Nostra Terra Oil and Gas chief executive interview
Investors in Texas-focused Nostra Terra Oil and Gas have endured a torrid time of late: aggressive shareholder activism, on-again/off-again general meetings to remove the CEO, chairmanship changes and a steadily falling share price.
But speaking to Total Market Solutions, chief executive Matthew Lofgran has explained why he believes the future is looking bright for Nostra.
What has happened at Nostra?
In early January this year, Nostra was not setting the world alight on the stock market – its share price had fallen from 1.35p in November to less than 1p – but everything appeared reasonably calm.
Then on 17 January, the company announced that activist shareholder Eridge Capital had requisitioned a general meeting seeking to remove Lofgran from the company’s board. To complicate the situation, the company revealed later that the removal of Lofgran could lead to the collapse of an important loan under terms agreed with the Washington Federal Bank.
In early February, Nostra revealed that Eridge – which is pushing for better corporate governance and lower remuneration – also wanted to remove chairman Ewen Ainsworth and set a general meeting date for 3 March to vote on the motions.
However, just before the general meeting was due to be held, the company announced Ainsworth would be leaving and replaced by Andrew Morrison for 12 months, at which time Stephen Staley, a new non-executive director, would take over. At the same time, Eridge withdrew its motion to remove Lofgran.
On 30 March, Nostra revealed though that Eridge had requisitioned another shareholder meeting to remove Lofgran as a director of the company.
Last week, with the company due to announce a date for this meeting by 16 April, Nostra revealed that Morrison has resigned as chairman and will be replaced by Staley with immediate effect.
The company also revealed last week that it had raised £318,055 to boost its balance sheet. This came after Nostra secured, on 1 April, a new hedging contract with BP to protect just over half of its revenue at $55.15 to $57.18 per barrel.
What the CEO says
As he faces a general meeting vote to remove him, Total Market Solutions about what investors in the company should be able to expect in the future with him in charge.
Q: Can investors expect a steadier ship now with the latest chairman in place?
A: “Later in 2019 and beginning of 2020 we interviewed several candidates that expressed interest in joining the board. We felt Dr Staley’s experience and expertise would make him a great addition to the company, including his experience from working with smaller companies such as Predator Oil & Gas to larger companies like Conoco and Cove, the latter where they went from early-stage to a very successful exit within a few years. We planned to appoint him in January but ultimately had to wait given the requisition. We’re excited he’s now the chairman and look forward to working together.”
Q: Can you explain more about last week’s hedging announcement? Why was it necessary, and how much of a boost is it to the company and shareholders?
A: “The hedges are huge! There is a lot of value in them. The market needed to know. Following the downturn in oil prices in 2015/2016 we repositioned our portoflio to have lower operating cost assets, in conventional reservoirs, with shallow declines and long production life. We then signed hedging facility with BP Energy. Normally something we would just include in our accounts, but as the price of oil dropped the hedges became material. We have just over half our production hedged for all of 2020, guaranteeing us $55 to $57 per barrel. Quite a bit of protection for the company.”
Q: What can investors expect from Nostra over the next year or so? What are you most excited about/ where are the big opportunities to come?
A: “Our focus is on increasing the scale of the company supported by strong fundamentals. Our board has diversified experience around the world and such we’re reviewing opportunities both inside and outside the USA as we look to expand our portfolio. We’re a low cost operator and will seek to take advantage of the lower oil price environment.”
You can catch the latest podcast interview with Nostra Terra here
Matt Lofgran spoke at the London South East (12/11/19) investor briefing here
We at TMS look forward to seeing you again later in the year…
The author was remunerated but does not hold shares