Nostra Terra Oil & Gas Co PLC on Tuesday said it has secured a hedging facility with BP Energy Co, part of London-listed oil major BP PLC.
Nostra Terra shares more than doubled on Tuesday to 2.62 pence after the news, having closed at 1.25p on Monday.
Nostra Terra intends to use the hedging facility in conjunction with a senior debt facility to fund development of its assets. The hedging facility can be used for price protection, enabling Nostra Terra to access greater working capital in a non-dilutive manner.
Nostra Terra has a USD25.0 million senior facility that is “in good standing” with Texas Capital Bank, and said it is in talks with a number of additional providers to ensure it obtains the best lending terms.
No details of the hedging facility from BP were disclosed.
“This is a tangible step forward for the company, and I am particularly pleased to confirm funds released through the hedging facility will not carry any geographical restrictions. This means we will be able to deploy capital across our entire portfolio, in the US and Egypt,” said Chief Executive Matt Lofgran.
“The next step is to confirm borrowing terms with a second senior facility provider. We are currently assessing a number of alternatives, with a view to securing the best terms for Nostra Terra. Despite the turbulence the industry has experienced over the last three years, we have always kept our existing facility in good standing. We believe this track record helps strengthen our negotiating position and I look forward to updating the market once we have concluded this process,” he added.