Nostra Terra Oil & Gas (LON:NTOG) revealed this morning it is acquiring a 16.25 percent working interest in the Verde prospect in south-eastern Colorado.
It has struck a deal with operator Plainsmen Partners, which is sinking an initial test well to 5,300 feet to target Mississippian formation at a total cost of US$1.1 million.
Nostra Terra will pay US$183,900, and drilling is expected to get underway in the third quarter. There is the potential to recover oil and gas from a number of shallow horizons.
The company says 3D seismic has been shot and interpreted that supports the subsurface mapping of a structural high being 25 to 50-feet up dip to historical production from the Lower Morrow Keyes.
Should the drilling of the initial test well on the Verde prove successful, two to three further development wells could be drilled, and Nostra Terra has the right to participate.
Chief executive Matt Lofgran said: “Nostra Terra is delighted to have entered into this agreement with Plainsman Partners, which further diversifies the company's operational relationships.
"The acquisition of a 16.25 percent working interest follows Nostra Terra's plans of continually upgrading our portfolio.
“We are also excited to be drilling in a location that is up dip from previous production. This could provide the participants in the Verde prospect with the opportunity to set up offset development wells."
In all, Verde covers 636 acres. Although Nostra has a 16.25 percent working interest, its net revenue interest is 13.41 percent.