Settlement of Loan Note

RNS Number : 0107L

Nostra Terra Oil & Gas Company PLC

28 September 2016

 

28 September 2016 

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Settlement of Loan Note

Nostra Terra (AIM:NTOG) is pleased to announce that its Joint Venture with Independent  Resources plc (AIM:IRG), Independent Resources (Egypt) Ltd ("IRE"), has reached an agreement ("Agreement") with TransGlobe Petroleum International Inc. ("TransGlobe") concerning the early repayment of the US$2.5 million loan note ("Loan Note") issued to TransGlobe in October 2015 and repayable on 30 September 2017. Under the terms of the Agreement, IRE will pay US$200,000 to TransGlobe in full and final settlement of the Loan Note.

IRE's 50% interest in the East Ghazalat concession (the "Concession") is not affected by this Agreement. Nostra Terra will pay US$100,000 for its proportional share of the Agreement. This extinguishes the liability of approximately US$1.3 million owed by Nostra Terra (including accrued interest), leaving no further debt on the asset.

Background

As previously announced, IRE is Nostra Terra's co-owned Joint Venture with Independent Resources. IRE owns a 100% interest in Sahara Resources (GOS) Inc, which owns a 50% non-operating interest in the Concession, located in the Western Desert region of Egypt approximately 240 kilometres southwest of Cairo. The Concession is operated by North Petroleum, a subsidiary of the Chinese state-owned ZhenHua Oil Co. Ltd. IRE acquired its stake in the Concession from TransGlobe on 15 October 2015 for a headline consideration of US$3.5 million, satisfied by the payment of US$1 million in cash and the issue of the $2.5 million loan note to TransGlobe. The implied acquisition cost has now been improved to US$1.19 per barrel (previously US$3.47 per barrel) of 2P oil reserves attributable to the acquired interest.

Gross 2P reserves attributable to IRE's interest in the Concession were estimated at 1,008,922 barrels of oil on 30 June 2015 (DeGolyer and MacNaughton Canada Limited estimate). In addition there are two natural gas discoveries on the Concession.

Early Settlement of the Loan Note

After recent negotiations, TransGlobe has agreed to accept the US$200,000 payment from IRE as full and final settlement of the Loan Note with no further adjustments of the type set out in the Company's announcement of 6 October 2015. IRE has agreed to release TransGlobe from any potential warranty and indemnity claims, which it may have had under the original sale and purchase agreement, and indemnifies TransGlobe in respect of any claims, which may arise from TransGlobe's prior ownership of East Ghazalat.

In return TransGlobe has agreed to forgo the outstanding $2.3 million balance on the Loan Note and any claims for accrued interest since completion of the acquisition in October 2015.

The Agreement represents final completion of IRE's acquisition of its 50% stake in the Concession.

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

"We are pleased to have reached agreement on the outstanding loan note.  It now allows IRE to focus our energies on improving operations in East Ghazalat."

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

For further information, visit www.ntog.co.uk or contact:

Nostra Terra Oil and Gas Company plc Matt Lofgran, CEO					[phone]
Strand Hanson Limited (Nominated & Financial Adviser and Joint Broker)						[phone]
Rory Murphy / Ritchie Balmer
Vicarage Capital Limited (Joint Broker)						[phone]
Rupert Williams / Jeremy Woodgate
Cornhill Capital Ltd (Joint Broker)						[phone]
Nick Bealer / Colin Rowbury

 

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