REG - Nostra Terra O&G Co - Production and Operations Update

Nostra Terra Oil and GasAnnouncement

11/11/2024 07:00

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RNS Number : 6492L  Nostra Terra Oil & Gas Company PLC  11 November 2024

11 November 2024

 

Nostra Terra Oil and Gas Company Plc

("Nostra Terra" or "the Company")

 

Production and Operations Update

 

Nostra Terra (AIM: NTOG), the international oil & gas exploration and
production company that is focused on its Pine Mills producing asset in Texas
USA, is pleased to provide a production and operations update on the Company.

 

Highlights

 

·    Phase 1 workover program complete

·    Production increased at Pine Mills Field by an average of 30 BOPD -
60% Increase

·    Company oil production is averaging approximately 120 bopd net, up
significantly

·    Enhanced oil recovery project in the northern end of Pine Mills
restarted

·    More work-over opportunities identified

·    New Fouke area development location adds 200,000 barrels of oil
reserves*

·    Field operating costs reduced by 25%

·    Field netbacks and profitability, significantly increased

·    Cash flow positive at the operating level and now also at the
corporate level

 

Production

Company oil production is currently averaging 120 bopd net, up significantly
due to the contribution from the first phase of the planned workover program
at Pine Mills in which NTOG has a 100% working interest ("WI").  Five
previously shut-in wells have been returned to production. Pine Mills is
currently averaging 80 bopd gross. This field rate does not include the Fouke
production or any benefit from restarting of the enhanced oil recovery project
or "waterflood". To date, the work-over program has resulted in a production
 increase by an average of 30 barrels of oil per day ("bopd") from the five
restarted wells.

 

The work in the field, combined with the recent technical work, has identified
a number of additional profitable work-over candidates that are expected to be
completed in a second phase of the work-over program.

 

The waterflood in the northern section of the field, which had been shut for
over two years, has also been restarted. The waterflood response is expected
to take approximately three months from the restart of injection to see the
first results, with the full benefit expected after six months of continuous
injection. The full benefit of the waterflood response is expected to deliver
an additional 15-30 bopd.

 

The Fouke 1 & 2 oil wells in which NTOG has a 32.5% WI are producing at a
combined average of 105 bopd gross, water-free, and without decline since May
2024.

 

Recently completed technical work in the Fouke area has identified a 30-acre
structure within the current lease, north of the Fouke 2 well, that is
drill-ready and expected to contain more than 200,000 barrels gross of
recoverable oil reserves (*) in the sub-Clarksville reservoir. Further work is
also being done to evaluate two additional structures within the field that
may have similar potential.

 

Operating Costs, Netbacks, and Profitability

As a result of the recent work-over activity, several changes have been made
to the field operations in Pine Mills, which has reduced the overall operating
costs by approximately 25%. These reductions, combined with the recent
production increases, have reduced the lifting costs per unit by more than
50%. This has improved netbacks to more than $44 and $63 per barrel for the
Pine Mills and Fouke areas, respectively, significantly increasing overall
field profitability.

 

Lower costs and higher netbacks are a direct result of the strategy formulated
in May 2024 to focus on the Pine Mills Field, which was in decline and had not
been a priority under previous management. Cost reductions, coupled with the
workover program results, have increased production, improved profitability,
and allowed NTOG to become cash flow positive at the operating or field level
and also at the corporate level at current oil prices.

 

Paul Welch, Nostra Terra's Chief Executive Officer, said:

 

"We are delivering on our plans to reduce costs, increase production, and grow
our cash flow by focusing our efforts on our Pine Mills asset. It's been more
than five years since an extensive work-over program was conducted in the
field, and the results on the first five wells have exceeded our original
expectations. We have also restarted the waterflood, which will take three
months to show results, and we believe this has the potential to deliver an
even greater boost to field performance.

 

Pine Mills has been an exceptional resource for the Company and can
potentially deliver more value in the future. Following this successful
work-over program, we have identified additional wells in other areas of the
field that will be addressed in a second work-over phase. We have also
identified other targets for future programs. In addition, we have recently
identified a new drill-ready development location in the Fouke area, which we
believe possesses another 200,000 barrels of additional oil reserves, and we
are also at an early stage in evaluating two further structures that we think
could have similar potential.

 

The changes we've implemented have delivered significant savings and allowed
us to improve our margins by more than 50%, with a corresponding improvement
in the netbacks. This results in NTOG being cash flow positive at the
operating level and now at the corporate level.

 

I am excited about this asset's future potential and believe it will
significantly exceed our previous estimates.  I look forward to reporting on
our newly identified opportunities in future periods."

 

 

Note (*): NTOG Management calculated proved undeveloped reserves (based on the
SPE PRMS Standard).

 

Qualified Person's Statement

In accordance with the "AIM Rules - Note for Mining and Oil and Gas
Companies", the information

contained within the announcement has been reviewed and signed off by Paul
Welch, Chief Executive Officer and Director, who has over 35 years of
international oil and gas industry experience and is a Member of the SPE.

 

Glossary

 bopd                  Barrels of oil per day
 Gross Production      Production at a total project level (100% basis) before royalties
 Net Production        Net production attributable to a participant's Working Interest before
                       royalties
 Royalty               A type of entitlement interest in a resource that is free and clear of the
                       costs and expenses of development and production to the royalty interest
                       owner. A royalty is commonly retained by a resources owner (lessor/host) when
                       granting rights to a producer (lessee/contractor) to develop and produce that
                       resource. Depending on the specific terms defining the royalty, the payment
                       obligation may be expressed in monetary terms as a portion of the proceeds of
                       production or as a right to take a portion of production in-kind. The royalty
                       terms may also provide the option to switch between forms of payment at
                       discretion of the royalty owner.
 SPE                   Society of Petroleum Engineers
 SPE PRMS              A standard for the definition, classification, and estimation of hydrocarbon
                       resources developed by the Oil and Gas Reserves Committee of the Society of
                       Petroleum Engineers and named the Petroleum Resource Management System
 Proved Reserves       An incremental category of estimated recoverable quantities associated with a
                       defined degree of uncertainty. Proved Reserves are those quantities of
                       petroleum that, 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 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.
 Undeveloped Reserves  Those quantities expected to be recovered through future investments: (1) from
                       new wells on undrilled acreage in known accumulations, (2) from deepening
                       existing wells to a different (but known) reservoir, (3) from infill wells
                       that will increase recovery, or (4) where a relatively large expenditure
                       (e.g., when compared to the cost of drilling and completing a new well) is
                       required to recomplete an existing well.
 Working Interest      A participant's equity interest in a project before reduction for royalties or
                       production share owed to others under the applicable fiscal terms.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK Domestic
Law by virtue of the European Union (Withdrawal) Act 2018. Upon the
publication of this announcement, this inside information is now considered to
be in the public domain.

 

For further information, contact:

 

 Nostra Terra Oil and Gas Company plc         Email:           paul@ntog.co.uk

 Paul Welch, CEO

 SP Angel Corporate Finance LLP               Tel:             +44 (0) 20 3470 0470

 (Nominated Adviser and Broker)

 Stuart Gledhill / Richard Hail / Adam Cowl

 Celicourt Communications (PR/IR)             Tel:   Email:    +44 (0) 20 7770 6424

NTOG@celicourt.uk
 Mark Antelme / Jimmy Lea

 

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