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Posted: April 29, 2019
RNS Number : 3193X
Nostra Terra Oil & Gas Company PLC
29 April 2019
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
First Horizontal Well at Mesquite
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 plans to drill the Company's first horizontal well at its Mesquite Asset in the Permian Basin, Texas ("Mesquite").
Proposed new lease agreement & plans to drill
Nostra Terra is pleased to announce that it is in advanced discussions with regards to a new 160-acre lease opportunity (the "New Lease") in the Mesquite Target Area (the "Target Area"). The Target Area currently covers over 30,000 acres, of which the Company has secured 2,184 gross acres (1,984 net acres to Nostra Terra).
The New Lease, presents Nostra Terra with an immediate opportunity to drill a half-mile horizontal well to prove up and increase the Company's overall Proven (1P) and Probable (2P) oil reserves at Mesquite. The New Lease is standalone, near, but not adjacent to, the existing acreage. Accordingly, the Company expects to be able to bring in partners on the New Lease whilst still maintaining a 100% interest in the existing Mesquite Asset
Nostra Terra intends to fund drilling of the proposed horizontal well using existing cash resources and through selling off a percentage working interest in the New Lease to certain oil and gas investors. Nostra Terra has already received expressions of interest from potential industry partners concerning the New Lease.
Next steps
Following completion of the placing announced on 27 February 2019, Nostra Terra engaged a landman to begin title work and to secure new leases for the Company in the Target Area.
The Company had previously identified the potential of the New Lease and has subsequently entered into discussions with the current mineral owners. These discussions are nearing conclusion and once complete Nostra Terra will apply for a permit to drill the first horizontal well.
Following permitting, Nostra Terra plans to secure a rig and prepare the pad, followed by drilling and completion operations. Subject to execution of the lease agreement, these activities are expected to take place in the coming weeks and months.
Matt Lofgran, Chief Executive Officer of Nostra Terra, commented:
"This new lease presents an excellent strategic opportunity for Nostra Terra. We see such large potential in the area and plan to increase our footprint, including retaining a larger interest in the Mesquite Asset. We will be able to drill our first horizontal well at Mesquite, with the aim of proving reserves for additional horizontal drilling. We intend do this while retaining full ownership of the acreage we have already secured.
Much more importantly, we will also preserve our first mover advantage in the wider Mesquite target area. The first horizontal well could deliver substantial cash flow to the Company whilst significantly strengthening our position in any future farm out discussions for Mesquite."
Competent Person Disclosure
John Stafford, a Director at Nostra Terra with over 35 years' relevant experience in the oil industry, has reviewed this announcement for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009. Mr. Stafford is a Fellow of the Geological Society and a member of the Petroleum Exploration Society of Great Britain.