TIDMNTOG
RNS Number : 3193X
Nostra Terra Oil & Gas Company PLC
29 April 2019
29 April 2019
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
First Horizontal Well at Mesquite
Nostra Terra (AIM:NTOG), the oil and gas exploration and
production company with a portfolio of assets in the USA and Egypt,
is pleased to announce plans to drill the Company's first
horizontal well at its Mesquite Asset in the Permian Basin, Texas
("Mesquite").
Proposed new lease agreement & plans to drill
Nostra Terra is pleased to announce that it is in advanced
discussions with regards to a new 160-acre lease opportunity (the
"New Lease") in the Mesquite Target Area (the "Target Area"). The
Target Area currently covers over 30,000 acres, of which the
Company has secured 2,184 gross acres (1,984 net acres to Nostra
Terra).
The New Lease, presents Nostra Terra with an immediate
opportunity to drill a half-mile horizontal well to prove up and
increase the Company's overall Proven (1P) and Probable (2P) oil
reserves at Mesquite. The New Lease is standalone, near, but not
adjacent to, the existing acreage. Accordingly, the Company expects
to be able to bring in partners on the New Lease whilst still
maintaining a 100% interest in the existing Mesquite Asset
Nostra Terra intends to fund drilling of the proposed horizontal
well using existing cash resources and through selling off a
percentage working interest in the New Lease to certain oil and gas
investors. Nostra Terra has already received expressions of
interest from potential industry partners concerning the New
Lease.
Next steps
Following completion of the placing announced on 27 February
2019, Nostra Terra engaged a landman to begin title work and to
secure new leases for the Company in the Target Area.
The Company had previously identified the potential of the New
Lease and has subsequently entered into discussions with the
current mineral owners. These discussions are nearing conclusion
and once complete Nostra Terra will apply for a permit to drill the
first horizontal well.
Following permitting, Nostra Terra plans to secure a rig and
prepare the pad, followed by drilling and completion operations.
Subject to execution of the lease agreement, these activities are
expected to take place in the coming weeks and months.
Matt Lofgran, Chief Executive Officer of Nostra Terra,
commented:
"This new lease presents an excellent strategic opportunity for
Nostra Terra. We see such large potential in the area and plan to
increase our footprint, including retaining a larger interest in
the Mesquite Asset. We will be able to drill our first horizontal
well at Mesquite, with the aim of proving reserves for additional
horizontal drilling. We intend do this while retaining full
ownership of the acreage we have already secured.
Much more importantly, we will also preserve our first mover
advantage in the wider Mesquite target area. The first horizontal
well could deliver substantial cash flow to the Company whilst
significantly strengthening our position in any future farm out
discussions for Mesquite."
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, visit www.ntog.co.uk or contact:
Nostra Terra Oil and Gas Company
plc
Matt Lofgran, CEO Tel: +1 480 993 8933
Strand Hanson Limited
(Nominated & Financial Adviser
and Joint Broker)
Rory Murphy / Ritchie Balmer /
Jack Botros Tel: +44 (0) 20 7409 3494
Shard Capital Stockbrokers (Joint
Broker)
Damon Heath / Erik Woolgar
Tel: +44 (0) 207 186 9952
Smaller Company Capital Limited
(Joint Broker)
Rupert Williams / Jeremy Woodgate Tel: +44 (0) 203 651 2910
About Nostra Terra
Nostra Terra's US portfolio includes its 100% working interest
in the Pine Mills oil field, East Texas, and its various working
interests in assets in the Permian Basin, West Texas, including
Mesquite. Net Revenue Interest to Nostra Terra in each lease ranges
from 75-80% after entitlements to mineral owners.
As of 14 February 2019, Nostra Terra's net 2P (Proved and
Probable) oil reserves across its US assets was 2,429,660 barrels
of oil, including Net Proved reserves of 764,030 barrels of
oil.
In Egypt, Nostra Terra owns a 50% working interest in the East
Ghazalat Concession ("the Concession"), via its wholly owned
subsidiary Independent Resources Egypt Limited ("IRE"). Nostra
Terra's attributable 2P Reserves from the Concession are 1,008,922
barrels of oil (according to the 2015 Competent Persons Report
produced by DeGoyler and MacNaughton Canada). Nostra Terra is
currently in international arbitration with the Concession's
operator, North Petroleum.
About Mesquite
The Mesquite asset covers 2,184 gross acres (1,984 net acres to
Nostra Terra) in the Eastern Shelf of the prolific Permian Basin.
The target formations at Mesquite are "tight", meaning the
oil-bearing rock formations are conventional horizons of low
permeability. As such, the target formations have characteristics
that make them ideal targets for horizontal drilling and have
delivered substantial oil production in other areas of the Permian
Basin using these techniques.
In the Engineered Economics Report for Mesquite, prepared by
Trey Resources ("Trey") and announced on 21 January 2019, the
Company reported that the first 1,384 net acres at Mesquite contain
2,400,000 barrels of recoverable oil (Estimated Ultimate Recovery,
"EUR"). The NPV 10 valuation assigned to these barrels, at US$60
oil, is US$28,600,000.
Trey's Per Well Economic model is based on drilling 5,000ft
(1,524m) lateral (horizontal) wells on 160-acre spacing. Each
5,000ft lateral is expected to have a 20-year well life and to
produce 100,000 barrels of oil in its first three years. The
estimated Internal Rate of Return for each well is 46% at US$60
oil.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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