General Discussion on Nostra

17th Nov '09 by monkeynuts

4 comments 3769 reads

Emerging oil and gas exploration and production company with newly acquired assets in established producing regions within the US mid-continent.
Nostra Terra also holds an interest in a licence to further explore and develop the onshore Oktyabrskoe oil field in Ukraine.
The advanced recovery technology which the Company and its joint venture partner are successfully exploiting in the US mid-continent may eventually be used to enhance the economic viability of this Ukrainian reservoir but rapid and profitable development of its US business is now Nostra Terra's primary focus.

http://www.ntog.co.uk/media/pdf/int_2009.pdf

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About the Author

Monkeynuts

Premium Member

4 comments

monkeynuts

17th Nov '09

Nostra Terra has been pushing out news with amazing regularity recently. It all started midway through the year when the company acquired a new CEO, Matt Lofgran. Since then, it's changed its strategy completely. Having started out with an oil field in Ukraine, it's now moved to invest in US oil fields instead - looking for areas where the exploration and operational risk, but also political and currency risk, is much lower.

NTOG holds a number of assets in partnership with HPI: the Boxberger prospect, Bloom prospect, and Hoffman property. All of them are in Kansas, and have gas as well as oil reserves. Recent months have seen newsflow on all these assets.

The shares have shot up from 0.25p as recently as September to 1.77p now, peaking at 2.79p. It's a tough call, given the run of good news recently, but I'm going to sit this one out. There are just too many risk factors - and the shares seem to have kept well up with events.

Posted an article with detailed thoughts here - http://www.stockopedia.com/article/view/33356/nostra-terra . Looking forward to some good comments on this one, as it seems to provoke strong opinions either way!

lowersharpnose

17th Nov '09

I think NTOG has a stink about it.I'll reproduce a couple of posts I made on TMF.

http://boards.fool.co.uk/Message.asp?mid=11725795

http://boards.fool.co.uk/Message.asp?mid=11738030

I have been looking at past RNSs.

The big one, when money was raised and Matt Lofgren took over is interesting.

http://www.investegate.co.uk/Article.aspx?id=20090630070000W2398

It talks about ML subscribing to the placing and agreeing to a lock in for his 1.5% of the company. So far, so good.

Further down we get:

...the Company will look to acquire assets in the USA, where opportunities are currently being evaluated, including a prospect in which Mr Lofgran has an interest. Any acquisition from Mr Lofgran would be satisfied by the issue of new shares, supported by an independent valuation.

I'll come back to this independent valuation.

Issue of Warrants

Subject to the Company entering into a joint venture agreement within 12 months,
the board has agreed to issue warrants to Mr Lofgran conferring the rights to
subscribe for such number of Shares as is required to be issued to Mr Lofgran
such that his total holding of Shares in the Company, when aggregated with any
person or persons with whom he is or would be considered to be acting in
concert, shall equal twenty nine point nine per cent. of the fully diluted share
capital of the Company at a price of 0.1p per ordinary share.

Well the terms were met almost straight away (Bloom Koelsch & Hoffman) , no surprise there.

And he gets 30% of the company for the square root of naff all.

And there is no lock in for the warrants.

On the 21st Aug, NTOG bought Boxberger from Hewitt Petroleum.

http://www.investegate.co.uk/Article.aspx?id=20090821123500W2145

The reserves for the Boxberger Field are estimated to be sufficient to produce 1,687,000 barrels oil over the first 15 years of production. These are categorized as proven, producing.

The independent evaluation of the reserves was done by...

The technical information in this announcement has been prepared and approved for release by Douglas C. Hewitt, CEO of HPI. He is a qualified person as defined in the Note for Mining and Oil & Gas Companies, June 2009, of the London Stock Exchange.

The same Hewitt who is selling the asset stands as a fit and proper evaluator of the reserves. Independent?

NTOG's reserves report for Hoffman, used W. A. Alexander Jr. of W. A. Alexander, Jr. Oil & Gas Consulting, who has only worked for Hewitt companies before (he is 73 and probably looking for a better retirement). Independent?

etc.

lsn

monkeynuts

3rd Dec '09

Very interesting post, LSN. Will reply in more detail. Just a quick update on the RNS today - http://www.stockopedia.com/news/announcement/NTOG/091203ntog000636.htm

Operational Update

Boxberger - Further to NTOG's announcement of 30 October 2009, development work on the first
of  several  wells is now complete and production operations are anticipated  to
commence  by  the  end  of 2009 once the field electrical facilities  have  been
upgraded  by  the  local  power  company. As a  consequence  of  the  multi-zone
completion  undertaken  on  the initial well, where two  new  lower  zones  were
discovered,  the  Company  has completed a detailed analysis  of  the  reservoir
dynamics  to  ascertain the best approach to adopt in further field  operations.
This  has  resulted  in  the redesign of pumps and other equipment  to  optimise
operations.  In addition to completing the first production well,  a  salt-water
disposal well has also been completed and licensed.  Details of flow rates  will
follow once production has stabilized.

Hoffman - Work is progressing on two production wells and one injection/saltwater disposal
well  on the Hoffman property and two workover rigs having been on site for  the
last  two  weeks.   It  is  anticipated that production will  begin  upon  final
disposal licensing and completion of the saltwater disposal and production  tank
facilities that are scheduled to be completed in early Q1 2010.

lowersharpnose

3rd Dec '09

In reply to monkeynuts (post #3)

I made a mistake in my post above. I wrote that there is no lock in for the warants, I think that when the warrants are converted to shares they are then covered by the lock in clause.

Whilst, we await the RNS on the Hoffman well with flow rates, what sort of stabilised production flow rates would be reasonable?

In the acquisition RNS,
http://www.investegate.co.uk/Article.aspx?id=20090821123500W2145

it is stated:

The reserves for the Boxberger Field are estimated to be sufficient to produce 1,687,000 barrels oil over the first 15 years of production. These are categorized as proven, producing.

To produce those reserves over 15 years, would need average flow rates of 110,000 bbls per year or an aggregate 300 bpd from all the wells. Given depletion, it is not unreasonable to assume that flow rates in the first years would need to be much higher, double, treble, more?

Now, look at the historical production figures for the field:
http://abyss.kgs.ku.edu/pls/abyss/oil.ogf4.IDProdQuery?FieldNumber=1000151295

The average over the last forty years has been 4,500 bbls per year.

NTOG & HPI need to produce at an average of 25 times that rate.

Even the peak production figures of 1971 need to be exceeded by a factor of 3.5 or so and maintained for fifteen years.

NTOG and HPI are planning to drill eleven production wells. Allowing for depletion, to hit 600 bpd from these eleven, flow rates are going to have to be 60 bpd+.

Lower flow rates mean that more wells will have to be drilled to have any hope of exploiting these 1,687,000 bbls of reserves.

Do you really think that NTOG/HPI will be able to increase the production of an old, depleted oil field by such a significant multiplier?

I am unconvinced.

lsn

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General Discussion on Nostra

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Monkeynuts

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