New Zealand Energy Corp. (NZEC or the Company) announced Wednesday that the Company has executed a Working Capital Facility Agreement (the Facility) with New Dawn Energy Limited (New Dawn) for up to $4 million (NZD 5 million). New Dawn is the parent company of L&M Energy Limited, NZEC’s 50 percent partner in the Tariki, Waihapa and Ngaere Licenses (the TWN Licenses) and the Waihapa Production Station (collectively the TWN Assets) and NZEC’s 35 percent partner in the Alton exploration permit, all located in the Taranaki Basin of New Zealand’s North Island.
“Execution of this $4 million (NZD 5 million) working capital facility is the first step in a capital rebuilding process for New Zealand Energy,” said John Proust, CEO and director of NZEC. “New Dawn’s willingness to advance funds is a strong vote of confidence in both the quality of the TWN Assets, and the ability of NZEC’s team as operator of the assets.
“The additional working capital will allow NZEC to undertake the activities required to further exploit the TWN Licences, with the objective of increasing oil production,” continued Proust. “In addition, NZEC, as operator of the TWN Assets, is reviewing an opportunity at the Waihapa Production Station that could enable liquefied petroleum gas (LPG) to be extracted, bringing in additional revenue.
“NZEC has made progress in 2014 to right-size the business, reduce operating costs, and focus on its most promising assets in both the Taranaki and East Coast basins. With this inflow of capital, NZEC’s technical and operations teams can apply the insight gained from nearly a year of operating the TWN Assets to advance additional production and cash flow opportunities.”
“The facility has been put in place to enhance oil and gas production from the TWN wells and expand third-party use of existing TWN income-producing infrastructure,” said Geoff Loudon, Founder of New Dawn Energy and Chairman of L&M Energy. “New Dawn and L&M Energy are fully supportive of the joint venture with New Zealand Energy, and look forward to unlocking the full potential of these promising assets.”
The Facility, to the extent drawn down, will bear interest at 12 percent per annum with a maturity date of March 31, 2015, or as extended by agreement. Interest is payable monthly, or may be capitalized with New Dawn’s consent, while NZEC may prepay the Facility at any point without penalty. NZEC’s obligations under the Facility are secured against NZEC’s 50 percent interest in the TWN Limited Partnership, the legal owner of the Waihapa Production Station, and NZEC’s 50 percent interest in NZEC Ngaere Limited, the general partner of the TWN Limited Partnership.
NZEC can draw down the Facility to fund its share of expenditures and equipment required to advance the TWN Assets, and for other working capital purposes as agreed to by New Dawn.
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