ENP Newswire -
Release date- 31052014 -
Details of the Company's financial results are described in the Unaudited Consolidated Interim Financial Statements and Management's Discussion and Analysis which, together with further details on the Company's operational activities, 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.
19,682 barrels of oil produced and 17,630 barrels of oil sold during Q1-2014 (Q1-2013: 30,179 and 27,246, respectively)
Average corporate production during Q1-2014: 219 barrels/day (net to NZEC)
Average field netback during Q1-2014 of
Total oil sales recorded during Q1-2014 of
New arrangement with gas marketing counterparty commenced
Generated total net proceeds of approximately NZ$1.47 million through disposal of non-core assets subsequent to
PROPERTY REVIEW & OUTLOOK
Production and Processing Revenue
To date the Company the Company has advanced 12 wells to production: four wells on the Eltham Permit and eight wells on the TWN Licenses. Total corporate production during the first quarter of 2014 averaged 219 bbl/d net to NZEC (not including production from the Waihapa-8 well). On
Ngaere-2 and Ngaere-3 resumed production on
NZEC and L&M acquired the TWN Licenses on
The wells produce light 41-degree API oil that is delivered by pipeline to the
Following closing of the TWN Acquisition, the TWN JA immediately proceeded with the work required to reactivate oil production from the Tikorangi Formation in six wells drilled by previous operators. On
The TWN JA continues to evaluate and optimize production from the reactivated wells. As part of the optimization process, in
The TWN JA expected that an ESP would allow the well to be produced continuously and would maximize oil recovery. The ESP was operated initially using a portable generator, which limited the pumping capacity and did not adequately draw down fluid levels in the well. In
Current pumping rates are still not sufficiently drawing down fluid in the well, as evidenced by the oil cut of 1.2%, which is lower than expected. The TWN JA is hopeful that higher pumping rates will draw down fluid levels in the well and allow the oil cut to increase, and is steadily increasing pumping rates with the expectation of ramping up to 8,000-10,000 bbl/d by
A number of wells on the TWN Licenses, with previous production from the Tikorangi Formation, have uphole completion potential in the shallower Mt. Messenger Formation. The TWN JA has recompleted one well uphole in the Mt. Messenger Formation (Waihapa-2) and achieved production from that well in
The Waihapa-2 well had produced an average of 120 bbl/d (60 bbl/d net to NZEC) over a period of eight days in May with an oil cut of approximately 67%. The presence of sand is not uncommon in the Miocene Formation, and the downhole pump is designed to handle some sand. The inflow of water and oil into the well, however, is drawing in volumes of sand that make the current artificial lift ineffective. The TWN JA is evaluating alternative methods of artificial lift which could service both the Waihapa-8 and Waihapa-2 wells.
The TWN JA continues to review well logs, historical drilling records and seismic data across the TWN Licenses to identify additional opportunities to advance existing wells to production. The TWN JA has identified four additional production opportunities in existing wells on the TWN Licenses: three uphole completions in the Mt. Messenger Formation and one well that offers production potential from both a Tikorangi reactivation and a Mt. Messenger uphole completion. The TWN JA will continue to evaluate these opportunities with the objective of advancing these wells to production.
Third-party revenue from the
The arrangement is expected to generate between NZ$250,000 and NZ$1 million revenue per year (net to NZEC). First gas commenced flowing on
The Company has drilled ten exploration wells on its 100%-owned Eltham Permit. Four have been advanced to production. Of the ten wells drilled on the Eltham Permit, only one well (Wairere-1) failed to encounter hydrocarbons and was immediately sidetracked. One well (Copper Moki-4) made an oil discovery in the Urenui Formation and has been shut-in pending additional economic analysis and evaluation of artificial lift options. Wairere-1A was drilled to the Mt. Messenger Formation and encountered hydrocarbon shows, with completion pending.
Arakamu-2 made an oil discovery in the Mt. Messenger Formation and has been shut-in pending evaluation of artificial lift options. Waitapu-1 is shut-in pending further testing or sidetrack to an alternate target and Arakamu-1A, a Moki Formation well, is suspending pending further evaluation. The Company continues to assess and reprioritize these Eltham Permit opportunities as new reservoir data becomes available from the Company's activities on the TWN Licenses.
To date the Company has produced approximately 260,879 bbl from its Eltham Permit wells (including oil produced during testing), with cumulative pre-tax oil sales from inception of approximately
Production from the Eltham wells has been very stable year to date, averaging 108 bbl/d during the first quarter of 2014, and 131 bbl/d during
NZEC is actively seeking farm-in partnerships to allow the Company to accelerate exploration of additional high-priority drill targets on the Eltham Permit.
During 2014, the Company plans to drill a new exploration well on the Alton Permit. The current work program for the Alton Permit requires the Company to drill an exploration well by
The Company has received an extension to its drilling commitment on the Castlepoint Permit, and is currently required to drill its first exploration well on this permit by
The Company has identified the preferred drill location and has progressed the community engagement and technical assessments required to obtain land access and resource consents. The Company applied for but has been unable to obtain an extension to the work program commitment, and is considering relinquishing the Wairoa Permit. The Company anticipates completing fieldwork and geochemical studies on the East Cape Permit in 2014.
RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED
During the three-month period ended
During the three-month period ended
Total recorded revenue during the three-month period ended
Expenses and Other Items
Production costs related to oil sales during the three-month period ended
Other costs of
Processing costs of
Depreciation costs incurred during the three-month period ended
Stock-based compensation for the three-month period ended
General and administrative expenses for the three-month period ended
Net finance expense for the three-month period ended
Foreign exchange loss for the three-month period
Total Comprehensive Income / Loss
Total comprehensive income for the three-month period ended
Based on a weighted average shares outstanding balance of 170,873,459, the Company realized a
NZEC is an oil and natural gas company engaged in the production, development and exploration of petroleum and natural gas assets in
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
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', 'expectation', 'continue', 'continuing', 'could', 'should', 'further', 'pending', 'anticipates', 'hopes', 'intend', 'objective', 'become', 'potential', 'look forward', 'increasing', 'evaluating' 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
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.
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