Nostra Terra Farms in to Three Permian Basin Leases in West Texas
UK-based Nostra Terra Oil & Gas Company Plc has entered into an agreement with a consortium of local owners and producers to acquire certain interests in three leases located in the Permian basin in west Texas.
Under the terms of the agreement, the total consideration is comprised of an initial consideration of US$25,000, payable at closing, plus an additional US$100,000 towards the initial re-entry of the first well planned for completion, pursuant to which Nostra Terra will earn 50% of the net cash-flow for the life of the well.
The leases are located approximately 6 miles from Nostra Terra’s ‘Twin Well’ (G5) in Mitchell County, Texas, and primarily target the Permian Clearfork and San Andres formations. The leases contain 8 active producing wells, 6 inactive wells, 1 salt water disposal, and other associated production facilities. 6 additional potential drilling locations have been identified on the leases, with the partners targeting additional upside potential through re-completion activities. The leases have a current average daily production of 4 barrels of oil per day (bbls/d).
For an additional payment of US$210,000, Nostra Terra will have the right to acquire a 75% working interest in all three leases, at any point prior to October 31st, 2020. After the initial completion, but prior to exercising the option to acquire the 75% interest, the company can elect to perform another re-completion prior to September 30th, 2020 for an additional US$100,000 in a subsequent well of its choice, where the company would earn a 75% working interest in the well.
“We’re excited to add another opportunity to our portfolio that could have a significant impact in a very short period of time, with multiple additional opportunities to follow up at our election, while still holding further development opportunities,” said Nostra Terra’s CEO Matt Lofgran.
“The transaction is structured in a way that minimizes both risk and cash outlay further providing leverage into a larger asset. We now have a portfolio of three different areas of operations in; the Permian Basin (West Texas), Pine Mills (East Texas), and Caballos Creek (South Texas), all of which provide stable cashflow with upside development opportunity,” he added.
AIM-listed Nostra Terra is currently focused on low-risk exploration and developmental drilling in the Permian Basin of west Texas, with additional assets in east Texas.