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Commercial oil discoveries on NZEC's properties and those of its peers have confirmed the prospectivity of the Mt. Messenger formation, which remains NZEC's primary exploration target in the near term. Mt. Messenger leads continue to be refined as the Company interprets its new Rotokare 3D seismic survey (100 km2 across the Eltham and Alton permits) and 3D seismic surveys on the petroleum licenses. NZEC's technical team has also identified a number of leads in the deeper Moki, Tikorangi and Kapuni formations. Discoveries by other companies have demonstrated significant flow rates and long-term production from reservoirs in these deeper formations. NZEC will continue to advance these leads to drillable targets and will move these targets higher on the Company's priority list as warranted.

In just two short years NZEC has established the foundation to build a significant oil and gas company. NZEC holds the largest onshore exploration land package on New Zealand's north island, with conventional opportunities in the country's main Taranaki Basin production fairway and both conventional and unconventional potential in the untapped East Coast "new frontier" of New Zealand's oil shales. The Company has forged strong relationships with local communities and its iwi partners. NZEC's reputation as a company committed to social and environmental responsibility will be integral to its success as the Company expands exploration activities into new communities. This reputation also helped recruit an experienced team with both New Zealand and Western Canadian sedimentary basins expertise, and NZEC continues to engage industry experts to ensure the capacity and expertise to support the Company's exploration activities and growth plans.

To secure its plans for long-term growth, NZEC has entered into strategic acquisitions and partnerships with New Zealand Oil & Gas, Westech Energy New Zealand, L&M Energy and Origin that have brought new exploration opportunities in both the East Coast and Taranaki basins and an agreement to acquire a full- cycle production facility. NZEC has proved its geological model with oil discoveries at three different sites and is producing high-quality light oil that sells at Brent pricing.

The Company's near-term plans are focused on growing production and cash flow in the Taranaki Basin, with exploration in the East Coast Basin providing additional long-term opportunities to NZEC's shareholders. Although the oil shale formations have yet to be proven with an exploration well, the considerable hydrocarbon potential and scale of the East Coast will be tested this year. Six exploration wells are planned for 2013, of which two will be drilled by NZEC (Ranui and Castlepoint). NZEC holds the largest exploration portfolio in the East Coast Basin, with more than two million acres (including permits pending) from which to explore and unlock the potential of these substantial oil shale formations.

NZEC believes the assets that the Company plans to acquire from Origin bring multiple opportunities to grow near-term oil and gas production and cash flow, with longer-term upside from the Company's substantial exploration portfolio. With a backdrop of decreasing netbacks for North American oil companies, NZEC's ability to sell its oil at Brent pricing should continue to differentiate the Company from its peers. Indeed, exploring and operating in New Zealand brings a number of competitive advantages to NZEC, with New Zealand's favourable royalty and tax structure, a proactive government approach to oil and gas development, a proven hydrocarbon system with multi-zone potential and established infrastructure with in-country demand for both oil and natural gas production. I look forward to sharing the Company's successes with our shareholders and community partners as our exploration and development plans unfold in 2013.