Nostra Terra Regulatory News (NTOG)

14 June 2021

Nostra Terra Oil and Gas Company Plc

("Nostra Terra" or "the Company")

2020 Audited Annual Results

Notice of AGM

Nostra Terra (AIM: NTOG), the oil & gas exploration and production company with a portfolio of development and production assets in Texas, USA, is pleased to announce its final results for the year ended 31 December 2020 (the "Results"). A copy of the Results, along with a Notice of AGM, is being posted to Shareholders and is available on the Company's website, www.ntog.co.uk. The AGM will be held at at the offices of Druces LLP at Salisbury House, London Wall, London EC2M 5PS at 11.00 a.m. on 5 July 2021.

Highlights during the period:

· Revenue for the period was $1,025,000 (2019: $1,795,000)

· Cashflow positive achieved in December (prior to new well being put into production)

· Gross loss from operations (before non-cash items of depreciation and amortization) for the period of $395,000 (2019: $290,000 profit) 

· Production for the period was 29,583 barrels of oil (2019: 33,179 boe)

· Sr. Lending Facility remain in compliance throughout year

· New Chairman appointed to the Board (3 Mar)

· Placing & Subscription raised additional £818,055, cornerstoned by institutional investor

· 60% reduction in monthly overheads, versus 2019 monthly average (in effect from 8 June) [44.5% YoY]

· Discovery loan extended to April 2022 (8 June)

· Three non-dilutive growth transactions completed during the year

o Pine Mills farmout - 32.5% WI in well, NTOG carried for 25% in first well

o Caballos Creek acquisition (2 Sep)

o Permian Basin farm-in (21 Sep)

Post year end highlights:

· New well at Pine Mills completed and producing above expectations

· Expansion of Farmout acreage with Cypress at Pine Mills

· Potential portfolio expansion into Tunisia

 Stephen Staley, Nostra Terra 's Chairman, said:

 "I am happy to say that Nostra Terra is now in a much stronger position than it was a year ago and that we can look forward to the year ahead of us being another busy and productive one. I should also like to thank our shareholders for their continued support throughout the last year."

Matt Lofgran, Nostra Terra 's Chief Executive Officer, said:

"2020 was a very challenging year for businesses around the world, with oil & gas companies amongst the worst hit. Nostra Terra went through many changes, repositioning the Company both at the corporate and portfolio levels. We fought through the tough times and our diligence and hard work bore fruit as we reached a significant milestone, becoming cashflow positive at the corporate level in December 2020, and being positioned for growth for years to come."

This announcement contains information for the purposes of Article 7 of the EU Regulation 596/2014.

For further information, contact:

Extracts of the Results are set out below:

Chairman's Report

I am pleased to present Nostra Terra Oil & Gas Company PLC's annual report for the year ending 31 December 2020.

2020 has been a busy, sometimes challenging, but ultimately very positive year for Nostra Terra.

Like the rest of the oil & gas industry, the Company was faced with a very difficult oil price environment in the first half of the year. West Texas Intermediate ("WTI") crude prices (the price benchmark on which Nostra Terra's oil sales are based) fell sharply in response to drop in demand caused by the Covid-19 pandemic. Added to this, the first quarter of the year saw the Company involved in costly and time-consuming requisitions of General Meetings. These twin threats to Nostra Terra are both now behind us.

WTI prices rose steadily throughout 2020 but many of our peers were badly, sometimes critically, affected by the major fall in revenues. Nostra Terra responded to the oil price crash in two ways: by rapidly reducing our operating and overhead costs by 60%, versus the 2019 monthly average, in effect from 8 June 2020, resulting in a 45% reduction period then by pursuing and securing attractive assets at prices that reflected the depressed oil price environment.

In March 2020, Ewen Ainsworth stepped down as chairman of Nostra Terra after five years in the role. On behalf of the board, I would like to thank Ewen for his valuable contribution to the Company.

In April 2020, despite the very low WTI price at the time, we were able to announce that Cypress Minerals LLC ("Cypress") had farmed into a small area of our east Texan Pine Mills acreage and would drill a well on which the Company would be carried for 25%. This well was successfully drilled in Q4 2021, completed and subsequently put into production with an IP rate of 100 bopd (limited by local constraints) in January 2021.

In September 2020 we announced the acquisition of a 100% working interest in the producing Caballos Creek Oil Field in southern Texas. We also completed a farm-in to additional producing acreage in the Permian Basin of west Texas. The farm-in structure provides the Company with the option to increase its working interest to up to 75% of all three leases covered by the agreement. We believe these assets offer potential for substantial additional reserves and oil production.

During the year the Company undertook two successful fundraisings with our new corporate broker, Novum Securities. These raised £818,055 before expenses and were used to fund Nostra Terra's asset acquisition programme and working capital.

After the end of the reporting period Nostra Terra announced that, with its partner Cypress, it was expanding its activities outside our Pine Mills acreage having acquired additional leases; the 'prospective area' in which we hold a 32.5% working interest. A second well is also planned on the original acreage.

The combination of reduced overheads, increased production, improved operational efficiency and steadily increasing oil prices meant that we were able to announce in January 2021 that the Company was cashflow positive.

Production was slightly down versus 2019 but given the investment climate of the last year we are happy with performance. Reserves are broadly stable but expected to increase once Caballos Creek and the new Cypress well are considered.

Following the result of many months of effort, in April 2021 the Company made public its progress in securing an interest in an oil & gas property in Tunisia. The nature of this asset is such that it will provide some portfolio balance to Nostra Terra's existing Texan acreage.

I am happy to say that Nostra Terra is now in a much stronger position than it was a year ago and that we can look forward to the year ahead of us being another busy and productive one. I should also like to thank our shareholders for their continued support throughout the last year.

Dr Stephen Staley

Non-Executive Chairman

11 June 2021

Chief Executive Officer's Report

2020 was a very challenging year for businesses around the world, with oil & gas companies amongst the worst hit. Nostra Terra went through many changes, repositioning the Company both at the corporate and portfolio levels. We fought through the tough times and our diligence and hard work bore fruit as we reached a significant milestone, becoming cashflow positive at the corporate level in December 2020, and being positioned for growth for years to come.

During the beginning of the year, we made a lot of changes; both organisational and operational. As oil prices dropped, we benefited greatly from hedges that management put in place during 2019. We went about making cost-cutting changes where possible to adapt to the environment. This yielded a 45% reduction in overheads year on year, but a 60% reduction in monthly overheads versus 2019 monthly average.

While many companies were inactive, Nostra Terra drove forward growing its portfolio and working on much larger opportunities on the horizon. These include:

1. Farmout an undrilled portion of Pine Mills

2. Acquisition of 100% WI in Caballos Creek

3. Farm-in to an asset in the Permian Basin,

4. New potential opportunities in Tunisia, with assets that have tremendous upside.

Revenues for the year were $1,010,929 down from $1,795,000 in 2019, reflecting the significantly lower commodity price environment (average $34.17 per barrel) and a small decline in production from temporarily shutting in assets during that time. Operating losses decreased significantly through a 44% reduction in administrative expenses (despite one-off fees of approximately $190,000 due to the requisitions at the beginning of the year). During the year we raised an additional £818,055, through professional and institutional investors, in order to strengthen the balance sheet and progress development of our portfolio. The Board continues to focus on its stated aim of remaining cashflow positive for the year ended 2021.

United States

All of Nostra Terra's operations in the US target conventional reservoirs (i.e., not shale), typically with lower lifting costs and long-life reserves than unconventional ones.

* Asset acquired in September 2020.

East Texas (33- 100% Working Interest, "WI")

Nostra Terra's core asset is Pine Mills (100% WI) providing stable production. Over the past years of ownership, the focus was on performing low-cost workovers and upgrades, to increase production as well as increase overall uptime, although the Company continues to feel there is much more room for growth.

During 2020 Nostra Terra farmed out an undrilled portion of the acreage to Cypress LLC, retaining a 32.5% working interest, where a 25% working interest was carried in the first well. The well was drilled at the end of 2020 and put into production at the beginning of 2021. This well was and remains a great success, increasing production, net cashflow, and reserves. (The well and its reserves are currently not part of the Senior Lending Facility; the Company plans to add those during the next redetermination).

West Texas (50 - 75% Working Interest)

In previous years, we have made three separate acquisitions in the Permian Basin. These were leases that had existing, albeit nominal, rates of production. The reason for the acquisitions was to gain access to upside through additional drilling locations on the leases, in a proven oil field, and during a lower oil price environment. In 2018, we brought two new wells into production. In February 2019 we announced that the first well paid out in under one year, meaning production rates were strong enough to generate a return of all our well costs in a rapid manner. The second well is performing to expectations. We have numerous other potential drilling locations that we keep in inventory to potentially drill in the future.

In September 2020 Nostra Terra signed a farm-in agreement with a consortium of local owners/producers for three additional leases in the Permian Basin. There is significant upside opportunity through a combination of re-completions, workovers, and new wells. The asset is in a proven area, adjacent to other leases Nostra Terra owns in the basin. Work is anticipated to commence later this year.

South Texas (100% Working Interest)

In September 2020 we acquired the Caballos Creek oilfield in South Texas. The wells are producing from conventional reservoirs, with long-life reserves. The acquisition was completed with non-dilutive financing and was immediately accretive.

From the above it is apparent that the Company continues to pursue its stated goals of acquiring a portfolio of low-cost medium to high impact acreage with upside to build a strong position in the conventional, low risk onshore Mid-Continent US.

Senior Lending Facility

Nostra Terra has a $5 million Senior Lending Facility, with scope for further expansion. The borrowing base at the end of the year was $1.64 million at a 4.75% interest rate, (with a variable rate of the greater of 4.25% and WSJ Rate plus 25 basis points) to 29 January 2022. This flexible facility provides an attractive opportunity to use non-dilutive funds to grow the Company. The facility is not fully drawn down and the next redetermination will take place mid-year when a substantial increase in the borrowing base is anticipated. This is partly due to an increase in commodity prices, but primarily to the success in the newly-drilled well at Pine Mills in the Cypress farmout area, which was put into production in January of 2021.

OutlookWe have a great portfolio of low-risk, producing assets in the USA, all with further growth potential. Being cashflow positive we'll look to grow that further in 2021. Our Senior Facility is one of the tools we have available; we can draw on it (with no restrictions on where funds are used) to use for further acquisitions, development, or even exploration. One such example is Tunisia, where we spent much of 2020 pursuing an opportunity that we felt would offer an exciting element to our portfolio.

Thank you to our shareholders, who have supported us through a volatile year. Overheads remain low, oil prices continue to strengthen and we've already increased production significantly with more planned throughout the year. We anticipate a greatly improved year for revenue and cashflow in 2021.

Matt Lofgran

Chief Executive Officer

11 June 2021

Consolidated Income Statement

For the year ended 31 December 2020

The accompanying accounting policies and notes are an integral part of these financial statements

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2020

The accompanying accounting policies and notes are an integral part of these financial statements

Consolidated Statement of Financial Position

As at 31 December 2020

The financial statements were approved and authorised for issue by the Board of Directors on 11 June 2021 and were signed on its behalf by:

M B Lofgran

Director

Company registration number: 05338258

The accompanying accounting policies and notes are an integral part of these financial statements

Company Statement of Financial Position

As at 31 December 2020

The parent company's loss for the financial year was $1,082,706 (2019: $1,796,333).

The financial statements were approved and authorised for issue by the Board of Directors on 11 June 2021 and were signed on its behalf by:

M B Lofgran

Director

Company registration number: 05338258

The accompanying accounting policies and notes are an integral part of these financial statements

Consolidated Statement of Changes in Equity

For the year ended 31 December 2020

The accompanying accounting policies and notes are an integral part of these financial statements

Share capital is the amount subscribed for shares at nominal value.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of those shares net of share issue expenses. Share issue expenses in the year comprise costs incurred in respect of the issue of new shares.

Share based payment reserve is a reserve used to recognize the cost and equity associated with the fair value of issues of share options and warrants.

Translation reserves arose due to the adoption of US dollars as the presentational currency at the start of the prior accounting period. Further information on the adjustment can be found in note 1.

Retained loss represents the cumulative losses of the company attributable to owners of the company.

Company Statement of Changes in Equity

For the year ended 31 December 2020

The accompanying accounting policies and notes are an integral part of these financial statements

Share capital is the amount subscribed for shares at nominal value.

Share premium represents the excess of the amount subscribed for share capital over the nominal value of those shares net of share issue expenses. Share issue expenses in the year comprise costs incurred in respect of the issue of new shares.

Share based payment reserve is a reserve used to recognize the cost and equity associated with the fair value of issues of share options and warrants.

Translation reserves arose due to the adoption of US dollars as the presentational currency at the start of the prior accounting period. Further information on the adjustment can be found in note 1.

Retained loss represents the cumulative losses of the company attributable to owners of the company.

Consolidated and Company Statement of Cash Flows

For the year ended 31 December 2020

The accompanying accounting policies and notes are an integral part of these financial statements.

3. Segmental analysis

In the opinion of the directors, the group has one class of business, being the exploitation of hydrocarbon resources.

The group's primary reporting format is determined by geographical segment according to the location of the hydrocarbon assets. The group's reportable segments under IFRS 8 in the year are as follows:

United Kingdom - being the location of the head office.

US Mid-Continent properties at year end included the following:

· East Texas: 100% working interest in the Pine Mills oilfield

· East Texas: 32.5% working interest in the Cypress farmout area of Pine Mills

· West Texas: 50-75% working interest leases located in the Permian Basin

· South Texas: 100% working interest in the Caballos Creek oilfield

The chief operating decision maker's internal report for the year ended 31 December 2020 is based on the location of the oil properties as disclosed in the below table:

The chief operating decision maker's internal report for the year ended 31 December 2019 is based on the location of the oil properties as disclosed in the below table:

4. Employees and Directors

Directors' remuneration

Other than the directors, the group had no other employees. Total remuneration paid to directors during the year was as listed above.

The director's emoluments and other benefits for the year ended 31 December 2020 is as follows:

5. Finance expense

Finance expense relates to interest charged on borrowings. Further details for which can be found in note 18.

6. Other income

Other income relates to the aggregate recognised and unrecognised gain on a commodity swap.

7. Operating loss

10. Earnings per share 

The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares in issue during the year. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The group had two classes of dilutive potential ordinary shares, being those share options granted to employees and suppliers where the exercise price is less than the average market price of the group's ordinary shares during the year, and warrants granted to directors and one former adviser.

Details of the adjusted earnings per share are set out below:

The diluted loss per share is the same as the basic loss per share as the loss for the year has an antidilutive effect.