TIDMNTOG
RNS Number : 6401X
Nostra Terra Oil & Gas Company PLC
23 February 2017
23 February 2017
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Second Permian Basin acquisition and Receipt of funds
Nostra Terra (AIM:NTOG), the oil and gas exploration and
production company with a portfolio of assets in the USA and Egypt,
is pleased to announce the acquisition of producing assets in the
Permian Basin, Texas, along with the receipt of US$100,000 in
connection with the previously announced sale of its interest in
the Chisholm Trail Prospect.
Highlights
-- 18 drilling locations
o 9 proven locations
o 9 probable locations
-- 75% working interest
-- Producing leases with 9 existing wells
o Infrastructure in place
o Workovers planned imminently
-- All acreage and locations Held By Production ("HBP")
-- Receipt of US$100,000, released from escrow
Acquisition of producing assets in the Permian Basin
In keeping with its Permian Basin strategy, Nostra Terra is
pleased to announce the acquisition of a package of 3 producing
assets for $60,000, funded from existing cash resources. These
leases include a 75% WI in 9 wells across an additional 200 acres
in Mitchell County, and 18 future drilling locations.
Currently 2 of the 9 wells are producing, 5 are shut in and
there is 1 injection well. The wells are producing circa 2 bopd
gross, however potential exists across the leases for workover
opportunities. A rig is currently being scheduled for the first of
these workovers, which is also funded through existing cash
resources.
As with the previous acquisition in the Permian Basin, all 3
leases are Held By Production (HBP), meaning they have no
expiration date and no required work programme and remain in effect
so long as the leases remain in production. The 18 future drill
locations have been identified over 2 separate formations. These
include 9 proven and 9 probable infill drilling locations.
Nostra Terra has identified further possible acquisition targets
in the same area.
Permian Basin Strategy
In November 2016 the Company made its first acquisition into the
Permian Basin and anticipated further acquisitions. Nostra Terra's
strategy is to purchase shallow conventional assets across this
commercially attractive oil province and to increase its Permian
Basin production incrementally, through the acquisition of
producing leases which have potential for growth through low-cost
workover programmes. Nostra Terra plans to fund this strategy
through existing cash resources and free cash flow from its
portfolio of producing assets.
The leases in the first acquisition included a 57% to 68%
Working Interest ("WI") in 4 wells across 50 acres in Mitchell
County. Since then Nostra Terra has completed an initial low-cost
workover, leading to a more than three-fold increase in production,
from 2 bopd to 7.5 bopd 30 day average. Importantly, the leases of
Nostra Terra's first Permian acquisition are also HBP. These leases
now have two new proven development locations that can be drilled
as and when the Company decides.
Following this second acquisition Nostra Terra has now increased
its inventory to 20 future drilling locations, (11 of which are
proven). Because all leases are HBP the Company can elect to drill
any of these locations when it chooses to do so and conditions
allow.
As a result of these acquisitions Nostra Terra has now taken its
first steps in this area of the prolific Permian Basin, which
offers the Company a material increase in the potential production
upside available to it. As operator of HBP licences Nostra Terra is
in complete control of the pace and timing of development.
Receipt of $100,000
Nostra Terra has received the $100,000 held in escrow in
connection with the sale of its interest in the Chisholm Trail
Prospect, as was announced on 8 December 2016. This represents the
conclusion of the sale of the Company's Chisholm Trail Prospect,
which the board of Nostra Terra ("Board") believes was appropriate
given the circa 20 fold increase in acreage costs since the
original acquisition.
Company Funding
In recent months, following a succession of value-creating
events and transactions by the Company and recent increased
interest in the oil sector, Nostra Terra has received approaches
from brokers with unsolicited offers of equity investment into the
Company. Nostra Terra declined those approaches, as the Company has
no immediate funding need.
However, given the current environment in the oil & gas
space, the board of Nostra Terra ("Board") has identified a number
of deals that have significant potential to enhance shareholder
value and accelerate Nostra Terra's growth but which would require
further funds. As such, the Board decided in the second half of
last week to accept an offer to raise funds at a premium to the
current share price.
As announced on 20 February 2017, the Board decided not to
proceed with the placing. This was due to Nostra Terra's share
price falling on Friday afternoon, as a result of social media
commentary.The Company is now no longer moving forward with the
funding offer.However Nostra Terra is currently funded and will
continue to grow organically, using existing cash and free cash
flow from its producing assets.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Matt Lofgran, Chief Executive Officer of Nostra Terra,
commented:
"We've worked hard over the last 12 months identifying
appropriate targets for acquisition in our efforts to rebuild
Nostra Terra. We now have a robust pipeline of potential
opportunities and are poised to continue growing. Our acquisition
targets range from prospects the size of today's acquisition to
significantly larger ones.
As keen as we are to take Nostra to the next level, we will only
enter into new transactions which the company can afford. As should
be clear, we are only prepared to do business at the right
price.
The success we've had in the sale of our interests in the
Chisholm Trail Prospect along with the acquisition of the Pine
Mills oil field are further vindication of Nostra's ability to
identify assets with potential for value appreciation, in producing
oil regions during the current downturn in crude oil prices. I
believe this skillset will have an important role to play over the
coming years as we deliver significant value to shareholders."
For further information, visit www.ntog.co.uk or contact:
Nostra Terra Oil and Gas Company
plc
Matt Lofgran, CEO +1 480 993 8933
Strand Hanson Limited
(Nominated & Financial Adviser and
Joint Broker) +44 (0) 20 7409 3494
Rory Murphy / Ritchie Balmer
Vicarage Capital Limited (Joint Broker) +44 (0) 20 3651 2910
Rupert Williams / Jeremy Woodgate
This information is provided by RNS
The company news service from the London Stock Exchange
END
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