LONDON (Alliance News) - Nostra Terra Oil & Gas Co PLC said Thursday it has signed a 12-month option to expand its Mesquite asset in the Permian basin by 600 net acres.
The 12-month option allows Nostra Terra to acquire a 75% working interest in an additional 800 acres, 600 net to the company, for USD320,00 in the asset which straddles the US states of New Mexico and Texas.
Nostra Terra said, if the option is exercised, the Mesquite asset will cover 2,184 gross acres with 1,984 net to Nostra Terra.
The agreement is structured so Nostra Terra earns into the option by paying 100% of the recompletion costs of one of three currently dormant vertical oil wells to bring it back into production. Nostra Terra will receive revenue from the increased production whether its exercises the option or not.
The leases over the additional acres are held by production.
Chief Executive Officer Matt Lofgran said: "We've moved quickly in securing this option for an additional 600 net acres at Mesquite. As the first operator in the area to pursue horizontal drilling on these leases, Nostra Terra has a crucial first mover advantage in this prolific oil field. This is reflected in the level of unsolicited interest the company has already received from potential industry partners concerning Mesquite.
"We look forward to receiving the first engineered economics report from Trey Resources very soon and will immediately commission them to incorporate the additional acreage to the field development plan."
Shares in Nostra Terra Oil & Gas were down 3.4% Thursday at 2.585 pence each.
Nostra Terra (NTOG)