New Zealand Energy Announces Second Quarter Financial Results

New Zealand Energy Corp. ("NZEC" or the "Company") (TSX
VENTURE:NZ)(OTCQX:NZERF), has released the results of its second quarter ended
June 30, 2012. Details of the Company's financial results are described in the
Unaudited Consolidated Financial Statements and Management's Discussion and
Analysis which, together with further details on each of the Company's projects,
are available on the Company's website at www.newzealandenergy.com and on SEDAR
at www.sedar.com. All amounts are in Canadian dollars unless otherwise stated.


HIGHLIGHTS



--  Entered into binding agreement to acquire strategic upstream and
    midstream assets 
--  Strengthened management team 
--  55,226 barrels of oil produced and 58,952 barrels of oil sold in Q2-2012
--  95,078 barrels of oil produced and 93,611 barrels of oil sold year to
    date 
--  Generated positive cash flow from production in Q2-2012 of $5.4 million
    resulting from netbacks of US$78.12/bbl 
--  Generated positive cash flow year to date of $9.9 million with an
    average netback of US$82.71/bbl 
--  Average production in August of 672 barrels of oil equivalent per day(1)
--  Strong balance sheet with $43.8 million of cash and cash equivalents as
    at August 28, 2012 
--  Received indicative term sheet from preferred lender to establish credit
    facility



FINANCIAL SNAPSHOT 



---------------------------------------------------------------------------
                          For the three    For the three       For the year
                           months ended     months ended              ended
                          June 30, 2012   March 31, 2012  December 31, 2011
---------------------------------------------------------------------------
Production                 55,226 bbl(i)    39,852 bbl(i)      11,623 bbl(i)
Sales                        58,952 bbl       34,659 bbl          9,567 bbl
---------------------------------------------------------------------------
Price                      105.28 $/bbl     117.94 $/bbl       106.83 $/bbl
Production costs            22.14 $/bbl      22.25 $/bbl        23.44 $/bbl
Royalties                    5.02 $/bbl       5.16 $/bbl         4.96 $/bbl
Field netback               78.12 $/bbl      90.53 $/bbl        78.43 $/bbl
---------------------------------------------------------------------------
Revenue                   $   5,910,993    $   3,908,683        $   974,517
Preproduction                   
 recoveries                     759,280        1,351,630            950,440
Total comprehensive             
 income (loss)                1,317,915          799,032         (6,655,829)
Interest income                 140,315           18,311            119,583
Earnings (loss) per share
 - basic                           0.01             0.00              (0.08)
Earnings (loss) per share
 - diluted                         0.01             0.00              (0.08)
Current assets               59,205,659       76,167,931         19,293,345
Total assets                 98,814,102       96,979,923         31,152,804
Total liabilities             5,737,495        6,017,299          1,383,376
Shareholders' equity         93,076,607       90,962,624         29,769,428
---------------------------------------------------------------------------



(1) Barrels of oil equivalent (BOE) may be misleading, particularly if used in
isolation. A BOE conversion ratio of 6 Mcf:1bbl is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.

(i) The abbreviation bbl means barrel or barrels of oil.

During the six-month period ended June 30, 2012, the Corporation produced 95,078
barrels of oil and sold 93,611 barrels from Copper Moki-1 and Copper Moki-2.
Copper Moki-3 flowed 7,456 barrels and 4,765 thousand cubic feet ("Mcf")(2) of
natural gas during production testing in the second quarter and commenced
continuous production on July 2, 2012. Preproduction revenue generated during
the start-up and testing phase of the well was treated as a cost recovery of the
capitalized well development costs. Total recoveries on the oil produced and
sold during the start-up and testing phase of Copper Moki-3 amounted to
$759,280, or $101.83 per barrel.


The aggregate volume of oil produced during the six-month period ended June 30,
2012, including production testing of Copper Moki-2 and Copper Moki-3, was
115,403 barrels with 115,968 barrels sold, taking into consideration the opening
period inventory balances, resulting in positive cash flow from operations of
$9,853,825.


At August 28, 2012, the Corporation had $43.8 million in cash and cash equivalents.

(2) Natural gas and associated natural gas liquids are currently being flared
until the well can be tied into NZEC's natural gas pipeline.


RECENT TRANSACTIONS

In May 2012, the Corporation entered into a binding agreement (the "Origin
Agreement") with Origin Energy Resources NZ (TAWN) Limited, a wholly-owned
subsidiary of Origin Energy Limited (collectively "Origin") to acquire upstream
and midstream assets (the "Acquisition"). These assets include four Petroleum
Mining Licenses totalling 26,907 acres (the "Petroleum Licenses") as well as the
Waihapa Production Station and associated gathering and sales infrastructure. 


Under the terms of the Origin Agreement, and pursuant to an exclusive
arrangement, the Corporation has agreed to pay Origin consideration in the
amount of $42 million in cash, payable in the US$ equivalent at a fixed C$/US$
exchange rate of 1.0349, and such other adjustments as may be required at
closing. A $5 million non-refundable deposit was paid with the remainder due on
closing, which is anticipated to occur in Q4-2012. Closing of the Acquisition is
contingent on receiving government approvals, Origin completing the current
recommissioning of the TAWN LPG extraction facility, Origin and/or NZEC entering
into an agreement with Contact Energy regarding ongoing operation of Contact's
Ahuroa gas storage facility, and standard TSX Venture Exchange approvals. 


Upon announcing the Origin Acquisition, NZEC set aside funds for the transaction
by converting Canadian dollar cash balances to US$26 million, which was
deposited into a US$ bank account to protect the Corporation against currency
fluctuations. The remaining approximately US$9.8 million outstanding and due
upon closing will be funded from operational cash flows, which are received in
US$.


Exploration Assets

Pursuant to the Origin Agreement, NZEC will acquire four Petroleum Licenses in
the main production fairway of the Taranaki Basin, contiguous with the northern
border of NZEC's Eltham and Alton permits. The Petroleum Licenses offer
multi-zone potential from the Urenui, Mt. Messenger, Moki, Kapuni and Tikorangi
formations. The Petroleum Licenses are permitted and renewable without
relinquishment, subject to government approval. Included are 16 established
drill pads, most with production infrastructure in place, which will allow for
timely tie-in to the Waihapa Production Station upon exploration and completion
success. 


The Acquisition includes 93 km2 of 3D seismic data with coverage over
approximately 50% of the Petroleum Licenses and 585 km of 2D seismic data. NZEC
has access to well log data from 27 previously drilled wells, offering
additional insight into the geology of the area. Numerous existing wells offer
uphole completion opportunities in NZEC's target formation, with well log data
demonstrating production potential from the Mt. Messenger and Kapuni formations
and good hydrocarbon shows from the Moki and Urenui formations.


NZEC's technical team has completed a preliminary review of the 3D seismic and
well log data covering the southern half of the Petroleum Licenses and
identified 8 Urenui leads, 14 Mt. Messenger leads and 8 Moki leads,
significantly expanding NZEC's drilling inventory in the Taranaki Basin. NZEC
will refine and prioritize these leads within the context of its 2013
exploration program. 


Production and Infrastructure Assets

The Waihapa Production Station is located approximately three kilometres from
NZEC's Copper Moki site and is central to NZEC's inventory of exploration
prospects, thereby reducing transportation and processing costs for NZEC's oil
and gas production. As the only open-access midstream facility in the Taranaki
Basin, the Waihapa Production Station offers business opportunities for
processing third-party gas, liquids, oil and water. Origin will continue as
operator of the Production Station during a transition period through to
mid-2013. 


The Waihapa Production Station and associated infrastructure includes:



--  a 45 mmcf/d gas processing, gas compression and LPG extraction facility
    ("TAWN facility"); 
--  a 51-km 8-inch gas sales pipeline from the Waihapa Production Station to
    the Stratford Gas Power Generation Plant then terminating in New
    Plymouth; 
--  59 km of oil/gas mixed product pipelines including gas lift lines; 
--  a 25,000 bbl/d oil processing facility; 
--  a 49-km oil sales pipeline from the Waihapa Production Station to the
    Omata Tank Farm, capable of transporting up to 15,500 bbl/d; and 
--  an 18,000 bbl/d water disposal processing system.



RECENT DEVELOPMENTS 

On August 19, NZEC commenced drilling of the Waitapu-1 well at its
newly-established Waitapu site, approximately 1.3 km south of the Corporation's
Copper Moki site. Waitapu-1 has a target depth of 2,172 metres and is expected
to drill through the Mt. Messenger formation. 


On July 9, NZEC announced the commencement of continuous production from its
Copper Moki-3 well. The well is producing from natural reservoir pressure
through a 18/64 inch choke out of the Mt. Messenger formation, producing at an
average rate of 219 bbl/d and 252 Mcf/d2 during the month of August. NZEC also
announced the completion of a production test for Copper Moki-4, the
Corporation's first Urenui formation well. The well produces 29 degrees API and
is currently shut in while NZEC completes the well test analyses and economic
evaluation of artificial lift systems required to make a production decision. 


NZEC is expanding and restructuring its leadership team to support continued
growth in all areas of its business. Chris Bush has been appointed New Zealand
Country Manager, commencing in October. Mr. Bush is an experienced oil and gas
professional with more than 30 years of experience in both upstream and
downstream sectors. As NZEC's New Zealand Country Manager, Mr. Bush will oversee
all aspects of the Company's in-country activities, including government and
community relations, production activities, acquisition/partnership
opportunities, and integration of the Petroleum Licenses and Waihapa Production
Station that NZEC has agreed to acquire pursuant to the Origin Agreement. Mike
Oakes joined NZEC as General Manager Midstream Operations on August 6. Mr. Oakes
has worked in the oil and gas industry for 33 years overseeing design,
commissioning and start up, staffing and operation of both onshore and offshore
oil and gas fields and production facilities. As General Manager Midstream
Operations, Mr. Oakes will be responsible for all producing wells and operation
of the Waihapa Production Station. James Watchorn joined NZEC as Operations
Manager on July 30, bringing more than 15 years of technical experience in
oilfield operations to the Corporation. Mr. Watchorn is a mechanical engineer
experienced in all aspects of drilling, completions and production, along with
facility and wellsite construction. As Operations Manager, Mr. Watchorn will
work with NZEC's General Manager Upstream Operations to design and execute the
Corporation's exploration and production strategy. As part of the restructuring,
Bruce McIntyre has been appointed to the role of Executive Director and Cliff
Butchko has been appointed to the role of General Manager Upstream Operations.


NZEC is in advanced discussions with potential lenders regarding a reserve-based
borrowing facility, and has received an indicative term sheet from its preferred
lender.


PROPERTY REVIEW

Taranaki Basin

The Taranaki Basin is situated on the west coast of the North Island and is
currently New Zealand's only oil and gas producing basin, producing
approximately 130,000 boe/d from 18 fields. Within the Taranaki Basin, NZEC
holds a 100% interest in the Eltham Permit, which covers approximately 93,167
acres (377 km2) of which approximately 31,877 acres (129 km2) are offshore in
shallow water, and a 50% interest in the Alton Permit in joint venture with L&M.
The Alton Permit covers approximately 119,204 onshore acres (482 km2). On
February 21, 2012, NZEC entered into an agreement with L&M whereby NZEC can
increase its interest in the Alton Permit to 65% by funding the collection and
processing of 3D seismic data over approximately 50 km2 of the permit. NZEC
expects to deliver the 3D seismic data to L&M and earn its 65% interest in
Q3-2012.


NZEC also expects to acquire four Petroleum Licenses and the Waihapa Production
Station upon completion of the Acquisition, as outlined in the Origin Agreement.


NZEC has made four consecutive oil discoveries in the Taranaki Basin. NZEC's
Copper Moki-1 well has been flowing from natural reservoir pressure from the Mt.
Messenger formation since December 10, 2011. Copper Moki-2 has been flowing from
natural reservoir pressure out of the Mt. Messenger formation since April 1,
2012. Copper Moki-3 has been flowing from natural reservoir pressure out of the
Mt. Messenger formation since July 2, 2012. The wells are producing 41.8 degrees
API oil that is trucked to the Shell-operated Omata tank farm and sold at Brent
pricing, resulting in a field netback of approximately US$78/barrel in Q2-2012.
NZEC calculates the netback as the oil sale price less fixed and variable
operating costs and a 5% royalty. The netback reflects an average realized oil
price in Q2-2012 of US$105, and will fluctuate based on variances in oil price.
Copper Moki-4 is currently shut in while NZEC completes the well test analyses
and economic evaluation of artificial lift systems required to make a production
decision. Total corporate production in August averaged 672 boe/d (465 bbl/d and
1,247 Mcf/d).


NZEC has completed a natural gas pipeline from the Copper Moki site to the
Waihapa Production Station. The operator is finalizing arrangements to receive
the gas and NZEC expects to begin generating cash flow from its natural gas
production shortly. Copper Moki-1 and Copper Moki-2 are tied into the natural
gas pipeline and produced approximately 995 Mcf/d of natural gas during the
month of August. NZEC expects to tie Copper Moki-3 into the natural gas pipeline
before year-end.


On August 19, NZEC commenced drilling of the Waitapu-1 well at its Waitapu pad.
Waitapu-1 has a target depth of 2,172 metres and is expected to drill through
the Mt. Messenger formation. 


East Coast Basin

The East Coast Basin of New Zealand's North Island hosts two highly prospective
shale formations, the Waipawa and Whangai, which are the source of more than 300
oil and gas seeps. Within the East Coast Basin, NZEC holds a 100% interest in
the Castlepoint Permit, which covers approximately 551,042 onshore acres (2,230
km2), and a 100% interest in the Ranui Permit, which covers approximately
223,087 onshore acres (903 km2) and is adjacent to the Castlepoint Permit. On
September 3, 2010, NZEC applied to the Minister of Energy to obtain a 100%
interest in the East Cape Permit. The application is uncontested and the
Corporation expects the East Cape Permit to be granted to NZEC upon completion
of New Zealand Petroleum & Minerals' review of the application. The East Cape
Permit covers approximately 1,067,495 onshore acres (4,320 km2) on the northeast
tip of the North Island.


NZEC has completed the coring of two test holes on its Castlepoint Permit. The
Orui (125 metres total depth) and Te Mai (195 metres total depth) collected data
across the Waipawa and Whangai shales. NZEC also completed a test hole on its
Ranui Permit. Ranui-2 was drilled to 1,440 metres, coring the Whangai shale
across several intervals. In Q2-2012, NZEC completed 70 line kilometres of 2D
seismic data across the Castlepoint and Ranui permits to further its technical
understanding of the area.


OUTLOOK 

Taranaki Basin

With three wells in production, NZEC is focused on growing reserves, production
and cash flow. NZEC is permitting a number of new drill pads as the Company
advances toward its objective of drilling eight additional conventional wells
and increasing production to 3,000 barrels of oil equivalent per day by year-end
2012. The Corporation has entered into a rig contract with Ensign International
Energy Services Pty Ltd. and on August 19 commenced drilling the Waitapu-1 well.



With completion of the four Copper Moki wells, NZEC has gained tremendous
insight into the Moki, Mt. Messenger and Urenui formations. While the Mt.
Messenger formation remains the Company's primary target, NZEC's drilling
inventory includes a number of leads with Moki targets and the Corporation
expects that at least two of the eight wells will be drilled to the deeper Moki
formation.


On its Eltham and Alton permits in the Taranaki Basin, NZEC has identified six
prospects on 3D seismic similar to Copper Moki, with the expectation of
establishing one pad per prospect with two to four wells per pad. NZEC has also
identified 12 leads on 2D seismic that will be further defined with data from
the recently acquired 100 km2 3D seismic survey. The 3D seismic survey will
further define existing prospects and reduce drilling risk while potentially
identifying new exploration leads and expanding NZEC's inventory locations for
its 2013 exploration program.


New exploration leads and uphole completion opportunities on the Petroleum
Licenses will further expand NEZC's drill inventory. NZEC's technical team is
completing a thorough review of the Petroleum Licenses to further define
exploration leads and uphole completion opportunities, and determine the status
of existing wells, drill pads and surface facilities. Once the Acquisition is
complete, these exploration opportunities will be ranked in comparison to the
Corporation's Eltham and Alton leads to plan future exploration programs. NZEC
plans to drill at least one well per month in the Taranaki Basin in 2013.


East Coast Basin 

NZEC has drilled two stratigraphic holes on its 100% working interest
Castlepoint Permit and one stratigraphic hole on its 100% working interest Ranui
Permit. These three stratigraphic test wells will advance NZEC's understanding
of the Waipawa and Whangai formations. A review of the geochemical and physical
properties of the two shale packages, coupled with information from existing
seismic data and the newly completed 70 km 2D seismic survey, will help focus
NZEC's exploration strategy for the East Coast shales. NZEC plans to drill at
least one exploration well on the East Coast Basin in 2013.


The Corporation's application for the East Cape Permit is uncontested and NZEC
expects the permit to be granted upon the completion of New Zealand Petroleum &
Minerals' review of the application.


RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2012

Revenue

During the three-month period ended June 30, 2012, the Corporation produced
55,226 barrels of oil and sold 58,952 barrels for total revenues of $6,206,749,
or $105.28 per barrel. Total recorded gross production revenue was $5,910,993,
which accounted for royalties of $295,756, or $5.02 per barrel sold. No revenues
or royalties were recognized during the same period in fiscal 2011.


Expenses and Other Items

Production costs during the three-month period ended June 30, 2012 totalled
$1,305,452, or $22.14 per barrel. Included in production costs are all
site-related expenditures, including applicable equipment rental fees, site
services, overheads and labour; transportation and storage costs including
trucking, testing, tank storage, processing and handling; and port dues as
incurred prior to the sale of oil. No production costs were incurred during the
same period in fiscal 2011.


Depreciation and accretion costs incurred during the three-month period ended
June 30, 2012 totalled $1,519,447, or $25.77 per barrel sold. Depreciation is
based on using the unit-of-production method by reference to the ratio of
production in the period to the related total proved and probable reserves of
oil and natural gas, taking into account estimated future development costs
necessary to access those reserves. No depreciation and accretion costs were
incurred during the same period in fiscal 2011.


Stock-based compensation for the three-month period ended June 30, 2012 totalled
$467,875 compared to $nil during the same period in 2011. The non-cash charge
incurred during the period related to the options granted to directors, officers
and employees of the Corporation upon the completion of the Corporation's
initial public offering in August 2011 and subsequent grants to new employees. 


General and administrative expenses for the three-month period ended June 30,
2012 totalled $1,007,617 compared to $1,102,503 incurred in the same period in
fiscal 2011. The general and administrative expenses incurred during the period
related to professional fees, management fees, consulting fees, travel and
promotion, rent, overheads, filing and insurance costs. See Note 11 to the June
30, 2012 unaudited condensed consolidated interim financial statements for
detail.


Transaction costs for the three-month period ended June 30, 2012 totalled
$200,779 compared to $nil incurred in the same period in fiscal 2011. The
transaction costs incurred during the period included legal and professional
fees incurred for the Origin transaction.


Finance income for the three-month period ended June 30, 2012 totalled $140,315
compared to $19,222 in the same period in fiscal 2011. Finance income relates to
interest earned on the Corporation's cash and cash-equivalent balances held in
treasury.


Foreign exchange loss for the three-month period ended June 30, 2012 amounted to
$615,552 compared to a $5,140 gain realized in the same period of fiscal 2011.
Foreign exchange gains and losses are a result of currency exchange differences
being recognized on transactions during the period.


Total Comprehensive Income (Loss) 

Total comprehensive income for the three-month period June 30, 2012 totalled
$1,317,915 after taking into account a gain on the exchange difference on
translation of foreign currency of $383,329, which compared to a total
comprehensive loss for the three-month period ended June 30, 2011 of $773,524.


Based on a weighted average shares outstanding balance of 121,769,105, and
diluted weighted average shares outstanding of 122,843,464, the Corporation
realized a positive $0.01 basic and diluted earnings per share for the
three-month period ended June 30, 2012. During the period ended June 30, 2011,
the Corporation realized a $0.01 basic and diluted loss per share on a weighted
average share balance of 77,010,000.


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 two million acres 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,
and takes a multi-disciplinary approach to value creation with a track record of
successful discoveries. 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
[e-mail].


Forward-looking Statements

This news release 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 "continues", "expects", "continues", "increase", "advances", "will" 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, including without limitation, the
speculative nature of exploration, appraisal and development of oil and natural
gas properties; uncertainties associated with estimating oil and natural gas
resources; uncertainties in both daily and long-term production rates and
resulting cash flow; volatility in market prices for oil and natural gas;
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; the need to obtain various approvals before exploring
and producing oil and natural gas resources; the need to obtain government
approval of work programs before exploring or developing the Petroleum Licenses;
uncertainty in the timing of receipt of permits and the Company's ability to
extend the permits if required; exploration hazards and risks inherent in oil
and natural gas exploration; operating hazards and risks inherent in oil and
natural gas operations; 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 as disclosed
in documents released by NZEC as part of its continuous disclosure obligations.
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. NZEC 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 this news
release should not be unduly relied upon. These statements speak only as of the
date of this news release and NZEC does not undertake to update any
forward-looking statements that are contained in this news release, except in
accordance with applicable securities laws.