Please see the latest form 51-101F1 reserves report filed on the System for Electronic Document Analysis and Retrieval (SEDAR) for the resource potential of the Taranaki Basin permits.
The Taranaki Basin offers an excellent opportunity to add substantial reserves and production in an environment of relatively low technical risks with established oil and natural gas infrastructure. NZEC holds and is operator on two large permits, Eltham (100%) and Alton (65%), and in October 2013 acquired a 50% interest and became operator of a full-cycle production station and an additional 23,049 acres across three Petroleum Mining Licenses ("TWN Licenses"), in a 50/50 joint arrangement with L&M Energy. All of NZEC's Taranaki Basin permits are on trend with the main production fairway and directly offset known production and reserves.
The Company’s near-term objective is to increase production and cash flow while reducing corporate expenses. To achieve this objective, NZEC is focused on production and exploration opportunities on its petroleum mining licenses. The Tariki, Waihapa and Ngaere petroleum licenses (collectively the "TWN Licenses") have a history of production, with 27 wells drilled by previous operators and more than 23 million barrels of oil produced historically from the Tikorangi formation. NZEC's review of seismic and well log data, which was corroborated independently by Deloitte LLP, identified remaining oil reserves that could be accessed from existing wells. Immediately upon closing the acquisition, NZEC reactivated oil production in six wells using an existing gas lift system. NZEC continues to identify additional production opportunities from existing wells and had advanced nine wells on the TWN Licenses to production by the end of Q2-2014. NZEC is also advancing a number of new commercial opportunities to use the Waihapa Production Station to its full potential and maximize facility revenues, while ensuring that NZEC’s gas and associated natural gas liquids production can be efficiently delivered to market.
Next steps on the TWN Licenses include installing high volume pumps on producing wells to increase daily production, and re-entering a number of existing wells to recomplete in the shallower Mt. Messenger formation. Recompletion of these wells should be significantly less expensive and faster than drilling new wells, and successful discoveries could be tied in to the Waihapa Production Station using existing oil and gas gathering pipelines. The Company also plans to drill a Mt. Messenger well on the Alton Permit in 2015, and expects to drill new Tikorangi and Mt. Messenger targets on the TWN Licenses in future exploration programs, prioritizing targets that can be accessed from existing drill pads with surface infrastructure.