10th Jun 2016 07:39
LONDON (Alliance News) - Nostra Terra Oil & Gas Co PLC on Friday said it has reduced its overheads by 40% after completing the cost-cutting initiative that was launched in the middle of 2015 in response to the downturn in the market caused by the fall in world oil prices.
"We're pleased to have achieved a significant cut in costs during such a severe downturn in the commodity cycle. We'll strive to keep cost low while our focus remains on increasing production and revenues," said Chief Executive Matt Lofgran.
The overall 40% fall in combined running costs was made primarily by reducing operational overheads by just under half and cutting corporate costs by a tenth, as well as from the savings generated by the company's board and management, which agreed to take a 25% cut to their salaries.
Nostra Terra said the voluntary wage cut that was accepted by its leadership team was a "core component" of the overall savings achieved, adding the reduction in salaries was suitable following the "significant declines" in share prices across the wider oil and gas market.
"With Nostra Terra now better positioned to withstand current market conditions, the board remains fully committed to securing new assets for the company, which stand to deliver significant shareholder value over the medium term," said the company.
Nostra Terra was in the process of acquiring an interest in some producing assets lying within New Mexico but lost its exclusive rights over the assets earlier this month after failing to meet the payment deadline, as the company admitted that "financing conditions remain tight".
Nostra Terra was given extra time to make the required payment to maintain its exclusivity over a 60% working interest in the producing south west US assets over the Permian Basin from Alamo Resources II LLC for a total of USD3.0 million, but still failed to make that payment.
Nostra Terra did not lose the right to bid for the assets as a result, but opened up the assets to potential competitors, weakening its position to strike a favourable deal.
Nostra Terra shares were trading up 7.7% to 1.75 pence per share on Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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