Nostra Terra opens data room for partners interested in Mesquite

Oil and gas exploration and production company Nostra Terra announced the opening of a data room for parties interested in farming into the Mesquite Asset in the Permian Basin on Tuesday.

The AIM-traded firm had announced on 21 January that Trey Resources had delivered the first complete iteration of the Mesquite Field Development Plan, which covered the initial 1,384 net acres at Mesquite, in which Nostra Terra has a 100% working interest.

It said that, based on Trey's analysis, it had concluded that the initial acreage contained 2,400,000 barrels of recoverable oil.

Using Trey's current and mid-case estimates, Nostra Terra had assigned a $21.6m net present value at a 10% discount (NPV10) valuation to the initial acreage at current strip pricing, and a $28.6m NPV10 at $60 crude prices.

Using those prices, the company calculated that Mesquite delivered an internal rate of return of between 34% and 46%.

Trey would work on future iterations of the Mesquite field development plan, as Nostra Terra secured more acreage, the board said.

However, in the meantime the company said it was now able to commence farm-in discussions with interested parties.

Nostra Terra had already received several unsolicited approaches from potential industry partners concerning Mesquite, it claimed.

To facilitate farm-in discussions, it confirmed it had prepared a data room, which contained “complete records” of the analysis conducted by Trey and Nostra Terra in their assessments of Mesquite and the surrounding area.

That included a 15 square mile volumetric map, and details of the in-house regional petrophysical analysis, which Trey used to create effective porosity, water saturation and net maps to build the volumetric model (the ‘AMI’).

Nostra Terra said the AMI presented a “significant expansion opportunity” for Nostra Terra, and any possible future farm-in partner.

The board said it would now make the data room available to interested parties, subject to confidentiality.

“Now that we have the first complete iteration of the Mesquite Field Development Plan, we are in a position to commence farm-in discussions,” said Nostra Terra chief executive officer Matt Lofgran.

“Mesquite is an extremely ambitious project for a company of Nostra Terra's size, with a great deal of potential to expand the current acreage.

“Teaming up with the right industry partner could unlock substantial value for shareholders, both in terms of the current NPV10 estimates and securing a much greater regional footprint.”