Mr. Ketan Chhima reports

NEW ZEALAND ENERGY ANNOUNCES SHARE CONSOLIDATION PRIVATE PLACEMENT AND TARIKI-5 DEVELOPMENT

New Zealand Energy Corp. has released management's discussion regarding its recent share consolidation and its announced private placement and to provide information and an update concerning the status of the proposed Tariki-5 drilling.

All amounts are in New Zealand dollars unless otherwise stated.

New Zealand Energy's shares are listed on the TSX Venture Exchange under the symbol NZ. Additional information is available on SEDAR+ and on the company's website.

New Zealand Energy's business

New Zealand Energy, through its subsidiaries, is engaged in the production of and exploration for oil and natural gas, as well as the operation of mid-stream assets, in New Zealand. The company's assets are located on New Zealand's North Island in the Taranaki basin, New Zealand's only commercial oil- and gas-producing area.

Background

New Zealand Energy is the operator of three petroleum mining licences, one petroleum mining permit and one petroleum exploration permit in each of which it has an interest. It holds a 50-per-cent interest in PML 38138 (Tariki licence), PML 38140 (Waihapa licence) and PML 38141 (Ngaere licence). L&M Energy Ltd. holds the remaining 50 per cent.

New Zealand Energy has a 100-per-cent interest in PMP 55491 (Copper Moki PMP) and PEP 51150 (the Eltham permit).

New Zealand Energy holds a 50-per-cent working interest (with New Dawn Energy Ltd.) in, and is operator of, the Waihapa production station and associated gathering and sales infrastructure, providing a range of services to its own operated assets and to third parties, oil-handling and pipeline throughput, gas processing and transport, liquefied petroleum gas storage and produced water-handling and disposal.

The following provides a recap of the Tariki history, excerpts from the RPS Energy Canada Ltd. reserves report dated Oct. 29, 2022, and updates on the drilling of a new well in the Tariki permit named Tariki-5.

The Tariki field was discovered in 1986 with the drilling of the Tariki-1A well. Additional drilling was undertaken in 1987 and 1988. Production commenced after the Tariki-4A well was drilled in 1995. The Tariki-1A well produced at a restricted rate of approximately 20 million standard cubic feet per day until 2002, when production began to decline. The well continued to produce at decreasing rates until the reservoir pressure declined to the point where the well could no longer lift liquids in 2008 (approximately 500 pounds per square inch). Minor amounts of production have come from the Tariki-4A and Tariki-D1 wells. There has been no material production from the field since 2008; however, continued pressure monitoring has shown that the reservoir pressure has been increasing since production ceased and is currently approximately 3,000 pounds per square inch, indicating a weak but extensive aquifer. Over 50 billion standard cubic feet have been produced to date from the field.

Tariki-1A was opened to flow, and a production log was run in September, 2022, utilizing compressed natural gas for artificial lift. No meaningful conclusion could be drawn from this test. While it may be possible to recover incremental volumes using the existing Tariki-1A well, the combination of extensive perforations in that well and unknown condition of the casing led New Zealand Energy to consider that there is less risk if a new well is drilled. RPS, which undertook the Tariki petroleum reserves evaluation, is in agreement with this approach.

New Zealand Energy, after completing additional 3-D seismic, geology and engineering work, is planning to drill a new development well (Tariki-5) at the crest of the Tariki reservoir to recover the remaining reserves in the field. Undeveloped reserves have been assigned by RPS to the planned reactivation of the field.

Remaining gas in place is evaluated at between 17 billion and 20 billion standard cubic feet (100 per cent), of which RPS has determined the economically recoverable reserves for each reserve case scenario net to New Zealand Energy (50 per cent) on both a before- and an after-tax basis from drilling of a crestal new well as summarized in the attached table. RPS modelled $50-million as tax pools to offset the majority of future tax liabilities. The company's New Zealand tax losses exceed $100-million.

The drilling program and design documentation for Tariki-5 have been completed, and an independent well examiner has issued a drilling design certificate. All regulatory consents are in place for the well drilling.

The net proceeds from the private placement will be used to procure long-lead items for the Tarki-5 well and to finance working capital. Discussions with the rig contractor are continuing, and a drilling unit can be available for contract in first quarter 2024.

The well is designed to test the intermediate fractured Tikorangi limestone formation en route to the target overthrust Tariki sandstone reservoir. The Tikorangi formation, from which over 24 million barrels of oil has been produced at the nearby Waihapa/Ngaere fields held and operated by New Zealand Energy, is also present in the Tariki permit. The Tariki-2C well produced over 180,000 barrels of oil from the Tikorangi formation -- a fractured limestone. The new seismic data indicate the Tariki-2C well penetrated the Tikorangi formation approximately 200 metres downdip from the crest of the structure, suggesting the potential for recoverable oil at the top of the structure. Further penetration and tests were conducted in Kupara-1 and Kupara-1A, which each tested oil at low rates.

Assessing the likely quantities of any oil in the Tikorangi formation is inherently difficult as oil quantities require information about the nature and extent of the fracturing within the host rocks. A production test will be performed in Tariki-5 using coiled tubing and N2 for artificial lift if required.

The target overthrust Tariki sandstone will then be drilled and cased in a crestal location mapped about 20 metres updip of the Tariki-1A well. The well is forecast to be capable of producing at rates over 20 million standard cubic feet per day with associated condensate. As advised in the company's release of Oct. 24, 2023, New Zealand Energy is advancing discussions with one or more gas purchasers interested in acquiring Tariki gas in the ground from the joint venture to finance the development well. This development well is planned thereafter to be used as the primary injector/producer for a gas storage development.

Share consolidation, common shares on issue and private placement

On Oct. 20, 2023, the company consolidated its shares on a one-for-10 basis.

Following this consolidation, as of the date of this discussion, the company's had 2,321,235 common shares on issue, with no warrants and no share options on issue.

On Oct. 24, 2023, the company announced its intention to complete a non-brokered private placement offering up to six million common shares of the company at a price of 38 Canadian cents per share for gross proceeds of up to $2.28-million (Canadian).

The net proceeds from the private placement will be used to procure long-lead items for the Tarki-5 well and to finance working capital. To further finance the Tariki-5 well, New Zealand Energy will advance discussions with one or more gas purchasers interested in acquiring Tariki gas in the ground.

New Zealand Energy will aim to close the private placement on or about Nov. 14, 2023.

The private placement is subject to regulatory approval, including approval of the TSX Venture Exchange. All securities issued in connection with the private placement will be subject to a hold period of four months plus one day from the date of closing.

Shareholders or investors who may wish to participate in the private placement and who seek further details about the offering should contact the company secretary Ketan Chhima at kchhima@newzealandenergy.com.

We seek Safe Harbor.