Ann: WAV/RULE: NZO: New Zealand Oil & Gas Limited

• Release Date: 01/05/13 11:49
• Summary: WAV/RULE: NZO: New Zealand Oil & Gas Limited - Waiver NZSX Rule 10.11.7
• Price Sensitive: No
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NZO
01/05/2013 09:49
WAV/RULE

REL: 0949 HRS New Zealand Oil and Gas Limited

WAV/RULE: NZO: New Zealand Oil & Gas Limited - Waiver NZSX Rule 10.11.7

NZX Market Supervision Decision
New Zealand Oil & Gas Limited ("NZO") Application for a Waiver from NZSX
Listing Rule 10.11.7

23 April 2013

Background

1. NZO is a Mining Issuer Listed on the NZX Main Board.

2. NZO through its wholly-owned, Australian incorporated subsidiary, NZOG
Asia Pty Limited (NZO Asia) has entered into an unincorporated joint venture
to explore Kisaran PSC located in the Barumun trough in the northern part of
the Central Sumatra Basin, in onshore Sumatra, Indonesia.

3. The joint venturers, and their respective ownership interests in the
Kisaran PSC, are:

(a) NZO Asia, via its shareholding in Pacific Oil & Gas (North Sumatera) Ltd
(Pacific Oil) - 22.5%;

(b) Pacific Oil & Gas (Kisaran) Ltd (Operator) - 55%; and

(c) Pacific Oil & Gas (Sumatera) Inc. - 22.5%.

4. Recent drilling in the Kisaran PSC exploration block commenced in early
February 2013, with the drilling of the Parit Minyak-2 (PM-2) exploration
well.

5. NZO has, in compliance with its obligations under Listing Rule 10.11.5,
released weekly update announcements to the market on the status of the
exploratory drilling of PM-2.

6. On 19 April 2013, NZO announced that preparations are being made to begin
flow testing at the PM-2 and that based on wireline logging results, up to
four drill stem tests (DSTs) will be conducted within a gross interval of
7700 to 9000 feet and that depending on the types of fluids and rates of
flow, this testing program could take 20-35 days.

7. NZO has previously announced to the market that the Kisaran PSC joint
venturers intend to commence drilling a second exploration well, Parit
Minyak-3 (PM-3), immediately following the completion of exploration
operations at PM-2.

8. NZSX Listing Rule (Rule) 10.11.7 requires a Mining Issuer to announce,
within prescribed timeframes under that Rule, certain reports to the market
regarding flow testing operations.

Indonesian Oil Legislation Requirements

9. Indonesian law (referred to as the Indonesian Oil Legislation) restricts
the ability for NZO to make the disclosures required by Rule 10.11.7.

10. Disclosure or publication of certain data relating to exploration and
exploitation activities (Data) without the prior written approval of the
Indonesian Special Task Force for Upstream Oil and Gas Activities (SKK Migas)
may be a criminal offence under Indonesian Oil Legislation.

11. NZO has implemented a process under which SKK Migas approval will be
sought for disclosure of Data contained in relevant NZO announcements.

Application

12. NZO has sought a waiver from the requirements of Rule 10.11.7 in respect
of the PM-2 and PM-3 exploration wells in the Kisaran PSC exploration permit
block subject to the condition that NZO be required to release the
information set out in Rule 10.11.7 immediately, to the extent that SKK Migas
provides its approval to the disclosure of such information, subject to any
conditions imposed by SKK Migas on that release.

13. In support of its application, NZO has made the following submissions:

(a) Investors in NZO are aware that NZO:

i. operates  in  a  number  of jurisdictions  internationally (such  as  in
Indonesia and Tunisia); and

ii. is subject to various overseas legislative requirements relating to the
exploration activities it undertakes, as well as the contractual arrangements
that underpin those activities.

(b) NZO  is  committed to  ensuring  that  it,  its  employees,  directors
and  its subsidiaries comply with the legislative and contractual
requirements to which they are subject.

NZO  should  not,  however,  be  required  to  breach  the  Indonesian Oil
Legislation in order to meet what are effectively operational disclosure
requirements in relation to flow test operations under the Rules.   NZO's
shareholders would not expect NZO to actively be a party to a breach of
primary legislation in a jurisdiction in which NZO operates.

(c) In the absence of the specific disclosure requirements set out in Rule
10.11.7, NZO would be able to rely on an exception from the requirement to
disclose the relevant Data under the continuous disclosure obligations in
Rule 10.1.1.

Rule 10.1.1 specifically contemplates, and provides an exception from
disclosure for, circumstances where release of the relevant information would
be in breach of law. In addition, for the purposes of Rule 10.1.1(a)(i) and
(ii):

i. a reasonable person would not expect the information to be disclosed,
given the serious criminal penalties which may be imposed in relation to such
disclosure; and

ii. the information is confidential and confidentiality is being maintained
in relation to the information.

This exception is directly analogous to the situation currently faced by NZO.

(d) It is inconsistent from a policy perspective if NZO is required to
release Data (which may not constitute Material Information) under Rule
10.11.7 in circumstances where it would (even if that Data was Material
Information) be able to rely on an exception from the continuous disclosure
obligations that apply under Rule 10.1.1.

(e) NZO has agreed to implement a process which will enable NZO to release to
the market information consistent with the content requirements under Rule
10.11.7.

(f) Under the terms of the waiver sought, any delay in the release of
information under Rule 10.11.7 would be temporary only, until such time as
SKK Migas' approval is obtained in respect of the relevant NZO announcement.

Rule 10.11.7

14. Rule 10.11.7 provides as follows:

"A report shall be issued on the day that:

(a) a decision to flow test an interval of the well is made, advising of the
decision and the depth and gross interval to be tested; and

(b) flow test operations commence, advising of such; and

(c) hydrocarbons are flowing to surface.

Within 24 hours of completion of flow test operations over the test interval,
a report shall be issued which includes:

(d) depth and interval tested; and

(e) representative sustained flow rate (if achieved); and

(f) choke size and representative surface flowing pressure (if achieved); and

(g) summary description of fluids recovered."

Decision

15. On the basis that the information provided to NZXR is full and accurate
in all material respects, and subject to the conditions contained in
paragraph 16, NZXR grants NZO a waiver from the requirements of Rule 10.11.7
in respect of the PM-2 and PM-3 exploration wells in the Kisaran PSC
exploration permit block.

16. The waiver provided in paragraph 15 above, is subject to the conditions
that:

(a) NZO will use all reasonable endeavours to obtain SKK Migas's approval for
the disclosure to NZX and the market of the information set out in Rule
10.11.7; and

(b) NZO be required to release the information set out in Rule 10.11.7
immediately, to the extent that SKK Migas provides its approval to the
disclosure of such information, subject to any conditions imposed by SKK
Migas on that release.

Reasons

17. In coming to  the decision to  grant the waiver in  paragraph 15  above,
NZXR considered that:

(a) A safe harbour exists from the requirement of Rule 10.1 to immediately
disclose Material Information to the market, where a reasonable person would
not expect the information to be disclosed, the information is confidential
(and confidentiality is maintained) and the release of the information would
be a breach of law. It is not appropriate for Rule 10.11.7 to go further
than Rule 10.1.1 (considered to be the fundamental continuous disclosure
rule) and require disclosure of information for which a safe harbour exists
under Rule 10.1.1;

(b) NZO's shareholders are aware that NZO operates in a number of foreign
jurisdictions  and  is subject  to  the  legislative  requirements  of
those jurisdictions; and

(c) NZO has taken steps to implement a process to endeavour to comply with
the requirements of Rule 10.11.7.

Confidentiality

18. NZO  has  requested  that  certain commercially  sensitive  matters
raised in  its application be kept confidential in accordance with Rule
1.10.2. NZXR has accepted NZO's request for confidentiality and redacted
those submissions from this decision.

ENDS
End CA:00235712 For:NZO    Type:WAV/RULE   Time:2013-05-01 09:49:22