New Zealand Energy Reports 2013 Year-end Reserves and Production
Update
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 2, 2014) - New
Zealand Energy Corp. ("NZEC" or the "Company")
(TSX-VENTURE:NZ)(OTCQX:NZERF) today announced that the Company
commenced oil production from two additional wells during March
2014. Workover activities on the TWN Licenses are on track as
outlined in previous updates, with the expectation that two
additional wells will further add to oil production during
April.
"NZEC continues to focus on reducing costs while increasing
production and cash flow," said John Proust, Chief Executive
Officer of NZEC. "We expect to report additional production
increases in April, and continue to identify new low-cost
opportunities on the TWN Licenses that could further add to
production in the coming months."
The Company also announced its 2013 year-end reserves, with
Proved + Probable (2P) reserves estimated at 1.2 million barrels of
oil ("bbl") (1.6 million barrels of oil equivalent1) with an after
tax net present value, discounted at 10%, of $57.9 million.
"NZEC's 2013 reserves estimate underscores the Company's
production potential," said John Proust, NZEC's Chief Executive
Officer and Director. "NZEC's Eltham Permit and TWN Licenses are
estimated to hold 1.6 million boe of 2P reserves net to NZEC,
valued at $57.9 million after the estimated costs to extract the
reserves. In addition, the Company offers additional value through
its interest in the Waihapa Production Station and other
infrastructure, plus exploration upside from significant
prospective resources identified on the Company's property
portfolio in both the Taranaki and East Coast basins."
Highlights
Production
- Average daily production for March (including Waitapu-2 well):
233 bbl/d net to NZEC
- Waitapu-2 well: Recommenced Mt. Messenger oil production on
March 6 (70 bbl/d net to NZEC)
- Waihapa-8 well: Reactivated Mt. Messenger oil production on
March 29 (55 bbl/d net to NZEC, not included in March average daily
production)
- Workover activities underway to prepare for additional oil
production in April
- Toko-2B well: Installing high-volume lift (ESP) to increase
Tikorangi oil production
- Waihapa-2 well: Installing artificial lift to commence Mt.
Messenger oil production
- April production numbers are expected to include all existing
wells plus all net production from Waihapa-8, Toko-2B (on ESP) and
Waihapa-2
Reserves
- Proved + Probable reserves (2P) increased 145% compared to
year-end 2012, following the acquisition of assets from Origin
- 2P reserves: 1,168,000 barrels of oil, 2.26 billion cubic feet
of natural gas, 104,000 barrels of natural gas liquids,
collectively 1,649,000 barrels of oil equivalent 1
- Net present value of 2P reserves (after tax, 10% discount
rate): $57,905,800
1 Barrels of oil equivalent (boe) may be misleading,
particularly if used in isolation. The boe conversion ratio of 6
Mcf : 1 bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead.
Production Update
The Waitapu-2 and Waihapa-8 wells commenced production on March
6 and March 29, respectively. Waitapu-2 on NZEC's 100%-owned Eltham
Permit had previously produced but was shut-in during 2013 to allow
for Mt. Messenger reservoir studies and installation of artificial
lift. Waitapu-2 commenced pumping on February 27, finished cleaning
up its load fluid on March 6 and averaged 70 bbl/d for the rest of
March. Waihapa-8 is a new reactivation opportunity on the TWN
Licenses identified during February by the TWN Joint Arrangement
("TWN JA") (NZEC and L&M Energy, joint owners of the TWN
Licenses). While the TWN JA originally expected to install a
dedicated downhole pump, further review confirmed that the well
could be produced by heating gas at the wellhead and using existing
gas lift, resulting in savings of approximately NZ$200,000 net to
NZEC. Waihapa-8 commenced production from the Mt. Messenger
Formation on March 29 and is currently producing at 110 bbl/d (55
bbl/d net to NZEC).
Total corporate production for March, which does not reflect
production from the Waihapa-8 well, averaged 233 bbl/d compared to
228 bbl/d in February and 202 bbl/d in January. The Copper Moki-3
well has been shut-in since early March pending installation of a
new pump. Toko-2B was shut-in on March 12 to allow for installation
of high-volume lift (ESP).
Third-party revenue at the Waihapa Production Station year to
date totals approximately NZ$539,000 net to NZEC.
Upcoming Production
NZEC anticipates that three existing wells could further add to
oil production during Q2-2014 (Table 1). Installation of artificial
lift on the Waihapa-2 well is nearly complete, and the well is
expected to commence production from the Mt. Messenger Formation by
mid-April. Installation of high-volume lift (ESP) on the Toko-2B
well is expected to be complete in mid-April. In addition, if
further evaluation of the Waihapa-1B well confirms production
potential from the Tikorangi Formation using artificial lift, the
TWN JA will consider whether the well could be advanced to
production in Q2-2014. Well logs and seismic data also show that
the Waihapa-1B well offers additional production potential from an
uphole completion in the Mt. Messenger Formation.
Newly Identified Low-Cost Opportunities on the TWN Licenses
The TWN JA continues to review well logs and historical drilling
records across the TWN Licenses and has identified three new
opportunities for uphole completions in the Mt. Messenger
Formation. The Waihapa-3, Waihapa-4 and Waihapa-5 wells were all
produced historically from the Tikorangi Formation. Recompletions
are significantly cheaper than drilling new wells, and successful
wells could be tied into the Waihapa Production Station using
existing infrastructure. The TWN JA will continue to assess
production potential from the Mt. Messenger Formation in these
wells.
To view Table 1 - NZEC's Production & Development
Wells, click the following link:
http://media3.marketwire.com/docs/nz402-Table1.pdf.
Year-end Reserves
As required under National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities, the Company commissioned
Deloitte LLP to prepare a year-end oil reserve estimate and
economic evaluation with an effective date of December 31, 2013.
NZEC's Proved + Probable (2P) reserves have increased 145% when
compared to the reserves reported at December 31, 2012, reflecting
the acquisition in October 2013 of a 50% interest in the TWN
Licenses. The reserve estimate and economic evaluation reflects
NZEC's 100% interest in the Eltham Permit and its 50% interest in
the Waihapa and Ngaere licenses. Additional information regarding
the Company's reserves is available in the Company's Form 51-101F1
Statement of Reserves Data dated April 2, 2014, which is filed on
SEDAR at www.sedar.com.
Marketable Oil and Gas Reserves |
Attributable to New Zealand Energy Corp. 1 |
As at December 31, 2013 |
Forecast Prices and Costs |
|
Reserves Category |
Light & Medium Oil (bbl)2 |
Natural Gas (Mcf)3 |
Natural Gas Liquids (bbl) |
Barrels Oil Equivalent (boe)4 |
Proved |
|
|
|
|
Developed Producing |
517,000 |
935,000 |
40,000 |
713,000 |
Developed Non-Producing |
181,000 |
554,000 |
27,000 |
301,000 |
Undeveloped |
111,000 |
88,000 |
3,000 |
129,000 |
Total Proved |
809,000 |
1,576,000 |
71,000 |
1,143,000 |
Probable |
359,000 |
683,000 |
34,000 |
506,000 |
Proved + Probable |
1,168,000 |
2,260,000 |
104,000 |
1,649,000 |
Notes: |
|
(1) |
Net
reserves to NZEC after deduction of royalty obligations payable to
the New Zealand government and Origin Energy Resources NZ (TAWN)
Limited. |
|
(2) |
Numbers may not sum due to rounding. See Cautionary Note Regarding
Reserve Estimates. |
|
(3) |
bbl -
barrels. |
|
(4) |
Mcf -
thousand cubic feet of natural gas. |
|
(5) |
boe -
barrels of oil equivalent using a conversion ratio of 6 Mcf : 1
bbl. Barrels of oil equivalent (boe) may be misleading,
particularly if used in isolation. The boe 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. |
|
|
|
|
Net
Present Value of Future Net Revenue |
Attributable to New Zealand Energy Corp. 1 |
After
Tax, Discounted at% per year |
As at
December 31, 2013 |
Forecast
Prices and Costs |
|
Reserves Category |
0% ($'000) |
5% ($'000) |
8% ($'000) |
10% ($'000) |
15% ($'000) |
20% ($'000) |
Unit Value 10% ($/boe) |
Proved |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed Producing |
$ |
42,349.6 |
$ |
24,786.3 |
$ |
20,986.3 |
$ |
18,452.9 |
$ |
15,261.1 |
$ |
13,286.9 |
$ |
22.42 |
|
Developed Non-Producing |
|
14,141.9 |
|
20,443.9 |
|
19,922.3 |
|
19,574.6 |
|
17,762.9 |
|
16,042.2 |
|
57.57 |
|
Undeveloped |
|
6,591.4 |
|
4,911.0 |
|
4,248.2 |
|
3,806.3 |
|
3,043.8 |
|
2,489.1 |
|
3.27 |
Total Proved |
|
63,082.9 |
|
50,141.1 |
|
45,156.8 |
|
41,833.8 |
|
36,067.8 |
|
31,818.2 |
|
31.84 |
Probable |
|
34,266.6 |
|
22,110.1 |
|
18,487.2 |
|
16,072.0 |
|
12,556.5 |
|
10,264.8 |
|
27.76 |
Proved + Probable |
|
97,349.5 |
|
72,251.2 |
|
63,644.0 |
|
57,905.8 |
|
48,624.3 |
|
42,083.0 |
|
30.59 |
Notes: |
|
(1) |
Net
present value of future net revenue to NZEC after deduction of
royalty obligations payable to the New Zealand On behalf of the
Board of Directors |
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 approximately 1.93 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.
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.
Cautionary Note Regarding Forward-looking
Statements
This document contains certain forward-looking information
and forward-looking statements within the meaning of applicable
securities legislation (collectively "forward-looking statements").
The use of the word "expectation", "will", "expect", "continue",
"could", "further", "pending", "anticipates", "offers", 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 reserves and 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 and production; the need to obtain
various approvals before exploring and producing oil and natural
gas resources; exploration hazards and risks inherent in oil and
natural gas exploration; operating hazards and risks inherent in
oil and natural gas operations; the Company's ability to generate
sufficient cash flow from production to fund future development
activities; 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. Such
forward-looking statements should not be unduly relied upon. The
Company 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. Actual
results could differ materially from those anticipated in these
forward-looking statements. The forward-looking statements
contained in the document are expressly qualified by this
cautionary statement. These statements speak only as of the date of
this document and the Company does not undertake to update any
forward-looking statements that are contained in this document,
except in accordance with applicable securities laws.
Cautionary Note Regarding Reserve Estimates
The oil and gas reserve calculations and net present value
projections 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. Revenue projections presented 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 do not
necessarily represent the fair market value of the reserves
evaluated. 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.
New Zealand Energy Corp.John ProustChief Executive Officer &
DirectorNorth American toll-free: 1-855-630-8997New Zealand Energy
Corp.Bruce McIntyreDirectorNorth American toll-free:
1-855-630-8997New Zealand Energy Corp.Rhylin BailieVice President
Communications & Investor RelationsNorth American toll-free:
1-855-630-8997info@newzealandenergy.comwww.newzealandenergy.com
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