Q3 Production Update

RNS Number : 2257G

Nostra Terra Oil & Gas Company PLC

23 November 2015

 

AIM: NTOG                                                                                                23 November, 2015

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Quarterly Production and Operations Update

Quarterly production increase of 232% 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 and Egypt, is pleased to provide an operational and production update for the third quarter of 2015.

Highlights

·    Expansion in USA - Paw Paw Prospect (Wyoming)

·    Significant additional production from Joint Venture in Egypt - East Ghazalat (Western Desert)

·    Quarterly production increase of 232% over same quarter last year

·    Quarterly production of 24,492 boe (net of royalties)

·    Quarterly revenues reached US$530,921 (net of royalties)

Monthly Production (Net)

	Production*			Revenue (USD)**
Month	USA	Egypt	Total	USA	Egypt	Total
July	2,027	6,787	8,814	$63,153	$144,726	$207,879
August	1,809	6,292	8,101	$52,038	$108,911	$160,949
September	1,671	5,906	7,577	$57,323	$104,820	$162,143

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

**Revenue in Egypt is the accrued combination of cost recovery and profit oil attributed to NTOG.  The average realised price for 3Q was $47.20 per barrel.

In the USA during August and September two of the larger contributing wells were temporarily offline causing a decrease in production.  Repairs have taken place and production has since been restored to previous levels.

Q3 2015 Operations Update

During recent quarters we have communicated that while the industry struggles, we believe it is a cyclical industry that will recover in time, and now is a great time to acquire assets and grow.  This quarter the Company has commenced executing on those plans.

Nostra Terra plans to expand into three different Focus Areas, where within each of these areas the primary focus is on cash flow. 

Nostra Terra has now expanded into a second Focus Area, where it is already in production, and when appropriate plans to expand to an eventual third Focus Area. To that end we are seeking assets that are already in production and generating revenue, or prospects with existing discoveries where significant upside could result in further development and exploration wells in the near term.

The large increase in production and revenues is attributed to the acquisition of a producing asset in Egypt (see East Ghazalat below).  The Company sold 24,492 barrels of oil equivalent in the third quarter bringing in approximately US$530,921 of revenue.  This represents an increase of 182% in production and 66% in revenue over the previous quarter alone. 

Paw Paw Prospect (Wyoming, USA)

As previously announced, Nostra Terra is progressing this prospect towards drilling through Wyoming licensing for operations, negotiations with drilling and completion contractors, creating an Exploration Unit, State and Federal permitting, and discussions with other exploration and production companies that could potentially acquire interests in the prospect.

Nostra Terra has been working diligently to secure an Exploration Unit ("Unit") from the government.  The primary benefit from a Unit is the ability to operate multiple leases as a single lease under a single operator.  This process allows for better, controlled development, hence is an important step in creating value to the prospect.  We anticipate announcing results of this shortly. 

At the same time, we continue to progress toward becoming an operator in the State of Wyoming along with getting necessary permits to drill.

Nostra Terra currently has a 100% working interest in this prospect, where Koch Exploration, a subsidiary of the second largest private company in the USA retains an overriding royalty interest until payout with the right to convert to a working interest.  As the oil markets strengthen Nostra Terra plans to sell a promoted interest to other oil companies while keeping a carried working interest and operating.  A contract operator has already been working with the Company at various stages of the planning process.  This allows Nostra Terra to scale up accordingly and drill larger prospects while maintaining lower overheads.

Haas Engineering (third-party reservoir engineer) has projected that the potential resource of the leased acreage could be as much as 7.368 million barrels of oil from primary and secondary recovery.

East Ghazalat (Western Desert, Egypt)

During the quarter Nostra Terra entered into a joint venture ("JV") agreement with Independent Resources, an AIM listed exploration and production company focused on the acquisition of producing assets in the Mediterranean and North Africa region, and a similar strategic intention to that of Nostra to invest in producing or near-production assets.

The initial acquisition from the JV is a 50 per cent interest in the East Ghazalat concession in Egypt for US$3.5 million, operated by North Petroleum, a wholly-owned subsidiary of China ZhenHua Oil Co, Ltd, a Chinese state-owned oil company.  The effective date of the closing was 1 July 2015, hence production and revenues are reflected this quarter.

The immediate priorities of JV are to improve operating margins through cost reduction initiatives, and to implement further reserve enhancement opportunities in a disciplined and rigorous manner.

South Texas (Eagle Ford Trend)

Earlier this year Nostra Terra announced the investment of a 1% Working Interest in two prospects, San Miguel and Don Pedro. The small interest was subscribed as a preliminary commitment with minimal cost, reserving the possibility of increasing the Working Interest pending results.

The Board has decided to concentrate its efforts on other assets, both in and outside the USA.  As such we will not be investing any more into the South Texas prospect.

Outlook

We believe that the continuing lower oil price environment this year presents an increasing number of opportunities. Nostra Terra will continue to seek for growth through acquisitions of assets within its focus areas, in known existing oil provinces such as the USA and Egypt.  We are currently evaluating further opportunities and look forward to updating shareholders at the appropriate time.

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

"We're very pleased to show a significant increase in both production and revenues for the quarter during a time in the industry where many companies are struggling. We feel it's a great time to grow our asset base and the acquisition in Egypt represents an excellent second focus area for the Company.  We will continue to seek other opportunities similar to East Ghazalat, both in the USA and beyond while remaining focused on cash flow.

During the quarter NTOG welcomed Ewen Ainsworth to the position of Non-executive chairman during a very active period for the company. Ewen's global experience is a strong asset to the board as we embark on the next level of growth for the company.

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]

Walbrook PR

Gary Middleton                                                              Telephone: [phone]

Nick Rome

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

 

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