Operations Update and Correction
8 July 2019
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Operations Update
and
Correction to the 2018 Annual Report and 1 July 2019 RNS
Nostra Terra (AIM: NTOG), the oil & gas exploration and production company with a portfolio of development and production assets in Texas, USA and Egypt is pleased to provide an operations update, as the Company moves towards drilling its first horizontal well in the Permian Basin.
Highlights
· Net Production increases to 111 bopd for the first five months of 2019, with production from existing operations expected to increase for the remainder of the year
· Preparation for first the Mesquite play' horizontal well progressing as planned
· Drilling engineering firm engaged to work on specific design issues in preparation of the new lease
· Several further potential drill sites have also been identified
· East Ghazalat arbitration process ongoing with a ruling expected near the end of July
Mesquite play, Permian Basin, Texas
Further to the announcement on 29 April 2019, the Company is pleased to report that leasing for the separate, 160-acre 'standalone' lease is moving forward as planned. Terms have been agreed with all mineral owners and Nostra Terra expects to receive executed agreements in the coming weeks.
In the meantime, Nostra Terra has engaged a drilling engineering firm to assist in conceptual well design, while the leasing is being finalised. This will be filed immediately upon completion of the leasing activity necessary for the initial well. Several further potential drill sites have also been identified.
Next Steps - First horizontal well
The new 160-acre lease represents an excellent opportunity for Nostra Terra to drill a horizontal well with a half-mile lateral in the Permian Basin, approximately 5 miles from its existing Mesquite acreage. If successful, this will potentially increase the Company's proven reserves and contribute to de-risking the wider Mesquite play.
Background to the Field Development Plan for Mesquite
Independent E&P company and consultant to Nostra Terra, Trey Resources Inc., ("Trey") has estimated that a single horizontal well has $3.3m NPV10 valuation to Nostra Terra at an oil barrel price of US$60 (WTI). Full development of the field could push the total NPV10 valuation up to US$28m based on a programme of at least eight wells, each with a 5,000ft lateral section.
Based on the engineered economics plan for the initial 1,384 net acres at Mesquite (released on 21 January 2019), Trey anticipates that the Estimated Ultimate Recovery for each successful horizontal well to its specification would be 300,000 barrels of oil, with initial production estimated to be 265 bopd over the first 30 days of production. The economic life of each well is estimated to be 20 years, with an estimated 100,000 barrels of oil that could be produced in the first three years of each well's productive life.
2019 Net Production
Net Production to Nostra Terra from the Pine Mills and the existing Permian Basin wells for the first five months of 2019 averaged 111 bopd, approximately a 10% increase over 2018.
Spring production was lower due to an unusually active storm season in Texas. Therefore, production from existing operations is anticipated to increase for the remaining seven months of the year.
East Ghazalat Concession, Egypt
As stated in the 2018 Annual Report, the dispute with the operator of East Ghazalat Concession, North Petroleum, is currently going through an arbitration process at the London Court of International Arbitration ("LCIA"). The LCIA hearing was held in May, and the Company has now been informed by its legal advisers that a ruling is expected towards the end of July. The Company looks forward to providing an update on this in due course.
Correction to 2018 Annual Report and Accounts
The Company notes that there is an error in its 2018 Annual Report and Accounts (on page 14), and as a result in the announcement of 1 July 2019 (with number 9323D). The Chief Executive Officer's Report incorrectly stated a "22% increase in production to 37,384 bopd", where it should have stated "37,384 boe" in line with other disclosures in the 2018 Annual Report and Accounts.
Matt Lofgran, Chief Executive Officer of Nostra Terra, said:
"We're making good progress in all areas of our portfolio. Production from existing assets in the USA are even better than 2018, this being prior to drilling any new wells. We're preparing to drill new wells in the Permian Basin in an exciting area where we're surrounded by nearby production on all four sides. Lastly, we are getting closer to a resolution at East Ghazalat.
We anticipate the coming weeks and months to increase in activity and we look forward to communicating progress with our shareholders."
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
Qualified Person Review
John Stafford, a Director at Nostra Terra with over 35 years' relevant experience in the oil industry, has reviewed this announcement for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009. Mr. Stafford is a Fellow of the Geological Society and a member of the Petroleum Exploration Society of Great Britain.
For further information, please 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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Shard Capital Stockbrokers (Joint Broker) Damon Heath / Erik Woolgar
Lionsgate Communications (Public Relations) Jonathan Charles |
Tel:
Tel: |
+44 (0) 20 7186 9952
+44 (0) 20 3697 1209
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