Nostra Terra Regulatory News (NTOG)

22 April 2020

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Pine Mills Farm-in

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 a farm-in to its Pine Mills acreage in East Texas.

Highlights:

· Nostra Terra owns a 100% working interest ("WI") in Pine Mills, which covers 2,400 acres ("Pine Mills Leased Area")

· The farminee will drill and complete one well at its sole expense to earn a 75% WI in an 80 acre portion of Pine Mills Leased Area (the "Well Area"), where the farminee has already acquired 3D seismic

· Nostra Terra will receive a 25% carried WI (at no cost to the Company) for one well

· The Company may participate for an additional 10% of the uncarried WI at cost for the one well, at its sole option within the next 30 days

· The Well Area has no existing production or reserves

Background

Nostra Terra currently owns and operates, via its wholly-owned subsidiary New Horizons Energy 1, LLC, a 100% WI in the Pine Mills Leased Area, which covers 2,400 acres. As stated on 8 April 2020, Nostra Terra has received multiple unsolicited approaches regarding additional opportunities in relation to this asset.

Cypress Mineral LLC and Cypress Production Inc (together "Cypress") have previously acquired 3D seismic covering the Well Area, and identified up to five potential new well locations.

The target formation is the prolific Woodbine Sand that is one of the main producers in the region in which the Pine Mills Leased Area is located.

Farmout Agreement

Nostra Terra has signed a binding farmout agreement with Cypress (the "Farmout Agreement") pursuant to which Cypress will drill and complete one well on the Well Area at no cost to Nostra Terra. The estimated cost of this drilling and completion is c. US$800,000. Once the well is drilled and completed, Cypress will earn a 75% interest in the Well Area, while Nostra Terra will retain a 25% WI in the well and the Well Area.

In addition to retaining the 25% carried WI, pursuant to the Farmout Agreement, Nostra Terra has an option to participate for a 10% WI at cost in the non-carried portion of the asset, with such option required to be exercised within 30 days from execution of the Farmout Agreement. If exercised this would result in an interest of 32.5% in the well and Well Area with 10% of the well cost (the decrease from a 10% to 7.5% WI is as a result of Nostra Terra's carry for the 25%). The Board will review the seismic data that Cypress has on the Well Area in order to assist its decision on whether to exercise the option.

Title work and permitting has already begun in relation to the Well Area. If Cypress does not commence drilling of the identified well within six months of the signature of the Farmout Agreement, then the agreement will terminate. A successful outcome from Cypress drilling this well could provide a further significant increase in production, in addition to the existing Pine Mills production. It could also open up and de-risk multiple additional well locations in the wider Pine Mills acreage to further drilling.

The Well Area currently has no production nor are there any assets or liabilities associated with it. After consideration, the Board agreed that pursuing drilling of a well in the Well Area was not in its immediate growth plans for production at Pine Mills. Accordingly, the Board considered it prudent to negotiate with Cypress with a view to retaining a potential upside to a part of the undrilled Pine Mills acreage.

The Farmout Agreement does not affect the remaining 2,320 acres of the Pine Mills Leased Area, where Nostra Terra will still owns and operates a 100% WI. Within the remaining 2,320 acres, the Company has identified an additional area, as a result of a review of a 3D seismic survey carried out by a third-party, which it believes could be suitable for a farmout deal or future drilling by the Company. The targeted acreage is nearby producing wells on adjacent acreage as well as being prospective for new wells to be drilled.

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

"We're excited to execute this farmout agreement with Cypress. Pine Mills has been a stable producer for the Company, whilst providing much scope for expansion. A farmout gives us the ability to leverage our existing asset and seek to grow our production and reserves, with no cost to Nostra Terra. We look forward to the opportunity to add new wells that could provide a significant increase in production."

"The farmout agreement is a clear execution of the Board's recently stated goal to carefully manage existing assets and restrict work to that which improves the economics of each project in the light of the changing oil price environment".

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

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