Nostra Terra has entered into a second agreement with New Century Exploration, shortly after its initial 1 percent investment in the Vintage Hills prospect earlier this month. Under the agreement Nostra Terra acquires a 3.64% working interest before payout (3% after payout) in the Nesbitt prospect unit, which is located within the producing Woodlawn field in Harrison County, Texas and which will also be operated by New Century Exploration.
The Nesbitt prospect is a horizontal development project targeting the Middle Pettet limestone formation. Most of the production to date from Woodlawn has been from the Lower Pettet "Crane" Zone. Previous vertical drilling on the Nesbitt acreage has indicated that the Middle Pettit is also oil-bearing and much thicker, but less porous and permeable, than the Lower Pettet - making it an ideal candidate for horizontal drilling.
Drilling of a new horizontal well, with a true vertical depth of approximately 7,000ft and a lateral section of 3,000ft, is expected to begin in the first quarter of 2011. Nostra Terra's participation in the first well allows the opportunity to participate in the additional wells on the lease and a further two development wells are planned to fully exploit the Middle Pettit within the Nesbitt unit.
Nostra Terra has paid a cash consideration of US $52,291 in respect of its budgeted participation in the drilling of the first Nesbitt horizontal well, with an estimated additional $14,145 completion cost.
Updates on progress on both the Nesbitt and Vintage Hills prospects will be provided in due course.
Matt Lofgran, CEO of Nostra Terra, said, "I am delighted that we are able to extend our relationship with New Century Exploration as we seek to grow the scale and quality of our asset base. Both companies recognize the potential of horizontal drilling technology to generate strong capital growth and sustainable cash flow from established oil and gas reservoirs. This has already proved to be the case in the Austin Chalk, and horizontal drilling is particularly effective in exploiting tight oil-bearing formations like Nesbitt's Middle Pettit limestone."
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