Quarterly Operations and Production Update

RNS Number : 5866R

Nostra Terra Oil & Gas Company PLC

29 October 2013

 

29 October 2013

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Quarterly Operations and Production Update

Production expected to increase 150% in 2013

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 on various assets.

Highlights

·     Significant jump in production following rework of CT3 (Gant 1-27H). Production rates of 471
 average Barrels of oil equivalent per day "Boepd" (10-day gross production, achieved in the
 final 10 days of September, 2013), surpassing original rate of 348 Boepd. Nostra Terra has
 12.58% working interest.

·     5^th well at Chisholm Trail (CT5, Kirtley 1-34H) beats Boards expectations with 448 Boepd.

·     New well drilled (CT7, LSEPMU 7-3H) testing the Mississippian formation, which offers
 potential to increase the number of drill locations much further.

·     5 wells in production at Chisholm Trail and several new wells expected to be drilled by year-end.

·     Third well in Verde Prospect drilled (undergoing production testing).

·     Company remains cash flow positive on an operational basis, with excess cash being re-
invested in new wells.

 Production

During the first half of 2013 several new wells in the Chisholm Trail prospect were brought into production. The impact of a significant portion of the production from these wells was not seen in the Company's interim results for the six months ended 30 June 2013 because there is a time lag of between two to four months from production to the receipt of funds by the Company from purchasers of the production. Despite the lag, the Company generated a gross profit of £256,000 before a non-cash charge of £387,000 reflecting depletion (as per note 3 in the Company's half yearly results to 30 June 2013).  Depletion does not affect actual cash flow, but provides tax advantages when operating in the USA.  This represents a 349% increase in Gross Profit from H1 2012.  The £256,000 gross profit has been reinvested in further lease acquisition and drilling.

During the third quarter a decision was made to rework CT3 (Gant 1-27H), where NTOG has a 12.58% working interest.  This was due to sand and other fine-grained material entering the well bore and choking off the production. The well was drilled out and the result has been a significant increase in production.  The most recent 10-day production average is 471 Boepd, a rate more than 30% higher than original production levels.  CT5 (Kirtley 1-34H) was put into production during Q3 2013 producing 448 Boepd during the initial period, more than double management's original expectations.  CT7 (LSEPMU 7-3H) has been drilled and completed in the Mississippian, a formation previously untested in this area.  The well is now undergoing production testing and results are imminent. 

Monthly Net Production

                                Month                  Total Net* Production (BOE)

Jan                                         1,793

Feb                                        1,748

March                                   1,621

April                                      1,245

May                                       1,396

June                                         958

July                                        1,388

*Net to Nostra Terra's working interests, after royalties ranging from 78% to 81%.

Outlook

Throughout the year we've seen the activity level in the Chisholm Trail Prospect area continue to increase.  New wells have been drilled and increased efforts are focused on the planning and permitting of new wells.  Nostra Terra anticipates drilling multiple new wells with various operators during Q4 2013, one of which will be drilled by Ward Petroleum where the Company anticipates having a working interest of over 10%. 

The third Verde well is currently undergoing production testing and the Company will provide production figures as the well stabilizes.

Work on the High Plains Prospect continues to progress. Since the update in the Company's interim results statement for the six months ended 30 June 2013, Nostra Terra is pleased to report that following the initial interpretation and mapping of a portion of the area, a number of prospects have now been identified.  The Company is now seeking to acquire leases for these prospects. Additional interpretation and mapping of the data will continue and further prospects may be identified.

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

"The third quarter of the year has been busy. The Chisholm Trail is providing a strong foundation for the Company as we remain cash flow positive on an operational basis.  We've been reinvesting free cash flow into additional leases and wells, and anticipate this will increase at a much quicker rate following an increase in production and revenues from the new wells that are in various stages of the planning and drilling process."

"Our production increased by 31% from 2011 to 2012.  We anticipate production in 2013 will increase by more than 150% over 2012.

Alden McCall, Chief Operating Officer of Nostra Terra, added:

"Each well drilled so far has been completed successfully and we believe that this success will continue. The permitting and drilling of new wells at Chisholm Trail is proceeding at a brisk pace. We are anticipating that several more wells will be added in the fourth quarter and through the first quarter of 2014. Meanwhile, in Colorado, the third Verde well is undergoing production testing.

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. He meets the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies 

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

Nostra Terra Oil and Gas Company plc

Matt Lofgran, CEO

[e-mail]                                                   Telephone: [phone]

Shore Capital & Corporate Limited (Nominated Adviser) 

Bidhi Bhoma/ Toby Gibbs                                            Telephone: [phone]

XCAP Securities plc (Broker)                             

Jon Belliss                                                                           Telephone: [phone] 

Lothbury Financial Services Limited

Gary Middleton / Michael Padley                            Telephone: [phone]

 

END

 

 

MSCUWVARORARUUA