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New Zealand Energy Forms Joint Venture with L&M Energy to Explore and Operate TWN Licenses and Waihapa Production Station, Secures $18.25 Million Toward Acquisition of Assets from Origin Energy

July 30, 2013

New Zealand Energy Corp. (TSX-V:NZ, OTCQX:NZERF) ("NZEC" or the "Company") has signed a binding Letter Agreement with L&M Energy Limited ("LME") whereby LME will pay NZEC C$18.25 million to form a 50/50 joint venture ("TWN Joint Venture") to explore, develop and operate the Tariki, Waihapa and Ngaere Petroleum Mining Licenses ("TWN Licenses"), the Waihapa Production Station and associated pipelines and infrastructure. The parties intend to finalize the definitive agreements shortly with the objective of closing the transaction contemporaneously with closing of the acquisition of the assets from Origin Energy Resources NZ (TAWN) Ltd. ("Origin") (the "Waihapa Assets Acquisition"). NZEC will become the operator of the TWN Licenses and the Waihapa Production Station. Decisions regarding exploration, development and operations of the Waihapa Assets will be made by management committees with equal representation from both companies.

NZEC believes the Waihapa Assets Acquisition and TWN Joint Venture will provide significant benefit to its shareholders, transforming NZEC into a fully integrated upstream/midstream company with the cash flow, infrastructure and inventory to support long-term growth. Closing the two transactions will bring a number of near-term catalysts and longer-term benefits to NZEC:

  • Immediately increase NZEC's reserves by 150% with the addition of 1.07 million boe of Proven plus Probable Reserves with a before tax net present value (10% discount) of $31.4 million(1)
  • Immediate production and cash flow with reactivation of six existing Tikorangi wells using existing gas lift system, with subsequent production increases from installation of high volume lift
  • Near-term production and cash flow growth potential with new Tikorangi wells and uphole Mt. Messenger completions in existing wells
  • Access to exploration targets in deeper, high-impact prospects
  • Large inventory of development opportunities across multiple horizons
  • High-capacity full-cycle production facility central to NZEC's portfolio of exploration and development opportunities
  • Optimization of NZEC's existing Taranaki exploration and production portfolio

"L&M Energy's $18.25 million investment is a significant show of confidence in NZEC's exploration and development plans for the TWN Licenses and Waihapa Production Station," said John Proust, Chief Executive Officer and Director of NZEC. "LME has been exploring and operating in New Zealand since 1969 and brings financial strength combined with business and technical expertise to the joint venture.

"With the $18.25 million purchase commitment from L&M Energy, NZEC is continuing to pursue a number of strategic options to fund the remaining $12 million required to close the acquisition of assets from Origin and add to existing working capital," continued Mr. Proust. "NZEC has developed an exploration and development program for the TWN Licenses, to be funded 50% by L&M Energy as an equal partner, which will bring both immediate value and long-term growth to the Company. We look forward to closing the acquisition of assets from Origin and executing our development strategy for the benefit of our partners and shareholders."

LME will pay NZEC $18.25 million, comprising half of the purchase price for the Waihapa Assets plus half of NZEC's costs incurred to date. Closing the TWN Joint Venture is subject to government and regulatory approvals, obtaining the additional funding and the closing of the Sale and Purchase Agreement with Origin, as announced by NZEC on June 17, 2013. Once the conditions precedent have been met and both the TWN Joint Venture and the Waihapa Assets Acquisition are complete, NZEC and LME will each own 50% of the TWN Licenses comprising 23,049 acres in the Taranaki Basin of New Zealand's North Island. NZEC and LME will also each hold a 50% interest in the Waihapa Production Station and associated oil and gas gathering and sales pipelines and other infrastructure associated with the TWN Licenses and the Waihapa Production Station.

"I have been watching this transaction unfold with interest," said Geoff Loudon , owner of LME. "I have long believed that the TWN Licenses and infrastructure hold great potential, both from an exploration perspective and with the strategic marketing and business opportunities presented by the Waihapa Production Station. I look forward to unlocking the value of these assets in partnership with NZEC."

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 2.25 million acres (including permits and acquisitions pending) 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. 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 www.newzealandenergy.com or by emailing info@newzealandenergy.com.

About L&M Energy and Geoff Loudon

Mr. Loudon is a New Zealand based international investor with family roots going back to the Hokitika, NZ gold fields in 1875. He was the former Chairman of L&M Energy (ASX, NZX) and completed a NZ$48 million takeover bid for LME in January 2013 through his privately owned company, New Dawn Energy Limited. L&M Energy holds a number of petroleum exploration permits on the North and South Islands of New Zealand, including a 35% interest in NZEC's Alton Permit. Mr. Loudon is Chairman of Nautilus Minerals Inc. (TSX), a Canadian based seabed minerals exploration company; a founding director from 1995 to 2010 of Lihir Gold Limited (ASX, TSX, NASDAQ), a PNG gold miner; and a founder and investor in Peru Copper Inc. (TSX, AMEX). He is a mining professional with qualifications in geology, engineering and international finance and is a Fellow of the Australasian Institute of Mining & Metallurgy (AIMM), a Member of the Canadian Institute of Mining (CIM) and a Member of the American Institute of Mining Engineers (AIME).

Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-looking Information

This document contains certain 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 "will", "intend", "objective", "become", "transforming", "potential", "continuing", "pursue", "subject to", "look forward", "unlocking" 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.

Such forward-looking statements should not be unduly relied upon. The Company 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. This document contains forward-looking statements and assumptions pertaining to the following: business strategy, strength and focus; the granting of regulatory approvals; the timing for receipt of regulatory approvals; geological and engineering estimates relating to the resource potential of the properties; the estimated quantity and quality of the Company's oil and natural gas resources; supply and demand for oil and natural gas and the Company's ability to market crude oil, natural gas and; expectations regarding the ability to raise capital and to continually add to reserves and resources through acquisitions and development; the Company's ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the ability of the Company to obtain the necessary approvals and secure the necessary financing to conclude the acquisition of assets from Origin on schedule, or at all; the ability of the Company to obtain the necessary approvals to conclude the TWN Joint Venture on schedule, or at all; the ability of the Company's subsidiaries to obtain mining permits and access rights in respect of land and resource and environmental consents; the recoverability of the Company's crude oil, natural gas reserves and resources; and future capital expenditures to be made by the Company. 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 document, such as 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 costs 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 Company 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 "reserves and 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 document are expressly qualified by this cautionary statement. These statements speak only as of the date of this document and the Company does not undertake to update any forward-looking statements that are contained in this document, except in accordance with applicable securities laws.

Cautionary Note Regarding Reserve and Resource Estimates

The oil and gas reserve and resource calculations and net present value projections were estimated in accordance with the Canadian Oil and Gas Evaluation Handbook ("COGEH") and National Instrument 51-101 ("NI 51-101"). The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf: one bbl was used by NZEC. This conversion ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on: the analysis of drilling, geological, geophysical, and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are classified according to the degree of certainty associated with the estimates. Proved Reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable Reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Revenue projections presented are based in part on forecasts of market prices, current exchange rates, inflation, market demand and government policy which are subject to uncertainties and may in future differ materially from the forecasts above. Present values of future net revenues do not necessarily represent the fair market value of the reserves evaluated. Information concerning reserves may also be deemed to be forward looking as estimates imply that the reserves described can be profitably produced in the future. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause the actual results to differ from those anticipated. Contingent resources are those quantities of oil and gas estimated on a given date to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters, or a lack of markets. Prospective resources are those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. The resources reported are estimates only and there is no certainty that any portion of the reported resources will be discovered and that, if discovered, it will be economically viable or technically feasible to produce.

(1) Reserves estimated by Deloitte LLP with an effective date of April 30, 2013. See NZEC press release dated June 17, 2013 and Cautionary Note Regarding Reserve and Resource Estimates.


About New Zealand Energy Corp.

NZEC is a publicly-traded company (TSX-V:NZ) focused on the production and exploration of oil and natural gas prospects in New Zealand.

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