Company oil production is currently averaging 120 bopd net, up significantly due to the contribution from the first phase of the planned workover program at Pine Mills in which NTOG has a 100% working interest (WI). Five previously shut-in wells have been returned to production. Pine Mills is currently averaging 80 bopd gross. This field rate does not include the Fouke production or any benefit from restarting of the enhanced oil recovery project or “waterflood.” To date, the work-over program has resulted in a production increase by an average of 30 bopd from the five restarted wells.
The work in the field, combined with the recent technical work, has identified a number of additional profitable work-over candidates that are expected to be completed in a second phase of the work-over program.
The waterflood in the northern section of the field, which had been shut for over two years, has also been restarted. The waterflood response is expected to take approximately three months from the restart of injection to see the first results, with the full benefit expected after six months of continuous injection. The full benefit of the waterflood response is expected to deliver an additional 15-30 bopd.
The Fouke 1 & 2 oil wells in which NTOG has a 32.5% WI are producing at a combined average of 105 bopd gross, water-free, and without decline since May 2024.
Recently completed technical work in the Fouke area has identified a 30-acre structure within the current lease, north of the Fouke 2 well, that is drill-ready and expected to contain more than 200,000 barrels gross of recoverable oil reserves (*) in the sub-Clarksville reservoir. Further work is also being done to evaluate two additional structures within the field that may have similar potential.
Operating costs, netbacks, and profitability
As a result of the recent work-over activity, several changes have been made to the field operations in Pine Mills, which has reduced the overall operating costs by approximately 25%. These reductions, combined with the recent production increases, have reduced the lifting costs per unit by more than 50%. This has improved netbacks to more than $44 and $63 per barrel for the Pine Mills and Fouke areas, respectively, significantly increasing overall field profitability.
Lower costs and higher netbacks are a direct result of the strategy formulated in May 2024 to focus on the Pine Mills Field, which was in decline and had not been a priority under previous management. Cost reductions, coupled with the workover program results, have increased production, improved profitability, and allowed NTOG to become cash flow positive at the operating or field level and also at the corporate level at current oil prices.
“We are delivering on our plans to reduce costs, increase production, and grow our cash flow by focusing our efforts on our Pine Mills asset,” said Paul Welch, CEO of Nostra Terra. “It’s been more than five years since an extensive work-over program was conducted in the field, and the results on the first five wells have exceeded our original expectations. We have also restarted the waterflood, which will take three months to show results, and we believe this has the potential to deliver an even greater boost to field performance.
Pine Mills has been an exceptional resource for the company and can potentially deliver more value in the future. Following this successful work-over program, we have identified additional wells in other areas of the field that will be addressed in a second work-over phase. We have also identified other targets for future programs. In addition, we have recently identified a new drill-ready development location in the Fouke area, which we believe possesses another 200,000 barrels of additional oil reserves, and we are also at an early stage in evaluating two further structures that we think could have similar potential.”
