Mr. John Proust reports

NEW ZEALAND ENERGY ANNOUNCES SECOND QUARTER RESULTS AND OPERATIONAL UPDATE

New Zealand Energy Corp. has released the results of its second quarter ended June 30, 2014. Details of the company's financial results are described in the unaudited consolidated interim financial statements and management's discussion and analysis which, together with further details on the company's operational activities, are available on the company's website and on SEDAR.

Highlights:

• Significantly improved netback of $65.30 per barrel of oil during the second quarter of 2014, compared to $62.33 per barrel in the first quarter of 2014 and $22.46 per barrel during the same three-month period in 2013;
• 19,066 barrels produced and 20,390 barrels sold during the second quarter of 2014 (second quarter of 2013: 18,573 and 21,958, respectively);
• Average corporate production during the second quarter of 2014: 228 barrels per day (net to New Zealand Energy);
• Total oil sales recorded during the second quarter of 2014 of $2,723,830 (second quarter of 2013: $2,216,815), including $313,425 of sales on behalf of JV partner;
• Generated first natural gas sales ($42,043) during the second quarter of 2014;
• Generated approximately $1.3-million of year-to-date third party revenue (net to New Zealand Energy) through 50-per-cent interest in the Waihapa production station (2013: nil);
• New arrangement with gas marketing counterparty commenced May 5, 2014, expected to generate between $250,000 (New Zealand) and $1-million (New Zealand) revenue per year (net to New Zealand Energy);
• Realized total net proceeds of approximately $1.76-million (New Zealand) through disposal of non-core assets.

                                            FINANCIAL SNAPSHOT

                                        Quarter ended       Quarter ended      Quarter ended 
                                        June 30, 2014      March 31, 2014      June 30, 2013 

Production                                 19,066 bbl          19,682 bbl         18,573 bbl
Sales                                      20,390 bbl          17,630 bbl         21,958 bbl
Price                                    118.22 $/bbl        119.15 $/bbl       100.96 $/bbl
Production costs                          43.38 $/bbl         44.25 $/bbl        73.62 $/bbl
Royalties                                  9.53 $/bbl         12.57 $/bbl         4.88 $/bbl
Field netback                             65.30 $/bbl         62.33 $/bbl        22.46 $/bbl
Revenue                               $     3,232,706    $      6,320,949    $     2,109,700
                                      ----------------   -----------------   ----------------
Total comprehensive (loss) income     $   (13,071,198)   $      8,452,444    $    (6,000,775)
                                      ================   =================   ================
Finance expense                       $        82,103    $         69,854    $       101,826
(Loss) per share -- basic and diluted           (0.06)              (0.01)             (0.02)

Property review and outlook

Taranaki basin

Within the Taranaki basin, New Zealand Energy holds a 100-per-cent interest in the Copper Moki permit, a 100-per-cent interest in the Eltham permit, a 65-per-cent interest in the Alton permit with L&M, and a 50-per-cent interest in the TWN licences and the TWN assets with L&M. New Zealand Energy's net Taranaki acreage totals 97,630 acres (395 square kilometres), of which approximately 6,055 acres are offshore. The Taranaki basin offers production potential from multiple prospective formations, ranging from the Kapuni sandstones at a depth of approximately 4,000 metres, the Tikorangi limestones at approximately 3,000 metres, the Moki sandstones at approximately 2,500 metres, and the shallower Mt. Messenger and Urenui sandstones at approximately 2,000 metres. All of New Zealand Energy's production to date is from the Tikorangi and Mt. Messenger formations.

Total corporate production during the first six months of 2014 averaged 214 barrels per day net to New Zealand Energy. Total corporate production during the second quarter averaged 228 barrels per day in April, 201 barrels per day in May and 231 barrels per day in June. Production in July averaged 202 barrels per day, with a small increase in August (up to Aug. 29) for an average of 205 barrels per day net to New Zealand Energy. Production fluctuations month to month are largely the result of optimization efforts on the TWN licences. The TWN wells (with the exception of Toko-2B, which is on high-volume lift) are now operating on a rest and recovery mode rotation, which is intended to optimize production by allowing wells to build up pressure during the rest period and then yield flush production. The TWN joint arrangement (the 50/50 New Zealand Energy/L&M Energy partnership that owns the TWN licences) is currently running well gradient surveys on all of the reactivated wells to help determine the optimum flow period for each well. Production from three of the Copper Moki permit wells has remained very stable year to date. The fourth well, Copper Moki-3, has been shut in since early March and will remain shut in until a revised artificial lifting system has been evaluated to deal with the sand accumulation in this highly deviated well.

TWN licences

New Zealand Energy and L&M formed the TWN JA, with New Zealand Energy as the operator, to explore and develop the TWN licences and operate the Waihapa production station and associated infrastructure. At the date hereof, the TWN JA had advanced eight wells to production on the TWN licences for a total of 57,826 barrels produced since closing of the TWN acquisition (28,913 barrels net to New Zealand Energy), with cumulative pretax oil sales net to New Zealand Energy of approximately $3.1-million. All of the wells produce light approximately 41-degree-API oil that is delivered by pipeline to the Waihapa production station and then piped to the Shell-operated Omata tank farm in New Plymouth, where it is sold at Brent pricing less standard Shell costs.

The TWN JA is focused on optimizing production from its wells. As part of the optimization process, in April, 2014, the TWN JA installed high-volume lift on the Toko-2B well. Toko-2B was chosen as the first well for ESP installation because the well had a high oil cut of approximately 20 per cent, but had to be shut in every few days to allow the company to unload a water column that would build up in the well. The TWN JA expected that an ESP would allow the well to be produced continuously and would maximize oil recovery. The ESP was operated initially using a portable generator, which limited the pumping capacity and did not adequately draw down fluid levels in the well. In May, 2014, the TWN JA connected the Toko-2B ESP to a permanent power source and has increased pumping to the rate of 9,000 barrels of oil equivalent per day. While the well is still pumping through a high water load and oil production has not reached anticipated levels, the TWN JA is hopeful that continual pumping of the well will draw down the reservoir pressure sufficiently to draw oil into the well, which should allow the oil cut to increase over time.

A number of wells on the TWN licences, with previous production from the Tikorangi formation, have uphole completion potential in the shallower Mt. Messenger formation. The TWN JA recompleted one well uphole in the Mt. Messenger formation (Waihapa-2) and achieved production from that well in April, 2014. This successful recompletion confirmed that production can be achieved from an uphole reservoir. After just eight days of production, however, sand was drawn into the pump and the well has been shut in since that time awaiting installation of a different artificial lift system. The TWN JA has determined that jet pump is the appropriate lift for this well, since jet pump would enable any unconsolidated sand around the well bore to be produced to surface, thus reducing the potential to sand up the well. The TWN JA appointed an engineering firm to design and prepare a cost estimate for the installation of surface jet pumping facilities, and expects to make its final investment decision shortly. If approved in the third quarter of 2014, the well could be brought on production in the fourth quarter of 2014. New Zealand Energy expects that the well will be recompleted with dual packers to segregate the upper and lower Mt. Messenger zones. This will allow the zones to be tested both separately and collectively, providing production flexibility and allowing the TWN JA to gain valuable information about both Mt. Messenger zones.

The TWN JA has identified four additional production opportunities in existing wells on the TWN licences, along with numerous new 3-D drill targets in the Mt. Messenger, Moki, Tikorangi and Kapuni formations. The company's ability to drill new exploration wells is contingent on its financial capacity, as discussed above.

The TWN JA continues to identify opportunities to generate revenue from the Waihapa production station and associated infrastructure. Third party revenue from the Waihapa production station since closing the TWN acquisition totals approximately $1,383,528 net to New Zealand Energy. In addition, during February, 2014, the TWN JA entered into an agreement with a gas marketing counterparty to transport gas along a section of the TAW gas pipeline for a term of four years with a five-year right of renewal. The arrangement is expected to generate between $250,000 (New Zealand) and $1-million (New Zealand) revenue per year (net to New Zealand Energy). First gas commenced flowing on May 5, 2014, with revenue earned since that date being applied as the TWN JA's contribution to the capital cost originally incurred by the counterparty. The TWN JA expects that its capital contribution will be paid up by the end of August, 2014, from which point forward the TWN JA will receive the proceeds from the revenue associated with this arrangement.

Eltham permit and Copper Moki permit

To date the company has drilled ten exploration wells on its 100-per-cent-owned Eltham and Copper Moki permits. Four have been advanced to production. Of the 10 wells drilled, only one well (Wairere-1) failed to encounter hydrocarbons and was immediately sidetracked. One well (Copper Moki-4) made an oil discovery in the Urenui formation and has been shut in pending additional economic analysis and evaluation of artificial lift options. Wairere-1A was drilled to the Mt. Messenger formation and encountered hydrocarbon shows, with completion pending. Arakamu-2 made an oil discovery in the Mt. Messenger formation and has been shut in pending evaluation of artificial lift options. Waitapu-1 is shut in pending further testing or sidetrack to an alternate target and Arakamu-1A, a Moki formation well, is suspended pending further evaluation. The company continues to assess these opportunities as new reservoir data become available from the company's activities on the TWN licences.

New Zealand Energy is actively seeking farm-in partnerships to allow the company to accelerate exploration of additional high-priority drill targets on the Eltham permit.

At the date hereof, the company has produced approximately 275,323 barrels from its Copper Moki permit wells (including oil produced during testing), with cumulative pretax oil sales from inception of approximately $29.7-million. Production from the Copper Moki wells has been very stable year to date, with virtually no decline in production rates during the first six months of 2014. All of the Copper Moki permit wells produce light approximately 41-degree-API oil from the Mt. Messenger formation. Oil is trucked to the Shell-operated Omata tank farm in New Plymouth and sold at Brent pricing less standard Shell costs.

During January, 2014, New Zealand Energy began delivering natural gas produced from wells on the Copper Moki site through a pipeline to the Waihapa production station, where it is blended with gas produced from the TWN licences and used by the TWN partnership to lift the TWN JA reactivated wells and run the Waihapa production station compressors. Using internally generated gas for these activities, rather than purchasing it, has significantly reduced operating costs at the Waihapa production station and brought modest natural gas revenue to the company. In addition, subsequent to the period-end New Zealand Energy has sold approximately six terajoules of Copper Moki natural gas production to a third party.

Alton permit

During 2014, the company plans to drill a new exploration well on the Alton permit. The current work program for the Alton permit requires the company to drill an exploration well by Nov. 22, 2014. The company has identified a drill target in the Mt. Messenger formation and has received all necessary resource and land access consents required to drill the well. However, certain conditions associated with the consents have prompted the company to lodge an appeal for mediation. In order to allow time for the appeal and anticipated mediation, New Zealand Energy has requested an extension to the drill date to at least the first quarter of 2015. New Zealand Energy is actively seeking farm-in partnerships to allow the company to accelerate exploration of additional high-priority drill targets on the Alton permit.

Manaia permit

The company announced on May 1, 2014, that it had relinquished its interest in the early stage Manaia permit, in the Taranaki basin, in order to focus on exploration and development opportunities with the potential to more rapidly yield additional production and cash flow for the company.

East Coast basin

The East Coast basin of New Zealand's North Island hosts two prospective oil shale formations, the Waipawa and Whangai, which are believed to be the source of more than 300 oil and gas seeps. Within the East Coast basin, New Zealand Energy holds a 100-per-cent interest in the East Cape permit which covers approximately 1,048,406 onshore acres (4,243 square kilometres) on the northeast tip of the North Island. The company anticipates completing fieldwork and geochemical studies on the East Cape permit in 2014. New Zealand Energy is also actively seeking a farm-in partner to participate in and finance exploration and development in return for an interest in the permit.

The company announced on June 23, 2014, that it had relinquished its interests in the Castlepoint and Wairoa permits in the East Coast basin, reducing its work program commitments by $13.9-million for 2014 and $54.3-million over the life of the relinquished permits. The work previously undertaken by the company on these permits has yielded significant technical information and insight into the Waipawa Black shale, which will guide the company's exploration strategy on the East Cape permit. In addition, New Zealand Energy's community engagement activities have allowed the company to build strong relationships with regulators, landowners and iwi communities in the East Coast basin.

We seek Safe Harbor.