TIDMNTOG
RNS Number : 9654D
Nostra Terra Oil & Gas Company PLC
04 February 2015
AIM: NTOG 4 February 2015
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Quarterly Production and Operations Update
102% Increase in Production over Previous Quarter
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 for the
fourth quarter of 2014.
Highlights
-- December net production averaged 169 boepd (net of
royalties), 102% increase from September net production
-- Quarterly production increase of 68% over previous quarter
-- Quarterly revenue increase of 20% over previous quarter
-- CT-17 (Wilson 3-8-5H) gross Initial Rate of 440 boepd, (Nostra Terra 2.92% WI)
-- CT-14 (Gant 22) gross Initial Rate of 286 boepd, (Nostra Terra 20% WI)
-- CT-16 (Bollenbach 1-33H) gross Initial Rate of 555 boepd, (Nostra Terra 20% WI)
-- CT-18 (Anderson 21-18-6 3H) gross Initial Rate of 100 boepd, (Nostra Terra 1.87% WI)
-- Additional productive formations being evaluated in Chisholm Trail Prospect
-- Progress continues at the White Buffalo Prospect in Wyoming
Monthly Production (Net)
Month Total Net* Production Revenue
(BOE) (US$)
---------- ---------------------- --------
October 2,665 223,823
---------- ---------------------- --------
November 4,468 254,407
---------- ---------------------- --------
December 5,243 229,748
---------- ---------------------- --------
*Net to Nostra Terra's working interests, after royalties
(NRIs range from 78% to 81%)
Q4 2014 Operations Update
The Company is pleased to report that average daily production
for December 2014 was 169 boepd net to Nostra Terra, an increase of
102% from September 2014. Exploration and production activity
continued on several prospects in the portfolio during the period,
including the White Buffalo Prospect in Wyoming, USA, where Nostra
Terra owns a 100% working interest.
Chisholm Trail Prospect (Oklahoma)
At the beginning of the fourth quarter the CT-3 well (Gant 27)
reached payout, 18 months from the start of production.
During the quarter four new wells in the prospect came into
production.
In October we announced that the CT-17 well (Willson 3-8-5H)
averaged 440 barrels of oil equivalent per day (boepd) for 10 days,
outperforming the operator's expectations. The well is another
producer in the prolific Hunton formation. Nostra Terra owns a
2.92% Working Interest ("WI") in the well, which is operated by
Stephens Production Company.
The CT-14 well (Gant 1-22H) was completed but was producing more
formation water relative to the volume of hydrocarbons than average
wells in the play. A rework was completed and the well averaged 440
barrels of oil equivalent per day (boepd) for 10 days from the
Hunton formation, a 54% increase on the figure we announced on 18
November 2014. Nostra Terra has a 20.0% WI in this well that is
operated by Ward Petroleum.
The CT-16 well (Bollenbach 1-33H) averaged 555 barrels of oil
equivalent per day (boepd) for 10 days, maintaining the prospect's
record of consistently outperforming the operator's expectations.
The well is another producer in the prolific Hunton formation.
Nostra Terra owns a 19% WI in the well, which is operated by
Stephens Production Company.
The CT-18 well (Chesapeake Anderson 21-18-6 3H) is a new
horizontal test well in the Oswego formation. It began producing in
mid-December where it reached a peak rate of 217 bopd and 146 mcfd
(241 boepd). Production was not consistent as the well underwent
additional work by its operator Chesapeake Energy. During the
middle of January it was put on continuous production and average
production during the past 10 days has been 100 boepd. Nostra Terra
has a 1.87% WI in the well, a relatively small investment in order
to gather production information for a third formation in the
prospect area.
The Chisholm Trail prospect has been successfully drilled in the
Hunton and Mississippian formations and other wells in the area are
seeing strong production from the Oswego formation. Additional
wells targeting the Oswego formation are planned in the future by
other operators. This helps establish a third horizontal play
within the prospect, creating a "multiplier effect" generating
potential drilling targets from the same acreage.
High Plains Prospect (Texas)
The site for the first exploration well is permitted and
prepared, however the operator has decided to wait for stronger oil
prices prior to drilling. Further updates will be made once
drilling is rescheduled.
The prospect covers 66 square miles and work continues to
integrate the detailed subsurface mapping and 3D seismic data that
will enable the operator to prioritise further areas for drilling.
Nostra Terra has a 20% WI in the prospect, which is operated by
Brown and Borelli.
White Buffalo Prospect (Wyoming)
Work continues on our largest asset to-date, 6,000 acres of
leases in the prolific Big Horn Basin of Wyoming. At this time we
are taking steps to enhance the value of the asset so that when the
economics are stronger we'll be able to advance quickly to
drilling.
LandSat imagery studies are underway to identify deep-seated
fault trends, often associated with fracturing and secondary
porosity. In addition, existing seismic studies have been
identified for purchase, new 2D lines are being planned down the
intended well paths of future horizontal wells, coring programs are
being evaluated and log suites are being prepared.
The first well will be drilled vertically to gather critical
information about the target formation and possible secondary
targets. Older seismic lines will be integrated with the newly
acquired lines pointing to fracture information in order to further
isolate areas of secondary porosity, induced by fracturing. After
drilling is complete, extensive, sophisticated log suites will be
run and evaluated. Once this work is concluded, the well will be
completed to serve as a water disposal well for future use.
Based on the information gathered, subsequent wells will be
drilled vertically to the target formation(s) and then turned to
the horizontal for a distance of 4,500 feet. Multiple locations
have already been identified and the drilling schedule will be
prioritized accordingly.
Outlook
Nostra Terra has had a record quarter. The Company more than
doubled its rate of production from the end of Q3 2014 to end of Q4
2014. From beginning to end of the fourth quarter, crude oil prices
have dropped by nearly 50%. Despite falling crude prices, the
Company achieved a significant increase in revenues for the
period.
Management expects the currently producing properties to be
economic even in the current oil price environment. However, most
operators that the Company works with have decided to postpone
further drilling until oil prices strengthen, to provide a greater
return on capital.
Nostra Terra is still cash flow positive from existing producing
wells, including those added in the last month. Management is
careful when and where free cash flow is invested and will continue
to be disciplined in maintaining its low corporate overhead.
During this period of low oil prices we are advancing our work
at the White Buffalo Prospect, where we have a 100% WI, so that the
Company will be in a stronger position to move forward quickly once
firmer oil prices are established.
Nostra Terra will also seek to take advantage of this current
environment to find further opportunities for growth in
conventional reservoirs throughout Mid-Continent USA.
Matt Lofgran, Chief Executive Officer of Nostra Terra,
commented:
"We had a great quarter, more than doubling our production and
delivering to shareholders as projected. Although during the period
we saw oil prices halve, Nostra Terra still realized an increase in
revenue of 20% over the previous quarter.
"While we do have an exploration component to our portfolio, our
recent focus has been to secure and maintain steady production,
allowing the Company to actively search for growth opportunities
without the need for external capital. We are pleased to be at that
point today. Our existing production comes from both vertical and
horizontal wells and our operating costs are relatively low. We are
currently cash flow positive with free cash flow adding to our
existing cash in the bank.
"We anticipate oil price volatility going forward, however the
consensus in the industry is that crude oil prices will be higher
at the end of the year than they are now. Management will continue
to be careful with funds while remaining vigilant in the search for
potential growth opportunities, which may arise in these
interesting times.
Alden McCall, Chief Operating Officer of Nostra Terra,
added:
"At White Buffalo we are planning our data acquisition strategy
in order to drill the fewest wells necessary to achieve the maximum
value. Hard engineering and reservoir data acquired from just a few
wells will then be used to project the most likely outcome of
future wells, across all 6,000 acres. By executing such a strategy,
NTOG will provide itself with numerous options when considering
future development and potential joint ventures."
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.
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
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