TIDMNTOG
RNS Number : 7243E
Nostra Terra Oil & Gas Company PLC
22 October 2018
22 October 2018
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Permian Basin Acquisition
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 the acquisition of the Mesquite Prospect in
the Permian Basin (the "Acquisition"). The Mesquite Prospect
comprises of 1,384 net acres in West Texas, with the potential to
drill an estimated 8 horizontal wells.
Highlights
-- 1,384 net acres
o Representing a 308% increase in the Company's total Permian
Basin (net) acreage position
o 100% Working Interest
o Nostra Terra to operate
-- Potential to drill an estimated 8 horizontal wells
o Target initial production 200-300 barrels of oil per day
("bopd") per horizontal well based on analogous regional
drilling
-- Additional vertical well potential
-- Nostra Terra to enagage a specialist firm to create a comprehensive Field Development Plan
-- Additional acquisition targets identified in the prospect area
About the Mesquite Prospect & horizontal drilling
The Mesquite Prospect is in West Texas, in the prolific Permian
Basin and is proven to produce from multiple, stacked-pay
reservoirs. The Acquisition covers 1,384 net acres and is
contiguous, opening the potential for Nostra Terra to drill an
estimated 8 horizontal wells on the leases. Completion of the
Acquisition increases Nostra Terra's net Permian Basin acreage by
308%.
Nostra Terra has agreed to acquire the Mesquite Prospect from
Tall City Exploration III. Tall City is an oil and gas exploration
and production company, which has been highly successful in
identifying new prospects in the Permian Basin that can be drilled
horizontally, and then drilling initial discovery and development
wells to prove up reserves. Tall City has a proven track record in
monetizing its prospects and creating significant returns for
shareholders.
The area of the Permian Basin where the Mesquite Prospect is
located has long-established producing wells that were drilled
vertically on 40 acre spacing. In recent years operators have
successfully drilled wells with tighter 20 acre spacing. On this
basis, the Mesquite Prospect has the potential to host a minimum 35
potential vertical well locations, by drilling at 40 acre spacing,
or a maximum 70 vertical well locations, based on drilling with 20
acre spacing.
However, Nostra Terra believes the Mesquite Prospect has much
greater development potential if drilled horizontally.
Horizontal drilling involves drilling an oil well at an angle to
the vertical, so that the horizontal well runs parallel to any
oil-bearing formation. According to the US Energy Information
Administration, horizontal drilling has been responsible for
driving the vast majority of the production gains witnessed in the
Permian Basin in recent years.
The target formations at the Mesquite Prospect are "tight",
meaning the oil-bearing rock formations are of low permeability. As
such, the target formations have characteristics that make them
ideal targets for horizontal drilling and have delivered
substantial oil production in other areas of the Permian Basin.
Comparable regional horizontal drilling has delivered initial oil
production rates of 200-300bopd.
Acquisition Terms
Under the terms of the Acquisition, Tall City will keep a
1/8(th) carried working interest in the first horizontal well,
which Nostra drills at the Mesquite Prospect. In addition to this
Nostra Terra will pay Tall City US$150,000 in cash
consideration.
Field Development Plan
Nostra Terra intends to engage a specialist firm, with specific
experience in horizontal drilling in the Permian Basin, to create a
Field Development Plan for the Mesquite Prospect.
A further announcement will be made on appointment of the
engineering firm.
Further acquisition targets
Now that Nostra Terra has secured the Mesquite Prospect, the
Company intends to increase its Permian acreage further. The
Company has identified a number of additional acquisition targets,
potentially suitable for horizontal drilling, and will provide
further updates as appropriate.
Matt Lofgran, Chief Executive Officer of Nostra Terra,
commented:
"We first identified the Mesquite Prospect in early 2017 as a
desirable acquisition target for Nostra Terra. However only recent
developments have enabled us to secure this opportunity.
We are incredibly excited to have made such a substantial
acquisition, quadrupling our Permian footprint and, much more
importantly, now having the opportunity to drill horizontally.
Horizontal drilling has been the primary driver in delivering the
substantial gains in production and reserves seen across the
Permian Basin in recent years. For a company of our size this is a
huge opportunity, which we are now well positioned to take
advantage of.
Having successfully grown our cash flow on steady gains in
production, it is now time for Nostra Terra to take its next leap
forward."
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 Tel: +1 480 993 8933
Strand Hanson Limited
(Nominated & Financial Adviser
and Joint Broker)
Rory Murphy / Ritchie Balmer /
Jack Botros Tel: +44 (0) 20 7409 3494
Smaller Company Capital Limited
(Joint Broker)
Rupert Williams / Jeremy Woodgate Tel: +44 (0) 20 3651 2910
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END
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