TIDMNOG
RNS Number : 1127D
Nostrum Oil & Gas PLC
24 June 2019
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, 24 June 2019
Proposed Acquisition of Oil & Gas assets in North West
Kazakhstan
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 that is has agreed, subject to
certain conditions, to acquire 50% of Positive Invest LLP
("Positive Invest"), which holds the subsoil use rights to the
Stepnoy Leopard licences in North Western Kazakhstan, for
US$500,000. Nostrum has the right to buy the remaining 50%, subject
to the satisfaction of certain additional conditions, at a price of
US$0.27 cent per boe of proven and probable reserves. The
acquisition of 100% of Positive Invest is referred to in this
announcement as the "Proposed Acquisition".
Management estimates that the Stepnoy Leopard licences could
hold up to 452 mmboe of in place volumes of which up to 200 mmboe
could be reported as Contingent Resources and over 20% estimated to
be liquids. There are eight fields within the licences with over
100 wells drilled in the Soviet era which have confirmed
hydrocarbons to be present. The resources are considered by
management to be contingent as the licences expire in 2020. One of
the conditions precedent required by Nostrum for its acquisition of
the remaining 50% in Positive Invest is the extension of the
licences by 25 years. In addition, Nostrum requires, as a condition
precedent, the approval of a development programme which allows the
raw gas from the fields to be treated in Nostrum's gas processing
facilities.
The Proposed Acquisition ensures Nostrum ties in further
resources in the region surrounding its gas processing facility
that can be processed at the Company's gas treatment facilities.
The Proposed Acquisition is structured in a two-step process. In
the event that the conditions for the second step are not met then
Nostrum has the right to transfer back to the sellers the 50%
interest in Positive Invest and the initial consideration of
US$500,000 will be repaid to Nostrum.
Key Highlights of the Proposed Acquisition
-- Stepnoy Leopard licences are located approximately 60-120km
west of Nostrum's Chinarevskoye field, 20km from its Rostoshinskoye
field and within 10km of its oil and condensate loading terminal at
Beles;
-- Stepnoy Leopard consists of two licences with eight fields
shown to contain hydrocarbons. Of the eight fields, four fields are
gas condensate fields and four are gas condensate fields with oil
rims;
-- in excess of 100 wells across the 8 fields were drilled
during the Soviet era, confirming the existence of hydrocarbons at
Stepnoy Leopard at a depth of around 3,000 metres. The project was
not developed due to a lack of infrastructure to support the
economic development of the fields;
-- Nostrum will work with Positive Invest to determine the field
development plans for each of the eight fields at Stepnoy Leopard
and submit them to the Republic of Kazakhstan's Ministry of Energy
("Ministry of Energy") for approval. Such approvals are a condition
precedent for completion of the second step of the Proposed
Acquisition;
-- a Competent Person's Report ("CPR") is being prepared by
Ryder Scott Company, LP ("Ryder Scott") to provide an estimate of
reserves and resources for Positive Invest which will be included
in the circular to shareholders referred to below. In connection
with step 2 of the Proposed Acquisition, Ryder Scott will deliver a
second updated report once both licences have been extended to
determine the number of proven and probable reserves in the fields.
Nostrum will pay the sellers a total price for the Proposed
Acquisition equivalent to US$0.27 per boe of proven and probable
reserves as certified by Ryder Scott;
-- the licences are currently due to expire in March 2020, but
an application will be made for a 25 year extension. Approval of
this extension is another condition precedent to step 2 of the
Proposed Acquisition being completed.
Kai-Uwe Kessel, Chief Executive Officer of Nostrum
commented:
"I am delighted that we have been able to take this first step
towards acquiring the rights to develop the Stepnoy Leopard blocks.
The licences contain the largest remaining undeveloped
gas-condensate fields in North West Kazakhstan and have been
extensively explored and appraised but never developed due to a
lack of infrastructure. Nostrum will not only be able to leverage
synergies with our treatment facilities but also the proximity to
our Rostoshinskoye licence will allow us to consider the joint
development of these licences which can further enhance the
economics of the transaction."
Overview of the Proposed Acquisition
A Sale and Purchase Agreement ("SPA") has been entered into
between Mr. Nurzhan Bekshenov and Mr. Vyacheslav Kim (the
"Sellers"), Nostrum Oil & Gas Coöperatief U.A., a wholly owned
subsidiary of Nostrum, and Positive Invest for the acquisition by
Nostrum of a 100% interest in Positive Invest (which holds 100% of
the subsoil use rights to the Stepnoy Leopard fields).
The Proposed Acquisition is to be completed in two steps. Step 1
is for the acquisition of 50% of Positive Invest for consideration
of US$500,000. Step 1 will be conditional upon, inter alia,:
-- consent being granted by the Ministry of Energy for the
transfer of ownership of up to 100% of Positive Invest;
-- approval being given by the Republic of Kazakhstan under
applicable antimonopoly regulations in Kazakhstan; and
-- the publication of a circular and the approval of
shareholders for the Proposed Acquisition at a general meeting of
the Company.
Following completion of Step 1 of the Proposed Acquisition, a
loan of up to US$1 million may be made to Positive Invest, to fund
its working capital during the course of satisfying the conditions
precedent for the Proposed Acquisition.
Step 2 of the Proposed Acquisition will see the acquisition by
Nostrum of the remaining 50% of Positive Invest. The consideration
for Step 2 will be based on a price of US$0.27 per boe of proven
and probable reserves to be acquired (as per an updated report to
be prepared by Ryder Scott). The aggregate consideration for the
Proposed Acquisition is to be capped at US$52,995,000. Step 2 will
be conditional upon, inter alia,:
-- consent being granted by the Ministry of Energy to extend the licence by 25 years;
-- approval being granted by the Ministry of Energy of the field
development plans for the Stepnoy Leopard licence; and
-- issuance of the updated Ryder Scott report;
US$2.5 million will be retained from the consideration paid for
a period of 14 months from completion of Step 2 of the Proposed
Acquisition as security against potential warranty and indemnity
claims.
The Sellers have no role within Nostrum and following completion
of the Proposed Acquisition no former shareholders or employees of
Positive Invest will hold any role within Nostrum.
The SPA has a long stop date of 3 March 2020, by which time all
conditions precedent in relation to the Proposed Acquisition must
be achieved. If any of the conditions precedent are not met or the
Proposed Acquisition is terminated, the Sellers will be required to
repurchase the 50% interest in Positive Invest initially acquired
by Nostrum for US$500,000 and to repay any outstanding amount under
any loan made to Positive Invest.
As noted above, the Proposed Acquisition is conditional on,
inter alia, the approval of shareholders at a general meeting of
the Company. A shareholder circular convening the general meeting
and setting out further details on the acquired assets and the
rationale for the Proposed Acquisition will be published and posted
to shareholders in due course. The Company will make a further
announcement about the timing of the shareholder meeting when it
publishes the circular.
Financial effects of the Proposed Acquisition on Nostrum
Step 1 of the Proposed Acquisition is expected to have a very
limited financial impact on Nostrum, with up front consideration of
US$500,000 and a loan to Positive Invest of up to US$ 1
million.
The total aggregate consideration can be funded out of Nostrum's
existing cash reserves. Nostrum is however considering alternative
solutions in the context of the broader strategic review that is
being carried out as announced by Nostrum today.
The future development of Stepnoy Leopard will be determined in
the development programme to be approved by the authorities in
Kazakhstan. The development concept foresees the construction of a
raw-gas pipeline to the Chinarevskoye gas processing facilities. In
the event of a full field development management expects the all in
finding and development costs to be under US$3 per 2P boe.
Positive Invest has no material assets outside of owning the
Stepnoy Leopard licences. As of 31(st) December 2018, prior to
acquiring the licences, Positive Invest had unaudited accounts
showing gross assets of approximately US$108,785 all in the form of
cash, no revenues and a loss before tax of approximately US$33,366
(all of which were administrative expenses).
The Proposed Acquisition constitutes a Class 1 Transaction under
the Listing Rules and is therefore subject to, inter alia, the
publication of a circular and the approval of shareholders at a
general meeting of the Company.
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
Amy Barlow
+44 203 740 7433
ir@nog.co.uk
Peel Hunt LLP - Joint Sponsor and Joint Corporate Broker
Richard Crichton
James Bavister
+44 (0) 203 418 8900
Numis Securities Limited - Joint Sponsor and Joint Corporate
Broker
John Prior
Emily Morris
Paul Gillam
+44 (0) 207 260 1000
Instinctif Partners - UK
David Simonson
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.
Additional Information
Peel Hunt LLP, which is authorised and regulated in the United
Kingdom by the FCA, is acting for the Company in connection with
the Proposed Acquisition and no-one else and will not be
responsible to anyone other than the Company for providing the
protections afforded to clients of Peel Hunt LLP nor for providing
advice in relation to the Proposed Acquisition or any other matter
referred to in this announcement.
Numis Securities Limited, which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting
for the Company and no one else in connection with the Proposed
Acquisition and will not regard any other person as its client in
relation to the Proposed Acquisition and will not be responsible to
anyone other than the Company for providing the protections
afforded to clients of Numis Securities Limited, nor for providing
advice in relation to any matter referred to in this
announcement.
The gross assets and loss before tax of Positive Invest as of
31st December 2018 included above in US$ have been calculated using
an average exchange rate for USD/KZT for the year ended 31st
December 2018 taken from Bloomberg of 1:344.84.
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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