TIDMNTOG
RNS Number : 8050D
Nostra Terra Oil & Gas Company PLC
30 October 2020
30 October 2020
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, is
pleased to announce its unaudited results for the six-month period
ended 30 June 2020.
Highlights:
-- Revenue for the period of $417,000 (30 June 2019: $947,000)
-- Gross loss from operations (before non-cash items of
depreciation and amortization) for the period of $115,000 (30 June
2019: $106,000 profit)
-- Average production during first half at 67 boepd net to Nostra Terra (2019: 98 boepd)
-- Hedges for all 2020 range from $55.15 to $57.18 per barrel
-- Sr. Lending Facility remain in compliance throughout year and currently
-- Dr Staley joins the Board (3 Mar)
-- GBP318,000 fundraise (8 Apr)
-- Pine Mills Farm-out, in which NTOG get a 25% carry potentially increasing to 32.5%
-- 60% reduction in monthly overheads (in effect from 8 June)
-- Discovery loan extended to April 2022 (8 June)
Post-period events:
-- Caballos Creek acquisition (2 Sep)
-- Permian Basin farm-in (21 Sep)
-- Oversubscribed fundraise of GBP500,000 (25 Sep)
Chairman's report
The first half of 2020 was a period of great uncertainty and
upheaval for the oil industry and for the world in general.
The most obvious impact on junior oil-producers like Nostra
Terra was the sharp reduction in oil prices, and hence revenue, in
March and in April. This was as a result of both the suppression of
demand by the Covid 19 crisis and the inability of OPEC to maintain
production discipline within its member base. Beyond the end of the
reporting period price stability appears to have arrived, but at
WTI oil prices around $40/bbl, not $60 which was the pre-Covid
price.
The Company reacted quickly to the drop in oil prices by
accelerating its cost reduction programme across both its US
operations and its UK corporate activities. As part of an
initiative that pre-dated the above global events, the Directors
also agreed to defer their remuneration and in some cases reduce
it, to better align it with creating value for shareholders;
corporate debt has been reduced too.
The overall effect is a 60% reduction in corporate overhead and
a drop in lifting costs, for example, at Pine Mills (East Texas)
from about $23/bbl to $16/bbl. This effect should become more
apparent in the full year accounts. This makes Nostra Terra a more
financially robust company, better able to weather future "storms".
The oil price crash has also provided Nostra Terra with more
opportunities to pursue its strategy of expanding its low-cost,
low-risk production portfolio. Many of the Company's peers, or
their creditors, have found themselves in a position where they are
prepared to sell or farm-out assets at lower prices than a year
ago.
We announced acquisitions in both Caballos Creek, South Texas
and in the Permian Basin, West Texas after the end of this
reporting period. Both assets are producing from conventional
reservoirs, with long-life reserves. We believe there is
significant room for growth in both areas through the expenditure
of relatively low capex.
In April 2020 we announced that, in spite of the reduced oil
price, we successfully negotiated a third party farm-in to
undrilled part of our Pine Mills acreage on which they would fund a
new well, carrying Nostra Terra for 25% of the costs. In June 2020
we exercised our option under this farm-in agreement to increase
our working interest in the well to 32.5%. As I write, we expect,
subject to permitting, to spud this well in the very near
future.
The first quarter of 2020 saw Nostra Terra involved in
requisitions for General Meetings by certain shareholders. This
process cost the Company considerable amounts and took up
significant management time. I am glad to say that these matters
are now behind the Company.
Staying with corporate matters, Nostra Terra continued to
benefit from its oil price hedges during the period and raised
GBP318,055 (before expenses) through a placing and subscription for
new shares in April 2020, while also appointing Novum Securities
Limited as corporate broker to the Company. I would also like to
take this opportunity to thank Ewen Ainsworth for his contribution
to the Company during his time as chairman.
The first half of 2020 was a difficult period for the Company,
but I believe we have emerged from it stronger than we went into
it. With lower costs and corporate debt and post-reporting period
increases in reserves and production we should have a firm base on
which to grow further. Larger, transformative transactions are also
on our radar - we will apply the same detailed due diligence to
them as we do to all our potential transactions.
These are exciting times for Nostra Terra and its shareholders.
I would like to thank those shareholders for their continued
support and look forward to updating them on the Company's
continued development over the coming months.
Dr Stephen Staley
Non-Executive Chairman
30 October 2020
Chief Executive Officer's report
The focus for Nostra Terra is to build a solid foundation of low
risk, producing assets, where we can then add to our portfolio with
different assets, including different geographies, and varying
levels of risk. Our assets are located in the USA, in East Texas
(Pine Mills) and West Texas (Permian Basin), and post-period we
rounded out the portfolio by expanding into a third area, South
Texas (with the Caballos Creek acquisition). While the year started
off rough, we've made great strides in following through with
developing the Company.
The first half of 2020 was a challenging time in the industry
and for Nostra Terra. During this time we; made significant cuts to
operating costs and overheads, had changes in the board, and used
this as an opportunity to reposition the company for attractive
opportunities.
Covid-19 had an impact on the global economy and subsequently
oil prices. The average WTI oil price during the first half of 2020
was US$25.45, per barrel (compared to US$57.39 in 2019), including
a couple days of negative oil prices for the first time in history.
As previously announced, some production was temporarily suspended
during the lower oil prices in order to conserve capital. As such,
revenues were $417,000 compared to $947,000 and the Gross loss from
operations (before non-cash items of depreciation and amortization)
for the period was $115,000 compared to $106,000 profit during the
same period in 2019. The year started with attempts from a
shareholder to change the management of the Company which was
ultimately put to Shareholders who voted 79/21 against the
resolution. The aggressive interventions continued as Covid-19 hit,
the global economy took a turn for the worse and oil prices
collapsed. The Board fought hard to put the Company in the best
position for both near and long-term, and we are happy to announce
that this situation is now behind us.
A positive change during the period was the addition of Dr.
Stephen Staley to the Board where he is now the non-executive
Chairman. Stephen brings a wealth of experience and we're excited
to have him as part of the team as we continue on this path to
carefully grow the Company. In June we then announced that due to a
forensic cost cutting review we were able to reduce our monthly
overheads by over 60%. We are benefiting from that now, however
given most of the changes were made later in the period this will
be reflected more fully in future financials.
During the period we farmed-out an undrilled 80-acre portion of
our Pine Mills oil field to another established operator. Nostra
Terra receives a 25% carried working interest (at no cost to
Nostra) in the first well, and participating at cost for another
7.5% working interest. The well has been planned, the location is
being prepared, and drilling is anticipated in the coming days. Our
partner benefits from 3D seismic data and the well is targeted to
drill higher on the structure than neighbouring , successful
wells.
We finished the first half stronger and repositioned - with
lower operating costs, a stronger balance sheet, and looking for
additional opportunities. We now possess a portfolio of three
operational areas, with varied drilling and workover opportunities
planned and funded that can have a significant near-term positive
impact.
In September we expanded our portfolio by acquiring a 100%
working interest in the Caballos Creek oil field in South Texas for
$425,000. We were able to execute this with non-dilutive financing.
The field was producing circa 30 bopd at the date of acquisition.
Proven reserves (producing and non-producing) have a PV10 of
US$1,052,300 with estimated remaining economic life of the wells
ranging from 16 years to 32 years per well, as per third-party
engineering report performed by Netherland Sewell & Associates.
We're now in the process of doing a thorough review of geology and
engineering, after which we plan to produce an updated reserve
report.
In September we also signed a farm-in agreement for an
additional asset near our other operations in the Permian Basin.
This allows us to carefully expand our footprint during a time of
lower asset valuations. There are 15 existing wells which secure
the acreage, where we see opportunity in recompleting some of the
existing wells and also drilling new, low risk development wells.
The Company will pay a US$25,000 fee at closing, followed by
US$100,000 towards the initial re-entry of the first well planned
for completion. Nostra Terra will earn 50% of the net cashflow for
the life of the well, while having an option to acquire a 75% WI,
at any point prior to 31 October 2021, in all three leases, for an
additional US$210,000 to the seller.
At the end of September, we raised GBP500,000 (before expenses)
through an oversubscribed fundraise with institutional and
professional investors. Our current work program is funded. We have
activity currently taking place in all three areas of operation.
Our focus is very much on increasing cashflow through these assets
with lasting reserves.
I would like to thank our shareholders. We look forward to
updating you on progress during the remainder of the year and
onward.
Matt Lofgran
Chief Executive Officer
30 October 2020
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
Beaumont Cornish Limited
(Nominated Adviser) +44 (0) 20 7628 3396
James Biddle / Roland Cornish
Novum Securities Limited (Broker) +44 (0) 207 399 9425
Jon Belliss
Lionsgate Communications (Public Relations) +44 (0) 7791 892509
Jonathan Charles
Nostra Terra Oil and Gas Company plc
Consolidated Income Statement
for the six months ended 30 June 2020
Year to
Six months to 30 June 2020 Six months to 30 June 2019 31 December 2019
Note Unaudited Unaudited Audited
$'000 $'000 $'000
------------------------------ ---- ----------------------------- -------------------------- -----------------
Revenue 417 947 1,795
Cost of sales
------------------------------ ---- ----------------------------- -------------------------- -----------------
Production costs (448) (662) (1,166)
Exploration - - -
Well Impairment - - (67)
Depletion, depreciation,
amortisation (84) (179) (272)
------------------------------ ---- ----------------------------- -------------------------- -----------------
Total cost of sales (532) (841) (1,505)
GROSS (LOSS)/PROFIT (115) 106 290
Share based payment (21) - (8)
Administrative expenses (610) (814) (1,614)
Gain on hedging activity 176 32 -
Foreign exchange gain/(loss) 228 (24) (114)
OPERATING LOSS (342) (700) (1,446)
Other income (expense) - 49 (99)
Finance expense (95) (61) (194)
------------------------------ ---- ----------------------------- -------------------------- -----------------
LOSS BEFORE TAX (437) (712) (1,739)
Income tax - - -
LOSS FOR THE PERIOD (437) (712) (1,739)
------------------------------------ ----------------------------- -------------------------- -----------------
Attributed to:
Owners of the company (437) (712) (1,739)
------------------------------ ---- ----------------------------- -------------------------- -----------------
Earnings per share expressed
in pence per share:
Continued operations
Basic and diluted (cents per
share) 3 (0.16) (0.39) (0.92)
------------------------------ ---- ----------------------------- -------------------------- -----------------
The Group'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 2020
Six months to Year to
Six months to 30 June 2019 31 December 2019
30 June 2020 Unaudited Unaudited Audited
$'000 $'000 $'000
-------------------------------------------- ----------------------- ------------- ---------------------
LOSS FOR THE YEAR (437) (712) (1,739)
Other comprehensive income:
Currency translation differences - -
-------------------------------------------- ----------------------- ------------- ---------------------
Total comprehensive income for the period (437) (712) (1,739)
-------------------------------------------- ----------------------- ------------- ---------------------
Total comprehensive income attributable to:
Owners of the company (437) (712) (1,739)
-------------------------------------------- ----------------------- ------------- ---------------------
Nostra Terra Oil and Gas Company plc
Consolidated Statement of Financial Position as at 30 June
2020
As at 30
As at 30 June 2020 June 2019 As at 31 December 2019
Unaudited Unaudited Audited
Note $'000 $'000 $'000
----------------------------------- ---- ------------------- ---------- ----------------------
ASSETS
NON-CURRENT ASSETS
Other intangibles 1,877 1,863 1,787
Property, plant and equipment
- oil and gas assets 739 653 690
2,616 2,516 2,477
CURRENT ASSETS
Trade and other receivables 50 390 352
Deposits and prepayments 186 106 18
Other assets 268 263 108
Cash and cash equivalents 46 201 240
------------------------------------------ ------------------- ---------- ----------------------
550 960 718
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 908 428 763
Borrowings 517 475 941
Lease liabilities 8 - 16
------------------------------------ ---- ------------------- ---------- ----------------------
1,433 903 1,720
----------------------------------- ---- ------------------- ---------- ----------------------
NET CURRENT (LIABILITIES) / ASSETS (883) 57 (1,002)
------------------------------------ ---- ------------------- ---------- ----------------------
NON-CURRENT LIABILITIES
Decommissioning liabilities 238 228 239
Other loans 2,048 1,820 1,753
Lease liabilities 16 - 16
------------------------------------ ---- ------------------- ---------- ----------------------
2,302 2,048 2,008
NET (LIABILITIES)/ ASSETS (569) 525 (533)
------------------------------------ ---- ------------------- ---------- ----------------------
EQUITY AND RESERVES
Share capital 4 7,633 7,435 7,435
Share premium 21,024 20,845 20,842
Translation reserve (676) (676) (676)
Share option reserve 113 120 92
Retained losses (28,663) (27,199) (28,226)
------------------------------------ ---- ------------------- ---------- ----------------------
(569) 525 (533)
----------------------------------- ---- ------------------- ---------- ----------------------
Nostra Terra Oil and Gas Company plc
Consolidated cash flow statement
For the six months ended 30 June 2020
Year
Six months to 30 June Six months to 30 June to 31 December 2019
2020 Unaudited 2019 Unaudited Audited
Note $'000 $'000 $'000
------------------------- ------ ------------------------- ------------------------- -------------------------
Cash flows from
operating activities
Operating loss for the period (437) (712) (1,739)
Adjustments for:
Depreciation of property, plant,
and equipment 8 53 138
Amortization of intangibles - 125 134
Well impairment - - 67
Accretion expense - 11 -
Share based payment 21 95 (28)
Operating cash flows before
movements in working capital (408) (428) (1,428)
Decrease in receivables 302 12 50
(Increase)/decrease in other
assets (160) - 153
(Decrease)/increase in payables 145 (214) 129
(Increase)/decrease in deposits
and prepayments (168) (10) 78
Interest paid 95 (61) 194
--------------------------------- ------------------------- ------------------------- -------------------------
Cash generated/(consumed) by
operations (194) (701) (824)
Cash flows from
investing activities
Purchase of intangibles - new
oil properties (91) (126) (115)
Purchase of plant and equipment (58) (170) (244)
Net cash from investing
activities (149) (296) (359)
--------------------------------- ------------------------- ------------------------- -------------------------
Cash flows from
financing activities
Proceeds from issue of shares 511 1,437 1,606
Cost of shares issued (131) - (77)
Net borrowing (128) (311) 16
Finance costs (95) - (178)
Lease payments (8) - (16)
Net cash from financing
activities 149 1,126 1,351
--------------------------------- ------------------------- ------------------------- -------------------------
Increase/(decrease) in cash and
cash equivalents (194) 129 168
Cash and cash equivalents at the
beginning of the period 240 72 72
--------------------------------- ------------------------- ------------------------- -------------------------
Cash and cash equivalents at the
end of the period 46 201 240
--------------------------------- ------------------------- ------------------------- -------------------------
Nostra Terra Oil and Gas Company plc
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2020
As at As at As at
30 June 30 June 31 December
2020 2019 2019
$'000 $'000 $'000
--------------------------- --------- --------- -------------
As at beginning of period (533) (295) (295)
Loss for the period (437) (712) (1,739)
Share based payments 21 95 (28)
Issue of share capital
net of expenses 380 1,437 1,529
---------------------------- --------- --------- -------------
As at end of period (569) 525 (533)
---------------------------- --------- --------- -------------
Nostra Terra Oil and Gas Company plc
Notes to the interim report
For the six months ended 30 June 2020
1. General Information
Nostra Terra Oil and Gas Company plc (Nostra Terra) is a company
incorporated in England and Wales and quoted on the AIM market of
the of the London Stock Exchange (ticker: NTOG). The principal
activity of the group is disclosed as described in the report
Chairman's statement and Chief Executive Officer's Report.
2. Basis of Preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards and IFRIC
interpretations issued by the International Accounting Standards
Board (IASB) as adopted by the European Union and with those parts
of the Companies Act 2006 applicable to companies reporting under
IFRS. The financial statements have been prepared under the
historical cost convention. This interim financial information for
the six months ended 30 June 2020 was approved by the Board on 30
October 2020 .
The unaudited results for the six months ended 30 June 2020 do
not constitute statutory accounts within the meaning of Section 435
of the Companies Act 2006. The comparative figures for the 12
months ended 31 December 2019 are extracted from the statutory
financial statements which have been filed with the Registrar of
Companies and which contain an unqualified audit report, which did
however draw attention to a material uncertainty relating to going
concern and contained no statement under Section 498 (2) or (3) of
the Companies Act 2006.
Copies of this interim statement are available from the Company
at its registered office at Salisbury House, London Wall, London,
United Kingdom, EC2M 5PS. The interim statement 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.
Year to
Six months to 30 June 2020 Six months to 30 June 2019 31 December 2019
Unaudited Unaudited Audited
Loss per ordinary shareholders
($000) (437) (712) (1,739)
Weighted average number of
ordinary shares 271,137,623 180,722,935 189,131,636
Basic and diluted (cents per
share) (0.16) (0.39) (0.92)
-------------------------------- -------------------------- -----------------
The diluted loss per share is the same as the basic loss per
share as the loss for the year has an antidilutive effect.
4. Share Capital
The issued share capital as at 30 June 2020 was 356,828,226
ordinary shares of 0.1p each. The issued share capital as at 31
December 2019 and 30 June 2019 was 197,131,903 ordinary shares of
0.1p each.
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END
IR XBLFXBBLXFBB
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