Nostra Terra Makes Third Acquisition in Permian Basin, Texas

Published: December 13, 2017 |

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Nostra Terra, an oil and gas exploration and production company with assets in the U.S. and Egypt, has made its third acquisition in the Permian Basin of Texas.

The acquisition includes a target which was previously drilled and produced oil. Operations for a twin well are scheduled to commence in November.

“We are particularly excited about the potential of the planned Twin Well. The operator of a neighboring lease drilled a discovery well, which crossed the boundary into the lease area of our new working interest. On realizing this, the well had to be plugged and abandoned in accordance with process, but the neighboring operator has shared its data. As such this presents Nostra Terra with an immediate drill target of a proven prior producing well,” said Matt Lofgran, chief executive officer of Nostra Terra.

“This was an opportunity that we didn’t want to pass up, given the fit in the portfolio and especially the discovery on the lease. The board is in full agreement about the value in the acquisition and its fit in our portfolio of leases. I’m very happy to have such strong support from my fellow directors. Assuming we secure it, we anticipate using the senior lending facility to repay the loan along with drilling additional wells. Shareholders can expect to see more news flow, as we expand our footprint in the Permian Basin acquiring new leases and building production,” added Lofgran.

HIGHLIGHTS

• Acquiring a 53.25 percent working Interest over a 120 acre lease

• Acquisition cost of US$40,000

• 3 drill ready locations
— Shallow, conventional wells

— Leases all held By production (HBP)

• Plan to drill a new “twin” well already underway
— Targeting previously successful well mistakenly drilled by offset operator, resulting in 350 barrels produced in less than 3 days

— Drilling permit already in place

— Rig expected onsite early November 2017

— Nostra Terra will carry existing working interests for drilling of first well

—The company will cover 71 percent of the first well cost, being approximately US$340,000

— Well profile

— Anticipated 2:1 return on investment (ROI) at $40/barrel oil

— Estimated Ultimate Recovery (EUR) of 35,000 barrels of oil per well

— Target 25-40 bopd average 1st year

— Shallow decline curve

• Additional growth potential through in-fill drilling, using 10-acre well spacing instead of existing 40-acre spacing

• Director bridge loan of £300,000 to fund acquisition and drilling of the Twin Well

• Further progress made on senior lending facility
— Expected interest rate of 4.5 percent - 5.5 percent

ACQUISITION

The acquisition covers 120 acres of the Permian Basin, Texas. Nostra Terra has secured a 53.25 percent working interest in the lease. The total cost of the acquisition and drilling of the Twin Well is expected to be approximately US$380,000.

There are 3 drill ready locations on the lease based on 40-acre spacing. There is further potential to increase the number of drill ready locations through in-fill drilling using 10-acre spacing. Current production is circa 3.5 barrels of oil per day (bopd), which allows the lease to be held by production. This means Nostra Terra has the flexibility to develop the lease further without any deadlines or the lease expiring. Nostra Terra can elect at its discretion when to invest in further development of the lease as conditions allow.

Nostra Terra’s board believes the acquisition represents excellent value to the company. The profile of the wells indicates approximately 35,000 barrels of oil EUR, generating an estimated return on investment of 2:1 at $40/barrel oil.

PLANNED TWIN WELL OF PREVIOUS SUCCESSFUL WELL

A Twin Well is planned for drilling at the lease over the course of November.

By way of background, the operator of a neighboring lease drilled a well, which produced 350 barrels of oil in less than 3 days. However, once the operator completed a directional survey of the bottom-hole location it discovered the well had crossed the boundary of the lease. The operator of the neighboring well plugged and abandoned the well and has provided all its data to assist with planning and drilling of the Twin Well.

The planned drilling operation of the Twin Well at the lease will target the same bottom-hole location as the discovery well made by the neighoring operator.

The drilling permit for the Twin Well has been granted. Work is scheduled to begin on preparing the location (drilling pad) at the start of November. The rig is expected to move onsite in early November 2017 and drilling will commence. Target depth is expected to be reached before the month end and completion of the well will follow shortly thereafter.

Under the terms of the acquisition, Nostra Terra will pay 71 percet of the drilling costs of the Twin Well. All working interest owners will be “heads up” (pay their pro-rata share after that).

Target production for the first year of the Twin Well is expected to be in the 25 bopd to 40 bopd range. A shallow decline curve is anticipated.

About Nostra Terra
Nostra Terra is an oil and gas exploration and production company focused on established hydrocarbon provinces in the USA and Egypt. Nostra Terra owns and operates producing assets in East Texas and West Texas (Permian Basin). Nostra Terra also has operations in the Western Desert of Egypt.

To stop by Nostra Terra’s website, CLICK HERE

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