Half-yearly report
NOSTRA TERRA OIL & GAS COMPANY PLC
("Nostra Terra", "NTOG" or the "Company")
Interim Results for the six months to 30 June 2009
28 September 2009
HIGHLIGHTS
· Losses contained at £181,000 for the period (Six months ended 30 June 2008:
loss of £291;000) and reduction in expenditure at head office
Since the period end:
· Appointment of new CEO and new strategy to develop oil assets in the USA
· Acquisition of Boxberger property - 1,659,191 BBLS oil proven reserves and
804.708 MMCF gas proven reserves
· Acquisition of Hoffman property 834,000 BBLS oil proven reserves and
404.490 MMCF gas proven reserves
CHAIRMAN'S STATEMENT
As announced on 30 June 2009 your Company has adopted a new strategy following
the appointment of Matt Lofgran as Chief Executive. I am pleased to report as
detailed in recent announcements that significant steps have already been taken
in this new direction. Mr. Lofgran's report below summarises these new
developments and outlines our expected future strategy. I look forward to being
able to report on further progress in the coming months.
Financial Overview
Expenses incurred during the period relate to basic administration costs and as
at the date of the balance sheet, the Company had net current assets of
£418,000, with £1,000 held in cash. For the period a loss of £181,000 has been
incurred, which on a weighted average equates to a basic and fully diluted loss
of 0.04p pence per share; no dividend is being declared.
Sir Adrian Blennerhassett
Chairman
CHIEF EXECUTIVE'S REPORT
Review and Outlook
The first six months of our current financial year have been difficult for the
Company given the greater economic problems that have impacted everyone.
Investment in the development of oil & gas properties fell significantly,
worldwide. Asset values have subsequently dropped as well. It has been
increasingly difficult operating in Ukraine during this time. In the aftermath
of the Ukrainian financial crisis, including the severe devaluation of the
Hryvnia (local currency), the Company is left with high royalties and a selling
price of oil at roughly half that of global prices. It should be noted that
other UK-based companies are not immune to this climate.
However, with this crisis comes opportunity. As the Chairman has commented,
following my appointment, the Board has reappraised its strategy to focus on
assets of substantial value in areas of low political and geological risk. As a
consequence of this revised approach the Company is looking at all options for
its Ukraine assets, which could include disposal, with the prime objective of
focusing on the new direction without the same hurdles and risk as experienced
in the Ukraine. In summary, we believe events over the course of the past 12
months have combined to create an opportunity for the Company to acquire assets
in areas that were considered prohibitively expensive in the past.
This Interim Financial Statement reflects activity prior to the change of
strategic direction. However, the Company has, over the last 3 months, raised
significant new working capital, which we have started to employ through the
acquisition of several properties with potentially significant reserves and
which we consider offer the ability for redevelopment. Specifically we have
acquired; a right of up to a 25% working interest in the Hoffman property, a 50%
working interest in the Bloom Field, an option for a 50% working interest in the
Koelsch Field, and most recently a 50% working interest in the Boxberger
property, all of which are located in Kansas, USA.
Our current estimate of the reserves for the Boxberger and Hoffman properties
(as provided by a Competent Persons Report) is set out below, as announced on 2
September 2009, but with amended subclassifications in relation to the Hoffman
property - whilst the reserve report for the Bloom Field is still being worked
on and the option on the Koelsch Field remains open to us:
Boxberger
· 1,659,191 BBLS oil proven reserves (1,430,982 Proved Developed, Producing +
228,209 Proved Developed, Behind Pipe);
· 804.708 MMCF gas proven reserves (694.026 Proved Developed, Producing +
110.682 Proved Developed, Behind Pipe);
· the report excludes any probable reserves; and
· the present value of the property attributable to NTOG, at a 10% discount
factor, is US$18.5 million (based on oil @ $60.00 per barrel).
Hoffman
· 834,000 BBLS oil proven reserves (166,800 BBLS Proved Developed, Non-
Producing and 667,200 BBLS Proven Undeveloped);
· 404.490 MMCF gas proven reserves (80.898 Proved Developed, Non-Producing
and 323.592 Proved Undeveloped);
· the report excludes any probable reserves; and
· the present value of the property attributable to NTOG, at a10% discount
factor, is US$3,349,298 (based on oil @ $60.00 per barrel).
Nostra Terra is now debt-free with the exception of the (non-interest bearing)
notes associated with the original acquisition of the Ukraine assets. We have
successfully kept overheads extremely low in order to maximize funds available
for the development of our assets with the focus of achieving production as soon
as possible. Our partner in the above properties has just begun the
redevelopment of these properties and we anticipate being in a position to
report on expected production on the Boxberger property during the final quarter
of this year. If achieved this will represent a rapid transformation from a
company with reserves to a producing company. Consequently, the Company has
additional potential reserves from these acquisitions that will provide a
pipeline of properties from which we will look to expand and grow the production
and revenues of the Company. Going forward we will continue to seek other
opportunities that fit our new approach.
Whilst it has only been a few months since I was appointed CEO; I am very
excited about what we have been able to accomplish in this period and I look
forward to being able to report on further progress in the coming months.
Matt Lofgran
Chief Executive
For further information contact:
Nostra Terra Oil and Gas Company plc Tel: +1 480 993 8933
Matt Lofgran, CEO mlofgran@ntog.co.uk
Blomfield Corporate Finance Ltd Tel: +44 (0)20 7489 4500
Alan MacKenzie/Peter Trevelyan-Clark/Ben Jeynes
Alexander David Securities Ltd Tel: +44 (0)20 7448 9820
David Scott/Jon Levinson
Statement of comprehensive Income
for the six months ended 30 June 2009
Six months Six months Twelve
to 30 June to 30 June months to
2009 2008 31 December
Unaudited Unaudited 2008
Audited
£'000s £'000s £'000s
Revenue 14 37 88
Cost of Sales (21) (35) (203)
______ ______ ______
GrossProfit/(loss) (7) 2 115
Administrative expenses (174) (293) (1,228)
______ ______ ______
Operating Loss (181) (291) (1,343)
Finance costs - (30) -
Impairment of goodwill and
other intangibles - - (943)
Finance income - 1 1
Loan notes and interest waived - - 1,293
______ ______ ______
Loss before tax (181) (320) (992)
Income tax (charges)/recovery - - (7)
______ ______ ______
Loss for the period from
continuing operations attributable
to shareholders (181) (320) (985)
====== ====== ======
Loss per share
Attributed to:
Equity holders of the company Pence Pence Pence
Basic and diluted (0.04p) (0.08p) (0.24p)
The Company's turnover and operating loss arise from continuing operations.
There were no recognised gains or losses other than those recognised in the
income statement above.
Statement of financial position as at 30 June 2009
As at 30 As at 30 As at 31
June 2009 June 2008 December
Unaudited Unaudited 2008
Audited
£'000s £'000s £'000s
Assets
Non-current assets
Goodwill 3,044 4,211 3,268
Other intangibles 133 510 153
Property, plant and equipment - 71 47
______ ______ ______
3,177 4,792 3,468
______ ______ ______
Current assets
Trade and other receivables 587 279 255
Cash and cash equivalents 1 124 11
______ ______ ______
588 403 266
______ ______ ______
Current liabilities
Trade and other payables 135 168 170
Tax payable - 8 -
Financial liabilities - borrowings 35 257
______ ______ ______
170 176 427
______ ______ ______
Net current assets 418 227 (161)
______ ______ ______
Non current liabilities
Other loans 367 1,480 421
______ ______ ______
Net assets 3,228 3,539 2,886
====== ====== ======
Equity
Capital and reserves
Share capital 988 424 424
Share premium account 4,066 3,927 3,927
Translation reserve (168) - 12
Retained earnings (4,835) (812) (1,477)
______ ______ ______
Total equity 3,228 3,539 2,886
====== ====== ======
Cash Flow Statement
For the six months ended 30 June 2009
Six months Six months Twelve months
to 30 June to 30 June to 31 December
2009 2008 2008
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Cash flows from
operating activities 3
Cash generated/(consumed)
by operations (19) (299) 550
Finance (costs)/recovery - (30) 31
______ ______ ______
Net cash from operating activities (19) (329) (519)
Cash flows from investing activities
Sale/(Purchases) of plant and
equipment 9 (100) (123)
Interest received - 1 1
______ ______ ______
Net cash from investing activities 9 (99) (122)
______ ______ ______
Cash flows from financing activities
Proceeds on issue of shares - 399 499
______ ______ ______
Increase/(decrease) or cost and cost
equivalents - 399 499
______ ______ ______
Net cash outflow (10) (29) (142)
Cash and cash equivalents at the
beginning of the period 11 153 153
______ ______ ______
Bank balances and cash 1 124 11
====== ====== ======
Consolidated statement of changes in equity
As at As at As at 31
30 June 30 June December
2009 2008 2008
£'000 £'000 £'000
As at beginning of period 2,886 3,360 3,360
Deficit for the period (181) (320) (985)
Issue of share capital net of expenses 356 399 499
Translation reserves (181) - 12
Conversion of loan notes and
other debt 348 100 -
______ ______ ______
As at end of period 3,228 3,539 2,886
====== ====== ======
Notes to the Interim Report
1. Significant Accounting Policies
These interim results have been prepared in accordance with International
Financial Reporting Standards and on the historical cost basis, using
generally recognised accounting principles and using the accounting policies
which are consistent with those set out in the Company Annual Report and
Accounts for the year to 31 December 2008.
This interim report for the six months to 30 June 2009, which complies with
IAS34, was approved by the Board on [ ] September 2009.
2. Loss per Share
Six months Six months Twelve months
to 30 June to 30 June to 31 December
2009 2008 2008
Unaudited Unaudited Audited
Loss per ordinary share
Basic and diluted (0.04p) (0.08p) (0.24p)
The loss per ordinary share is based on the Company's loss for the period
of £181,000 (30 June 2008 - £320,000; 31 December 2008 £985,000) and basic
weighted average number of shares in issue of 379,256,131 (30 June 2008-
379,256,131; 31 December 2008- 191,848,170).
Given the Company's loss for the period, the diluted loss per share is the
same as the basic loss per share.
3. Reconciliation of operating loss to net cash outflow from operating
activities.
Six months Six months Twelve months
to 30 June to 30 June to 31 December
2009 2008 2008
Unaudited Unaudited audited
£'000s £'000s £'000s
Loss for the period (181) (291) (1,343)
Adjustments for:
Depreciation of property,
plant and equipment 46 7 152
Amortisation of exploration costs - 98 357
(Increase)/Decrease in receivables 23 (86) (62)
(Decrease)/Increase in payables 91 (27) (126)
Foreign exchange losses 2 - 472
______ ______ ______
Net cash from operating activities (19) (299) (550)
4. Called up Share Capital
The issued share capital as at 31 December 2008, per the audited accounts
was 424,016,380 Ordinary Shares of 0.1p each. The shares issued in the
period are noted below.
Date Number of Issue Purpose
ordinary price
shares pence
of 0.1p
June 30,2009 110,910,200 0.2 Settlement of Loan Stock
June 30, 2009 62,841,000 0.2 Settlement of director and
management fees
June 30,2009 390,000,000 0.1 Placing
5. The unaudited results for period ended 30 June 2009 do not constitute
statutory accounts within the meaning of Section 435 of the Companies Act
2006. The comparative figures for the eleven months ended 31 December 2008
are extracted from the statutory financial statements which have been filed
with the Registrar of Companies and which contain an unqualified audit
report and did not contain statements under Section 237(2) or (3) of the
Companies Act 1985.
6. Subsequent events
On 15 July 2009 the Company entered into definitive agreements with Hewitt
Petroleum, Inc. ("HPI") for the purchase and exploration of three
properties in Kansas, USA for an initial consideration of US$235,000 which
has been paid in cash with US$25,000 of the balance due within 60 days of
execution of definitive agreements ("Execution"), US$425,000 within 90 days
of Execution and US$100,000 to be satisfied by the assignment by Mr Lofgran
to HPI of his working interest in another property known as the Perth
field where HPI is also a partner. Under the agreements between Company
and HPI, in the event that either party elects not to participate in the
drilling, deepening, reworking or completion attempt on an additional
well, such party will be deemed to have released and relinquished
to the other participating party or parties all its right, title and
interest in and to that well and the participating party shall own the
relinquished interest free and clear of all obligations to the non-
participating party. Following the Boxberger Field transaction noted below
, the Company has secured an extension on all development funding
commitments to focus initial efforts on the Boxberger Field - with the
intention of delivering revenues sooner.
On 21 August 2009 the Company acquired a 50 per cent working interest in
ten production wells and one salt water disposal well (together the
"Boxberger Wells") located in the Boxberger field, Russell County, Kansas,
USA (the "Boxberger Field"). The consideration was US$230,000 of which
US$50,000 has been paid in cash. The remaining US$180,000 of the
acquisition cost is to be paid after the initial development costs have
been completed or within twelve months of the execution of the definitive
agreement ("Execution") whichever is earlier.
The Company and HPI have agreed that initial production shall place at
least two wells into production. The costs of production are to be agreed
between the Company and HPI however, the Company is committed to paying
US$350,000 towards such costs, which shall be paid within two weeks of
Execution. The remainder of the development costs will be paid over the
life of the development process. The Company has also agreed to assign
its proceeds from production from the Boxberger Wells to pay for its
obligation to pay for the development costs of the Boxberger Wells until
all eleven wells have been developed.
HPI and the Company shall bear the revenue and operating costs for the
wells on the basis of 75 per cent. to the Company and 25 per cent. to
HPI until such time as the Company has received revenue from the
production revenue of the Boxberger Wells equal to 100 per cent. of its
initial development costs. Upon the Company receiving its initial
development costs from the production revenue, the revenue and operating
costs shall be divided equally between the Company and HPI.
In the event either party elects not to participate in the drilling,
deepening, reworking, or completion attempt on an Additional Well, such
party will be deemed to have released and relinquished to the other
participating party or parties all its right, title and interest in and
to that well; and participating party shall own the relinquished
interest free and clear of all obligations under this Agreement to the
non-participating party.
On the same date a placing was completed of 233,333,333 ordinary shares in
the Company (the 'Placing Shares') at a price of 0.15p per share, raising
£350,000 before expenses. These funds will be used for the development of
the Boxberger property.
Alexander David Securities Limited had, in part payment for its services in
this placing, been granted warrants over 4,666,667 ordinary shares with an
exercise price of 0.15p per share exercisable for two years from the date
of issue of the placing shares.
On 3 September 2009 10,000,000 ordinary shares of 0.1p each were allotted
to Investor Union Ltd. in settlement of a services invoice for £15,000.
7. Copies of this interim statement are available from the Company at its
registered office at Finsgate, 5-7 Cranwood Street, London EC1V 9EE. The interim
statement will also be available on the Company's website www.ntog.co.uk.
8. The technical information in this announcement has been prepared for
and approved for release by W. A Alexander. Jr of W. A. Alexander, Jr. Oil & Gas
Consulting. He is a qualified person as defined in the Note for Mining
and Oil & Gas Companies, June 2009, which forms part of the AIM Rules for
Companies of the London Stock Exchange.
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