Quarterly Operations and Production Update

RNS Number : 4482X

Nostra Terra Oil & Gas Company PLC

13 January 2014

 



13 Jan 2014

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Quarterly Operations and Production Update

150% Production Increase Ahead Of Schedule

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

·     Annual production increase of over 150%* reached in November 2013, exceeding guidance ahead of schedule

·     October 2013 net production averaged 60 boepd (net of royalties)

·     Participating in 5 additional wells (since the last Quarterly Operations Update covering Q3 2013)

·     Participating in 2^nd test well in the Mississippian formation, which offers potential to increase the number of drilling locations in the Chisholm Trail Prospect

·     Testing of the third well in the Verde Prospect is complete and the well has been put into continuous production

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

·     NTOG's largest Working Interest ("WI") in a well proposed in the Chisholm Trail Prospect, thus far, is being permitted

(*based on production for January 2013 to November 2013 vs. total production for 2012. Full production numbers for November 2013 are not yet available but will be published in due course)

Production Update

Nostra Terra averaged net production of 60 boepd in October, 2013 (80% oil and liquids). This increase in production was driven largely by the successful rework of CT3 (Gant 1-27H) Production was lowest during the months of August and September when the CT3, was shut-in and then re-worked.  Since then, the Company's production levels for October are the highest of the year to date on a monthly basis.

Monthly Net Production

                                Month                  Total Net* Production (BOE)

July                                        1,388

August                                  1,151

September                         1,601

October                               1,870

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

(NRIs range from 78% to 81%)

Q4 2013 Operations Update

Since the last Quarterly Operations Update on 29 October 2013 (for Q3 2013), the Company has elected to participate in 5 additional wells (CT8-CT12).  No production from these wells is included in the October production figures.  Of these 5 wells; two (CT8 & CT9) are being put into production, two (CT10 & CT12) are permitting, and one (CT11) has been completed.  Four of the five wells are in the Hunton Limestone formation where the company has experienced drilling success.  The fifth well is a test of the Mississippian where some operators are now beginning to drill test wells in the play following successful drilling into the Mississippian in neighboring counties.

After the drilling of the V3 (Holt) well in the Verde Prospect was completed, a completion rig was brought in to place the well into production. The V3 (Holt) well is now in continuous production and production averages will be provided once the rate of production stabilizes.

Outlook

We remain cash flow positive on an operational basis with free cash flow being reinvested in the drilling of new wells.  During the quarter, the final hearing was held on the collection of the Richfield Note.  The Company was awarded an additional US$210,000, over and above the $150,000 held by the Court already awarded to Nostra Terra.  We anticipate receiving the $360,000 total in January 2014, which will be invested in the drilling of new wells.

New wells continue to be planned and proposed by multiple operators in the Chisholm Trail Prospect.  We anticipate participating in many more and will update shareholders in due course.  Most notably, Ward Petroleum has scheduled a pooling and spacing hearing for a horizontal Hunton well that is scheduled to take place in January 2014. Following Oklahoma Corporation Commission approval, it is anticipated that the well will be permitted and drilled during Q1, 2014.  While the exact Working Interest has not been determined, it is anticipated that it will be Nostra Terra's largest WI to-date at Chisholm Trail.

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, published on 30 September 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, for which the Company is acquiring leases.  Additional interpretation and mapping of the data is continuing and further prospects may be identified.

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

"The permitting and drilling of new wells at Chisholm Trail continues to accelerate as six operators propose additional horizontal wells now in not one but two resource-play targets. We anticipate that the two zones will supply drilling opportunities throughout 2014". 

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

"We're happy to have surpassed previous guidance production for the year ahead of schedule.  In addition, we have several wells in various stages of planning through to production, which we anticipate will add to our existing production base in the coming months." 

"The Chisholm Trail prospect is providing a strong foundation for the Company and 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 accelerate following the increase in production and revenues from the new wells that are coming on stream. We also continue to evaluate new opportunities from which to grow our portfolio even further."

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.

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]

 

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