LONDON (Alliance News) - Nostra Terra Oil & Gas Co PLC said Monday it is "excited" about the engineered economics report carried out at its Mesquite asset in the Permian Basin, in New Mexico and Texas.
Shares in Nostra Terra were up 11% Monday at 3.00 pence each.
Based on the report carried out by Trey Resources Inc, Nostra Terra said it expects the initial 1,384 net acre field can generate 2.4 million barrels of recoverable oil with an NPV10 valuation of USD21.6 million at current strip pricing.
"We're very excited to have such strong confirmation of the potential of the Mesquite asset. The work that Trey has done on our behalf has been thorough and detailed. The volumetric map in particular could provide Nostra Terra with a crucial advantage as we develop this project," said Chief Executive Officer Matt Lofgran.
Nostra Terra is estimating an initial flow rate of 265 barrels of oil production per day, with a 20 year well life. The AIM-listed oil and gas company expects Mesquite to produce 100,000 barrels per well in the first three years.
The report estimates an internal rate of return of 34% at current strip pricing and an internal rate of return at USD60 oil pricing. At USD60 oil, NPV10 per well is estimated at USD3.3 million and at current strip pricing, NPV10 per well is estimated to be USD2.5 million.
Drill and completion costs are expected at USD2.9 million.
Nostra Terra said a field development plan, based on these initial findings, will begin shortly.
Lofgran added: "The Mesquite asset is a perfect example of what we hoped to bring to Nostra Terra, where a single well has the ability to triple our current production, without the associated exploration risk. Now that we have the field development plan based on initial assessment we will open discussions with potential partners, with a view to realizing considerable value at Mesquite."
Nostra Terra (NTOG)