Cypress will have to undertake drilling and completion of a well on the 80-acre spread Well Area in the Pine Mills acreage to earn a 75% stake from Nostra Terra
UK-based Nostra Terra Oil and Gas has signed a farm-in deal with Cypress Mineral and Cypress Production (Cypress) pertaining to its 100% owned Pine Mills acreage in East Texas, US.
As per the terms of the farm-in deal, Cypress will have to undertake drilling and completion of a well on the 80-acre spread Well Area in the acreage to earn a 75% stake. Nostra Terra, which will not bear any expenses associated with the drilling, will retain a 25% working interest in the well and the Well Area, which doesn’t have any existing production or reserves.
Currently the company, through its subsidiary New Horizons Energy 1, holds 100% working interest in the Pine Mills leased area, which spans 2,400 acres.
The deal does not include the remaining 2,320 acres of the Pine Mills leased area, where the company has identified an additional area following a review of a 3D seismic survey taken up by a third-party. The company expects the area to be suitable for a farmout deal or future drilling.
As part of the deal with Cypress, the company has an option to take part for a 10% working interest at cost in the non-carried part of the asset, with such option needed to be exercised within 30 days from execution of the agreement.
If exercised, Nostra Terra will increase its stake to 32.5% in the well and Well Area with 10% of the well cost.
Nostra Terra CEO comments on the deal with Cypress
Nostra Terra CEO Matt Lofgran said: “Pine Mills has been a stable producer for the Company, whilst providing much scope for expansion. A farmout gives us the ability to leverage our existing asset and seek to grow our production and reserves, with no cost to Nostra Terra.
“We look forward to the opportunity to add new wells that could provide a significant increase in production.
“The farmout agreement is a clear execution of the Board’s recently stated goal to carefully manage existing assets and restrict work to that which improves the economics of each project in the light of the changing oil price environment.”