Operational & Financing Update for Pine Mills
12 December 2016
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Operational & Financing Update for Pine Mills
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 an operational and financing update for its recently acquired Pine Mills oil field in Texas (the "Acquisition").
Highlights
· Management has completed first site visit to Pine Mills, since Nostra Terra took over operatorship last month
· As expected, Nostra Terra's operations team has identified:
o Significant cost savings across operations at Pine Mills
o Initial workover targets to deliver potential near-term, incremental increases in oil production
· Work has commenced on an updated reserves report, initially being undertaken by internal personnel
· Nostra Terra plans to raise additional non-dilutive funds via hedging a portion of current production from Pine Mills for further development
Operational update
On completion of the Acquisition, Nostra Terra's management and Dallas-based operations team had several meetings with Pine Mills' existing operational personnel to discuss current and future work plans. Following these operational meetings and site visit, Nostra Terra has made good progress in identifying the short-term priorities for further development of the oil field.
Nostra Terra's immediate goal is to reduce operational overheads to improve profitability of Pine Mills. As previously announced, current lifting costs at Pine Mills are below $30 a barrel. Based on due diligence completed prior to completion of the Acquisition and work completed in the first week as the field's operator, Nostra Terra's operational team believes it has identified significant potential cost savings that can be introduced quickly. Nostra Terra will report to the market as it makes progress in implementing these cost-cutting measures.
Further, Nostra Terra's operations team has created an initial workover schedule for a number of existing oil wells, with the expectation of delivering near-term, incremental increases in daily oil production. Work will commence immediately on the first well targeted. Beyond this, the operations team will produce a more comprehensive field-wide plan for the development of Pine Mills to increase overall production.
Updated reserves report
Since completion of the Acquisition, Nostra Terra has commenced work on an updated reserves report on Pine Mills initially using internal personnel, to be released as soon as it is available. It is the Company's expectation that, following release of this report, it will be audited by an independent party.
Financing update
Nostra Terra is preparing to raise further non-dilutive funds through hedging a portion of its current production at Pine Mills. Nostra Terra plans to use these funds for further workovers and drilling at Pine Mills.
By implementing a careful hedging policy, Nostra Terra will be able to hedge a portion of current production in order to secure returns, while leaving the Company further room for upside. This balances short-term capital requirements with the longer-term desire to maximize returns.
Matt Lofgran, Chief Executive Officer of Nostra Terra, commented:
"I am delighted at the fast progress our team is making at Pine Mills. We are looking forward to providing further updates as we increase production and improve profitability at the field.
Our strategy over 2016 has been to position Nostra ahead of recovery from the recent bear market. Our goal is to continue targeting and growing assets with lifting costs below $30 per barrel.
Thanks to our recent acquisitions, Nostra now stands to benefit meaningfully from being able to hedge a portion of future production at much higher prices. We will use funds raised from hedging, together with the additional $600,000 cash received from the sale of our interest in the Chisholm Trail, to focus on further increasing production and reserves.. As a result, the board would like to assure shareholders that there are no immediate funding needs for the company."
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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+1 480 993 8933 |
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Strand Hanson Limited (Nominated & Financial Adviser and Joint Broker) |
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+44 (0) 20 7409 3494 |
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Rory Murphy / Ritchie Balmer |
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Vicarage Capital Limited (Joint Broker) |
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+44 (0) 20 3651 2910 |
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Rupert Williams / Jeremy Woodgate |
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This information is provided by RNS
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