing 438 km of 2D seismic data and carrying out a number of other technical studies to the satisfaction of the Ministry of Energy, the Corporation earned a 100% interest in the Eltham Permit which was assigned to NZEC on March 3, 2011. Total expenditures incurred as of June 30, 2011 relating to the Eltham Permit amounted to $3,421,462.
As of June 30, 2011, the Corporation paid $1,104,952 as deposit toward the acquisition of the Alton Permit pursuant to the Alton Agreement.
East Coast Basin
During the six-month period ended June 30, 2011, the Corporation incurred $46,624 in capitalized exploration costs on the Castlepoint Permit. Total expenditures incurred as of June 30, 2011 relating to the Castlepoint Permit amounted to $115,111.
In February 2011, the Corporation entered into the Ranui Assignment Agreement with Discovery Geo, pursuant to which Discovery Geo agreed to assign to NZEC its 100% interest in the Ranui Permit. Upon satisfaction of the conditions of assignment, NZEC will pay Discovery Geo US$1,000,000 and will issue 1,000,000 common shares to Discovery Geo. As of June 30, 2011, the Corporation incurred $16,533 in capitalized acquisition costs relating to the Ranui Permit. On August 3, 2011, NZEC paid US$500,000 to Discovery Geo as partial payment of the purchase price for the Ranui Permit. On August 24, 2011, the Corporation paid the remaining US$500,000 and initiated the issuance of 1,000,000 common shares for final consideration to of the Ranui Assignment Agreement.
During the six-month period ended June 30, 2011, the Corporation did not capitalize any exploration or acquisition costs relating to the East Cape Permit.
OUTLOOK
Use of Proceeds
On August 3, 2011, NZEC closed the Offering for gross proceeds of $20,000,000. NZEC–s intended use of the net proceeds over the next 12 to 15 months is outlined below:
As at the date of the filing of the MD&A, management does not anticipate any significant changes to its current anticipated use of proceeds.
RESULTS OF OPERATIONS FOR THREE-MONTH PERIOD ENDED JUNE 30, 2011
Period Expenses
During the three-month period ended June 30, 2011, the Corporation incurred total expenses of $1,109,045. Management fees, professional and consultant fees recorded during the period were significant as the Corporation continued its development activities and as a result of the Offering. Management fees were in line with the consulting agreements entered into with J. Proust & Associates Ltd. (“JPA”) and Wexford Energy Ltd (“Wexford”) as detailed in the related party transactions recorded during the period. Travel and promotion materially related to travel costs associated with marketing of the Offering. On February 21, 2011, the Corporation entered into an asset purchase agreement (“IRBA Agreement”) with Ian R. Brown Associates Limited (“IRBA”) pursuant to which the Corporation acquired certain assets and agreed to offer employment to certain IRBA employee. As a result of the IRBA Agreement, the Corporation began incurring office and general costs for a larger office in Wellington, along with the additional salary and wages of its in-country staff. The remaining general and administrative costs were reflective of the Corporation–s current stage of development.
Interest Income
The Corporation earned $19,222 of interest income on its excess cash and cash equivalent balances held during the three-month period ended June 30, 2011.
Net Loss and Funds from Operations
The Corporation generated net loss of $1,089,823 ($0.01 per share) for the period ended June 30, 2011.
ABOUT NEW ZEALAND ENERGY
NZEC is an oil and natural gas company engaged in the exploration, acquisition and development of petroleum and natural gas assets in New Zealand. NZEC–s property portfolio collectively covers nearly two million acres in the Taranaki Basin and East Coast Basin of New Zealand–s North Island. NZEC holds two petroleum exploration permits (Eltham Permit and Castlepoint Permit) and a 50% interest in a petroleum exploration permit (Alton Permit, pending completion of certain conditions), one pending petroleum exploration permit pursuant to an assignment agreement (Ranui Permit), and one pending non-competitive petroleum exploration permit application (East Cape Permit).
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 program focusing on the discovery of onshore and offshore oil and natural gas resources in the politically and fiscally stable country of New Zealand. The Company–s strategy is to develop its existing portfolio of assets and to pursue further exploration opportunities in other areas with proven hydrocarbon systems. NZEC will continue to evaluate strategic acquisitions from time to time where it views further exploration and development opportunities exist, and may participate in future tenders offered by the Government of New Zealand to acquire additional petroleum exploration permits or petroleum mining permits.
On behalf of the Board of Directors
John Proust, Chief Executive Officer and Director
Forward-looking Statements
This news release contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “propose”, “should”, “believe” 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; changes in the cost of operations, including cots 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 discussed under “Risk Factors” in NZEC–s Prospectus dated July 19, 2011. 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. In addition, this news release may contain forward-looking statements attributed to third-party industry sources.
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.
Rhylin Bailie
Vice President, Communications & Investor Relations
+1 604-601-2010
New Zealand Energy Corp.
Bruce McIntyre
President & Director
+1 604-601-2010
+1 604-488-0319 (FAX)