TIDMNTOG
RNS Number : 1878J
Nostra Terra Oil & Gas Company PLC
08 April 2020
8 April 2020
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Fundraise and Appointment of Joint Broker
Partial Loan Conversion
Corporate Update
Related Party Transactions
Nostra Terra (AIM: NTOG), the oil & gas exploration and
production company with a portfolio of development and production
assets in Texas, USA, is pleased to announce that it has raised
GBP318,055 (the "Fundraise"), before expenses, in order to
strengthen its balance sheet and position the Company for potential
further growth in 2020 despite challenging market conditions.
Highlights:
-- GBP318,055, before expenses, raised via a Placing and Subscription
o Directors have participated in the Subscription, amounting to,
in aggregate, GBP90,000
-- Fundraise completed to strengthen the Company's balance sheet
-- Portfolio of conventional oil assets with relatively low operating cost
-- Significant reduction in CEO's remuneration
-- Additional reductions in overheads being implemented, with cost review ongoing
-- Reduction in corporate debt pursuant to the Partial Loan Conversion
-- Novum appointed as joint broker
Fundraise
The Company has raised, in aggregate, GBP 318,055 , before
expenses, by way of a placing of 20,000,000 new ordinary shares
(the "Placing Shares") (the "Placing") and a subscription of
107,222,000 new ordinary shares (the "Subscription Shares") (the
"Subscription") at a price of 0.25 pence per share (the "Issue
Price"). The net proceeds of the Fundraise will be utilised to
further the Company's strategy and for general short to medium term
working capital purposes. Further fundraises are likely to be
necessary thereafter.
The Issue Price represents a discount of approximately 47% to
the closing middle market price of the Company's ordinary shares on
AIM of 0.47 pence on 7 April 2020, being the latest practicable
date prior to this announcement. The Placing Shares and
Subscription Shares (together, the "Fundraise Shares") represent
approximately 64% of the Company's issued share capital.
The Placing was conducted by Novum Securities Limited ("Novum")
acting as agent for the Company. Novum has been appointed as a
joint broker to the Company with immediate effect.
Issue of Warrants
Participants in the Fundraise will be issued with one warrant
for every two Fundraise Shares subscribed for (the "Warrants"),
resulting in the issue of 63,611,000 Warrants. The Warrants will be
exercisable for a period of two years at a price of 0.60 pence per
share, which equates to a premium of 140% to the Issue Price.
In addition, Novum will be issued with 10,000,000 Warrants in
connection with its services to the Company both with regard to the
Placing and acting as joint broker.
The Company does not currently have the requisite share
authorities to issue new ordinary shares in connection with the
potential future exercise of Warrants. Therefore, the issue of the
Warrants is conditional on shareholder approval at a duly convened
general meeting. Further announcements in this regard will be made
in due course. The receipt of the proceeds from the Fundraise is
conditional only on admission of the Fundraise Shares and the Fee
Shares to trading on AIM.
Directors' Participation in the Subscription
Matthew Lofgran and Stephen Staley, CEO and Non-Executive
Chairman of the Company respectively, have subscribed for
32,000,000 and 4,000,000 Subscription Shares respectively,
amounting to subscriptions of GBP80,000 and GBP10,000 respectively
(the "Directors' Subscriptions"). Accordingly, 16,000,000 Warrants
and 2,000,000 Warrants will be issued to Mr Lofgran and Mr Staley
respectively (the "Director Warrants").
On completion of the Fundraise, Messrs Lofgran and Staley will
be interested in 38,525,976 ordinary shares and 4,000,000 ordinary
shares respectively, representing 10.8% and 1.1% of the Company's
then enlarged issued share capital.
In addition, Ewen Ainsworth, a former Director of Nostra Terra,
has subscribed for 5,000,000 Subscription Shares. As such, Mr
Ainsworth will be issued with 2,500,000 Warrants.
Issue of Fee Shares
8,000,000 new ordinary shares have been issued to Novum as part
of its advisory fees in connection with the Placing and acting as
joint broker to the Company (the "Fee Shares").
Partial Loan Conversion
The Company is also pleased to announce that Discovery Energy
Limited ("Discovery") (a company controlled by Ewen Ainsworth) has
agreed to convert GBP57,500 of the outstanding loan owed to
Discovery (the "Discovery Loan") by the Company into 23,000,000 new
ordinary shares at the Issue Price (the "Conversion Shares") (the
"Partial Loan Conversion"). Following the Partial Loan Conversion,
GBP229,811, being principal and interest, remains outstanding under
the Discovery Loan. The Company is in constructive dialogue with Mr
Ainsworth with regard to restructuring the remaining amounts
outstanding, particularly in the context of the challenging
operating environment.
Corporate Update
At the beginning of the year, the Board designed a 'Low Cost,
High Impact' work plan for 2020, focusing on growing production,
primarily from existing assets, while still seeking additional
opportunities that could be transformational for the Company.
Included in these plans for the year were planned reductions in
overhead costs.
During the oil price volatility of 2015/2016, the Company
repositioned its portfolio for a lower oil price environment and,
in 2017, took the prudent step to begin hedging a significant part
of its production. Low cost production from conventional reservoirs
form the basis of Nostra Terra's cashflow and this is protected by
recently negotiated hedges guaranteeing approximately US$56/bbl for
around half of the Company's production (as announced on 1 April
2020), which provides a level of support in the current depressed
oil price environment.
In the last month, following the significant drop in oil prices
and the severe economic downturn caused by the spread of the
coronavirus, the Board began prioritising certain, highly targeted
work necessary to ensure maintenance of low cost production and the
safety and regulatory requirements of the leases, subject to
satisfying applicable regulations with regard to operating in the
current coronavirus environment. Accordingly, further investment by
the Company into its portfolio will be very limited until such time
that the oil price strengthens.
The goals for the Company at this time are as follows:
1. To carefully manage existing assets and restrict work to that
which improves the economics of each project in the light of the
changing oil price environment.
2. To maintain low overheads and seek to reduce them further.
3. To expand the portfolio, seeking the right opportunities to
grow the asset base, including significant transactions.
Existing Assets
The Company has identified multiple areas across its entire
portfolio to increase production. As mentioned earlier, given the
lower oil price environment, the Company is being very selective on
the work done in order to preserve capital.
Nostra Terra has received multiple unsolicited approaches
regarding additional opportunities around Pine Mills (outside of
the Company's existing production, but acreage which the Company
owns) and the Company is pleased to report that it is in advanced
discussions with an operator regarding a potential farm-in for a
portion of this Pine Mills area acreage, wherein a well would be
drilled at no cost to Nostra Terra and the Company would retain a
carried working interest.
A successful outcome from the potential farm-in partner drilling
this well could provide a further significant increase in
production in addition to the existing Pine Mills production. It
could also open up and de-risk multiple additional well locations
in the Pine Mills acreage to further drilling.
Cost Reductions
Matt Lofgran has agreed to a 60% decrease in annual salary until
such time that the Company completes its next sizeable fundraise.
The Directors of the Company (excluding Mr Lofgran) will have
discretion over whether a fundraise is of sufficient size, at which
point Mr Lofgran's salary will increase to 76% of its original
amount. In addition, at such time of the relevant sizeable
fundraise, the Company will settle the difference between Mr
Lofgran's reduced salary and his increased salary on a monthly pro
rata basis, with the first three months satisfied by the issue of
new ordinary shares at the price associated with such fundraise and
the balance settled in cash. These arrangements together being
defined as the "CEO's Remuneration Arrangements".
In addition, the Non-Executive Directors are currently putting
in place an executive Long Term Incentive Plan that will better
align Mr Lofgran's remuneration with growth in value for
shareholders. A further announcement in this regard will be made in
due course.
Moreover, the Non-Executive Directors of the Company, being
Stephen Staley and John Stafford, intend to accept short term
reductions to their remuneration arrangements and a further
announcement in relation to this will be made in due course.
Additional reductions have been made in overheads, with review
ongoing as the Directors identify additional savings.
Potential Acquisitions
The Board continues to seek additional assets to expand the
Company's portfolio, with the aim of adding to production, thereby
increasing revenue and net cash flow, and increasing the Company's
oil reserves, whilst also diversifying the portfolio. The Board has
a wide range of exploration and operational experience in diverse
areas around the world, and as such a number of potentially
transformative opportunities are under consideration both inside
and outside the USA. The current low oil price environment may
provide opportunities for acquisitions at attractive
valuations.
Related Party Transactions
Matt Lofgran and Steve Staley, as Directors of the Company, and
Ewen Ainsworth, as a Director of the Company in the last 12 months,
are considered to be related parties of the Company under the AIM
Rules for Companies ("AIM Rules"). Accordingly, the CEO's
Remuneration Arrangements, the Directors' Subscriptions and the
issue of the Director Warrants, and the issue of the Conversion
Shares, Subscription Shares and Warrants to Mr Ainsworth are
considered to be related party transactions pursuant to Rule 13 of
the AIM Rules. John Stafford, independent Director, having
consulted with the Company's Nominated Adviser, Strand Hanson
Limited, considers that the terms of the CEO's Remuneration
Arrangements, Directors' Subscriptions and the issue of the
Director Warrants, and the issue of the Conversion Shares,
Subscription Shares and Warrants to Mr Ainsworth are fair and
reasonable in so far as the Company's shareholders are
concerned.
Admission and Total Voting Rights
The Fundraise is conditional only on the admission of the
Fundraise Shares and the Fee Shares to trading on AIM
("Admission").
Application will be made for Admission of the Fundraise Shares,
Fee Shares and Conversion Shares, which is expected to occur at
8.00 a.m. on or around 20 April 2020.
Following Admission, the Company will have 356,828,226 ordinary
shares in issue, none of which will be held in treasury.
Accordingly, the total number of voting rights in the Company will
be 356,828,226 and shareholders may use this figure as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their
interest in, the Company under the FCA's Disclosure Guidance and
Transparency Rules.
Matt Lofgran , Nostra Terra's Chief Executive Officer, said:
" Considering the macroeconomic challenges we're pleased to
raise additional equity to help Nostra Terra to progress in this
adverse market. We look forward to building on the foundation in
place throughout the year.
"I also want to take the time to welcome Dr Staley as the new
Chairman of Nostra Terra. Stephen brings over 35 years of
experience from working with smaller companies such as Predator Oil
& Gas to larger companies like Conoco and Cove, the latter
where they went from early-stage to a very successful exit within a
few years. We're excited to be working with him and the leadership
he'll bring to the Board."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
For further information, contact:
Nostra Terra Oil and Gas Company
plc
Matt Lofgran, CEO Email: +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
Shard Capital Stockbrokers (Joint
Broker)
Damon Heath / Erik Woolgar
Novum Securities Limited (Joint Tel: +44 (0) 207 186 9952
Broker)
Jon Belliss
Tel: +44 (0) 207 399 9425
Lionsgate Communications (Public
Relations)
Jonathan Charles Tel: +44 (0) 7791 892509
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDUPUUWCUPUUQR
(END) Dow Jones Newswires
April 08, 2020 02:45 ET (06:45 GMT)
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