It’s been a long time since we wrote up Nostra Terra Oil & Gas (LON: NTOG). The feisty oil minnow fighting for attention amongst the bigger, riskier AIM oil exploration company’s. Let’s start by saying that this company are run by a team who are decent, honest individuals trying to get their message across against a cacophony of noise from more voluble oilers. The message often gets lost. That is about to significantly change.
Here’s where they’re whispered to be at time of writing. NTOG recently announced the spudding of the 17th development well in which it has an interest in the Chisholm Trail Prospect, located in Oklahoma. This is in line with the Lofgran strategy of not risking the Company on a massive exploration well (Roll of the dice). By buying into a portfolio of low-risk wells Nostra believe(d) that they could grow both revenue and also “dedicate time to new assets where we’ll be the operator.” Their bopd took a bit of a hit but is now known to be on the increase. They are selling leases & producing wells within the Bloom prospect. We think that this is just the start, all non-core assets will be cashed in. They are re-positioning to bounce off a near 52 week low. They’re going on a bull run.
We think or now believe that Lofgran is moving them into a more aggressive phase of exploration. Finally the penny has dropped. All around them they see huge rises in SP’s of similar oilers who have at best a 1 in 5 chance of success, (COS) on roll of the dice plays. Ergo they have to become more aggressive in their chosen area of operations. Just what type of exploration and where? Are the questions that need to be sourced.
We suspect that Tom Reynolds of Quixote Associates, the newly appointed consultants to the Company, are assisting Nostra Terra in the assessment, due diligence and financing of a potential transformational acquisition in the USA. Remember Bridge Energy? In November 2013, Reynolds oversaw the successful sale to Spike Exploration of Bridge for £103,000,000 million pounds sterling.
Nostra are or are rumoured to be in discussions to buy a large under-explored asset in the USA similar to Chisholm trail. They’re going for a 100% operated controlling interest which will be, as per standard industry practice, farmed out for cash (Derisked) while they remain in operational control with the largest interest. Common-sense would dictate that the experience gained from drill and operating techniques learned from Ward petroleum and other operators means that this is the type of play they will be buying. They should initially be able to fund this deal through cash-flow and their loan facility. The deal is thought to be very close. Remember they’ve signed up for The London Stock Market Show in September next month, I’d expect that they’ll use this as a forum to announce and discuss it with (potential) investors & farmees!
So it’s hang on to your hats and see how the market take the news when it’s eventually announced.