Nostra Terra Oil and Gas Company PLC (AIM:NTOG, OTC:NTOGF) chief executive Paul Welch discussed the company's recent fundraiser of £450,000 aimed at returning idle wells to production, which is expected to significantly boost daily production and cash flow. He also emphasised the potential of the Pine Mills field, which is projected to increase production and generate substantial revenue through optimised drilling techniques and 3D seismic analysis.
Proactive: To start, can you give us an intro to Nostra Terra? For those who are not familiar with the story?
Paul Welch: Sure. Thanks, thanks. Thanks for having me. Great to be back. So Nosta Terra is an onshore U.S. producer. relatively small cap, UK listed. Our primary assets are in East Texas, in the US. And then we have a few legacy assets in West Texas and in South Texas that we're currently selling. I came on board, almost two months ago now, after having been a board member for the better part of two years.
Since I've come on board, we've kind of revamped the company. We've done a number of things. We've focused on our producing assets and we started to sell the assets that we didn't make any money with. So we went through a whole restructuring process where we look, you know, is something making money? Is it not? If it's not, then we're going to move on even things that are making money where they're making a sufficient amount of money for us to keep. And if we can't get rid of them, we cut our overhead. So we did a kind of a complete revamp of the company.
We also changed the board members as well. So since I've come on board, we've changed the board, and we've cut our G&A by a substantial amount. And we've really focused on generating cash from our primary asset, which is in the Pine Mills field. It's about 100 miles east of Dallas, which the company originally purchased in 2019. But hadn't really invested any substantial money into it subsequent to that acquisition. And so the money that was generated from the field was used to buy other assets and look in other parts of the world, kind of a geographic expansion rather than a cash flow or production expansion. And so we're kind of changing that narrative, and we're putting money that the field is generating back into the field to increase its production.
Proactive: Well, you just raised £450,000 in a fundraise. Can you tell us what the proceeds will be used for?
Paul Welch: Right. So we just did a fundraise. And so that was essentially to return idle wells to production. So we have 11 wells that are capable of producing. When the field was originally purchased there were 20 producing wells, we're down to nine now. And so there's 11 idle wells. And so we've reviewed those 11 wells and the first six of those, that have the most potential. We're going to return to production using the funds that we just raised in the last few days here. And so when we return those wells to production, that will increase our daily production by plus or minus 50 barrels a day.
So over the course of a couple of months will increase production. And in Pine Mills, we have a netback of roughly $40 a barrel at $75 Brent, which is where we are today. So, you know, if you take 50 barrels a day times $40 a barrel, you know, you're looking at increasing your revenue by almost $2,000 per day. So that adds up over time. And so that's, you know, that's the purpose of this is to get this money back into the ground, return these wells that have been sitting there, you know, just waiting for this money to be invested in them, and then generating the cash we know we can from that and then putting again that money back into the remaining five wells to return those production. So we think it's a good use of funds. It's something that's been needed for quite some time. Because over the course of five years, these wells have just come off production and some of them have been idle for more than three years. So again, it's the idea of just basically investing in our primary asset and generating cash from that.
Proactive: Well, what can we expect to hear from Nostra Terra over the next 6 to 12 months?
Paul Welch: In six to twelve months, I think we're going to hear the story of more wells returning to production. And then we're going to hear, you know because we think we have about 85 barrels a day that are idle at the moment. So the fields making plus or minus 70 at the moment prior to restarting these wells, we think we have about 85 barrels that we can return. So, you know, we can see a doubling of production. And when we doubled production, our cash flow increased by almost 6x because our costs didn't change. Right? We have a facility. We have a staff, we have everything in place. So the majority of that revenue just drops straight to the bottom line. So we see a significant increase in cash, which is important.
In addition to that, we, you know, we picked up this field in 2019. There has been a 3D seismic program that was shot in 2018 that covered a big portion of the field, and that really has not really been looked at in detail across our field. And so back in January, we started a process where we farmed into the 3D, and now we're looking for opportunities. And the reason that's important is that in 2022, a company called Cypress farmed into 80 acres of a, which is a small portion of our field, and drilled two wells, the Fouke-1 and the Fouke-2. And those wells came in at 120 barrels a day each. Right. So the field itself is making 75. One well in Fouke is making more than that. And so what we're doing now is looking for other Fouke-like opportunities. We definitely see one. We think we have up to three more out there. But I think the more important point is that when the field was originally developed back in the 50s and 60s, you know, some 70 years ago, it was developed with bad quality 2D seismic. Now we have good quality 3D seismic. So a lot of the well locations, and the placement of those wells we think can be optimized.
So we do see an upside in the existing main body of the field. And looking at this 3D. And the other thing too is that there are four horizons in the Pine Mills field. The majority of the production has come from one of the four. And so all wells have drilled these four horizons. So we have the ability to go back in and look for opportunities that haven't been completed in the past. So I think we're going to hear a lot about Pine Mills, which is what I've been talking about today. And but what about the technical, I think, understanding and improvement in the operation in that field.
And so anything that we do here is relatively cheap because the Wells, you know, a new well is less than $1 million of dry hole and re-completion is, you know, $15,000 to $30,000, you know, and so one of those re-completions can add 20 or 30 barrels a day. It's a very, very profitable piece of business. So it's not exciting. It's not, you know, we're not drilling, you know, deepwater offshore wells, but it's one of those things that really makes a difference to the company, because the revenue stream, again, it's important to us because of this fixed cost element we have the more, the more revenue we can generate, the more barrels we can produce, the more profitable the company becomes. And I kind of that's our that's our focus over the next 6 to 12 months.
Proactive: Finally Paul, why should investors be excited about Nostra Terra?
Paul Welch: I think they should be invested because it's a new team, new energy, and there's a lot of new opportunities out there. I mean, I think from my perspective, what gets me excited is the Fouke opportunity because this was a field that was discovered in 1949. And in 2022, two new wells were drilled in the main part of the field, and they came in essentially at original reservoir conditions. And so with the 3D seismic, you know, we have a new interpretation of the field, and I think we're going to see a lot of opportunities like that. So, you know, small full plot that hadn't been developed originally, you know, that has, you know, has production that comes in at 120 barrels a day. Now, that has changed when the original Fouke wells were drilled, there was a limit of 80 barrels a day, and now we can drill that. We can produce these wells at 50% higher rates, 120 barrels a day.
So, you know, those wells payout in something like in depending on the oil price, but less than six months. And so, you know, for us that is a huge addition to the revenue stream. And we really think that that that will that will turn the needle. That'll make a big, big difference in the the story going forward is these new opportunities that aren't probably new to the field. They've been sitting there for 60, 70 years, but because we didn't have a 3D seismic available to us, we couldn't develop them. Now that we do, we can do the technical work required to find these opportunities and put them into production relatively cheaply. I mean, some of them will just be re-completions and that is something, you know, we can do our existing cash flow. So we're we're really excited about that. So I think it'll be a lot of Pine Mills I think we probably word people will get tired of hearing.
But it's but it's the opportunity in front of us. And I think that that is, you know, exciting. And it can generate revenue. And I think it can really make the company something that it hasn't been in the past, which is something that's growing, increasing production and generating cash, in excess of expenses, which is important. So I think that's what the future looks like for us.
Proactive: Paul, I hope you'll keep us posted on any progress. Thank you very much for the update today.