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New Zealand Energy Boosts Size Of Eltham Permit In Taranaki Basin

New Zealand Energy Corp. (CVE:NZ)(OTCQX:NZERF) said Tuesday it has increased the size of its Eltham Permit in the Taranaki Basin of New Zealand's North Island.

New Zealand Petroleum and Minerals has granted the company an additional 700 acres, or 2.83 square kilometres, in the northwest corner of the Eltham Permit.

The land extension gives the company control over two prospects that were overlapping the permit boundary, and will allow New Zealand Energy to drill the prospects from the "optimal location", it said.

The oil and gas producer said it will proceed with obtaining land access agreements and resource consents, and expects to drill the prospects as part its previously announced eight well exploration program in the second half of this year.

The company has two wells in production on its Eltham Permit, Copper Moki-1 and Copper Moki-2, and is currently testing Copper Moki-3 and Copper Moki-4.

New Zealand Energy achieved production in December from Copper Moki-1, its first discovery well in the Taranaki Basin. Production rates from the company's discovery well have averaged 424 barrels per day and 1,058 Mcf/d since starting continuous production in December. It has produced more than 67,000 barrels of oil since it was first tested in August 2011.

Last month, the company also achieved continuous production from its Copper Moki-2 well, currently producing from natural reservoir pressure out of the Mt. Messenger formation at an average rate of 581 barrels of oil per day and 1,530 thousand cubic feet of natural gas per day (Mcf/d) through a 24/64th inch choke.

With Copper Moki-1 and Copper Moki-2 now in production, Copper Moki-3 and Copper Moki-4 are slated to be completed and tested in the second quarter.

As part of its exploration program, the company has identified six prospects on 3D seismic, with the expectation of establishing one pad per prospect. It said that two to four wells could be drilled per pad.

The oil and gas company has also found leads on 2D seismic that will be further defined with the 100 square kilometre 3D seismic survey that is now being acquired.

The exploration campaign in the second half of the year will be focused on the Mt. Messenger, Urenui and Moki formations, but with a fully-funded treasury, the company is also looking at opportunities to drill additional wells that may target the deeper Tikorangi and Kapuni formations.

New Zealand Energy controls two permits covering 169,949 net acres in the Taranaki Basin. The company also holds large land positions in the East Coast Basin of North Island, and although under-explored, these basins hold large conventional and non-conventional oil potential.

The company said late last month that since December 10, 2011, it produced 11,623 barrels of oil and sold 9,567 barrels for total revenues of $1.02 million, or $106.83 per barrel sold.

Total recorded gross production revenue was $974,517 after accounting for royalties of $47,492, or $4.96 per barrel sold. No revenues or royalties were seen in the prior year period.

Production costs were $23.44 per barrel, while price amounted to $106.83 per barrel.