Nostra Terra, the oil & gas exploration and production company with a portfolio of development and production assets in Texas, USA, has provided an operations update for its Pine Mills asset in East Texas.
- Cypress Farmout acreage doubled in size
- Potential additional locations and reserves identified
- 2nd Cypress well planned in 2021
- Remaining acreage owned 100% by NTOG being assessed for further potential farmouts
Nostra Terra currently owns and operates a 100% working interest ('WI') in the Pine Mills asset which covers 2,400 acres. On 22 April 2020 Nostra Terra announced that it had signed a farmout agreement with Cypress Minerals on an undrilled 80 acre area of the 2,400 acres, where Cypress would drill and complete one well at its sole expense to earn a 75% WI. Nostra Terra would retain a 25% WI in the Farmout Area where the drilling and completion in the first well cost would be paid for by Cypress. Additionally Nostra Terra would retain the right to participate for another 10% WI (7.5% WI after carry) at cost. Pine Mills was selected by Cypress as its top choice to farm-in to, based on 3D seismic data and because of the historically high production rates of nearby wells.
The Farmout Well was successfully drilled at the end of 2020 and put into production in January of this year. The well continues to produce at the levels advised by the Company on 25 January. It is anticipated that the Farmout Well will be added as collateral to Nostra Terra's Senior Lending Facility which will provide non-dilutive funds to fund further drilling activity.
In addition, Nostra Terra and Cypress are planning a second well within the original Farmout Area, due to spud in the second half of this year.
Further, within the original 2,400 acres, where Nostra Terra still owns a 100% WI, there are additional undrilled areas that are currently being assessed for additional farmouts.
Ongoing analysis of the technical data indicates that the Farmout Area, and a significant area beyond, is virgin reservoir. Hence Cypress has now taken additional leases outside the Farmout Area (and outside Nostra Terra's 100% owned acreage). The Farmout Area has now doubled in size, in which Nostra Terra has a 32.5% WI in the enlarged acreage position. Potential additional locations and reserves are also being assessed in these areas.
Matt Lofgran, Nostra Terra's Chief Executive Officer, said:
'With the recent success at Pine Mills we're excited to have doubled the acreage position in an area of virgin reservoir with the next well now being planned. Pine Mills has been a strong asset with much more potential for further development.
Nostra Terra continues to execute on our plans to grow production and cashflow, primarily from existing assets, while still seeking additional opportunities that could be transformational for the Company, both in the USA and in other developed oil and gas provinces.'