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Nostra Terra O&G Co (NTOG)

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Monday 30 September, 2019

Nostra Terra O&G Co

Interim Results

RNS Number : 1786O
Nostra Terra Oil & Gas Company PLC
30 September 2019
 

 

 

 

 

 

30 September 2019

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

 

Interim Results

 

Nostra Terra (AIM: NTOG), the oil & gas exploration and production company with a portfolio of development and exploration assets in Texas, USA, is pleased to announce its unaudited results for the six-month period ended 30 June 2019.

 

Highlights:

·    Revenue for the period of $947,000 (30 June 2018: $1,133,000)

·    Gross profit from operations (before depletion, depreciation, amortization and one-off exploration costs) for the period of $297,000 (30 June 2018: $568,000)

·    Average net oil sales of 98 bopd (30 June 2018: 101 bopd)

Demonstrates stability of oil production

·    Engineered economics completed on Mesquite Asset

2,400,000 barrels gross recoverable oil

US$28,600,000 NPV10 at US$60 per barrel oil assumed

·    Twin Well reached payback within one year

·    276% increase in proven and probable reserves, primarily from the Mesquite acquisition

·    £1.15m placing completed, primarily with a new institutional investor

·    New 160-acre standalone lease targeted in Mesquite area

 

Post-period events:



 

·    Phase 1 arbitration hearing over non-core Egyptian assets concluded

Chairman's report

During 2019, the price of West Texas Intermediate, the most relevant benchmark crude for Nostra Terra's oil production, has traded broadly in the $50/bbl to $60/bbl range. This is lower than during 2018.

Nostra Terra's core long-term cash flow assets, being Pine Mills and the Permian Basin wells, continue to produce at relatively stable oil rates being a testament to the Company's field operations. This, combined with a focus on maintaining low field and well operating costs, enables oil production to continue to make a profitable and positive cash contribution to the broader activities of the Company.

During the period, the Company raised £1.15 million with a share placing at 2.4p per share in order to continue the development of assets in the Permian Basin as well as enabling the balance sheet to be significantly strengthened resulting in a reduction in borrowings and loans along with trade and other payables. The financing facilities remain in place with room to draw down funds as we begin drilling operations.

In the latter half of 2018, the Company announced the acquisition of the Mesquite Asset in the Permian Basin. This has been a prime focus of Nostra Terra's work during 2019, and following technical work undertaken by Trey Resources Inc., it was determined that a single, successful Mesquite well has the potential to add initial estimated production of 265 barrels of oil per day, which would be immediately transformative for Nostra Terra. In addition, the wider Mesquite play and well locations that are in the Company's inventory could allow for potential multiples of this to be achieved with further follow up drilling.

I am pleased to report that in early 2019 Nostra Terra increased its net proven and net probable reserves to 2,429,660 barrels of oil, a 276% increase, with a net present value using a 9% discount rate of US$24 million. This bodes well for the future. This increase was not solely due to the addition of Mesquite resources but also an overall increase in the existing producing assets, more than offsetting production.       

In Egypt, the Company's interest in the East Ghazalat field is the subject of an arbitration process. As announced on the 12 August 2019 the London Court of International Arbitration Tribunal (the "Tribunal") published its phase 1 award in relation to the East Ghazalat field, in which Nostra Terra's wholly owned subsidiary, Nostra Terra Inc. ("NTI"), holds a 50% participating interest. The Tribunal found that NTI was in default of the Joint Operating Agreement. The Board has been considering next steps with its legal advisers. Further announcements will be made in due course.

Nostra Terra continues to deliver secure, long-term, profitable production. From this solid foundation, our intention is to build further to enable profit at the operating level, with material organic growth from the Mesquite and other assets in the Permian Basin, whilst being ever vigilant for other opportunities consistent with the Company's strategy.

I would like to thank our shareholders for their continued support and look forward to reporting more progress in future.

Ewen Ainsworth

Chairman

30 September 2019



 

Chief Executive Officer's report

 

During the first half of 2019, the average oil price (WTI) was US$57.39, per barrel (compared to US$65.55 in 2018). Despite significantly lower oil prices during the period, we were able to achieve comparable results in revenues, being $947,000 compared to $1,133,000 during the same period in 2018. Gross profit for operations (before depletion, depreciation, amortization and one-off exploration costs) were $297,000 (from $568,000 during the same period in 2018).

 

Our assets are located in the USA, in East Texas (Pine Mills) and West Texas (Permian Basin). In Texas we have a skilled workforce, strong supply of rigs and service companies, and plenty of great infrastructure. We're able to go from permitting a well, to drilling, completing, placing into production, selling the oil, and collecting revenue in less than four months. These characteristics make it one of the best places in the world for investment in the oil and gas sector.

 

Pine Mills has been the primary source of revenue and cashflow for the Company; however the quicker growth has been coming out of the Permian Basin, the most prolific oil patch in the USA.

 

Our Twin Well in the Permian Basin reached payback (100% of our investment) in less than one year. This further highlights the great economics of the area where we invest and of our operations. We have chosen the area as a great place to expand operations, hence the acquisition of the Mesquite Asset. In the first half of 2019, we announced a 276% increase in our reserves, primarily from the Mesquite acquisition, which provides the Company much more room to expand as we develop the Mesquite Asset.

 

During 2019 we also identified an attractive area within the Mesquite play where 160 acres were available to be leased. The Mesquite target area covers over 30,000 acres, of which Nostra Terra has approximately 2,000 acres. The additional 160 acres is a standalone lease, separate from the core acreage previously acquired and will provide further attractive locations to drill both horizontal and vertical wells.

 

Moving forward we're looking at growth both in developing existing assets, such as Mesquite, and also acquiring new assets, which could prove to be transformative to the Company. We're currently in various stages of due diligence and negotiations on acquiring additional producing US assets. These assets, if acquired, could provide an immediate positive impact on cashflow. Financing for such acquisitions would be provided by the US$5 million Senior Lending Facility with Washington Federal Bank, with a borrowing base of just under US$2 million and current interest rate of 5.25%. The facility size and borrowing base will both adjust with any new wells brought into production or acquired.

 

A sincere thank you to our shareholders, existing and new. We look forward to updating you as we continue to grow the Company.

 

Matt Lofgran

 

Chief Executive Officer

 

30 September 2019

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:

 

Nostra Terra Oil and Gas Company plc

Matt Lofgran, CEO

 

Tel:

+1 480 993 8933

Strand Hanson Limited

(Nominated & Financial Adviser and Joint Broker)

Rory Murphy / Ritchie Balmer / Jack Botros

 

Tel:

+44 (0) 20 7409 3494

Shard Capital Stockbrokers (Joint Broker)

Damon Heath / Erik Woolgar

 

Lionsgate Communications (Public Relations)

Jonathan Charles

Tel:

 

 

Tel:

+44 (0) 207 186 9952

 

 

+44 (0) 203 697 1209

 

 

 



 

 

Nostra Terra Oil and Gas Company plc

 

Consolidated income statement

for the six months ended 30 June 2019

 

 

 

 

Note

Six months to 30 June 2019 Unaudited

 

Six months to 30 June 2018

 Unaudited

 

Year to

31 December  2018

Audited

 

 

 

 

$'000s

 

$'000s

 

$'000s

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

947

 

1,133

 

2,267

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

 

 

Production costs

 

 

 

(662)

 

(565)

 

(1,325)

Exploration

 

 

 

-

 

(212)

 

(298)

Well Impairment

 

 

 

-

 

-

 

(32)

Depletion, depreciation, amortisation

 

 

 

(179)

 

(86)

 

(238)

Total cost of sales

 

 

 

(841)

 

(863)

 

(1,893)

GROSS PROFIT

 

 

106

 

270

 

374

Share based payment

 

-

 

-

 

(42)

Administrative expenses

 

(814)

 

(703)

 

(1,324)

Gain (loss) on sale

 

32

 

-

 

38

Impact from change in reporting currency

 

-

 

(72)

 

-

Foreign exchange gain (loss)

 

(24)

 

47

 

17

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

 

(700)

 

(458)

 

(937)

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

49

 

(26)

 

214

Finance expense

 

 

(61)

 

(88)

 

(207)

 

 

 

 

 

 

 

 

 

LOSS BEFORE TAX

(712)

 

(572)

 

(930)

LOSS FOR THE PERIOD

(712)

 

(572)

 

(930)

 

 

 

 

 

 

Attributed to:

 

 

 

 

 

Owners of the company

 

(712)

 

(572)

 

(930)

 

 

 

 

 

 

 

 

 

Earnings per share expressed

 

 

 

 

 

 

 

 

in pence per share:

 

 

 

 

 

 

 

 

Continued operations

 

 

 

 

 

 

 

 

Basic and diluted (USD)

 

 

3

(0.0039)

 

(0.0041)

 

(0.0065)

 

The Company's operating loss arose from continuing operations.

 

There were no recognised gains or losses other than those recognised in the income statement above.



 

Nostra Terra Oil and Gas Company plc

 

Consolidated statement of comprehensive income

for the six months ended 30 June 2019

 

 

Six months to 30 June 2019 Unaudited

 

Six months to 30 June 2018

 Unaudited

 

Year to

31 December  2018

Audited

 

$'000s

 

$'000s

 

$'000s

LOSS FOR THE YEAR

(712)

 

(572)

 

(930)

Other comprehensive income:

 

 

 

 

 

Currency translation differences

-

 

-

 

-

Total comprehensive income for the period

(712)

 

(572)

 

                       (930)

 

 

 

 

 

 

 

 

 

Total comprehensive income attributable to:

 

 

 

 

 

Owners of the company

 

(712)

 

(572)

 

(930)

 

 

 

 

 

 

 

 

 

 



Nostra Terra Oil and Gas Company plc

 

Consolidated statement of financial position as at 30 June 2019

 

 

 

 

 

 As at 30 June 2019

Unaudited

 

As at 30

June 2018

Unaudited

 

As at 31 December 2018

Audited

 

 

Note

$'000s

 

$'000s

 

$'000s

ASSETS

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

Other intangibles

 

1,863

 

1,681

 

1,873

Property, plant, and equipment

 

 

 

 

 

- oil and gas assets

 

 

653

547

536

 

 

 

2,516

 

2,228

 

2,409

CURRENT ASSETS

 

 

 

 

Trade and other receivables

390

325

402

Deposits and prepayments

106

539

96

Other assets

263

-

263

Cash and cash equivalents

201

 

188

 

72

 

 

 

960

 

1,052

 

833

LIABILITIES

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Trade and other payables

 

 

428

 

951

 

642

Borrowings

 

 

475

 

1,082

 

723

 

 

 

903

 

2,033

 

1,365

NET CURRENT

ASSETS/(LIABILITIES)

 

 

57

 

(981)

 

(532)

NON-CURRENT LIABILITIES

 

 

 

 

 

 

 

Decommissioning liabilities

 

 

228

 

177

 

217

Other loans

 

 

1,820

 

1,049

 

1,955

NET ASSETS/(LIABILITIES)

 

 

525

 

21

 

(295)

 

 

 

 

 

 

 

 

EQUITY AND RESERVES

 

 

 

 

 

 

 

Share capital

6

6,859

6,770

6,770

Share premium

 

21,421

19,978

19,978

Translation reserve

 

(676)

(676)

(676)

Share option reserve

 

120

78

120

Retained losses

 

 

(27,199)

 

(26,129)

 

(26,487)

 

 

 

525

 

21

 

(295)

 

 

 

 

 

 

 

 

 

 

 

 

 



Nostra Terra Oil and Gas Company plc

 

 Consolidated cash flow statement

For the six months ended 30 June 2019

 

 

 

 

Six months to 30 June 2019 Unaudited

 

Six months to 30 June 2018 Unaudited

 

Year

 to 31 December  2018 Audited

 

Note

$'000

 

$'000

 

$'000

Cash flows from operating activities

 

 

 

 

 

 

Cash generated/(consumed) by operations

4

(640)

 

(706)

 

(996)

Interest paid

 

(61)

 

(21)

 

(41)

Cash generated/(consumed) by operations

 

(701)

 

(727)

 

(1,037)

Cash flows from investing activities

 

 

 

 

 

 

Purchase of intangibles - new oil properties

 

(126)            

 

(309)

 

(639)

Purchase of plant and equipment

 

(170)

 

(228)

 

-

Purchase of investments

 

-

 

-

 

(271)

Net cash from investing activities

 

(296)

 

(537)

 

(910)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds of issue of shares

 

1,437

 

902

 

902

Net borrowing

 

(311)

 

412

 

979

Net cash from financing activities

 

1,126

 

           1,314

 

1,881

Increase/(decrease) in cash and cash equivalents

 

129

 

50

 

(66)

Cash and cash equivalents at the beginning of the period

 

72

 

  138

 

138

Cash and cash equivalents at the end of the period

 

201 

 

188

 

72

Represented by:

 

 

 

 

 

 

Cash at bank

 

201

 

188

 

72

 



Nostra Terra Oil and Gas Company plc

 

Consolidated statement of changes in equity

For the six months ended 30 June 2019

 

 

 

 

As at

30 June

 2019

As at

30 June

2018

As at

31 December 2018

 

 

$'000

$'000

$'000

As at beginning of period

 

(295)

(309)

(309)

 

 

 

 

 

Loss for the period

 

(712)

(572)

(930)

 

 

 

 

 

Share based payments

 

95

-

42

 

 

 

 

 

Issue of share capital net of expenses

 

1,437

902

902

 

As at end of period

 

525

 

21

 

(295)



Nostra Terra Oil and Gas Company plc

 

Notes to the interim report

For the six months ended 30 June 2019

 

 

1.   General Information

 

      Nostra Terra Oil and Gas Company plc (Nostra Terra) is a company incorporated in England and Wales and quoted on the AIM market of the of the London Stock Exchange (ticker: NTOG). The principal activity of the group is disclosed as described in the directors' report.

 

 

2.   Basis of Preparation

 

These financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations issued by the International Accounting Standards Board (IASB) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention. This interim financial information for the six months ended 30 June 2019 was approved by the Board on 30 September 2019.

 

The unaudited results for the six months ended 30 June 2019 do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the 12 months ended 31 December 2018 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and which contain a qualified audit report due to the lack of primary accounting information and exclusion of Independent Resources (Egypt) Ltd from the consolidated financial statements..

.

 

Copies of this interim statement are available from the Company at its registered office at Finsgate, 5-7 Cranwood Street, London EC1V 9EE. The interim statement will also be available on the Company's website www.ntog.co.uk in accordance with Rule 26 of the AIM Rules for Companies.

 

 

3.    Loss per share

 

      The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares in issue during the period. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The group had two classes of dilutive potential ordinary shares, being those share options granted to employees and suppliers where the exercise price is less than the average market price of the group's ordinary shares during the year, and warrants granted to directors and one former adviser.

 

 

Six months

to 30 June 2019 Unaudited

 

Six months

 to 30 June 2018

Unaudited

 

Year to

31 December  2018

Audited

 

 

 

 

 

 

Loss per ordinary shareholders ($000)

 

 

 

 

 

Basic and diluted

(0.0039)

 

(0.0041)

 

(0.0065)

 

      The loss per ordinary share is based on the Company's loss for the period of $712,000 (30 June 2018 - $572,000; 31 December 2018 - $930,000) and basic weighted average number of ordinary shares in issue of 180,722,935 (30 June 2018 - 139,306,025; 31 December 2018 - 143,112,345).

 

      Given the Company's loss for the period, the diluted loss per share is the same as the basic loss per share.

 



 

Nostra Terra Oil and Gas Company plc

 

Notes to the interim report

For the six months ended 30 June 2019

 

 

4.   Reconciliation of operating loss to net cash outflow from operating activities.

 

 

 

Six months to

30 June 2019 Unaudited

 

Six months to

30 June 2018 Unaudited

 

Year to

31 December  2018

Audited

 

 

$'000s

 

$'000s

 

$'000s

Operating loss for the period

 

(712)

 

(572)

 

(930)

Adjustments for:

 

 

 

 

 

 

Depreciation of property, plant, and equipment

 

53

 

39

 

93

Amortization of intangibles

 

125

 

39

 

145

Accretion expense

 

11

 

8

 

32

Share based payment

 

95

 

-

 

42

Other non-cash movements

 

-

 

-

 

-

Operating cash flows before movements in working capital

 

(428)

 

(486)

 

(618)

(Increase)/decrease in receivables

 

12

 

(135)

 

(212)

(Increase)/decrease in other assets

 

-

 

-

 

(263)

(Decrease)/increase in payables

 

(214)

 

124

 

(137)

(Increase)/decrease in deposits and prepayments

 

(10)

 

(209)

 

234

Cash generated/(consumed) by operating activities

 

(640)

 

(706)

 

(996)

 

 

 

5.   Segmental analysis

 

In the opinion of the directors, the Group has one class of business, being the exploitation of hydrocarbon resources.

 

The Group's primary reporting format is determined by geographical segment according to the location of the hydrocarbon assets.

 

As the group only operates in a single business and geographical segment, no segmental information for business segment or geographical segment is required.

 

 

6.   Share Capital

     

      The issued share capital as at 30 June 2019 was 197,131,903 ordinary shares of 1p each. The issued share capital as at 31 December 2018 and 30 June 2018 was 147,206,221 ordinary shares of 1p each.  

 



 

7. Events arising after the balance sheet date

 

The following is a summary of events arising after the balance sheet date:  

 

In Egypt, the Company's interest in the East Ghazalat field is the subject of an arbitration process. As announced on the 12 August 2019 the London Court of International Arbitration Tribunal (the "Tribunal") published its phase 1 award in relation to the East Ghazalat field, in which Nostra Terra's wholly owned subsidiary, Nostra Terra Inc. ("NTI"), holds a 50% participating interest. The Tribunal found that NTI was in default of the Joint Operating Agreement ("JOA") for the non-payment of the November and December 2015 cash calls, to North Petroleum International Company SA ("North"), in an amount of US$1,062,613 plus interest (estimated at US$125,000). Non-payment could culminate in the transfer of NTI's interest in the Concession to North. North holds the other 50% participating interest in the Concession and is the operator. The Board is considering next steps with its legal advisers..

 

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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