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Nostra Terra shares slump after Texas well forced to shut down
Oil and gas firm Nostra Terra saw its shares dip on Monday after the company reported that operations have shut down at its C8 well in the Permian Basin, Texas.
The AIM-traded company's drilling operations ceased at the site for safety reasons after salt water was encountered at a depth of 2,195 feet, just a few hundred feet above the main targeted reservoir.
Nostra Terra said a cement plug is being set in order to safely abandon the well.
Matt Lofgran, chief executive of Nostra Terra, said: "Drilling operations were running smoothly including oil shows in the initial targeted formation. However, once the surge was encountered the group quickly made the decision to shut down operations for the safety of the drilling team and to limit financial exposure in order to allocate funds to other future wells."
The company reported that it managed to save "the majority of its budget" for the C8 well due to the prompt shutdown of operations.
Data gathered from the operation will also be used when planning future wells on nearby lease areas for which the company intends to target the Clearfork and San Andres formations.
"Although this isn't the result we were hoping for, the oil field isn't without risks. We plan for this by having a larger and carefully balanced portfolio. Our exposure is only approximately 3% of our current market capitalization. Nostra Terra's balance sheet remains strong and we continue to be cash flow positive at the Plc level, while still growing our production and reserves," said Lofgran.
As if 1239 BST, Nostra Terra's shares were down 9.79% at 4.37p.