Nostra Terra Oil and Gas (LSE:NTOG) has successfully drilled its second well in the Permian Basin, Texas and is now moving on to drill a third well in the area. The firm said the G6 well, in which it owns a 53.25pc working interest, has been logged with oil shows in all of the target formations.
The well intersected more than 103ft of gross oil pay in aggregate across the target objected, and drilling completed on time and within budget. Nostra has run production casing and cemented the well and will now proceed with completion and tie-in operations in anticipation of beginning continuous production.
The well was the first of two back-to-back drills planned by Nostra in the Permian Basin. Its drilling rig has now been released and mobilised to the second well, where the business has a 73pc working interest.
Both wells are funded by Nostra’s existing resources, with support from the highly-attractive $5m Senior Lending Facility it secured with Washington Federal Bank in January. Nostra’s shares rose on the news in early trading, but were down 1pc, or 0.1p, to 5.1p as at the time or writing.
Matt Lofgran, chief executive officer of Nostra Terra, said: ‘We’re excited to see another well successfully drilled and logged following the Twin Well, again encountering all of the oil-bearing formations that are productive in the area. We look forward to completing the G6 well and are now moving quickly to drill the next well in that area, in which Nostra Terra owns a larger working interest.’
Nostra announced that it had decided to ramp up activity across its acreage in the Permian Basin last month. The decision followed stronger-than-expected production from its recently-drilled Twin Well at the Texas-based location.
The Twin Well jumped straight into production in February after skipping the test phase. Last month, Nostra announced that the well had produced an average of 58 barrels of oil per day (bopd), well ahead of its medium-term targeted production of between 25-40bopd.
The well’s quick turnaround into production was a vital factor in Nostra becoming cashflow positive at the Plc level for the first time in February, a status it has now held for three consecutive months.
Both of the new wells will have similar economic profiles to the Twin Well and are on the same lease targeting the same Clear Fork formation. Specifically, they will focus on secondary formations – common producing structures in the area.