Production and Operations Update

Nostra Terra Oil & Gas Company PLC

11 November 2024

 

11 November 2024

Nostra Terra Oil and Gas Company Plc

("Nostra Terra" or "the Company")

Production and Operations Update

Nostra Terra (AIM: NTOG), the international oil & gas exploration and production company that is focused on its Pine Mills producing asset in Texas USA, is pleased to provide a production and operations update on the Company.

Highlights

·    Phase 1 workover program complete

·    Production increased at Pine Mills Field by an average of 30 BOPD - 60% Increase

·    Company oil production is averaging approximately 120 bopd net, up significantly

·    Enhanced oil recovery project in the northern end of Pine Mills restarted

·    More work-over opportunities identified

·    New Fouke area development location adds 200,000 barrels of oil reserves*

·    Field operating costs reduced by 25%

·    Field netbacks and profitability, significantly increased

·    Cash flow positive at the operating level and now also at the corporate level

Production

Company oil production is currently averaging 120 bopd net, up significantly due to the contribution from the first phase of the planned workover program at Pine Mills in which NTOG has a 100% working interest ("WI").  Five previously shut-in wells have been returned to production. Pine Mills is currently averaging 80 bopd gross. This field rate does not include the Fouke production or any benefit from restarting of the enhanced oil recovery project or "waterflood". To date, the work-over program has resulted in a production  increase by an average of 30 barrels of oil per day ("bopd") from the five restarted wells. 

The work in the field, combined with the recent technical work, has identified a number of additional profitable work-over candidates that are expected to be completed in a second phase of the work-over program.

The waterflood in the northern section of the field, which had been shut for over two years, has also been restarted. The waterflood response is expected to take approximately three months from the restart of injection to see the first results, with the full benefit expected after six months of continuous injection. The full benefit of the waterflood response is expected to deliver an additional 15-30 bopd.

The Fouke 1 & 2 oil wells in which NTOG has a 32.5% WI are producing at a combined average of 105 bopd gross, water-free, and without decline since May 2024. 

Recently completed technical work in the Fouke area has identified a 30-acre structure within the current lease, north of the Fouke 2 well, that is drill-ready and expected to contain more than 200,000 barrels gross of recoverable oil reserves (*) in the sub-Clarksville reservoir. Further work is also being done to evaluate two additional structures within the field that may have similar potential.

Operating Costs, Netbacks, and Profitability

As a result of the recent work-over activity, several changes have been made to the field operations in Pine Mills, which has reduced the overall operating costs by approximately 25%. These reductions, combined with the recent production increases, have reduced the lifting costs per unit by more than 50%. This has improved netbacks to more than $44 and $63 per barrel for the Pine Mills and Fouke areas, respectively, significantly increasing overall field profitability.

Lower costs and higher netbacks are a direct result of the strategy formulated in May 2024 to focus on the Pine Mills Field, which was in decline and had not been a priority under previous management. Cost reductions, coupled with the workover program results, have increased production, improved profitability, and allowed NTOG to become cash flow positive at the operating or field level and also at the corporate level at current oil prices.

Paul Welch, Nostra Terra's Chief Executive Officer, said:

"We are delivering on our plans to reduce costs, increase production, and grow our cash flow by focusing our efforts on our Pine Mills asset. It's been more than five years since an extensive work-over program was conducted in the field, and the results on the first five wells have exceeded our original expectations. We have also restarted the waterflood, which will take three months to show results, and we believe this has the potential to deliver an even greater boost to field performance.

Pine Mills has been an exceptional resource for the Company and can potentially deliver more value in the future. Following this successful work-over program, we have identified additional wells in other areas of the field that will be addressed in a second work-over phase. We have also identified other targets for future programs. In addition, we have recently identified a new drill-ready development location in the Fouke area, which we believe possesses another 200,000 barrels of additional oil reserves, and we are also at an early stage in evaluating two further structures that we think could have similar potential.

The changes we've implemented have delivered significant savings and allowed us to improve our margins by more than 50%, with a corresponding improvement in the netbacks. This results in NTOG being cash flow positive at the operating level and now at the corporate level.

I am excited about this asset's future potential and believe it will significantly exceed our previous estimates.  I look forward to reporting on our newly identified opportunities in future periods."

Note (*): NTOG Management calculated proved undeveloped reserves (based on the SPE PRMS Standard).

Qualified Person's Statement

In accordance with the "AIM Rules - Note for Mining and Oil and Gas Companies", the information

contained within the announcement has been reviewed and signed off by Paul Welch, Chief Executive Officer and Director, who has over 35 years of international oil and gas industry experience and is a Member of the SPE.

Glossary

bopd	Barrels of oil per day
Gross Production	Production at a total project level (100% basis) before royalties
Net Production	Net production attributable to a participant's Working Interest before royalties
Royalty	A type of entitlement interest in a resource that is free and clear of the costs and expenses of development and production to the royalty interest owner. A royalty is commonly retained by a resources owner (lessor/host) when granting rights to a producer (lessee/contractor) to develop and produce that resource. Depending on the specific terms defining the royalty, the payment obligation may be expressed in monetary terms as a portion of the proceeds of production or as a right to take a portion of production in-kind. The royalty terms may also provide the option to switch between forms of payment at discretion of the royalty owner.
SPE	Society of Petroleum Engineers
SPE PRMS	A standard for the definition, classification, and estimation of hydrocarbon resources developed by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers and named the Petroleum Resource Management System
Proved Reserves	An incremental category of estimated recoverable quantities associated with a defined degree of uncertainty. Proved Reserves are those quantities of petroleum that, 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.
Undeveloped Reserves	Those quantities expected to be recovered through future investments: (1) from new wells on undrilled acreage in known accumulations, (2) from deepening existing wells to a different (but known) reservoir, (3) from infill wells that will increase recovery, or (4) where a relatively large expenditure (e.g., when compared to the cost of drilling and completing a new well) is required to recomplete an existing well.
Working Interest	A participant's equity interest in a project before reduction for royalties or production share owed to others under the applicable fiscal terms.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For further information, contact:

Nostra Terra Oil and Gas Company plc Paul Welch, CEO	Email:	[e-mail]
SP Angel Corporate Finance LLP (Nominated Adviser and Broker) Stuart Gledhill / Richard Hail / Adam Cowl	Tel:	[phone]
Celicourt Communications (PR/IR) Mark Antelme / Jimmy Lea	Tel:   Email:	[phone] [e-mail]

 

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