TIDMNTOG
RNS Number : 5217S
Nostra Terra Oil & Gas Company PLC
09 July 2015
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Agreement To Operate New Wyoming Prospect
Nostra Terra (AIM:NTOG), the oil and gas exploration and
production company with a growing portfolio of assets in the USA,
is pleased to announce it has entered into a farm-out agreement
(the "Farm-Out Agreement") with Koch Exploration Company, LLC
("Koch"), a subsidiary of Koch Industries, Inc., in relation to the
Paw Paw Prospect located in the Big Horn Basin of Wyoming.
Highlights
-- Nostra Terra to operate 2,440 net acres in new prospect in Wyoming
-- Nostra Terra earns 100% Working Interest through drilling of the first well
-- Koch will retain an overriding royalty interest
-- Potentially twice the size and a direct analogue to the
highly productive Enigma Field (EUR 3.788 million barrels of oil,
Tensleep Formation) located only two miles southeast
-- Estimated test well cost of US$1.2 million
-- Up to 25 potential locations for vertical wells are possible
with total recoverable potential exceeding 7 million barrels of oil
by primary and secondary recovery
-- PV10 of a single, conventional well in the Tensleep Formation estimated at US$5.446 million
-- Geophysical and geological due-diligence already completed
-- Expected to spud in Q4 of 2015
-- The Tensleep Formation has a history of prolific production
and there are two nearby analogues
-- Secondary targets are the Phosphoria and Mowry Shale, both with known production in the area
Agreement Details and Planning
The board of Nostra Terra is pleased to announce that it has
signed an agreement with Koch Exploration Company, LLC ("Koch") to
earn an interest in the 2,440 net acre Paw Paw Prospect in Wyoming.
The Prospect was first mapped by Koch and then independently by
Nostra Terra, using proprietary 3D seismic data.
There is no up-front fee payable to Koch, only the commitment to
drill the first well to earn the leasehold. Nostra Terra will drill
a conventional 4,500 foot well to test the Tensleep Formation at an
estimated cost of US$1.2m. Koch will retain an overriding royalty
interest ("ORRI") until payout and retain the right to convert the
ORRI to a working interest. Nostra Terra and its partners will earn
80% net revenue in the test well. The Farm-Out Agreement provides
Nostra Terra with considerable flexibility to bring in partners,
maintaining significant upside potential.
Nostra Terra is in the process of becoming a licensed operator
in Wyoming and has already completed extensive work on the prospect
including; geological & geophysical analysis, third-party
reservoir engineering, and preparations with drilling and
completions contractors. Nostra Terra plans to create an
Exploration Unit (with the US Bureau of Land Management) expected
to be completed during Q4 2015. During this time, the Company
intends to sell working interests to third parties. The first well
is currently planned to drill during Q4 2015.
The Farm-out Agreement gives the Company access to a near
ready-to-drill prospect with considerable short and long-term
production potential. The directors believe that Paw Paw
significantly increases the potential scope of Nostra Terra's
operations. Nostra Terra's negotiations to operate the wells is
consistent with the longer term goal of gaining greater control of
its own destiny. In the view of the directors, the Company is also
benefiting from much lower lease and seismic acquisition costs
Nostra Terra continues to investigate farm-out prospects in
basins with an established history of oil production and the
availability of farm-outs has increased dramatically over the past
several months.
Independent Evaluation of Assets
Based on technical analysis using the analogous Enigma Field, a
potential resource of the leased acreage has been estimated by Haas
Petroleum Engineering Services, Inc. ("HPESI") on behalf of the
Company. According to this report, as many as 25 conventional
vertical wells could be drilled on the prospect. The primary and
secondary recovery could be as much as 7.368 MMBO (PV10 US$135
million, before facilities cost) by this method. After correcting
for transportation and oil quality (differential), the beginning
oil price utilized in projections was approximately US$40.
Resource Report Summary
Oil FNI PV10
Single Well
Primary Recovery 110,775 $1,935,451 $1,052,465
Single Well Primary
+ Secondary 275,595 $8,298,754 $5,446,077
Total Primary Resources 3,788,000
Total Resources Primary
+ Secondary 7,368,000
============================ ========== =========== ===========
Source: Haas Petroleum Engineering Services Inc. assessment of
net Prospective Resources. Type decline curves were extracted from
analog wells using decline curve analysis. Prospective resources
take into account constraints on profitability, such as royalties,
operating expenses and future commodity prices.
Regional Geology and Prospectivity Mapping
The Pawpaw Prospect is a conventional type structural fault trap
that was originated by studying the regional geology, well logs,
several Wyoming Geological Association Guidebook articles and
regional 2-D seismic lines available for lease by seismic brokers.
A four square mile 3-D proprietary seismic shoot was initiated in
2012 and determined that a possible fault could have trapped oil in
a way similar to the Enigma Field just two miles southeast. The
Enigma oilfield was discovered in 1988 and was in full production
from 12 wells within two years. Independent calculations suggest
that 3.63 MMBO has already been produced through 2014 and that
3.788 MMBO will ultimately be recovered from 18 producing
wells.
The primary objective of the Pawpaw Prospect is the Tensleep
Formation. The Pennsylvanian Tensleep Formation is composed of
porous Aeolian sands with interbedded tight dolomitic rocks. Total
combined thickness of all of the porous sands varies from 65 to 85
feet in the area. Average porosity for the Tensleep is about 15%
with good permeability. The interbedded dolomites have low
permeability and act as barriers between each of the porous sands.
The sands fracture but those that have healed tend to
compartmentalize the Tensleep production. Many of the Tensleep
producing fields in the Big Horn Basin are spaced at 10 acres or
less because of these flow barriers. Twenty-acre spacing was
assumed in the earlier projections.
The top member of the Tensleep Formation is the Nowood Member
that ranges from five feet to up to 50 feet in the area and can
form the caprock seal for the Tensleep throughout the Big Horn
Basin on many of the structural closures. The Nowood Member is
usually tight but can have a porous streak.
Other potential secondary objectives are the Mowry Shale and the
Phosphoria Formation. Both of these zones have produced within
several miles of the Paw Paw Prospect.
Matt Lofgran, Chief Executive Officer of Nostra Terra,
commented:
"We're pleased to have reached an agreement with Koch
Exploration Company, LLC. Koch Exploration is a subsidiary of Koch
Industries, the second largest private company in America. Nostra
Terra will operate and Koch retains an interest in the prospect
going forward.
This prospect also represents the type of opportunity we have
previously told shareholders and investors we planned to target,
being conventional wells in proven basins, where economics are
attractive even at lower oil prices. Acquisitions such as these
should help lower our risk profile and actively protect the future
of the Company. We look forward to sharing the progress on this
prospect with shareholders."
The technical information within this announcement has been
reviewed by Alden McCall, the Company's Chief Operating Officer, a
Certified Petroleum Geologist and a member of the American
Association of Petroleum Geologists and the Society of Petroleum
Engineers.
Glossary
"EUR" means Estimated Ultimate Recovery
"FNI" means Future Net Income
"MBO" each mean thousand barrels of oil
"MMBO" each mean million barrels of oil
"PV10" means the pre-tax, net present value of acquisition cost
and estimated future revenues to be generated from the production
of hydrocarbons, discounted at the annual discount rate of 10 per
cent.
For further information, visit www.ntog.co.uk or contact:
Nostra Terra Oil and Gas Company plc
Matt Lofgran, CEO
mlofgran@ntog.co.uk +1 480 993 8933
Sanlam Securities UK Limited (Nominated
Adviser & Broker) +44 (0)20 7628 2200
Lindsay Mair/James Thomas
Jamie Vickers (Broking)
Walbrook PR Ltd +44 (0)207 933 8797
Gary Middleton (Media Relations)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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