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Nostra Terra spikes following borrowing base boost on landmark lending facility (NTOG)

Shares in Nostra Terra Oil & Gas (LSE:NTOG) leapt 6pc to 4.5p this morning after the company announced that the borrowing base for its senior lending facility with Washington Federal Bank has increased by $750,000. The additional money, which will be immediately available for use, brings the borrowing base for the $5m facility to $1.95m.

The recalculation of the borrowing base was calculated using Nostra’s production as its Pine Mills acreage as of 1 May this year. Its increasing production in Texas’s Permian Basin and its recently announced production increases at Pine Mills were not factored into the borrowing base calculation. As a result, the business said it expects the borrowing base to increase further when next recalculated.

The facility with Washington Federal Bank, secured in January, has no geographic restrictions and an interest rate of just 4.75pc – virtually unheard of terms for a junior commodities firm. What’s more, Washington Federal is a well-regarded lender in the energy market with around $15bn in assets under management. As we wrote at the time, banks like this do not lend money unless they are confident they will get it back.  With this in mind, Washington Federal’s willingness to extend terms after a lengthy due diligence process at Pine Mills was another ringing endorsement for Nostra, given that it had already secured a facility with BP.

Elsewhere in today’s update, the business said that the completion process of its new G6 well at its Mitchell County Licence in the Permian Basin is continuing. Commercial production has started, and Nostra will provide a production update from its Permian assets once stabilised rates can be reported, continuing the firm’s tradition of not releasing initial flow rates to the market.

It also said it is finalising plans for further drilling in the second half of 2018 and will provide an update on this in the coming weeks.

Matt Lofgran, chief executive of Nostra Terra, said: ‘We are delighted at our progress this year and the increase in the size of borrowing base of the facility is testament to the resources we have invested in developing our current portfolio. Being cashflow positive at the PLC levels also means that any funds used from the Facility can go towards drilling new wells to continue our growth.’

Author: Daniel Flynn

The author does not own shares in the company mentioned in this article

 

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