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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
London, 19 April 2024
Full Year Results for the Year Ended 31 December 2023
Delivering our mixed-asset energy strategy
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, is pleased to announce its consolidated full year financial results for the twelve months ended 31 December 2023 ("FY 2023"), together with the publication of its 2023 Annual Report.
Nostrum's management team will present the FY 2023 Results and will be available for a Q&A session with analysts and investors at 2pm UK time, 22 April 2024. If you would like to participate in this call, please register by clicking on the following link and following instructions: Results Call
Arfan Khan, Chief Executive Officer of Nostrum Oil & Gas, commented:
"2023 has been a transformative year for Nostrum, as it commenced execution of its mixed-asset energy strategy by implementing key catalyst projects.
We successfully completed the restructuring of our bonds, leading to a strengthened balance sheet and helping to safeguard our cash reserves. This financial stability enabled us to expand our upstream portfolio, notably through the acquisition of the Stepnoy Leopard fields and commencement of a limited-scale drilling program at the Chinarevskoye field. In our midstream business, we achieved a major milestone by starting to process third-party feedstock from Ural Oil & Gas ("Ural O&G") in our gas treatment facility.
The financial performance of the Group in 2023 was helped by the improved production performance from the gas-lift expansion and improved netbacks under new off-take agreements. However, revenues decreased year-on-year by 40% due to the continued high production declines of the mature Chinarevskoye field, in combination with lower average Brent prices of $82/bbl compared with $101/bbl for 2022. Consequently, our EBITDA was reduced to US$42 million, with an EBITDA margin of 35.2%, reflecting the impact of reduced revenues against a largely fixed operating cost base.
In 2023, we further strengthened our ESG task force. As evaluated by Sustainalytics, our ESG Risk Rating improved to 30.1 from 40.1 in 2022, transitioning Nostrum to within 0.1 point of the "Medium Risk" categoryand ranking Nostrum among the top 10% best ESG performing companies in the Oil & Gas Exploration and Production sector according to Sustainalytics ranking.
As we transition into 2024, I am enthusiastic about the future and the forthcoming commercial opportunities. Nostrum is poised to advance its strategic objectives, contributing to regional development, supporting Kazakhstan's energy transition, and enhancing value for our investors and stakeholders."
2023 Highlights
Financial
· Revenues of US$119.6m with average 2023 Brent prices of US$82/bbl (FY2022: revenues of US$199.7m, average Brent price of US$101/bbl). From 2023, the Company negated the adverse impact of Urals-Brent spread on oil and gas condensate exports, by using alternative delivery routes and destinations which resulted in improved netbacks in 2023 vs 2022.
· EBITDA1 of US$42.1m (2022: US$115.7m) and EBITDA1 margin of 35.2% (FY2022: 57.9%).
· Unrestricted cash position at 31 December 2023 of US$161.7m (31 December 2022: US$233.6m). US$25.2m remained as restricted cash at 31 December 2023 (31 December 2022: US$31.0m), including US$16.5m held in a debt service retention account under the terms of the bond trust deeds (31 December 2022: US$22.8m in escrow account under the forbearance agreement).
· The Group continued focusing on cost optimisation to help manage liquidity, with increases necessary to support the growth projects such as Ural O&G processing and Stepnoy Leopard appraisal and project development.
Operational
Chinarevskoye Field
· Daily production after treatment averaged 10,091 boepd (2022: 13,200 boepd).
· Daily sales volumes averaged 8,874 boepd (2022: 12,524 boepd).
· Two-well drilling programme commenced to keep the balance between investment in risk-based opportunities and maintaining our license commitments for the Chinarevskoye field.
· Successfully launched the expansion of Gas lift system, almost doubling thew total field gas lift capacity and helped to slow down the production decline from the Chinarevskoye field.
· Total Proven plus Probable ("2P") reserves of 23.2 million barrels of oil equivalent ("mmboe") and together with 8.2 mmboe of Possible reserves a total "3P" reserves of 31.4 mmboe, based on the management's estimates updated from the annual reserves audit conducted by Ryder Scott as of 31 December 2022.
Stepnoy Leopard Fields
· Acquisition of 80% stake in Positiv Invest LLP for a cost of US$20 million, commencing the transition to a multi-asset company.
· 2-well appraisal programme close to completion.
· Final Investment Decision approved for the initial field development phase of the Stepnoy Leopard fields, budgeted at US$100 million gross and planned to be financed from the Company's own cash reserves and forecast project cashflows.
Ural Oil & Gas Processing
The tie-back project commenced with 300 th.m3 of raw gas per day from U-21 well in December 2023 and continues to ramp-up. Ural O&G plan to connect an additional four wells during H2 2024 with an estimated 1.5mn m3 of raw gas per day from these four wells.
This collaboration with Ural O&G represents a pivotal moment for us as we expand the utilisation of our world-class treatment facilities and position ourselves as a preferred partner for handling and processing third-party gas in Western Kazakhstan. Our state-of-the-art infrastructure is designed to process up to 4.2 bcm per annum or more of third-party gas, offering faster processing solutions at significantly reduced costs compared to other alternatives. The realisation of the Ural O&G tie-back project is a proof-of- concept for commercialisation of the stranded gas-fields in West Kazakhstan that would otherwise not be economic as stand-alone developments.
GTU-3 Gas Plant Re-start
The Company successfully re-started its c.$750 million state-of-the-art GTU-3 gas plant, with an additional 2.5 billion cubic metres per annum gas processing capacity and resulting in improved efficiency in the extraction of LPG by 15%-20%.
ESG
· Total Recordable Incidents Rate ("TRIR") of 0.75 for 2023 (2022:1.56).
· Lost Time Injury Rate ("LTIR") of 0.37 for 2023 (2022: zero).
· Road Traffic Incidents Rate ("RTI") rate of zero.
· One contractor fatality in a height-related incident. The Company undertook a comprehensive investigation and implemented measures to avoid such incidents in the future.
· ESG Risk Rating, from the from the international rating agency Sustainalytics, improved to 30.1 from 40.1 in 2022, transitioning Nostrum to within 0.1 point of the "Medium Risk" category and ranking Nostrum among the top 10% best ESG performing companies in the Oil & Gas Exploration and Production sector according to Sustainalytics ranking.
· Nostrum joined the National ESG-Club in 2023 which unites companies that are leaders in ESG transformation in their industries and who actively promote the principles of sustainable development in Kazakhstan.
· Nostrum obtained "B-" score for the climate change module and "B-" for water security module (according to CPD score reports).
2024 Q1 results
· The Company plans to release its unaudited and unreviewed interim condensed consolidated accounts for the three months ending 31 March 2024 on or around 31 May 2024.
The Company's results materials will be available to download on Nostrum's website.
Notes to press release
1 EBITDA is defined as profit before tax + non-recurring expenses + finance costs + foreign exchange loss/(gain) + employee share-option adjustments + depreciation - interest income + other expenses/(income).
LEI: 2138007VWEP4MM3J8B29
Further enquiries
Nostrum Oil & Gas PLC
Petro Mychalkiw
Chief Financial Officer
Instinctif Partners - UK
Guy Scarborough
Vivian Lai
+ 44 (0) 207 457 2020
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, 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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