REG - Nostrum Oil & Gas - Operational Update for 2Q and 6M

Nostrum Oil & GasAnnouncement

28/07/2023 07:00

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RNS Number : 5454H  Nostrum Oil & Gas PLC  28 July 2023

 

 

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FOR IMMEDIATE RELEASE

 

 

London, 28 July 2023

 

 

Operational Update for the second quarter and six months ended 30 June 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 operational update in respect of the
second quarter and six months ended 30 June 2023.

 

 

H1 2023 Highlights:

 

Operational

·      Daily production after treatment averaged 10,048 boepd (H1 2022:
14,167 boepd).

 

·      Daily sales volumes averaged 9,020 boepd (H1 2022: 13,102 boepd).

 

·      Following the end of the reporting period, the Group completed
the acquisition of an 80% interest in Positiv Invest LLP, which holds the
subsoil use right for the Stepnoy Leopard Fields. 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. The Company will launch an appraisal programme with the intention
of preparing a technical expert's report which could allow re-classification
of certain of the hydrocarbon resources into reserves.

 

·      The Group successfully launched the expansion of its Gas lift
system with the new compressor doubling its capacity and helping to slow down
production decline from its maturing Chinarevkoye field. The initial
production gains exceed management's expectations and further updates on
production guidance will be provided as part of Q3 2023 operational update.

 

·      The GTU-3 restart is progressing as per plan with wet gas
introduction expected during H2 2023, following which all gas is planned to be
processed through the 3(rd) train of the gas treatment unit to assess its
efficiency.

 

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

 

·      The Group is continuing to study opportunities for limited-scale
drilling operations in the Chinarevskoye field with a plan to finalise its
conclusions in the near term.

 

·      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 with an expected start in Q4 2023.

 

·      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 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.

 

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

 

Financial

·      H1 2023 revenues expected to be in excess of US$52m (H1 2022:
US$107m). H1 and FY sales and revenues remain in line with management's
targets and expectations. Decrease in revenues compared to H1 2022 resulted
from declining production and relatively lower average product prices.

 

·      The Group's unrestricted cash position as at 30 June 2023 was in
excess of US$192m (31 March 2023: US$191m). Restricted cash balance was in
excess of US16m as at 30 June 2023 (31 March 2023: US$22.6m), which decreased
due to US$6.2m interest payments for the period from 9 February 2023 to 29
June 2023, and was replenished subsequently to cover the next two interest
payments. The next semi-annual cash interest payment is scheduled for December
2023.

 

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

 

Sustainability

·      Zero fatalities among employees and contractors during operations
in H1 2023 (H1 2022: zero).

 

·      Zero Lost Time Injury ("LTI") in H1 2023 (H1 2022: zero)

 

·      One Total Recordable Incidents ("TRI") in H1 2023 (H1 2022: two).

 

·      2,277 tonnes of air emissions emitted in H1 2023 against 6,309
tonnes permitted for 2023 under the Kazakhstan Environmental Code.

 

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

 

"We are pleased with the significant operational milestones we have achieved
during the H1 2023.

 

Following the successful completion of the Stepnoy Leopard Fields acquisition
this month, we have already commenced an appraisal programme to reclassify
certain contingent resources into proven reserves which will help us to
determine the commercially viable development schemes. This is an attractive
upstream tie-back project for us that could deliver material reserves addition
to the Group's resource base.

 

We are also excited with the initial production gains following the recent
launch of our Gas lift system expansion and will provide further updates on
our production guidance as part of our Q3 2023 operational update.

 

We will continue with the execution of our mixed-asset energy strategy
launched this year to capitalise on the advantaged position of our existing
infrastructure and attract third party volumes."

 

Sales volumes

The sales volume split for H1 2023 was as follows:

 Products                    H1 2023   H1 2023       H1 2022   H1 2022

                             volumes   product mix   volumes   product mix

                             (boepd)    (%)          (boepd)    (%)
 Crude Oil                   2,713     30.1%         2,858     21.8%
 Stabilised Condensate       2,006     22.2%         3,100     23.7%
 LPG (Liquid Petroleum Gas)  1,270     14.1%         1,836     14.0%
 Dry Gas                     3,031     33.6%         5,308     40.5%
 Total                       9,020     100.0%        13,102    100.0%

 

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

 

 

Release of Nostrum's H1 2023 Financial Results

Nostrum plans to release its H1 2023 interim financial report including
unaudited and unreviewed interim condensed consolidated accounts for the
period ending 30 June 2023 on 22 August 2023.

 

 

LEI: 2138007VWEP4MM3J8B29

 

Further information

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

 

Further enquiries

Nostrum Oil & Gas Plc

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
 

 

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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