Nostra Terra Regulatory News (NTOG)

AIM: NTOG

3 February 2014

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

US$25 Million Credit Facility Secured and Chisholm Trail update

Nostra Terra, the AIM quoted oil and gas producer with a growing portfolio of producing assets in the USA, is pleased to announce that it has entered into a US$25 million credit facility ("Facility") with Texas Capital Bank ("Bank").

The new Facility contains both a three year Revolving Credit Facility and a Standby Letter of Credit Facility with an initial nominal limit of US$25 million. Interest is charged on monies drawn down at the current rate of 4.25% (determined by the higher of either: the sum of the Wall Street Journal Rate plus 1% or 4.25%).

Texas Capital Bank is a highly regarded energy lender based in Dallas Texas, with over US$11 billion in assets under management. No warrants or equity are to be issued as part of the facility, hence no dilution to shareholders. The Company has agreed to an initial borrowing base of US$500,000, to be reassessed at least semi-annually.

The US$25 million Facility includes provisions to increase the borrowing base as additional wells are brought on production. The initial borrowing base has been determined upon stabilized production from the Company's top five wells across Kansas, Colorado and Oklahoma, not the entire portfolio. The Company believes that additional value from the reworking of CT3 and several currently producing additional wells will be added by the end of Q1 and going forward.

Nostra Terra will use the credit line to expand its portfolio further. The proceeds are intended for future drilling within the Chisholm Trail Prospect, High Plains Prospect, and other prospects as the Company elects, without restriction by the Bank.

Chisholm Trail

The Company is also pleased to update on the progress for the second well operated by Ward in the Chisholm Trail Prospect. A forced-pooling hearing took place where the proposed production unit was approved and the well is now being permitted. When the election to participate is made, Nostra Terra will announce its Working Interest in the well, which the Company anticipates will be the largest yet in the Chisholm Trail Prospect. The election and permitting is expected to take place in short order.

Matt Lofgran, Chief Executive Officer of Nostra Terra, commented:

"We're pleased to be able to secure such a strong facility on very good terms for the Company. While we have always been cautious about debt, and will remain so, this facility will give us the ability to quicken the pace of growth through non-dilutive funds. We're happy to have the validation of a strong and conservative, Texas-based institution that is well known in the industry. With the granting of such a large facility its clear the bank supports our growth plans, which we have demonstrated over the last 12 months.

In recent months the pace of development in the play has increased significantly due to great economics being seen in production from the Hunton Limestone formation. Ward has also been making preparations for its next operated well where we anticipate Nostra Terra will have its largest Working Interest yet. We look forward to providing frequent updates to shareholders on the growth of our portfolio."

Alden McCall, Chief Operating Officer of Nostra Terra, added:

"The typical revolving facility is limited to only the risk-adjusted value of discounted future cash flow from wells that have been in continuous production for at least six months. We expect that the Company will secure an increased facility borrowing base from the stabilizing production of the newly reworked CT3 well and several more wells which are not currently reflected in the initial borrowing base. As the new wells come onto production, we anticipate that we will be able to expand the facilities substantially. All horizontal Hunton wells drilled in the area of Chisholm Trail, by at least six different operators, have continued to be successful. Having the privilege to work with established operators has given us an advantage of vast knowledge, experience, and skills thus minimizing risks."

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

XCAP Securities plc (Broker)

Jon Belliss Telephone: +44 (0)20 7101 7070 

Lothbury Financial Services Limited

Gary Middleton / Michael Padley Telephone: +44 (0)20 3440 7620