Nostra Terra Oil and Gas Company PLC (AIM:NTOG, OTC:NTOGF) earlier this week secured an injection of capital to support its next phase of growth in Texas, and chief executive Paul Welch spoke with Stephen Gunnion in the Proactive studio.
It comes after the first phase delivered production growth and boosted cash generation in the business.
Here, we take another look at what was said.
Proactive: I'm joined by Nostra Terra CEO Paul Welch. Paul, very good to speak with you. You've completed a £500,000 fundraise, which has brought new institutional investors on board. Strong support for the fundraise?
Paul Welch: Yeah. No, we had fantastic support for the fundraise.
We're really happy to put it away. It was the second phase of a two-phase workover program that we started back in July. So, we were happy to get it done yesterday.
Proactive: I see the shares were issued at a bit of a discount. Could you explain that?
Paul Welch: Yeah. Unfortunately, it went out at a bigger discount than we would have liked. The shares were down the previous week and trading around 0.03 pence per share. One of our largest investors made a comment at a conference that the company could go up two to five times. That happened on the day we were doing the raise, and the share price rose by almost 25%. But we were already in the market raising, so the discount was larger than we would have liked.
However, we're happy to get the money, and we expect to retrace those steps relatively quickly. It was just unfortunate timing in a tricky market.
Proactive: Fortunate for the new investors though, Paul. You talked about the two phases of the workover program.
We've discussed the first phase, which increased your production by 30 barrels of oil per day. Tell us how this cash will be used for the second phase and what the prospects are.
Paul Welch: The second phase targets another five wells. These wells are a bit more challenging than the first five but should produce more oil. Many of these wells need new casing.
We're not drilling new wells but reworking the existing ones. The first wells averaged six barrels per day net production. These next wells could produce between six and 15 barrels per day, so we’re targeting about 50 barrels or more of increased production once they’re fully operational.
The second phase is larger and should deliver more impact than the first. Additionally, there’s untapped potential in the first phase. We’ve restarted the water flood in the northern part of the field, which could deliver another 15 to 30 barrels per day.
That process will take three to six months, with the first barrels expected in December and increasing into the first quarter.
Proactive: And of course, this should significantly boost your revenue and cash flow going forward, Paul?
Paul Welch: It will. The first 30 barrels per day are profitable for us. Once we exceed that profitability hurdle, every additional barrel adds about $50 in profit—sometimes more, depending on the field.
In Fouke, for example, it’s closer to $65 per barrel. For Pine Mills, it’s $45 to $50 per barrel.
Once we get all these wells running, we expect to increase our monthly cash flow by nearly fivefold. It’s a significant step change. The work begins in early December and should take six weeks, with benefits visible in the first quarter.
It’s an exciting time for shareholders, and I believe even those joining now will be richly rewarded.
Proactive: Paul, I hope you'll keep us updated on any progress. Thank you very much for speaking with us today.
Paul Welch: Thank you. Appreciate your time.