London-based Nostra Terra has received approval for a request to increase production at the two Fouke wells in its Pine Mills oilfield in Texas.
In April, Fouke wells operator Cypress Production Inc. requested a permanent increase in the allowable field rate from 82 barrels of oil per day (bopd) to 126 bopd per well before the Texas Railroad Commission. The commission has now released a final order approving the proposed change, Nostra Terra said in a news release Thursday.
The final order cancels all accrued overproduction that has taken place since start-up, therefore the company will not have to bear any consequences for the overproduction to date, according to the release.
The Fouke 1 and Fouke 2 wells, in which Nostra Terra holds a 33 percent working interest, are currently producing 88 and 91 bopd, respectively, with both still above the original field limit, Nostra Terra said. Fouke 1’s cumulative production, which started January 2021, is 76,634 barrels of oil, while Fouke 2’s cumulative production, which began May 2022, is 56,294 barrels of oil, the company noted.
Nostra Terra said it is undertaking further geological and geophysical work on the rest of the Pine Mills acreage, where it owns a 100 percent working interest, aiming to identify additional “Fouke-like” locations.
“We are very pleased to have a positive result from the hearing, allowing the wells to be produced at these new limits while not requiring the company to make up for its past overproduction”, Nostra Terra Chief Executive Officer Matt Lofgran said. “It’s the best possible result we could have achieved. These wells have provided strong cash flow and a great return on investment. The company continues to seek additional similar opportunities in the area.”
In its audited annual report, Nostra Terra reported a 2022 net loss of $546,000, compared to a 2021 net loss of $1.09 million.
Nostra Terra’s revenues for 2022 were $4.02 million, an increase of 76 percent from $2.3 million in 2021, which the company said reflected a combination of a 19 percent increase in production sales and an improving commodity price environment. Its 2022 gross profit before non-cash items of depreciation, depletion, and amortization was $2.2 million, “vastly improved” from a gross loss of $574,000 in 2021, the company said.
“As planned, Nostra Terra took advantage of the generally strong oil prices during the year to consolidate production and to invest further into our existing acreage”, Nostra Terra Non-Executive Chairman Stephen Staley said in the release. “Strong cash flows meant that we were able to drill both the Fouke #2 (East Texas) and the Grant East #1 (Permian Basin) wells without diluting existing shareholders. The Fouke well has been a good producer, though the Grant East well suffered from completion problems.”
“Also, in line with our strategy for 2022, further workovers on existing wells took place during the year. These have supported our production volumes and our revenues”, Staley said. “All in all, 2022 provided the Company with the highest production and revenues since it was founded.”
“Toward the close of the year, this was a contributing factor to the increase in the borrowing base of the senior facility provided to Nostra Terra by WAFD [Washington Federal Bank] from $3,350,000 to $4,350,000, though increases in interest rates globally also led to an increase in the interest rate associated with this facility”, Staley added.
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