New Zealand Energy Corp. and its subsidiary, NZEC Wairoa Ltd., have entered a binding agreement with Westech Energy New Zealand, a subsidiary of Energy Corporation of America.

Pursuant to the terms of the agreement, NZEC will enter a joint venture agreement with Westech whereby NZEC can acquire 80% ownership and become the operator of petroleum exploration permit 38346, covering 1,084 sq km (419 sq miles) in the East Coast basin of New Zealand's north island, according to a news release.

In consideration for the transfer of the 80% interest, NZEC will immediately assume 100% responsibility for the permit and completion of the related work program and will pay Westech US $725,000. Upon completion of the related work program, Westech will refund US $225,000 to NZEC and all future expenditures for the permit will be funded 80% by NZEC and 20% by Westech, the release said. Transfer of the 80% ownership and operatorship of the permit, formation of the joint venture, and proposed amendments to the work program are subject to approval by New Zealand Petroleum & Minerals.

The proposed work program requires NZEC to complete various technical studies, reinterpret existing seismic data, shoot and interpret additional 2D seismic, and drill two exploration wells by March 2016, according to the release. NZEC has the option to withdraw from the joint venture after drilling the first exploration well, in which case it would transfer ownership and operatorship of the permit back to Westech.