Nostra Terra Oil and Gas Co. plc (AIM: NTOG) has received approval of an exploratory unit within the Paw Paw prospect by the Bureau of Land Management (BLM).
The BLM approved the creation of an exploratory unit encompassing the most highly prospective 1,280 acres within the 2,440-acre leasehold within the Paw Paw prospect. All formations are included within the unit.
The company says that there are numerous benefits to the creation of the unit. Firstly, a single commercial well will perpetuate all leases within the entire unit, effectively suspending the original expiration terms. Secondly, Nostra Terra will be able to operate the original multiple leases as a single lease under a single operator. This process allows for more efficient, controlled development and is an important step in creating value to the prospect.
Nostra Terra currently has a 100% working interest in this prospect, where Koch Exploration (a subsidiary of Koch Industries) retains an overriding royalty interest with the right to convert to a working interest.
In tandem with applying for approval of the unit, Nostra Terra is in the process of becoming an operator in Wyoming and is in the process of applying for the necessary permits to drill.
As the oil markets strengthen, Nostra Terra plans to sell a promoted interest to other oil companies while keeping a carried working interest and operating. A contract operator has already been working with the company at various stages of the planning process. This allows Nostra Terra to scale up accordingly and drill larger prospects while maintaining lower overheads.
Haas Engineering (a third-party reservoir engineer) has projected that the potential resource of the leased acreage could be as much as 7.368 million barrels of oil from primary and secondary recovery.