Financial Results for 2Q and 6M ended 30 June 2023

Nostrum Oil & Gas PLC

22 August 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

FOR IMMEDIATE RELEASE

London, 22 August 2023

Financial Results 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 financial results in respect of the second quarter and six months ended 30 June 2023.

Nostrum's management team will present the H1 2023 Results and will be available for a Q&A session with analysts and investors today, 22 August 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

H1 2023 Highlights:

Financial

·    Revenues of US$52.8m (H1 2022: US$107.8m) against average realised Brent oil price of US$79.9/bbl (H1 2022: US$104.7/bbl). Decrease in revenues compared to H1 2022 resulted from declining production and relatively lower average product prices.

·     EBITDA¹ of US$15.5m (H1 2022: US$68.8m) with EBITDA¹ margin of 29.4% (H1 2022: 63.8%).

·    The Group's unrestricted cash position as at 30 June 2023 was US$192m (31 March 2023: US$191m). Restricted cash balance was US$16.3m as at 30 June 2023 (31 March 2023: US$22.6m), which decreased due to US$6.2m interests 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.

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 launched 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.

·   Following the end of the reporting period, 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 the Q3 2023 operational update.

·     The GTU-3 restart is progressing according to the 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.

·   Following the end of the reporting period, the 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 its production sharing agreement. 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. The total cost of the programme is estimated at around US$26 million.

·    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.

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 Incident ("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 continuing with the execution of our operational programme and pleased with the milestones we have achieved during this reporting period.

The second half of 2023 has already started with the busy schedule with the launch of an appraisal programme at the Stepnoy Leopard Fields, the initial production gains following the recent launch of our Gas lift system expansion as well as the approval of the limited-scale drilling programme at our Chinarevskoye Field. 

Our focus will remain on our cost optimisation to help manage liquidity while progressing with the execution of our mixed-asset energy strategy and realising value for all our stakeholders."

Sales volumes

The sales volume split for H1 2023 was as follows:

Products	H1 2023 volumes (boepd)	H1 2023 product mix  (%)	H1 2022 volumes (boepd)	H1 2022 product mix  (%)
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.

Notes to press release

¹ EBITDA is defined as profit before tax net of finance costs, impairment, foreign exchange loss/gain, ESOP, depreciation, interest income, other income and expenses.

LEI: 2138007VWEP4MM3J8B29

Further information

For further information please visit www.nostrumoilandgas.com

Further enquiries

Nostrum Oil & Gas Plc

Ulugbek Makhmadiyarov - Head of Finance

[e-mail]               

Instinctif Partners - UK                                                                                        

Tim McCall

Galyna Kulachek

Vivian Lai

+ 44 (0) 207 457 2020

[e-mail]

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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