Nostra Terra Oil and Gas : Mesquite Asset Expansion

RNS Number : 4114N

Nostra Terra Oil & Gas Company PLC 17 January 2019

17 January 2019

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Mesquite Asset Expansion

Nostra Terra (AIM:NTOG), the oil and gas explora#on and produc#on company with a por'olio of assets in the USA and Egypt, is pleased to announce it has secured a 12 month op#on to acquire an addi#onal 600 net acres (800 gross) (the "Addi#onal Acres") to add to its Mesquite Asset in the Permian Basin ("Mesquite"). If the op#on is exercised, Mesquite will cover 2,184 gross acres (1,984 net to Nostra Terra), in a contiguous land parcel amenable to additional horizontal drilling.

Highlights

• · 12 month option to acquire 75% working interest in 800 acres (600 net to Nostra Terra)

  • o Leases are Held By Production ("HBP")

  • o 11 active producing vertical wells with minimal production

  • o 12-month op#on earned by paying 100% of the cost of recomple#on of 1 dormant ver#cal wells at the Additional Acres ("Recompletion")

  • o US$320,000 to complete acquisition of the Additional Acres

• · Mesquite Field Development Plan

  • o First Mesquite engineered economics report nearing completion

  • o Nostra Terra to receive Field Development Plan ("FDP") before deciding how best to develop Mesquite

Agreement terms

Nostra Terra has entered into a 12-month op#on agreement to acquire the Addi#onal Acres (the "Agreement"). The Agreement is structured so that Nostra Terra earns into the op#on by paying 100% of the recomple#on costs of 1 of 3 currently dormant ver#cal oils wells, to bring it back into produc#on. Nostra Terra will receive revenue from the increased production, whether the option is exercised or not.

The leases of the Addi#onal Acres are Held By Produc#on, meaning the leases remain in force so long as they are in con#nuous oil produc#on. The Addi#onal Acres currently host 11 ac#ve producing ver#cal wells, with minimal but stable production, which covers costs.

Further ver#cal wells can be drilled at the Addi#onal Acres, however, given the length of the leases, Nostra Terra's preference will be to drill horizontal wells here. To exercise the Agreement, Nostra Terra will pay US$320,000 to acquire the Additional Acres.

Recompletions

Among the available Recomple#on targets is a well that was drilled but never completed (a DUC), and two wells that were completed but not in primary pay zones that are proven producers in the area. These three wells each present viable opportuni#es for producing primary produc#on volumes for the modest cost of the recomple#on effort (up to $150,000). Nostra Terra will decide which of the 3 wells is to be drilled in due course.

Mesquite Field Development Plan

As previously announced, the first engineered economics report for Mesquite is nearing comple#on and will be released shortly. This will include a complete assessment of the commercial poten#al of the initial 1,384 net acres at Mesquite, which the Company acquired on 22 October 2018.

Nostra Terra will then instruct Trey Resources to produce a second engineered economics report to review the Addi#onal Acres. Once this is complete, Trey Resources will incorporate the two engineered economics reports into the Mesquite FDP.

Nostra Terra's board will await receipt of the final Mesquite FDP before deciding how best to respond to interest shown in the project by potential industry partners.

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

"We've moved quickly in securing this op on for an addi onal 600 net acres at Mesquite. As the first operator in the area to pursue horizontal drilling on these leases, Nostra Terra has a crucial first mover advantage in this prolific oil field. This is reflected in the level of unsolicited interest the Company has already received from potential industry partners concerning Mesquite.

We look forward to receiving the first engineered economics report from Trey Resources very soon and will immediately commission them to incorporate the addi onal acreage to the Field Development Plan."

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

For further information, visitwww.ntog.co.uk or contact:

Nostra Terra Oil and Gas Company plc

Tel:

[phone]

Matt Lofgran, CEO

Strand Hanson Limited

Tel:

[phone]

(Nominated & Financial Adviser and Joint Broker)

Rory Murphy / Ritchie Balmer / Jack Botros

Smaller Company Capital Limited (Joint Broker)

Tel:

[phone]

Rupert Williams / Jeremy Woodgate

About the Mesquite Propsect

The Mesquite Asset is in West Texas and covers 2,184 gross acres (1,984 net acres to Nostra Terra) in the prolific Permian Basin. The Mesquite Asset is proven to produce from mul#ple, stacked-pay reservoirs. Nostra Terra has iden#fied a minimum 8 targets to drill horizontal wells across the Mesquite leases.

The target forma#ons at the Mesquite Asset are "#ght", meaning the oil-bearing rock forma#ons are of low permeability. As such, the target forma#ons have characteris#cs that make them ideal targets for horizontal drilling and have delivered substan#al oil produc#on in other areas of the Permian Basin. Comparable regional horizontal drilling has delivered initial oil production rates of 200-300bopd.

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