Austin Chalk re-entry a success
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Austin Chalk re-entry a success
16 June 2010
Nostra Terra Oil and Gas Company plc (AIM: NTOG) is pleased to announce the
results of the redevelopment work conducted on an Austin Chalk well located in
the Giddings Field in Lee County, Texas, in which the Company has a 2% interest;
as announced on 7 June 2010.
A new lateral section extending just over 1900 feet horizontally from the
original wellbore has been drilled into the Lower Austin Chalk. In an initial 24-
hour flow test the redeveloped well produced at a gross rate of 994 barrels of
oil per day (bopd) and 804,000 cubic feet of gas per day (mcfd). The well has
sustained those production levels during the initial 3-day production period
although we anticipate production levels to decrease in line with the relatively
steep decline curves typical of the area and so will provide an update at a
later date.
The re-entry included the prospect of two different laterals. The first lateral
in the so-called upper "B Zone" and the second in the lower "A Zone". Within the
first few days of drilling, indications of producibility in the B zone were so
strong that the decision was made to stop drilling and put the well into
production sooner. The drilling of the second lateral into the lower "A Zone"
has been deferred as a target for a later date.
The Texas Austin Chalk formation produces high-grade light crude oil and natural
gas from a fractured carbonate of relatively low permeability, with the natural
fractures in the reservoir rock acting as conduits for hydrocarbon recovery. The
formation has undergone several periods of exploitation as new techniques have
been developed to overcome low permeability. Most recently, horizontal drilling
has proved to be highly effective in accessing more fractures from a single
wellbore than is possible through traditional vertical drilling.
Historically, Austin Chalk producing wells have delivered at high initial rates
but with relatively steep decline curves, and this is also generally the case
when modern horizontal drilling techniques are used. Nevertheless, the current
well is expected to remain in production for several years before its output
falls below commercial levels, and Nostra Terra intends to grow its presence in
the Austin Chalk redevelopment play in view of the potential rapid payback and
high ROI it can generate at relatively low risk and operating cost.
Matt Lofgran, CEO of Nostra Terra, said: "Our first step into Texas is a very
small one, but we are delighted with the initial results which validate our
expansion strategy. We intend to build a significant proportion of our growing
business by drilling horizontal wells in established sandstone and carbonate
reservoirs like the Austin Chalk. Where appropriate and value adding, we will
leverage existing relationships by partnering with other companies."
He added: "We recognise that some of these redeveloped wells will perform above
and some below our expectations, but we will put each candidate well through a
careful screening process to identify those with the highest potential and
probability of success. We will then apply the most effective technology to
maximise the profitability of those we select for redevelopment."
The technical information in this announcement has been reviewed and approved
for release by Alden McCall, a consultant to Nostra Terra. He is a Certified
Petroleum Geologist and a member of the American Association of Petroleum
Geologists and the Society of Petroleum Engineers, among others, and is a
qualified person as defined in the Note for Mining and Oil & Gas Companies, June
2009, of the London Stock Exchange.
For further information contact:
Nostra Terra Oil and Gas Company plc Telephone: +1 480 993 8933
Matt Lofgran, CEO
mlofgran@ntog.co.uk
Religare Capital Markets Telephone: +44 (0)20 7444 0800
Peter Trevelyan-Clark/Ben Jeynes
Alexander David Securities Ltd Telephone: +44 (0)20 7448 9820
David Scott/Bill Sharp/Nick Bealer
Announcements made by the Company are available automatically by email to
thosewho register at www.ntog.co.uk.
For more information please visit: www.ntog.co.uk
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