4th Feb 2015 08:10
LONDON (Alliance News) - Nostra Terra Oil and Gas Co PLC Wednesday said it placed four new wells into production during the fourth quarter which significantly increased production and said although its partners are cutting back on drilling activity, it will take advantage of the low oil price to try and secure further growth opportunities.
The company said net production in the fourth quarter ended December 31 rose 68% compared with the third quarter to 12,376 barrels of oil equivalent. This generated revenue of USD707,978, which is up 20% on the previous quarter.
Net production steadily increased throughout the quarter. In October, Nostra Terra's net production totalled 2,665 barrels of oil equivalent, increasing to 4,468 barrels of oil equivalent in November and 5,243 barrels of oil equivalent in December.
The steady increase in production was caused by four new wells being placed into production on the Chisholm Trail prospect in Oklahoma, in the US, where all of its production currently comes from. Nostra Terra holds a 20% stake in the prospect.
Despite production increasing in December, the revenue generated in the month actually fell to USD229,748 from USD254,407 in November, reflecting the decline in oil prices.
"From beginning to end of the fourth quarter, crude oil prices have dropped by nearly 50%. Despite falling crude prices, the company achieved a significant increase in revenues for the period," said the company.
"Management expects the currently producing properties to be economic even in the current oil price environment. However, most operators that the company works with have decided to postpone further drilling until oil prices strengthen, to provide a greater return on capital," it added.
The company said it will take advantage of the current environment to find further opportunities for growth in conventional plays throughout mid-continent US, it said.
"While we do have an exploration component to our portfolio, our recent focus has been to secure and maintain steady production, allowing the company to actively search for growth opportunities without the need for external capital," said Chief Executive Matt Lofgran.
Nostra Terra is also continuing work on its wholly-owned White Buffalo project in Wyoming in the US, which will strengthen the company's position once firmer oil prices are established, it said.
"At this time we are taking steps to enhance the value of the asset so that when the economics are stronger we'll be able to advance quickly to drilling," said Nostra Terra.
"At White Buffalo we are planning our data acquisition strategy in order to drill the fewest wells necessary to achieve the maximum value," said Chief Operating Officer Alden McCall.
"We anticipate oil price volatility going forward, however the consensus in the industry is that crude oil prices will be higher at the end of the year than they are now," said Lofgran.
Nostra Terra shares were up 10.6% at 0.177 pence early Wednesday, making it one of the best-performing stocks in the AIM All-Share index.
By Joshua Warner; [email protected]; @JoshAlliance
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