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New Zealand Energy to raise $850,000 for working capital

Last updated: 08:56 12 Dec 2014 EST, First published: 09:56 12 Dec 2014 EST

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New Zealand Energy (CVE: NZ) (OTCQX: NZERF) has announced it will undertake an $850,000 financing with Geoservices Limited, with the proceeds to be used for general working capital. 

The financing will be made up of 17 million units at a price of 5 cents apiece, with each unit consisting of one common share and one share purchase warrant, which entitles the holder to acquire an additional common share at a price of 7 cents for a period of 12 months.

New Zealand Energy posted higher revenues in its third quarter as the junior oil and gas producer continues with further steps to reduce costs in the face of a declining oil price.

The company late last month announced that it will shut its Vancouver office as of December 31 as part of its efforts to reduce operating overheads, while also announcing the appointment of new chief executive officer David Robinson. Robinson was the previous head of the New Zealand business. 

Its management agreement with J. Proust and Associates, which has been providing a number of management services to the company, will also be terminated and these services will be absorbed by its New Zealand-based staff, or outsourced.

For the past year, New Zealand Energy has been focused on increasing production and cash flow in the Taranaki Basin of New Zealand since closing the purchase of theTariki, Waihapa and Ngaere (TWN)  petroleum mining liceneses from Origin Energy (ASX:ORG) last October. 

The company's strategy has been to focus on workovers and uphole completions on the new licenses, a significantly cheaper task than drilling new wells, that if successful, could easily tied into its Waihapa production station using existing infrastructure. 

It also recently secured a NZ$5 million loan with New Dawn Energy to advance its assets in the Taranaki Basin, a first step in a capital rebuilding process for the junior oil and gas producer. New Dawn is the parent company of L&M Energy, New Zealand's 50 percent partner in the TWN licenses. 

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