New Zealand Energy Corp. ("NZEC" or the "Company") (TSX VENTURE: NZ), an oil and natural gas company that is developing and exploring prospects in New Zealand, is pleased to provide an update on its activities in the Taranaki and East Coast Basins on New Zealand's North Island. NZEC has placed its discovery well on a long-term production test and expects to achieve commercial production in Q4-2011.
Taranaki Basin Update
-- Commenced a long-term production test on Copper Moki-1 at a restricted
-- Finalizing approval to drill Copper Moki-2 and Copper Moki-3
-- Initiated planning of a 100-km2 3D seismic survey to define future
drilling targets on both the Eltham and Alton Permits
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, producing approx. 130,000 boe/day from 18 fields. Within the Taranaki Basin, NZEC holds and is the operator of two permits covering 152,066 net acres. NZEC completed its previously announced Copper Moki-1 discovery well in August 2011. The well flowed 1,100 barrels of 41.8 API(1) oil per day along with 855 mcf(2) of natural gas per day from the Mt. Messenger Formation over a 48-hour production test through a 28/64th inch choke.
The Copper Moki-1 well has been placed on a long-term production test at a restricted rate of approximately 500 barrels of oil per day and 500 mcf per day of natural gas. The well has been flowing for six days through a 20/64th inch choke. The well will be produced until it has recovered between 5,000 and 6,000 barrels of oil and will then be shut-in for a three-week pressure build-up. The production test and subsequent build-up will allow NZEC to determine the optimal production rate for the well when it is placed on permanent production later in Q4-2011. Oil is being trucked and sold to the Shell-operated Omata Tank Farm, which is approximately 45 km north of the Copper Moki well site. The oil is sweet and high quality and fetches a premium to the Brent reference price(3).
Resource consent and surface access approvals are underway for the Copper Moki-2 and Copper Moki-3 wells, which NZEC expects to drill in December 2011. The Copper Moki-2 well will be drilled directionally from the same pad as the Copper Moki-1 well to target both the Urenui and Mt. Messenger formations. The Copper Moki-3 well will be drilled approximately 1.3 km south of the Copper Moki-1 site and will target multi-zone potential in the Mt. Messenger, Urenui and Moki formations. The Copper Moki-2 and Copper Moki-3 targets were identified using 3D seismic and are analogous to the Mt. Messenger Formation in Copper Moki-1.
NZEC has identified at least 6 features similar to Copper Moki-1 on 3D seismic and another 12 have been identified with the Company's extensive 2D seismic database. NZEC is planning a 100-km2 3D seismic program, which will cover the northern region of the Eltham and Alton permits, to more accurately define drilling targets and significantly reduce drilling risk. The 3D seismic survey will also further define the Horoi, Maata and Morea features identified on the Alton Permit and define additional exploration targets for 2012.
NZEC's exploration strategy is to prioritize wells that have a well-defined, lower-risk Mt. Messenger target coupled with deeper exploration targets such as the Moki Formation and the Kapuni Group.
East Coast Basin Update
-- Cored two test holes on the Castlepoint Permit to test the Waipawa
-- Plan to re-drill and core the Ranui-1 well in Q4-2011 to test the
The East Coast Basin of New Zealand's North Island hosts two highly prospective shale formations, the Waipawa and Whangai, which are the source of more than 300 oil and gas seeps. NZEC has two granted permits and one pending permit in the East Coast Basin, covering more than 1.8 million acres.
NZEC has completed the coring of two test holes on its 100% working interest Castlepoint Permit. The Orui (125 metres total depth) and Te Mai (195 metres total depth) test holes were cored in the Waipawa Shale. The cores are being analysed to determine the production potential of the Waipawa Shale, with results expected by year-end.
NZEC has a rig commitment to re-drill the Ranui-1 well, located on its 100% working interest Ranui Permit. The Ranui-1 well was drilled in 2008 by the previous owner and encountered 224 metres of prospective Whangai Shale before reaching total depth of 1,134 metres, but did not penetrate the base of the Whangai Shale. NZEC's Ranui-2 test well will core the Whangai Shale across several intervals to determine the production potential of the Whangai Shale, and will drill though the base of the Whangai Shale and into the underlying conventional reservoir sands.
NZEC looks forward to reporting additional results as exploration, development and production activities continue to advance its portfolio of properties.
On behalf of the Board of New Zealand Energy Corp.
Bruce McIntyre, President & Director
About New Zealand Energy
NZEC is an oil and natural gas company engaged in the 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.
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 "initiate", "will be", "will", "plan", "expect" 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.
(1) American Petroleum Institute.
(2) Thousand cubic feet.
(3) The reference against which two thirds of the world's internationally
traded crude oil supplies are priced.
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