Permian Basin Farm-in Agreement

21 September 2020

Nostra Terra Oil and Gas Company plc

("Nostra Terra" or the "Company")

Permian Basin Farm-in Agreement

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 a farm-in agreement targeting immediate production in the Permian Basin.

Highlights:

·    Targeting near-term production and cashflow

·    Low risk opportunity 

·    Minimal cash outlay

·    Commercially attractive by using existing drilled well that never completed

·    Prolific basin

·    Shallow, conventional oil

·    Existing producing asset

·    Targeting upside through recompletions

·    15 existing wells (8 active producers, 1 Salt Water Disposal, 6 inactive)

o 3 planned recompletions  

·    6 additional potential drilling locations

Farm-in Agreement

Nostra Terra has signed a farm-in agreement with a consortium of local owners/producers for three leases in the Permian Basin (West Texas). The Company will pay a US$25,000 fee at closing, followed by US$100,000 towards the initial re-entry of the first well planned for completion  Nostra Terra will earn 50% of the net cashflow for the life of the well. Nostra Terra will then have the right to acquire a 75% WI , at any point prior to 31 October 2021, in all three leases, for an additional US$210,000 to the seller. Additionally, after the initial completion but prior to exercising the option to acquire, the Company can elect to perform another recompletion, prior to 30 September 2021, for a further $100,000 in a subsequent well of its choosing, where the Company would earn a 75% working interest ("WI") in the that well.

Asset description

The assets include three adjacent leases, (currently producing circa 4 bopd), all of which are Held By Production ("HBP"), hence the leases will continue with no relinquishment obligations due to the existing producing wells, and production facilities. The primary producing formations are the Permian Clearfork and San Andres, which typically exhibit low operating costs and stable production in this region.

The production facilities have a current storage capacity of 900 barrels of oil which will give Nostra Terra the ability to increase production whilst minimising spend on new facilities thus allowing oil to be sold immediately.

The leases are approximately 6 miles from Nostra Terra's 'Twin Well' (G5) in Mitchell County, Texas, which reached payback on investment in less than 1 year. The first recompletion will be performed on a well that was drilled in 2008, but prior to being completed, oil prices fell substantially and the operator suspended operations and investment. Nostra Terra will be re-entering the existing wellbore and completing the well in the same target formation and using the same completion techniques used in the Twin Well. All production facilities are already in place, including the purchase contract for oil. Preparations for the recompletion are now underway. Upon completion Nostra Terra will benefit immediately from increased cash flow in a success case.

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

"We're excited to add another opportunity to our portfolio that could have a significant impact in a very short period of time, with multiple additional opportunities to follow up at our election, while still holding further development opportunities. The transaction is structured in a way that minimizes both risk and cash outlay further providing leverage into a larger asset.

We now have a portfolio of three different areas of operations in; the Permian Basin (West Texas), Pine Mills (East Texas), and Caballos Creek (South Texas), all of which provide stable cashflow with upside development opportunity.

Earlier this month we announced the acquisition of the Caballos Creek oil field, followed by Cypress preparing to drill the new well at Pine Mills in October, and now the new opportunity in the Permian Basin. With these three distinct areas of activity we are in the process of turning 2020 into a strong year for Nostra Terra. We continue to screen new opportunities for growth and look forward to continued value accrual for shareholders."

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

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