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Nostra Terra reports production update and development plan for its Mitchell County assets

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Oilfield Technology,


Nostra Terra, the oil and gas exploration and production company with a portfolio of assets in the USA and Egypt, reports a production update and development plan for the Company's Mitchell County assets in the Permian Basin.

Permian Basin production

Nostra Terra owns a 53.25% working interest (WI) in each of the Twin Well and G6 Well located in Mitchell County, Texas. Both wells produce from the Clearfork formation. Combined, these wells are generating significant free cash flow which is being predominantly reinvested in the field.

All oil production on this lease is collected in a single tank battery and the combined July production from the two wells was 63 bpd, with the most recent 10 day period being 68 bpd. This is the stabilised rate following initial decline, which the company believes is more meaningful for long term analysis than initial (higher) rates. Nostra Terra will continue to report stabilised, average production as it adds more producing wells to its portfolio.

Twin Well payback

One of the industry's key investment criteria for measuring performance is the payback period for each well it drills. Nostra Terra has received back approximately 50% of the costs it incurred drilling the Twin Well within six months of bringing the well into commercial production, which considerably exceeded management's expectations of the likely payback period at the start of drilling. Cash received has been utilised for general working capital and field development purposes.

Future development of existing Permian leases

Following the successes of the Twin Well and G6 Well, Nostra Terra will commission an independent engineer to update the reserves report for its existing Permian Basin leases, which the Company expects to do before the year-end.

As previously announced, Nostra Terra's US$5 million Senior Lending Facility with Washington Federal Bank, which currently has a borrowing base of US$1.95 million, has been based solely on oil production at the Company's 100% owned Pine Mills oilfield.

Now that Nostra Terra has drilled two commercial wells at its Mitchell County leases, the company intends to present technical data of its oil production here at future redeterminations of the Facility, which will involve updating the reserves report.

In addition to this, Nostra Terra will submit applications for permits to drill three new wells at its Mitchell County leases. The company already has one permit to drill, awarded in March 2018.

Additional acquisitions

Nostra Terra is currently reviewing multiple acquisition opportunities to expand its footprint in the Permian Basin and across Texas. These include existing producing assets and new prospects. The company will look to balance expanding its footprint whilst continuing to grow production and increase cash flow in the weeks and months ahead.

Matt Lofgran, Chief Executive Officer of Nostra Terra, commented:

"Production at our Permian Basin assets is making an increasingly valuable contribution to Nostra Terra. Not only are we able to reinvest free cashflow, but the faster than expected payback rate of the Twin Well is further evidence of the strength of our model.

We've always believed that our existing Permian Basin assets have the potential to be a multiple in size of Pine Mills. Now that we have drilling and production data from the initial two wells to calibrate this view, we will update our independent reserves report accordingly.

Whilst we were recently awarded a significant increase to the borrowing base of our Senior Lending Facility, this didn't factor in our Permian production. We anticipate that the inclusion of this should have a positive impact on future redeterminations of the Senior Lending Facility."

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/23082018/nostra-terra-reports-production-update-and-development-plan-for-its-mitchell-county-assets/

 

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