Monday, 30 April 2012

Stonecap previews New Zealand Energy's FY earnings

Stonecap Securities previewed full-year earnings from New Zealand Energy (CVE:NZ) in a research note.

New Zealand Energy is an oil and natural gas company engaged in the exploration, development and production of petroleum and natural gas assets in New Zealand. NZEC’s property portfolio covers nearly two million acres of conventional and unconventional prospects in the Taranaki Basin and East Coast Basin of New Zealand’s North Island.

"We estimate average production of 500 barrels per day through the end of 2011, with Brent pricing and a $90 netback," Stonecap analyst Amin Haque said.

The capital markets firm has an "Outperform" rating and $3.75 target price on New Zealand Energy.

Since the company had the benefit of production from only one well drilled during 2011 - Copper Moki 1 - there will be
only limited revenue and cash flow in 2011.

The company's Copper Moki 3 and 4 wells are awaiting completion with both wells intersecting multiple formations and are expected to add to production after completion.

New Zealand Energy announced a 10-well drilling program for 2012 and Stonecap's Haque expects to receive more information on the location and target of these wells.

Stonecap said the company is undertaking two seismic shoots in Taranaki and the East Coast basins. It is also constructing a 2.6 km pipeline to tie-in the gas produced at its Copper Moki well.

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