Nostra Terra Oil & Gas Company PLC Interim Results (6334A)

TIDMNTOG

RNS Number : 6334A

Nostra Terra Oil & Gas Company PLC

30 September 2015

30 September 2015

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Interim results for the six months ended 30 June 2015

Nostra Terra (AIM:NTOG), an oil and gas exploration and production company with a growing portfolio of producing and exploration prospects, is pleased to announce its unaudited results for the six months ended 30 June 2015.

Highlights:

Corporate:

   --    Revenue for the period of GBP393,000 (30 June 2014: GBP414,000) 
   --    Gross profit before non-cash items of depreciation and amortization of GBP268,000 

(30 June 2014: GBP250,000)

   --    New Nomad and Broker appointed 
   --    New Chairman appointed 

Operational:

   --    Acquisition of 100% Working Interest in Paw Paw Prospect 
   --    JV with Independent Resources Plc to expand into Egypt (post-period) 

For further information, visit www.ntog.co.uk or contact:

Nostra Terra Oil and Gas Company plc

Matt Lofgran, CEO

   [e-mail]                             Telephone: [phone] 

Sanlam Securities UK Limited (Nominated Adviser & Broker)

   Lindsay Mair/James Thomas                   Telephone: [phone] 

Walbrook PR Ltd (Media Relations)

   Gary Middleton/Nick Rome                     Telephone:  [phone] 

Chief Executive's report

The industry is going through a very tough time right now with low and volatile oil prices caused by global oversupply, primarily driven by horizontal drilling and fracking in the United States. This has led US focused oil companies to concentrate on capital discipline and balance sheet strength while they wait for stability and higher oil prices before committing to new developments. This has been shown in the drop in US production and drill rigs turning in recent months.

Recent news stories that non-Arab members of OPEC are lobbying hard in an effort to get production cuts and therefore higher oil prices are encouraging, though how effective this will be and how long it will take is uncertain. While we are not aiming to time the bottom of the market, we are in a cyclical business and believe the path of least resistance for oil prices is up. Given this, we believe it's an opportune time to look for further investments.

Our focus remains in producing basins with conventional reservoirs, primarily using modern exploration and production technologies. Our existing production and reserves occur within the Mid-Continent USA, however we are also finding intriguing opportunities outside the USAwhich will provide further diversification going forward. We are targeting existing producing assets with further upside through exploration. These assets can be acquired on advantageous terms and with careful application of leverage.

Towards the end of 2014 and beginning of 2015, we doubled production putting the Company on a much stronger footing. With revenue of GBP393,000, we achieved a gross profit for the period before depreciation and amortization costs of GBP268,000.

We've positioned our White Buffalo Prospect in the Big Horn Basin of Wyoming, acquired towards the end of 2014 just before the sharp downturn, to be drill ready for exploration once the market strengthens. The leases have several more years, which allows us to maintain the inventory to grow in the future, but without the pressure of having to spend money to keep them. During the first half of the year we signed an operator agreement on another larger prospect in Wyoming with Koch Exploration, a subsidiary of the second largest private company in the USA. While this is an exploration prospect, we were able to secure the opportunity with no acquisition costs. Our plan is to continue to progress it while promoting some interest to others, thus creating a free carry.

Our debt facilities remain in place providing an alternative to issuing equity. We've kept the debt at relatively conservative levels and maintain flexibility to continue our growth.

As we look to grow Nostra Terra organically and globally we welcomed a new Chairman, Ewen Ainsworth to the Company. Mr. Ainsworth brings with him a global wealth of experience and contacts to help Nostra Terra. Most notably he was the CFO of Gulf Keystone, a company that started as one of the smaller oil & gas companies on AIM and grew to be one of the largest oil & gas companies on the London Stock Exchange. We look forward to more of his contributions as we make much larger strides from here.

Post-period we announced plans to expand into a second focus area, Egypt and the surrounding region. Our plans are to acquire existing producing assets with further exploration potential. This approach allows us to acquire assets of lower risk, already generating revenues, where leverage can be applied to the acquisition. Once assets are acquired we will look to quickly improve efficiencies through tighter cost controls and improved operations.

We appreciate the support from our shareholders and look forward to updating them on the progress of the Company in the coming months and into 2016.

Matt Lofgran

Chief Executive Officer

29 September 2015

Chief Operating Officer's Report

We have stated that the oil and gas industry of the United States was entering an exciting period of change, characterized by a dramatic shift in the application of assets. We were positioned to expand beyond our current platform of reliable partners and strong lender relationships to acquire some of these assets. The former strategy was to apply horizontal drilling and completion techniques to known producing formations where they had not been previously applied. Although that is still a viable pathway, the acquisition of producing assets that are held by over-levered operators presents an even greater opportunity without exploration risk.

White Buffalo was acquired at the beginning of the downturn. The prospect covers 6,100 net mineral acres of leases in the Big Horn Basin of Wyoming. It represents the Company's first step into a basin, which has been producing oil and gas since early 1900's. According to the US Department of Interior, more than 3.3 billion BOE have been produced from 48 separate formations across 139 oil and gas fields. Importantly, a study by the United States Geological Survey projects that a mean of 1 billion BOE (barrels of oil equivalent) additional resources remain to be discovered from both conventional and unconventional sources. Independent assessment by Haas Engineering, of White Buffalo has projected a mean potential recovery of 13 million barrels of oil to Nostra Terra.

As the decline in oil prices continued, it was determined to postpone further exploration risk until prices have recovered. The Company has idled any further work on the White Buffalo project, awaiting improvement in prices. More than three years remain before the majority of leases begin to expire and most have extension provisions beyond that as well.

During the first half of 2015 we entered into two agreements in South Texas. This was part of a drill-to-earn on larger prospects. We acquired a small interest in each at a very low cost, providing us optionality for expansion should the results prove up. The initial wells were drilled and put into production. The operator decided to do additional work on each well almost immediately and we are waiting to see the outcome before committing ourselves further.

NTOG located another very attractive opportunity in the Big Horn Basin of Wyoming during the first half of this year. The Paw Paw Prospect consists of 2,280 acres under lease by Koch Exploration Company. The Company will earn interests in the Paw Paw Prospect by drilling wells ("Farmout"). It is expected to earn more than 80% Net Revenue in wells drilled. The unit will support up to 25 development wells and independent assessment from Haas Engineering supports the ultimate recovery of 7.3 million barrels of oil, if successful.

The Farmout did not require costs of leasing and seismic acquisition, usually associated with exploration projects. We are in the process of creating an Exploration Unit, along with permitting through the Bureau of Land Management and State of Wyoming. During this time we will also become a bonded operator in Wyoming.

The Company's disciplined approach has established a stable revenue platform across several partnerships in this portfolio. It is the portfolio that enables us to move into much larger prospects as the energy lending relationships provide us with much of the capital required. The Company owns 100% of both While Buffalo and Paw Paw. NTOG will operate the wells and will further reduce exposure through the sale of promoted interests to industry partners. In this manner, we will continue to grow our portfolio.

Alden McCall

Chief Operating Officer

Nostra Terra Oil and Gas Company plc

Consolidated statement of comprehensive income

For the six months ended 30 June 2015

 
                                                    Six months                        Year to 
                                       Six months   to 30 June                    31 December 
                                       to 30 June         2014                           2014 
                            Note   2015 Unaudited    Unaudited                        Audited 
                                         GBP'000s     GBP'000s                       GBP'000s 
 
Revenue                                       393          414                          1,267 
 
Cost of sales                3            (1,065)        (452)                        (1,666) 
                                  ---------------  -----------  ----------------------------- 
 
Gross profit/(loss)                         (672)         (38)                          (399) 
Share based payment                             -            -                           (19) 
Administrative expenses                     (378)        (313)                          (318) 

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September 30, 2015 02:02 ET (06:02 GMT)

                                  ---------------  -----------  ----------------------------- 
 
Operating loss                            (1,050)        (351)                          (736) 
 
Finance 
 income                                         -            -                              - 
Finance expense                              (11)         (11)                          (107) 
                                  ---------------  -----------  ----------------------------- 
 
Loss before 
 tax                                      (1,061)        (362)                          (843) 
 
Taxation                                        -            -                              - 
                                  ---------------  -----------  ----------------------------- 
Loss for the financial 
 period                                   (1,061)        (362)                          (843) 
                                  ---------------  -----------  ----------------------------- 
 
Other comprehensive 
 income 
Exchange gain/(loss) 
 on translation of foreign 
 ops.                                        (19)        (114)                          (249) 
                                  ---------------  -----------  ----------------------------- 
 
Total comprehensive 
 income for the period                    (1,080)        (476)                        (1,092) 
                                  ===============  ===========  ============================= 
 
Loss per share 
Attributed to: 
Equity holders of 
 the company 
 
Basic and 
 diluted                     4           (0.032p)     (0.017p)                       (0.029p) 
                                  ---------------  -----------  ----------------------------- 
 

The Company's operating loss arose from continuing operations.

There were no recognised gains or losses other than those recognised in the income statement above.

Nostra Terra Oil and Gas Company plc

Consolidated statement of financial position as at 30 June 2015

 
                                                            As at   As at 31 
                                             As at 30          30   December 
                                            June 2015   June 2014       2014 
                                            Unaudited   Unaudited    Audited 
                                   Note      GBP'000s    GBP'000s   GBP'000s 
 
Assets 
 
Non-current assets 
Other intangibles                               3,545       3,689      4,283 
Property, plant, and equipment                    483         571        521 
                                                4,028       4,260      4,804 
                                          -----------  ----------  --------- 
 
Current assets 
Trade and other receivables                       163         223        491 
Deposits and prepayments                           53         258          - 
Cash and cash equivalents                         526         122        861 
                                                  742         603      1,352 
                                          -----------  ----------  --------- 
 
Current liabilities 
Trade and other payables                          229         708        293 
Borrowings                                          -         325      1,010 
                                                  229       1,033      1,303 
                                          -----------  ----------  --------- 
 
Net current assets                                513       (430)         49 
                                          -----------  ----------  --------- 
 
Non-current liabilities 
Other loans                            7        1,380         645        612 
                                          -----------  ----------  --------- 
 
Net assets                                      3,161       3,185      4,241 
                                          ===========  ==========  ========= 
 
Equity 
 
Capital and reserves 
Share capital                       8           3,360       2,776      3,360 
Share premium account                          11,060       9,991     11,060 
Translation reserve                             (194)        (40)      (175) 
Share option reserve                              139         119        138 
Accumulated deficit                          (11,204)     (9,661)   (10,142) 
Total equity                                    3,161       3,185      4,241 
                                          ===========  ==========  ========= 
 
 

Nostra Terra Oil and Gas Company plc

Consolidated cash flow statement

For the six months ended 30 June 2015

 
                                                               Six months         Year to 
                                           Six months               to 30     31 December 
                                           to 30 June           June 2014            2014 
                                       2015 Unaudited           Unaudited         Audited 
 
                               Note           GBP'000             GBP'000         GBP'000 
 
 Cash flows from operating 
  activities 
 Cash generated/(consumed) 
  by operations                  5                 79                 247             222 
 Interest paid                                      -                   -           (163) 
                                     ----------------  ------------------  -------------- 
 
 Net cash outflow 
  from operating activities                        79                 247              59 
                                     ----------------  ------------------  -------------- 
 
 Cash flows from investing 
  activities 
 Sale/(purchases) 
  of plant and 
  Equipment                                      (18)               (143)           (245) 
 Purchase of intangibles 
  - new oil properties                          (174)               (979)         (2,527) 
 Proceeds from sale 
  of assets                                         -                   -             295 
 Net cash from investing 
  activities                                    (192)             (1,122)         (2,477) 
                                     ----------------  ------------------  -------------- 
 
 Cash flows from financing 
  activities 
 Proceeds on issue 
  of shares                                         -                   -           1,653 
 Repayment of borrowings                        (381)                               (966) 
 New borrowing (net)                              159                 626           2,221 
                                     ----------------  ------------------  -------------- 
 Net cash from financing 
  activities                                    (222)                 626           2,908 
 Increase/(decrease) 
  in cash and cash 
  equivalents                                   (335)               (249)             490 
                                     ----------------  ------------------  -------------- 
 
 Cash and cash equivalents 
  at the beginning 
  of the period                                   861                 371             371 
                                     ----------------  ------------------  -------------- 
 
 Cash and cash equivalents 
  at the end of the 
  period                                          526                 122             861 
                                     ================  ==================  ============== 
 
 

Nostra Terra Oil and Gas Company plc

Consolidated statement of changes in equity

For the six months ended 30 June 2015

 
                               As at      As at          As at 
                             30 June    30 June    31 December 
                                2015       2014           2014 
                             GBP'000    GBP'000        GBP'000 
 
 As at beginning of 
  period                       4,241      3,661          3,661 
 
 Other comprehensive 
  income                        (19)      (114)          (249) 
 
 Deficit for the period      (1,061)      (362)          (843) 
 
 Share based payments              -          -             19 
 
 Issue of share capital 
  net of expenses                  -          -          1,653 
  As at end of period          3,161      3,185          4,241 
                           =========  =========  ============= 
 

Nostra Terra Oil and Gas Company plc

Notes to the interim report

For the six months ended 30 June 2015

   1.   General Information 

Nostra Terra Oil and Gas Company plc is a public limited company incorporated in England with a company number 05338258 and quoted on the AIM market of the London Stock Exchange Plc.

   2.   Basis of Preparation 

This interim report, which incorporates the financial information of the Company, has been prepared using the historical cost convention, on a going concern basis and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, using accounting policies which are consistent with those set out in the financial statement for the year ended 31 December 2014. This interim financial information for the six months ended 30 June 2015 was approved by the Board on 29 September 2015.

The unaudited results for the year ended 30 June 2015 do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the 12 months ended 31 December 2014 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and which contain an unqualified audit report, did not draw attention to any matters by way of an emphasis of matter paragraph and contained no statement under Section 498 (2) or (3) of the Companies Act 2006.

Copies of this interim statement are available from the Company at its registered office at Finsgate, 5-7 Cranwood Street, London EC1V 9EE. The interim statement will also be available on the Company's website www.ntog.co.uk.in accordance with Rule 26 of the AIM Rules for Companies.)

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