Quarterly Production Update

RNS Number : 8464O

Nostra Terra Oil & Gas Company PLC

12 August 2014

 



Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Quarterly Production and Operations Update

Two Chisholm Trail Wells Reach Early Payout

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.  The Company is now looking to expand by increasing its Working Interest ("WI") percentages and is also preparing to become an operator on further prospects.

12 August 2014

 Highlights

·    CT-4 (Kathy James) reached payout at end of February (13 months)

·    CT-3 (Gant 27) projected to reach payout in Q3-14 (approximately 18 months)

·    CT-15 (Curly 1-26H) adds gross Initial Rate of 232 boepd early production to the portfolio, (approx. 21 boepd net to Nostra's 11.62% WI)

·    CT-14 (Grant 22) is producing commercial rates of oil and gas and awaiting further fluid recovery for stabilised rates

·    Elected to participate in two additional CT wells

·    Proceeds from final Richfield payment and recently increased borrowing base used for further investment in Chisholm Trail

·    Quixote Associates added to team to work on larger acquisitions

Monthly Production (Net)

Month	Total Net* Production (BOE)	Revenue (US$)
January	2,125	154,100
February	1,960	142,670
March	2,100	150,800
April	1,265	86,130
May	1,370	101,300
June	1,450	107,735

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

(NRIs range from 78% to 81%)

Q1 2014 Operations Update

Chisholm Trail Prospect (Oklahoma)

The Company elected to participate in two additional wells (CT-16 and CT-17) in the Hunton Limestone formation, where the Company has experienced repeated drilling success. Nostra Terra has a 20% WI in the CT-16 well (Bollenbach 1-33H).  The completion operations of the CT-15 (Curly 1-26H) resulted in a drop in production from the neighboring CT-3 (Gant 27), which is reflected in the reduced production and revenue in April.  However this is a common occurrence and production from the well has been steadily rising since April.

Operations on the CT-15 well were transferred from Husky Ventures to Ward Petroleum on 1 July 2104.  Production from this well was intermittent over the last 60 days of Q2.

The CT-14 (Gant 22) well has been completed and has been flowing back for two months.  Although the well is producing oil and gas, it is yet to reach peak levels.  Approximately 20% of the fluid from hydraulic fracturing operations has been recovered, however operators in the area have indicated that on some occasions, little production is seen until 25% to 30% of the fluid is recovered.  Ward Petroleum and the Company continue to be in close communication as progress is evaluated.

Overall, production in H1 declined in line with expectations, due to the completion operations, but since May it has been increasing again with the potential to rise sharply as newer wells come on stream.

High Plains Prospect (Texas)

The first exploration well in the High Plains Prospect is still planned to drill during Q3 2014.  The prospect covers 66 square miles and work continues to integrate detailed subsurface mapping and 3D seismic data that will prioritise further areas for drilling.

Nostra Terra has a 20% working interest ("WI") in the prospect, which is operated by Brown and Borelli.  The geophysical results indicate that High Plains has the potential to provide a healthy pipeline of drilling locations for some years to come.

Borrowing Facility

During the quarter the borrowing base of the $25m facility with Texas Capital Bank was increased from $500,000 to $1.1m and the Company took advantage of this investing over $800,000 in CT-16 where Nostra Terra has a 20% WI and over $100,000 in CT-17 where it has a 2.92% WI.

Outlook

The CT-3 (Gant 27) well has fully-recovered from the interruption in production caused by the completion of CT-15. In addition, production from CT-15 has greatly improved after the first several erratic weeks on line.  Current production from the portfolio underpins the economics of the business as the Company looks to expand.

New wells have been planned and proposed by multiple operators in the Chisholm Trail Prospect, and Nostra Terra continues to evaluate its involvement in these.  Furthermore, a new drilling location within the High Plains Prospect has been identified, with leasing for the location now complete.  If it proves successful, the well will be followed by an on-going leasing program within the 43,000 acre Area of Mutual Interest.

The Company plans to sell the leases and producing wells within the Bloom prospect.  Selling these non-core assets will allow Nostra Terra to focus its resources in areas where it believes there is significant growth potential and, as part of this strategy, the Company is considering larger acquisitions where it would be the operator. 

Nostra Terra recently appointed Quixote Associates Limited ("Quixote"), led by Tom Reynolds, to work with the team.  Tom brings a wealth of experience, not just in oil and gas exploration and production, but also in completing large acquisitions and corporate transactions.  The directors believe the appointment of Quixote will be invaluable in acquiring the potentially significant opportunities the Company is currently considering and prove to be a fruitful ongoing relationship.

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

"Our goal and guideline has been to participate in wells that reach payout in three years or fewer.  We are very pleased that two of the earliest large-interest wells reached payout by the end of July.  A third well, Kirtley, is projected to reach payout during H2-14. Ward Petroleum and Nostra Terra continue to be hopeful that the Gant 22 will begin to produce hydrocarbons in larger quantities soon, and will advise when definitive information becomes available."

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

"While we anticipate growth in production from the portfolio, both from wells within Chisholm Trail and the drilling of the High Plains prospect, our focus is to acquire much larger assets where we will be the operator.  This will allow us to have more control over the pace of operations, while leveraging production and reserves for shareholders.  The signing of an agreement with Quixote gives Nostra Terra invaluable additional experience as we progress with these acquisitions."

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]

Northland Capital Partners Ltd

(Nominated Adviser) 

Matthew Johnson / Lauren Kettle                Telephone: [phone]

Hume Capital Securities plc

(Broker)                             

Jon Belliss / Abigail Wayne                         Telephone: [phone]

Lothbury Financial Services Ltd

Gary Middleton / Michael Padley                Telephone: [phone] 

 

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