REG - Nostra Terra O&G Co - Senior Facility Expansion and asset value increase

Nostra Terra Oil and GasAnnouncement

28/03/2022 07:00

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RNS Number : 1509G  Nostra Terra Oil & Gas Company PLC  28 March 2022

 

 

28 March 2022

 

Nostra Terra Oil and Gas Company Plc

("Nostra Terra" or "the Company")

 

$10 Million Senior Facility Expansion

and a

Substantial Corporate Asset Value Increase

 

Nostra Terra (AIM: NTOG), the international oil & gas exploration and
production company with a portfolio of production and development assets in
Texas, USA, is pleased to announce a significant expansion its Senior Lending
Facility ("Senior Facility" or "Facility"), along with a significant increase
in the Company's asset value.

 

 

Highlights

 

Senior Facility

·    Borrowing Base Increase to $3,350,000 (from $2,350,000), up 43%
increase from 1 September 2021

·    Interest Rate: 4.40% (no change)

 

Reserves & Valuation

·    2,148,090 gross barrels oil (1,073,960 net barrels oil) proven
reserves, a 10% increase from 1 September 2021

·    Future Net Income: $32,426,450 (total proved), a 37% increase from 1
September 2021

·    NPV10: $14,632,340 (total proved), a 39% increase from 1 September
2021

 

 

Senior Facility & Corporate Valuation

The Company has received a large increase in the borrowing base, providing it
with access to additional non-dilutive capital which is available to
supplement cash flow from operations, to further its growth plans.

 

Estimated Future Net income has increased by 37% whilst Net Present Value (10%
discount rate) has increased by 39%. The Borrowing Base of the $10,000,000
Senior Facility has been increased to US$3,350,000 based on improved
production and cashflow during first half of 2021. The previous borrowing base
was US$2,550,000, hence an additional US$1,000,000 is available for
utilisation.

 

The size of the Facility and Borrowing Base will continue to be reassessed at
least twice yearly. The Board anticipates the Facility and Borrowing Base will
continue to expand as the Company's production, cashflows and reserves
increase. The current interest rate on the facility is 4.40% which is
unchanged from previous periods. The Facility is not restricted to any
geographical region. The Company can deploy funds from the Facility for
operational purposes and acquisitions in its current areas of operation in the
USA, or in other areas, should the opportunity arise.

 

Reserves

Nostra Terra has updated its annual reserves ("Reserves"), using a third-party
engineering firm APN Energy ("APN"), effective 1 February 2021. The reserves
report was prepared by APN for the Company for submission to the Washington
Federal Bank.

 

Assets included are as follows:

 

 Asset                         Operator  Interest (%)  Status                     Lease expiration  Total Acres (gross)
 Pine Mills                    NTOG      100%          Producing and Development  HBP               2,320
 Pine Mills (Cypress farmout)  Cypress   32.5%         Producing and Development  HBP               160
 Permian Basin                 NTOG      53-100%       Producing and Development  HBP               1,280

 

Probable or Possible reserves have not been included in this assessment. The
Company's producing asset Caballos Creek in South Texas has also not been
included in the Reserves or Senior Facility.

 

Total net proved reserves have increased by 10% when compared to the 1
September 2021 reserves (1,073,960 barrels oil versus 973,180 barrels oil).
This reserve increase does not, however, include the recent results of the
Fouke 2 well which will only be included after it has been successfully
completed and placed on production.  All reserve growth was funded from
corporate cashflows and not expansion of the Facility.

 

Net oil reserves were generated using decline curve analysis and applying bank
pricing per table further below. Net total proved reserves have been estimated
to be as follows:

 Reserve Class and Category      Gross Oil (barrels)  Net Oil (barrels)
 Proved Developed Producing      892,100              510,660
 Proved Developed Non-Producing  75,000               57,440
 Proved Undeveloped              1,180,990            505,860
 Total Proved                    2,148,090            1,073,960

 

 

 

 

 

 

 

Future net income is determined after deducting estimated future operating and
development costs, production and ad valorem taxes, but before Federal income
taxes.

 

Net incomes are defined as a portion of gross revenues attributable to the
Company's interest after deducting all shrinkage and royalties, and are
included in the table below:

 

 Reserve Class and Category      Future Net Income (USD)  Net Present Value

                                                          10% Discount Rate (USD)
 Proved Developed Producing      $13,319,030              $6,408,700
 Proved Developed Non-Producing  $2,786,060               $1,601,380
 Proved Undeveloped              $16,321,450              $6,622,260
 Total Proved                    $32,426,540              $14,632,340

 

 

Future revenues were estimated using an oil price forecast supplied by the
lender which follows:

 

 Year                Oil ($/Bbl)
 2022                $63.50
 2023                $63.50
 2024                $60.00
 2025                $60.00
 2026                $60.00
 3% Price            $70.00 CAP

 Escalation to Cap

 

 

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
(http://www.spe.org/industry/docs/Petroleum-Resources-Management-System-2007.pdf)
 

 

 

 

 

 

Matt Lofgran, Nostra Terra's Chief Executive Officer, said:

 

"This year has started very positively and we are pleased to have such a large
increase in asset value and facility borrowing base, using very conservative
oil prices. This was also achieved without adding any of our new wells to the
base.  This expansion provides the Company with flexibility to execute its
growth plans while accessing new opportunities.

 

Our immediate focus is on expanding our production base through the drilling
of new wells within our existing areas of operations. To this end, we're
making good progress with our drilling plans in the Permian Basin where we are
not only planning to drill multiple wells this year, but also securing
additional drilling locations for further growth. Finally, at the Fouke 2,
which came in better than expected, a workover rig is on location to
perforate, complete and place the well on production.  I look forward to
reporting on the results of this activity in a subsequent release."

 

 

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

 

 

For further information, contact:

 Nostra Terra Oil and Gas Company plc          Tel:   +1 480 993 8933

 Matt Lofgran, CEO

 Beaumont Cornish Limited                      Tel:   +44 (0) 20 7628 3396

 (Nominated Adviser)

 James Biddle/ Roland Cornish

 Novum Securities Limited (Broker)             Tel:   +44 (0) 207 399 9425

 Jon Belliss

                                               Tel:    +44 (0) 7791 892509

 Lionsgate Communications (Public Relations)

 Jonathan Charles

 

Technical Glossary

 

Borrowing Base - the amount of money that a lender is willing to loan a
company, based on the value of the collateral the company pledges

 

Future Net Income "FNI" - the projected
(https://www.lawinsider.com/dictionary/projected)  Gross Revenues
(https://www.lawinsider.com/clause/gross-revenues)  expected
(https://www.lawinsider.com/dictionary/expected)  to be realized
(https://www.lawinsider.com/dictionary/realized)  by the Company
(https://www.lawinsider.com/clause/by-the-company)  during such period less
the sum (https://www.lawinsider.com/dictionary/sum)  of the Operating Costs
payable (https://www.lawinsider.com/clause/costs-payable) .

 

Gross - total quantity or amount

 

HBP- Held by Production

 

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
(https://www.investopedia.com/terms/v/valuation.asp)  of cash outflows over a
period of time.

 

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.

 

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