3rd Feb 2014 09:11
LONDON (Alliance News) - Nostra Terra Oil and Gas Company PLC Monday said it has entered into a USD25 million credit facility with Texas Capital Bank in order to fund growth without diluting its shares, while it also said it expects to have its largest working interest yet at a new well in the Chisholm Trail Prospect.
In a statement, the AIM-quoted oil and gas producer said the Chisholm Trail Prospect well is now being permitted after a forced-pooling hearing.
"When the election to participate is made, Nostra Terra will announce its working interest in the well, which the company anticipates will be the largest yet in the Chisholm Trail Prospect. The election and permitting is expected to take place in short order," the company said in a statement.
It said it will use the credit line to expand its portfolio further with plans in the pipeline for for future drilling within the Chisholm Trail Prospect, High Plains Prospect, amongst others.
Nostra Terra said no warrants or equity will be issued as part of the facility, meaning there will be no dilution to shareholders' interests.
"While we have always been cautious about debt, and will remain so, this facility will give us the ability to quicken the pace of growth through non-dilutive funds," Matt Lofgran, chief executive, said in a statement.
The company said the new facility includes a three-year revolving credit facility and a standby letter of credit facility with an initial nominal limit of USD25 million.
The initial borrowing base of the facility will be USD500,000, with that amount being reassessed "at least semi-annually".
Under the terms of the facility, there is scope to increase the borrowing base as additional wells are brought on production, with the initial USD500,000 based upon stabilized production from the company's top five wells across Kansas, Colorado and Oklahoma, and not the entire portfolio.
"We expect that the company will secure an increased facility borrowing base from the stabilizing production of the newly reworked CT3 well and several more wells which are not currently reflected in the initial borrowing base. As the new wells come onto production, we anticipate that we will be able to expand the facilities substantially," Alden McCall, chief operating officer, said in a statement.
The oil and gas producer said it expects that "additional value" from the reworking of CT3 well and several currently producing additional wells will be added by the end of the first quarter.
Nostra Terra shares were Monday quoted at 0.280 pence, up 0.015 pence, or 5.7%.
By Samuel Agini; [email protected]; @samuelagini
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