TIDMNOG
RNS Number : 8336O
Nostrum Oil & Gas PLC
22 May 2018
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
London, 22 May 2018
Financial Results for the First Quarter and Three Months ending
31 March 2018
Nostrum Oil & Gas PLC (LSE: NOG) ("Nostrum", or "the
Company"), 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 in respect
of the three-month period ending 31 March 2018.
Highlights:
Financial:
-- Revenue of US$94.8 million (Q1 2017: US$111.9 million)
-- Net operating cash flows(1) of US$56.0 million (Q1 2017: US$68.2 million)
-- EBITDA(2) of US$57.2 million (Q1 2017: US$68.5 million)
-- EBITDA margin of 60.3 % (Q1 2017: 61.2%)
-- Transport/boe costs of US$4.7 /bbl (Q1 2017: US$4.0/bbl)
-- Closing cash(3) for the period of US$132.3 million (FY 2017: US$120.0 million)
-- Total debt of US$1,104.1 million and net debt of US$971.9 million as at 31 March 2018
Operational:
-- Q1 2018 average production after treatment of 32,946 boepd
-- Q1 2018 average sales volumes of 30,874 boepd
-- Tie in of GTU1&2 to GTU3 completed five days quicker than forecast
Kai-Uwe Kessel, Chief Executive Officer of Nostrum Oil &
Gas, commented:
"Q1 2018 was disappointing operationally as we encountered water
in the first production well of the year near the flanks of the
Biski North East reservoir. Our subsequent analysis has shown the
issue is likely restricted to just water in the natural fractures
in the flanks of the Biski North East reservoir and will not have
any material impact on our reserves in this reservoir. We are
working on potential solutions to be able to bring this well in to
production.
Q1 2018 was more positive financially, as we have seen a
sustained recovery in the oil price during Q1 and also a reduction
in costs, leading to higher EBITDA margin compared with Q4 2017. We
will continue to carefully monitor costs while we work on adding
production during Q2 2018.
We are pleased to have successfully tied-in GTU3 which, once
fully completed, will provide us with the capacity to significantly
increase production in the longer-term. We look forward to bringing
additional production online and seeing a recovery in 2018 sales
volumes."
(1) IFRS term based on indirect cash flow method
(2) Defined as profit before tax net of finance costs, foreign
exchange loss/gain, ESOP, depreciation, interest income, other
income and expenses.
(3) Defined as cash and cash equivalents including current and
non-current investments and excluding restricted cash
Other News
Progress on the development of GTU3
The tie-in of GTU3 to GTU1&2 has been completed with a total
downtime of ten days, which was well inside our forecasted time of
three weeks. We are now focused on achieving mechanical completion
as quickly as possible.
The below figures reflect all future cash payments to be made
excluding VAT on GTU3.
Remaining GTU3 Cash Spend US$45.9 million
(excl VAT) as at 31 March
2018
--------------------------- ----------------
Conference call
Nostrum's management team will present the Q1 2018 Financial
Results and will be available for a Q&A session with analysts
and investors today at 14.00 pm BST, 22 May 2018. If you would like
to participate in this call, please register by clicking on the
following link and following instructions: Results Call
Download: Q1 2018 Results Presentation
Download: Q1 2018 Financial Statements
Disclosure of inside information in accordance with Article 17
of Regulation (EU) 596/2014 (16 April 2014) relating to Nostrum Oil
& Gas PLC and Zhaikmunai LLP
LEI: 2138007VWEP4MM3J8B29
Further information
For further information please visit www.nog.co.uk
Further enquiries
Nostrum Oil & Gas PLC - Investor Relations
Kirsty Hamilton-Smith
Amy Barlow
+44 203 740 7433
ir@nog.co.uk
Instinctif Partners - UK
David Simonson
Laura Syrett
George Yeomans
+ 44 (0) 207 457 2020
Promo Group Communications - Kazakhstan
Asel Karaulova
Irina Noskova
+ 7 (727) 264 67 37
Notifying person
Thomas Hartnett
Company Secretary
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 principal
producing asset of Nostrum Oil & Gas PLC is the Chinarevskoye
field, in which it holds a 100% interest and is the operator
through its wholly-owned subsidiary Zhaikmunai LLP. In addition,
Nostrum Oil & Gas holds a 100% interest in and is the operator
of the Rostoshinskoye, Darinskoye and Yuzhno-Gremyachenskoye oil
and gas fields through the same subsidiary. Located in the
pre-Caspian basin to the north-west of Uralsk, these exploration
and development fields are situated approximately 60 and 120
kilometres respectively from the Chinarevskoye 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 Partnership 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 or 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 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.
Q1 2018: Nostrum Financial Results
In millions of US$ (unless mentioned otherwise) Q1 Q1 Variance Variance in %
2018
2017
------------------------------------------------- ------ ------ --------- --------------
Revenue 94.8 111.9 (17.1) (15.3)
------------------------------------------------- ------ ------ --------- --------------
EBITDA 57.2 68.5 (11.3) (16.5)
------------------------------------------------- ------ ------ --------- --------------
EBITDA margin 60.3 61.2 - -
------------------------------------------------- ------ ------ --------- --------------
In millions of US$ (unless Q1 FY Variance Variance
mentioned otherwise) 2018 2017 in %
---------------------------- ------ ------ --------- ---------
Cash Position 132.3 127.0 5.3 4.2
---------------------------- ------ ------ --------- ---------
Net Debt 971.9 960.9 (11.9) 1.1
---------------------------- ------ ------ --------- ---------
Revenue, EBITDA and Profit for the Period
Revenue from sales of crude oil, stabilised condensate, LPG and
dry gas over the period amounted to US$94.8 million, down 15.3% on
the same period last year due to lower sales volumes. EBITDA was
US$57.2 million with an EBITDA margin of 60.3%. Profit for the
period was US$3.6 million.
Cost of sales
The cost of sales was US$41.4 million, a decrease from the Q1
2017 figure of US$44.5 million. This is partially due to the prior
year figure including royalties and government profit share within
the cost of sales line.
Cash resources and Net debt
The Group ended the period with US$132.3 million in cash and
cash equivalents (FY 2017: US$127.0 million). Net debt at the end
of the period was US$971.9 million (FY 2017: US$960.9 million).
Hedging
On 4 January 2018, Nostrum entered into a hedging contract
equating to production of 9,000 barrels of oil per day. The hedging
contract is a zero-cost capped collar with a floor price of
US$60.0. The Group has covered the cost of the floor price by
selling a number of call options with different strike prices for
each quarter; Q1:US$67.5; Q2:US$64.1; Q3:US$64.1; and Q4:US$64.1.
The amount of upside given away has been capped through the
purchase of a number of call options with different strike prices:
Q1:US$71.5; Q2:US$69.1; Q3:US$69.6; and Q4:US$69.6. There were no
upfront costs to the Company for the hedging contract. The hedging
contract matures on 31 December 2018 and is settled in cash on a
quarterly basis.
The average Brent price during Q1 resulted in no settlements
taking place between Nostrum and its hedging counterparty. The
Company remains hedged on 9,000 barrels of oil per day at a floor
price of US$60.0.
Sales volumes
The sales volumes split for Q1 2018 was as follows:
Products Q1 2018 sales Q1 2018 Product
volumes Mix (%)
(boepd)
---------------------------------- ------------- ---------------
Crude Oil & Stabilised Condensate 12,080 39
---------------------------------- ------------- ---------------
LPG (Liquid Petroleum Gas) 3,978 13
---------------------------------- ------------- ---------------
Dry Gas 14,816 48
---------------------------------- ------------- ---------------
Total 30,874 100
---------------------------------- ------------- ---------------
The difference between production after treatment and sales
volumes is due to part of the dry gas being used for internal
consumption (power generation), gas lift and some losses during
transportation.
Drilling
-- 43 wells currently producing at the Chinarevskoye Field - 23
oil wells and 20 gas condensate wells
-- Our first raw gas production well found both hydrocarbons and
water in the natural fractures in the Biski North East reservoir
and we have stopped working on it whilst we analyse how best to
produce from it
-- Our second gas condensate well is now nearing completion and
we will look to bring this online in the coming weeks
-- Completion and stimulation activity finished on one oil
development well which was successfully brought online
-- Preparations were made to recommence the technical appraisal
of one well in the Western area of the Chinarevskoye field to
target the probable reserves in the Biski West reservoir
-- Wellsite preparation commenced on two further gas condensate
development wells to be completed later in the year
-- Deepening of a well in the Northern Area of the field has
been completed using a work over rig. The well has found
hydrocarbons and is currently under test production to determine
the reservoir properties
-- Currently there are two drilling rigs on the field site with
a third rig due to arrive and be operational in Q2 to allow for up
to eight wells to be drilled during 2018
Production guidance
-- Following the loss of the first production well which had
forecast 3,000 boepd from Q2 onwards in 2018 we are revising down
our 2018 guidance to target average production of plant products
before own use of 34,000 boepd. Assuming an average consumption of
dry gas during 2018 of 2,000 boepd we therefore expect sales
volumes to average 32,000 boepd for the year.
-- Given the revision downwards in 2018 production the forecast
figures calculated by Ryder Scott will also likely be impacted. We
are therefore removing the January 2018 Ryder Scott forecast data
and will be providing management guidance for 2019 production in
the 2018 Q3 results.
-- The longer-term guidance of being able to fill both our gas
plants once GTU3 is complete remains. Our target is to reach full
capacity of 4.2bn cubic metres per annum within the next 3-5 years.
The speed at which we ramp up is directly correlated to the speed
of drilling and the number of rigs we have on field site. Currently
the forecast is to have three rigs in 2019, five rigs in 2020 and
six rigs in 2021.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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