Operational Update for 3Q and 9M

Nostrum Oil & Gas PLC

27 October 2023

 

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, 27 October 2023

Operational Update 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 operational update in respect of the third quarter and nine months ended 30 September 2023.

9M 2023 Highlights:

Operational

·      Daily production after treatment averaged 10,288 boepd (9M 2022: 13,684 boepd).

·      Daily sales volumes averaged 9,096 boepd (9M 2022: 12,780 boepd).

·   On 29 September 2023, the Company announced the commencement of the appraisal campaign at the Stepnoy Leopard fields. The objective of the appraisal campaign is 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 and support the future decision related to the selection of a phased field development concept in 2024.

·    On 4 September 2023, the successful completion of the re-start of Nostrum's c.$750 million state-of-the-art GTU-3 gas plant, with 2.5 billion cubic metres per annum gas processing capacity was announced. The Company completed the modifications and other works on GTU-3 subsequent to its commissioning and start-up in 2019. The plant employs cutting-edge turbo-expander technology enabling improved efficiency in the extraction of LPG; the upgrades also reduced the plant operating turndown capacity.  GTU-3 is operating as per design and delivering dry gas, LPG, and condensate to sales specifications.  

·    On 22 August 2023, the Company also announced that its 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. 

·    On 23 July 2023, the Group announced the successful launch of the expansion of its Gas lift system with the new compressor doubling its capacity and helping to slow down production decline from its maturing Chinarevkoye field. The initial production gains exceed management's expectations.

·   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 with a view to compliance by the Group with all applicable sanctions and to ensuring 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.

Financial

·   9M 2023 revenues expected to be in excess of US$88m (9M 2022: US$155.5m).  Decrease in revenues compared to 9M 2022 resulted from 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) and declining production. 9M and full year 2023 sales and revenues remain in line with management's targets and expectations.

·     The Group's unrestricted consolidated cash balance as at 30 September 2023 was in excess of US$171m (30 June 2023: US$192m). The restricted cash balance was in excess of US24m as at 30 September 2023 (30 June 2023: US$16.3m). The next semi-annual loan note cash interest payment is scheduled for December 2023.

·     The Group continues to focus on cost optimisation to help manage liquidity.

Sustainability

·     Zero fatalities among employees and contractors during operations for the 9M 2023 (9M 2022: zero).

·     Zero Lost Time Injury ("LTI") for the 9M 2023 (9M 2022: zero)

·     One Total Recordable Incidents ("TRI") for the 9M 2023 (9M 2022: four).

·   3,347 tonnes of air emissions emitted for the 9M 2023 against 6,309 tonnes permitted for 2023 under the Kazakhstan Environmental Code.

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

"Nostrum has continued to make significant progress during this reporting period.

The appraisal campaign at the Stepnoy Leopard fields and the re-start of our GTU-3 gas plant demonstrated the strength and improved efficiency of our operations. We are also confident about the production value created by the limited-scale drilling programme for the Chinarevskoye field and the expansion of our Gas lift system.

We remain focused on delivering on our multi-asset energy strategy, supported by our combined 4.2 bcma gas process infrastructure in North-western Kazakhstan, and will build on this momentum to unlock further opportunities for all our stakeholders."

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

Products	9M 2023 volumes (boepd)	9M 2023 product mix  (%)	9M 2022 volumes (boepd)	9M 2022 product mix  (%)
Crude Oil	2,731	30.0%	2,926	22.9%
Stabilised Condensate	1,963	21.6%	3,080	24.1%
LPG (Liquid Petroleum Gas)	1,325	14.6%	1,778	13.9%
Dry Gas	3,077	33.8%	4,996	39.1%
Total	9,096	100.0%	12,780	100.0%

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

Release of Nostrum's 9M 2023 Financial Results

Nostrum plans to release its unaudited and unreviewed interim condensed consolidated accounts for the period ending 30 September 2023 on 21 November 2023.

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) 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.

 

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