Operations Update
Nostra Terra Oil & Gas Company plc
("Nostra Terra" or the "Company")
OPERATIONS UPDATE
31 March 2010
Nostra Terra Oil & Gas Company plc (AIM: NTOG) is pleased to provide an update
on its operations during the first quarter of 2010.
· Weather now improving, allowing delayed works to begin or resume
· Six production wells currently being reworked and an additional salt water
disposal ("SWD") well being completed
· Remedial lateral work on the first two redeveloped Hoffman wells will be
carried out in April to restore sustainable flow rates
· 50% working interest in Koelsch property now acquired
· Interest acquired in the Liberty #1 exploratory well in Utah Overthrust
Weather impact
Kansas is finally emerging from its worst winter in many years, with persistent
heavy snowfalls and sub-zero temperatures well below average for the state.
Throughout January and much of February, these challenging weather conditions
significantly hampered progress on Nostra Terra's three properties in the
Central Kansas Uplift, as they did on other oil and gas operations in the
region. As a result, redevelopment work on wells that had been scheduled for
completion by the end of March was delayed and is now expected to be completed
during the second quarter of 2010.
Current operations
The Company now has increased its rig count to five rigs on site, four of which
are redeveloping oil production wells which, after an extensive rework program
to understand and optimise the well dynamics, are expected to deliver stable and
sustainable production. The fifth rig is finishing a rework of a salt water
disposal (SWD) well. A description of the current operations on each property,
as well as information on the Company's other activities and plans, is given
below.
Hoffman
On 12 February 2010, Nostra Terra increased its interest in the Hoffman property
from 7.8% to 25% after making the final consideration payment of $275,000. On
the same day, the Company announced that it had acquired a 50% interest in a
further 160 acres nearby which, like the Hoffman property, lie within the large,
mature Trapp field.
As announced on 8 February, initial production from the first redeveloped
Hoffman well swabbed at a daily rate of approximately 74 barrels of oil per day
(bopd), over a three day period. The produced oil is a good quality, 39° API
crude. Since then, whilst reservoir pressure in the targeted zone in the well is
unchanged, inflow caused from fines has caused interruptions to flow rates which
are very significantly reduced pending remedial work to open up lateral
sections within the borehole to go beyond the immediate issue. This remedial
work was itself delayed pending the availability of suitable contractors, but is
now underway. The Company and its equity partner and operator of the Kansas
properties, Hewitt Petroleum Inc. ("HPI"), have continued to assess the well
dynamics and most effective methods to deliver sustainable production from the
property.
A specialist contractor arrived on site yesterday, 30 March, to carry out radial
jet enhancement - a proven technology to increase production in mature oil
fields that involves pressure-jetting lateral sections into the producing
formation - both on the first well and on a second Hoffman well that has been
reworked and is now ready to be brought on line.
The Hoffman property is located in Barton County and Russell County, Kansas, and
contains five existing production wells (two of which are plugged) and one SWD
well. As stated in the Company's 2 September 2009 reserves announcement, the
Hoffman property is estimated to contain total proven reserves of 834,000
barrels of crude oil and 404 million cubic feet of natural gas, excluding any
probable or possible reserves. The Company's working interest is 25% (after
production royalties).
Bloom
First production from the Bloom property, which had been targeted before the end
of March, is now expected to begin in April. Three rigs are now operating on the
property. Electrical power infrastructure has been completed at seven of the
nine production well locations, as well as production flowlines and surface
equipment.
Nostra Terra holds an interest in nine existing production wells and two SWD
wells on the Bloom property, which is located within the Chase-Silica field in
Rice County, Kansas. The reserves report on the Bloom property, highlights of
which were announced by the Company on 2 November 2009, stated that the property
includes total proven reserves of 2.26 million barrels of crude oil and 1.1
billion cubic feet of natural gas, excluding any probable or possible reserves.
Nostra Terra has a 50% working interest in the Bloom property.
Boxberger
On 8 February 2010, Nostra Terra announced that initial flow rates from the
first reworked Boxberger well were very encouraging, and that the Company
expected to be in a position to provide production data before the end of this
quarter once a second, higher-capacity SWD well had been brought on stream.
These operations were severely disrupted by the weather, but have now resumed.
Once the second SWD has been permitted for use, the first producer will be
brought on stream.
Nostra Terra holds an interest in 11 wells, including at least two SWDs, on the
Boxberger property, which is located in Russell County, Kansas, within the
mature Gorham field. As stated in the Company's 2 September 2009 reserves
announcement, the Boxberger property is estimated to contain total proven
reserves of 1.66 million barrels of crude oil and 805 million cubic feet of
natural gas, excluding any probable or possible reserves from other intervals
that have not yet been tested. Nostra Terra has a 50% working interest (after
production royalties) in the Boxberger property.
Anticipated rework and drilling programme for 2010
Nostra Terra has plans with its partner to rework or drill 15 wells by 31
December 2010. All of these wells are within the Company's existing asset
portfolio, and are funded, although other wells from new acquisitions may be
substituted where this would be strategically advantageous. The Company will
report further in its preliminary results statement for the year ended 31
December 2009.
Acquisition
Liberty #1 (Utah Overthrust)
Nostra Terra also announces today that it has acquired a 7% working interest
(WI) before payout and 5% WI after payout in the Liberty #1 exploratory well in
Juab County, Utah, for an initial consideration of US$125,000, with an estimated
additional contribution of US$87,500 should the Liberty #1 be deemed capable of
producing commercial quantities of hydrocarbons. The Company has the right to
participate in the wider prospect area.
The Liberty #1 drill site and access road have already been constructed, a
drilling rig has been contracted and is due to arrive on site in the week
beginning 19 April.
The Liberty prospect lies on the Paxton thrust, six miles west of the Gunnison
thrust, where Wolverine Gas & Oil has had two major overthrust discoveries.
Wolverine Gas & Oil discovered 100 million-barrels of oil at its Covenant
field in just the shallowest of two stacked Navajo sandstone oil pools.
Subsequently, Wolverine Gas & Oil discovered the stacked, multi-pool Providence
field, which may be larger than the Covenant field and is now under development.
Surface geology, seismic, geochemical and gravity survey data were acquired and
interpreted to validate the potential sourcing, reservoir quality and structure
of the Liberty prospect.
The Liberty #1 well will be drilled to a total depth of approximately 5,000 feet
in order to test the Twin Creek formation and Navajo sandstone. Whilst there is
very limited seismic data and geological or geophysical analysis to verify the
depths and specific hydrocarbon potential, if any, Jeremiah Burton, a geologist
at HPI, estimates that the target holds a 60 million barrel reserve, that could
potentially yield in excess of 5 million barrels of high-quality crude oil per
well based on offset drilling, on intermediate seismic and on the area's recent
success.
Koelsch property (Kansas)
The leases and wellbores at the Koelsch Field referred to in the Company's
announcement of 15 July 2009 have now been acquired and the Company now holds
a 50% WI in two production wells and one SWD in the Koelsch Field, located in
Stafford County, Kansas.
Matt Lofgran, CEO of Nostra Terra, said: "The exceptionally harsh and long
winter in Kansas has delayed our progress and been frustrating for us and our
equity partner and operator, Hewitt Petroleum, Inc. However, during that time we
made progress on other fronts and now that spring has finally arrived, we are
bringing additional equipment and resources on site in order to accelerate
development of our current assets.
"During the quarter, we have also continued to identify and evaluate further
opportunities to add value to our asset base, in pursuit of our strategy to
transform Nostra Terra into a low-cost, profitable and growing oil and gas
producer."
Nominated adviser name change
Nostra Terra also announces that Blomfield Corporate Finance Limited, the
Company's Nominated Adviser, has changed its name to Religare Capital Markets
(UK) Limited - trading as Religare Capital Markets.
The technical information in this announcement has been prepared and approved
for release by W. A. Alexander Jr. of W. A. Alexander, Jr. Oil & Gas Consulting.
He is a qualified person as defined in the Note for Mining and Oil & Gas
Companies, June 2009, of the London Stock Exchange.
For further information contact:
Nostra Terra Oil and Gas Company plc Telephone: +1 480 993 8933
Matt Lofgran, CEO
mlofgran@ntog.co.uk
Religare Capital Markets Telephone: +44 (0)20 7444 0800
Peter Trevelyan-Clark/Ben Jeynes
Alexander David Securities Ltd Telephone: +44 (0)20 7448 9820
David Scott/Bill Sharp/Nick Bealer
Announcements made by the Company are available automatically by email to those
who register at www.ntog.co.uk.
Notes to Editors
Nostra Terra Oil & Gas Company plc (AIM: NTOG) is an emerging oil and gas
exploration and production company with assets in established producing regions
within the US mid-continent. The majority of the Company's current US properties
are located in the Central Kansas Uplift (CKU).
Hoffman
Nostra Terra holds a 25 per cent working interest in five production wells and
one salt water disposal well on the Hoffman property, located within the Trapp
field in Barton County and Russell County, Kansas, and has a 50 per cent
interest in an additional undeveloped 160 acres nearby, also within the Trapp
field.
Bloom
Nostra Terra holds a 50 per cent working interest in nine production wells and
two salt water disposal wells on the Bloom property, located within the Chase-
Silica field in Rice County, Kansas.
Boxberger
Nostra Terra holds a 50 per cent working interest in eleven wells, including at
least two salt water disposal wells, on the Boxberger property, located in
Russell County, Kansas within the Gorham field.
Koelsch
Nostra Terra also has a 50 per cent working interest in two production wells and
one salt water disposal well in the Koelsch property, located in Stafford
County, Kansas.
Ukraine
Nostra Terra retains the right to a 25 per cent profit share in the onshore
Oktyabrskoe oil field in the Ukraine.
For more information please visit: www.ntog.co.uk