Nostrum Oil says GTU3 delays will hurt annual production in 2017, 2018
LONDON (Alliance News) – Nostrum Oil & Gas PLC on Tuesday lowered its 2017 and 2018 production guidance due to delays to the tie-in of GTU3, the company’s third gas processing facility in the Chinarevskoye field, Kazakhstan.
The oil and gas producer said due to the delayed delivery of some specially designed valves required for the tie-in of GTU3 with GTU1 and GTU2 mean it will not be possible to bring gas into GTU3 in 2017. The tie-in is now scheduled to be completed in April 2018.
The tie-in will allow gas to go from GTU1 and GTU2 into GTU3, with GTU3 to be connected with the export gas pipeline.
Nostrum said it is unlikely sales volumes will exceed 40,000 barrels of oil equivalent per day in 2017 due to the delay. For 2018, it does not foresee any increase in production for the first half until GTU3 is tied-in. For the second half, the company expects a gradually ramp up in production.
The company expects sales volumes to total between 60,000 barrels and 80,000 barrels daily in 2019 and around 100,000 barrels daily in 2020.
For the nine months period ended September 30, the company recorded average production of 44,879 barrels per day and sales volume of 39,600 barrels daily. Revenue for the period totaled USD303.0 million versus GBP241.5 million the year before.
Average production and sales volumes for the three months to end of September totaled 41,265 barrels daily and 36,635 barrels daily.
“Financially it was a strong quarter with the successful bond refinancing completed, higher oil prices and continued implementation of our cost saving programme. However, from an operational perspective it was disappointing to announce earlier this month the delay to the GTU3 tie-in due to the inability to be able to complete hydro-testing prior to the winter period as a result of the non-delivery of critical equipment,” said Chief Executive Kai-Uwe Kessel.
“In addition the loss of two production wells after the fourth quarter shut down last year and the delay from the first quarter in the drilling schedule has meant production is behind our 2017 targets as we haven’t yet been able to bring on the new production wells. On the upside we have had some positive appraisal results which mean our overall strategy looks like it will be well supported by more reserves in the future to prolong the production peak,” he added
Shares in Nostrum were trading 1.1% lower at 377.90 pence in early trade.