TIDMNTOG
RNS Number : 2877S
Nostra Terra Oil & Gas Company PLC
29 September 2017
29 September 2017
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Interim Results
Nostra Terra (AIM:NTOG), the oil and gas exploration and
production company with a portfolio of assets in the USA and Egypt,
is pleased to announce its unaudited results for the six month
period ended 30 June 2017.
Highlights:
-- Fourfold (313%) increase in revenue for the period to GBP549,000 (30 June 2016: GBP133,000)
-- Gross profit for operations (before non-cash items of
depreciation and amortization) for the period of GBP163,000 (30
June 2016: GBP60,000)
-- Net proven (1P) oil reserves of 522,000 barrels (at April 2017)
o 326,000 barrels of oil at Pine Mills
o 196,000 barrels of oil across Permian Basin assets
-- Total NPV10 valuation assigned to the Company's Texas assets
of US$5.07million (at April 2017)
o US$4.03million NPV10 valuation assigned to Nostra Terra's 100%
Working Interest in Pine Mills
o US$1.04million NPV10 valuation assigned to Nostra Terra's
Permian Basin assets;
-- Pine Mills production over period of 97 barrels of oil per day (gross)
-- Nostra Terra is the first operator in the past 3 years to
operate the Pine Mills oilfield profitably
-- Increased footprint in the Permian Basin for future development
-- Acquired further 25% interest in East Ghazalat (now own 50% interest in concession)
-- Strengthened the board with the appointment of technical director John Stafford
-- Acquired 204,226,748 shares in Magnolia Petroleum Plc
(AIM:MAGP) at a 47% discount to the prevailing price
Post-period events:
-- Confirmed 100% Working Interest in Pine Mills, effective 01 November 2016
-- Secured hedging facility with BP Energy Company, which can
help in accessing capital for the Company.
Chairman's report
Our new strategy at Nostra Terra is founded on two key
principles. First, we have sought to secure producing oil assets
which we can operate and add value to. Second, we have aimed to
increase our proven (1P) oil reserves while still in this low oil
price environment.
In the first half of 2017, we successfully reached a number of
key milestones in delivering these strategic goals. We confirmed
the Company's current proven (1P) reserves of 522,000 barrels of
oil (US only) through a bankable, independent reserves report, and
we increased our footprint in the Permian Basin and Egypt for
future development. Nostra Terra also increased stabilised oil
production at Pine Mills generating free cash flow and delivering
an operating profit of GBP163,000 for the period (before non-cash
items of depreciation and amortization).
For a company in Nostra Terra's position, in this persistently
weak market for oil & gas, we have achieved a great deal
working with limited resources. Although the market has largely
failed to recognise the progress we've made, at the corporate level
our improved performance is yielding tangible results. This is
represented in the figures we now present, with the highlight being
the fourfold increase in revenue (GBP549,000 for the period).
Further progress for the year came three days before the release
of this interim report, when we secured a hedging facility for
future oil production with BP Energy Company, part of the BP plc
group. This represents a significant step forward for Nostra Terra
and takes the Company much closer to accessing non-dilutive working
capital to fund future growth.
It is rare for an internationally recognised business such as BP
Energy Company to work with a company as small as Nostra Terra. As
happy as we are to have received such a strong endorsement for the
long-term viability of our strategy, we will use the hedging
facility prudently. This facility opens up a great deal of
potential for the Company, both to increase production
significantly across our portfolio and to assist with future
acquisitions. This could mark the beginning of an exciting phase of
growth for the Company.
Nostra Terra is now also well positioned to negotiate with
additional senior lending facility providers. Our next immediate
goal is to secure as favourable a funding package as we are able.
We are in discussions with a number of providers and will provide
an update when we can.
With respect to our investment in Magnolia Petroleum (AIM:MAGP),
we identified an opportunity where we believed our involvement
would add significant value both to that company and to Nostra
Terra. In response to the requisition for a General Meeting to seek
change to Magnolia's board, Magnolia's existing directors chose to
complete a highly dilutive deal, which we believe added precious
little in terms of value to that company and was unfortunate for
Magnolia's shareholders. Our aim is to exit our position, but as we
paid significantly less than the current market price for the
stock, we are in no particular hurry to sell and our expectation is
we should be able to generate a profit for Nostra Terra.
In Egypt we continue to work hard behind the scenes to resolve
the legacy issues relating to East Ghazalat. There remains a lot to
be excited about in this asset, but the situation is complex. We
have had productive dialogue and we hope the recent board visit to
our partners in Egypt will lead to a mutually beneficial resolution
for all stakeholders.
Finally, I would like to mention our appointment of John
Stafford to the board of directors. John joined Nostra Terra in
February and brought with him a wealth of technical experience,
which has strengthened the Company's management. John has already
provided a great deal of support in managing our various assets and
I am sure he will play an active role in any future acquisitions we
might make.
The future for Nostra Terra now looks brighter than at any point
since I joined the Company. The progress we are making is
accelerating and I expect this will soon be reflected in our
valuation.
Ewen Ainsworth
Chairman
29 September 2017
Chief Executive Officer's report
In tough market conditions we have proved our ability to
identify, negotiate for, acquire and improve existing producing oil
assets. We set out to restructure the Company so that it makes
money below $30 oil prices, while remaining well positioned to
profit substantially from any improvement in the market. This has
been my most important personal goal for Nostra Terra and I am very
happy that this interim report reflects the success we've had this
year.
Our increasingly established track record of profitable
operations opens up significant additional opportunity for Nostra
Terra, including the acquisition of larger assets. I believe we are
on the cusp of realizing this ambition.
Since we started our turnaround strategy I've believed in the
calibre of our operational team, the quality of our board and our
ability to identify the right deals for the Company. The figures we
present below are a testament to of all this.
During the first half of 2017 we delivered a fourfold increase
in revenue to GBP549,000 and generated an operating profit of
GBP163,000 (before non-cash items of depreciation and
amortization). At the same time we increased Nostra Terra's proven
(1P) reserves to 522,000 barrels of oil in the US (April 2017),
through pursuing an effective acquisition strategy.
While many companies focus on exploration, our primary focus at
Nostra Terra is acquiring and developing existing producing assets
with further room for growth. As such we are very driven by cash
flow and economics. Industry professionals recognise the value of
this, which is why we have recently been able to secure a hedging
facility with BP Energy Company.
In order to hedge production not only does a company need to
have stable producing assets that generate positive cash flow, they
also need a track successful record of performance. At Pine Mills
we are the first operator in the past 3 years to have operated the
oil field profitably, and have done so every month since taking
over ownership and operations. While we focussed on securing the
100% Working Interest in Pine Mills, our operational team continued
to make improvements so we could prove our model worked and our
production could be relied on.
In addition to this we have been acquiring multiple leases in a
shallow, conventional area of the Permian Basin. The primary goal
here has been to acquire low-risk reserves that can be exploited
once we see fit. We have more than a dozen locations for new wells
lined up and ready to exploit. We plan on using the new hedging
facility with BP Energy Company alongside a senior facility to
unlock further value, and grow our production and reserves in this
prolific area. I see great scope for improvement on the
US$1.04million NPV10 valuation at April 2017 of our assets here,
potentially even surpassing the US$4.03million NPV10 valuation
assigned to Pine Mills (April 2017). With the possibility of
further acquisitions in the region, I have high expectations for
our growth in the Permian Basin as we move into 2018.
During the period we also acquired a further 25% in the East
Ghazalat concession in Egypt, increasing our stake to 50%. Our aim
here is to create value through solving the legacy issues caused by
a former partner, but the situation is complex. Nostra Terra has
continued to be restricted in terms of information received and
what it has been able to announce but we are hopeful that we will
reach a resolution to these issues before the end of the year.
While we acquired the additional interest at a very good price,
reflecting the current state of the asset, Nostra Terra has done so
without any additional capital. Payments to the seller are only
made at stages once success is achieved.
There is no denying the last few years have been difficult for
Nostra Terra, but this interim report shows in black and white the
progress we have made. We could not have done this without the
support of our shareholders and I want to thank all those who have
supported us and backed the Company. I hope their patience will
soon be well rewarded and I look forward to providing further
updates as we increase the growth rate further from here.
Matt Lofgran
Chief Executive Officer
29 September 2017
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information, visit www.ntog.co.uk or contact:
Nostra Terra Oil and Gas Company plc
Matt Lofgran, CEO +1 480 993 8933
Strand Hanson Limited
(Nominated & Financial Adviser and
Joint Broker) +44 (0) 20 7409 3494
Rory Murphy / Ritchie Balmer / Jack
Botros
Vicarage Capital Limited (Joint Broker) +44 (0) 20 3651 2910
Rupert Williams / Jeremy Woodgate
Nostra Terra Oil and Gas Company plc
Consolidated income statement
for the six months ended 30 June 2017
Six months Year to
Six months to 30 June 31 December
to 30 June 2016 2016
Note 2017 Unaudited Unaudited Audited
GBP'000s GBP'000s GBP'000s
----------------------------- ---- --------------- ----------- ------------
Revenue 549 133 282
Cost of sales
------------------------------ ---- --------------- ----------- ------------
Production costs (386) (73) (130)
Abortive acquisition costs - - (618)
Well impairment - - (1,855)
Depletion, depreciation,
amortisation (59) (316) (445)
------------------------------- ---- --------------- ----------- ------------
Total cost of sales (445) (389) (3,048)
GROSS PROFIT/(LOSS) 104 (256) (2,766)
Share based payment - - 154
Administrative expenses (472) (222) (760)
Share of results of joint
venture - (314) (162)
------------------------------- ---- --------------- ----------- ------------
OPERATING LOSS (368) (792) (3,534)
Other income 10 4 967
Finance expense (66) (16) (324)
------------------------------ ---- --------------- ----------- ------------
LOSS BEFORE TAX (424) (804) (2,891)
Tax (expense) recovery - - -
------------------------------------- --------------- ----------- ------------
LOSS FOR THE PERIOD (424) (804) (2,891)
------------------------------------- --------------- ----------- ------------
Attributed to:
Owners of the company (424) (804) (2,891)
------------------------------- ---- --------------- ----------- ------------
Earnings per share expressed
in pence per share:
Continued operations
Basic and diluted (pence) 3 (0.401p) (1.079p) (3.416)
------------------------------- ---- --------------- ----------- ------------
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 comprehensive income
for the six months ended 30 June 2017
Six months Year to
Six months to 30 June 31 December
to 30 June 2016 2016
2017 Unaudited Unaudited Audited
GBP'000s GBP'000s GBP'000s
------------------------------------------- --------------- ----------- -----------------------------
LOSS FOR THE YEAR (424) (804) (2,891)
Other comprehensive income:
Currency translation differences (34) (177) 262
------------------------------------------- --------------- ----------- -----------------------------
Total comprehensive income for
the period (458) (627) (2,629)
------------------------------------------- --------------- ----------- -----------------------------
Total comprehensive income attributable
to:
Owners of the company (458) (627) (2,629)
------------------------------------------ --------------- ----------- -----------------------------
Nostra Terra Oil and Gas Company plc
Consolidated statement of financial position as at 30 June
2017
As at 31
As at 30 June As at 30 December
2017 June 2016 2016
Unaudited Unaudited Audited
Note GBP'000s GBP'000s GBP'000s
------------------------------- ----- -------------- ---------- ---------
ASSETS
NON-CURRENT ASSETS
Goodwill - - -
Other intangibles 998 2,012 1,036
Property, plant, and equipment
- oil and gas assets 248 237 202
Other assets 165 - 41
Investment in joint venture 1 (125) 1
-------------------------------- ----- -------------- ---------- ---------
1,412 2,124 1,280
CURRENT ASSETS
Assets held for resale - 1,374 -
Trade and other receivables 421 291 439
Cash and cash equivalents 94 11 172
--------------------------------------- -------------- ---------- ---------
515 1,676 611
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 661 383 791
Borrowings 946 1,282 788
-------------------------------- ----- -------------- ---------- ---------
1,607 1,665 1,579
------------------------------- ----- -------------- ---------- ---------
NET CURRENT LIABILITIES (1,092) 11 (968)
NON-CURRENT LIABILITIES
Other loans - 387 -
-------------------------------- ----- -------------- ---------- ---------
NET ASSETS 320 1,748 312
-------------------------------- ----- -------------- ---------- ---------
EQUITY AND RESERVES
Share capital 6 4,149 3,666 4,124
Share premium 11,763 11,060 11,322
Translation reserve 164 113 198
Share option reserve 11 165 11
Retained losses (15,767) (13,256) (15,343)
-------------------------------- ----- -------------- ---------- ---------
320 1,748 312
------------------------------- ----- -------------- ---------- ---------
Nostra Terra Oil and Gas Company plc
Consolidated cash flow statement
For the six months ended 30 June 2017
Six months Six months Year
to 30 June to 30 June to31 December
2017 Unaudited 2016 Unaudited 2016 Audited
Note GBP'000 GBP'000 GBP'000
----------------------------------------- ----- ---------------- ---------------- ---------------
Cash flows from operating activities
Cash generated/(consumed) by operations 4 (543) (300) (567)
Interest paid (35) (11) (175)
----------------------------------------- ----- ---------------- ---------------- ---------------
Cash generated/(consumed) by operations (578) (311) (742)
Cash flows from investing activities
Purchase of intangibles - new oil
properties (39) (4) (987)
Sales/(purchases) of plant and
equipment (81) (1) (156)
Proceeds from sale of assets - - 2,431
----------------------------------------- ----- ---------------- ---------------- ---------------
Net cash from investing activities (120) (5) 1,288
----------------------------------------- ----- ---------------- ---------------- ---------------
Cash flows from financing activities
Proceeds on issue of shares 466 306 600
Repayment of borrowings (108) (162) (2,850)
New borrowing 286 - 1,286
----------------------------------------- ----- ---------------- ---------------- ---------------
Net cash from financing activities 644 144 (964)
----------------------------------------- ----- ---------------- ---------------- ---------------
Effect of exchange rate changes
on cash and cash equivalents (24) 39 446
----------------------------------------- ----- ---------------- ---------------- ---------------
Increase/(decrease) in cash and
cash equivalents (78) (133) 28
Cash and cash equivalents at the
beginning of the period 172 144 144
----------------------------------------- ----- ---------------- ---------------- ---------------
Cash and cash equivalents at the
end of the period 94 11 172
----------------------------------------- ----- ---------------- ---------------- ---------------
Represented by:
Cash at bank 94 11 172
----------------------------------------- ----- ---------------- ---------------- ---------------
Nostra Terra Oil and Gas Company plc
Consolidated statement of changes in equity
For the six months ended 30 June 2017
As at As at As at
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- -------------
As at beginning of period 312 2,069 2,069
Other comprehensive income (34) 177 262
Loss for the period (424) (804) (2,891)
Share based payments - - (154)
Issue of share capital
net of expenses 466 306 1,026
----------------------------- --------- --------- -------------
As at end of period 320 1,748 312
----------------------------- --------- --------- -------------
Nostra Terra Oil and Gas Company plc
Notes to the interim report
For the six months ended 30 June 2017
1. General Information
Nostra Terra Oil and Gas Company plc (Nostra Terra) is a public
limited company incorporated in England and Wales (registration
number 05338258) and quoted on the AIM market of the of the London
Stock Exchange (ticker: NTOG). The address of the registered office
is Finsgate, 5-7 Cranwood Street, London, EC1V 9EE.
The Company's principal activity continues to be that of the
exploitation of hydrocarbon resources focusing at present in the
USA and Egypt.
2. Basis of Preparation
The financial information in these interim results is that of
the Company and all of its subsidiaries (together referred to as
the "Group"). It has been prepared in accordance with the
recognition and measurement requirements of International Financial
Reporting Standards (IFRSs) as adopted for use in the European
Union. The accounting policies applied by the Group in this
financial information are the same as those applied by the Group in
its financial statements for the year ended 31 December 2016 and
which will form the basis of the 2017 financial statements except
for a number of new and amended standards which have become
effective since the beginning of the previous financial year. These
new and amended standards are not expected to have a material
effect on the 2017 financial statement of the Group.
The financial information presented herein does not constitute
full statutory accounts under Section 434 of the Companies Act 2006
and was not subject to a formal review by the auditors. The
financial information in respect of the year ended 31 December 2016
has been extracted from the statutory accounts which have been
delivered to the Registrar of Companies. The Group's Independent
Auditor's report on those accounts was qualified as a result of the
Auditor's inability to obtain sufficient and appropriate audit
evidence in relation to the Group's investments in its
equity-accounted joint venture, Independent Resources (Egypt)
Limited. The report also drew attention to the existence of a
material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern by way of an
Emphasis of Matter paragraph. The report did not contain a
statement under Section 498 (2) or 498(3) of the Companies Act
2006.
The financial information for the half years ended 30 June 2017
and 30 June 2016 is unaudited and the twelve months to 31 December
2016 is audited. This interim financial report does not fully
comply with IAS 34 "Interim Financial Reporting", which is not
currently required to be applied by AIM companies.
The financial statements have been prepared under the historical
cost convention, are presented in pounds sterling and all values
are rounded to the nearest GBP1,000 except where indicated
otherwise.
Copies of this interim report are available from the Company at
its registered office at Finsgate, 5-7 Cranwood Street, London EC1V
9EE. The interim report 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. Loss per share
The calculation of earnings per ordinary share is based on
earnings after tax and the weighted average number of ordinary
shares in issue during the period. For diluted earnings per share,
the weighted average number of ordinary shares in issue is adjusted
to assume conversion of all dilutive potential ordinary shares. The
group had two classes of dilutive potential ordinary shares, being
those share options granted to employees and suppliers where the
exercise price is less than the average market price of the group's
ordinary shares during the year, and warrants granted to directors
and one former adviser.
Six months Year to
Six months to 30 June 31 December
to 30 June 2016 2016
2017 Unaudited Unaudited Audited
Loss per ordinary shareholders
(GBP000)
Basic and diluted (0.401p) (1.079p) (3.416p)
--------------- ----------- ------------
The loss per ordinary share is based on the Company's loss for
the period of GBP424,000 (30 June 2016 - GBP804,000; 31 December
2016 - GBP2,891,000) and basic weighted average number of ordinary
shares in issue of 105,566,771 (30 June 2016 - 74,491,865; 31
December 2016 - 84,623,219).
Given the Company's loss for the period, the diluted loss per
share is the same as the basic loss per share.
4. Reconciliation of operating loss to net cash outflow from operating activities.
Six months Six months Year to
to to 31 December
30 June 30 June 2016
2017 Unaudited 2016 Unaudited Audited
GBP'000s GBP'000s GBP'000s
------------------------------------------------ --------------- --------------- ------------
Operating loss for the period (368) (792) (3,534)
Adjustments for:
Depreciation of property, plant, and
equipment 25 56 93
Amortization of intangibles 25 260 352
Accretion expense 7 - -
Well impairment - - 1,855
Share based payment - - (154)
Other non-cash movements 19 - 6
Abortive acquisition costs - - 426
Share of results from joint venture - 314 162
------------------------------------------------- --------------- --------------- ------------
Operating cash flows before movements
in working capital (292) (162) (794)
(Decrease)/increase in finance charge
provision (20) - 99
(Increase)/decrease in receivables 3 (77) (268)
(Increase)/decrease in other assets (127) (47) (41)
(Decrease)/increase in payables (102) (16) 418
(Increase)/decrease in deposits and prepayments (5) 2 5
(Decrease)/increase in translation reserves - - 262
Borrowings written off - - (248)
------------------------------------------------- --------------- --------------- ------------
Cash generated/(consumed) by operating
activities (543) (300) (567)
------------------------------------------------- --------------- --------------- ------------
5. 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.
6. Share Capital
The issued share capital as at 30 June 2017 was 120,566,771
ordinary shares of 1p each following the share capital
reorganization completed in May 2016. The issued share capital as
at 31 December 2016 and 30 June 2016 was 95,566,771 and 82,206,954
ordinary shares of 1p each, respectively.
7. Events arising after the balance sheet date
On 6 September 2017, the Company acquired full ownership of the
Pine Mills asset adding additional reserves, effective date of 1
November 2016.
-- As previously announced, Nostra Terra has a non-appealable
Court Judgement against Hammerhead Management Partners
("Hammerhead") (the "Court Judgement") from GFP Texas, the previous
majority owner of Pine Mills. This Court Judgement stood at
$450,246 and was secured by Hammerhead's ownership of a 12.5%
working interest in Pine Mills. On 5 September 2017, an auction was
held for the sale of the 12.5% stake in Pine Mills. As a result of
the auction Nostra Terra now has full ownership of the 100% working
interest in Pine Mills.
-- Additionally Hammerhead owes Nostra Terra a further
US$594,031 (plus accruing interest), which is comprised of the
outstanding balance of the original Court Judgement and a second
trade payable. Nostra Terra will continue to take action against
Hammerhead to recover this amount.
-- On 5 April 2017, Nostra Terra published the result of the
Company's Texas Assets Independent Reserves Report ("the Reserves
Report"). Nostra Terra commissioned the Reserves Report to act as a
bankable assessment of the Company's oil-producing assets to enable
it to access hedging facilities against future oil production.
-- The Reserves Report originally assigned a US$3.53million
NPV10 valuation to the Company's then 87.5% stake in Pine Mills and
identified 1P Reserves of 285Mbbl attributable to Nostra Terra. As
a result of yesterday's auction, Nostra Terra NPV10 valuation is
now increased to US$4.03million, based upon its 100% Working
Interest in Pine Mills comprising of 326Mbbl of 1P Reserves.
On 6 September 2017, the Company announced the completion of the
settlement of the acquisition of Magnolia Shares that was
previously announced on 26 May 2017.
On 26 Sep 2017, announce it secured a hedging facility with BP
Energy Company ("the hedging facility"), part of the BP plc
group.
-- Nostra Terra intends to use the hedging facility in
conjunction with a senior debt facility to fund development of the
Company's assets. The hedging facility can be used for price
protection, enabling Nostra Terra to access greater working capital
in a non-dilutive manner.
-- Nostra Terra currently has a $25,000,000 senior facility,
which is in good standing, with Texas Capital Bank. The Company is
also currently in discussions with a number of additional providers
to ensure it obtains the best lending terms.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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