Nostra Terra Oil & Gas Company PLC Pine Mills Farm-in (4186K)
April 22 2020 - 2:00AM
UK Regulatory
TIDMNTOG
RNS Number : 4186K
Nostra Terra Oil & Gas Company PLC
22 April 2020
22 April 2020
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Pine Mills Farm-in
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 a farm-in to its Pine
Mills acreage in East Texas.
Highlights:
-- Nostra Terra owns a 100% working interest ("WI") in Pine
Mills, which covers 2,400 acres ("Pine Mills Leased Area")
-- The farminee will drill and complete one well at its sole
expense to earn a 75% WI in an 80 acre portion of Pine Mills Leased
Area (the "Well Area"), where the farminee has already acquired 3D
seismic
-- Nostra Terra will receive a 25% carried WI (at no cost to the Company) for one well
-- The Company may participate for an additional 10% of the
uncarried WI at cost for the one well, at its sole option within
the next 30 days
-- The Well Area has no existing production or reserves
Background
Nostra Terra currently owns and operates, via its wholly-owned
subsidiary New Horizons Energy 1, LLC, a 100% WI in the Pine Mills
Leased Area, which covers 2,400 acres. As stated on 8 April 2020,
Nostra Terra has received multiple unsolicited approaches regarding
additional opportunities in relation to this asset.
Cypress Mineral LLC and Cypress Production Inc (together
"Cypress") have previously acquired 3D seismic covering the Well
Area, and identified up to five potential new well locations.
The target formation is the prolific Woodbine Sand that is one
of the main producers in the region in which the Pine Mills Leased
Area is located.
Farmout Agreement
Nostra Terra has signed a binding farmout agreement with Cypress
(the "Farmout Agreement") pursuant to which Cypress will drill and
complete one well on the Well Area at no cost to Nostra Terra. The
estimated cost of this drilling and completion is c. US$800,000.
Once the well is drilled and completed, Cypress will earn a 75%
interest in the Well Area, while Nostra Terra will retain a 25% WI
in the well and the Well Area.
In addition to retaining the 25% carried WI, pursuant to the
Farmout Agreement, Nostra Terra has an option to participate for a
10% WI at cost in the non-carried portion of the asset, with such
option required to be exercised within 30 days from execution of
the Farmout Agreement. If exercised this would result in an
interest of 32.5% in the well and Well Area with 10% of the well
cost (the decrease from a 10% to 7.5% WI is as a result of Nostra
Terra's carry for the 25%). The Board will review the seismic data
that Cypress has on the Well Area in order to assist its decision
on whether to exercise the option.
Title work and permitting has already begun in relation to the
Well Area. If Cypress does not commence drilling of the identified
well within six months of the signature of the Farmout Agreement,
then the agreement will terminate. A successful outcome from
Cypress 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 wider Pine Mills acreage to further
drilling.
The Well Area currently has no production nor are there any
assets or liabilities associated with it. After consideration, the
Board agreed that pursuing drilling of a well in the Well Area was
not in its immediate growth plans for production at Pine Mills.
Accordingly, the Board considered it prudent to negotiate with
Cypress with a view to retaining a potential upside to a part of
the undrilled Pine Mills acreage.
The Farmout Agreement does not affect the remaining 2,320 acres
of the Pine Mills Leased Area, where Nostra Terra will still owns
and operates a 100% WI. Within the remaining 2,320 acres, the
Company has identified an additional area, as a result of a review
of a 3D seismic survey carried out by a third-party, which it
believes could be suitable for a farmout deal or future drilling by
the Company. The targeted acreage is nearby producing wells on
adjacent acreage as well as being prospective for new wells to be
drilled.
Matt Lofgran , Nostra Terra's Chief Executive Officer, said:
" We're excited to execute this farmout agreement with Cypress.
Pine Mills has been a stable producer for the Company, whilst
providing much scope for expansion. A farmout gives us the ability
to leverage our existing asset and seek to grow our production and
reserves, with no cost to Nostra Terra. We look forward to the
opportunity to add new wells that could provide a significant
increase in production."
"The farmout agreement is a clear execution of the Board's
recently stated goal t o 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".
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
Novum Securities Limited (Joint
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
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