Operational Update for the second quarter and six months ended 30 June 2024

Nostrum Oil & Gas PLC (LSE: NOG) (“Nostrum”, or the “Company” and together with its subsidiaries, the “Group”), an independent mixed-asset energy company with world-class gas processing facilities and export hub in north-west Kazakhstan, today announces its operational update for the second quarter and six months ended 30 June 2024 (“H1 2024”).

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

“H1 2024 saw a considerable year-on-year improvement in our production volumes and revenues, reflecting our successful midstream third-party processing and improved GTU-3 LPG yields, whilst our Chinarevskoye field production decline was slowed down by the expansion of our gas-lift capacity from mid-2023. We are also pleased to see approximately $21 million EBITDA estimated for the first half of the year, approximately 35% improvement compared to H1 2023, and net positive operating cashflows in H1 2024. 

We also progressed our strategic initiatives by making a final investment decision for the initial development phase of the Stepnoy Leopard Fields (“SL Fields”) in March 2024, followed by the release of a full Competent Person’s Report on the SL Fields (“SL CPR”) in July 2024. The SL CPR confirms the commercial viability of the full-field development and increases the Company’s proved plus probable (2P) reserves base over fivefold to 133 mmboe, a substantial driver for enhancing shareholder and investor returns. 

As we move forward, we remain committed to driving sustainable growth and delivering value to our stakeholders.”

H1 2024 Highlights:

Operational

• Production and sales
• Daily production averaged 12,220 boepd (H1 2023: 10,048 boepd), a 22% increase driven by:
  • Additional volumes of dry gas and LPG produced from processing raw gas received from Ural Oil & Gas LLP (“Ural O&G”) at Nostrum’s gas processing facilities.
• Successful launch of the gas-lift system expansion in July 2023, which doubled its capacity and helped to slow down the production decline from the maturing Chinarevskoye field.
• Additional LPG production from GTU-3 owing to improved yield by around 20%.
• The production volume split for H1 2024 was as follows: 

*Stabilised condensate volumes exclude Ural O&G processed volumes for which Nostrum receives a tolling fee

• Daily sales volumes averaged 10,475 boepd for H1 2024 (H1 2023: 9,020 boepd). The difference between production and sales volumes is primarily due to the internal consumption of dry gas produced and may also include inventory increases or decreases at period end. 

• Chinarevskoye drilling programme

As previously announced, well No.301 was drilled on time and within budget, reaching a total depth of 4,980 meters. The well targeted multiple in-fill zones across the Carboniferous and Devonian reservoirs and encountered hydrocarbons (oil, gas-condensate) in all three key intervals. The well was perforated in the lowest of these reservoirs and put into production in May 2024, with initial flow rates in line with the management’s expectations. The drilling rig was moved to well No.41 for an appraisal sidetrack targeting the upper Devonian gas-condensate horizon, with completion planned for Q3 2024.

• Stepnoy Leopard Fields

Following the final investment decision for the initial development phase of the SL Fields in early 2024, Nostrum continued reserves evaluation and in July 2024, released the SL CPR, an evaluation of reserves and resources as of 1 January 2024 prepared by Xodus Group Limited. Nostrum has an 80% working interest in the SL Fields. Key highlights of the report include:

• 138 mmboe (including approximately 25% liquids) proved plus probable (2P) gross reserves, increasing Nostrum’s reserves base over fivefold (from 23 mmboe to 133 mmboe working interest reserves).
• Material value creation attributable to Nostrum of approximately US$220 million of after-tax net NPV10 at 34% IRR.
• A remaining large discovered, proven un-developed contingent resource base (2C) of 67 mmboe gross across the SL Fields represents a significant potentially commercial opportunity. Future subsurface work is also planned to identify deeper exploration and prospective resources.   

• Ural O&G volumes

Throughout H1 2024 the Company continued processing Ural O&G raw gas from the U-21 well in the Rozhkovskoye field. The tie-back of an additional four wells during 2024 is expected to increase processing to 1.5 million cubic meters of raw gas per day, according to Ural O&G guidance.

Financial

• H1 2024 revenues are estimated to be approximately US$65 million, a 23% increase compared to US$52.8 million in H1 2023, resulting from increased production and sales volumes. Brent crude oil price increased from an average of US$79.7/bbl in H1 2023 to an average of US$83.7/bbl in H1 2024. 
• The Group’s EBITDA increased by approximately 35% from $15.5 million in H1 2023 to approximately $21 million in H1 2024. This is primarily driven by increased production and revenues as well as prudent cost management.
• During H1 2024 the Group continued to generate net positive operating cashflows, notwithstanding a net negative movement in working capital including increase in condensate receivables. The reduction in the Group’s unrestricted cash balance during H1 2024 reflected committed capital expenditures on Chinarevskoye drilling programme and Stepnoy Leopard appraisal works, as well as the semi-annual bond coupon payment in June 2024.
• The Group’s unrestricted cash balance as at 30 June 2024 was in excess of US$142 million (31 March 2024: US$157.6 million), including current investments in fixed term deposits and liquid money market funds. The restricted cash balance (DSRA and asset liquidation fund) was in excess of US$25 million as at 30 June 2024 (31 March 2024: US$25.2 million). 
• The Group continues to focus on maximising facility uptime, controlling costs where possible and improving efficiencies across all facets of our business, while allocating and efficiently utilising resources on growth projects.

Sustainability and HSE

• Zero fatalities among employees and contractors during operations in H1 2024 (H1 2023: zero).
• Total Recordable Incidents Rate (incidents per million man-hours) of 0.64 for H1 2024 (H1 2023:1.0).

• Zero Lost Time Injury Rate (incidents per million man-hours) for H1 2024 (H1 2023: zero).
• 2,590 tonnes of air emissions emitted in H1 2024 against 5,983 tonnes permitted for 2024 under the Kazakhstan Environmental Code.

Release of Nostrum’s H1 2024 Financial Results

Nostrum plans to release its H1 2024 interim financial report including unaudited interim condensed consolidated accounts on or around 20 August 2024.

LEI: 2138007VWEP4MM3J8B29

Further information

For further information please visit https://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 

Notifying person

Thomas Hartnett
Company Secretary

About Nostrum Oil & Gas

Nostrum Oil & Gas PLC is an independent mixed-asset energy company with world-class gas processing facilities and export hub in north-west Kazakhstan. Its shares are listed on the London Stock Exchange (ticker symbol: NOG). The principal producing asset of Nostrum Oil & Gas PLC is the Chinarevskoye field which is operated by its wholly-owned subsidiary Zhaikmunai LLP, which is the sole holder of the subsoil use rights with respect to the development of the Chinarevskoye field. The Company also owns an 80% interest in Positive Invest LLP, which holds the subsoil use rights for the “Kamenskoe” and “Kamensko-Teplovsko-Tokarevskoe” areas in the West Kazakhstan region (the Stepnoy Leopard fields). 

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.