Nostra Terra buys into Texas horizontal drilling prospect

Small UK oil explorer and producer Nostra Terra Oil & Gas has acquired an interest in its largest oilfield to date.

Confirming rumours late on Friday, the company, which is listed on the AIM junior market, has bought a 1% working interest in a 20,000-acre prospect in South Texas where an initial well has already begun drilling and new wells are planned every four months.

Management did not mention the exact cost of the purchase but said this and the cost of drilling wells would be funded from internal cash flow. There are plans to acquire further interests in the property "if appropriate".

Chief Executive Matt Lofgran said: "During the past several months we've been actively looking for additional assets from which to grow our portfolio, where they will have attractive economics even at lower oil prices. The play in South Texas fits that description. While many companies are cutting back their capex budgets significantly we are planning to continue to grow our production and reserves."

The initial well has been drilled to a depth of 4,500 feet and is expected to be completed in roughly 10 days after it is extended horizontally another 5,100 feet.

Nostra Terra said the property, which has been subject of extensive regional structural mapping, had shallow oil targets with associated liquids-rich natural gas.

Shares in Nostra Terra were up 10% to 0.16p by 10:45 on Monday.