Hewitt Petroleum Update

RNS Number : 5528W

Nostra Terra Oil & Gas Company PLC

01 February 2012

 



AIM: NTOG

1 February 2012

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Foreclosure on Hewitt Petroleum, Inc. (now Richfield Oil & Gas) and Bale Creek update

Nostra Terra, the AIM-quoted oil and gas producer with projects in the USA, has commenced foreclosure proceedings against Richfield Oil & Gas Company, formerly Hewitt Petroleum, Inc. ("Richfield").

Under the terms of the agreement announced on 14 April 2011 (the "Agreement) Richfield and Hewitt Energy Group, Inc., issued to the Company a US$1.3 million secured loan note (the "Loan Note") which has been accruing interest at 10% per annum from the date of issue and which matured on 31 December 2011.  As announced on 6 January 2012, the Company granted Richfield an extension on the repayment date to 31 January 2012. 

To date, no funds have been received from Richfield in respect of the Loan Note. Richfield has been notified that it is in default, and Nostra Terra has begun the process of recovering against the collateral.  The Loan Note is secured against producing leases located in Kansas and non-producing leases located in Utah. Nostra Terra is in the process of assuming temporary control to operate the producing leases in Kansas during the foreclosure process.

Bale Creek update

Following 3D seismic interpretation at Bale Creek, locations of the initial wells have been adjusted.  Site construction is now underway, and spudding is expected to follow.

Further updates on both the foreclosure process and Bale Creek will be made in due course.

Matt Lofgran, Chief Executive Officer of Nostra Terra, commented:

"Last year, we excluded all proceeds from the Loan Note from our funding plans.  Consequently, we remain fully-funded for all planned drilling activities for H1-2012 as well as having funds available for further acquisitions. 

As part of the extension granted to Richfield on 6 January 2012, the Company obtained agreement on several issues that will expedite an efficient end to this matter in the event of a default.  Specifically, Richfield agreed to waive all rights under the foreclosure process and also completed the change of operator forms which have been delivered to the Company as a result of Richfield's January 31 default. Consequently, we have the necessary documentation to qualify as operator of the producing leases.  Net cash flow from the leases will offset ongoing interest expenses accruing on the Loan Note during the foreclosure process. 

We will continue to build a diverse portfolio of assets in various stages from leasing to production and plan to add significant production and reserves in 2012."

For further information, visit www.ntog.co.uk or contact:

Nostra Terra Oil and Gas Company plc

Matt Lofgran, CEO

[e-mail]                                                       Telephone: [phone]

Shore Capital & Corporate Limited (Nominated Adviser) 

Bidhi Bhoma / Toby Gibbs                                                Telephone: [phone]

Alexander David Securities Ltd

David Scott / Bill Sharp                                                     Telephone: [phone]

Lothbury Financial Services Limited

Gary Middleton / Michael Padley                                       Telephone: [phone]

Notes:

The Loan Note is secured against both producing leases located in Kansas and non-producing leases located in Utah. Nostra Terra is in a [position to operate the producing leases in Kansas with immediate effect.

Security for the Note is as follows:

·     100% working interest in the Furthmyer-Neidenthal leases in Kansas, including all associated production equipment.

·     10% working interest in the Utah Overthrust Project, with leases covering approximately 14,000 net acres located on the Sanpete-Sevier Overthrust Tend, located in Central Utah.

Announcements made by the Company are available automatically by email to those who register at www.ntog.co.uk.

 

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