Q1 Production Update

RNS Number : 9336L

Nostra Terra Oil & Gas Company PLC

01 May 2015

 



AIM: NTOG                                                                                 1 May 2015

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Quarterly Production and Operations Update

Quarterly production increase of 79% over same quarter last year

Nostra Terra (AIM:NTOG), the oil and gas exploration and production company with a growing portfolio of assets in the USA, is pleased to provide an operational and production update for the first quarter of 2015.

Highlights

·    Quarterly production increase of 79% over same quarter last year

·    Quarterly production more than 11,000 boe (net of royalties)

·    Quarterly revenues reached US$446,956 (net of royalties)

·    Expansion in South Texas, Eagle Ford trend

Monthly Production (Net)

Month	Total Net* Production (BOE)	Revenue (USD)
January	4,012	144,320
February	3,415	140,827
March	3,641	161,809

*Net to Nostra Terra's working interests, after royalties

(NRIs range from 78% to 81%)

Q1 2015 Operations Update

The Company is pleased to report that first quarter production continued to surpass 11,000 boe and revenue from production of US$446,956, despite the lowest oil prices since 2009.

Chisholm Trail Prospect (Oklahoma)

Multiple formations have been drilled and successfully tested. Economics for existing horizontal wells remain positive, however operators have significantly slowed down drilling in recent months - as a significant proportion of production is obtained in the early months of the well, it is better to wait for higher oil prices than to produce relatively large volumes at lower prices. Nostra Terra will continue to evaluate new proposals as they are made by operators.

White Buffalo Prospect (Wyoming)

White Buffalo is our largest 100% asset acquisition to date, consisting of 6,000 net acres of leases in the prolific Big Horn Basin of Wyoming. Independent projections are that the prospect holds up to 20 potential locations for horizontal drilling and a recoverable potential of 13 million barrels of oil. At oil prices of $73.4 per barrel, each well has been independently projected to an optimum value of US$12 million and a total asset value of US$236 million.

We have taken steps that will enable us to move quickly when oil prices increase and in the meantime see no requirement to start drilling, given that .we have revenues from our other interests. The acquisition of technical data has been concluded. Existing seismic studies have been identified for purchase, new 2D lines have been laid out along the intended well paths of future horizontal wells, while the log suites and coring programs have been defined.

South Texas (Eagle Ford Trend)

Earlier this week Nostra Terra announced the acquisition of a 1% Working Interest in a prospect covering approximately 20,000 acres in South Texas. The Working Interest will not be subject to reduction, as previously seen in some of our Oklahoma interests, as Forced Pooling regulations are different in Texas.

The 870 million acre Eagle Ford trend has the same "stacked pay" characteristic that is consistent with Chisholm Trail. Such areas allow for the "multiplier effect" where numerous zones can be exploited within the same leases.

This prospect offers the opportunity for the Company to enter a potentially large play at very low risk, while at the same time offering a significant upside for leveraging into a multi-well, continuous drilling program. The first well was already drilling at the time of the announcement and completion is anticipated very soon. Investment in future wells will be paid from the cash flow of our currently producing assets. Success in these first test wells of this 20,000-acre opportunity, will allow drilling along the trend and replacement of reserves due to normal production decline of our other assets in the portfolio.

Nostra Terra will continue to look for opportunities to invest in the many formations along this trend and grow to larger scale.

Outlook

Our current revenue from producing properties continues to exceed our overheads, even in the current oil price environment.  That said we are selective of when and where free cash flow is invested and will continue to be disciplined in maintaining already very low corporate overhead. 

Many operators have cut their CAPEX drilling budgets significantly, simply waiting for oil prices to strengthen while we see this period is an opportunity to grow. 

The concentration remains on areas of "stacked pay" and will be acutely focused on investing where the economics are strong, despite the lower current oil prices. We are particularly interested in assets that are already producing, or are drilling, or drill-ready immediately.  We anticipate that many more opportunities will become available to us along the Eagle Ford trend in South Texas, where further growth is targeted.

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

"While the oil price appears to be recovering, we are looking for a more stable oil price before committing to a drilling program at White Buffalo, preferring to grow our cash position further by investing in the type of low-risk prospects that we enjoyed along Chisholm Trail. By doing this we can build our cash position with the aim of maintaining more of our interest of White Buffalo.

Despite the lower oil price, environment portfolio investments made in the last few years continue to generate cash which we are using to help fund growth, both in production and exploration. Our recent acquisition of interest in South Texas, the largest acreage in our portfolio, offers much more opportunity to add production and cash."

The technical information within this announcement has been reviewed by Alden McCall, the Company's Chief Operating Officer, a Certified Petroleum Geologist and a member of the American Association of Petroleum Geologists and the Society of Petroleum Engineers.

Glossary

`boe' means barrels of oil equivalent: a unit of energy based on the approximate energy released by burning one barrel (42 US gallons or 158.9873 litres) of crude oil.

`boepd' means barrels of oil equivalent per day

'mcfd' means Thousand Cubic Feet per Day

'NRI' means Net Revenue Interests

'WI' means Working Interest

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

Nostra Terra Oil and Gas Company plc

Matt Lofgran, CEO

[e-mail]                                                    Telephone: [phone]

Sanlam Securities UK Limited

(Nominated adviser and broker)

Lindsay Mair / James Thomas / Jamie Vickers        Telephone: [phone]

PR

Gary Middleton                                                              Telephone: [phone] 

 

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