Nostra Terra acquires producing oil and gas assets

LONDON: Nostra Terra Oil & Gas Company has announced the acquisition of a 100% working interest in the Caballos Creek Oil Field, a producing oil field with additional development opportunity in Atascosa County Texas.

The primary assets are shallow, vertical oil wells producing 30 bopd gross (22 bopd net of royalties) with further development potential. Proven reserves (producing and non-producing) are PV10 US$1.052 million with estimated remaining economic life of the wells ranging from 16 years to 32 years per well, per third-party engineering report performed by Netherland Sewell & Associates (NSAI).

The acquisition represents an approximately 25% increase in total Company daily production, from year end 2019, financed entirely without dilution.  As at 30 June 2020, NSAI estimated proved remaining reserves of 92,100 boe gross, 69,300 boe net. For the year ended 31 December 2019, the assets generated turnover of c. $0.35 million and profit-before-tax of c. $0.22 million.

Nostra Terra has entered into an agreement to acquire 100% WI in the assets from Oro Resources LLC and Oro East Tx LLC for $425,000, which is anticipated to close within the next week. The acquisition includes 5 producing wells, 2 injectors, and 1 shut-in producer located on 745 acres in Atascosa County Texas. The entire acreage is HBP, hence the leases will continue in perpetuity due to the existing producing wells.

The primary producing formations are the Miocene Hockley, Navarro, and the Olmos. The previous owner made a significant investment in the current infrastructure (estimated over $500,000), providing room for further development. The Company estimates that the assets will reach payback of the acquisition cost in less than 2 years (based on current production rate and $40 oil price).

Nostra Terra has arranged non-dilutive financing from an unconnected third-party in the amount of $430,000. The financing is a loan note carrying an 8% coupon, 10-month term, with a $30,000 redemption fee. The Loan Note has limited recourse only to the assets in Atascosa County. Nostra Terra plans to move the financing for the acquired assets over to its existing Senior Facility prior to the Loan Note being due.

Matt Lofgran, Nostra Terra ‘s Chief Executive Officer, said: “The first half of 2020 was relatively quiet from an acquisition perspective as the Board took a very measured approach to assessing the turbulent economy, board changes and oil price environment. Considerable effort has taken place since to identify assets that make money in a low oil price environment, and to which we could add to our portfolio on good terms while being cautious about dilution.

We’re very excited about the acquisition of these assets. We’re acquiring low risk, producing assets, with average life over 20 years, immediately adding net cash flow to the Company, all with non-dilutive financing.”

Add a Comment

Your email address will not be published. Required fields are marked *