New Zealand Energy Corp. (TSX VENTURE:NZ)(OTCQX:NZERF) ("NZEC" or the
"Company"), an oil and natural gas company that is producing, exploring and
developing petroleum prospects in New Zealand, has released the results of its
fourth quarter and fiscal year ended December 31, 2011. Details of the Company's
financial results are described in the Audited 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
www.newzealandenergy.com and on SEDAR at www.sedar.com. All amounts are in
Canadian dollars unless otherwise stated.
NZEC has also released the results of its 2011 year-end reserve and resource
estimation and economic evaluation (the "Report"), prepared by Deloitte & Touche
LLP ("AJM Deloitte"). The reserve estimate and economic evaluation was confined
to NZEC's 100% working interest Eltham Permit (PEP 51150) and was based on the
reservoir and production data from the Copper Moki-1 well with a December 31,
2011 cut-off. Regulatory filings associated with the Report are available for
review on SEDAR. NZEC expects to commission a reserve and resource update in the
near term to include exploration and production data from three more wells on
the Copper Moki pad that were drilled in 2012.
FINANCIAL SNAPSHOT
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For the year ended For the year ended
December 31, 2011 December 31, 2010
$ $
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Production 11,623 bbl Nil
Sales 9,567 bbl Nil
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Price 106.83 $/bbl Nil
Production costs 23.44 $/bbl Nil
Royalties 4.96 $/bbl Nil
Net revenue 78.43 $/bbl Nil
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Revenue $ 974,517 $ Nil
Total comprehensive loss (6,655,829) (10,338,136)
Interest income 119,583 Nil
Loss per share - basic and diluted (0.08) (0.24)
Current assets 19,293,345 6,229,650
Total assets 31,152,804 6,301,322
Total liabilities 1,383,376 371,958
Shareholders' equity $ 29,769,428 $ 5,929,364
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Note: The abbreviation bbl means barrel or barrels of oil.
On December 10, 2011, the Corporation commenced continuous production from its
Copper Moki-1 well and as such began to recognize revenue from this period.
Incidental revenue generated during the start-up and testing phase of the well
was treated as a cost recovery of the capitalized well development costs. During
the period year December 31, 2011, the Corporation produced and sold 8,603
barrels of oil during the Copper Moki-1 start-up and testing phase for total
recoveries of $950,440. The aggregate volume of oil produced during the year was
20,226 barrels.
During the start-up and testing for Copper Moki-1, the Corporation incurred
various one-off costs to commission the well, resulting in a netback of
$78.43/bbl for the initial production period to December 31, 2011. First quarter
2012 netback numbers are in excess of $90.
RESERVE ESTIMATE
On April 27, 2012, NZEC booked its first oil and gas reserves. The reserve
estimate and economic evaluation was confined to NZEC's 100% working interest
Eltham Permit (PEP 51150) and was based on the reservoir and production data
from the Copper Moki-1 well with a December 31, 2011 cut-off. Regulatory filings
associated with the Report are available for review on SEDAR. NZEC expects to
commission a reserve and resource update in the near term to include the
reservoir and production data from three more wells on the Copper Moki pad that
were drilled in 2012.
Summary of Oil and Gas Reserves
As at December 31, 2011
Forecast Prices and Costs
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Reserves
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Light and Medium Oil Natural Gas
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Gross Remaining Gross Remaining
Reserves Category (Mbbl) (MMcf)
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Proved
Developed Producing 117.9 125.6
Developed Non-Producing - -
Undeveloped - -
Total Proved 117.9 125.6
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Probable 103.9 235.5
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Total Proved + Probable 221.8 361.1
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Possible 95.4 208.9
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Total Proved + Probable + Possible 317.2 570.0
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Notes: Mbbl - thousand barrels of oil. MMcf - million cubic feet of natural
gas. See Cautionary Note Regarding Reserve Estimates.
Summary of Net Present Value of Future Net Revenue
As at December 31, 2011
Forecast Prices and Costs
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Unit Value
Net Present Values of Future Net Before Tax
Revenues Before Tax Discounted at
Discounted at (%/year) (%/year)
----------------------------------------------------
0% 5% 10% 10%
Reserves Category (M$) (M$) (M$) ($/boe)
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Proved
Developed Producing 6,624.0 6,475.4 6,339.2 45.7
Developed Non-
Producing - - - -
Undeveloped - - - -
Total Proved 6,624.0 6,475.4 6,339.2 45.7
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Probable 7,120.3 6,328.2 5,653.2 39.5
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Total Proved + Probable 13,744.3 12,803.7 11,992.5 42.5
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Possible 7,207.5 6,091.9 5,262.1 40.4
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Total Proved + Probable
+ Possible 20,951.8 18,895.6 17,254.6 41.9
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Notes: boe - barrels of oil equivalent, calculated as 6 Mcf:1 bbl. See
Cautionary Note Regarding Reserve Estimates.
RECENT DEVELOPMENTS
On April 24, 2012, NZEC entered into a drilling agreement with Ensign
International Energy Services Pty Ltd ("Ensign") pursuant to which Ensign has
committed to drill three exploration wells for NZEC, with the option for up to
five additional wells, in the second half of 2012.
On April 1, 2012, NZEC commenced continuous production from its Copper Moki-2
well. Copper Moki-2 flowed 14,825 barrels of oil and 15,352 thousand cubic feet
("Mcf") of natural gas(1) during a 16-day flow test in February and was
subsequently shut-in for pressure build-up before commencing production in
April. The well is currently producing from natural reservoir pressure out of
the Mt. Messenger formation at an average rate of 581 barrels of oil per day
("bbl/d") and 1,530 Mcf of natural gas(1) per day ("Mcf/d") through a 24/64th
inch choke.
On March 21, 2012, NZEC closed a bought deal financing and over-allotment for
gross proceeds of $63,480,000. Through a syndicate of underwriters led by
Canaccord Genuity Corp. and including Macquarie Capital Markets Canada Ltd.,
Mackie Research Capital Corporation, PI Financial Corp. and Haywood Securities
Inc., NZEC issued 21,160,000 common shares at a price of $3.00 per common share.
The Underwriters elected to exercise their over-allotment option in full. Net
proceeds will be used to explore and develop NZEC's oil and gas properties, for
additional geologic and technical studies, and for other general corporate
purposes.
On February 22, 2012, the Company provided year-end production guidance of 3,000
boe/d.
On February 22, 2012, NZEC entered into a Cooperation Agreement with Te Runanga
o Ngati Ruanui Trust ("TRoNRT"), the iwi (tribe) located in South Taranaki near
NZEC's Alton and Eltham permits. Under the terms of the agreement, TRoNRT will
support NZEC's exploration, development and production activities within the
Ngati Ruanui area and NZEC will contribute to positive cultural, economic and
social outcomes for the development of Ngati Ruanui and its communities. NZEC
and TRoNRT have agreed to establish clear process and communication protocols
and to share relevant environmental and technical information. TRoNRT will
provide relevant cultural advice and support as NZEC moves through the resource
consent, permitting and development process. In addition, NZEC will provide a
right of first opportunity to TRoNRT's members for business, employment,
educational and training opportunities in South Taranaki. The Cooperation
Agreement outlines the parties' desire to build a sustainable and enduring
relationship that promotes the activities and prosperity of NZEC while
developing a sustaining and prosperous environment for TRoNRT.
On February 21, 2012, NZEC entered into an agreement with L&M Energy Limited
("L&M") to increase its interest in the Alton Permit from 50% to 65%. NZEC will
earn the additional 15% by funding the collection and processing of 3D seismic
data over approximately 50 km2 of the permit. NZEC is the operator of the
permit.
On February 6, 2012, NZEC reached target depth of 1,441 metres in its Ranui-2
well on its 100% working interest Ranui Permit in the East Coast Basin,
collecting open hole log data and coring the Whangai shale formation across
three intervals.
On December 20, 2011, NZEC commenced trading on the OTCQX International under
the symbol "NZERF".
On December 10, 2011, NZEC commenced continuous production from its Copper
Moki-1 well in the Taranaki Basin. Copper Moki-1 continues to flow from natural
reservoir pressure; production rates have averaged 424 bbl/d and 1,058 Mcf/d(1)
since commencing continuous production. Over the last 30 days, CM-1 has produced
at an average rate of 309 bbl/d and 1,205 Mcf/d(1) through a 24/64th inch choke.
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, producing
approximately 130,000 boe/day from 18 fields. Within the Taranaki Basin, NZEC
has acquired the following PEPs:
-- On March 3, 2011, New Zealand's Minister of Energy granted an assignment
of the Eltham Permit to NZEC. The Eltham Permit covers approximately
92,467 acres (374 km2) of which approximately 31,877 acres (129 km2) are
offshore in shallow water.
-- On June 24, 2011, NZEC entered into the Alton Agreement with AGL
pursuant to which the Corporation agreed to acquire a 50% interest in
the Alton Permit and associated joint venture with L&M, which owns the
other 50% of the permit. Approval for the assignment of the 50% interest
was granted on October 4, 2011. The Alton Permit is adjacent to the
Eltham Permit and covers approximately 119,203 acres (482 km2). On
February 21, 2012, NZEC entered into a subsequent agreement with L&M
whereby NZEC can increase its interest in to the Alton Permit to 65% by
funding the collection and processing 3D seismic data over approximately
50 km2 of the permit.
NZEC has drilled five exploration wells in the Taranaki Basin, one on the Alton
Permit and four from the Copper Moki pad on the Eltham Permit. Copper Moki-1 and
Copper Moki-2 are currently in production. Copper Moki-3 and Copper Moki-4 will
be completed and tested in Q2-2012.
Production
NZEC's Copper Moki-1 well has been flowing from natural reservoir pressure since
December 10, 2011 and has produced more than 67,000 barrels of oil since it was
first tested in August 2011. Production rates have averaged 424 bbl/d and 1,058
Mcf/d(1) since commencing continuous production in December 2011. Over the last
30 production days, Copper Moki-1 has produced at an average rate of 309 bbl/d
and 1,205 Mcf/d(1) through a 24/64th inch choke.
Copper Moki-2 flowed 14,825 barrels of oil and 15,352 Mcf of natural gas(1)
during a 16-day flow test in February and was subsequently shut-in for pressure
build-up. NZEC initiated continuous production from Copper Moki-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 581 bbl/d and 1,530 Mcf/d(1)
through a 24/64th inch choke.
Natural gas and associated natural gas liquids are being flared until the
Corporation completes a 2.6-km pipeline and associated production and sales
agreements, with the pipeline scheduled for completion by the end of Q2-2012.
Exploration
Copper Moki-3 reached target depth at 3,167 metres in mid-March and is the
Corporation's first well drilled through to NZEC's deeper exploration target,
the Moki formation. After evaluation, the Corporation identified 12 metres of
net pay within the Mt. Messenger formation and 15 metres of net pay within the
Moki formation. NZEC brought a service rig to site and commenced completion of
Copper Moki-3 on April 25, 2012.
Copper Moki-4 reached target depth of 2,125 metres on April 10, 2012. After
evaluation, the Corporation has decided to perforate and test both the Urenui
and Mt. Messenger formations, and will commence completion activities after
perforating the Moki formation in Copper Moki-3.
East Coast Basin
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. Within the East Coast Basin, the following PEPs have been, or
are in the process of being, acquired:
-- On September 3, 2010, NZEC applied to the Minister of Energy for the
East Cape Permit. The application is uncontested and the Corporation
expects the East Cape Permit to be granted to NZEC upon completion of
Crown Mineral's 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.
-- On November 24, 2010, the Minister of Energy granted the Castlepoint
Permit to NZEC. The Castlepoint Permit covers approximately 551,042
onshore acres (2,230 km2).
-- On February 22, 2011, NZEC entered into a permit acquisition agreement
with Discovery Geo, pursuant to which Discovery Geo agreed to assign its
100% interest in the Ranui Permit to NZEC upon completion of certain
conditions. Those conditions have been completed and approval for
assignment of the permit was granted on June 27, 2011. The Ranui Permit
is adjacent to the Castlepoint Permit and covers approximately 223,087
acres (903 km2). The Corporation has completed the geophysical and
geochemical studies required to re-enter the Ranui-1 well.
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) collected data across the Waipawa and Whangai shales. NZEC also
completed a test hole on its 100% working interest Ranui Permit. Ranui-2 was
drilled to 1,440 metres, coring the Whangai shale across several intervals.
OUTLOOK
Taranaki Basin
With two wells in production, NZEC is focused on growing reserves, production
and cash flow by testing Copper Moki-3 and Copper Moki-4 and executing an
aggressive exploration program.
Since Copper Moki-3 is NZEC's first well to be drilled to the Moki formation,
the Corporation 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 assessed the Corporation will determine whether the Mt.
Messenger formation will be tested in Copper Moki-3 or advanced through an
additional well.
NZEC will complete and test Copper Moki-4 once the service rig has finished
completion operations with respect to the Moki formation of Copper Moki-3. If
successful, both wells will be tied into the existing production facilities at
the Copper Moki pad.
NZEC will shortly begin construction of an approximately 2.6-km natural gas
pipeline that will deliver natural gas from the Copper Moki site to a gas
production facility. The pipeline is targeted for completion at the end of
Q2-2012. NZEC is currently producing approximately 2,630 Mcf/d(1) of natural
gas.
NZEC has identified six prospects on 3D seismic similar to Copper Moki, with the
expectation of establishing one pad per prospect with two to four wells per pad.
NZEC has also identified 12 leads on 2D seismic that will be further defined
with the ongoing 3D seismic survey.
With a fully-funded treasury, NZEC is evaluating opportunities to accelerate its
exploration program, including drilling additional wells which may target the
deeper Tikorangi and Kapuni formations. While previous guidance was for six
wells in the Taranaki Basin, NZEC has entered into a rig contract to drill up to
eight wells in the second half of 2012. NZEC also has the ability to move
quickly should the team identify a strategic acquisition, partnership or farm-in
opportunity.
NZEC is completing a 100-km2 3D seismic program over the northern region of the
Eltham and Alton permits. Preparation for the seismic survey is nearly complete
and NZEC intends to initiate the 30-day data acquisition process in early May.
Following data acquisition, NZEC's technical team will take approximately four
months to process and interpret the data and integrate the information into its
technical database. The 3D seismic survey will further define existing targets
and reduce drilling risk while potentially identifying new exploration targets
and expanding NZEC's inventory locations for its 2013 exploration program.
(1) Natural gas and associated natural gas liquids are currently being flared
until the Corporation completes a pipeline and associated production and sales
agreements, with the pipeline targeted for completion by the end of Q2-2012.
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 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 70 line kilometres of 2D seismic
in the second half of 2012 and complete additional technical studies to further
advance its understanding of the properties. The Corporation's application for
the East Cape Permit is uncontested and NZEC expects the permit to be granted
upon the completion of Crown Minerals' review of the application.
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2011
Revenue
During the year ended December 31, 2011, the Corporation commenced continuous
production and as such began to recognize revenue during the period. Since
December 10, 2011, the Corporation produced 11,623 barrels of oil and sold 9,567
barrels for total revenues of $1,022,009 or $106.83 per barrel sold. Total
recorded gross production revenue was $974,517 after accounting for royalties of
$47,492 or $4.96 per barrel sold. No revenues or royalties were recognized
during the year ended December 31, 2010.
Expenses and Other Items
Production costs during the year ended December 31, 2011 totalled $224,219 or
$23.44 per barrel. During the start-up and testing for Copper Moki-1, the
Corporation incurred various one-off costs to commissioning costs for the well.
Included in production costs are all site related expenditures, including
applicable equipment rental fees, site services, overheads and labour;
transportation and storage costs including trucking, testing, tank storage,
processing and handling; and port dues as incurred prior to the sale of oil. No
production costs were incurred during the year ended December 31, 2010.
Depreciation and accretion costs incurred during the year ended December 31,
2011 totalled $246,540 or $25.77 per barrel sold. As a result of the Copper
Moki-1 well deemed to have commenced commercial production during the year all
the related costs to the well were reclassified from exploration and evaluation
assets to property, plant and equipment and depreciated using the
unit-of-production method by reference to the ratio of production in the period
to the related total proved and probable reserves of oil and natural gas, taking
into account estimated future development costs necessary to access those
reserves. No depreciation and accretion costs were incurred during the year
ended December 31, 2010.
During the year ended December 31, 2011, the drilling of the Talon-1 well was
completed and total costs incurred amounted to $2,544,131. The Talon-1 well was
drilled pursuant to an agreement to acquire the Corporation's 50% interest in
the permit. The well location was selected by the previous operator based on 2D
seismic data. The well results were not positive and as such did not indicate
any commercially viable reserves, and the well was plugged and abandoned.
Furthermore, management determined that the well would not generate future
economic benefits and decided to write-off all related Talon-1 well costs. No
impairments were incurred or recognized in the year ended December 31, 2010.
Stock-based compensation for the year ended December 31, 2011 totalled
$2,203,548 compared to $9,996,000 recognized in 2010. Of the total non-cash
charge for the year ended December 31, 2011, $1,000,000 related to the IRBA
asset purchase agreement, on the valuation of the shares issued, that was
executed on February 21, 2011. The balance of $1,203,548 primarily related to
the options granted to directors, officers and employees of the Company upon the
completion of the Corporations initial public offering in August 2011. The
entire balance of stock-based compensation recognized in 2010 related to the
issuance and valuation of the Corporations founders shares upon its
incorporation. The common shares were granted to some of the Corporation's
directors and officers in lieu of the services performed and substantial
guarantees provided to assist in obtaining the legal rights to its resource
properties.
General and administrative expenses for the year ended December 31, 2011
totalled $2,583,530 compared to $338,469 incurred in 2010. The general and
administrative expenses incurred during the year related to professional fees,
management fees, consulting fees, travel and promotion, rent, overheads, filing
and insurance costs. The increase over prior year was indicative of a growing
and developing business over a twelve month period as compared to only a 60 day
period being recognized in the prior year due to its the incorporation on
October 29, 2010. The general and administrative costs specifically related to
establishing an operational structure, setting up offices in Vancouver, British
Columbia and Wellington, New Zealand, engaging key personnel and incurring the
necessary professional fees associated with the formation, public listing,
over-all business development of the Corporation.
Finance income for the year ended December 31, 2011 totalled $119,583 compared
to $nil being recognized in 2010. Finance income relates to interest earned on
the Corporations cash and cash equivalent balances held in treasury.
Foreign exchange gains for the year ended December 31, 2011 amounted to $134,934
compared to a foreign exchange loss of $3,667 being realized in 2010. Foreign
exchange gains and losses are a result of currency exchange differences being
recognized on transactions during the period.
Net Loss and Total Comprehensive Loss for the Year
Total expenses and other items for the year ended December 31, 2011 totalled
$7,547,451 compared to $10,338,136 in 2010 representing an over-all decrease of
$2,790,685 or 27%. Net loss for the year ended December 31, 2011 totalled
$6,572,934, after taking into account gross net revenues of $974,517, which
compared to a net loss for the year ended December 31, 2010 of $10,338,136 or an
overall decrease of $3,765,202 or 36%. The Corporation did not recognize any
gross revenues in 2010. After production revenues of $974,517, total
comprehensive loss for the year ended December 31, 2011 totalled $6,655,829,
after taking into account an exchange difference on translation of foreign
currency of $82,895. This compared to a total comprehensive loss for the year
ended December 31, 2010 of $10,338,136 for an over-all decrease of $3,682,307 or
36%.
Based on a weighted average shares outstanding balance of 85,122,879, the
Corporation realized an $0.08 basic and diluted loss per share for the year
ended December 31, 2011. During December 31, 2010, the Corporation realized a
$0.24 basic and diluted loss per share on a weighted average share balance of
43,005,714.
SUMMARY OF QUARTERLY RESULTS
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2011 2011
Q4 Q3
$ $
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Total assets 31,152,804 33,566,611
Resource properties 6,052,699 9,509,095
Property, plant and equipment 5,509,511 63,421
Working capital 18,030,398 18,699,022
Accumulated deficit (16,911,070) (17,057,134)
Total comprehensive loss (1,258,314(1)) (4,279,538)
Basic earning/(loss) per share 0.01 (0.04)
Diluted earning/(loss) per share 0.01 (0.04)
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SUMMARY OF QUARTERLY RESULTS
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2011 2011 2010
Q2 Q1 Q4
$ $ $
----------------------------------------------------------------------
Total assets 10,683,239 11,491,806 6,301,322
Resource properties 4,641,525 3,161,561 60,222
Property, plant and equipment 68,366 65,721 -
Working capital 5,333,999 7,596,329 5,857,692
Accumulated deficit (13,258,649) (12,168,826) (10,338,136)
Total comprehensive loss (773,524) (1,878,754) (10,338,136)
Basic earning/(loss) per share (0.01) (0.03) (0.24)
Diluted earning/(loss) per share (0.01) (0.03) (0.24)
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(1) During the fourth quarter, the Corporation reclassified various
expenditures to exploration and evaluation assets.
New Zealand Energy Corporation was incorporated on October 29, 2010, under the
Business Corporations Act of British Columbia. Upon incorporation, 40,000,000
common shares were granted to certain directors and officers of the Corporation
in lieu of the services performed and substantial financial guarantees provided
to assist in obtaining the legal rights to the Castlepoint and East Cape
petroleum exploration permits within the East Coast Basin. The corporation then
raised seed capital of $7,000,000 upon the subsequent issuance of 28,000,000
common shares in Q4-2010 and Q1-2011 to engage in the exploration, acquisition
and development of petroleum and natural gas assets in New Zealand. This
financing was followed by another private placement completed in Q1-2011 for
gross proceeds of $5,257,500 on the issuance of 7,010,000 common shares. The
Corporation entered into an agreement in Q1-2011 with IRBA Consulting pursuant
to which it would acquire certain assets and provide employment to certain
personnel in consideration for CDN $400,000 and the issuance of 2,000,000 common
shares. Also in Q1-2011, upon satisfying the conditions of a deed of assignment,
the Corporation took ownership of its Eltham permit. Further exploration and
evaluation expenditures continued on the Eltham permit throughout fiscal 2011,
which ultimately saw the commercialization of the Copper Moki-1 well in Q4-2011.
All related costs to the Copper Moki-1 well were transferred to property, plant
and equipment in Q4-2011. In Q2-2011, the Corporation agreed to acquire a 50%
interest in the Alton permit for AUD2,000,000 and fund 100% of the Talon-1 well
development costs, which totalled $2,544,131. The Talon-1 well development costs
were written off in Q3-2011 due to management's view that the well would not
provide any future benefits. In Q2-2011, the Corporation completed the
acquisition of its Ranui permit for USD1,000,000 and the issuance of 1,000,000
common shares. Since the Corporation's inception, general and administrative
costs have been incurred to assist in establishing the operating structure,
setting up offices in both Canada and New Zealand, securing key personnel and
general business development.
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 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 "anticipate", "continue", "estimate", "expect", "may", "will", "project",
"propose", "should", "believe", "initiate", "with the objective of", "plan" 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. 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. 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.
Cautionary Note Regarding Reserve Estimates
The oil and gas reserves calculations and income projections, upon which the
Report was based, 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 in the Report 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 documented in
the Report do not necessarily represent the fair market value of the reserves
evaluated in the Report.
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.
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