Nostrum Oil Beats Guidance But Production, Revenue Both Fall

Nostrum Oil says GTU3 delays will hurt annual production in 2017, 2018

LONDON (Alliance News) – Nostrum Oil & Gas PLC on Tuesday said it beat its full year production guidance by a fraction and exited 2016 at an even higher rate, but said revenue has dropped significantly, as has the cash balance.

The operator of the Chinarevskoye field in Kazakhstan said daily production averaged 40,351 barrels of oil equivalent per day in 2016, slightly ahead of guidance of 40,000 barrels. In the final quarter of 2016, production averaged 44,708 barrels per day, Nostrum said.

Although ahead of guidance, production has dropped from 2015 when the average was 40,402 barrels of oil equivalent per day.

In terms of the product mix, Nostrum said 40% of its total production was made up of crude oil and stabilised condensate, 11% of liquid petroleum gas and 49% dry gas. Crude oil and condensate’s contribution fell slightly year-on-year while LPG production made a slightly higher contribution.

Nostrum said full year revenue in 2016 will be in the region of USD340 million, a steep drop from the USD445 million generated in 2015. Cash at the end of 2016 stood at a healthy level of USD100 million, but that has dwindled over the full year from USD170 million at the end of 2015.

Total debt at the end of 2016 stood at USD960 million with net debt of USD860 million. At the end of 2015, total debt was at the same level and net debt was lower at USD790 million.

Nostrum said it received payments totalling USD27 million over the full year from its hedging programme that it entered in December 2015. Until the end of 2017, Nostrum has 15,000 barrels hedged daily at USD49.16 per barrel, the same volume and price that had been forward-hedged at the end of 2015.

Nostrum said it is building a short pipeline to provide access to the KTO pipeline so its crude oil can be exported. The pipeline should be completed for under USD10 million in total and should be operational by the second quarter of 2017, the company said.

A total of 24 oil wells and 22 gas condensate wells are currently producing from the field, with three production wells added in the final quarter of 2016. A total of seven wells will be drilled on the field in 2017, one of which will be an appraisal well. Preparations for re-entering an existing well on the Darjinskoye field are also currently underway.

Nostrum said production in 2017 should average “above” 44,000 barrels per day and exit 2017 at a rate of 50,000 to 60,000 barrels daily. In 2018, production should be between 50,000 to 80,000 barrels daily before rising further in 2019 to 80,000 to 100,000 barrels daily.

Nostrum said the GTU3 development is still on schedule to be completed in 2017, and the total budget – which has been phased to reflect subdued oil prices – will still be below USD500 million, with USD122 million being spent in 2016. Nostrum said it has about USD120 million left to invest in the project.

Nostrum will post its full year results covering 2016 on March 28, 2017.

Nostrum Oil & Gas PLC (Nostrum) is an independent oil and gas company. The Company is engaged in the production, development and exploration of oil and gas in the pre-Caspian Basin. The Company’s range of products includes crude oil, stabilized liquid condensate, liquefied petroleum gas (LPG) and dry gas. It has invested in developing its own infrastructure to control the transportation of its products to serves a network of destinations and off-takers. The operational facilities of Nostrum Oil & Gas are located in Chinarevskoye field. The Company has three fields in north-western Kazakhstan that offers direct operational synergies, such as the Rostoshinskoye field, the Darzhinskoye field, and the Yuzhno-Gremyachenskoye field. Nostrum indirectly holds a 100% interest in Zhaikmunai LLP, which is engaged in the exploration, production and sale of hydrocarbons from the Chinarevskoye field in north-west Kazakhstan.