Indeed, City broker Northland Capital, in a note points out that Nostra Terra is now a self sustaining, AIM quoted E&P company.
Nostra Terra ( LON:NTOG) told investors that the amount of money currently available under its credit facility has increased by 120% to US$1.1mln from US$500,000.
The parameters of the credit facility are linked to the group’s ongoing production performance and can rise to as much as US$25mln as output grows.
Nostra Terra said the current level of stabilised production allowed an increase in the borrowing base much earlier than it expected.
Separately, the company received a further cash boost as it was paid US$231,000 from Richfield Oil and Gas Company, which is the final amount owing following the settlement of a legal dispute.
"The increase in the facility and the collection from Richfield gives us an additional US$831,000 to be used in the field to continue growing our portfolio,” said chief executive Matt Lofgran.
“I'd like to add that the increase in the facility's borrowing base doesn't take into account the newest wells in our portfolio where Nostra Terra has an 11% and 20% working interest.
“Once those wells have stabilised production we anticipate a significant increase in production and subsequently a further increase in the borrowing base. This should help demonstrate the ability for the company to grow its production and cash flow without the need for dilution to shareholders."
The expanded borrowing limit both reaffirms that the production growth strategy continues as planned, and as this trend continues the company will have the financial wherewithal to scale up its investments.
Indeed, City broker Northland Capital, in a note points out that Nostra Terra is now a self sustaining, AIM quoted E&P company.
Northland, which today began covering the stock, with a ‘buy’ recommendation and a 0.37p target price, said Nostra Terra is building on a portfolio of low to mid risk exploration and appraisal opportunities
“Nostra has been able to embark upon a more aggressive well campaign this year that is seeing a marked increase in production volumes at its key asset, the Chisolm Trail (CT) prospect,” said analyst Andrew McGeary.
“New wells at CT could see the company raise production from c. 60 boepd to between 150 to 200 boepd. Longer-term there is scope for the company to grow by means of asset acquisitions.”
The analyst also said the accelerating production evident this year offers good scope for share price appreciation. He also anticipates a revisiting of his 0.37p price target, as Nostra’s operations continue to scale up.
On AIM, Nostra Terra shares today trade at 0.28p, up around 2%. |
