Nostra Terra acquires its way into Permian Basin

Nostra Terra Oil and Gas announced a new acquisition on Monday, with the purchase of producing assets in the Permian Basin of New Mexico from Alamo Resources II.

The AIM-traded company agreed to pay $3m to acquire a 60% working interest in the producing assets located in the southwestern US state. $2.7m was due by 31 March, and an additional $0.3m was due one year later, payable in cash or shares in Nostra Terra at its own discretion.

Nostra Terra said it would finance the acquisition with a debt facility, covering the entire acquisition cost. The net cash flow in the current oil price environment would service the debt while excess cash may be reinvested, the company said.

"The leases will add significantly to our production, revenues, and reserves. While we will add over 1.6m barrels of proven reserves, less than 20% of that is currently producing, providing scope for significant improvement," said Nostra Terra CEO Matt Lofgran.

"The leases are 100% operated and 100% held by production, meaning Nostra Terra will be in full control of the development pace," he added.

Nostra Terra's board said the assets generated turnover of $1.8m for the year ended 31 July 2015, with a profit before tax of $0.25m, including $1.02m non-recurring expenses.

The company's 60% working interest would give a pro forma turnover of $1.08m revenue, and profit before tax of $0.15m at current oil prices.