REG - Nostrum Oil & Gas - 1st Quarter Results

Nostrum Oil & GasAnnouncement

30/06/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230630:nRSd4652Ea&default-theme=true

RNS Number : 4652E  Nostrum Oil & Gas PLC  30 June 2023

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF THAT JURISDICTION

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

FOR IMMEDIATE RELEASE

 

 

London, 30 June 2023

 

 

Financial Results for the first quarter ending 31 March 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 in respect of
the three months ended 31 March 2023.

 

 

Q1 2023 Highlights:

 

Financial

·     Revenues of US$17.4m (Q1 2022: US$60.2m). Although revenues
decreased in Q1 2023, the management expects H1 and FY sales and revenues to
remain in line with targets and expectations. Decrease in revenues resulting
from declining production and relatively lower average product prices was in
line with management expectations, while temporary oil inventory build-up of
254,000 boe (or equivalent of 2,822 boepd) due to transition to new offtake
agreements and delivery destinations was realised in Q2 2023 and relevant
revenues of approximately US$15 million recognised in that period.

 

·     EBITDA(1) of US$4.6m (Q1 2022: US$40.5m) with EBITDA(1) margin of
26.4% (Q1 2022: 67.3%). Both EBITDA and EBITDA margin have been affected by
the temporary oil inventory build-up mentioned above and the relevant H1
figures are expected to recover accordingly.

 

·      The Group's unrestricted cash position as at 31 March 2023 was
US$191.8m (31 December 2022: US$233.6m), excluding restricted cash of US$22.6m
as at 31 March 2023 (31 December 2022: US$31.0m).

 

·      The Group continues to focus on cost optimisation to help manage
liquidity.

 

 

Operational

·      Daily production after treatment for Q1 2023 averaged 10,479
boepd (Q1 2022: 14,683 boepd).

 

·      Daily sales volumes for Q1 2023 averaged 7,278 boepd (Q1 2022:
14,059 boepd). Oil inventory as at quarter-end totalled approximately 254,000
boe which were sold in Q2 2023.

 

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

 

·      The Group is continuing to progress 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 with an expected start in Q4 2023.

 

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

 

·      The Group continues to prioritise the safety of all staff and
contractors as well as focussing on conducting sustainable operations.

 

 

Restructuring

On 9 February 2023, the Group completed the implementation of the
restructuring initially announced on 23 December 2021 (the "Restructuring")
and the related lock-up and forbearance arrangements were terminated. The
principal elements of the Restructuring are as follows:

 

·      exchange of a portion of the Group's legacy Notes Debt for the
issuance to each Noteholder of a pro rata allocation of the New Notes,
comprising US$250 million of new senior secured notes (the "SSNs") and US$345
million of senior unsecured notes (the "SUNs");

 

·      conversion of the remainder of the Notes Debt into fully paid
ordinary shares (the "New Shares"), resulting in the Noteholders holding
88.89% of the Enlarged Share Capital of the Company;

 

·      issuance of the New Warrants, to be held by the Warrant Trustee
on behalf of the holders of the SUNs from time to time, exercisable in full by
a majority of such holders upon the occurrence of certain events to increase
their holding of the Company's Enlarged Share Capital to 90.00%; and

 

·      certain new governance and cashflow arrangements.

 

Pursuant to the terms of the Restructuring the interest accrued on the SSNs
and the SUNs from 1 January 2022. Accordingly, cash interest accrued to 9
February 2023 in the amount of US$17.5 million was paid in cash to the
Noteholders upon the issuance of the SSNs and the SUNs. The next semi-annual
cash interest payment is scheduled for 30 June 2023.

 

Further details of the Restructuring are contained in the prospectus dated 14
October 2022 (as supplemented) which is available on the Company's website at
https://www.nostrumoilandgas.com/investors/documents-circulars/
(https://www.nostrumoilandgas.com/investors/documents-circulars/) .

 

 

Sustainability

·      Zero fatalities among employees and contractors during operations
in Q1 2023 (Q1 2022: zero).

 

·      Zero Lost Time Injury ("LTI") in Q1 2023 (Q1 2022: zero)

 

·      Zero Total Recordable Incidents ("TRI") in Q1 2023 (Q1 2022:
one).

 

·      1,113 tonnes of air emissions emitted in Q1 2023 against 6,309
tonnes permitted for 2023 under the Kazakhstan Environmental Code.

 

Positive Invest

·     In March 2023, the Company agreed, subject to certain conditions, to
acquire 80% of Positive Invest LLC  ("Positive Invest"), the company which
holds the subsoil use rights 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 (the
"Positive Invest Contract"), for US$20 million (less a modest amount of  debt
owed to Nostrum Oil & Gas Coöperatief U.A) (the "Proposed Acquisition").

 

·   Management estimates that the Stepnoy Leopard Fields hold between 50
mmboe and 150 mmboe of recoverable volumes which are considered contingent
resources, with over 20% estimated to be liquids. Hence, the Proposed
Acquisition will enable Nostrum to tie-in further resources in the region that
can be processed at the Company's gas treatment facilities. Upon completion of
the Proposed Acquisition an affiliate of the Company will be appointed as the
operator of the Stepnoy Leopard Fields under the Positive Invest Contract.

 

·     The Sale and Purchase Agreement for the Proposed Acquisition has a
long stop date of 30 June 2023, by which time all conditions precedent in
relation to the Proposed Acquisition must be fulfilled or waived and the
Proposed Acquisition completed. One regulatory condition precedent to
completion has not yet been fulfilled and both parties are seeking to fulfil
such condition so that completion may occur as soon as possible.

 

 

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

 

"The reduction in revenue in Q1 2023 was caused by the natural decline in the
production as well as temporary oil stock build-up, which was realised in Q2
2023, and our FY 2023 production and sales volumes forecast remain on target.
We continue to focus on cost optimisation to help manage liquidity.

 

As at 31 March 2023, the Group's unrestricted cash position was in excess of
US$191m and US$17.5 million was paid in cash to the Noteholders in the process
of Restructuring. The next semi-annual cash interest payment is scheduled for
30 June 2023.

 

We are working on completion of the acquisition of the Stepnoy Leopard Fields
and will update the market as soon as it occurs.

 

We will continue to build on the momentum achieved so far to capitalise on
opportunities to add value to our assets."

 

Sales volumes

The sales volume split for Q1 2023 was as follows          :

 Products                    Q1 2023 volumes  Q1 2023       Q1 2022 volumes  Q1 2022

                             (boepd)          product mix   (boepd)          product mix

                                               (%)                            (%)
 Crude Oil                   1,493            20.5%         3,359            23.9%
 Stabilised Condensate       1,833            25.2%         3,117            22.2%
 LPG (Liquid Petroleum Gas)  909              12.5%         2,024            14.4%
 Dry Gas                     3,043            41.8%         5,559            39.5%
 Total                       7,278            100.0%        14,059           100.0%

 

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

 

Notes to press release

(1) EBITDA is defined as profit before tax + non-recurring expenses + finance
costs + foreign exchange loss/(gain) + employee share-option adjustments +
depreciation - interest income + other expenses/(income).

 

LEI: 2138007VWEP4MM3J8B29

 

Further information

For further information please visit www.nog.co.uk (http://www.nog.co.uk)

 

Further enquiries

Ulugbek Makhmadiyarov - Head of Finance

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

 

Instinctif Partners -
UK
 

Tim McCall

Galyna Kulachek

Vivian Lai

+ 44 (0) 207 457 2020

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

 

Notifying person

Thomas Hartnett

Company Secretary

 
 

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.

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  QRFDGGDLCGDDGXC