Nostra Terra Oil and Gas Company PLC (AIM:NTOG, OTC:NTOGF) this week joined the Proactive studio to talk about the firm’s positive production and operations update.
CEO Paul Welch highlighted that, after joining in May, the company redirected its focus to Pine Mills. It led to a 25% reduction in operating costs and a 30-barrel per day increase in production, marking a 60% uplift.
Welch noted that the improvements raised profitability both at the field and corporate levels. He also discussed the reactivation of a water flood project in northern Pine Mills. Expected to yield additional barrels.
We take a closer look at what was said here.
Proactive: Paul, very good to speak with you. You're out with a production and operations update, and you eventually significantly increase production while also cutting operating costs.
So, a very positive development for the company?
Paul Welch: That's correct, yeah. We spent the better part of the summer just working on the field. I came on board in May, and at that point, we decided to change the company strategy and really focus on Pine Mills, which is our premier asset.
We've done that. Through the months of June, July, and August, we worked hard on several workovers, improved production facilities, and refined operations.
As mentioned in today's release, we reduced operating costs by 25%, increased field production by 30 barrels a day, and improved our profit per barrel by 50%.
Proactive: That has allowed the company to be profitable now?
Paul Welch: Yes, it has. We've become profitable both at the operating level and the corporate level. This outcome was a significant effort for the team, but we're pleased with the results.
Now, everything beyond this is an additional profit. So, as we move forward, we will be more profitable. It was a really good result for us.
Proactive: You mentioned a 30-barrel per day increase at Pine Mills, a 60% rise. You're now averaging 120 barrels per day company-wide. Is there more potential for improvement?
Paul Welch: Yes, there is. We restarted a water flood project in the northern part of Pine Mills, which had been shut in for two years, at the end of September. It takes about three months to see results as we need to replenish reservoir pressure.
This could add another 15 to 30 barrels a day. These additions are profitable, as our overhead is fixed. Thirty more barrels a day at the current netback would boost our annual revenue by $0.5 million, a significant increase given our starting market cap of around £1 million.
Proactive: You also spoke about potential development in the Fouke area. Is that a current focus or more of a long-term plan?
Paul Welch: In that area, we have a partner, so development depends on oil prices and their interest. We expect to start within the next 12 months.
The area has been mapped, and it’s a ready location where wells could each yield about 120 barrels a day, generating $66 profit per barrel. Our stake there is 32.5%, which, though smaller, would still contribute considerable revenue.
Proactive: What is your immediate focus as 2024 closes?
Paul Welch: We aim to maintain cost-cutting and further develop workover projects as cash flow permits. We’ll also support the water flood process to accelerate results.
We hope to achieve an additional 30 barrels a day, potentially seeing outcomes by year-end or January. It’s been an exciting five months, and the next period should be even more so.