Wednesday, 11 April 2012

New Zealand Energy starts production from Copper Moki-2

New Zealand Energy Corp. (CVE:NZ)(OTCQX:NZERF) said Wednesday that it has started production from its Copper Moki-2 well in the Taranaki Basin of New Zealand's North Island.

The Copper Moki-2 well is now producing out of the Mt. Messenger formation roughly 700 barrels of oil per day (bbl/d), and around 850 thousand cubic feet of natural gas per day(mcf/d).

The news follows the company's announcement in late February that it started an extended production test from the Copper Moki-2 well.

Wednesday, the oil and natural gas company said that its Copper Moki-3 well has encountered 12 metres of net pay in the Mt. Messenger formation and 15 metres of net pay in the Moki formation. The company plans to complete and flow test both formations, it added.

New Zealand Energy controls two permits covering 169,949 net acres in the Taranaki Basin. It achieved production in December 2011 from Copper Moki-1, its first discovery well in the Taranaki Basin that has produced more than 62,000 barrels of oil to date since it was first tested last August.

Over the last 30 days, Copper Moki-1 has produced at an average rate of 377 bbl/d and 1,410 mcf/d through a 24/64th inch choke.

Current company production from the Mt. Messenger formation is 1,000 barrels of oil per day and 2,050 mcf/d, with an additional 341 barrels oil equivalent per day of natural gas plus associated liquids to be tied in by the end of the second quarter.

The Copper Moki-1 and Moki-2 wells are producing oil that is trucked to the Shell-operated Omata tank farm and sold at Brent pricing, resulting in a field netback of around US$90 per barrel, the company said.

Natural gas and associated natural gas liquids are currently being flared until the company completes a 2.6 kilometre pipeline and associated production and sales agreements, with the pipeline scheduled for completion by the end of the second quarter.

The company stood by its previous guidance for production of 3,000 barrels of oil equivalent per day by year-end, and also said that its Copper Moki-4 has been drilled to the target depth of 2,125 metres.

Once the drill rig on Copper Moki-4 is removed, a service rig is expected to start completion of the Copper Moki-3 well within the next two weeks. Copper Moki-3 is the first of the company's wells to target the Moki formation, and therefore New Zealand Energy plans to carefully evaluate the characteristics of the formation to guide its exploration strategy for such future targets.

Once the Moki formation is fully evaluated, the company will decide whether the Mt. Messenger formation will be tested in Copper Moki-3, or through an additional well.

Meanwhile, a 100 square kilometre seismic survey is underway across both the company's Eltham and Alton permits in the Taranaki Basin to further define existing targets and identify new ones.

New Zealand Energy previously set aside funds to drill six Mt. Messenger exploration wells in the Taranaki Basin in the second half of the year. Additional details for its 2012 capital program, including plans to accelerate activities, will be released with the company's fourth quarter financial results at the end of April, it said.

The oil and gas company's exploration strategy is to prioritize wells identified on 3D seismic that have well-defined, lower-risk Mt. Messenger targets, coupled with additional exploration potential from the Urenui, Moki or Kapuni formations.

The Taranaki Basin is currently New Zealand's only oil and gas producing basin, generating around 130,000 barrels of oil equivalent per day from 18 fields.

New Zealand Energy's property portfolio collectively covers nearly two million acres of conventional and unconventional prospects in the Taranaki Basin and East Coast Basin of New Zealand's North Island.

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