TIDMNOG
RNS Number : 1217I
Nostrum Oil & Gas PLC
31 March 2020
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, 31(st) March 2020
Operational and Strategic Update
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 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. In
addition the Board will not be presenting a shareholder circular in
connection with the acquisition of Positive Invest given the
current oil price environment and constraints on liquidity. As
such, the Company has ceased to be in an "offer period" as defined
in the Code. The disclosure requirements pursuant to Rule 8 of the
Code are no longer applicable. The Company will now seek to engage
with its bondholders regarding a possible restructuring of the
Company's outstanding bonds.
2019 Reserve report
Please click here for the full reserve report
Gross Company Reserves as of 31(st) December, 2019 Chinarevskoye
Field
Proved
----
Fluid Unit Producing Non-producing Undeveloped Total proved
Oil/Condensate barrels 12,044,488 626,846 3,080,209 15,751,543
---------- ----------------- ---------------- -------------- ------------------------
Plant products barrels 6,772,009 487,689 1,279,685 8,539,383
---------- ----------------- ---------------- -------------- ------------------------
Gas (after
shrink) mmcf 130,905 8,932 19,970 159,807
---------- ----------------- ---------------- -------------- ------------------------
Gas (after
shrink) boe 24,575,963 1,676,884 3,749,146 30,001,994
---------- ----------------- ---------------- -------------- ------------------------
Total boe 43,392,460 2,791,419 8,109,040 54,292,920
---------- ----------------- ---------------- -------------- ------------------------
Probable
-------------------------------------------------------------------------------------------------------------
Fluid Unit Producing Non-producing Undeveloped Total probable
---------- ----------------- ---------------- -------------- ------------------------
Oil/Condensate barrels 0 596,510 25,327,462 25,923,972
---------- ----------------- ---------------- -------------- ------------------------
Plant products barrels 0 555,504 11,788,401 12,343,905
---------- ----------------- ---------------- -------------- ------------------------
Gas (after
shrink) mmcf 0 11,363 231,358 242,721
---------- ----------------- ---------------- -------------- ------------------------
Gas (after
shrink) boe 0 2,133,277 43,434,901 45,568,179
---------- ----------------- ---------------- -------------- ------------------------
Total boe 0 3,285,291 80,550,764 83,836,056
---------- ----------------- ---------------- -------------- ------------------------
Proved+Probable
-------------------------------------------------------------------------------------------------------------
Fluid Unit Producing Non-producing Undeveloped Total proved+probable
---------- ----------------- ---------------- -------------- ------------------------
Oil/Condensate barrels 12,044,488 1,223,356 28,407,671 41,675,515
---------- ----------------- ---------------- -------------- ------------------------
Plant products barrels 6,772,009 1,043,193 13,068,086 20,883,288
---------- ----------------- ---------------- -------------- ------------------------
Gas (after
shrink) mmcf 130,905 20,295 251,328 402,528
---------- ----------------- ---------------- -------------- ------------------------
Gas (after
shrink) boe 24,575,963 3,810,161 47,184,048 75,570,172
---------- ----------------- ---------------- -------------- ------------------------
Total boe 43,392,460 6,076,710 88,659,805 138,128,975
---------- ----------------- ---------------- -------------- ------------------------
Source: Ryder Scott
The 31 December 2019 Ryder Scott Reserve Report, for the
Chinarevskoye Field, assumes a total of 45 Interventions, including
new wells are planned between 2020-2026, which together with 46
existing producers, recover the estimated 2P reserves in the 31st
December 2019 assessment. This compares to 72 interventions under
the previous years' report, approximately one-third less.
The Chinarevskoye field Interventions comprise 30 new wells, 2
sidetracks, 7 workovers and 6 non-rig re-completions for a total
Drilling CAPEX estimate of $324mm, which compares with the previous
2019 estimate of $640mm.
Current reserves estimates are shown in Table 1. The Total 1P
(Proven) case for Chinarevskoye is 54.3 mmboe comprising 43.4 mmboe
for Proved Developed Producing (PDP) - from 46 current wells, 8.1
mmboe for the Proved Undeveloped (PUD) category and 2.8 mmboe for
Proved Developed Non-Producing (PDNP). Overall Proven volumes are
down by c. 46 mmboe due to 10.8 mmboe of 2019 production plus a
reduction in Condensate Yields in the Biyski-Afoninski reservoir,
to reflect current observed and expected rates and a reduction in
Tournasian wells and water-flood performance.
The Chinarevskoye 2P (Proven plus Probable) volume is 138 mmboe,
with the majority of Probable Undeveloped Reserves associated with
the development of the Biyski-Afoninski West, North-East and
North-West reservoirs. The 2P volumes are reduced by 156 mmboe
compared to last year's report. Offsetting some of the above
reductions are inclusion of volumes for Frasnian North, Filippovski
gas-condensate and the Biyski North-East low-pressure production
system (LPS II).
The three fields which together make up the Trident project are
now entirely classified as resources. A total of 116 mmboe Probable
Reserves for Rostoshinskoye and Darinskoye in the 31/12/2018
reserves report has been moved into the Contingent Resource
category pending further appraisal.
The Ryder Scott Reserves Reports as of 31 December 2019 purely
looks at the economics of a possible field development to extract
the maximum number of reserves at a US$65 long-term oil price.
All of the information provided does not take into account the
repayment of the company's liabilities as they come due in 2022 and
2025. It also does not take into account any short-term impact on
the liquidity position of Nostrum as a result of fluctuations in
the oil price.
Disclosure of inside information in accordance with Article 17
of Regulation (EU) 596/2014 (16 April 2014) relating to Nostrum Oil
& Gas PLC.
LEI: 2138007VWEP4MM3J8B29
Further information
For further information please visit www.nog.co.uk
Further enquiries
Nostrum Oil & Gas PLC - Investor Relations
Kirsty Hamilton-Smith
+44 203 740 7433
ir@nog.co.uk
Instinctif Partners - UK
Mark Garraway
Sarah Hourahane
Dinara Shikhametova
+ 44 (0) 207 457 2020
nostrum@instinctif.com
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 between approximately 60 and
120 kilometres 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 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 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.
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contact rns@lseg.com or visit www.rns.com.
END
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