Financial Results for Q1 ended 31 March 2024

Nostrum Oil & Gas PLC

30 May 2024

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION

FOR IMMEDIATE RELEASE

London, 30 May 2024

Financial Results for the first quarter ended 31 March 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 unaudited financial results for the first quarter ended 31 March 2024.

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

"We are pleased to report an increase in revenues and overall positive operational results  this quarter. The improved financial performance was underpinned by the lower upstream base production decline owing to expansion of the gas-lift capacity, and increasing midstream third-party production. To safeguard our margins and cash balances, we are continuing to prioritise cost optimisation and capital allocation that maximizes our ability to further grow the midstream business and progress the upstream Stepnoy Leopard development."

Q1 2024 Highlights:

Financial

·    Revenues of US$31.8m (Q1 2023 US$17.4m; Q4 2023 US$30.8m), including US$1.7m for processing third-party hydrocarbons. The increase in revenues compared to Q4 2023 was achieved as a result of additional sales volumes from processing third-party Ural Oil & Gas LLP ("Ural O&G") hydrocarbons, whilst average Brent oil price remained at similar levels (average Brent oil price of US$83.9/bbl for Q4 2023 vs US$82.9/bbl for Q1 2024).

·    EBITDA[1] of US$10.6m (Q1 2023: US$4.6m; Q4 2023: US$9.1m) with EBITDA margin of 33.3% (Q1 2023 26.4%; Q4 2023 29.5%).

·    The Group's unrestricted consolidated cash balance as at 31 March 2024 was US$157.6m (31 December 2023 US$161.7m), including current investments in term deposits and money market funds. Quarterly reduction mainly due to investing activities related to Chinarevskoye drilling programme and Stepnoy Leopard appraisal programme. The restricted cash balance was US$25.2m as at 31 March 2024 (31 December 2023 US$25.2m), comprised of the debt-service retention account and liquidation fund deposits.

·    The Group continues to focus on cost optimisation to help preserving cash balances and enabling growth projects such as Ural O&G third-party processing and Stepnoy Leopard appraisal and project development.

Operational

·      Production and sales

·     Daily production, including third-party volumes acquired, averaged 11,943 boepd (Q1 2023 10,479 boepd without third-party volumes; Q4 2023 9,527 boepd with nominal third-party volumes).

·      Daily sales volumes averaged 10,022 boepd (Q1 2023 7,276 boepd, Q4 2023 8,215 boepd). The difference between production and sales volumes is primarily due to the internal consumption of gas and may also include inventory stock build-up around period end.

·      The production volume split was as follows:

Products	Q1 2024 volumes (boepd)	Q1 2024 product mix  (%)	Q1 2023 volumes (boepd)	Q1 2023 product mix  (%)
Crude Oil	2,382	19.9%	2,948	28.1%
Stabilised Condensate*	1,934	16.2%	1,955	18.7%
LPG (Liquid Petroleum Gas)	1,858	15.6%	1,318	12.6%
Dry Gas	5,769	48.3%	4,259	40.6%
Total Processed	11,943	100.0%	10,479	100.0%

*Condensate volumes exclude third-party processed volumes

Production and sales volumes were improved in Q1 2024 by the following:

·   Additional volumes of dry gas and LPG produced from processing raw gas received from Ural O&G Rozhkovskoye field U-21 well 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 15% to 20%.

·      Chinarevskoye drilling programme

During Q1 2024, CHN 301 has been drilled on time and on budget, reaching a total depth of 4,980 meters. The well objective had multiple in-fill targets across the Carboniferous and Devonian reservoirs. Hydrocarbons (oil, gas-condensate) have been encountered across all 3 key intervals. The results are in line with the Company's expectations of initial well rates of 400 to 700 boepd, expected to startup mid-year. The drilling rig is being moved to the next well, CNH 41 for an appraisal sidetrack, with expected start of operations Q3 2024.

·      Stepnoy Leopard fields

During Q1 2024 the two-well appraisal operations on the Stepnoy Leopard Fields were largely complete and significant data has been collected, which provided positive results to date and confirmed the commercial potential of the field. Based on these results the Company made a final investment decision ("FID") for the initial field development phase of the fields that includes drilling of four development wells across the key reservoirs, targeting recoverable resource potential between 30 mmboe and 50 mmboe. The forecast total capital budget for this initial field development phase is US$100 million gross. The project related capital expenditures and contractual commitments will commence later in 2024 and ramp-up gradually over the 3-year execution period prior to startup at the end of 2026. Early cash generation will also strengthen the self-financing capacity and help spur further development of the remaining resource base.

Sustainability, HSE

·      Zero fatalities during operations for Q1 2024 (Q1 2023: zero).

·      Zero Lost Time Injury ("LTI") for Q1 2024 (Q1 2023: zero)

·      Zero Total Recordable Incidents ("TRI") for Q1 2024 (Q1 2023: zero).

·   1,094 tonnes of air emissions emitted for Q1 2024 against 5,983 tonnes permitted for 2024 under the Kazakhstan Environmental Code.

·    Safety of all staff and contractors as well as focus on conducting sustainable operations remain the Group's priority.

Please note that the next investor and analyst call will be held in August 2024 as part of Nostrum's H1 2024 Results publication.

The Company's interim condensed consolidated financial statements are available to download on Nostrum's website:

Download: Q1-2024 Interim Condensed Consolidated Financial Statements

LEI: 2138007VWEP4MM3J8B29

Further information

For further information please visit www.nostrumoilandgas.com

Further enquiries

Nostrum Oil & Gas PLC

Petro Mychalkiw

Chief Financial Officer

[e-mail]                                                                                                     

Instinctif Partners - UK                                                                                        

Guy Scarborough

Vivian Lai

+ 44 (0) 207 457 2020

[e-mail]

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). The 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.

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[1] EBITDA is defined as profit before tax + non-recurring expenses + finance costs + foreign exchange loss/(gain) + employee share-option adjustments + depreciation - interest income + other expenses/(income).

 

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