- Nostra Terra Oil and Gas [LON:NTOG] was the sector's biggest faller in late trading after it set out plans to improve capital structure of the company.

Background to and reasons for the Capital Reorganisation

The board of the Company ("Board") believes that the current market for oil & gas assets presents a rare opportunity. After a prolonged period of low prices, the Board considers the time is right to reposition Nostra Terra to take advantage of these conditions. Specifically the Board has noted a recent increase in the quantity and caliber of assets available for sale, at depressed or distressed prices. As such, the Board believes that if Nostra Terra is to grow and deliver shareholder value over the coming years it needs to take appropriate steps to restructure the company now.

The existing ordinary shares of 0.1p ("Existing Ordinary Shares") have in recent months frequently been trading on AIM at a price below their nominal value of 0.1 pence per share. The issue of new shares by an English and Wales incorporated company at a price below their nominal value is prohibited by the Companies Act 2006 and accordingly the ability of the Company to raise funds to take advantage of the aforementioned opportunity by way of the issue of further equity has been inhibited.

In addition, the share price levels at which the Existing Ordinary Shares are currently trading means that small absolute movements in the share price represent large percentage movements in the Company's market capitalization, resulting in increased share price volatility. The Directors also note that the number of Existing Ordinary Shares in issue at 4,110,347,691 is an excessive number for a company of the size of Nostra Terra.

A Circular and Notice of General Meeting is being sent to shareholders today to convene a General Meeting of the Company at which resolutions will be proposed to shareholders to sub-divide and consolidate the issued share capital, amend the Articles of Association, increase the authorised share capital and disapply pre-emption rights (the "Proposals"). The expected timetable of principal events can be found at the end of this announcement.

Details of the Capital Reorganization

The Capital Reorganisation comprises a sub-division of shares that will create two classes of shares: subdivided shares with a nominal value of 0.002p ("Subdivided Shares") and deferred shares with a nominal value of 0.098p ("Deferred Shares") (the "Subdivision") followed by a consolidation of every 50 Subdivided Shares into one new ordinary share of 0.1 pence ("Consolidated Share") (the "Consolidation"). Subject to the provisions of the Companies Act 2006, the Deferred Shares may then be cancelled by the Company; or may be bought back by the Company for �1 and then cancelled as permitted under the amended articles, leaving the number of shares in issue the same as at the date of sending out this notice (except for shares subsequently issued). If the Company determines to cancel or buy back the deferred shares, it will advise Shareholders accordingly at the relevant time.

The Deferred Shares shall not be quoted and no share certificates will be issued in respect of the same. The Deferred Shares are effectively valueless. The Deferred Shares are required to be issued in order for the aggregate par value of the shares, once sub-divided and consolidated, to remain at 0.1p.

It is proposed to issue an additional 9 shares so that the total number of shares in issue will be 4,110,347,700 at the time of the Subdivision and Consolidation to ensure the number of shares in issue is exactly divisible by 50.

The Directors believe that the Proposals are in the best interests of the Company and its shareholders as a whole and recommend a vote in favour of the resolutions to be proposed at a General Meeting to be held on 31 May 2016 at 11:00am at the offices of Jeffreys Henry LLP at Finsgate, 5-7 Cranwood Street, London EC1V 9EE. The Directors intend to vote in favour of the resolutions in respect of their combined holding of 241,965,468 Existing Ordinary Shares, representing 5.89 per cent. of the issued share capital of the Company.

New certificates representing the Consolidated Shares will be issued as soon as practicable after the Record Date. No share certificates will be issued for the Deferred Shares.

Application will be made to the London Stock Exchange for the Consolidated Shares to be admitted to trading on AIM conditional on, inter alia, the passing of the resolutions, it is expected that Admission will become effective and that dealings in the Consolidated Shares on AIM will commence on 1 June 2016.

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LGO Energy [LON:LGO] has started production from a new interval in well GY-50 at the Goudron field in Trinidad.

A total of 197 feet of perforations were added to the Goudron Sandstone, also known as the Mayaro ‎Sandstone, at a depth between 1,134 and 1,616 feet, in an interval that has previously not been completed for production in this well that was originally drilled in 1930.

Well GY-50 was logged through casing with modern electric logs and intervals of clean oil sand in the Mayaro section were selected for perforating. The well was completed using tubing conveyed perforating guns on 11 May and will now remain on test production to establish initial conditions before being equipped with a downhole pump.

Pumped oil rate is expected to be in the order of 50-100 barrels per day and will support the ongoing effort to bring on low cost new production. Historic initial oil rates from wells in similar Mayaro Sandstone intervals have averaged approximately 65 bopd, however, no modern completion using TCP guns of a Mayaro interval has been undertaken in recent years.

Well GY-671, which was recompleted in the Upper C-sand in late April, continues to produce dry 39 API oil. The well has recently been converted to pumped production to determine if lower pressure drawdown will lead to better long term production characteristics in some C-sand wells. Current production rate is being built up gradually and once stable rates are established those will be reported in a later operational update.

A further five target wells have been selected including legacy wells GY-240, GY-282 and GY-288 and wells GY-673 and GY-675 from the 2014 drilling program which are considered to have additional production intervals that have so far not been completed.

The LGO Group production in first quarter 2016 averaged 574 bopd. A total of 52,250 barrels were produced, 39,383 barrels in Trinidad and the balance in Spain.

Oil stocks at the company's Ayoluengo Field in Spain have been built up over the recent low oil price period and an estimated 6,000- 7,000 barrels of oil will now be marketed as a bulk cargo since Brent prices have now recovered and have stabilised at approximately US$45 per barrel.

Chief executive Neil Ritson said: "A programme of low cost well interventions is being pursued at Goudron Field to raise production levels gradually after a period of enforced low activity whilst the Company's finances were put in order following the loss of well GY-678 in late 2015. Once capital becomes available the Company anticipates the drilling of infill wells in the shallow Mayaro Sandstone where there are a large number of low cost new wells that can be added to the field using the Company-owned heavy work-over rig."

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Range Resources [LON:RRL] is to drill a follow-up development well named MD 51-2 after highly encouraging results of the recently bored MD 250 well in Trinidad.

"This will be a directional well to be drilled to a total depth of 3,900 feet to test the Forest and Cruse sands, which were encountered with the MD 250 well. The Company will be submitting the relevant approvals to spud the well to the regulatory bodies in Trinidad shortly," Range said.

"As previously announced, initial log evaluations on the MD 250 development well identified multiple hydrocarbon bearing zones, with an estimated net pay of over 140 feet.

"In line with safety requirements, production testing operations of the MD 250 and MD 51-2 wells will be performed only once all drilling operations on the pad area are completed.

"The MD 51-2 well is an additional well to the 2016 drilling programme announced on 22 February 2016. The remaining scheduled wells include two development wells in Morne Diablo, one development well in Beach Marcelle, and one exploration well in the Guayaguayare block.

"The well will be drilled by RRDSL, a wholly owned subsidiary of LandOcean Energy Services Co., Ltd ("LandOcean"), using the same rig that drilled the MD 250 well (4,000 m rig). The drilling of this well will be funded under the existing credit terms for drilling services with LandOcean."

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The sector's biggest risers were Borders & Southern Petroleum [LON:BOR] and Bahamas Petroleum [LON:BPC] - up by more than 14.4% and over 13.6% respectively in late trading.

At 3:49pm:

[LON:AUR] Aurum Mining PLC share price was 0p at 0.95p

[LON:BOR] Borders Southern Petroleum PLC share price was +0.25p at 1.91p

[LON:BPC] Bahamas Petroleum Company PLC share price was +0.21p at 1.71p

[LON:CHAR] Chariot Oil Gas Ltd share price was -0.15p at 8.32p

[LON:ENQ] EnQuest Plc share price was +0.38p at 35.38p

[LON:GKP] Gulf Keystone Petroleum share price was +0.06p at 4.3p

[LON:GPX] Gulfsands Petroleum PLC share price was 0p at 6p

[LON:INDI] Indus Gas Ltd share price was +2.13p at 173.63p

[LON:LGO] LGO Energy PLC share price was -0.01p at 0.2p

[LON:NTOG] Nostra Terra Oil Gas Company PLC share price was -0.02p at 0.06p

[LON:PET] Petrel Resources PLC share price was 0p at 3.75p

[LON:RKH] Rockhopper Exploration PLC share price was +0.13p at 34.63p

[LON:RPT] Regal Petroleum PLC share price was +0.01p at 2.33p

[LON:RRL] Range Resources Ltd share price was +0p at 0.47p

[LON:XEL] Xcite Energy Ltd share price was +0.13p at 14.75p

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