New $5million Senior Lending Facility at 4.75%
08 January 2018
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
New $5million Senior Lending Facility at 4.75%
Nostra Terra (AIM:NTOG), the oil and gas exploration company with a portfolio of assets in the USA and Egypt, is pleased to announce that it has received approval for a new US$5 million Senior Lending Facility ("the Facility") with Washington Federal Bank. US$1.2 million of the Facility will be immediately available for use on completion of the legal paperwork ("Completion"). Completion is expected to take place before the end of January. The interest rate is 4.75%.
About the Senior Lending Facility
The Facility has an initial nominal amount of US$5 million, with US$1.2 million immediately available for use on Completion based on current production ("Borrowing Base"). The size of the Facility and Borrowing Base will be reassessed at least twice yearly. The board of the Company anticipates the Facility and Borrowing Base will increase with increased oil production, any further increases in the Company's Proven 1P oil reserves, and with use of the BP Energy Company Hedging Facility (as announced on 29 September 2017 and 19 October 2017).
Currently the size of the Facility and Borrowing Base have been determined solely upon stabilized production at Nostra Terra's Pine Mills asset. Recent reserves used by the bank were performed conservatively, with a "sensitivity case", using an oil sales price of US$36.50 per barrel or less for the next 6 years. With current oil prices nearly double that, hedging a portion of future production could significantly increase funds available.
Increased production across Nostra Terra's Permian Basin assets will further enhance the Company's position in this respect.
The interest rate on drawn down borrowings from the Facility is determined by the higher of either the sum of the Wall Street Journal Rate plus 0.25% or a flat 4.25%. The current Wall Street Journal Rate is 4.5%. As such the current interest rate applied to use of the Facility is 4.75%
The Facility is not restricted to geographical region. Nostra Terra can deploy funds from the Facility for operational purposes and acquisitions in its current areas of operation, in the USA and Egypt, or in other areas should the opportunity arise.
Washington Federal Bank
Washington Federal Bank is a well-regarded lending provider, which has an established pedigree in the energy market. It is based in Seattle, Washington, and has approximately US$15 billion in assets under management.
Use of funds
As previously announced, Nostra Terra plans to use the Facility to accelerate its growth, focusing initially on increasing the Company's free cash flow generation. Nostra Terra plans to commence further drilling at its 24-drill ready locations across its portfolio of Permian Basin assets. In addition to this Nostra Terra has identified a pipeline of potential acquisitions to expand its Permian acreage and continues its discussions with the stakeholders at its Egyptian asset with a view to realizing value.
Nostra Terra will continue to update the market on all progress in the coming weeks and months.
Matt Lofgran, Chief Executive Officer of Nostra Terra, commented:
"Securing the hedging facility with BP Energy Company last September marked a step change for Nostra Terra. We now have approval for a new, non-dilutive and sizeable funding source for the Company, on highly attractive commercial terms. We're excited to be working with such a strong energy lender as Washington Federal that endorses our plans to grow production, cash flow, and the size of the facility.
With commercial flow testing due to commence shortly at our recently drilled Twin Well and the permitting process to begin for our next Permian development well, this is an extremely exciting time for Nostra Terra. The new funds of the Facility will allow us in 2018 to quicken the pace of drilling our 24 drill ready locations, make further progress in Egypt and seek new acquisitions to add value to the Company. We look forward to providing further updates on all this soon."
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:
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Nostra Terra Oil and Gas Company plc Matt Lofgran, CEO
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Tel: |
+1 480 993 8933 |
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Strand Hanson Limited (Nominated & Financial Adviser and Joint Broker) Rory Murphy / Ritchie Balmer / Jack Botros
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Tel: |
+44 (0) 20 7409 3494 |
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Smaller Company Capital Limited (Joint Broker) Rupert Williams / Jeremy Woodgate |
Tel: |
+44 (0) 20 3651 2910 |
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This information is provided by RNS
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