TIDMNOG
RNS Number : 3592I
Nostrum Oil & Gas PLC
30 August 2016
Amsterdam, 30 August 2016
Half Year 2016 Financial Results
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 results in respect of the
six months ended 30 June 2016.
Financial highlights from the six months to 30 June 2016:
-- Revenue of US$163.5m (H1 2015: US$274.1m), reflecting the 31%
decrease in average Brent crude oil price for the period compared
to H1 2015 from US$59.4/bbl to US$41.0/bbl
-- EBITDA(1) of US$100.9m (H1 2015: US$152.6m)
-- Strong EBITDA margin of 62%
-- Reduction in opex to US$3.3 / boe, down 30.1% from H1 2015 to a total of US$23.4m
-- Reduction in G&A to US$2.8 / boe, down 22.0% from H1 2015 to a total of US$19.5m
-- US$24.8m received from the hedge in H1 2016; 15,000 boepd
hedged at US$49.16 per barrel from December 2015, with a 24-month
tenor and quarterly payments
-- Closing cash(2) for the period of US$111.9m
Operational highlights from the six months to 30 June 2016:
-- GTU3 construction progressing on time and on budget; completion expected during 2017
-- Production for the first half of 2016 was 38,993 boepd,
including the scheduled GTU maintenance
-- Full year 2016 production guidance remains at 40,000 boepd
-- Drilling programme for 2016 close to completion with 3 new
wells completed; new wells to be brought online during Q3
Kai-Uwe Kessel, Chief Executive Officer of Nostrum,
commented:
"Nostrum has again demonstrated its financial resilience over
the first six months of 2016. The continued reduction in costs has
allowed the Company to maintain a strong EBITDA margin of over 60%
and steady cash generation. We received approximately US$25m over
the first half from our hedge and will continue to receive cash on
a quarterly basis through December 2017 should the oil price remain
below US$50. We have continued to scale down our cost base in
response to the volatile oil price environment and look forward to
further reducing our transportation costs next year through the
crude pipeline connection to the KazTransOil (KTO) pipeline.
Meanwhile, we have kept a keen focus on the completion of GTU3 and
with it the doubling of Nostrum's production capacity. I am pleased
to report that the construction is progressing well and we expect
to complete the project on budget next year.
"Our careful control of costs, alongside our steady progress
towards doubling capacity demonstrates the resilience of our
business model and underpins our future performance and
growth."
Conference Call
Nostrum's management team will present the H1 2016 Results and
will be available for a Q&A session with analysts and investors
today at 14.00 BST, 30th August. Please click on the following link
to register for the call: Conference call registration ID
60288084
A presentation will be available in advance on our website
www.nog.co.uk.
Publications
In addition to publishing its H1 2016 reviewed financial
statements the Company today also publishes Q2 2016 unreviewed
financial statements for purposes of compliance with ongoing
reporting obligations in its bond documentation.
Download: Nostrum's 2016 Half-Year Results Presentation
Download: Nostrum's 2016 Half-Year Interim Management Report and
Reviewed Financial Statements
Download: Nostrum's 2016 Second-Quarter Interim Management
Report and Unreviewed Financial Statements
(1) Defined as Profit Before Tax + Finance Costs + Foreign
Exchange Loss /(Gain) + ESOP + Depreciation - Interest Income +
Other Expenses /(Income)
(2) Defined as Cash & Cash Equivalents + Current
Investments
Further information:
For further information please visit www.nog.co.uk
Further enquiries:
Nostrum Oil & Gas PLC - Investor Relations
Kirsty Hamilton-Smith
Rachel Pescod
ir@nog.co.uk
+ 44 (0) 203 740 7430
Instinctif Partners - UK
David Simonson
Catherine Wickman
+ 44 (0) 207 457 2020
Promo Group Communications - Kazakhstan
Asel Karaulova
+ 7 (727) 264 67 37
About Nostrum
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 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 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 Group 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.
H1 2016: Nostrum Financial Results
In millions of
US$ (unless mentioned Variance
otherwise) H1 2016 H1 2015 Variance in %
------------------------ -------- -------- --------- ---------
Revenue 163.5 274.1 (110.6) (40.4%)
EBITDA 100.9 152.6 (51.7) (33.9%)
EBITDA margin 61.7% 55.7% 6.0% -
Cash Position 111.9 238.1 (126.2) (53.0%)
Net Debt 844.3 710.1 134.2 18.9%
Revenue, EBITDA and Profit for the Period
Revenue from sales of crude oil, stabilised condensate, LPG and
dry gas was US$163.5 million. This is mainly explained by the
decrease in the average Brent crude oil price from US$59.4/bbl
during the first half of 2015 to US$41.0bbl during the reporting
period. EBITDA stood at US$100.9 million and the Company made a
loss over the period of US$55.7 million.
Cost of Sales
Cost of sales decreased by 6.2% to US$94.5 million for the
reporting period (H1 2015: US$100.8 million). The decrease is
primarily explained by the change in royalties, referred to below,
payroll and related taxes and repair, maintenance and other
services partially offset by higher depreciation, depletion and
amortisation costs. On a boe basis, cost of sales increased
marginally by US$0.57 or 4.4% to US$13.43 for the reporting period
(H1 2015: US$12.86) and cost of sales net of depreciation per boe
increased by US$1.22, or 21.4%, to US$4.49 (H1 2015: US$5.71).
Depreciation, depletion and amortisation increased by 12.2% to
US$62.9 million for the reporting period (H1 2015: US$56.1
million). The increase of depreciation for H1 2016 in comparison to
H1 2015 is a consequence of the ratio change between the volume
produced and the proven developed reserves.
Repair, maintenance and other services decreased by 25.2% to
US$10.5 million for the reporting period (H1 2015: US$14.1
million). These expenses include maintenance expenses related to
the gas treatment facility and other facilities of the Group,
engineering and geophysical study expenses. These costs fluctuate
depending on the planned works on certain objects. The decrease in
the reporting period is mainly attributable to Tenge
devaluation.
Payroll and related taxes decreased by 44.2% to US$5.6 million
for the reporting period (H1 2015: US$10.0 million). This mainly
resulted from the Tenge devaluation over the reporting period as
the majority of payroll costs are denominated in Tenge.
Royalties, which are calculated on the basis of production and
market prices for the different products, decreased by 57.3% to
US$4.2 million for the reporting period (H1 2015: US$9.8 million).
This decrease follows the decline of revenues for sold
products.
Other transportation services increased by 166.8% to US$3.4
million for the reporting period (H1 2015: US$1.3million). Such an
increase is explained by the fact that transportation services
previously provided within the Group have been outsourced since Q4
2015 and these outsourced costs now include for example, vehicle
rental fees.
Cash
The Group ended the first half of 2016 with US$111.9 million in
cash, which includes US$38.0 million of current investments (FY
2015 US$165.6 million).
Hedging
In December 2015, Nostrum rolled its pre-existing hedge into a
new hedge of 15,000 boepd with a strike price of US$49.16 per
barrel. The cost of the hedge was paid entirely from the sale of
the Company's previous hedge for US$92m. The new hedge has a
24-month tenor, maturing in December 2017, with cash settlements on
a quarterly basis.
Production
The product split for H1 2016 was as follows:
PRODUCTS H1 2016 Average H1 2016
Production Product Mix %
------------------------ ---------------- ---------------
Crude Oil & Stabilised
Condensate 15,622 40%
------------------------ ---------------- ---------------
LPG (Liquid Petroleum
Gas) 4,377 11%
------------------------ ---------------- ---------------
Dry Gas 18,994 49%
------------------------ ---------------- ---------------
TOTAL 38,993 100%
------------------------ ---------------- ---------------
Current Product Destinations
Nostrum's primary export destinations for H1 2016 were as
follows:
-- Crude Oil - Neste Oil's and Socar's refineries in Finland and Azerbaijan
-- Condensate - Russian Black Sea port of Taman
-- LPG - Russian Black Sea ports and Bulgaria
-- Dry Gas - Sold for export markets
The Company is working on adding access to the KazTransOil (KTO)
pipeline for its crude oil transportation but has no current plans
to change any of these export destinations during 2016. Once
connected, the KTO pipeline will benefit Nostrum by helping to
further reduce transportation costs. The cost of access to the KTO
pipeline is expected to be approximately US$7m.
Drilling
-- 23 oil wells and 18 gas condensate wells are currently producing at the Chinarevskoye field
-- Drilling programme for 2016 close to completion with 3 new wells completed
-- New wells to be brought online during Q3
-- Rostoshinskoye well reached target depth of 5050 metres
-- 2016 production drilling capex remains below US$50m for the year
Production schedule
Based on the current drilling programme stated above and taking
into account the current oil price we reaffirm our production
guidance below.
-- 2016 - Approximately 40,000 boepd
-- 2017 - Approximately 40,000 - 60,000 boepd
-- 2018 - Approximately 60,000 - 90,000 boepd
-- 2019 - Approximately 90,000 - 100,000 boepd
Should oil prices deviate materially the production guidance
will be updated accordingly.
Progress on Development of GTU3
Nostrum continues to make steady progress on GTU3. Following the
fall in the oil price over the period from H2 2015 onwards, Nostrum
took the decision to phase the payments of GTU3 over 2016 and 2017
in order to match the payment profile of the hedge put in place in
December 2015. Completion remains scheduled for 2017. The phasing
of payments involves no additional cost for Nostrum and the total
budget remains at US$500m. The phasing of the payments allow for a
continued preservation of cash on Nostrum's balance sheet during
this period of low oil prices.
The below figures reflect all cash payments made and future cash
payments excluding VAT on GTU3.
GTU3 Cash Spent As per 30
June 2016
------------------------------- -----------
Expenditure to date US$317m
------------------------------- -----------
Remaining expected expenditure US$93m
in 2016
------------------------------- -----------
Expected expenditure US$88m
in 2017
------------------------------- -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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