Acquisition of Producing Assets & Issue of Shares

2 September 2020

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Acquisition of Producing Assets, Issue of Shares and TVR

Nostra Terra (AIM: NTOG), the oil & gas exploration and production company with a portfolio of development and production assets in Texas, USA, is pleased to announce the acquisition of a 100% Working Interest in the Caballos Creek Oil Field, a producing oil field with additional development opportunity in Atascosa County Texas.

Highlights

·    Independently assessed PV10 US$1,052,300 for proved reserves

o Proved reserves as at 30 June 2020 of 92,100 boe (gross)

o Remaining economic life of 16 - 32 years per well

·    Shallow, conventional, oil producing assets

·    745 acres, all held-by-production ("HBP")

·    100% working interest ("WI"), with NTOG assuming operatorship

·    30 bopd current production (gross), which increases Company-wide production by circa 25%

·    Financed entirely without dilution

·    Estimated payback less than 2 years

Further details on the Acquisition

The primary assets are shallow, vertical oil wells producing 30 bopd gross (22 bopd net of royalties) with further development potential. Proven reserves (producing and non-producing) are PV10 US$1,052,300 with estimated remaining economic life of the wells ranging from 16 years to 32 years per well, per third-party engineering report performed by Netherland Sewell & Associates ("NSAI").

The acquisition represents an approximately 25% increase in total Company daily production, from year end 2019, financed entirely without dilution.  As at 30 June 2020, NSAI estimated proved remaining reserves of 92,100 boe gross, 69,300 boe net. For the year ended 31 December 2019, the assets generated turnover of c. $0.35 million and profit-before-tax of c. $0.22 million. 

Nostra Terra has entered into an agreement to acquire 100% WI in the assets from Oro Resources LLC and Oro East Tx LLC for US$425,000, which is anticipated to close within the next week. The acquisition includes 5 producing wells, 2 injectors, and 1 shut-in producer located on 745 acres in Atascosa County Texas. The entire acreage is HBP, hence the leases will continue in perpetuity due to the existing producing wells. The primary producing formations are the Miocene Hockley, Navarro, and the Olmos. The previous owner made a significant investment in the current infrastructure (estimated over $500,000), providing room for further development. The Company estimates that the assets will reach payback of the acquisition cost in less than 2 years (based on current production rate and $40 oil price).

Acquisition Financing

Nostra Terra has arranged non-dilutive financing from an unconnected third-party in the amount of $430,000. The financing is a loan note carrying an 8% coupon, 10-month term, with a $30,000 redemption fee (the "Loan Note"). The Loan Note has limited recourse only to the assets in Atascosa County. Nostra Terra plans to move the financing for the acquired assets over to its existing Senior Facility prior to the Loan Note being due.

Issue of new Ordinary Shares to Consultants and Directors

3,846,154 new ordinary shares of 0.1 pence each in the capital of the Company ("Ordinary Shares") ("Consultant Shares") and 3,000,000 warrants over Ordinary Shares, exercisable for a period of two years at a price of 0.60 pence per Ordinary Share, have been issued to the Company's US consultants assessing the acquisition and finance of the assets. The Consultant Shares were issued at a deemed price of 0.3p per Consultant Share.

As previously announced on 8 June 2020, the Directors of Nostra Terra agreed to be paid for 3 months of their annual remuneration in new Ordinary Shares in order to further improve the cash flow of the Company, with such shares to be issued at a time to be determined in the future by the Board. Accordingly, Mr Staley, Mr Lofgran, and Mr Stafford have each been issued 4,166,667, 12,179,487, and 2,500,000 new Ordinary Shares ("Director Fee Shares"), respectively, at a deemed price of 0.30p per Director Fee Share.

The cash fees currently being deferred for all Board members will continue to be deferred for the time being to allow the financial position of the Company to continue to improve.

Messrs Staley, Lofgran, and Stafford are interested in 8,166,667, 50,705,463 and 2,500,000 ordinary shares respectively, representing 2.15%, 13.36% and 0.66% of the Company's enlarged issued share capital.

This demonstrates the start of our stated growth plan, continued the alignment of Directors and shareholders, and commitment of the Board to the future success of Nostra Terra.

Admission to Trading on AIM and Total Voting Rights

Application will be made for the admission of the Consultant Shares and the Director Fee Shares, totalling, in aggregate, 22,692,308 new Ordinary Shares, to trading on AIM, which is expected to occur at 8.00 a.m. on or around 7 September 2020.

Following Admission, the Company will have 379,520,534 Ordinary Shares in issue, none of which will be held in treasury. Accordingly, the total number of voting rights in the Company will be 379,520,534 and shareholders may use this figure as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

Matt Lofgran, Nostra Terra 's Chief Executive Officer, said:

"The first half of 2020 was relatively quiet from an acquisition perspective as the Board took a very measured approach to assessing the turbulent economy, board changes and oil price environment. Considerable effort has taken place since to identify assets that make money in a low oil price environment, and to which we could add to our portfolio on good terms while being cautious about dilution.

We're very excited about the acquisition of these assets. We're acquiring low risk, producing assets, with average life over 20 years, immediately adding net cash flow to the Company, all with non-dilutive financing."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014

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