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Studied: Power Engineering, Exploration Technology, Worked Upstream, Midstream, Downstream in Oil and Gas, Pipelines, Drilling, Refineries. I'm Interested in very big picture, game changers that come from sizeable economic deposits of Oil, Gas, Gold, Silver, Uranium, Specialty Metals used in... More
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  • Q3 News Flow For New Zealand Energy Is Worth Attention  22 comments
    Nov 29, 2013 5:28 PM | about stocks: NZERF

    It has been a long twisty road to set the current stage for this junior company and its ambitious plans to liberate the energy in the hydrocarbon bearing rocks of New Zealand's North Island.

    The Recent Q3 Results for New Zealand Energy Ltd. (referred to as NZEC, NZ, or NZERF) demonstrate that with the acquisition and financing phases finally all in place, and with drilling permits, licenses, cash and people, we are now moving forward with utmost confidence that this team can deliver in Q4. If so 2014 will be looking like a turnaround story worth serious attention.

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    News flow should be steady from this point forward. Early December could offer the first glimpse of what is in store for patient followers of the story in both Taranaki basin and by early Q1 2014 maybe some added excitement on the East Coast Basin potential.

    (click to link to NOV 27 Actual new release)

    I have extracted a few sections of the Q3 results, not to restate or comment on the obvious, but to draw attention for any new followers to this play on any relevant backstory that may broaden their view on how NZERF,NZ got to where we are today. You can click on links to read previous instablogs or commentary on this play as it has unfolded over the past year.

    My view, is yesterday's numbers is not why I am here. I am only interested in looking forward to the real future of this play. The rare opportunity offered within its unique geology, exploration potential, and project fundamentals that speak so loudly on their own merits.

    I am not qualified to advise you what to do, or not do, with your money or your time, but if you are still here reading this you are obviously looking for something different in the world and this play offers a unique value proposition. I don't want to waste your time or mine, but obviously I believe very strongly in this play, its projects, and its people.

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    All three 1)the rocks, 2)the projects and 3)the people, have to line up for this to be an overall success. It's now looking like the path to success is well prepared, from this point forward the players are on the field and its time to step aside and let them do what they do best. The next 3-4 months will be full of interesting activity and you owe it to yourself to learn the short and long term views of this story, because with their efforts and a few breaks this could be the play of your lifetime if you spread your dollars across these new basins.

    (Update from Q3)

    (Visual interpretation of New Release Dec 2)

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    As of Dec 2, only 2 wells are on gas lift, when the High Volume lift is turned on the bright green area representing oil production kicks in and oil production should soar. (click to enlarge)

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    BACK in 2002, Tikorangi this was still an academic "Theory".

    In this paper "Petrogenesis of the Tikorangi Formation fracture reservoir, Waihapa-Ngaere Field, Taranaki Basin"

    (You will find it was this kind of research that lead to drilling wells)

    Abstract

    The subsurface mid-Tertiary Tikorangi Formation is the sole limestone and the only fracture-producing hydrocarbon reservoir within Taranaki Basin. This study, based on core material from seven wells in the onshore Waihapa/Ngaere Field, uses a range of petrographic (standard, CL, UV, SEM) and geochemical techniques (stable isotope, trace element data, XRD) to unravel a complex diagenetic history for the Tikorangi Formation.

    A series of eight major geological-diagenetic events for the host rock and fracture systems have been established, ranging from burial cementation through to hydrocarbon emplacement within mineralised fractures. For each diagenetic event a probable temperature field has been identified which, combined with a geohistory plot, has enabled the timing of events to be determined.

    This study has shown that the Tikorangi Formation comprises a complex mixed siliciclastic-carbonate-rich sequence of rocks that exhibit generally tight, pressure-dissolved, and well cemented fabrics with negligible porosity and permeability other than in fractures.

    Burial cementation of the host rocks occurred at temperatures of 27-37°C from about 0.5-1.0 km burial depths.

    Partial replacement dolomitisation occurred during late burial diagenesis at temperatures of 36-50°C and at burial depths of about 1.0 km, without any secondary porosity development.

    Fracturing occurred after dolomitisation and was associated with compression and thrusting on the Taranaki Fault. The location of more carbonate/dolomite-rich units may have implications for the location of better-developed fracture network systems and for hydrocarbon prospectivity and production.

    Hydrocarbon productivity has been ultimately determined by original depositional facies, diagenesis, and deformation. Within the fracture systems, a complex suite of vein calcite, dolomite, quartzine, and celestite minerals has been precipitated prior to hydrocarbon emplacement, which have substantially healed and reduced fracture porosities and permeabilities.

    The occurrence of multiple vein mineral phases, collectively forming a calcite/dolomite-celestite-quartzine mineral assemblage, points to fluid compositions varying both spatially and temporally. The fluids responsible for vein mineralisation in the Tikorangi Formation probably involvedwaters of diverse origins and compositions. Vein mineralisation records a history of changing pore fluid chemistry and heating during burial, punctuated by changes in the relative input and mixing of downward circulating meteoric and upwelling basinal fluids.

    A sequence of mineralisation events and their probable burial depth/temperature fields have been defined, ranging from temperatures of 50-80°C and burial depths of 1.0-2.3 km. Hydrocarbon emplacement has occurred over the last 6 m.y. following the vein mineralisation events. The Tikorangi Formation must continue to be viewed as a potential fracture reservoir play within Taranaki Basin.

    --------------------------------------------------------------------

    So they were correct, the Fractures were huge, storing vast amounts of Oil under extreme pressure within a reservoir rock, and controversial "fracking or Fracturing is not necessary due to fracturing.

    Now Fast Forward to Today!

    (The 6 Tikorangi wells are still "Choked back" ...)

    What is HVL? High Volume Lift

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    Image Credit

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    What makes WAIHAPA interesting is that nearby, Tag Oil Ltd. is drilling a expensive and challenging gas well targeting the deep kapuni formation. If Tag's well (Cardiff-3) hits gas, it will mean that NZEC has similar geology that has yet to be drilled into. This adds punch to the play called 'Kapuni formation' which may contract substantial amounts of Natural Gas under substantial pressure. You can compare the plays yourself, toggle between the two investor presentations. Here is a rough sketch of the geology and proximity of the neighboring plays.

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    The Investor relations representative for new zealand energy mentions in the interview that only 2 of the 6 Tikorangi wells are on Gas Lift, and 4 more were just re-activated on Natural Reservoir pressure, and the uphole completions have not been performed yet but are in progress.

    There are then 3 active pay zones in the Tikorangi wells, (4 if you were to drill deeper into the Kapuni Zone), Kapuni could be very lucrative down the road (await and see what their next door neighbor is learning targeting the same rock layer at a $15MM cost).

    Listening to what wasn't said, they are cautiously not saying much about the "Flush Rate" or Initial Production from the pressure build up from the other 4 wells being shut in for years.

    Like turning on a garden hose they have only barely cracked the Tap open on these re-activations. The Valve or Choke is just opened enough to allow flow, these IP Numbers are not what the maximum barrels the wells can produce they are a taste or appetizer of what can be produced.

    However, I'm not saying that you will ever see these MAX BBL/Day numbers again, I am just saying that you may see much larger numbers than the choked back re-activation numbers released on December 3rd.

    How much larger? This is a Reservoir Engineers question, not a Bankers or Financiers Question. The issue is with a 35% water cut, you can't bring on production full blast, because the Pressure Drop from 3 Km below to Surface can cause long term reservoir problems down below if you draw the oil out too fast you can get situations where you take on too much water and that process is irreversible. Its a very art-science kind of performance and its not something you mess with or you can destroy the future income potential from the wells. They will take this slow and when the data supports it. They will tweak the rates based on science and frizzy white haired math types who stare at numbers for years, and then have an ah-ha moment of brilliance and say...'You can produce at XYZ Barrels per day according to my calculations' from that point its a viable number.

    When the next update occurs, mid to end of Dec we may see encouraging numbers from 4 more wells, and there will be 1 best well of the six, you can see if you can guess which one it is below.

    (A bit of history...back to 2011 Activity)

    (Note the proximity of Tag and NZEC permits side by side)

    (Cheal, Cardiff and Waihapa have similar targeted geology)

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    Note: The TAWN Licenses stood for Tariki Auhroa Waihapa Ngaere, these are surface land place names in maori language that refer to licenses and permits for oil and gas exploration. Origin Energy was the holder of the TAWN License and the negotiations over 1.5 years ended up with New Zealand Energy acquiring 3 of the 4 permits, and the "A" or Auhora permit was traded for a gas compressor, the acquisition deal then became known as the "TWN" rather than 'TAWN' after the 'A' for Auhroa was negotiated different to the original deal terms.

    The Red and Green areas on the below map refer to known Gas and Oil fields. The large yellow areas are existing permits that NZ owns. The small red area Tariki/Ahuroa and the Green area Waihapa just above the Waihapa/Ngaere are recent acquisitions from Origin Energy Ltd and they are refered to as 'TWN' Assets.

    With the Assets changed hands, and Financing in place, its now "Go Time" for NZ. As many as 6 wells are about to be 'turned on' or re-activated so to speak in early December. This could add 49 to 365 BBL's per day. This will bring immediate cash into the bank for NZ, and set-up some needed $ for Q1 2014 drilling programs that offer upside fairly soon.

    The Green Circle called Cheal, is not part of NZEC's permit but it is targeting the same Geology as Waihapa/Ngaere which is right next door to Cheal. At this moment around 9 wells are being drilled by Tag Oil and its partner East West Petroleum inside the Cheal Permit.

    The near term story is the Cardiff-3 well at Cheal which in early December may drill to its Total Depth into the KAPUNI rock formation known to hold vast volumes of Natural Gas. This Cardiff-3 could be a real success story for both Tag Oil and East West, as early as mid-december.

    If so, their new neighbor New Zealand Energy, who just acquired Origin Energy's TWN Assets including Waihapa, could make their Acquisition timing look quite fantastic.

    Reason being that the Waihapa Permit, sits smack dab on top of the same KAPUNI Formation, and the license to drill was just acquired by New Zealand Energy on Oct 28, 2013.

    This kind of makes New Zealand Energy worth a serious look as early as next week! In addition to the map below, the real future story of this company is potentially what comes from future East Coast wells. NZERF, NZ, or New Zealand Energy Ltd recently upped its stake in the East side of the island, by another 1,048,221 acres and now holds the Largest Acreage position in the East Coast Basin, a shale play of epic proportions. (You can read the release on that under the title EAST CAPE below)

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    Link to Reserves

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    Link to Taranaki Basin FACT SHEET

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    Link to East Coast Basin FACT SHEET

    Link to East Coast Basin previous blog post

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    (ASSUMPTIONS)

    New Zealand Energy Awarded East Cape Permit

    November 29, 2013

    Download this Press Release

    VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 29, 2013) - New Zealand Energy Corp. (TSX VENTURE:NZ)(OTCQX:NZERF) ("NZEC" or the "Company") is pleased to announce that the Company has been awarded a 100% interest in the East Cape Permit. The East Cape Permit covers approximately 1,048,221 onshore acres (4,242 km2) in the Raukumara region of the East Coast Basin, on the northeast tip of New Zealand's North Island. The East Coast Basin is considered highly prospective with significant resource potential from both conventional Miocene sands and unconventional oil shales. There are more than 300 onshore oil or natural gas seeps in the East Coast Basin. Many have been sourced to two oil shale packages that are rich in total organic carbon and locally naturally fractured: the Waipawa and Whangai shale formations. (click to enlarge)

    NZEC now controls 2,036,642 acres (8,242 km2) across four permits in the East Coast Basin (Figure 1).1 A resource estimate for NZEC's East Coast Basin permits, completed by Deloitte LLP with an effective date of February 1, 2011, outlined prospective resources of 604.5 million barrels of oil.2

    NZEC will be the first company to explore the East Cape Permit since the mid-1980s. The Company's work program for the permit includes technical studies, reprocessing 145 km of 2D seismic and acquiring 40 km of new 2D seismic data, and drilling an exploration well by Q2-2016. NZEC has met with iwi groups from the permit area and looks forward to continuing to build these relationships as exploration proceeds.

    "With the backdrop of heightened interest in oil shales worldwide, NZEC now controls the largest exploration portfolio in New Zealand's East Coast Basin, with more than 2 million acres from which to explore and unlock the potential of these highly prospective oil shale packages," said John Proust, Chief Executive Officer of NZEC. "NZEC's technical work over the last three years has given us a much greater understanding of the East Coast Basin. We look forward to advancing our oil shale exploration strategy in 2014."

    Additional plans for the East Coast Basin include drilling exploration wells on both the Castlepoint and Wairoa permits in 2014. The Company will focus its exploration efforts on the East Cape, Castlepoint and Wairoa permits, and will make a decision regarding potential relinquishment of the Ranui Permit before year-end 2013

    Acquisition of Interest in Upstream and Midstream Assets

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    On October 28, 2013, the Company closed the acquisition of strategic upstream and midstream assets (the "Acquisition") from Origin Energy Resources NZ (TAWN) Limited ("Origin").

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    The Acquisition was originally announced on May 31, 2012 and is described in more detail in Note 2 to the Condensed Consolidated Interim Financial Statements for the quarter ended September 30, 2013. NZEC now owns, through its wholly-owned subsidiaries, a 50% interest in the Tariki, Waihapa and Ngaere PMLs ("TWN Licenses") in the main Taranaki Basin production fairway, as well as a 50% interest in the Waihapa Production Station and associated gathering and sales infrastructure (collectively, "TWN Assets"). NZEC and L&M acquired the assets jointly and formed a 50/50 joint arrangement ("TWN Joint Arrangement") to explore and develop the TWN Licenses and operate the TWN Assets, with NZEC as the operator. NZEC and L&M formed the TWN Limited Partnership to operate the TWN Assets, with NZEC as the operator. The TWN Limited Partnership also operates the Ahuroa Gas Storage Facility, owned by Contact Energy Limited ("Contact"), a subsidiary of Origin. Contact pays TWN Limited Partnership a monthly operating fee of NZ$201,000.

    The purchase price for the Acquisition was $33.7 million in cash, with $30 million payable to Origin and $3.7 million (NZ$4.25 million) payable to Contact. The Company paid a $5 million deposit to Origin for the Acquisition in June 2012 and a further $1 million deposit in August 2013. The remaining $27.7 million was paid on closing, of which $18.25 million was contributed by L&M and $9.45 million was contributed by NZEC. The TWN Joint Arrangement will also pay Origin a 9% net revenue royalty on all future hydrocarbon production from the TWN Licenses, and can reduce the royalty at any time by as much as 4% by paying Origin $4.25 million per percentage point. The TWN Licenses are also subject to a "grandfathered" NZPAM 10% net revenue royalty.

    The Company took joint control of the TWN Licenses and TWN Assets on October 28, 2013, and immediately commenced the work required to reactivate oil production from six existing wells that had been drilled by a previous operator and produced oil from the Tikorangi Formation.

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    (click to link to TMX)(click to link to otcmarkets)

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    Canaccord Genuity
    Initiated coverage on November 12, 2012
    Analyst: Christopher Brown
    Contact: 403-508-3858

    Credit Suisse
    Initiated coverage on October 5, 2012
    Analyst: David Phung
    Contact: 403-476-6023

    Dundee Capital Markets
    Initiated coverage on December 4, 2012
    Analyst: David Dudlyke
    Contact: 44-20-3440-6870

    Haywood Securities
    Initiated coverage on April 27, 2012
    Analyst: Alan Knowles
    Contact: 403-509-1931

    Mackie Research Capital Corporation
    Initiated coverage on January 20, 2012
    Analyst: Bill Newman
    Contact: 403-750-1297

    Macquarie Equities Research
    Initiated coverage on December 3, 2012
    Analyst: David Popowich
    Contact: 403-539-8529

    M Partners
    Initiated coverage on September 4, 2012
    Analyst: David Buma
    Contact: 416-603-7381

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    MORE TO COME IN 2014 - STAY TUNED - HAPPY HOLIDAYS

    LOTS OF NEW ACTION IN EAST COAST BASIN...Coming Up.

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    OIL PLAYERS in the East Coast Basin: (click to enlarge)

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    ( No Consensus Rating Average for MES yet )

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    East West Petroleum Corp. (TSX-V: EW, the "Company" or "East West"), is pleased to announce that New Zealand Petroleum and Minerals ("NZPAM") has awarded the Company a 40% interest and its joint venture partner and operator TAG Oil Ltd ("TAG") a 60% interest in petroleum exploration permit 55770 ("PEP 55770") covering 106,157 acres in the East Coast Basin of New Zealand as part of the 2013 New Zealand Block Offer.

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    Disclosure: I am long NZERF.

    Additional disclosure: NZERF is the symbol on OTCBB, NZ is the symbol on TMX. NZEC is an Acronym for New Zealand Energy Corp.

Back To tullii's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (22)
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  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Oil is flowing from first wells, see link below for the Numbers.

     

    http://bit.ly/1cUJcz4

     

    This is a good start...looking forward to rest of the year!
    2 Dec 2013, 07:09 AM Reply Like
  • JohnIntuitive
    , contributor
    Comments (58) | Send Message
     
    I really like your article - you scrutinized Rhellyn's interview as much as I did...especially when she would not give the production rates on the 4 remaining wells. I think the pictures you build and put into your articles are extreme EYE CANDY! I wish I could print an enlarged version of your pictures.

     

    Excellent JOB Tullii!
    5 Dec 2013, 06:21 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Thanks John, I look forward to learning what the other 4 wells can do after being shut in for a few years, there are a couple of monsters on the historical records and I so don't think we have seen anything as lucrative as is yet to come. Thanks for following, I can barely keep up with all the activity in New Zealand across the many companies, block offers, and operations. This won't be under the radar much longer, when it gets mainstream attention I think we will all be glad we were early starters in learning about it.
    5 Dec 2013, 11:46 PM Reply Like
  • JohnIntuitive
    , contributor
    Comments (58) | Send Message
     
    If this stock ever gets back above 2 dollars...it will change my life forever! I will be able to pay off all my bills & take care of my parents.
    6 Dec 2013, 01:21 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » I hope they do too.

     

    Tag Oil announced a share buy back offer today.They will start buying their own shares back starting next week on Dec 10 th.

     

    This means upto 10% of their shares will be cancelled from the float, which means only 90% of what is available today will be available within 1 year (Dec 9th 2014) In other words they want to own their own stock starting tuesday next week. the stock is up 5.45% on the news. If you watch next week toward the Friday the 13th, it might just be that they have something good to share by that date, if not we will likely have to wait until the new year.
    6 Dec 2013, 02:40 PM Reply Like
  • jmale
    , contributor
    Comments (8) | Send Message
     
    I am grateful for your articles as well Tullii,
    hardly ever anybody gives so much his or her energy and knowledge as You have done. So, a big-big Thank You.

     

    As far as I understand New Zealand Energy has very similar tactics as Tag Oil has, having the low risk wells to finance the otherwise very risky drilling programs in other areas. Both companies have active production facilities as well. NZ comes some steps later but walks the same path than TAO.

     

    To have entered either company relatively late has to be taken as an advantage because both companies have dropped drastically from their highs. Looking backwards one year TAO is down -52.50% and NZ -81.01%. Little further back, from the Spring 2012 (April 27th 2012) the time when both of them were on 'high heels' TAO has droppep -68.87% and NZ -90.59%. That gives New Zealand Energy theoretically more upside but it might have been more hyped back in the earlier times. Does anybody else have any thoughts about the different valuation of these two companies if You compare them to each other?

     

    Luckily high hopes do exist also for those share holders who have entered the companies with much higher share prices to get finally a break-even moment if things go to the right direction. They might do. Hopefully so.
    8 Dec 2013, 10:08 AM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » The share price is not indicative of the value of an exploration company as much as most people think. There are 20+ years of very hard to solve geotechnical, geological and geophysical problems that seem to have all recently been unlocked, almost like a combination lock....the technology, math, computing power have moved us into a new era that is only at the cusp of what is possible.
    Exploration is about discovering the undiscovered, going where nobody has drilled and finding and creating new energy.

     

    From about 2002, there were theories that had to be sold in academia, then financing raised, then people and technology applied. Now that this is all coming together we are witnessing the largest exploration rush in New Zealand's history offshore, onshore.

     

    My point is, the value is in the people who apply science and technology to unlock the energy located several Km below. Without
    people none this is possible, the oil in the ground is the future revenue. The oil will not come out and be sold without people.
    The share price tells you what has already happened, it does not tell you what is going to happen.

     

    The Seismic data, Log Data, Drilling data all corroborated by experienced geoscientists put into a complex reserve study, this is where the crystal ball really is.

     

    If people used this metric instead of the share price we would be in a whole different scenario, but it doesn't work this way...until the appraisal wells are verified, and the field length width height are all established we are living in an old world view of reserves.
    New Zealand is not like any other geology, it's going to rewrite
    the equations on how reserves are calculated, engineers and accountants will have to invent new ways outside their current box of thinking to deal with the unknowns that have already blown the doors off expectations from other countries.

     

    To me the # of exploration permits issues and the scope and scale of the offshore and onshore drilling tell me we have already crossed the point of a new era. New Zealand will be one of the most important players in energy in 7-10 years, if you can have that long to retire, you will see gains in multiples you never thought possible, rock bottom will be right now...we won't see these low prices after Q1 2014 ever again.

     

    These $1MM/Day offshore wells that take 100-200 days are an indicator the prize is much much larger than previous indicators.

     

    NZ and TAO are first movers in a fast growth space, they will be very successful in due time.
    15 Dec 2013, 10:13 AM Reply Like
  • jmale
    , contributor
    Comments (8) | Send Message
     
    PS. Both companies (NZERF and TAOIF) serve to balance the wins somewhere else, that's why the tax sell-off before Christmas.
    11 Dec 2013, 07:16 AM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Makes sense, although I would think there is few comparable plays as these two that are this far along in their plans and this close to material upside changes, i'm holding on. the old addage buy low sell high means you are better to pick up or add during 2 week seasons like this, and then unload some gain 50-60 days later when others are just entering.

     

    Most people will seem to sell low, and buy higher because they just tend to follow the market trends, "their memory is shorter than a pencil" (my dad used to say) so write down what happened this week on your calendar and think twice next year, might be a wise plan to schedule your buys in this short tax loss season to get a bargain.
    11 Dec 2013, 11:38 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » New Zealand Energy acquires 80% interest in another East Coast Basin Permit !! Will drill 1 exploratory well by June 2014.

     

    http://bit.ly/1fpVRMN
    13 Dec 2013, 08:32 AM Reply Like
  • JohnIntuitive
    , contributor
    Comments (58) | Send Message
     
    I am crawling the walls waiting for this press release - I am betting 800 bpd.
    3 Jan, 09:24 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » (** This is inline with their stated expectations for T+1 or month 1 after reactivation, there are a few wells Moki-3 and Waitapu-2 yet to be added in January which will bump up numbers, we are seing some taste of what is to come, the Februrary production numbers will be more relevant and should jump from net 151 bbl/day.)

     

    Here is news release:

     

    New Zealand Energy Production and Operational Update

     

    VANCOUVER, BRITISH COLUMBIA-( - Jan. 6, 2014) - New Zealand Energy Corp. (TSX VENTURE:NZ)(OTCQX:NZERF)

     

    today provided an update on its production and operational activities. The Company is currently producing approximately 236 barrels ("bbl") 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 Q1-2014.

     

    HIGHLIGHTS
    TWN Reactivated Wells (NZEC 50% interest)

     

    -- Six wells reactivated and producing oil from Tikorangi Formation using installed gas lift

     

    -- Total production (100% basis) during December 2013: 9,332 bbl oil, 16.2nmillion cubic feet ("mmcf") natural gas(1)

     

    -- Total production net to NZEC during December 2013: 4,666 bbl oil

     

    -- Average daily production (100% basis) during December 2013: 302 bbl oil, 0.52 mmcf natural gas,1 average water cut 74%

     

    -- Average daily production net to NZEC during December 2013: 151 bbl oil

     

    TWN Recompleted Well (NZEC 50% 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% interest)

     

    -- Average daily production during December 2013: 85 bbl/d 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% interest in the TWN Licenses, with L&M Energy and its related entities (collectively "L&M") holding the other 50%. NZEC and L&M acquired the TWN Licenses on October 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.(2) 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.

     

    TWN Licenses - Mt. Messenger Formation Production and Development Plan
    In December 2013, the TWN JA recompleted the Waihapa-2 well to access bypassed pay with production potential in the Mt. Messenger Formation. Waihapa-2 had been drilled by a previous operator through the Mt. Messenger Formation to the Tikorangi, and produced 4.8 million bbl of oil from the Tikorangi Formation. The TWN JA used a service rig to perforate two intervals in the Mt. Messenger Formation. The well flowed from natural reservoir pressure for three short tests. Following a further flow test in early January, the well will be shut-in for pressure build-up, with commercial production expected in early February.

     

    A number of additional existing wells on the TWN Licenses have uphole completion potential in the Mt. Messenger Formation. Recompletion of these wells is significantly less expensive and faster than drilling new wells, and economic discoveries could be tied in to the Waihapa Production Station using existing oil and gas gathering pipelines. The TWN JA plans to commence uphole completion of the Waihapa-1 well in mid-January.2
    Exploration and development plans for the Mt. Messenger Formation on the TWN Licenses in 2014 include drilling three new Mt. Messenger wells (in addition to the uphole completions referred to above).2 The TWN JA will prioritize exploration targets that can be accessed from existing drill pads that are tied in or in close proximity to the Waihapa Production Station infrastructure.
    Eltham Permit Production and Development Plans

     

    NZEC's Copper Moki-1 and Copper Moki-2 wells produced a total of 2,633 bbl of oil during December 2013, with average daily production of 85 bbl/day (100% net to NZEC). NZEC will commence workover activities on the Copper Moki-3 well in mid-January to clean out sand around the well bore and replace the pump, with the objective of recommencing production in January.

     

    NZEC completed installation of artificial lift on the Waitapu-2 well in December, but has encountered problems with the down hole pump. Servicing of the pump will commence this week to allow Waitapu-2 to recommence production.

     

    (1) Gas produced from the reactivated Tikorangi wells has been used as fuel for the compressor at the Waihapa Production Station. There were no gas sales through December.

     

    (2) Development and operating costs are to be funded initially by existing working capital and cash flows from production. However, in order to carry out all of the planned development activities, the Company is considering a number of options to increase its financial capacity. These options include increasing cash flow from oil production, additional joint arrangements, commercial arrangements or other financing alternatives.

     

    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 1.97 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 http://bit.ly/1a0c2My or by emailing info@newzealandenergy....
    6 Jan, 09:41 AM Reply Like
  • JohnIntuitive
    , contributor
    Comments (58) | Send Message
     
    I can not help but feel disappointed...was really hoping for 800 barrels. When are they going to install those high volume electric submersible pumps we keep hearing so much about.

     

    Truthfully...it sounds like they are running out of money...DAMITT!
    6 Jan, 02:29 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » I Understand the sentiment, my patience has been tested too, but better days are ahead, the things that require engineering and approvals are not done at light speed, they are done by what is tried and true and the oversight by regulators and industry take priority over us shareholders. (not too sound like a politician:)

     

    Remember 2 wells did not report, and 1 well has had a pump issue, so when the FEB production numbers report they will be better than Jan 6. That being said, the $/Day coming in are from BBL/Day so understand that everyone wants higher numbers but the bringing on of wells after shut-ins for several years is very tedious work, its not like turning on a water tap, they have very critical things to watch and its got to be done right the first time or the wells can have Water Coning. The T+3 numbers will be the ones to watch, the water cut, and bbl/day in March 2014 should be much better than Jan and Feb, but not likely 800.

     

    Hang on if you can, Feb 7 should be next update approx date, and much more will be known by then, and keep in mind the East Coast has zero value to the share price right now, so any tidbits that trickle out from Tag oil could help boost interest here as well.

     

    Things will improve, their are Billionaires and Millionaires invested in this company with deep pockets, if they need money, they will get it, and short term that may seem negative but it saves our butts from the alternatives, so its not going to fall flat, but they have had some tough months and 2014 is going to be game on for this team.

     

    7 Jan, 10:13 PM Reply Like
  • jmale
    , contributor
    Comments (8) | Send Message
     
    Thanks Tullii, good information.
    I was a bit worried about the increasing water cut of Jan 6. Have read earlier about the problems having too much water could cause the oil not coming out at all. But that might not be the case, 75 percent is rather "normal" tread somewhere else, even 95 percent possible. Anyway the process is much more physical than the share price is. That's something we so easy forget looking the world through our displays. Oil is reality, share price is an illusion of it.
    8 Jan, 03:56 AM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » In this case in the face of adversity, leaders will do today what will setup a positive future, regardless of how people interpret their present decisions the end goal it to grow to increase value.

     

    The expression "Double Down" is often referred to when you either have suffered a setback and in order to get back to where you were you need to increases your efforts or increase your investment.

     

    In a positive light, doubling down can be a good thing, where you're sticking to your guns when you're "right." You don't want to always simply give in to other people's ideas and arguments.

     

    In a negative light, it means to continue blindly championing your own ideas in spite of its poor merit.

     

    This play is not a card game of chance though, the Oil is in the ground, it is now flowing and cash flow has started. Existing shareholders need to assess for themselves if to protect money they may have lost in 2013 on paper if they should "double down" on any % of their holdings at these depressed share prices.

     

    "Doubling down" is a situation in which you believe that you have a better chance of winning than your opponent, so you double your original wager (investment) because you know your opponent, is on shaky ground. In this case the opponent is "other investments" like bonds, equities, etc.

     

    The Alternative investments like oil explorers can perform exceptionally well in adverse climates like we are entering into with currency issues and inflation situations. So my view is looking outward 3 years, I see the possibility for this company to outperform in adverse economic situations, that is why I own it, and if it takes morey money or slight dilution to get this ball rolling it can only protect my long term upside even if I have to stomach the short term swings in share prices.

     

    I am sticking to my guns. This is the play of a lifetime, it still is.
    We are only in month one of 2014, a lot can happen in the world in 3 months. By March 31,2014 we should be on a clear path of getting to understand production expectations. I expect by June 2014 this play on both west and east side of the island to be no longer a secret followed by the few, but to be widely public so any plans to add shares should weigh in the timeline before New
    Numbers in February come out.
    8 Jan, 10:09 AM Reply Like
  • JohnIntuitive
    , contributor
    Comments (58) | Send Message
     
    I talk to Rhyllin, the 4 wells they turned on are only putting out 10bbls/day. I redid the numbers in my head...we should be at 500 bbls/day by Feb. 3.

     

    Hopefully the Mt. Messenger uphole completions put out 300 bbls/day each. Then NZEC's #s would climb quickly...even though they only get 50% of production.

     

    Truthfully...I just want the **%#$!! share price to at least get into the .50 cent range...especially since East West Petroleum is @ .45 cents & they only produce 250 Net barrels per day.

     

    By the way...I'm still all in. Thanks for relpying Tullii.
    8 Jan, 04:40 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » "Fracking, Fuels and Friction" a radio New Zealand program.

     

    http://bit.ly/1j0roJG

     

    Discuss oil exploration potential on east coast around 3 min 40 sec mark. Worth a listen.
    1 Feb, 10:16 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Vancouver Resource Conference 2014

     

    At 18min 55sec if you FFWD to that mark listen to quick update from
    New Zealand Energy about what is in store for 2014.

     

    http://bit.ly/1eI2lUk

     

    Brief discussion of share price, retaining key personal, options reprice, and going forward strategy.
    1 Feb, 10:20 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Vancouver Resource Show 2014
    Similar Discussion only with Video clip

     

    2014 http://bit.ly/LCbYwQ

     

    Around the 3:50 mark she states they have 140 targets in mt.messenger and they only drilled 8 of them so far. This is a early growth story for sure.
    2013 http://bit.ly/1j0tk4R
    1 Feb, 10:23 PM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » http://bit.ly/MWjOma

     

    New Zealand Energy Production and Operational Update

     

    February 04, 2014
    VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 4, 2014) -

     

    Editors note: There is a photo associated with this release.

     

    New Zealand Energy Corp. (TSX VENTURE:NZ)(OTCQX:NZERF) is currently producing light, high-quality oil from nine wells in the Taranaki Basin of New Zealand's North Island, with five further wells expected to add to production over the next four months. NZEC's Waitapu-2 well on its 100%-owned Eltham Permit and the Waihapa-1B well on NZEC's 50%-owned TWN Licenses are expected to recommence production in Q1-2014. A high-volume electric submersible pump ("ESP") is scheduled to be installed on Toko-2B in Q1-2014 in order to realize a further increase to production in April, followed by additional production from the Waihapa-2 and Waihapa-8 wells later in Q2-2014.

     

    Production Highlights

     

    Total corporate production (net to NZEC)
    February 2014 first three days average: 284 barrels per day ("bbl/d") oil
    January 2014 average: 202 bbl/d oil
    December 2013 average: 236 bbl/d oil
    Commenced delivery of Copper Moki natural gas to the Waihapa Production Station in early January
    All gas required for compressor fuel at the Waihapa Production Station and for gas lift of the TWN JA reactivated wells is currently provided from corporate production (TWN JA purchased external lift gas in Dec 2013), resulting in savings of approx NZ$100,000 net to NZEC in January (Company estimate)
    Third-party revenue at the Waihapa Production Station during January of approx NZ$155,000 (net to NZEC)
    Upcoming Catalysts

     

    Additional production opportunities identified
    Waitapu-2 well expected to resume production in Q1-2014
    Waihapa-1B: Testing the production potential of the Tikorangi Formation. If successful, the well should recommence production in Q1-2014
    Toko-2B ESP installation targeted for Q1-2014, with a production increase anticipated in April 2014
    Waihapa-2: Existing Tikorangi well successfully recompleted uphole to access bypassed Mt. Messenger production. Well shut-in for installation of artificial lift, production expected in Q2-2014
    Waihapa-8: Mt. Messenger Formation production potential confirmed by short flow test. Well shut-in for installation of artificial lift, production anticipated in Q2-2014
    Production fluctuations are the result of ongoing work at the TWN Joint Arrangement ("TWN JA") reactivated wells to optimize oil production. Two TWN JA wells were shut-in at the end of December for optimization activities and resumed production in the second week of January. Likewise, NZEC's Copper Moki-3 well remained shut-in for the first half of January, resuming production on January 17.

     

    During January, NZEC commenced delivery of Copper Moki natural gas to the Waihapa Production Station. As a result, the Company is currently able to internally generate all of the natural gas required to lift the TWN JA reactivated wells and run the Waihapa Production Station compressors, significantly reducing operating costs at the Waihapa Production Station and bringing modest natural gas revenue to the Company.
    4 Feb, 07:39 AM Reply Like
  • tullii
    , contributor
    Comments (92) | Send Message
     
    Author’s reply » Here is a link to the Agreement between Contact Energy /Origin/New Zealand Energy/Waihapa Production Station)

     

    Some confidential info is redacted but the overall plans for how the LPG will loop between WPS and Contact Energy is laid out.

     

    http://bit.ly/1kHK3Yg
    2 Mar, 09:37 AM Reply Like
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