During 2018 Nostrum worked to achieve key strategic, financial and operational targets in line with our strategy for progression.
Ural Oil & Gas
We continuously monitored opportunities in and around the Chinarevskoye field to identify where stranded gas reserves could be processed through Nostrum infrastructure, in accordance with our 2017 goal. The Company signed binding agreements with Ural Oil & Gas LLP to process third-party hydrocarbons delivered to our processing facilities.
In 2018 we targeted reductions in G&A and opex against 2017 figures. Continued efficiencies saw a reduction in G&A by 34.0% and operating capital by 11.6%. While this was partly a result of reduced production, we also streamlined our corporate structure leading to reduced payroll, as well as renegotiated key contracts.
In February 2018 Nostrum successfully issued a US$400 million bond with a seven year maturity and a fixed coupon of 7.000% in order to refinance the remainder of its outstanding debt due 2019. Following this transaction, Nostrum has no debt maturities until 2022.
Production and reserves
In 2018 we did not meet our production or reserve KPIs. Production was 22% lower than forecast due to subsurface issues with water in the flanks of the Biyski North-east reservoir, and slower than planned drilling. 2P reserves also declined by 60 million boe due to water losses and also other areasbeing moved into contingent resources, due to it not being commercially viable to drill in them under current oil prices.
We targeted mechanical completion of GTU3 in 2018 and this was achieved in December 2018. Commissioning was planned for 2018 but is now anticipated in 2019. Additionally, we successfully implemented a low pressure system to extend the life of our producing wells.
Reduction in TRIF and LTIF
Following a commitment to improve our Health & Safety processes in 2018, we saw our Total Recordable Injury Frequency rate reduced from 3.92 to 1.39 per million man hours worked, and our Lost Time Injury Frequency from 2.48 to 1.05 per million man hours worked.
GTU 3 Mechanically Complete
Commissioning on track for 2019
Binding deal with Ural Oil & Gas LLP
Terms agreed for the processing of third-party hydrocarbons in our state-of-the-art facilities
Continued Improvement in cost reduction
Improved efficiencies leading to an 11.6% reduction in gross operating expenditure
Strong EBITDA Margin
Improved at 59.3%
Continued cash generation
Low operating costs and a stringent focus on return on capital
During 2018 we faced a number of issues relating to our reservoirs and drilling, with sales volumes of 29,516 boepd and a 78 mmboe decline in 2P reserves
Nostrum’s extensive infrastructure footprint, variety of sales products and multiple routes to export markets allow the Company to generate stable operating cash flows throughout the commodity cycle through proactively managing netbacks. The Company is positioned to realise the value of surrounding resources in North-western Kazakhstan.
Net income (US$m)
Operating cash flow (US$m)
Investing cash flow (US$m)
Operating costs (US$m)
Performing responsibly is integral to our success and to the sustainability of our business. We believe that long-term value comes from seeing success as a part of a bigger picture, encompassing people and the environment. We have set ourselves specific non-financial KPIs to track our record, as we believe it to be the best way to monitor our achievements in relation to environmental, social andgovernance matters.
Sales volumes (boepd)
29,516 boepd -22%
1P reserves (mmboe)
2P reserves (mmboe)
Total GHG emissions (tCO2e/mmboe)
254,562 tCO2e/mmboe -0.2%
Lost Time Injury Frequency (hours)
Total Recordable Injury Frequency (hours)