NZ New Zealand Energy Corp

New Zealand Energy Corp. ("NZEC" or the "Company") (TSX VENTURE:NZ)(OTCQX:NZERF)
is pleased to provide an operational update on its production and exploration
activities on New Zealand's North Island. 


HIGHLIGHTS



Taranaki Basin                                                              

--  Copper Moki-1 ("CM-1") has produced an average of 550 barrels of oil per
    day over the first 30 days of long-term production 
--  CM-1 cumulative production of 29,000 barrels of oil to date with
    operating netbacks of approx. US$90 per barrel 
--  Commenced drilling of Copper Moki-2 ("CM-2"), targeting the Mt.
    Messenger and Urenui formations 
--  Will commence drilling of Copper Moki-3 ("CM-3") in Q1-2012 
--  Services and consents in place for a total of four wells from the Copper
    Moki pad 

                                                                            
East Coast Basin                                                            

--  Commenced drilling of Ranui-2 core well targeting the Whangai Shale 
--  Completed the coring of two holes testing the Waipawa and Whangai Shales



TARANAKI BASIN UPDATE

The CM-1 well has been flowing from natural reservoir pressure since December
10, 2011 at an average rate of 550 barrels of 41.8 API oil per day and 685
thousand cubic feet of natural gas per day through a 20/64th inch choke. CM-1
has produced over 29,000 barrels of oil since it was first tested in August 2011
with operating netbacks of approximately US$90 per barrel. NZEC calculates the
netback as the oil sale price less fixed and variable operating costs and a 5%
royalty.


NZEC has commenced drilling of CM-2, its second exploration well in New
Zealand's Taranaki Basin. The Company expects to finish drilling the CM-2 well
by the end of January, targeting the Mt. Messenger and Urenui formations. NZEC
will continue to produce CM-1 as CM-2 is drilled and will bring CM-2 on-stream
using existing production facilities if the well is successful. 


NZEC plans to drill CM-3 upon completion of CM-2, targeting the Mt. Messenger,
Urenui and deeper Moki formations. While the Company had originally planned to
drill CM-3 from a separate pad south of CM-1, the decision to drill from the
CM-1 pad will allow NZEC to bring CM-3 on-stream using existing production
facilities and eliminates the infrastructure costs associated with a separate
pad. 


NZEC's rig contract includes the option to drill a fourth well from the CM-1
pad. NZEC's consents for the CM-1 pad allow for multiple wells and construction
of permanent surface facilities. The Company has installed surface facilities to
accommodate production of up to 1,000 barrels of oil per day, and can expand the
facilities to handle production from additional wells. NZEC anticipates
establishing permanent facilities by mid-2012 that will accommodate production
from an estimated four wells. The permanent facilities will include a gas
pipeline to allow the Company to market its natural gas production.


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. The Taranaki Basin offers
multi-zone potential, and NZEC's exploration strategy is to prioritize wells
identified on 3D seismic that have a well-defined, lower-risk Mt. Messenger
target coupled with deeper exploration targets such as the Moki and Kapuni
formations. 


EAST COAST BASIN UPDATE

The East Coast Basin of New Zealand's North Island hosts two 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, collectively covering more than 1.8 million acres. NZEC's Ranui
permit acquisition included the Ranui-1 well, drilled by the previous permit
holder in 2008. The Ranui-1 well encountered 224 metres of prospective Whangai
Shale but did not penetrate the base of the shale before reaching total depth of
1,134 metres. 


The Ranui-2 well on NZEC's 100% working interest Ranui Permit will core the
Whangai Shale across several intervals and will drill through the base of the
Whangai Shale and into the underlying conventional reservoir sands, with a
planned depth of approximately 1,500 metres. Ranui-2 drilling commenced on
January 14, with drilling and coring expected to take approximately three weeks.
NZEC is planning to cut up to four cores in the Whangai Formation and will run a
full suite of open hole logs to assist in determining the reservoir
characteristics of the shale. 


In Q4-2011, NZEC 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 cored and tested the Waipawa and Whangai shales.
Analysis of the core is ongoing.


These three stratigraphic test wells will advance NZEC's understanding of the
Waipawa and Whangai formations. A review of the geochemical and physical
properties of the two shale packages will help focus NZEC's exploration strategy
for the East Coast shales. In addition, NZEC's technical team will reprocess
existing East Coast Basin seismic data and plans to shoot approximately 50
kilometres of 2D seismic in 2012 and complete additional technical studies to
advance the properties. 


EXPANDED MANAGEMENT TEAM

NZEC has expanded its in-country management team to support the Company's
exploration, development and production efforts, with the appointments of a
Manager Exploration, Manager Land and Group Financial Controller. NZEC has
granted 523,000 options to officers and employees with a five-year term and an
exercise price of $1.30, with 25% vesting six months after the option grant date
and 25% vesting every six months thereafter. 


NZEC currently employs, directly and indirectly, approximately 60 people from
local communities to support production and exploration activities in the Copper
Moki area, with an additional 10 employees and consultants in its Wellington
corporate office. NZEC currently employs, directly and indirectly, eight people
from local communities to support exploration activities in the East Coast
Basin. 


June Cahill is a geologist with 32 years of experience working in applied earth
science, and previously held the position of senior geologist with NZEC. As
Manager Exploration, Ms. Cahill will manage the Wellington based team of
geologists and geophysicists. Ms. Cahill has extensive knowledge and experience
with New Zealand sedimentary basin geology and the management of geological and
geophysical databases. Her early professional experience was with the New
Zealand Geological Survey division of the Department of Scientific and
Industrial Research. From 1993 through to joining NZEC, she was a senior
geologist with the consulting company Ian R Brown Associates Ltd. Ms. Cahill has
a Bachelor of Science in geology from Victoria University of Wellington, and a
Bachelor of Applied Economics from Massey University. 


Tokatumoana (Toka) Walden has joined NZEC as Manager Land, responsible for the
Company's land access activities including negotiating access provisions and
managing the resource consent application process. Mr. Walden will also have an
important role as the Company continues to build a strong relationship with iwi
groups across all operational areas. Mr. Walden started his career as a teacher;
before joining NZEC he was a senior manager with New Zealand's Department of
Conservation. Mr. Walden is also a director of Parininihi Ki Waitotara Inc.,
Taranaki's largest corporate dairy farmer.


John Hudson has been working with NZEC as a consultant since October 2011 and
has joined the Company full time as Group Financial Controller. Mr. Hudson has a
Bachelor of Business Studies in accounting from Massey University and is a
Chartered Accountant with more than 15 years of experience covering a range of
accounting responsibilities. Mr. Hudson joined NZEC after nearly four years as
the Financial Controller of Weatherford New Zealand Ltd., an international
company providing well construction and intervention services to the oil and gas
industry. Prior to that Mr. Hudson held a number of positions including Finance
Manager with Parker Drilling and Chartered Accountant with Ernst & Young. As
Group Controller, Mr. Hudson will be responsible for all New Zealand accounting
and financial reporting.


On behalf of the Board of Directors

Bruce McIntyre, President & 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 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
info@newzealandenergy.com.


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 "will", "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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