REG - Nostrum Oil & Gas - Full Year Results

Nostrum Oil & GasAnnouncement

19/04/2024 18:30

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RNS Number : 4064L  Nostrum Oil & Gas PLC  19 April 2024

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

 

London, 19 April 2024

 

 

Full Year Results for the Year Ended 31 December 2023

 

Delivering our mixed-asset energy strategy

 

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, is pleased to announce its consolidated full year financial
results for the twelve months ended 31 December 2023 ("FY 2023"), together
with the publication of its 2023 Annual Report.

 

Nostrum's management team will present the FY 2023 Results and will be
available for a Q&A session with analysts and investors at 2pm UK time, 22
April 2024. 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=YRkgUkwArzLfUiEbacIUwOV5tnkP8ncq0DBn2qMEwpA=&b=2389e96d-457b-46a8-bebb-fec356d5b031)

 

 

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

"2023 has been a transformative year for Nostrum, as it commenced execution of
its mixed-asset energy strategy by implementing key catalyst projects.

We successfully completed the restructuring of our bonds, leading to a
strengthened balance sheet and helping to safeguard our cash reserves. This
financial stability enabled us to expand our upstream portfolio, notably
through the acquisition of the Stepnoy Leopard fields and commencement of a
limited-scale drilling program at the Chinarevskoye field. In our midstream
business, we achieved a major milestone by starting to process third-party
feedstock from Ural Oil & Gas ("Ural O&G") in our gas treatment
facility.

The financial performance of the Group in 2023 was helped by the improved
production performance from the gas-lift expansion and improved netbacks under
new off-take agreements. However, revenues decreased year-on-year by 40% due
to the continued high production declines of the mature Chinarevskoye field,
in combination with lower average Brent prices of $82/bbl compared with
$101/bbl for 2022. Consequently, our EBITDA was reduced to US$42 million, with
an EBITDA margin of 35.2%, reflecting the impact of reduced revenues against a
largely fixed operating cost base.

In 2023, we further strengthened our ESG task force. As evaluated by
Sustainalytics, our ESG Risk Rating improved to 30.1 from 40.1 in 2022,
transitioning Nostrum to within 0.1 point of the "Medium Risk" categoryand
ranking Nostrum among the top 10% best ESG performing companies in the Oil
& Gas Exploration and Production sector according to Sustainalytics
ranking.

As we transition into 2024, I am enthusiastic about the future and the
forthcoming commercial opportunities. Nostrum is poised to advance its
strategic objectives, contributing to regional development, supporting
Kazakhstan's energy transition, and enhancing value for our investors and
stakeholders."

 

2023 Highlights

 

Financial

 

·      Revenues of US$119.6m with average 2023 Brent prices of US$82/bbl
(FY2022: revenues of US$199.7m, average Brent price of US$101/bbl). From 2023,
the Company negated the adverse impact of Urals-Brent spread on oil and gas
condensate exports, by using alternative delivery routes and destinations
which resulted in improved netbacks in 2023 vs 2022.

 

·      EBITDA(1) of US$42.1m (2022: US$115.7m) and EBITDA(1) margin of
35.2% (FY2022: 57.9%).

 

·      Unrestricted cash position at 31 December 2023 of US$161.7m (31
December 2022: US$233.6m). US$25.2m remained as restricted cash at 31 December
2023 (31 December 2022: US$31.0m), including US$16.5m held in a debt service
retention account under the terms of the bond trust deeds (31 December 2022:
US$22.8m in escrow account under the forbearance agreement).

 

·      The Group continued focusing on cost optimisation to help manage
liquidity, with increases necessary to support the growth projects such as
Ural O&G processing and Stepnoy Leopard appraisal and project development.

 

 

Operational

 

Chinarevskoye Field

 

·      Daily production after treatment averaged 10,091 boepd (2022:
13,200 boepd).

 

·      Daily sales volumes averaged 8,874 boepd (2022: 12,524 boepd).

 

·        Two-well drilling programme commenced to keep the balance
between investment in risk-based opportunities and maintaining our license
commitments for the Chinarevskoye field.

·        Successfully launched the expansion of Gas lift system,
almost doubling thew total field gas lift capacity and helped to slow down the
production decline from the Chinarevskoye field.

 

·      Total Proven plus Probable ("2P") reserves of 23.2 million
barrels of oil equivalent ("mmboe") and together with 8.2 mmboe of Possible
reserves a total "3P" reserves of 31.4 mmboe, based on the management's
estimates updated from the annual reserves audit conducted by Ryder Scott as
of 31 December 2022.

 

 

Stepnoy Leopard Fields

 

·      Acquisition of 80% stake in Positiv Invest LLP for a cost of
US$20 million, commencing the transition to a multi-asset company.

 

·      2-well appraisal programme close to completion.

 

·      Final Investment Decision approved for the initial field
development phase of the Stepnoy Leopard fields, budgeted at US$100 million
gross and planned to be financed from the Company's own cash reserves and
forecast project cashflows.

 

 

Ural Oil & Gas Processing

The tie-back project commenced with 300 th.m(3) of raw gas per day from U-21
well in December 2023 and continues to ramp-up. Ural O&G plan to connect
an additional four wells during H2 2024 with an estimated 1.5mn m(3) of raw
gas per day from these four wells.

This collaboration with Ural O&G represents a pivotal moment for us as we
expand the utilisation of our world-class treatment facilities and position
ourselves as a preferred partner for handling and processing third-party gas
in Western Kazakhstan. Our state-of-the-art infrastructure is designed to
process up to 4.2 bcm per annum or more of third-party gas, offering faster
processing solutions at significantly reduced costs compared to other
alternatives. The realisation of the Ural O&G tie-back project is a
proof-of- concept for commercialisation of the stranded gas-fields in West
Kazakhstan that would otherwise not be economic as stand-alone developments.

 

GTU-3 Gas Plant Re-start

The Company successfully re-started its c.$750 million state-of-the-art GTU-3
gas plant, with an additional 2.5 billion cubic metres per annum gas
processing capacity and resulting in improved efficiency in the extraction of
LPG by 15%-20%.

 

 

ESG

 

·      Total Recordable Incidents Rate ("TRIR") of 0.75 for 2023
(2022:1.56).

 

·      Lost Time Injury Rate ("LTIR") of 0.37 for 2023 (2022: zero).

 

·      Road Traffic Incidents Rate ("RTI") rate of zero.

 

·      One contractor fatality in a height-related incident. The Company
undertook a comprehensive investigation and implemented measures to avoid such
incidents in the future.

 

·      ESG Risk Rating, from the from the international rating agency
Sustainalytics, improved to 30.1 from 40.1 in 2022, transitioning Nostrum to
within 0.1 point of the "Medium Risk" category and ranking Nostrum among the
top 10% best ESG performing companies in the Oil & Gas Exploration and
Production sector according to Sustainalytics ranking.

 

·      Nostrum joined the National ESG-Club in 2023 which unites
companies that are leaders in ESG transformation in their industries and who
actively promote the principles of sustainable development in Kazakhstan.

 

·      Nostrum obtained "B-" score for the climate change module and
"B-" for water security module (according to CPD score reports).

 

 

2024 Q1 results

 

·      The Company plans to release its unaudited and unreviewed interim
condensed consolidated accounts for the three months ending 31 March 2024 on
or around 31 May 2024.

 

 

The Company's results materials will be available to download on Nostrum's
website.

 

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 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)

 

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). 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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