Participating in Sixth Chisholm Well
AIM: NTOG
29 May 2013
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Sixth Chisholm Trail Well, Reserve Report Commissioned
Further Acceleration of Chisholm Trail Prospect
Nostra Terra, the AIM quoted oil and gas producer with assets in the USA, is pleased to announce that it has elected to participate in its sixth well in the Chisholm Trail Prospect (CT6). This commitment represents further acceleration of the play and the beginning of Nostra Terra's participation with multiple operators across 21 potential locations, targeting the same geological formation as Gastar Exploration Ltd. (NYSE: GST) ("Gastar").
The sixth well will be operated by a wholly-owned subsidiary of Alta Mesa Holdings of Houston, Texas. Nostra Terra has elected to participate in a net Working Interest of approximately 5.0% in this horizontal Hunton well. Final elections in the Alta Mesa drill have not been concluded but the Company will make relevant announcements of the final Working Interest percentage and anticipated spud date, once finalised.
Alta Mesa is a privately held company engaging in onshore oil and gas acquisition, exploitation and production. It maintains an inventory of holdings in the Eagle Ford Shale, Oklahoma, South Louisiana, East Texas and Hilltop area. Their Oklahoma assets are located in large oil fields with multiple pay zones at depths from less than 2,000 feet to 7,500 feet. The fields are located in the Sooner Trend area of the Anadarko Basin and were initially developed by Conoco, Texaco and Exxon. These assets are predominantly shallow-decline, long-lived oil fields originally drilled on uniform, 80-acre spacing and waterflooded to varying degrees.
The Company's fifth well on the Prospect (CT5), in which it has a 2.2% working interest, has now finished drilling and is undergoing completion and production testing. A further announcement in relation to production will be made in due course.
Reserve Report
The Company has commissioned a reserve report for all wells drilled in the Chisholm Trail Prospect, plus allocations for those to be drilled, and its publication is anticipated in June. Once completed the Company expects to be able to put in place reserve-based lending, an attractive alternative to the use of more dilutive forms of financing.
Matt Lofgran, Chief Executive Officer of Nostra Terra, commented:
"The strength of activity and quantifiable results in the play mean that we have decided to accelerate preparation of reserve estimates earlier than we had originally anticipated. We plan to utilize the results to put a reserve-based lending facility in place which offers an attractive alternative to the use of more dilutive forms of financing as a foundation to further the growth of the Company."
Alden McCall, Chief Operating Officer of Nostra Terra, added:
"Because this play does not expose operators to either significant geological or drilling risks, the Horizontal Hunton play of Oklahoma is rising to the definition of a "Resource Play", meaning that results are repeatable within statistical boundaries. There have been no "dry holes" or mechanical failures reported, and so we believe the largest remaining risk is one of economics. We and other operators are satisfied that the risk-adjusted economics are quite attractive.
Due to this low-risk appeal and to the very nature of Forced Pooling Measures in Oklahoma, expansion of the play has always harbored the potential of NTOG participating with several other operators, in addition to Ward Petroleum. The 1 April 2013 announcement of Gastar's US$85 million acquisition and legal settlement, along with other companies entering the play, further reflects our confidence that the pace of development will accelerate and we only expect this trend to continue."
For further information, visit www.ntog.co.uk or contact:
Nostra Terra Oil and Gas Company plc
Matt Lofgran, CEO
mlofgran@ntog.co.uk Telephone: +1 480 993 8933
Shore Capital & Corporate Limited (Nominated Adviser)
Bidhi Bhoma/ Toby Gibbs Telephone: +44 (0)20 7408 4090
XCAP Securities plc (Joint Broker)
Jon Belliss / Halimah Hussain Telephone: +44 (0)20 7101 7070
Alexander David Securities Ltd (Joint Broker)
David Scott / Bill Sharp Telephone: +44 (0)20 7448 9812
Lothbury Financial Services Limited
Gary Middleton / Michael Padley Telephone: +44 (0)20 3440 7620
Notes:
In August 2012, Nostra Terra entered into the Chisholm Trail Prospect, a multi-well horizontal drilling project in Oklahoma. The prospect area is large in size and a leasing programme is on-going. Nearby drilling has resulted in several wells that produce in excess of 200boepd after the first 30 days of "flush" production. Nostra Terra owns a 20% interest in the programme with Ward Petroleum within which working interests in the individual wells vary. Based on results from neighbouring wells, this prospect also has the potential to deliver rapid payouts with continued strong production levels.
This information is provided by RNS
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