(Sharecast News) - Texas-focussed oil and gas explorer and producer Nostra Terra announced on Monday that the Fouke #2 well, in which it has a 32.5% working interest, had reached payback less than three months from production start-up.
The AIM-traded firm said that was "considerably ahead" of pre-drill expectations, due to a combination of higher realised oil prices and a production rate that was 70% greater than originally forecast.
It said the production rate at Fouke #2 remained at 140 barrels of oil per day, with the well experiencing no decline since start-up at 100% oil.
Fouke #1 was also producing 100% dry oil at a rate of 110 barrels per day, which was the maximum supported by the current surface production equipment.
Nostra Terra said the production rates would be maintained so that the operator could collect technical data to support its request for an increased 'field allowable rate' - a maximum recovery rate applicable to the longer term.
A hearing with the relevant authority on changing the field allowable rate, which currently stood at 82 barrels per day, had been requested but not yet scheduled.
The company said it had completed additional technical work in the farm-out area, using information obtained from the Fouke #1 and #2 wells.
Based on the results of that analysis, the firm said it had initiated discussions with the Fouke operator on a third well in the farm-out area.
Those technical discussions were ongoing, and would continue until the results of the field allowable rate hearing were known, after which a decision on the third well will be made.
Nostra Terra said it had also started a five-well workover program in the Pine Mills oilfield, focussed on returning several wells to production that had been shut-in due to mechanical issues.
Finally, it also said it had completed a technical study on optimising water handling in the field, and planned to implement the report recommendations as part of the workover programme to further increase production in the Pine Mills oilfield.
"Both the Fouke #1 and Fouke #2 wells have been very strong producers, adding significant cash flow to the company," said chief executive officer Matt Lofgran.
"These results highlight some of the opportunities that exist in the Pine Mills Field for Nostra Terra whilst having a working interest of 32.5% at the Fouke wells, owns a 100% working interest in 2,320 acres and continues to develop additional opportunities to grow production from this field.
"Additionally, planning, and technical work continues on our West Texas asset to select a location for our next drilling opportunity."
Lofgran said long-lead items were being ordered, and drilling contractors contacted, to "firm up" the timing of the next well in the area.
"All current growth initiatives in our portfolio are anticipated to be funded internally, without need for dilution.
"It's been a great year for the company so far with a strong increase in cash flows and production rates and I am looking forward to reporting on the results of our current activities in future periods."
At 1251 BST, shares in the Nostra Terra Oil and Gas Company were up 6.07% at 0.3p.
Reporting by Josh White at Sharecast.com.
Nostra Terra (NTOG)