Nostra Terra Oil & Gas has lost the exclusive right to acquire an interest in producing assets in New Mexico’s Permian Basin after failing to meet a payment deadline.
The company is still hoping to raise the necessary funds to complete the deal by issuing a bond instrument is also looking at other potential new projects.
Nostra Terra remains in ongoing discussions with a number of interested parties for provision of a bond but despite the recent rally in the price of oil, financing conditions remain tight within the industry it warned.
Nostra Terra struck a $3million deal to purchase a 60% working interest in Permian assets from Alamo Resources but failed to pay the bulk of that consideration by the original deadline at the end of March and also missed last Monday’s extended deadline.
As a result, other interested parties are now free to make offers and evaluate the assets – comprising 55 active vertical producing wells and 12 active injector wells.
It remains keen on the acquisition however, as the purchase price, cash flow projections for the asset and $17 lifting costs present a financially attractive proposition.
“Nostra Terra continues to work closely with the seller to complete the proposed acquisition and the board of the company will continue its efforts to secure the necessary debt funding but it has not negotiated a further extension to the closing of the acquisition of the Permian assets,” the company said.