REG - Nostra Terra O&G Co - Further Reserves Update

Nostra Terra Oil and GasAnnouncement

20/10/2021 07:05

RNS Number : 5923P
  
Nostra Terra Oil & Gas Company PLC
  
20 October 2021
  
 

 
 
7.00am 20 October 2021
 
Nostra Terra Oil and Gas Company Plc
("Nostra Terra" or "the Company")
 
Further Reserves Update
 
 
Nostra Terra (AIM: NTOG), the oil & gas exploration and production company with a portfolio of development and production assets in Texas, USA, is pleased to provide an update regarding its recently published Reserves, both in terms of presentation and the effects of the current oil price.
 
 
Highlights
 
·    $68.5 million Future Net Income (total proved), assuming $75 flat oil price
o  189% increase from value reported on 29 Sep 2021
·    $22.5 million NPV10 (total proved), assuming $75 flat oil price
o  113% increase from value reported on 29 Sep 2021
 
 
 
Nostra Terra updated its reserves ("Reserves"), using a third-party engineer APN Energy ("APN"), effective 1 September 2021 and as announced on 29 September 2021. The reserves report was prepared by APN for the Company for submission to support its Senior Lending Facility ("Facility"). The increased size of the Facility to $10 million and Borrowing Base (funds immediately available for use) to $2.35 million, are supported by the increased reserve value, Future Net Income ("FNI") and Net Present Value ("NPV") using the bank's price deck. These are typically a more conservative position compared to actual oil prices.
 
The Company has engaged APN to produce updated figures to reflect the current increase in commodity prices, as well as providing a breakdown of each area of US operations. These calculations use a flat $75 oil price, as detailed below, and seek to show the cashflow benefit the Company could get from stable oil prices at the levels currently being experienced.
 
The size of the Facility and Borrowing Base will be reassessed at least twice yearly. The Board anticipates the Facility and Borrowing Base will increase with increased oil production, oil prices, and could be further increased should the Company hedge any of its production, there are currently no hedges in place.
 
 
Reserves Value Increase
Net incomes are defined as the portion of gross revenues attributable to Nostra Terra's interest after deducting all shrinkage and royalties, and are displayed in the following table. For comparison tables are presented using the bank's oil price curve reported in the 29th September announcement and a $75 flat oil price, both with a 10% discount factor.
 
 
 
 
 
 
 







$75 flat oil price


$59 oil price or less 
(Bank deck)




Reserve Class and Category


Future Net Income (USD)


NPV10


Future Net Income (USD)


NPV10




Proved Developed  Producing ("PDP")


$39,935,647


$10,812,570


$10,260,800


$4,755,020




Proved Developed Non-Producing ("PDNP")


$4,803,972


$2,958,680


$3,025,580


$1,859,140




Proved Undeveloped ("PUD")


$23,742,430


$8,714,750


$10,417,860


$3,935,260




Total Proved


$68,482,049


$22,486,000


$23,704,240


$10,549,420



 
Future net income is determined after deducting estimated future operating and development costs, production and ad valorem taxes, but before Federal income taxes.  Future revenues were estimated using forecast prices as follows:
 



Year


Oil ($/Bbl)








Current


Bank




2021


$75


$59.00




2022


$75


$57.50




2023


$75


$54.75




2024


$75


$52.00




2025


$75


$49.00



 
 
Reserves by Asset
Net oil reserves are generated using decline curve analysis and applying bank pricing as per the table below. Net total proved reserves have been estimated to be as follows:
 



Property


Gross Oil (Mbbl)


Net Oil (Mbbl)


Operator




East Texas
Pine Mills PDP


496.6


386.4


NTOG




Pine Mills PDNP


100.0


76.2




Pine Mills PUD


0.0


0.0




Pine Mills Total


596.6


462.6




 
East Texas










 
Cypress




Cypress farmout PDP


183.0


48.7




Cypress farmout PDNP


0.0


0.0




Cypress farmout PUD


403.2


99.6




Cypress farmout Total


586.2


148.3




 
West Texas










 
NTOG




Permian Basin PDP


179.4


66.9




Permian Basin PDNP


0.0


0.0




Permian Basin PUD


632.0


295.4




Permian Basin Total


811.4


362.3






















Grand Total


1,994.3


973.2







 
Probable and Possible reserves have not been included in this assessment. The Company's producing asset Caballos Creek in South Texas has not been included in the Reserves or Senior Facility but is intended to be added in the future.
 
The reserve figures stated above use the standards set by The Petroleum Resources Management, which is accepted by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers. The definitions can be found at: www.spe.org/industry/docs/Petroleum-Resources-Management-System-2007.pdf 
 
Matt Lofgran, Nostra Terra's Chief Executive Officer, said:
 
"We have a very strong asset base, with a diversified portfolio. We're able to maintain low operating cost in the field so an increase in oil prices provides a tremendous improvement in income and net cashflow, as demonstrated with the 189% increase in Future Net Income.
 
Our immediate focus is on increasing production and cashflow. We look forward to updating the market shortly with an operations update, including plans for the remainder of the year."
 
 
 
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014
 
Competent Person Disclosure
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.
Cautionary Note
 
The flat oil price of $75 used above compares to current WTI spot price of $83.67 The oil price is volatile and should it be materially different then the figures for Reserves set out herein could in turn be materially different.
 
For further information, contact:



Nostra Terra Oil and Gas Company plc
Matt Lofgran, CEO
 


Email:


+1 480 993 8933




Beaumont Cornish Limited
(Nominated Adviser)
James Biddle/ Roland Cornish
 


Tel:


+44 (0) 20 7628 3396




Novum Securities Limited (Broker)
Jon Belliss
 
Lionsgate Communications (Public Relations)
Jonathan Charles


Tel:
 
 
Tel:


+44 (0) 207 399 9425
 
 
+44 (0) 7791 892509
 



 
 
Technical Glossary
 
Bbl - Barrels
 
Future Net Income "FNI" - the projected Gross Revenues expected to be realised by the Company during such period less the sum of the Operating Costs payable.
Gross - total quantity or amount
 
Mbbl - Thousand barrels
 
Net - quantity or amount of Nostra Terra's interest 
 
Net Present Value "NPV" - the difference between the present value of cash inflows and the present value of cash outflows over a period of time.
 
PDP - Reserves in the category 'Proved, Developed, Producing'
PDNP - Reserves in the category 'Proved, Developed, Not producing'
PUD - Reserves in category 'Proved Undeveloped'
 
Proved Reserves - Proved Reserves are those quantities of petroleum, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. If deterministic methods are used, the term reasonable certainty is intended to express a high degree of confidence that the quantities 10 will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate.
 

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 rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
  END
 
 
MSCDKCBNCBDDOKD