Nostra Terra Oil And Gas Share Discussion Threads

[eekorehc] 29/10/2015 11:35

1.25 hours in.

[andy] 18/10/2015 21:49

Jonhdee,

I'm not surprised, they were out of funds and now they are avoiding dilution, I see it as a win win ofo them, not so sure about NTOG though.

[johndee] 18/10/2015 21:06

IRG has been rising though.

[andy] 18/10/2015 21:02

The falling share price suggests the market is none too enamored with the deal.

[cashandcard] 15/10/2015 08:38

BBR

That is the transglobe valuation summary - they spent something like $25mln on the asset.

Those values have little to do with the JV's value for the assets because they were based on different cost assumptions.

Greg and Brian Hepp (experienced in Egypt) I understand there will be a presentation out in the next few weeks which will clarify the forward plan.


Cash

[buffythebuffoon] 12/10/2015 10:56

It remains to be seen how much existing investors make. Those adding to their holding in the future or those jumping in for the first time after the inevitable dilution from fund raising/s to come, may do very well.

Buffy

[gavinbell] 10/10/2015 23:45

for those interested, check out JLP and WRES next week. NEWS COMING!!

platinum is making huge recovery since last week and JLP got the RNS intraday on Friday and not many would have seen it.

both platinum player AQP and LMI have surged strongly last week. JLP, as a low cost platinum producer, not yet recover and will hopefully start to make recovery next week. Furthermore, AQP platinum got a takeover offer which now make many to believe JLP will soon get its takeover target/JV partner, potentially after mining licence is granted, which is expected in this month.

those interested can dyor on JLP and see the huge potential in there, with JLP sitting on $4bn worth of assets and mcap only 30m?

no wonder JLP was 30p a couple of years ago and now making the comeback.

another potential for multibag will be WRES, CEO target 3p with share price now only 0.6p

expecting rerating RNS in JLP and WRES anytime next week/this month

dyor

[barnetpeter] 10/10/2015 22:56

Ntog has been a disaster for investors and continues to lose money. This latest deal in a war torn area and dangerous for Western staff looks dire to me. Throwing more cash on the bonfire ...sure the oil is cheap but getting to it safely is another thing.

sold most of mine when it spiked to 0.18 earlier this year and have written off the rest. I see this drifting lower and lower...0.08 then 0.05 and so on. A consolidation and a placing and then down again. Worthless at current oil prices and the money will likely run out long before a rally in oil.

Punters only here imo....and expect to get little back.

[chinese investor] 10/10/2015 20:15

US-focused AIM underperformer Nostra Terra Oil and Gas (LSE:NTOG) has teamed up with junior market pariah Independent Resources (LSE:IRG) in a potentially transformational $3.5 million (£2.3 million) deal to acquire a half share in Egypt’s East Ghazalat oil producing concession, containing proven and probable reserves of one million barrels.

The two exploration companies, which have both lost more than 90% of their stockmarket value since floating on AIM, have formed a 50-50 joint venture to buy the stake in East Ghazalat, which is currently producing at the rate of 880 barrels a day, half attributable to the joint venture company.

Transglobe Energy of Canada is selling the stake in East Ghazalat, in Egypt’s Western desert near the coastal town and world war battle site of El Alamein, and is also providing the buyers with a $2.5 million 10% loan note to help pay for it.
With Independent Resources experienced in exploring in Tunisia, analysts expect the joint venture companies to renegotiate arrangements with the field’s present operator, ZhenHua Oil of China, or even replace it, while Matt Lofgran, Nostra Terra’s chief executive officer, says the deal ‘will triple our production right away.’

Currently active in Texas, Wyoming, Colorado and Oklahoma, Nostra Terra, which lost £840,000 last year and another £1 million in the six months to June, argues the acquisition is costing $3.47 a barrel in proven and probable reserves and $7.95 a barrel in terms of daily oil production, against current oil prices in the region of $52 a barrel, little more than a third of their level seven years ago.
In addition to six producing wells, the concession sports two natural discoveries: North Dabaa 1X and North Dabaa 2X, which have respectively tested at rates of 16 million and 18.7 million cubic feet per day.

Lofgran explains Nostra Terra and Independent Resources, which itself lost £1.6 million last year and another £890,275 in the six months to June, formed a company based in the Turks and Caicos Islands tax haven to pursue the new Egyptian strategy and notes ‘there are other opportunities to be worked through.’
Commenting that East Ghazalat holds a ‘conventional reservoir’ with ‘vertical wells’, he says ‘we have identified changes we should like to make’ in the running of the concession.

According to Lofgran, the two partners intend to expand production at East Ghazalat.
They are working to benefit from a depressed oil market identify other potential acquisitions in the area ahead of an eventual cyclical upturn.
Nostra Terra, whose shares have fallen from a 12-month high of 0.3p and a 2007 float price of 5p to 0.12p now, commands an AIM value of £3.2 million.
That is nearly twice the £1.5 million stockmarket tag of Independent Resources, at 0.72p down from a year’s peak of 4.37p and a 2005 float price of 60p.

If Egypt bears fruit, they have speculative appeal as medium-term recovery punts, though clearly not without risk.

[bam bam rubble] 09/10/2015 12:56

10 months ago Edison said the interests NTOG/IRG are acquiring have NPVs of just $1m

That's assuming a higher oil price than today and is an 'Edison valuation' which are
always too high. A change of owner doesn't change the fact this field is small beer.



(above table assumes oil price of $62.5/bl for 2015/16 and $80/bl thereafter)

[cashandcard] 09/10/2015 12:40

Andy,


The post above from olderandwiser clarifies why they were willing to sell. East Ghazalat is 'small beer' - even reworked it would remain small beer in comparison to the numbers they are going for in their other assets.

Of course, its not small beer to the JV partners.

Companies always rationalise and downsize - in 2003 BP sold Forties oilfield to Apache when it still had 232mmboe in reserves. Apache then increased those reserves and production with new fieldwork and optimised drilling to tap undrained areas of the field.


Cash

[andy] 08/10/2015 23:47

CAsh,

Re #16676

I take and accept your point about being'non core', but if they wells are suitable for stimulation I am surprised they did not try it first.

[andy] 08/10/2015 21:43

The $100,000 a month cash flow figure net to irg, cited last night by Greg, is already in place, effective July 1, though weaker oil prices in the last few months mean this figure is forward-looking taking current oil prices and making assumptions using the forward oil price curve for future cash flow projections.

---

A couple of questions spring to mind;

Where was the presentation last night please?

Are you saying that the $100,000 figure is in fact a future figure based upon expectations of an increase in the oil price from here?

If so, did he mention what the figure would be at the current oil price?


TIA, genuine questions.

[chinese investor] 08/10/2015 10:15

Great Post Cash !

[cashandcard] 08/10/2015 10:12

from olderandwiser on lse:

--------------------------------------------------------------->>
Olderandwiser Wed 16:55

"Feel very comfortable..with my investment here.

Greg is a straight talker, experienced and focussed on maximising this income-producing opportunity. I asked why TransGlobe is selling. He explained that this field is small beer to them, at 880 bopd. They were looking for oil in the '000s bopd and haven't been successful. They produce 16k bopd elsewhere in the region so it is regarded as marginal to their plans. As well, they were not the operator which is not their preferred way of managing their assets.

Yes, the Chinese group is still the operator here, but irg has the right to appoint the Deputy Operations Manager, and approve the budget. They have already met with North Petroleum and it appears they are very receptive to new ideas of horizontal well drilling and multi-stage frakking. They are keen to increase production and reserves but I get the sense that their technological know-how is inferior to irg's and that there is plenty of upside potential for cost reduction AND enhanced production once Greg's small team gets to work.

The next six months will be all about planning, agreeing a target for production increases and target new well drilling, selecting drilling locations etc.Actual drilling will start about 6 months from now, up to a year.

I would imagine that if they drill wells successfully, they could then attract RBL funding, which would assist in exchanging the existing $2.5mn 2-year loan note due to TransGlobe, as well as fund future drilling opportunities identified in the project area. He has in mind drilling up to ten new wells, depending on success rates, oil prices etc, over the next two years or so.

The $100,000 a month cash flow figure net to irg, cited last night by Greg, is already in place, effective July 1, though weaker oil prices in the last few months mean this figure is forward-looking taking current oil prices and making assumptions using the forward oil price curve for future cash flow projections. Aside from a small G&A allocation, the remainder of available cash will be ring-fenced for this Egyptian project, and will not be leaking out to their Tunisian project.

Current operating costs are in the range $15-20/bl. The JV will seek to cut this cost down to $8-10/bl through various measures.

My take: this is a great opportunity for a junior oil company with plenty of in-country experience, to utilise modern drilling techniques and extracting multiple cost efficiencies, so that top line revenues can grow, at the same time as more flows through to the bottom line than the projected $100k/month mentioned already by Greg. Financial terms are flexible enough so as not to be onerous, assuming current or higher oil prices throughout the next two years. With this deal, fears of extreme cash shortage leading to a heavily dilutive equity offering, or inertia, can be dismissed. MC of £1.7mn? Must be cheap in relation to Egyptian cash flows alone, forgetting the Tunisian asset. DYOR. IMHO.

------------------------------------------------->>



Cash

[cashandcard] 08/10/2015 09:39

from olderandwiser on lse:

--------------------------------------------------------------->>
Olderandwiser Wed 16:55

"Feel very comfortable..with my investment here.

Greg is a straight talker, experienced and focussed on maximising this income-producing opportunity. I asked why TransGlobe is selling. He explained that this field is small beer to them, at 880 bopd. They were looking for oil in the '000s bopd and haven't been successful. They produce 16k bopd elsewhere in the region so it is regarded as marginal to their plans. As well, they were not the operator which is not their preferred way of managing their assets.

Yes, the Chinese group is still the operator here, but irg has the right to appoint the Deputy Operations Manager, and approve the budget. They have already met with North Petroleum and it appears they are very receptive to new ideas of horizontal well drilling and multi-stage frakking. They are keen to increase production and reserves but I get the sense that their technological know-how is inferior to irg's and that there is plenty of upside potential for cost reduction AND enhanced production once Greg's small team gets to work.

The next six months will be all about planning, agreeing a target for production increases and target new well drilling, selecting drilling locations etc.Actual drilling will start about 6 months from now, up to a year.

I would imagine that if they drill wells successfully, they could then attract RBL funding, which would assist in exchanging the existing $2.5mn 2-year loan note due to TransGlobe, as well as fund future drilling opportunities identified in the project area. He has in mind drilling up to ten new wells, depending on success rates, oil prices etc, over the next two years or so.

The $100,000 a month cash flow figure net to irg, cited last night by Greg, is already in place, effective July 1, though weaker oil prices in the last few months mean this figure is forward-looking taking current oil prices and making assumptions using the forward oil price curve for future cash flow projections. Aside from a small G&A allocation, the remainder of available cash will be ring-fenced for this Egyptian project, and will not be leaking out to their Tunisian project.

Current operating costs are in the range $15-20/bl. The JV will seek to cut this cost down to $8-10/bl through various measures.

My take: this is a great opportunity for a junior oil company with plenty of in-country experience, to utilise modern drilling techniques and extracting multiple cost efficiencies, so that top line revenues can grow, at the same time as more flows through to the bottom line than the projected $100k/month mentioned already by Greg. Financial terms are flexible enough so as not to be onerous, assuming current or higher oil prices throughout the next two years. With this deal, fears of extreme cash shortage leading to a heavily dilutive equity offering, or inertia, can be dismissed. MC of £1.7mn? Must be cheap in relation to Egyptian cash flows alone, forgetting the Tunisian asset. DYOR. IMHO.

------------------------------------------------->>



Cash

[cashandcard] 08/10/2015 00:02

Andy,


After spending a fortune, the oil price fall has impaired the value of their investment, thus the value of their assets in East Ghazalat. Like Vegas oil and gas (previous owner), its non-core to them. A company with their production profile (15,000 bopd, Q2), I doubt they are going to bother putting the time and effort trying to extract what must look to them like a small pool - does not mean others cannot pick-up where they left-off.


Cash

[andy] 07/10/2015 17:18

What puzzles me is why did Transglobe sell these producing assets if the re-completion is so easy and relatively cheap?

They retain other producing assets in Egypt.

[cashandcard] 07/10/2015 16:31

BAM BAM Rubble,


Perhaps so, but its not the main focus (I think everyone apart from yourself seems to accept that). The focus is to optimise production, cashflow and reduce costs from current producing oilfield. Greg has stated they have done thorough DD, to ensure they can add value to the concession, not merely take a stake and sit pretty.

I'm not sure what the costs in Egypt are for recompletions, but in the US, wells can be recompleted for $50-100k - a months revenue for each of the JV partners.

The Gas, Its a play on improving future costs and pricing - pricing has already improved since 2014. The biggest cost - drilling wells, is done and dusted already. Besides, in 2-3years, I can see other assets in the JV - maybe close to the current asset or further afield. Doubt it will remain a single asset or single area JV with a sole aim of developing those gas/condensate discoveries.


Cash

[bam bam rubble] 07/10/2015 16:06

Economics don't change much if the price range is set at the time it is awarded;

(standard development lease terms)
"In case of a gas Development Lease the application should include the gas price
which shall be agreed upon on the basis of the area's technical/economic factors
before the Minister of Petroleum can approve the Development Lease"


Transglobe wrote off the lease in full at the end of 2014 as it was uneconomic
"on the basis of the agreed pricing and cost structure"

The terms also say if a field isn't online within 4 years it gets relinquished
so NTOG/IRG won't have to admit the gas is worthless for another 2 years or so.
Management can talk it up until then but that spiel can be seen for what it is.

[cashandcard] 07/10/2015 14:59

I don't doubt they were small pools, but the economics can change BAM BAM, what was perhaps marginal at best a couple of years ago maybe economic given improving circumstances - the key here is the gas price. The wells are drilled and shut-in, they are an option on improving prices, falling costs/services, data and of course management.

But I said earlier, Safwa producing oilfield is the focus for the JV - anything else is a future option.



Cash