Nostra Terra Oil Gas Co Plc (LON:NTOG) announced today that its wholly owned subsidiary, Nostra Terra Overseas has entered into a contract with Crimea Invest regarding its Ukrainian Assets.
Crimea Nadra Invest, based in Evpatoria, Crimea, and has other oil and gas interests in the region, is to acquire all the rights and obligations associated with the Joint Activity Agreement covering Nostra Terra Overseas operations in Ukraine, in particular the Oktyabrskoe field licence. In return, Nostra Terra Overseas will retain a right to payment of 25% of any net profits generated by the joint agreement, with a term of 25 years from Jan 2001. The deferred payment from future oil sale proceeds of approximately GBP£29,000, applied towards general working capital, will settle the transaction.
The Company's 25 per cent interest in the Oktyabrskoe field licence was carried at GBP153,000. In 2008, Nostra Terra reported a gross loss of GBP115,000 on turnover of GBP88,000 from its Ukrainian operations following unsuccessful exploration on several of the Oktyabrskoe wells.
For the past 9 months, Nostra Terra has been focusing on the mature, low cost oil producing region of the US mid-continent working with joint venture partner and lease operator, Hewitt Petroleum Inc (HPI). It is an area the company has already established a presence in and the Company has indicated that it regards the US mid-continent as an exceptionally attractive oil and gas play. While the prospects of discovering a giant new oil or gas reservoir are remote compared to the potential in less explored frontier areas, the Company argues that the probability of achieving steady and sustainable cash flow is far greater. The Central Kansas Uplift has yielded more than 6 billion barrels of oil. Production today is less than a third of what it was 50 years ago - yet the Kansas Geological Survey estimates that 60 per cent of the region's recoverable reserves remain untapped.
Matt Lofgran, CEO of Nostra Terra, commented:
"I believe this is a very positive deal for Nostra Terra and our shareholders, as it provides us with the right to 25% of any future net profits from the currently non-productive JAA [Joint Activity Agreement], with no further cost exposure. Our primary objective at this stage is to build a solid…
