REG - Nostra Terra O&G Co - Interim Results <Origin Href="QuoteRef">NTOG.L</Origin>

Nostra Terra Oil and GasAnnouncement

30/09/2015 07:03

RNS Number : 6334A
Nostra Terra Oil & Gas Company PLC
30 September 2015
30 September 2015
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Interim results for the six months ended 30 June 2015
Nostra Terra (AIM:NTOG), an oil and gas exploration and production company with a growing portfolio of producing and exploration prospects, is pleased to announce its unaudited results for the six months ended 30 June 2015.
Highlights:
Corporate:
 Revenue for the period of 393,000 (30 June 2014: 414,000)
 Gross profit before non-cash items of depreciation and amortization of 268,000
(30 June 2014: 250,000)
 New Nomad and Broker appointed
 New Chairman appointed
Operational:
 Acquisition of 100% Working Interest in Paw Paw Prospect
 JV with Independent Resources Plc to expand into Egypt (post-period)
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
Sanlam Securities UK Limited(Nominated Adviser & Broker)
Lindsay Mair/James Thomas Telephone: +44 (0)20 7628 2200
Walbrook PR Ltd(Media Relations)
Gary Middleton/Nick Rome Telephone: +44 (0)20 7933 8797


Chief Executive's report
The industry is going through a very tough time right now with low and volatile oil prices caused by global oversupply, primarily driven by horizontal drilling and fracking in the United States. This has led US focused oil companies to concentrate on capital discipline and balance sheet strength while they wait for stability and higher oil prices before committing to new developments. This has been shown in the drop in US production and drill rigs turning in recent months.
Recent news stories that non-Arab members of OPEC are lobbying hard in an effort to get production cuts and therefore higher oil prices are encouraging, though how effective this will be and how long it will take is uncertain. While we are not aiming to time the bottom of the market, we are in a cyclical business and believe the path of least resistance for oil prices is up. Given this, we believe it's an opportune time to look for further investments.
Our focus remains in producing basins with conventional reservoirs, primarily using modern exploration and production technologies. Our existing production and reserves occur within the Mid-Continent USA, however we are also finding intriguing opportunities outside the USAwhich will provide further diversification going forward. We are targeting existing producing assets with further upside through exploration. These assets can be acquired on advantageous terms and with careful application of leverage.
Towards the end of 2014 and beginning of 2015, we doubled production putting the Company on a much stronger footing. With revenue of 393,000, we achieved a gross profit for the period before depreciation and amortization costs of 268,000.
We've positioned our White Buffalo Prospect in the Big Horn Basin of Wyoming, acquired towards the end of 2014 just before the sharp downturn, to be drill ready for exploration once the market strengthens. The leases have several more years, which allows us to maintain the inventory to grow in the future, but without the pressure of having to spend money to keep them. During the first half of the year we signed an operator agreement on another larger prospect in Wyoming with Koch Exploration, a subsidiary of the second largest private company in the USA. While this is an exploration prospect, we were able to secure the opportunity with no acquisition costs. Our plan is to continue to progress it while promoting some interest to others, thus creating a free carry.
Our debt facilities remain in place providing an alternative to issuing equity. We've kept the debt at relatively conservative levels and maintain flexibility to continue our growth.
As we look to grow Nostra Terra organically and globally we welcomed a new Chairman, Ewen Ainsworth to the Company. Mr. Ainsworth brings with him a global wealth of experience and contacts to help Nostra Terra. Most notably he was the CFO of Gulf Keystone, a company that started as one of the smaller oil & gas companies on AIM and grew to be one of the largest oil & gas companies on the London Stock Exchange. We look forward to more of his contributions as we make much larger strides from here. 
Post-period we announced plans to expand into a second focus area, Egypt and the surrounding region. Our plans are to acquire existing producing assets with further exploration potential. This approach allows us to acquire assets of lower risk, already generating revenues, where leverage can be applied to the acquisition. Once assets are acquired we will look to quickly improve efficiencies through tighter cost controls and improved operations. 
We appreciate the support from our shareholders and look forward to updating them on the progress of the Company in the coming months and into 2016. 
Matt Lofgran
Chief Executive Officer
29 September 2015 


Chief Operating Officer's Report
We have stated that the oil and gas industry of the United States was entering an exciting period of change, characterized by a dramatic shift in the application of assets. We were positioned to expand beyond our current platform of reliable partners and strong lender relationships to acquire some of these assets. The former strategy was to apply horizontal drilling and completion techniques to known producing formations where they had not been previously applied. Although that is still a viable pathway, the acquisition of producing assets that are held by over-levered operators presents an even greater opportunity without exploration risk.
White Buffalo was acquired at the beginning of the downturn. The prospect covers 6,100 net mineral acres of leases in the Big Horn Basin of Wyoming. It represents the Company's first step into a basin, which has been producing oil and gas since early 1900's. According to the US Department of Interior, more than 3.3 billion BOE have been produced from 48 separate formations across 139 oil and gas fields. Importantly, a study by the United States Geological Survey projects that a mean of 1 billion BOE (barrels of oil equivalent) additional resources remain to be discovered from both conventional and unconventional sources. Independent assessment by Haas Engineering, of White Buffalo has projected a mean potential recovery of 13 million barrels of oil to Nostra Terra.
As the decline in oil prices continued, it was determined to postpone further exploration risk until prices have recovered. The Company has idled any further work on the White Buffalo project, awaiting improvement in prices. More than three years remain before the majority of leases begin to expire and most have extension provisions beyond that as well.
During the first half of 2015 we entered into two agreements in South Texas. This was part of a drill-to-earn on larger prospects. We acquired a small interest in each at a very low cost, providing us optionality for expansion should the results prove up. The initial wells were drilled and put into production. The operator decided to do additional work on each well almost immediately and we are waiting to see the outcome before committing ourselves further.
NTOG located another very attractive opportunity in the Big Horn Basin of Wyoming during the first half of this year. The Paw Paw Prospect consists of 2,280 acres under lease by Koch Exploration Company. The Company will earn interests in the Paw Paw Prospect by drilling wells ("Farmout"). It is expected to earn more than 80% Net Revenue in wells drilled. The unit will support up to 25 development wells and independent assessment from Haas Engineering supports the ultimate recovery of 7.3 million barrels of oil, if successful.
The Farmout did not require costs of leasing and seismic acquisition, usually associated with exploration projects. We are in the process of creating an Exploration Unit, along with permitting through the Bureau of Land Management and State of Wyoming. During this time we will also become a bonded operator in Wyoming.
The Company's disciplined approach has established a stable revenue platform across several partnerships in this portfolio. It is the portfolio that enables us to move into much larger prospects as the energy lending relationships provide us with much of the capital required. The Company owns 100% of both While Buffalo and Paw Paw. NTOG will operate the wells and will further reduce exposure through the sale of promoted interests to industry partners. In this manner, we will continue to grow our portfolio.
Alden McCall
Chief Operating Officer


Nostra Terra Oil and Gas Company plc
Consolidated statement of comprehensive income 
For the six months ended 30 June 2015 
Note
Six months to 30 June 2015 Unaudited
Six months to 30 June 2014
Unaudited
Year to
31 December 2014
Audited
'000s
'000s
'000s
Revenue
393
414
1,267
Cost of sales
3
(1,065)
(452)
(1,666)
Gross profit/(loss)
(672)
(38)
(399)
Share based payment
-
-
(19)
Administrative expenses
(378)
(313)
(318)
Operating loss
(1,050)
(351)
(736)
Finance income
-
-
-
Finance expense
(11)
(11)
(107)
Loss before tax
(1,061)
(362)
(843)
Taxation
-
-
-
Loss for the financial period
(1,061)
(362)
(843)
Other comprehensive income
Exchange gain/(loss) on translation of foreign ops.
(19)
(114)
(249)
Total comprehensive income for the period
(1,080)
(476)
 (1,092)
Loss per share
Attributed to:
Equity holders of the company
Basic and diluted
4
(0.032p)
(0.017p)
(0.029p)
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 financial position as at 30 June 2015
As at 30 June 2015
Unaudited
As at 30
June 2014
Unaudited
As at 31 December 2014
Audited
Note
'000s
'000s
'000s
Assets
Non-current assets
Other intangibles
3,545
3,689
4,283
Property, plant, and equipment
483
571
521
4,028
4,260
4,804
Current assets
Trade and other receivables
163
223
491
Deposits and prepayments
53
258
-
Cash and cash equivalents
526
122
861
742
603
1,352
Current liabilities
Trade and other payables
229
708
293
Borrowings
-
325
1,010
229
1,033
1,303
Net current assets
513
(430)
49
Non-current liabilities
Other loans
 7
1,380
645
612
Net assets
3,161
3,185
4,241
Equity
Capital and reserves
Share capital
8
3,360
2,776
3,360
Share premium account
11,060
9,991
11,060
Translation reserve
(194)
(40)
(175)
Share option reserve
139
119
138
Accumulated deficit
(11,204)
(9,661)
(10,142)
Total equity
3,161
3,185
4,241


Nostra Terra Oil and Gas Company plc
Consolidated cash flow statement
For the six months ended 30 June 2015
Six months to 30 June 2015 Unaudited
Six months to 30 June 2014 Unaudited
Year to
31 December 2014
Audited
Note
'000
'000
'000
Cash flows from operating activities
Cash generated/(consumed) by operations
5
79
247
222
Interest paid
-
-
 (163)
Net cash outflow from operating activities
79
247
59
Cash flows from investing activities
Sale/(purchases) of plant and
Equipment
(18)
(143)
(245)
Purchase of intangibles - new oil properties
(174)
(979)
(2,527)
Proceeds from sale of assets
-
-
295
Net cash from investing activities
(192)
(1,122)
(2,477)
Cash flows from financing activities
Proceeds on issue of shares
-
-
1,653
Repayment of borrowings
(381)
(966)
New borrowing (net)
159
626
2,221
Net cash from financing activities
(222)
 626
2,908
Increase/(decrease) in cash and cash equivalents
(335)
(249)
490
Cash and cash equivalents at the beginning of the period
861
 371
371
Cash and cash equivalents at the end of the period
526
122
861


Nostra Terra Oil and Gas Company plc
Consolidated statement of changes in equity
For the six months ended 30 June 2015
As at
30 June 2015
As at
30 June 2014
As at
31 December 2014
'000
'000
'000
As at beginning of period
4,241
3,661
3,661
Other comprehensive income
(19)
(114)
(249)
Deficit for the period
(1,061)
(362)
(843)
Share based payments
-
-
19
Issue of share capital net of expenses
-
-
1,653
As at end of period
3,161
3,185
4,241


Nostra Terra Oil and Gas Company plc
Notes to the interim report
For the six months ended 30 June 2015
1. General Information
 Nostra Terra Oil and Gas Company plc is a public limited company incorporated in England with a company number 05338258 and quoted on the AIM market of the London Stock Exchange Plc.
2. Basis of Preparation
This interim report, which incorporates the financial information of the Company, has been prepared using the historical cost convention, on a going concern basis and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, using accounting policies which are consistent with those set out in the financial statement for the year ended 31 December 2014. This interim financial information for the six months ended 30 June 2015 was approved by the Board on 29 September 2015.
The unaudited results for the year ended 30 June 2015 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 2014 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and which contain an unqualified audit report, did not draw attention to any matters by way of an emphasis of matter paragraph and contained no statement under Section 498 (2) or (3) of the Companies Act 2006.
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. Cost of Sales
Cost of sales includes 940,000 non-cash items (not affecting actual cash flow), in respect of depreciation, depletion and amortization costs. 
 



Year to 

Six months
Six months
31 December

to 30 June 2015
to 30 June 2014
2014

Unaudited
Unaudited
Audited

'000s
'000s
'000s




Revenue
393
414
1267




Cost of sales - cash items
125
164
270




Profit before non cash items
268
250
997




Depreciation, depletion 
940
288
1396
 and amortisation







Gross loss
-672
-38
-399
4.  Loss per share
Six months
to 30 June 2015 Unaudited
Six months
to 30 June 2014
Unaudited
Year to
31 December 2014
Audited
Loss per ordinary shareholders
Basic and diluted
(0.032p)
(0.017p)
(0.029p)
 The loss per ordinary share is based on the Company's loss for the period of 1,061,000 (30 June 2014 - 476,000; 31 December 2014 - 843,000) and basic weighted average number of shares in issue of 3,359,578,276 (30 June 2014 - 2,776,211,610; 31 December 2014 - 2,922,053,277).
 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 2015 
5.  Reconciliation of operating loss to net cash outflow from operating activities.
Six months to
30 June 2015 Unaudited
Six months to
30 June 2014 Unaudited
Year to
31 December 2014
Audited
'000s
'000s
'000s
Loss for the period
(1,061)
(362)
(736)
Adjustments for:
Depreciation of property, plant, and equipment
51
50
127
Amortization of intangibles
889
239
577
Well impairments
-
-
-
Loss on disposal of assets
-
-
691
(Increase)/decrease in receivables
221
62
52
(Decrease)/increase in deferred charges
(165)
-
-
Share based payment
-
-
19
(Decrease)/increase in related party
142
-
-
(Decrease)/increase in payables
(62)
372
13
(Increase) in deposits and prepayments
48
-
-
Foreign exchange
Translation-movement in provision
16
(114)
(521)
Net cash from operating activities
79
247
222
6 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.
7. Loan notes issued by Nostra Terra (Overseas) Limited
 The long-term creditors represent unsecured and interest-free loan notes issued by Nostra Terra (Overseas) Limited ("NTOL") on 25 May 2007 with no contingency based on the cash flow from NTOL's Ukrainian assets.


Nostra Terra Oil and Gas Company plc
Notes to the interim report
For the six months ended 30 June 2015 
7. Loan notes issued by Nostra Terra (Overseas) Limited (Continued)
Additionally, in 2015 the group entered into a revolving line of credit agreement that provides for borrowings of up to $25 million USD, depending on certain borrowing base requirements. The line of credit matures in January 2016. Borrowings under the line of credit bear interest at either 1% plus the U.S. Prime Rate published by the Wall Street Journal or 4.25%, whichever is greater. All borrowings are collateralize by 80% of the value of the oil and gas properties utilized in determining the borrowing base, plus certain liens and guaranties of Churchill Operating. The borrowings under the line of credit are subject to certain financial covenants and restrictions on indebtedness, business combinations, and other related items.
8. Share Capital
 The issued share capital as at 30 June 2015 and 31 December 2014 was 3,359,578,276 ordinary shares of 1p each, respectively and 30 June 2014 was 2,776,211,610 ordinary shares of 1p each.

This information is provided by RNS
The company news service from the London Stock Exchange
  END
IR LFFSIAEIAFIE