Financial Results for the third quarter and nine months ended 30 September 2023

FOR IMMEDIATE RELEASE

London, 21 November 2023

Financial Results for the third quarter and nine months ended 30 September 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 for the third quarter and nine months ended 30 September 2023 (the “Results”).

Nostrum management will present the Results and be available for a Q&A session with analysts and investors today, 21 November 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 

9M 2023 Highlights: 

Financial

• Revenue of US$88.8m (9M 2022: US$155.6m), a 43% decrease reflecting production decline in line with management expectations and relatively lower average product prices (average Brent oil price of US$81.9/bbl for 9M 2023 vs US$102.5/bbl for 9M 2022).

• EBITDA¹ of US$33.0m (9M 2022: US$94.9m) and an EBITDA margin of 37.1% (9M 2022: 61.0%), both decreasing as a result of lower revenues and a largely fixed operating cost base.

• The Group’s unrestricted cash balance as at 30 September 2023 was US$171.7m (30 June 2023: US$192.0m), the quarterly reduction due primarily to the US$19.3m acquisition payment for the Company’s 80% interest in Positive Invest LLP. The Group’s restricted cash balance as at 30 September 2023 was US$24.6m (30 June 2023: US$16.3m). 

• While the Group is focused on future growth opportunities to fill the spare capacity of its gas processing infrastructure, the management also continues to focus on cost optimisation to help maintain its liquidity and cash reserves.

Operational

• Daily production after treatment averaged 10,288 boepd (9M 2022: 13,684 boepd). The 2023 forecast average daily production remains in the range of 9,000-10,000 boepd.

• Average daily sales of 9,096 boepd (9M 2022: 12,780 boepd). 

• In September 2023, the Company commenced appraisal campaign at the Stepnoy Leopard fields² to re-enter two existing wells in the Teplovskoye reservoir to take representative fluid samples and conduct Extended Well Testing. The data will help to confirm the commercial potential of the field and support the future decision related to the selection of a phased field development concept in 2024.

• In September 2023, Nostrum successfully completed the re-start of its c.$750 million state-of-the-art GTU-3 gas plant with a processing capacity of 2.5 billion cubic meters per annum. Subsequent to commissioning and start-up of the plant in 2019, the Company completed the modifications and other works on GTU-3, which also reduced the plant operating turndown capacity.  GTU-3 employs cutting-edge turbo-expander technology enabling improved efficiency in the extraction of LPG, and it is operating as designed delivering dry gas, LPG, and condensate to sales specifications.

• In August 2023, the Company’s 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 the analysis of the Field Development Plan and obligations under its production sharing agreement for the field. 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.

• In July 2023, the Group successfully launched its Gaslift system expansion with the new compressor, doubling its capacity and helping to partially offset production decline from its maturing Chinarevkoye field. The production gains to date exceed the management’s expectations and are reflected in Q3-2023 production volumes.

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

• 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.

• 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, entities and products that are subject to sanctions to ensure compliance by the Group with all applicable sanctions and to ensure 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 for the 9M 2023 (9M 2022: zero).

• Zero Lost Time Injury for the 9M 2023 (9M 2022: zero).

• One Total Recordable Incident for the 9M 2023 (9M 2022: four).

• 3,347 tonnes of GHG and non-GHG air emissions for the 9M 2023 against 6,309 tonnes permitted for 2023 under the Kazakhstan Environmental Code.

• As part of the Company’s Environment Protection Plan and in support of the Republic of Kazakhstan’s ecology improvement objectives, over 400 trees have been planted in October in Beles. 

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

“During this reporting period, we completed several significant milestones which will contribute to ramping up our future production, including the re-start of our state-of-the-art GTU-3 gas plant, expansion of the Gaslift system, launch of the appraisal campaign at our newly acquired Stepnoy Leopard fields as well as the approval of the limited-scale drilling programme for the Chinarevskoye field.

We continue with the implementation of our growth strategy and our plans to further improve our liquidity position by taking advantage of our world-class infrastructure, and ultimately bringing our potentials to fruition for our stakeholders.”

Sales volumes

The sales volume split for the 9M 2023 was as follows: 

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

The Company’s results materials are available to download on Nostrum’s website:

Download: 9M 2023 Results Presentation

Download: 9M 2023 Interim Condensed Consolidated Financial Statements

Notes to press release

¹ EBITDA is a non-IFRS measure that the Company uses to measure and monitor performance defined as profit before tax net of finance costs, impairment, foreign exchange loss/gain, ESOP, depreciation, interest income, other income and expenses.

² Positive Invest LLP holds the subsoil use right to the contract No. 25 for estimation, development and production of hydrocarbons for the area “Kamenskoe” and the development area “Kamensko-Teplovsko-Tokarevskoe” (the “Stepnoy Leopard Fields”) in the West Kazakhstan region of the Republic of Kazakhstan dated 3 March 1995.

LEI: 2138007VWEP4MM3J8B29

Further information

For further information please visit www.nostrumoilandgas.com

Further enquiries

Nostrum Oil & Gas Plc

Petro Mychalkiw 

Chief Financial Officer

ir@nog.co.uk 

Instinctif Partners – UK                                                  

Guy Scarborough

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.