Last checked at 16 May 2022 07:00
16 May 2022
Nostra Terra Oil and Gas Company Plc
("Nostra Terra" or "the Company")
Fouke 2 Production Rates Exceed Expectations
Significant Increase in Free Cash Flow
Nostra Terra (AIM: NTOG), the international oil & gas exploration and production company with a portfolio of production and development assets in Texas, USA, is pleased to announce that the Fouke 2 well (NTOG 32.5% WI), at the Company's Pine Mills oil field in east Texas, has been completed, tested and is now on production.
Highlights:
· Fouke 2 well producing at 145 bopd greatly exceeding internal expectations
o 77% higher than Fouke 1 current production rate
o 100% oil, no water
· Oil sales from the Fouke 2 have commenced
· Both Fouke wells to produce at higher levels while permanent allowable increase is sought;
· Increased production rate from both Fouke wells would represent a circa 40% increase in net production based on Q4 2022 average bopd
· Significant increase in Company's free cashflow due to increased production, higher prices
· Grant East #1 well being completed
The Fouke 2 well was completed in two reservoir sections within the Cretaceous Woodbine Formation. A total of 23 ft of pay was perforated within these two sequences only, one of which was found in the offset Fouke 1 well. After completion, the well was tested and flowed at a rate of 145 bopd over a 24- hour period with a 0% watercut. The well has now been placed into continuous production and oil sales from the Fouke 2 have commenced. This production rate exceeds that of the offset Fouke 1 well by 77% which has been limited by field rules (allowable) to 82 bopd per well. For more than a year the Fouke 1 has produced oil at this allowable rate without decline and not produced any water.
As a result of the past performance of the Fouke 1 and the test rate of the Fouke 2, the operator plans to request a substantial increase in the field allowable rate so that both wells can be produced at much higher and more efficient rates. A decision is anticipated later in the year. During the interim period the operator plans to produce each well at circa 140 bopd, which is above the current allowable cap, to obtain sufficient technical information to support the increased field allowable.
The Company also is pleased to announce, following completion of the Fouke 2 well, a substantial increase in average monthly net operating cashflow is anticipated. This is due to a combination of increased production from the Fouke wells combined with recent high oil prices. The Company is anticipating that free cash flow for the remainder of the year will be in excess of original internal budget forecasts as a result.
Finally in West Texas, the Company's Grant East #1 well (NTOG 100% WI) was fracture stimulated last week and will continue being completed this week. Work on the production facilities is underway and is expected to be completed in the near term.
Matt Lofgran, Nostra Terra's Chief Executive Officer, said:
"We are very pleased with the results of the Fouke 2 test and the plans by the operator to seek a substantial increase in the field production allowable. The Fouke 2 production will have a very positive impact on our cash flow. Given the performance of these wells we anticipate that a substantial allowable increase will be approved which will result in a further step change increase in our cash flow performance. Finally, I am looking forward to the results of the Grant East 1 completion and simulation activity concurrent with the completion of the field facilities. It's been an active period for the company recently and I look forward to reporting additional results of our efforts in due course."
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
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Competent Person Disclosure
John Stafford, a Director at Nostra Terra with over 35 years' relevant experience in the oil industry, has reviewed this announcement for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009. Mr. Stafford is a Fellow of the Geological Society and a member of the Petroleum Exploration Society of Great Britain.