Nostra Terra Regulatory News (NTOG)

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Final results for the year ended 31 December 2011

29 May 2012

Nostra Terra (AIM: NTOG), the AIM quoted oil and gas producer with a growing portfolio of horizontal and vertical drilling projects in the USA, today announces its final results for the year ended 31 December 2011.

Highlights

·; Substantial interests acquired in Colorado and Oklahoma

·; Production in Kansas, Texas and Colorado

·; Own play launched in Oklahoma

·; Full ownership and operatorship assumed on Bloom property in Kansas; foreclosure proceedings subsequently initiated in relation to HPI settlement agreement

·; Operating loss for the year £996,000 (2010: £591,000)

·; £5 million financing agreement (expandable to £10 million) and US$1 million promissory note (expandable to US$3 million) with YA Global

·; First Verde well continues to perform above expectations.

For further information, visit www.ntog.co.uk or contact:

Nostra Terra Oil and Gas Company plc

Matt Lofgran, CEO

mlofgran@ntog.co.uk Telephone: +1 480 993 8933

Shore Capital & Corporate Limited (Nominated adviser)

Bidhi Bhoma/Toby Gibbs Telephone: +44 (0)20 7408 4090

Alexander David Securities Ltd (Broker)

David Scott/Bill Sharp Telephone: +44 (0)20 7448 9800

Lothbury Financial Services Limited

Gary Middleton/Michael Padley Telephone: +44 (0)20 7868 2010

Chairman's statement

I am pleased to present the annual report and accounts of Nostra Terra Oil and Gas Company plc for the year ended 31 December 2011.

2011 was a busy and productive year for the Company, in which we significantly increased our work programme and successfully expanded our asset base within the resurgent US onshore industry.

This carefully targeted growth began in the first weeks of the year with two small acquisitions in Texas - a 1% interest in the Vintage Hills Prospect Unit and a 3% interest in the Nesbitt Prospect Unit. A horizontal well was drilled on each of these properties in the first half of the year, and both are now in production.

We then set out to scale up our pipeline of development prospects. By mid-year we had acquired larger interests in two multi-well properties - the Verde Prospect Unit in Colorado (16.25% working interest) and the Bale Creek Prospect Unit in Oklahoma (30% working interest).

The initial Verde well was drilled in the third quarter and is producing above our expectations. The first of several potential horizontal wells on the Bale Creek property was drilled after the year end, and is currently in the process of being completed. It will be tested as the second Bale Creek well is being drilled.

Just a few days after the end of the reporting period, the Company made a further substantial acquisition, of a 10% working interest in the Warrior Prospect Unit in Oklahoma. Six potential horizontal well locations have been identified on Warrior; the first of these has now been drilled, and the well will be completed and tested very shortly.

In our interim report last September, we detailed the terms of the revised agreement reached between Nostra Terra and HPI (now Richfield Oil & Gas) to terminate the arrangements between them, which related mainly to properties in Kansas and Utah. Regrettably, the US$1.3 million secured loan note issued by Richfield under the terms of that agreement was not paid when due on 31 January 2012, and we are currently in the process of recovering against the collateral.

Despite this distraction, we are encouraged by the progress made in building our asset base during 2011, and I believe the Company is well positioned, financially and technically, to identify and secure many more value-adding growth opportunities in the future.

As always, I wish to thank all Nostra Terra's shareholders for their continuing loyalty, and we look forward to keeping you informed about our further progress in the months and years ahead.

Sir Adrian Blennerhassett

Chairman

Chief Executive's review

Throughout 2011, Nostra Terra continued to expand its asset base within established hydrocarbon regions of the US. A dramatic renaissance is under way in these historic producing regions, with Goldman Sachs predicting recently that the US could once again become the world's largest oil producer.

The key to this transformation - and the cornerstone of our own growth strategy - is the use of precision drilling technology, including horizontal drilling, combined with 3D seismic mapping, sophisticated log suites and multi-stage well completions in order to target and exploit compartmentalised reservoirs that were underproduced or overlooked when the original vertical wells were drilled in these mature fields.

The recent surge in technological innovation within the US was initially driven by shale gas, but these value-adding techniques are now being adapted successfully to oil plays, which are the focus of Nostra Terra's growth strategy.

Stepping up our growth

Having acquired small working interests in three successful horizontal wells in Texas in 2010 and the beginning of 2011, Nostra Terra stepped up its efforts to identify, screen and acquire larger percentage interests and acreage holdings in order to increase the scale of its operations and revenues.

The two small acquisitions made in January 2011 were a 1% interest in the Vintage Hills Prospect Unit and a 3% interest in the Nesbitt Prospect Unit. The first well on each of these prospects was drilled early in the year, and both wells are currently in production.

By mid-year, we had signed two agreements to acquire larger interests in properties with multi-pay potential.

The first of these was the Verde Prospect Unit covering 636 acres in south-eastern Colorado, in which we hold a 16.25% interest with Plainsmen Partners LLC as operator. The initial vertical well, targeting the Mississippian formation, was brought into production in September and at year end was producing approximately 50 barrels of oil per day (bopd). The well has served to derisk the prospect unit for any potential subsequent wells.

The second agreement, with operator Pathfinder Development Capital LLC, was for a 30% interest in the Bale Creek Prospect in northern Oklahoma. This prospect lies within a highly productive and extensively mapped trend, with multi-pay potential from as many as eight reservoirs.

It is planned to develop Bale Creek in two phases, with the first phase consisting of acquisition and interpretation of proprietary 2D and 3D seismic data, followed by drilling of a vertical pilot hole to determine the most promising of the several potentially productive zones within the prospect area, after which horizontal wells will be drilled and the required production and transmission facilities will be constructed.

Following completion of the seismic programme before year end, and of the pilot borehole in March 2012, the first horizontal well has been drilled and is in the process of being completed prior to testing. The second Bale Creek horizontal well was spudded in mid-May.

Also after the end of the financial year, Nostra Terra continued to build its portfolio by entering into an agreement with Crown Energy Company Inc. to acquire a 10% interest in the Warrior Prospect. Like Bale Creek, Warrior lies within a prolific oil system in Oklahoma, and contains multiple, stacked reservoirs. Several potential horizontal well locations have been identified within the prospect areas. The first Warrior well reached planned depth in May, and is also in the process of being completed prior to testing.

Financial

Nostra Terra incurred an operating loss for the year of £996,000 (2010: £591,000), while revenues rose to £244,000 from £137,000 in the prior year.

In June 2011, we successfully raised £2 million before expenses by way of a placing of 333,333,335 new shares at 0.6 pence per share. We were pleased to secure the support of both retail and institutional investors in this fundraising, which is being used for working capital as we step up the pace of our growth.

In September, we further increased our financial flexibility by entering into a Standby Equity Distribution Agreement (SEDA) with YA Global. Under this agreement, YA Global has committed to subscribe, if requested by the Company, for up to £5 million of ordinary shares over a period of three years. The shares will be priced at 96% of the lower of the daily volume weighted average price during the 10-day pricing period following a draw down request, or at a price agreed in writing between the two parties prior to the commencement of the pricing period. Nostra Terra also has the right to set a minimum acceptable price for each draw down, and to increase the commitment amount to £10 million at any time during the three-year term of the SEDA.

We continue to identify opportunities to grow and upgrade our asset base. While most of these are within our existing financial resources, we want to ensure that we are able to enter negotiations on a wide range of potential acquisitions in the strongest possible position. The SEDA provides another strategic option in securing the most attractive deals that will add maximum value for our shareholders.

At year end, the Company held cash reserves of £1,457,133.

Post year end, Nostra Terra entered into a loan facility of up to US$3 million with YA Global, which is supported by the SEDA detailed above. The initial advance will be US$1 million, subject to interest at a rate of 10% per annum for a term of 360 days, and will be repaid in 10 monthly instalments commencing in July 2012. The proceeds from the initial advance will be used to step up the Company's leasing programme and to provide additional working capital for its expanding activities.

Also after the end of the financial year, Nostra Terra was obliged to initiate foreclosure proceedings against Richfield Oil & Gas Company, formerly Hewitt Petroleum, Inc ("Richfield"). Under the terms of the revised agreement announced by the parties on 14 April 2011, Richfield issued to Nostra Terra a US$1.3 million secured loan note which matured on 31 January 2012 and had been accruing interest at 10% per annum from the date of issue.

The Company granted Richfield a one-month extension to the repayment deadline. However, as no funds were received by that date, Nostra Terra has been obliged to begin the process of recovering against the collateral, which consists of producing leases in Kansas and non-producing leases in Utah.

Controlling our own destiny

During 2011, we expanded and upgraded our asset portfolio and prospect pipeline significantly. We are very encouraged by the results so far on Verde, Bale Creek and Warrior, and intend to continue building our portfolio in this way.

As well as partnering with experienced regional operators, Nostra Terra is also looking to acquire and develop properties as operator and sole or majority interest holder. Towards the end of the financial year, we initiated the development of our own play in which we aim to establish a strong acreage position and generate multiple prospects. We will initially hold 100% ownership of leases within the play, giving us greater control over the pace and scale of our future growth.

The project area extends over several counties in Oklahoma, and was identified following months of intensive geological investigation. It lies within a proven and well mapped hydrocarbon system containing shallow oil and liquids-rich gas in stacked, multi-pay formations. The Company has engaged a team of experienced geologists and landmen to identify drilling targets and secure leases throughout the area. Our objective is to create value over a much larger area controlled by the Company.

During the last two years, Nostra Terra has demonstrated its ability to find new oil from old fields in the US Mid-Continent region using the most advanced exploration, drilling and production techniques. Our primary focus throughout 2012 and beyond is to increase the number and quality of our producing wells, and to progress our long-term strategic plan of generating and operating prospects internally as well as through partnerships in order to build our reserve base and deliver steady, material and growing cash flow.

Matt Lofgran

Chief Executive Officer

Consolidated income statement

for the year ended 31 December 2011

2011 2010

Notes £000 £000

Revenue 244 137

Cost of sales (370) (256)

GROSS LOSS (126) (119)

Administrative expenses (933) (472)

OPERATING LOSS 2 (1,059) (591)

Finance income 63 -

LOSS BEFORE TAX (996) (591)

Tax (expense) recovery - -

LOSS FOR THE YEAR (996) (591)

Attributable to:

Owners of the Company (996) (591)

Earnings per share expressed

in pence per share:

Continued operations

Basic and diluted (pence) 3 (0.056) (0.038)

Consolidated statement of comprehensive income

for the year ended 31 December 2011

Consolidated statement of changes in equity

for the year ended 31 December 2011

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

Retained loss represents the cumulative losses of the Group attributable to owners of the Company.

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 on the London Stock Exchange's AIM market.

Translation reserves occurs on consolidation of the translation of the subsidiary's balance sheet at the closing rate of exchange and its income statement at the average rate.

Consolidated statement of financial position

31 December 2011

Consolidated statement of cash flows

for the year ended 31 December 2011

2011 2010

Notes £000 £000

Cash (consumed) by operations 1 (1,223) (446)

Purchase of intangibles - new oil and gas properties (8) (460)

Purchase of plant and equipment 9 (269)

Net cash from investing activities 1 (729)

Cash flows from financing activities

Issue of new shares 1,959 -

Net cash from financing activities 1,959 -

Increase/(decrease) in cash and cash equivalents 737 (1,175)

Cash and cash equivalents at beginning of year 7 720 1,895

Represented by:

Cash at bank 7 1,457 720

Notes to the consolidated statement of cash flows

for the year ended 31 December 2011

RECONCILIATION OF LOSS BEFORE TAX TO CASH GENERATED FROM OPERATIONS

2011 2010

£000 £000

Loss before tax for the year (996) (591)

Depreciation of property, plant and equipment 34 12

Amortisation of intangibles 2 -

Foreign exchange loss/(gains) non-cash items 47 (42)

Operating cash flows before movements in working capital (913) (621)

Decrease in receivables (180) 291

(Decrease) in payables (119) (116)

(Increase) in deposits and prepayments (11) -

Cash (consumed) by continuing operations (1,223) (446)

Notes to the financial statements

for the year ended 31 December 2011

GENERAL INFORMATION

The financial information set out in this announcement does not constitute the Company's financial statements for the years ended 31 December 2011 or 2010. The financial information for 2010 is derived from the financial statements for 2010 which have been delivered to the Registrar of Companies.

The financial statements for 2011 have been audited and will be delivered to the Registrar of Companies. The auditors have reported on the 2011 statements; their report was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

The preliminary announcement has been prepared on the basis of the accounting policies as stated in the financial statements for the year ended 31 December 2011.

Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. 

1. ACCOUNTING POLICIES

Going concern

The financial statements have been prepared on the assumption that the Group is a going concern. When assessing the foreseeable future, the directors have looked at a period of 12 months from the date of approval of the report and accounts.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive Officer's Report and Directors' Report. In addition, note 19 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; and its exposures to credit risk and liquidity risk.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current cash resources. In addition, the Group has entered into a £5 million financing agreement (expandable to £10 million) and US$1 million promissory note (expandable to US$3 million) with Yorkville Advisors.

After making enquiries, the directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations issued by the International Accounting Standards Board (IASB) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

2. OPERATING LOSS FOR THE YEAR

The operating loss for the year is stated after charging/(crediting):

2011 2010

£000 £000

Auditors' remuneration (Company £18,300 - 2010: £18,545) 18 19

Depreciation of property, plant and equipment 34 8

Amortisation of intangibles 2 -

Loss on disposal of fixed assets (1) 4

Foreign exchange differences 11 (3)

═════ ═════

The analysis of administrative expenses in the consolidated income statement by nature of expense:

3. 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 in 2009 Convertible Loans.

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

2011 2010

EPS - loss

Loss attributable to ordinary shareholders (£000) (996) (591)

Weighted average number of shares 1,777,379,579 1,549,600,913

Weighted average number of shares on diluted basis 2,045,555,418 1,829,943,089

Continued operations:

Basic and diluted EPS - loss (pence) (0.056) (0.038) 

4. OTHER INTANGIBLES

Group

The assets expensed in the year relate to the plugging and abandonment of 2 wells in the Bloom Field.

On 13 April 2011, the Company entered into an agreement with Hewitt Petroleum, Inc. (now Richfield Oil & Gas Company) and Hewitt Energy Group, Inc. (together the "HPI Entities").

The principal terms of the agreement, which on closing led to termination of the operational relationship between the Company and the HPI Entities, were as follows:

Nostra Terra acquired 100% working interest (WI) in, and assumed operatorship of, the producing Bloom property;

Nostra Terra's existing 75% WI before payout (50% WI after payout) in the Boxberger property, where operations remain suspended pending the resolution of title issues, was assigned to the HPI Entities;

Nostra Terra assigned to the HPI Entities its interests in all other HPI-operated assets (including Hoffman, the undeveloped adjoining acreage within the Trapp field and the Koelsch property) and the Liberty #1 exploration well;

Nostra Terra received a US$1.3 million note to be secured by other assets of the HPI Entities (the "HPI Note"). The HPI Note was extended by a month, matured on 31 January 2012 and accrues interest at 10% per annum. An early settlement discount of 3% per 30 day period prior to the maturity date is available to the HPI Entities;

In the expectation that HPI's successor, Richfield Oil & Gas Company ("Richfield") will become publicly traded prior to the expiration of the HPI Note, Nostra Terra has the right, but not the obligation, to convert the principal amount outstanding under the HPI Note into shares of Richfield at US$0.25 per share; and

Richfield has issued Nostra Terra a Warrant, exercisable in whole or in part, to subscribe for up to 6 million shares of Richfield common stock with an aggregate exercise price of US$1.5 million, at a strike price of US$0.25 per share, expiring one year after admission to trading on the Toronto Stock Exchange or the TSX Venture Exchange. The warrant will be transferable, subject to the provisions of the US Securities Act 1933 (as amended).

However, as no funds were received by the maturity date, the Company began the process of recovering against the collateral which consists of producing leases in Kansas and non-producing leases in Utah.

On 18 February 2010, the Group via its wholly-owned subsidiary, Nostra Terra Overseas Ltd ("NTOL"), entered into a contract with Crimea Nadra Invest (CNI) relating to its assets in Ukraine.

Under the terms of the contract, CNI acquired all the rights and obligations associated with the Joint Activity Agreement of 27 January 2001 (the "JAA") covering NTOL's operations in Ukraine and in particular the Oktyabrskoe field licence, while NTOL retains a right to payment of 25 per cent of any net profits generated by CNI from the JAA, which runs for a period of 25 years from 27 January 2001. The consideration for the transaction is to be settled by the deferred payment from future oil sale proceeds of 360,000 Ukraine hryvnia (approximately £29,000), which will be applied towards general working capital.

5. PROPERTY, PLANT AND EQUIPMENT

6. TRADE AND OTHER RECEIVABLES

Group

2011 2010

£000 £000

Current:

Other receivables 943 785

Other taxes receivables 31 9

974 794

The directors consider that the carrying amount of other receivables approximates their fair value.

7. CASH AND CASH EQUIVALENTS

Group

2011 2010

£000 £000

Bank current accounts 1,457 720

8. TRADE AND OTHER PAYABLES

Group

2011 2010

£000 £000

Current:

Trade payables 20 29

Accruals and deferred income 37 147

Other payables - -

57 176

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing expenses.

The directors consider that the carrying amount of trade and other payables approximates their fair value.

9. FINANCIAL LIABILITIES - BORROWINGS

Maturity of the borrowings is as follows:

Group

2011 2010

£000 £000

Repayable between one and five years:

Loan notes 368 315

368 315

On 25 May 2007, the Company issued pursuant to the Share Purchase Agreement a promissory note in the sum of US$1,838,928 to be issued to the Vendors of Nostra Terra (Overseas) Limited.

The Company will be obliged to repay the sums due under the terms of the promissory note relating to the Ukraine properties quarterly in arrears, based on the Group's cash flow from all of its wells which have been producing for at least 30 days for the most recently completed quarter. No repayments shall be made until the net income from such wells exceeds US$225,000 for the relevant quarter.

However, on 24 December 2009, the Company agreed with its wholly owned subsidiary, Nostra Terra (Overseas) Limited ("NTOL"), and Nikea Nominees Limited and Nikea Trustees Limited (together "Nikea") to an assignment and variation of the promissory note dated 25 May 2007 in the sum of US$1,838,928, whereby the amount due from the Company to Nikea is reduced by 75% to US$459,732 (the "Nikea Sum") and the obligation to repay the Nikea Sum is assigned to NTOL. In addition, interest will no longer be payable on the Nikea Sum, and the Nikea Sum will be due for repayment on or before 30 November 2012 with no contingency based on the cash flow from the Company's wells. A provision allowing the parties to assign the promissory note has also been inserted.

On 25 June 2007, the Company issued £327,679.38 of zero coupon Creditors Convertible Loan Stock 2009 to the Nostra Terra (Overseas) Limited Vendors. The principal amount of the Creditors Convertible Loan Stock is convertible at the rate of one ordinary share for each 2p of the principal amount of the stock in the period to 25 June 2009. The stock was to be repaid on or before 31 December 2009. The Company would have been able to give notice at any time to convert any stock at 120% of its nominal value.

On 25 June 2007, the Company issued £88,483 of zero coupon Creditors Non-convertible Loan Stock 2009, to be issued to the Vendor under the Acquisition Agreement. The Redeemable Loan Stock may be redeemed at any time by the Company and was repayable on or before 31 December 2009.

On 30 June 2009, the Company reached agreement with all holders of outstanding loan notes issued in 2007 whereby the outstanding £252,951 (together with an additional £4,000 owing to one of the loan note holders) is settled by the payment of £35,131 in cash and the issue of 110,910,200 new ordinary shares at an effective issue price of 0.2 pence per ordinary share.

Loan notes issued by Nostra Terra (Overseas) Limited

On 25 May 2007, a promissory note was issued to Nikea and Masterworks (Overseas) Limited ("Masterworks") in the sum of US$436,460, which bears interest at 4.9% per annum.

Repayment of the sums due under the terms of this promissory note is to be quarterly in arrears based on cash flow from the group's wells which have been producing for at least 30 days for the most recently completed quarter. No repayments shall be made until the net income from such wells exceeds US$225,000 for the relevant quarter.

On 24 December 2009, NTOL agreed with Nikea and Masterworks to a variation of the promissory note dated 25 May 2007 as partially assigned by deed of assignment dated 14 November 2007 in the total sum of US$436,460, whereby the amount due from NTOL to Nikea is reduced from US$194,161 by 75% to US$48,540 and the amount due from NTOL to Masterworks is reduced from US$242,299 by 75% to US$60,575 (together the "Nikea/Masterworks Sum"). In addition, interest will no longer be payable on the Nikea/Masterworks Sum and the Nikea/Masterworks Sum will be due for repayment on or before 30 November 2012 with no contingency based on the cash flow from the Company's wells.

On 10 May 2006, a promissory note in the sum of US$159,744.50 was issued to Ucoco Energy, Inc ("Ucoco"). On 24 December 2009, NTOL agreed with Ucoco to a variation of the promissory note dated 10 May 2006 as amended by deed of variation dated 25 May 2007 in the sum of US$159,745, whereby the amount due from NTOL to Ucoco is reduced by 75% to US$39,936 (the "Ucoco Sum"). In addition, interest will no longer be payable on the Ucoco Sum and the Ucoco Sum will be due for repayment on or before 30 November 2012 with no contingency based on the cash flow from the Group's wells.

On 8 October 2010, pursuant to a deed of cancellation executed between Ucoco and the Company's wholly-owned subsidiary Nostra Terra (Overseas) Limited ("NTOL"), a promissory note under which NTOL had agreed to pay the sum of US$39,936 to Ucoco has lapsed and been terminated in its entirety.

10. CALLED UP SHARE CAPITAL

Authorised:

Number: Class: Nominal 2011 2010

value: £000 £000

2,500 million (2010: 2,500 million) Ordinary 0.1p 2,500 2,500

Allotted, called up and fully paid:

Number: Class: Nominal 2011 2010

value: £000 £000

1,950,100,585/1,950,100,585 Ordinary 0.1p 1,950 1,550

11. RESERVES

Group Translation Retained Share Total

reserve losses premium 

£000 £000 £000 £000

At 1 January 2010 12 (5,318) 6,842 1,536

Loss for the year - (591) - (591)

At 31 December 2010 12 (5,909) 6,842 945

Shares issued in the year - - 1,669 1,669

Share issue cost - - (110) (110)

Loss for the year - (996) - (996)

______

At 31 December 2011 12 (6,905) 8,401 1,508

______

 12. EVENTS AFTER THE REPORTING PERIOD

On 3 January 2012, the Company entered into an agreement with Crown Energy Company Inc ("Crown") to acquire a 10% working interest in the Warrior Prospect, located in Oklahoma. The Warrior Prospect lies within a prolific oil system, proven to produce from multiple, stacked-pay reservoirs. Leasing, pooling and permitting of the initial well are already complete. Drilling of the initial horizontal well is anticipated to begin during the first half of 2012, along with construction of all production and transmission facilities. Up to five additional horizontal wells may be drilled on the prospect in the future and tie into the infrastructure that is being installed for the initial well. The development budget for the prospect, including current acreage (800 acres), cost to drill and complete the initial test well, and cost to drill and complete a salt water disposal well if required, is US$1,926,800, of which Nostra Terra's estimated portion is US$192,680.

On 6 January 2012, the Company announced that further to the revised agreement with Richfield which was announced on 14 April 2011, a 30-day extension to the repayment period of the US$1.3 million loan note had been granted to Richfield by the Company. As the loan had defaulted, the Company began the process of recovering against the collateral, which consists of producing leases in Kansas and non-producing leases in Utah.

On 25 January 2012, the Company granted 14,000,000 warrants to M B Lofgran, 14,000,000 warrants to A B McCall, 4,000,000 warrants to A M Blennerhassett and 6,000,000 warrants to S V Oakes exercisable on or before 25 January 2017 at a price of 0.41p.

On 11 May 2012, the Company entered into a loan facility of up to US$3 million (the "Loan Facility"), with YA Global Master SPV Ltd ("YA Global"), an investment fund managed by Yorkville Advisors LLC. The initial advance on the loan facility will be US$1 million ("Initial Advance") and the Company may request further advances of up to US$2 million, such advances to be at the discretion of YA Global. The Loan Facility is subject to interest at a rate of 10% per annum and is for a term of 360 days. The Loan Facility is supported by the Standby Equity Distribution Agreement ("SEDA") between Nostra Terra and YA Global announced on 7 September 2011. The Initial Advance together with the interest thereon will be repaid in 10 monthly instalments commencing in July 2012, with the repayment schedule to be adjusted in the event further advances are drawn down. The proceeds from the Initial Advance will be used to augment the Company's existing leasing programme, as well as providing additional capital for Nostra Terra's expanding portfolio.

13. AVAILABILITY OF THE REPORT AND ACCOUNTS

A copy of the Company's annual report and accounts for the year ended 31 December 2011 will be posted to shareholders on or before 1 June 2012 and it will also be available on the Company's website (www.ntog.co.uk).