Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Today shareprophets speaks to Matt Lofgran about the highs and lows of running a small cap oil and gas company – namely AIM listed Nostra Terra Oil & Gas (NTOG)
I have often wondered why the more direct and pragmatic approach to speaking with investors taken by Nostra Terra's CEO Matt Lofgran has not been welcomed with open arms by the market, Today I caught up with Matt to discuss a few facts whilst sharing thoughts on valuable changes implemented.
For years private Investors have looked upon Nostra mainly with caution and the odd glimmer of excitement, each time quelled with a round of funding! We must remember that the company was on the brink of closure when Matt took charge – it is a wholly different beast today.
As things stand today, Nostra has a stack of wells in production or near production in the US and it is revenue generating. Output is increasing. Gastar Exploration Ltd. (NYSE: GST) has basically encircled the assets of Nostra, spending a fortune – that rather highlights how much Nostra’s acreage is worth. So to the Q& A:
Q. Recently Nostra announced from the Chisholm Trail project: '' We exceed expectation.‘‘ What effect has this had on the portfolio and what did the market miss with this paramount piece of news?
A. It’s important to understand what we’re looking at in order to build our portfolio: existing fields, stacked pay, oil-prone formations, with the ability to apply modern technology for significantly better returns.
1. Existing fields means we have well logs and other data that give us a better understanding of the formations in the field. We know the oil is there, a dry hole is rare, and it’s about the economics of getting it out.
2. Stacked pay means once we control the acreage we have multiple formations that can provide additional drilling opportunities beyond the “primary objective” (main formation being targeted).
3. We’re not interested in drilling for $3 and $4 gas when we can target $80 and $100+ oil.
4. Modern technology such as horizontal drilling and hydraulic fracking are having global impact. Going into an area with wells producing less than 10 bopd, then drilling a horizontal well in between them and getting 200+ bopd? Now that’s fun
The significance of the results of CT5 is we set shareholders expectation at 200 (boepd) a good production figure based on economics, but were very happy to see the wells surpass that which confirms we are expanding and derisking.
The production rate on CT5 shouldn’t come as a surprise what it should show is how we’re invested in a play that has repeatability. The Holy Grail in Oil & Gas exploration is a “Resource Play”. When we announced the results of CT5 our COO Alden said this has all the hallmarks.
Could we have a bad well in CT? Sure, it happens. Is it likely? No. We’re in a fortunate position on CT. Many know about Gastar ‘s (NYSE:GST) larger acquisition and news about the play.
Q. Nostra Terra has succeeded in increasing production while minimising overheads and is now operating a profitable portfolio which is allowing you the freedom to increase overall resource possibilities. Can this continue?
A. Yes, exactly correct. This is exactly what we’ve done with High Plains (HP). We have a larger Working Interest (WI) than in Chisholm Trail (CT), covering a much larger area. Unlike Oklahoma, Texas doesn’t have the same “forced pooling” laws, so our 20% WI will remain 20% WI.
Q.From recent presentations we see there are multiple productive formations all in the same well area?
A. Of course, that’s a common trait about all our prospects. We are always building our portfolio in areas of “stacked pay”. As one formation is explored, de-risked and under development there are other formations that can be explored hence generating additional prospects. There is a lot of exciting opportunity in the High Plains area, some of which we've spoken about in recent presentations.
Q. What are your thoughts on the share price performance and how this reflects (or does not reflect) Nostra Terra's position?
A. Microcaps have been down beat in 2013 and we are not exempt from that however as investors look for solid and safer options built on strong growing foundations, we offer a unique opportunity of a cash flowing portfolio in a critical environment.
Never miss a story.
This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.
Comments are turned off for this article.
Search ShareProphets |
Stock market news |
Recent Comments |