Nostra Terra Oil and Gas : Operations Update

Untitled Document Operations Update

RNS Number : 3721M
Nostra Terra Oil & Gas Company PLC
20 January 2016
 
AIM:NTOG
20 January 2016
 
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company") 
Operations Update
 
 
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 provide an 
operational and production update for Egypt, for the fourth quarter of 2015. 
(Due to the number of operators we deal with in the USA, production and revenue 
figures for that region were not finalised at the time of this release and will 
be incorporated in later updates.)
 
 
Highlights
 
- Completion of East Ghazalat acquisition providing NTOG with its initial 
revenue generating asset in Egypt
- Fourth quarter net production of 15,400 barrels of oil
- Fourth quarter attributable revenues of US$242,499  
- Discussions in progress with East Ghazalat's operator North Petroleum to 
improve this asset's financial and operating performance
- Finalising arrangements to invoice and receive revenue payments directly from 
the Egyptian General Petroleum Company to improve cash flow 
- 3 year extension agreed on US$25m credit facility
 
 
 
Monthly Production (Net)
 
Egypt
 
Month       Total Net Production    Attributable
        (BOE)*          Revenue** (USD)
July        6,787           $144,726
August      6,292           $108,911
September   5,906           $104,820
October     4,629           $82,446
November    5,171           $83,374
December    5,600           $76,679
 
*Net production represents 25 per cent. of total field production. Output in 
October and November was adversely affected by an interruption in production at 
one of the field's producing wells. Independent Resources Group plc ("IRG") and 
Nostra Terra through their joint venture company Independent Resources (Egypt) 
Limited moved quickly to liaise with North Petroleum, the operator of the East 
Ghazalat concession, to rectify the disruption to output and restore the well 
to its previous productivity.
 
**Revenue in Egypt is the accrued combination of cost recovery and profit oil 
attributed to NTOG. The average realised price for Q4 was $40.59 per barrel
 
Q4 2015 Operations Update
 
East Ghazalat (Western Desert, Egypt)
 
In October 2015 Nostra Terra entered into a joint venture ("JV") agreement with 
Independent Resources Group plc, an AIM listed exploration and production 
company with a focus on the Mediterranean basin, which has a similar strategic 
intention to that of Nostra Terra to invest in producing or near-production 
assets with upside potential.
 
In October 2015 the JV acquired a 50 per cent interest in the East Ghazalat 
concession in Egypt ("East Ghazalat") for US$3.5 million, operated by North 
Petroleum ("the Operator"), a wholly-owned subsidiary of China ZhenHua Oil Co, 
Ltd, a Chinese state-owned oil company. The effective date of this acquisition 
was 1 July 2015 and accordingly NTOG has reported its production and revenues 
derived from East Ghazalat from that date.
 
Historic collection periods for revenues prior to the JV's acquisition have 
been around 4 months, hence the JV has not yet received its third and fourth 
quarter revenue payments. The JV is finalising arrangements with the Egyptian 
General Petroleum Company ("EGPC") in respect of both these outstanding and 
future revenue receivables. The JV will energetically pursue timely payment of 
 receivables.
 
The JV has identified five key objectives for East Ghazalat. These comprise:
 
- a reduction in operating costs;
- increasing production through implementing operational improvements; 
- drilling of new lower risk oil wells;
- improving the asset's cash flow through accelerated invoicing for production 
and quicker receipt of outstanding invoices; and
- developing the North Dabaa gas discovery
 
The JV is in discussions with the Operator on all of these initiatives. Whilst 
the JV has identified and proposed measures which will improve the operating 
performance and cashflow generation of the asset, it does not operate East 
Ghazalat and the necessary changes to achieve these objectives require the 
consent and cooperation of the Operator and the EGPC.  Equally the Operator 
requires the consent of the JV in order to approve budgets and operating plans 
for East Ghazalat. Accordingly, there is a clear economic alignment between all 
parties to reach an agreement to achieve these improvements. Nostra Terra looks 
forward to providing updates on progress during the course of the year. 
 
Credit Facility
 
During the quarter Texas Capital Bank granted Nostra Terra an extension on the 
lending facility. The Facility contains both a three year Revolving Credit 
Facility and a Standby Letter of Credit Facility with an initial nominal limit 
of US$25 million. Interest is charged on monies drawn down at the current rate 
of 4.25% (determined by the higher of either: the sum of the Wall Street 
Journal Rate plus 1% or 4.25%).
 
Outlook
 
In the current environment with lower oil prices Nostra Terra is seeing an 
increasing number of attractive opportunities. The Board feels that now is an 
ideal time to acquire producing assets, such that they can be acquired with 
debt. 
 
Nostra Terra is in various stages on deals, including contract negotiations on 
certain producing assets within the USA.
 
 
Matt Lofgran, Chief Executive Officer of Nostra Terra, commented:
 
"Our focus is on the acquisition of producing assets with further, low risk 
upside potential.  Many of the companies struggling today either have assets 
with higher operating costs, have applied leverage at much higher oil prices, 
or sometimes both cases.  With low oil prices we see this as an opportune time 
to acquire assets using debt. This strategy allows us to grow our production 
and reserves now, which should have a significant positive impact on cash flow 
when oil prices strengthen.
 
We have two different groups covering each focus area of the Company. They are 
actively evaluating new opportunities, performing due diligence, and in 
contract negotiations.  We look forward to updating on the progress of these in 
future announcements."
 
 
 
For further information, visit www.ntog.co.uk or contact:
 
 
Nostra Terra Oil and Gas Company plc
Matt Lofgran, CEO
[e-mail]
Telephone: [phone]
 
Sanlam Securities UK Limited
(Nominated adviser and broker)
Lindsay Mair / James Thomas
Telephone: [phone]
 
Walbrook PR
Gary Middleton
Nick Rome
Telephone: [phone]

This information is provided by RNS
The company news service from the London Stock Exchange
 
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