Operational Update for Q1 2024

Nostrum Oil & Gas PLC

30 April 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 April 2024

Operational Update for the quarter ended 31 March 2024

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 quarter ended 31 March 2024. This update is being issued in advance of the release of Nostrum's unaudited interim condensed consolidated accounts for the same period.

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

"Nostrum's Q1 highlights demonstrate the positive results of the strategic initiatives taken by the management, which are reflected in increased revenues, production and sales volumes.

We continued our appraisal of the Stepnoy Leopard fields as well as the limited-scale drilling programme at our Chinarevskoye field.

In our midstream activities, the processing of Ural Oil & Gas ("Ural O&G") raw gas is ongoing. Ural O&G plan to connect additional four wells during H2 2024 with an estimated 1.5mn m3 of raw gas per day from these four wells, as per the guidance provided by Ural O&G.

Moving forward we will continue to execute the strategic catalysts and priorities with razor-sharp focus on controlling costs, maintaining operational liquidity, and judicious allocation of capital to progress value-accreting growth opportunities across our upstream and midstream portfolios."

Q1 2024 Highlights:

Operational

·      Production and sales

·      Daily production including volumes acquired through third-party processing 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 including volumes produced from third-party processing (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 processing volumes

Production and sales volumes were improved as a result of the following initiatives implemented by the management during 2023:

·    Additional volumes of dry gas and LPG produced from processing raw gas received from Ural Oil & Gas LLP ("Ural OG) Rozhkovskoye field U-21 well at Nostrum's gas processing facility.

·    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.

Financial

·    Q1 2024 revenues are in excess of US$31m (Q1 2023: US$17.4m; Q4 2023: US$30.8m), including US$1.7m for processing third-party hydrocarbons. Slight increase in revenues compared to Q4 2023 was achieved as a result of additional volumes from processing third-party hydrocarbons and related sales volumes, while average product prices remained around the same level (average Brent oil price of US$83.9/bbl for Q4 2023 vs US$82.9/bbl for Q1 2024).

·   The Group's unrestricted consolidated cash balance as at 31 March 2024 was in excess of US$157m (31 December 2023: US$161.7m), quarterly reduction mainly due to investing activities related to Chinarevskoye drilling programme and Stepnoy Leopard appraisal programme. The restricted cash balance was in excess of US$25m 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.

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.

Release of Nostrum's Q1 2024 Financial Results

Nostrum plans to release its unaudited interim condensed consolidated financial statements in respect of the quarter ended 31 March 2024 on or around 30 May 2024.

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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