New Zealand Energy Presentation February 2012

February 2012

Forward‐looking Statements

2

This

presentation

contains

forward-looking

information

and

forward‐looking

statements

within

the

meaning

of

applicable

securities

legislation

(collectively

“forward‐looking

statements”).

The

use

of

any

of

the

words

“expand”,

“repeat”,

“increase”,

“unlock”,

“build”,

“de‐risk”,

“target”

and

similar

expressions

are

intended to identify forward‐looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results

or

events

to

differ

materially

from

those

anticipated

in

such

forward‐looking

statements.

The

Corporation

believes

the

expectations

reflected

in

those

forward‐

looking statements are reasonable, but no assurance can be given

that

these

expectations

will

prove

to

be

correct.

Such

forward‐looking

statements

included

in

the

presentation

should

not

be

unduly

relied

upon.

These

statements

speak

only

as

of

the

date

of

the

presentation.

The

presentation

contains

forward‐looking

statements pertaining to the following:

business strategy, strength and focus; the granting of regulatory approvals; the timing for receipt of regulatory approvals;

the

resource

potential

of

the

Properties;

the

estimated

quantity

and

quality

of

the

Corporation’s

oil

and

natural

gas

resources;

projections

of

market

prices

and

costs and the related sensitivity of distributions; supply and demand for oil and natural gas; expectations regarding the ability to raise capital and to continually add

to

resources

through

acquisitions

and

development;

treatment

under

governmental

regulatory

regimes

and

tax

laws,

and

capital

expenditure

programs;

expectations

with

respect

to

the

Corporation’s

future

working

capital

position;

capital

expenditure

programs;

and

abandonment

and

reclamation

costs.

With

respect to forward‐looking statements contained in the presentation, assumptions have been made regarding, among other things: future commodity prices; the

Corporation’s ability to obtain qualified staff and equipment in a timely and cost‐efficient manner; the impact of any changes in New Zealand law; the regulatory

framework governing royalties, taxes and environmental matters in New Zealand and any other jurisdictions in which the Corporation may conduct its business in

the

future;

the

ability

of

the

Corporation's

subsidiaries

to

obtain

subsequent

mining

permits,

access

rights

in

respect

of

land

and

resource

and

environmental

consents;

the

recoverability

of

the

Corporation’s

crude

oil,

natural

gas

and

natural

gas

liquids

resources;

the

applicability

of

technologies

for

recovery

and

production

of

the

Corporation’s

oil,

natural

gas

and

natural

gas

liquids

resources;

the

Corporation’s

future

production

levels;

the

Corporation’s

ability

to

market

crude

oil,

natural

gas

and

natural

gas

liquids

production;

future

development

plans

for

the

Corporation’s

assets

unfolding

as

currently

envisioned;

future

capital

expenditures

to

be

made

by

the

Corporation;

future

cash

flows

from

production

meeting

the

expectations

stated

herein;

future

sources

of

funding

for

the

Corporation’s capital program; the Corporation’s future debt levels; geological and engineering estimates in respect of the Corporation’s resources; the geography

of the areas in

which

the

Corporation

is

exploring;

the

impact

of

increasing

competition

on

the

Corporation;

and

the

Corporation’s

ability

to

obtain

financing

on

acceptable terms, or at all. Actual results could differ materially from those anticipated in

these forward‐looking statements as a result of the risk factors set forth

below

and

elsewhere

in

the

presentation: the

speculative

nature

of

exploration,

appraisal

and

development

of

oil

and

natural

gas

properties;

uncertainties

associated with estimating oil and natural gas resources; changes in the cost of operations, including cots of extracting and delivering oil and natural gas to market,

that affect potential profitability of oil and natural gas exploration; operating hazards and risks inherent in oil and natural gas operations; volatility in market prices

for oil and natural gas; market conditions that prevent the Corporation from raising the funds necessary for exploration and development on acceptable terms or

at all; global financial market events that cause significant volatility

in commodity prices; unexpected costs or liabilities for environmental matters; competition for,

among

other

things,

capital,

acquisitions

of

resources,

skilled

personnel,

and

access

to

equipment

and

services

required

for

exploration,

development

and

production; changes in exchange rates, laws of New Zealand or laws of Canada

affecting foreign trade, taxation and investment; failure to realize the anticipated

benefits of acquisitions; and other factors. Readers are cautioned that the foregoing list of factors is not exhaustive. Statements relating to “resources”

are deemed

to

be

forward‐looking

statements,

as

they

involve

the

implied

assessment,

based

on

certain

estimates

and

assumptions,

that

the

resources

described

can

be

profitably

produced

in

the

future.

The

forward‐looking

statements

contained

in

the

presentation

are

expressly

qualified

by

this

cautionary

statement.

Except

as

required

under

applicable

securities

laws,

the

Corporation

does

not

undertake

or

assume

any

obligation

to

publicly

update

or

revise

any

forward‐looking

statements.

3

ProductionExplorationGrowth

ProductionExplorationGrowth

3

4

Opportunity

Conventional Production•

Copper Moki‐1 produced an average of 500 bbl/d & 860 mcf/d1

between Dec 10,

2011 and Feb 21, 2012

•

Copper Moki‐2 produced 5,318 bbl and 4,158 mcf1

over first 5 days of extended

flow test between Feb 17, 2012 and Feb 21, 2012 >>> ~1,200 boe/d

(88% oil)•

Top‐tier operating netback of ~US$90 per barrel2

High Impact Exploration•

Currently drilling Copper Moki‐3, with Copper Moki‐4 targeted for Q2‐2012 •

Inventory of 3D defined drill‐ready targets: 7 targets identified, up to 4 wells per

target, with potential of up to 1 million bbl recoverable per well

Large Portfolio•

2 million net acres with both conventional and unconventional targets3•

Large prospective resource base: 203 MM bbl conventional, 478 MM bbl

unconventional4,5

Growth•

Expanding portfolio with acquisitions and partnerships•

Using North American technology to unlock production potential of

unconventional resources

1. Marketing of natural gas is subject to completion of a pipeline. 2. Assuming US$110 Brent oil price. NZEC calculates the netback as the oil

sale price less fixed and variable operating costs and a 5% royalty. 3. Approximately 1 million net acres granted across four permits. East

Cape permit, covering 1,067,495 acres, is pending Crown approval. 4. AJM Petroleum Consultants Net Prospective Resource (best estimate).

See Cautionary Note Regarding Resource Estimates. 5. Assumes NZEC completes requirements to earn full 65% interest in Alton Permit.

5

2011 Achievements / 2012 Plan

2011 Achievements

Capture dominant land position in 2 basins in New Zealand

High impact conventional basin and highly prospective shale play

Prove conventional geological model

Production and cash flow

2012 Plan Repeat success in conventional basin Drill up to 10 exploration wells

increase reserves, production

and cash flow Unlock potential of shale resources Target exit rate 3,000 boe/d

6

Corporate Profile

Common Shares Outstanding 100.6 million

Options (Exercisable at $1.03)Advisor Warrants (Exercisable at $1.00)

5.8 million0.7 million

Fully Diluted Shares Outstanding

Market Capitalization (FD) (at Feb 21, 2012)

Working Capital (at Jan 31, 2012)

Insider Ownership (FD)

IPO –

August 2011

52 Week High / LowAverage Volume (last 3 months)

107.1 million

~$290 million

~$14.5 million

~40%

$1.00/share

$2.97 / $0.90~495,000 shares/day

7

Experienced Management Team

John A. GreigChairman, Director

(42 years experience)

Celeste CurranVP, Corporate &

Legal Affairs(23 years experience)

Ian BrownChief Operating

Officer(30 years experience)

D. Kenneth TruscottDirector


Hamish J. CampbellDirector


John G. ProustCEO, Director


Bruce G. McIntyrePresident, Director


Cliff ButchkoSenior VP


Jeff RedmondChief Financial Officer(15 years experience)

Eileen AuCorporate Secretary(10 years experience)

Rhylin BailieVP, Communications

& Investor Relations(16 years experience)

•

3 Geologists•

2 Geophysicists•

2 Logistics Staff•

1 Office Manager

North American experience partnered with New Zealand technical expertise

Celeste CurranVP, Corporate &

Legal Affairs(23 years experience)

Ian BrownChief Operating

Officer(30 years experience)

John G. ProustCEO, Director


Bruce G. McIntyrePresident, Director


Cliff ButchkoSenior VP


Jeff RedmondChief Financial Officer(15 years experience)

Eileen AuCorporate Secretary(10 years experience)

Rhylin BailieVP, Communications

& Investor Relations(16 years experience)

•

3 Geologists•

2 Geophysicists•

2 Logistics Staff•

1 Land Manager

http://en.wikipedia.org/wiki/File:Flag_of_New_Zealand.svg

8

Asset Overview

Permit Working

Interest

Net Acres Prospective

Resource 1

Eltham 100% 92,467 32.1 MM bbl

Alton 65%2 77,482 45.0 MM bbl

Ranui 100% 223,087 40.5 MM bbl

Castlepoint 100% 551,045 208.6 MM bbl

East Cape 3 100% 1,067,495 355.4 MM bbl

Total Acreage 2,011,576

1.

Net Prospective Resource as identified by AJM Petroleum

Consultants (best estimate) assuming 9% recovery

for Eltham

and Alton Permits and 2% recovery for Ranui, Castlepoint and

East Cape Permits.2.

Assumes NZEC completes the requirements to increase its

interest in the Alton permit from 50% to 65%, as per an

agreement with L&M Energy Limited.3.

East Cape permit pending Crown approval.

Eltham Alton

Ranui

Castlepoint

East Cape

ConventionalFocus

Conventional and

UnconventionalTargets

9

Taranaki BasinTaranaki Basin

9

10

Taranaki Basin

•

Proven hydrocarbon

basin producing

~130,000 boe/day from

18 fields

•

2 permits with more

than 33 prospects

•

2D seismic coverage:

60,666 km

•

3D seismic coverage:

5,702 km2

169,949Net acres 1

843 MMBarrels OOIP 1,3

77.1 MMBarrels conventional prospective resource 1,2

1. Assumes NZEC completes the requirements to increase its interest in the Alton permit from 50% to 65%, as per an

agreement with L&M Energy Limited. 2. Net Prospective Resource as identified by AJM Petroleum Consultants (best

estimate) assuming 9% recovery. 3. Net Undiscovered Petroleum Initially in Place (OOIP) as identified by AJM Petroleum

Consultants. See Cautionary Note Regarding Resource Estimates.

11

Taranaki Basin

•

Copper Moki‐1•

Averaged 500 bbl/d + 860 mcf/d1 almost

entirely through a 20/64th

choke (Dec 10,

11 to Feb 21, 12)

•

Produced over 44,000 bbl since August

2011

•

Copper Moki‐2•

Produced 5,318 bbl and 4,158 mcf1

over

5‐day production test through a 24/64th

choke >>> ~1,064 bbl/d + 832 mcf/d1

(Feb 17, 12 to Feb 21, 12)

•

Q1/Q2 ‐

2012•

Drill Copper Moki‐3•

Drill Copper Moki‐4•

Build pipeline to market natural gas

production

•

Shoot 100 km2

of 3D seismic to further

define future drilling inventory

•

Q3/Q4 ‐

2012•

Drill 6 additional conventional wells~20,000 boe/d productionsurrounding NZEC permits

CM‐1 and CM‐2discovery wells x

1. Marketing of natural gas is subject to completion of a pipeline.

12

Top Tier Netbacks

•

Brent pricing environment•

Close to open access infrastructure, tanking facility and natural gas pipeline•

5% royalty converts to 20% of accounting profit post payout

NZEC calculates the netback as the oil sale price less fixed and

variable operating costs

and a 5% royalty.

13

Taranaki Basin –

Exploration Model

•

Identify prospects using

proprietary database and

technical expertise

•

Target Mt. Messenger

formation

•

Explore multi‐zone potential at

minimal incremental cost

•

Continue to expand 3D seismic

database to further delineate

exploration targets and reduce

drilling risk

A

A’

14

Near‐term Copper Moki Focus

A A’Seismic Cross Section Cheal ‐

Copper Moki ‐

Taranaki Thrust Fault Zone

15

Exploration Inventory

•

In addition to its Mt. Messenger focus, NZEC is exploring three secondary

formations over the Eltham and Alton permits: the Urenui, Moki and Kapuni

Primary Formation Leads Wells/Lead Potential Inventory(Wells)

3D defined Mt. Messenger 7 2 -

4 14 -

28

2D defined Mt. Messenger * 12 2 -

4 24 -

48

Total Mt. Messenger 19 38 -

76

* 100 km2

3D seismic survey in 2012 to further delineate exploration targets

16

East Coast BasinEast Coast Basin

16

17

East Coast Basin

•

World‐class resource potential in

multiple shale packages

•

1.4 B bbl conventional OOIP 2

•

20.9 B bbl unconventional OOIP 2

•

2 permits issued, 1 permit

pending 3

•

2D seismic coverage: 14,535 km

•

3D seismic coverage: 1,390 km2

1.8 MNet acres

126 MMBarrels conventionalprospective resource 1

478 MMBarrels unconventional

prospective resource 1

1. Net Prospective Resource as identified by AJM Petroleum Consultants (best estimate) assuming 2% recovery. 2. Net

Undiscovered Petroleum Initially in Place (OOIP) as identified by AJM Petroleum Consultants. See Cautionary Note Regarding

Resource Estimates. 3. East Cape Permit pending Crown approval.

18

East Coast Basin –

Exploration

•

Over 300 oil and gas seeps

sourced back to two shale

formations

•

Advancing technical

understanding of shale targets•

NZEC analyzing results from

three stratigraphic wells

•

NZEC completing 50 km of 2D

seismic in 2012

•

Apache Corp. and TAG Oil

exploring offsetting permits in

Q2‐2012

19

East Coast Basin Shale Potential

Waipawa Whangai Bakken

Basin/Jurisdiction East CoastNew Zealand

East Coast New Zealand

WillesdenNorth Dakota &

Saskatchewan

Quartz Content (%) 40 – 80 40 – 80 40 – 60 Carbonate

Content

(%) 5 – 40 5 – 40 10 – 20

Clay Content (%) Unknown Unknown 5 – 20 Depth (meters) 0 – 5,000 0 – 5,000 2,700 –

3,500Thickness (meters) 10 – 70 300 – 600 10 – 50 Porosity (%) 3 – 8 3 – 8 4 – 12 Permeability (microdarcies) 10 – 200 10 – 110 5 – 1,000Kerogen Type Type II Type II Type IITOC (%) 3.0 – 12.0 0.2 – 1.7 1.0 – 21.0Vit Reflectance (R) 0.3 – 0.4 0.4 – 1.4 0.7 – 1.1Tmax (Celsius) 430 – 445 420 – 445 420 – 450

Geologic Age Late Paleocene Late Cretaceous /

Paleocene Upper Devonian

Source: AJM Petroleum Consultants

•

Cores and open hole logs from three stratigraphic wells will advance NZEC’s understanding of

the shale formations and focus the 2012 East Coast exploration strategy

20

Adding Value in 2012

Taranaki Basin•

Repeat exploration success

•

Achieve long‐term production from Copper Moki‐2•

Drill Copper Moki‐3 and Copper Moki‐4 in H1‐2012

•

Rapidly advance new wells to production using existing facilities•

Establish inventory of 3D‐identified drill‐ready targets to

accelerate exploration programEast Coast Basin•

Analyze shale cores from three stratigraphic wells

advance

exploration strategy, unlock highly prospective shale potential

21

AppendixAppendix

21

22

New Zealand Advantage

•

Proven hydrocarbon systems

with multi‐zone potential•

Brent pricing environment

with top‐tier netbacks•

Favorable royalty and tax

structure•

Proactive Government

approach to exploration and

development•

Established infrastructure

with capacity

23

New Zealand Market for Oil & Gas

New Zealand Market for Oil•

Significant net importer of oil•

Production of ~55,000 bbl/d exclusively from the

Taranaki Basin

•

Current demand is ~150,000 bbl/d

•

Premium pricing environment•

NZEC oil production sold at Brent•

Premium to WTI

New Zealand Market for Gas•

Demand and infrastructure supported 460 million cf/d

of production and sales within domestic marketplace

in 2009

•

Excess demand environment•

Methanex methanol production facility at 40%

capacity, requires additional ~120 million cf/d for

full capacity

Oil Infrastructure

Shell Operated

Export Hub

Source: IEA

24

Management Team

Name Expertise Experience

John G. Proust, C.DirCEO

•

Proven track record of building companies from grass

roots to advanced development. Specializes in

identifying undervalued assets on a global basis

•

Chairman, CEO & Director, Southern Arc Minerals Inc.•

Chairman, Canada Energy Partners Inc.•

Executive Chairman, Superior Mining International Corp.

Bruce G. McIntyre,

P.Geol.President

•

Professional petroleum geologist with over 30 years of

proven exploration and development oriented value

creation

•

President, CEO Sebring Energy Inc.•

President, CEO TriQuest Energy Corp.•

President, CEO BXL Energy Ltd.,•

Exploration Manager Gascan Resources Ltd.

Ian R. Brown, D.Eng

MIPENZChief Operating Officer

•

Professional geological engineer•

Management of technical teams

•

Director, Ian R Brown Associates Ltd since 1985•

Director, Hugh Green Energy Ltd•

Consultant on many resource appraisal and development

projects in New Zealand

Cliff ButchkoP.Eng, MBA (Hon)

Senior VP

•

Professional engineer with over 30 years experience

evaluating and managing oil and gas resources

•

President Omni Oil and Gas Inc.•

Vice President Lexoil Inc.•

Partner and Co‐founder TIFF advisory group•

Senior technical positions in several resource companies

Jeff Redmond, CA Chief Financial Officer

•

Finance, mergers & acquisitions, and taxation•

Public company reporting and assurance

•

Former Director of Finance, acting CFO for Western Coal Corp•

Controller for hi‐tech publicly listed company•

Auditor with KPMG LLP

Celeste M. Curran,

B.A. (Hon), L.L.B.VP Corporate & Legal

Affairs

•

Over 20 years of legal and negotiating experience

specializing in major projects

•

Vice President, Corporate & Legal Affairs, J. Proust & Associates•

Lead counsel for City of Vancouver and City of Richmond for the

2010 Olympic and Paralympic Winter Games•

Senior Solicitor, City of Vancouver

Rhylin Bailie, B.ES.VP Communications &

Investor Relations

•

More than 16 years of experience in the resource

industry, in both finance and investor relations•

Professional writer and editor

•

Director Communications & Investor Relations, NovaGold

Resources Inc.•

Supervisor Treasury Administration, Placer Dome Inc.

25

Board of Directors

Name Expertise Experience

John A. Greig,M.Sc., P.GeoChairman

•

Founder and financier of numerous mining

and oil and gas companies. Specializing in

recognizing undervalued geological assets

• Founder, Director & Officer Sutton Resources, Cumberland

Resources Ltd., Eurozinc Mining Corp., Crown Resources Corp.

John G. Proust, C.Dir.CEO

Director

•

Proven track record of building companies

from grass roots to advanced development.

Specializes in identifying undervalued assets

on a global basis

• Chairman, CEO & Director, Southern Arc Minerals Inc.• Chairman, Canada Energy Partners Inc.• Executive Chairman, Superior Mining International Corp.

Bruce G. McIntyre,

P.Geol.President, Director

•

Professional petroleum geologist with over

30 years of proven exploration and

development oriented value creation

•President, CEO Sebring Energy Inc.• President, CEO TriQuest Energy Corp.• President, CEO BXL Energy Ltd.,• Exploration Manager Gascan Resources Ltd.

D. Kenneth TruscottDirector

•

Senior executive with over 30 years of

corporate development and negotiation

experience in the Canadian oil and gas

industry

• Senior Vice President, Land & Business Development

Crew Energy Inc.• Founder, CEO Morpheus Energy Corp.

Hamish J. CampbellB.Sc. (Geology),

FAusIMMDirector

•

Professional geologist with 30 years of

experience managing exploration programs,

evaluation and assessment of joint ventures

and acquisitions

•Director of a number of New Zealand limited liability mineral

and petroleum companies• Principal Indonesian mining service company• Executive Vice President, Southern Arc Minerals Inc.

26

New Zealand Technical Team

Name Qualifications Expertise

Dr. Ian Brown D. Eng Chief Operating Officer; professional geological engineer

June CahillB.Sc,

B. Applied Econ.Acquisition, management, and analysis of complex geoscience data

Bill LeaskB.Sc (Hons)M.Sc (Hons)

Petroleum geology related to the East Coast and other New Zealand

basins

Dr. Simon WardB.Sc (Hons)

Ph.DPetroleum geology related to the Taranaki and other New Zealand basins

Ian Calman B.Sc (Hons) Seismic data acquisition, processing, and interpretation

Sam PrydeB.Sc

Post. Grad. Dip.Geological investigations in the East Coast basin area

Peter WoodB.E, B.Sc (Hons)M.Sc (Hons)

Management and development of computing resources for geoscience

applications

Toka WaldenSenior Manager,

New Zealand Dept.

Conservation

Negotiating access provisions and facilitating resource consent process,

assisting with community relationship building

27

Cautionary Note Regarding Resource Estimates

A prospective resource is defined as those quantities of petroleum estimated, as of a given date,

to

be

potentially

recoverable

from

undiscovered

accumulations

by

application

of

future

development projects. Prospective resources have both an associated chance of discovery and a

chance

of

development.

Prospective

resources

are

further

subdivided

in

accordance

with

the

level

of

certainty

associated

with

recoverable

estimates

assuming

their

discovery

and

development

and

may

be

sub�classified

based

on

project

maturity.

There

is

no

certainty

that

any portion of the resources will be discovered. If discovered, there is no certainty that it will be

commercially viable to produce any portion of the resources.

28

Contact NZEC

Corporate Head OfficeJohn Proust, Chief Executive Officer

Bruce McIntyre, President

NA Toll‐free: 1‐855‐601‐2010

[email protected]

New Zealand OfficeIan Brown, Chief Operating Officer

Tel: + 64‐4‐471‐1464

NZ Toll‐free: 0800‐469‐363

www.NewZealandEnergy.com

New Zealand Energy Presentation February 2012

Investor Relations

Transcript of New Zealand Energy Presentation February 2012