Mesquite and Corporate Update

RNS Number : 8356P

Nostra Terra Oil & Gas Company PLC

15 October 2019

 

15 October 2019

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Mesquite and Corporate Update

Nostra Terra (AIM: NTOG), the oil & gas exploration and production company with a portfolio of development and production assets in Texas, USA, is pleased to provide an update on permitting at the Company's Mesquite asset, as well as a general corporate update.

Highlights

·    Completion of leasing 160-acre standalone asset within the Mesquite asset

o Lease is surrounded by commercially productive wells on all four sides

·    The lease provides an excellent opportunity for horizontal drilling

o Well design complete, and well permitting currently underway

·    Production from existing assets remains in line with that reported in the Company's 30 June 2019 interim results

·    Company continuing its evaluation of potential acquisition targets

Leasing Complete, Permitting Underway

Leasing of the 160-acre standalone asset within the Mesquite Target Area ("Target Area") has been completed. The target area covers over 30,000 acres in the prolific Permian Basin of which Nostra Terra now has approximately 2,000 acres, within which the 160-acre standalone lease is surrounded by production wells on all four sides.

The lease provides the Company and potential partners with the opportunity to drill a minimum of two horizontal wells, each with approximately a half-mile lateral within formation, or approximately eight vertical wells based on 20 acre spacing, in a single formation. Additional wells could be drilled in other formations.

The permitting process is now underway. The Company is permitting two wells; one in the standalone 160-acre lease, and the other in the core Mesquite acreage. Well design is now complete. Both wells have been designed with optionality to drill a vertical well first that could be used as a pilot well to core and test the target formation, to help make further determinations on the lateral portion of the well. The wells could then either be put into production at that point as a vertical well, or kick-off horizontal drilling into the lateral from the original vertical wellbore.

Drilling permits are expected to be received by the Company in the coming weeks.

Corporate Update

As previously communicated, Nostra Terra is seeking to grow through acquisition as well as organically through drilling existing assets.

Production from existing assets remains in line with that reported in the Company's 30 June 2019 interim results.

The Company is preparing to drill new wells on existing leases whilst also spending considerable efforts identifying and pursuing acquisitions of existing producing assets. In terms of acquisitions, we are currently seeing a number of opportunities to acquire producing assets at very attractive multiples of net cash flow, and where we could use leverage at attractive rates to finance the majority of the acquisition cost.

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

"Leasing can be unduly complex when dealing with several mineral owners simultaneously, but we now look forward to the formal permitting application process. The 160-acre lease represents an excellent opportunity for Nostra Terra to drill its first horizontal well with a half-mile lateral in the Permian Basin.

Furthermore, we are in various stages of negotiations to acquire additional producing assets, most of which are in the Permian Basin, and are working hard to complete the right deals at attractive valuations. We anticipate that any acquisition will be cash generative and immediately accretive to earnings, which could prove transformational to the Company."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

For further information, contact:

Nostra Terra Oil and Gas Company plc Matt Lofgran, CEO	Tel:	[phone]
Strand Hanson Limited (Nominated & Financial Adviser and Joint Broker) Rory Murphy / Ritchie Balmer / Jack Botros	Tel:	[phone]
Shard Capital Stockbrokers (Joint Broker) Damon Heath / Erik Woolgar Lionsgate Communications (Public Relations) Jonathan Charles	Tel: Tel:	[phone] [phone]

About Nostra Terra

Nostra Terra is seeking to increase oil production and reserves through both organic growth and strategic acquisitions, utilising the latest drilling and completion techniques.

Nostra Terra's core asset is a 100% working interest in the Mesquite asset located in the prolific Permian Basin, West Texas. The Mesquite asset covers 1,984 net acres with estimated proven recoverable reserves of 2.4mmbbls.

In addition, Nostra Terra has a 100% working interest in the well-established East Texas region, and interests in three additional Permian Basin properties in close proximity to Mesquite and is currently producing from two wells. The first well reached pay-out in less than one year.

The Permian Basin, which covers 75,000 square miles over West Texas and southeast New Mexico, is the most prolific oil producing basin in the country. 

For further information, please visit our website: www.ntog.co.uk.

 

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