Nostra Terra Oil and Gas Company PLC (AIM:NTOG, OTC:NTOGF) shares traded strongly on Monday, rising as much as 20%, after the company confirmed the success of its well workover activities in Texas.
Today, the company told investors it had completed Phase 1 of its workover program at the Pine Mills field in Texas, which delivered a 60% increase in production.
It said that oil production now averages around 120 barrels of oil per day (BOPD) net, thanks to the return of five previously shut-in wells to production.
Nostra Terra noted that it has also restarted its enhanced oil recovery project (waterflood) in the northern area of Pine Mills, which had been inactive for over two years.
Initial results from this are expected in three months, with full benefits anticipated in six months, potentially adding 15-30 bopd.
Further workover opportunities have been identified in Pine Mills as part of a planned second phase, Nostra Terra added.
Meanwhile, in the Fouke area, the company has identified a new development location with an estimated 200,000 barrels in recoverable oil reserves.
“That has allowed us now to be a profitable company both at the operating level, at the field level and also at the corporate level,” Welch said in an interview with Proactive.
“It was a big undertaking for everybody but we're we did it and we're happy to be there.”
The Nostra Terra boss added: “So the immediate focus of the company is just continue to kind of wring costs out of the system and then look forward to developing some additional workovers.”
He also highlighted the anticipated benefits of the water flood-assisted recoveries, which will payoff progressively over time.
“The more barrels we can put in the ground the higher we're going to increase the pressure, the quicker we're gonna see that result.
“So we're just gonna continue to monitor that and you know get the 30 barrels a day that we think we can and hopefully by the end of the year beginning of January we'll start to see that response.
“We have a lot to play for moving forward and it's been an exciting last 5 months so far but the next 5 should be even more exciting,” Welch said.
Nostra Terra this morning also highlighted that operating costs reduced by 25%, and combined with increased production, the field’s netbacks and profitability have significantly improved, Nostra Terra said.
The firm expects it will now be cash flow positive both at the operating and corporate levels under current oil prices.
Paul Welch, who took over as chief executive in May, told investors he is excited about the asset's future potential and said he believes it will significantly exceed previous estimates.
"We are delivering on our plans to reduce costs, increase production, and grow our cash flow by focusing our efforts on our Pine Mills asset,” Welch said in Monday’s statement.
“It's been more than five years since an extensive work-over program was conducted in the field, and the results on the first five wells have exceeded our original expectations.
“We have also restarted the waterflood, which will take three months to show results, and we believe this has the potential to deliver an even greater boost to field performance.”
He added: “Pine Mills has been an exceptional resource for the Company and can potentially deliver more value in the future.
“The changes we've implemented have delivered significant savings and allowed us to improve our margins by more than 50%, with a corresponding improvement in the netbacks. This results in NTOG being cash flow positive at the operating level and now at the corporate level.”
In London, Nostra Terra shares closed Monday 20% higher, changing hands at 0.045p each.