REG - Nostrum Oil & Gas - Financial Results for 3Q and 9M ended 30 Sep 2023

Nostrum Oil & GasAnnouncement

21/11/2023 07:00

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RNS Number : 0466U  Nostrum Oil & Gas PLC  21 November 2023

 

 

FOR IMMEDIATE RELEASE

 

 

London, 21 November 2023

 

 

Financial Results for the third quarter and nine months ended 30 September
2023

 

Nostrum Oil & Gas PLC (LSE: NOG) ("Nostrum", or the "Company" and together
with its subsidiaries, the "Group"), an independent oil and gas company
engaging in the production, development and exploration of oil and gas in the
pre-Caspian Basin, today announces its financial results for the third quarter
and nine months ended 30 September 2023 (the "Results").

 

Nostrum management will present the Results and be available for a Q&A
session with analysts and investors today, 21 November 2023, at 2pm UK time.
If you would like to participate in this call, please register by clicking on
the following link and following instructions: Results Call
(https://event.loopup.com/SelfRegistration/registration.aspx?booking=3B7fhXlt6RfkQp4djJiZqoXe4IurviWfmIURzo4e9qs=&b=2389e96d-457b-46a8-bebb-fec356d5b031)

 

 

9M 2023 Highlights:

 

Financial

·    Revenue of US$88.8m (9M 2022: US$155.6m), a 43% decrease reflecting
production decline in line with management expectations and relatively lower
average product prices (average Brent oil price of US$81.9/bbl for 9M 2023 vs
US$102.5/bbl for 9M 2022).

 

·    EBITDA(1) of US$33.0m (9M 2022: US$94.9m) and an EBITDA margin of
37.1% (9M 2022: 61.0%), both decreasing as a result of lower revenues and a
largely fixed operating cost base.

 

·   The Group's unrestricted cash balance as at 30 September 2023 was
US$171.7m (30 June 2023: US$192.0m), the quarterly reduction due primarily to
the US$19.3m acquisition payment for the Company's 80% interest in Positive
Invest LLP. The Group's restricted cash balance as at 30 September 2023 was
US$24.6m (30 June 2023: US$16.3m).

 

·   While the Group is focused on future growth opportunities to fill the
spare capacity of its gas processing infrastructure, the management also
continues to focus on cost optimisation to help maintain its liquidity and
cash reserves.

 

 

Operational

·     Daily production after treatment averaged 10,288 boepd (9M 2022:
13,684 boepd). The 2023 forecast average daily production remains in the range
of 9,000-10,000 boepd.

 

·      Average daily sales of 9,096 boepd (9M 2022: 12,780 boepd).

 

·    In September 2023, the Company commenced appraisal campaign at the
Stepnoy Leopard fields(2) to re-enter two existing wells in the Teplovskoye
reservoir to take representative fluid samples and conduct Extended Well
Testing. The data will help to confirm the commercial potential of the field
and support the future decision related to the selection of a phased field
development concept in 2024.

 

·     In September 2023, Nostrum successfully completed the re-start of
its c.$750 million state-of-the-art GTU-3 gas plant with a processing
capacity of 2.5 billion cubic meters per annum. Subsequent to commissioning
and start-up of the plant in 2019, the Company completed the modifications and
other works on GTU-3, which also reduced the plant operating turndown
capacity.  GTU-3 employs cutting-edge turbo-expander technology enabling
improved efficiency in the extraction of LPG, and it is operating as designed
delivering dry gas, LPG, and condensate to sales specifications.

 

·   In August 2023, the Company's Board of Directors approved a
limited-scale drilling programme for the Chinarevskoye field to be executed
over 2023-2024, which is in line with the commitments of the Company's
subsidiary Zhaikmunai LLP under the analysis of the Field Development Plan
and obligations under its production sharing agreement for the field. The
programme will leverage existing wellbores to reduce costs and carries a level
of uncertainties and risks as the planned subsurface targets contain multiple
exploration, appraisal, and development objectives.

 

·     In July 2023, the Group successfully launched its Gaslift system
expansion with the new compressor, doubling its capacity and helping to
partially offset production decline from its maturing Chinarevkoye field. The
production gains to date exceed the management's expectations and are
reflected in Q3-2023 production volumes.

 

·   The Group continues its well and reservoir management strategy through
well workovers and rigless well intervention in 2023.

 

·     The Group is progressing with a tie-back project, budgeted for
c.US$5m of capital expenditures. It will allow for the first ever third-party
feedstock from Ural Oil & Gas LLP ("Ural OG") to be received for treatment
in the Group's facilities.

 

·     Whilst not itself a target of sanctions imposed in connection with
the conflict in Ukraine, Nostrum continues to monitor the current and evolving
lists of individuals, entities and products that are subject to sanctions to
ensure compliance by the Group with all applicable sanctions and to ensure
that the Group's ongoing activities are not materially affected by such
sanctions.

 

·    Safety of all staff and contractors as well as focus on conducting
sustainable operations remain the Group's priority.

 

 

Sustainability

·      Zero fatalities among employees and contractors during operations
for the 9M 2023 (9M 2022: zero).

 

·      Zero Lost Time Injury for the 9M 2023 (9M 2022: zero).

 

·      One Total Recordable Incident for the 9M 2023 (9M 2022: four).

 

·    3,347 tonnes of GHG and non-GHG air emissions for the 9M 2023
against 6,309 tonnes permitted for 2023 under the Kazakhstan Environmental
Code.

 

·    As part of the Company's Environment Protection Plan and in support
of the Republic of Kazakhstan's ecology improvement objectives, over 400 trees
have been planted in October in Beles.

 

 

Arfan Khan, Chief Executive Officer of Nostrum Oil & Gas, commented:

 

"During this reporting period, we completed several significant milestones
which will contribute to ramping up our future production, including the
re-start of our state-of-the-art GTU-3 gas plant, expansion of the Gaslift
system, launch of the appraisal campaign at our newly acquired Stepnoy Leopard
fields as well as the approval of the limited-scale drilling programme for the
Chinarevskoye field.

 

We continue with the implementation of our growth strategy and our plans to
further improve our liquidity position by taking advantage of our world-class
infrastructure, and ultimately bringing our potentials to fruition for our
stakeholders."

 

 

 

Sales volumes

The sales volume split for the 9M 2023 was as follows:

 Products                    9M 2023   9M 2023       9M 2022   9M 2022

                             volumes   product mix   volumes   product mix

                             (boepd)    (%)          (boepd)    (%)
 Crude Oil                   2,731     30.0%         2,926     22.9%
 Stabilised Condensate       1,963     21.6%         3,080     24.1%
 LPG (Liquid Petroleum Gas)  1,325     14.6%         1,778     13.9%
 Dry Gas                     3,077     33.8%         4,996     39.1%
 Total                       9,096     100.0%        12,780    100.0%

 

The difference between production and sales volumes is primarily due to the
internal consumption of gas.

 

The Company's results materials are available to download on Nostrum's
website:

 

Download: 9M 2023 Results Presentation
(https://www.nostrumoilandgas.com/investors/reports-presentations/#presentations)

Download: 9M 2023 Interim Condensed Consolidated Financial Statements
(https://www.nostrumoilandgas.com/investors/summary-financials/#quarterly)

 

 

Notes to press release

(1) EBITDA is a non-IFRS measure that the Company uses to measure and
monitor performance defined as profit before tax net of finance costs,
impairment, foreign exchange loss/gain, ESOP, depreciation, interest income,
other income and expenses.

(2) Positive Invest LLP holds the subsoil use right to the contract No. 25
for estimation, development and production of hydrocarbons for the area
"Kamenskoe" and the development area "Kamensko-Teplovsko-Tokarevskoe" (the
"Stepnoy Leopard Fields") in the West Kazakhstan region of the Republic of
Kazakhstan dated 3 March 1995.

 

 

LEI: 2138007VWEP4MM3J8B29

 

Further information

For further information please visit www.nostrumoilandgas.com
(http://www.nostrumoilandgas.com)

 

Further enquiries

Nostrum Oil & Gas Plc

Petro Mychalkiw

Chief Financial Officer

ir@nog.co.uk (mailto:ir@nog.co.uk)

 

Instinctif Partners -
UK
 

Guy Scarborough

Vivian Lai

+ 44 (0) 207 457 2020

nostrum@instinctif.com (mailto:nostrum@instinctif.com)

 
 

About Nostrum Oil & Gas

Nostrum Oil & Gas PLC is an independent oil and gas company currently
engaging in the production, development and exploration of oil and gas in the
pre-Caspian Basin. Its shares are listed on the London Stock Exchange (ticker
symbol: NOG) and the Astana International Exchange (ticker symbol: NOG). The
principal producing asset of Nostrum Oil & Gas PLC is the Chinarevskoye
field, which is operated by Zhaikmunai LLP, a wholly-owned subsidiary of
Nostrum Oil & Gas PLC and the sole holder of the subsoil use rights with
respect to the development of the field.

 

Forward-Looking Statements

Some of the statements in this document are forward-looking. Forward-looking
statements include statements regarding the intent, belief and current
expectations of the Company or its officers with respect to various matters.
When used in this document, the words "expects", "believes", "anticipates",
"plans", "may", "will", "should" and similar expressions, and the negatives
thereof, are intended to identify forward-looking statements. Such statements
are not promises nor guarantees and are subject to risks and uncertainties
that could cause actual outcomes to differ materially from those suggested by
any such statements.

 

No part of this announcement constitutes, or shall be taken to constitute, an
invitation or inducement to invest in the Company or any other entity, and
shareholders of the Company are cautioned not to place undue reliance on the
forward-looking statements. Save as required by the relevant listing rules and
applicable law, the Company does not undertake to update or change any
forward-looking statements to reflect events occurring after the date of this
announcement.

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