TIDMNTOG
RNS Number : 5987B
Nostra Terra Oil & Gas Company PLC
05 April 2017
05 April 2017
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Texas Assets Reserves Report
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 results of its Independent Reserves
Report (the "Report") for the Pine Mills oil field and Permian
Basin assets (collectively referred to as the "Texas assets").
Highlights:
-- Total net proven reserves of 481,350 barrels of oil ("481.35
Mbbl") attributable to Nostra Terra across its Texas assets:
o 285Mbbl of net proven reserves at Pine Mills
o 196Mbbl of net proven reserves at the Permian Basin assets (of
which 180Mbbl is Proven Undeveloped);
-- US$4.57m NPV10 valuation assigned to Nostra Terra's Texas assets:
o US$3.53m NPV10 valuation assigned to Nostra Terra's 87.5%
stake in Pine Mills (a 22% increase since 01 December 2016 on a
like for like basis)
o US$1.04m NPV10 valuation assigned to Nostra Terra's Permian
Basin assets;
-- Significant improvement in NPV10 at Pine Mills as a result of operational cost reduction; and
-- Further increases anticipated to net proven reserves and NPV
valuation on completion of foreclosure proceedings to take Nostra
Terra's Working Interest in Pine Mills to 100%.
Independent Reserves Report
Nostra Terra commissioned the Report to assess the economics of
its portfolio of Texas assets. The Texas assets include Nostra
Terra's 87.5% Working Interest in the Pine Mills oil field ("Pine
Mills") and its 57.2% to 75% Working Interests in the leases
located in the Permian Basin, Mitchell County ("Permian Basin
assets").
The Report was compiled by Booth Reeves, a Texas based Petroleum
Engineer, using the standards set by The Petroleum Resources
Management, which is accepted by the Oil and Gas Reserves Committee
of the Society of Petroleum Engineers. The definitions can be found
at
www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf.
The reserves were estimated using decline curve analysis where
production trends have been established. When trends were not
established, reserves were estimated by volumetric analysis,
research of analogous reservoirs, or a combination of both. The
maximum reserves life assigned to the wells is 40 years. Booth
Reeves has applied a "NYMEX Prices Strip" to estimated hydrocarbon
production, which is standard industry practice for these types of
wells in the USA.
The independent report adopts a conservative approach in
assessing the reserves, focusing primarily on Proven Reserves (1P).
The Report does not include the potential for Proven Undeveloped
("PUDS") for Pine Mills (although it does for the Permian Basin
assets). There is potential for Probable and Possible Reserves to
be evaluated in the future on all the Texas assets. All of Proved
Developed Producing ("PDP"), Proved Developed Non-producing
("PDNP") and PUDS are considered to be Proven Reserves (1P) under
the Petroleum Resources Management System.
In summary Nostra Terra's certified 1P net reserves across its
Texas assets are 481Mbbl. The NPV10 valuation assigned to these
reserves is US$4.57m (net of costs, including royalties).
The Report's key findings in tabular form are:
As at 1 March 2017:
Proven Reserves Recoverable Oil (Mbbl)
----------------- -------------------------
Category Net NPV10 (USD)
----------------- ------ -----------------
PDP & PDNP 301 3.665m
----------------- ------ -----------------
PUD 180 0.907m
----------------- ------ -----------------
Total Proven
(1P) 481 4.573m
----------------- ------ -----------------
Reserves, Valuation and Development of Pine Mills
Net proven reserves for Pine Mills are 285Mbbl of oil. The NPV10
valuation assigned to these reserves is US$3.53m, representing an
increase of 22% since 01 December 2016 (on a like for like basis).
This increase in value has been driven primarily by operational
improvements Nostra Terra has made since assuming the operatorship
of Pine Mills.
The operational improvements include Nostra Terra's efficient
cost cutting initiative and workover programme, both of which have
already yielded meaningful results. This has significantly
increased Nostra Terra's net cash flow generation.
Additionally since the year-end Nostra Terra acquired a further
7.5% working interest in Pine Mills, along with a secured
receivable, which the Company believes will result in it taking
100% ownership of the asset in the coming weeks. This action will
generate a further increase in value assigned to Pine Mills with no
further funds being spent.
Beyond this Nostra Terra has also identified further potential
development upside at Pine Mills. The Company believes this can be
achieved through reactivation of existing drilled wells,
development drilling of proven locations and exploration
drilling.
Reserves, Valuation and Development of the Permian Basin
assets
At Nostra Terra's Permian Basin assets, the Report shows net
proven reserves of 196Mbbl of oil. The NPV10 valuation assigned to
these reserves is US$1.04m.
Nostra Terra has made two acquisitions in the Permian Basin and
performed initial workovers. All the interests in the Permian Basin
assets are "Held By Production" ("HBP"), meaning the Company can
decide on the pace of development. Nostra Terra expects to increase
the value of its Permian Basin assets through additional workovers,
drilling new wells and making other operational improvements.
Nostra Terra will continue to perform further workovers and
reactivations of existing drilled wells to take place in 2017. New
wells may also be drilled to improve overall production and
increase reserves.
Matt Lofgran, Chief Executive Officer of Nostra Terra,
commented:
"We've been excited about the progress we've been making at
Nostra since the end of last year. Our approach has been to acquire
oil-producing assets for the company, which we believed our
experienced operational team could add significant value to through
targeted workover programmes, cost cutting initiatives and other
development work. The publication of today's Independent Reserves
Report is vindication of this strategy.
Over the course of the three months since the start of last
December we have booked reserves at our Permian Basin assets and
increased Nostra's proven oil reserves at Pine Mills through
increasing our interest to 87.5% and increased the NPV10 valuation.
We've achieved this without diluting shareholders, using internally
generated funds. In a challenging environment we've delivered all
our short term targets for these assets and I would like to thank
our dedicated operational team, which has made this possible
through such hard work.
Nostra Terra is now well positioned to continue growing at its
own pace as conditions allow. In the near future we expect to
complete the foreclosure on the remaining 12.5% Working Interest in
Pine Mills, further adding value to the business.
Beyond acquiring 100% of Pine Mills, we have in place a schedule
for reactivation of existing drilled wells to take place in 2017
across our Texas assets. If the market for oil remains robust and
builds on recent gains, Nostra Terra expects to be able to carry
out a more extensive drilling campaign to improve overall
production and increase reserves. I look forward to providing
further updates to the market."
Competent Person Disclosure
Christian Snyder, a Petroleum Engineer at Nostra Terra with over
20 years relevant experience in the oil industry, has reviewed this
announcement for the purposes of the current Guidance Note for
Mining, Oil and Gas Companies issued by the London Stock Exchange
in June 2009. Mr. Snyder is a member of the Society of Petroleum
Engineers.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
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
Smaller Company Capital Limited (Joint
Broker) +44 (0) 20 3651 2910
Rupert Williams / Jeremy Woodgate
Glossary
Mbbl: Thousand barrels
NPV10: the Net Present Value calculated at a discount rate of 10
per cent.
Proved Reserves (1P): those quantities of petroleum, which, by
analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be commercially recoverable, from a given
date forward, from known reservoirs and under defined economic
conditions, operating methods, and government regulations. If
deterministic methods are used, the term reasonable certainty is
intended to express a high degree of confidence that the quantities
will be recovered. If probabilistic methods are used, there should
be at least a 90% probability that the quantities actually
recovered will equal or exceed the estimate.
Probable reserves: those unproved reserves which analysis of
geological and engineering data suggests are more likely than not
to be recoverable. In this context, when probabilistic methods are
used, there should be at least a 50% probability that the
quantities actually recovered will equal or exceed the sum of
estimated proved plus probable reserves
Possible reserves: those unproved reserves which analysis of
geological and engineering data suggests are less likely to be
recoverable than probable reserves. In this context, when
probabilistic methods are used, there should be at least a 10%
probability that the quantities actually recovered will equal or
exceed the sum of estimated proved plus probable plus possible
reserves
The company news service from the London Stock Exchange
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