22nd Feb 2016 09:43
LONDON (Alliance News) - Nostra Terra Oil and Gas Co PLC on Monday said it was purchasing a working interest in assets in the Permian Basin of New Mexico from Alamo Resources II LLC for USD3.0 million.
The oil and gas exploration and production company said it had agreed to purchase a 60% working interest in the south west US assets and will make a USD2.7 million payment by March 31, on the closing of the deal. Nostra Terra said it will pay the other USD300,000 a year after the closing of the deal, meaning in March 2017, payable in cash or Nostra Terra shares at the discretion of Nostra Terra.
Nostra Terra said it would be financing the acquisition using a debt facility.
The site has 55 active vertical producing wells and 12 active injector wells, and in November had an average gross production of 122 barrels of oil per day. The assets in New Mexico generated USD1.8 million revenue for the year ended-July, with pretax profit of USD250,000.
"We're excited about the acquisition of these assets in the Permian Basin, one of the most prolific basins in the world. The leases will add significantly to our production, revenues, and reserves. The leases are 100% operated and 100% held by production (not at risk of expiring), meaning Nostra Terra will be the in full control of the development pace," said Matt Lofgran, chief executive of Nostra Terra.
"The industry is facing a difficult time with low oil prices which most in the industry believe to be temporary. This creates an opportunity-rich environment where assets such as these can be acquired at much better prices than previously," Lofgran added.
Nostra Terra shares were up 17% at 0.102 pence on Monday morning.
By Hannah Boland; [email protected]; @Hannaheboland
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