Nostra Terra Oil and Gas Company PLC (LON:NTOG) has highlighted the settlement of a loan by its Egyptian joint venture (JV) company.
The JV company, Independent Resources Egypt Ltd (IRE), has agreed to make a US$200,000 payment to TransGlobe, which represents full and final settlement of a US$2.5mln loan note.
The loan note was part of the arrangement put in place when IRE agreed to acquire the non-operated stake in East Ghazalat last October. At that time the headline deal consideration was US$3.5mln, comprising US$1mln of cash and a US$2.5mln loan note issued to TransGlobe.
An early settlement has since been agreed with TransGlobe whereby it receives US$200,000 and will forgo the other US$2.3mln; in return IRE agrees to release TransGlobe from any potential warranty and indemnity claims that may arise from TransGlobe's prior ownership of East Ghazalat.
Nostra Terra told investors that this new arrangement sees IRE’s acquisition costs improve to US$1.19 per barrel from US$3.47.
Nostra Terra said IRE’s 50% stake in the East Ghazalat concession is not affected. IRE’s stake in East Ghazalat represents just over 1mln barrels of gross proved and probable oil reserves.
The AIM quoted company also noted that that the US$100,000 share of the debt that it will pay extinguishes the liability of approximately US$1.3 million owed by Nostra Terra (including accrued interest), leaving no further debt on the asset.
"We are pleased to have reached agreement on the outstanding loan note,” said Matt Lofgran, Nostra Terra chief executive. “It now allows IRE to focus our energies on improving operations in East Ghazalat."