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NZEC Expects Increased Oil Production from its Assets in Taranaki Basin

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New Zealand Energy Corp. (NZEC) provided Monday an update on its production and operational activities in New Zealand. The Company is currently producing approximately 236 barrels per day of light, high-quality oil (average daily production net to NZEC during December 2013) from eight wells in the Taranaki Basin of New Zealand’s North Island, with the expectation that three more wells will contribute to production by the end of 1Q 2014.

Highlights

TWN Reactivated Wells (NZEC 50 percent interest)

  • Six wells reactivated and producing oil from Tikorangi Formation using installed gas lift
  • Total production (100 percent basis) during December 2013: 9,332 barrels oil, 16.2 million cubic feet (MMcf) natural gas
  • Total production net to NZEC during December 2013: 4,666 barrels oil
  • Average daily production (100 percent basis) during December 2013: 302 barrels oil, 0.52 MMcf natural gas, average water cut 74 percent
  • Average daily production net to NZEC during December 2013: 151 barrels oil

TWN Recompleted Well (NZEC 50 percent interest)

  • Existing Tikorangi Waihapa-2 well recompleted uphole to access bypassed production in Mt. Messenger Formation
  • Perforated two zones, well flowed from natural reservoir pressure for three short flow tests
  • A further flow test planned for early January, followed by shut-in for pressure build-up
  • Commercial production expected in early February
  • Recompletion activities on a second well expected to commence by mid-January

Eltham Permit Wells (NZEC 100 percent interest)

  • Average daily production during December 2013: 85 barrels per day from Copper Moki-1 and Copper Moki-2 wells
  • Copper Moki-3 shut-in during December, workover activities underway to resume production in January
  • Waitapu-2 well expected to resume production in January

New Zealand Energy Corp., through its subsidiaries (collectively NZEC or the Company), holds a 50 percent interest in the TWN Licenses, with L&M Energy and its related entities (collectively L&M) holding the other 50 percent. NZEC and L&M acquired the TWN Licenses Oct. 28, 2013 and formed the TWN Joint Arrangement (TWN JA), with NZEC as the operator, to explore and develop the TWN Licenses and operate the Waihapa Production Station and associated infrastructure.

TWN Licenses – Tikorangi Formation Production and Development Plan

During November 2013 the TWN JA reactivated oil and gas production from six wells that had been drilled to the Tikorangi Formation by previous operators. Well head metering was installed at each well to monitor flow rates on a well-by-well basis. A number of wells flowed from natural pressure for two to three weeks, and all six wells are now being produced using an existing gas lift system. The TWN JA is monitoring production data to identify the most efficient method to optimize oil production from each well, which may include installation of high-volume electric submersible pumps (ESPs) or other methods of artificial lift.

NZEC believes the Tikorangi Formation underlying the TWN Licenses holds significant production potential. Current development plans for the Tikorangi Formation on the TWN Licenses include drilling two new Tikorangi wells on the Waihapa License in 2014. In addition, the TWN JA has identified production potential from additional existing wells in other areas of the TWN Licenses, and from additional drilling opportunities identified on 3D seismic.


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