SMALL CAP IDEA: Nostra Terra's 'pragmatic' turnaround
Thirteen months on, Welch's approach, combining prudent cost management, targeted investments, and disciplined project execution, is starting to bear fruit.
The AIM-listed oil junior operates the Pine Mills field in East Texas, a conventional oil asset acquired back in 2016 for $1.2million.
Production from Pine Mills had dwindled significantly, dropping from an average of 107 barrels per day (b/d) in 2019 to just 54 b/d in early 2024, due largely to underinvestment.
Swift changes, low cost
Welch's new management team swiftly implemented a low-cost 'quick-cycle' workover programme, reviving 10 idle wells at a modest outlay of around $1million.
This relatively small investment nearly doubled production, lifting current output to about 130 b/d, with ambitions to push this further towards 150 b/d.
What makes Pine Mills particularly appealing is its economics. At oil prices above US$25 per barrel, the field generates robust cash flows, leaving Nostra Terra comfortably profitable even during periods of volatile oil prices.
SP Angel, the broker behind the latest coverage initiation, expects Nostra Terra to generate $1.4million in EBITDA by 2026, based on conservative WTI oil price forecasts of $67 per barrel.
This positive cash flow underpins further growth initiatives, meaning investors shouldn't anticipate frequent equity raises diluting existing shareholders.
Looking ahead, the company plans to drill the Fouke-3 development well in the third quarter of 2025.
Right risk-reward
Located within Pine Mills, Fouke-3 promises an attractive risk-reward profile: The well could produce up to 124 b/d, with payback expected within just a few months.
SP Angel attributes a one-in-two chance of success to Fouke-3, which, alongside the restarted enhanced oil recovery programme (waterflood), offers substantial near-term upside.
Moreover, Welch is not shy about his ambition to scale Nostra Terra via acquisitions. East Texas remains an active market for mergers and acquisitions, particularly with smaller, undercapitalised operators who might find themselves struggling in tougher price environments.
Consolidating these assets could help Nostra Terra achieve its long-term goal of hitting production levels closer to 5,000 b/d over the next three to five years.
Confident buy
For now, SP Angel has initiated coverage on Nostra Terra with a confident 'buy' recommendation and sets a twelve-month price target at 0.06p per share, representing a compelling upside of just under 320 per cent from current levels.
Given that Nostra Terra currently trades at just 0.013p per share, this target reflects the broker's conviction that the company's existing reserves alone justify a far higher valuation.
In short, Nostra Terra's turnaround under new management offers UK investors direct exposure to a small-cap oil story with attractive cash flow, near-term production catalysts, and substantial upside potential through strategic acquisitions.
While the path from here requires careful navigation, Welch's experienced leadership and pragmatic strategy suggest Nostra Terra could indeed deliver on its promise.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
26 minutes ago
- The Independent
Solar panels that fit on your balcony or deck are gaining traction in the US
When Terrence Dwyer received a knock on his door and a flyer for a solar panel system small enough to fit on his deck, he was quickly sold. Solar systems that plug into regular wall outlets have been popular in Europe for years and are gaining traction in the U.S. for their affordability and simple installation. 'We thought absolutely, let's do this right away,' said Dwyer, who lives in Oakland, California. These small-scale solar systems could become attractive to more homeowners now that President Donald Trump's sweeping budget-and-policy package will scrap residential rooftop solar tax credits and may shift interest to cheaper alternatives. Even before the GOP bill passed, manufacturers of the smaller systems known as plug-in or balcony solar were seeing increased demand and other positive signs such as a new Utah law streamlining regulations for homeowners to buy and install them. The systems about the size of a door haven't been as widely adopted in the U.S. as in Europe because of lack of awareness, patchwork utility rules and limited availability. The $2,000 plug-in solar system installed on Dwyer's backyard deck in March consists of two 400 watt panels, an inverter, a smart meter and a circuit breaker. It saves him around $35 per month on his power bill because he is consuming less energy from the grid, but he said reducing his carbon footprint was his primary motivation. 'We like the environmental benefits of solar and wanted to engage with solar in some fashion,' Dwyer said. Had Dwyer opted for rooftop solar, he would have paid $20,000 for the system and $30,000 to upgrade his roof to support the panels. Installing a plug-in solar system requires some homework. What power companies let customers do with energy-generating equipment varies, which is why prospective purchasers should check their utility's policies first. Building permits might be required depending on the municipality. Some systems can be self-installed, while others may require an electrician. For example, some kits have meters that must be wired into a home's circuit breaker. Removing hurdles for plug-in solar Dwyer bought his system from Bright Saver, a nonprofit company in California that advocates for plug-in solar. In addition to the type Dwyer bought, the company also offers a smaller model costing $399 that recently sold out in six days. 'The interest and demand have been overwhelming,' said Cora Stryker, a founder of Bright Saver. 'It is clear that we are hitting a nerve — many Americans have wanted solar for a long time but have not had an option that is feasible and affordable for them until now.' Kevin Chou, another founder of Bright Saver, said wider adoption of the systems in the U.S. has been hindered by utility policies that create uncertainty about whether they're allowed and a lack of state and local policies to make clear what rules apply. Some utilities contacted by The Associated Press say plug-in solar systems require the same interconnection applications as rooftop panels that send electricity back to the wider network. But Steven Hegedus, an electrical engineering professor at University of Delaware, said he doesn't understand why a utility would need to require an interconnection agreement for plug-in solar because, unlike rooftop systems, they are designed to prevent energy from flowing to the grid. Still, if in doubt, a customer should follow their utility's policy. During the early days of plug-in solar's growth, some opposition from utilities is likely since customers are buying less energy, said Robert Cudd, a research analyst at the California Center for Sustainable Communities at the University of California, Los Angeles. 'Utilities really prefer everyone being a predictable and generous consumer of the electricity they sell,' Cudd said. This year, Utah enacted a novel law supporting plug-in solar by exempting certain small-scale systems from interconnection agreements and establishing safety requirements such as being certified by a nationally recognized testing organization such as Underwriters Laboratories. It appears to be the only state that's passed legislation supporting plug-in solar, according to the National Conference of State Legislatures. Republican state Rep. Raymond Ward, who sponsored the legislation, said the smaller systems allow people to better manage where their energy comes from and what they pay. 'Europe has these things. You can go buy them and they work and people want them. There is no reason why we shouldn't have them here in the United States,' Ward said. Bright Saver says they are lobbying other states for similar legislation. Alexis Abramson, dean of the University of Columbia Climate School, also applauded Utah's move. 'We actually need more localities, more states putting in allowances for this type of equipment,' she said. Plug-in solar availability and savings potential Some questions remain about how much customers could save. Severin Borenstein, a professor at the University of California, Berkeley's Haas School of Business, said the cost of some portable solar systems in the U.S. would make it hard for customers to come out ahead on their utility bills over the time they own them. He estimates the price of a $2,000 system in the U.S. works out to paying about $0.20 a kilowatt-hour over a 25-year period, which only saves people money if they have high utility costs. By comparison, Borenstein said the cost of systems sold in Europe, typically around $600, is equivalent to paying about $0.05 or $0.06 per kilowatt-hour over 25 years. Baltimore resident Craig Keenan said saving money was only part of why he installed one of the smaller Bright Saver models on his balcony in July. 'I'm interested in renewable energy because the amount of carbon emissions that we produce as a species is very, very unsustainable for our world,' he said. He said he expects the system will save him about $40 per year on utility bills, so it would take him about 10 years to recoup the cost of the kit. Keenan, a mechanical engineer, said installation took him 10 to 15 minutes. 'I think anyone can install this,' he said. 'It's not complicated. It doesn't require a technical degree.' Other companies selling plug-in solar kits include Texas-based Craftstrom. It has sold about 2,000 systems in the U.S. since 2021, mostly in California, Texas and Florida. The company's basic kits contain a solar panel that can fit in a backyard or other sunny space, along with equipment to maintain and regulate the flow of energy including an inverter and smart meter. Kenneth Hutchings, Craftstrom's chief revenue officer, said their U.S. sales rose this year even before the passage of the GOP tax bill, and he expects demand for plug-in solar to increase further as federal rooftop solar credits expire. The company advises customers to notify their power company before installation, but it has "never had any pushback from any utility,' said Michael Scherer, one of the founders of Craftstrom. China-based EcoFlow plans to begin selling plug-in solar systems in Utah and expand to other states if supportive legislation is passed, said Ryan Oliver, a company spokesperson. 'This is an example of where technology is sort of ahead of the regulators,' Oliver said, adding: 'As this rolls out to more of a nationwide product, we expect it will become more mainstream as people understand it better." ___ Associated Press video journalist Mingson Lau in Baltimore contributed to this report. ___ The Associated Press' climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at
Reuters
27 minutes ago
- Reuters
Intel shares rise on report of possible US government stake
Aug 15 (Reuters) - Intel shares (INTC.O), opens new tab rose 3% on Friday on hopes of more financial aid for the turnaround of the struggling chipmaker after a report that the U.S. government may buy a stake. The Bloomberg News report followed a meeting between CEO Lip-Bu Tan and President Donald Trump on Monday after Trump demanded the new Intel chief's resignation over his "highly conflicted" ties to Chinese firms. Trump, who called the meeting "very interesting", has taken an unprecedented approach to interventions and deal-making with corporate America. His administration had struck a deal with MP Materials (MP.N), opens new tab that would make the Department of Defense the largest shareholder of the rare-earth producer. Federal backing could give Intel more time to revive its loss-making foundry business, analysts said, but it still faces a weak product roadmap and trouble attracting customers for new factories. Under the Biden administration, Intel had emerged as one of the biggest beneficiaries of the 2022 CHIPS Act, as former CEO Pat Gelsinger laid out plans to build advanced factories. Tan, however, pared back such ambitions, slowing construction of new plants in Ohio. He plans to build factories based on demand for the services, which analysts have said could put him at odds with Trump's push to shore up American manufacturing. The report said a deal would help build out the Ohio plant, which has faced delays and was expected to be completed by 2030. It could be a "game-changer", said Matt Britzman, senior equity analyst at Hargreaves Lansdown. But he warned "government support might help shore up confidence, but it doesn't fix the underlying competitiveness gap in advanced nodes." Intel lost its competitive edge years ago to Taiwan's TSMC ( opens new tab. It has virtually no presence in the booming AI chips market dominated by Nvidia (NVDA.O), opens new tab and is losing market share in PCs and datacenters to AMD (AMD.O), opens new tab. Its latest 18A manufacturing process is facing quality issues, Reuters has reported, as only a small share of chips produced are good enough for customers, while it remains partly dependent on TSMC to make Intel in-house designed chips. "Intel also needs capability; can the US government do anything to help here?" Bernstein analysts said. "Without a solid process roadmap the entire exercise would be economically equivalent to simply setting 10s of billions of dollars on fire."
Reuters
27 minutes ago
- Reuters
Dow set to open at record high on rate-cut hopes, UnitedHealth's gains
Aug 15 (Reuters) - The blue-chip Dow was on track to open at a record high on Friday, underpinned by expectations of an interest rate cut in September and gains in UnitedHealth's shares after Berkshire Hathaway raised its stake in the health insurer. UnitedHealth Group (UNH.N), opens new tab jumped 10% in premarket trading after Warren Buffett's company (BRKa.N), opens new tab revealed a new investment in the health insurer, while a securities filing showed Michael Burry's Scion Asset Management included bullish positions in the company. Rising costs in the broader healthcare sector and an about 46% slump in heavyweight UnitedHealth's shares this year have left the Dow (.DJI), opens new tab lagging its Wall Street peers on the road to record highs. The price-weighted index last scaled an all-time high on December 4. This week, however, the healthcare sector (.SPXHC), opens new tab is the top performer on the benchmark S&P 500 and is on track for its best weekly performance in three. Other insurers also gained, with Elevance (ELV.N), opens new tab up 4.2%, Centene (CNC.N), opens new tab rising 4% and Molina (MOH.N), opens new tab adding 3.5% before the bell on Friday. Meanwhile, data showed retail sales rose by an expected 0.5% in July, but a spike in import prices raised concerns that U.S. tariffs could fuel inflation in the months ahead. Wall Street's main U.S. stock indexes are on track for their second week of gains, buoyed by expectations that the Fed could restart its monetary policy easing cycle with a 25-basis-point interest rate cut in September. The central bank last lowered borrowing costs in December and said U.S. tariffs could add to price pressures. However, recent labor market weakness and signs that tariff-induced inflation was yet to reflect in headline consumer prices have made investors confident of a potential dovish move next month. "The totality of the data keeps the Fed alive for a September rate cut," said Art Hogan, chief market strategist at B Riley Wealth. "If you take the components of consumer inflation and producer inflation and extrapolate that out to the Personal Consumption Expenditures Price Index, it's going to be well within the confines of what the Fed would like to see to feel comfortable cutting rates in September." At 08:43 a.m. ET, Dow E-minis were up 269 points, or 0.60%, S&P 500 E-minis were up 7.5 points, or 0.12%, and Nasdaq 100 E-minis were down 25 points, or 0.10%. On the trade front, U.S. President Donald Trump said he would unveil tariffs on steel and semiconductors next week. Applied Materials tumbled 12.8% after the chip equipment maker issued weak fourth-quarter forecasts on sluggish China demand, fueling concerns over tariff-related risks. Shares of other chip equipment makers such as KLA (KLAC.O), opens new tab and Lam Research (LRCX.O), opens new tab lost 5.1% and 4.4%, respectively. Intel (INTC.O), opens new tab rose 3.1% on the heels of a 20% gain this week after a report said the Trump administration was in talks with the struggling chipmaker for the U.S. government to potentially take a stake in the company. On the commodities front, crude prices slipped to around $65 a barrel with attention on a meeting in Alaska between Trump and his Russian counterpart, Vladimir Putin, that markets hope could pave the way for a resolution to the Ukraine conflict. The meeting will take place at 1900 GMT.
