Cashflow Positive

RNS Number : 1297N

Nostra Terra Oil & Gas Company PLC

28 January 2021

 

7.00am 28 January 2021

Nostra Terra Oil and Gas Company Plc

("Nostra Terra" or "the Company")

Cashflow Positive

Nostra Terra (AIM: NTOG), the oil & gas exploration and production company with a portfolio of development and production assets in Texas, USA,   is pleased to announce that the Company is cashflow positive. This is a significant milestone achieved following comprehensive, but careful, cost reductions and an increase in daily net oil production by the Company.

Highlights

· Cashflow positive achieved in December (prior to new well), key drivers being:

o  Lowered operating costs and overheads

o  Improved operating efficiency

o  Increased production

o  Increase in oil prices

· New well at Pine Mills in January increases net production by circa 26% further supporting positive cashflow

· Surplus cash to be utilised in further increasing oil production and asset base  

The Company is now cash generative at the corporate level including meeting our monthly debt repayment obligations. Having now completed the December accounts which included production of net 103 bopd, the Company achieved positive cashflow in December 2020. In January 2021 Nostra Terra announced the success of the new well at Pine Mills, adding a further net 32.5 bopd (before royalties), an increase of approximately 26% in production net to the Company compared to December's figures.  The Company's cashflow positivity is now a robust position, not simply dependent on the short-term oil price spike, but being first achieved in December where the spot price for oil (West Texas Intermediate, "WTI") was $45. January has proven to be stronger than December: oil prices have increased further and the new well at Pine Mills is now in production with its oil sales already commenced.

Lowered operating costs and overheads

During the first half of the year the Company made significant reductions in overheads at the corporate level and operationally in the field.

The Company's objective is to have a portfolio of assets with low lifting costs that will continue to support the Company at lower oil prices. Nostra Terra has built a lean, but strong, operating team most of whom we have long-term relationships with. Another important aspect is the focus on conventional assets, as opposed to unconventional assets such as "shale plays". These conventional assets are characterised by shallow decline curves, relatively lower operating expenses and long-life reserves.

Increased production

Prior to the new well at Pine Mills being completed and put into production, Nostra Terra returned production from other assets to above pre-curtailment levels. This month the new well at Pine Mills was put into continuous production, with sales already occurring. This provides a further significant percentage increase in production and net cashflow.

Increase in oil prices

During 2020 the average WTI oil price was $38.52 per barrel compared to $56.99 in 2019 and $64.94 in 2018. WTI is currently above $50 per barrel.

( https://www.statista.com/statistics/266659/west-texas-intermediate-oil-prices/ )

As the macro-economic environment continues to re-build and strengthen, Nostra Terra will seek to continue to grow cashflow, production and reserves through a combination of developing its existing assets and also expanding its portfolio. As previously mentioned, the Company continues to progress various opportunities at various stages, both in the USA and internationally. The unsolicited fundraise completed earlier this month (at no discount to the market share price) provides additional funds to achieve this.

Matt Lofgran , Nostra Terra's Chief Executive Officer, said:

"The primary goal for the Company over the past 12 months has been to become cashflow positive. This became increasingly difficult during the global economic downturn brought on by the Covid-19 pandemic, simultaneously bringing on an oil price crash. We've seen a record number of bankruptcies during the same period. The Board worked diligently to not only survive the downturn, but to reposition the Company to be in a stronger position. We're pleased to be able to announce today that we've reached this milestone.

During the downturn we've also worked on multiple opportunities to expand our portfolio, in the USA and in other developed oil and gas provinces. Our goal with this has been to add to our existing foundation assets with large multiples of upside in potential reserves and production, while still sticking with assets that are substantially de-risked. To help achieve this we have capital from the recent fundraise, free cashflow from production and our Senior Lending Facility. We look forward to updating shareholders on progress in these various areas."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

Competent Person Disclosure

John Stafford, a Director at Nostra Terra with over 35 years' relevant experience in the oil industry, has reviewed this announcement for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009. Mr. Stafford is a Fellow of the Geological Society and a member of the Petroleum Exploration Society of Great Britain.

For further information, contact:

Nostra Terra Oil and Gas Company plc Matt Lofgran, CEO	Email:	[phone]
Beaumont Cornish Limited (Nominated Adviser) James Biddle/ Roland Cornish	Tel:	[phone]
Novum Securities Limited (Broker) Jon Belliss Lionsgate Communications (Public Relations) Jonathan Charles	Tel: Tel:	[phone] [phone]

 

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