Nostrum Oil & Gas, an independent oil and gas company engaging in the production, development and exploration of oil and gas in the pre-Caspian Basin, today announces an operational and Reserve Report update.

Kaat Van Hecke, Chief Executive Officer of Nostrum Oil & Gas, commented:  
“In these challenging times, we remain focused on the safety of our people and have adapted our operations to ensure their continued welfare and to ensure we comply with all government guidelines in relation to COVID-19 in the countries we operate in.  We are taking a prudent approach to running our business with a sharp focus on financial discipline and maintaining liquidity.

“At current oil prices we are able to cover our next coupon payment in Q3 2020 but recognise the precarious liquidity position of the Company and will therefore look to engage with our bondholders. Given the postponement of the Full Year results we are publishing the 2019 reserve report. Total reserves have reduced by 272mmboe. The reduction in reserves follows a significant amount of work carried out both internally and by third parties during 2019 to better understand the productivity of our reservoirs. We will continue to try to recover as many hydrocarbons as possible from Chinarevskoye field but the focus for filling our infrastructure has moved to obtaining more third-party volumes. This reserve downgrade will lead to a significant impairment being taken when we release our full year results.”    

Operational

• 2020 average daily production as at 25 March 2020 above 23,000 boepd
• 2019 average daily production of 28,587 boepd (2018: 31,254 boepd) corresponding to average daily sales volumes of 26,671 boepd (2018: 29,516 boepd)
• GTU3, the Company’s third gas treatment unit, is complete and commissioned
• Focus remains on commercializing the spare capacity in this world-class gas processing infrastructure
• 46 wells in production as at 31 December 2019 – 20 oil wells and 26 gas-condensate wells
• Drilling halted for 2020
• 2P reserves at 138 mmboe – a reduction of 66.3% (2018: 410 mmboe)

Financial

• Current cash balance as of 25 March 2020: US$65m
• Q3 coupon payment covered at current oil prices
• Strategic review and bondholder engagement

Nostrum commenced a strategic review on 24 June 2019 to optimise its value and that of its assets.  A range of options, including a formal sale process (FSP) and the acquisition of Positive Invest, were evaluated and, as announced in January 2020, the Company will focus on (i) commercialising the spare capacity in its world-class gas processing infrastructure; (ii) lower-risk reservoir management and (iii) re-organising to a lower cost base. A comprehensive process was run to assess interest from potential acquirers of the Company and their ability to deliver an offer that could be recommended to shareholders. This has not led to any firm proposals being received and the Board does not believe there is merit in prolonging this process and therefore announces that the Company is no longer in a formal sales process pursuant to the Code.

Link to Nostrum Oil & Gas Kazakhstan country profile