TIDMNOG
RNS Number : 3613N
Nostrum Oil & Gas PLC
29 January 2021
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
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
London, 29 January 2021
Operational Update for the Fourth Quarter and the Year ending 31
December 2020
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, today announces its operational update in respect of the
year ending 31 December 2020. This update is being issued in
advance of the release of Nostrum's annual consolidated accounts
for the same period.
Highlights:
Operational
-- Average daily production after treatment for 2020 totalled
22,337 boepd with average daily sales volumes for the year of
21,514 boepd. This compares to our production and sales guidance of
21,000 boepd and 20,000 boepd, respectively.
-- COVID 19 remains of the utmost concern. Actions continue to
be taken to protect the safety of all staff and contractors and
mitigate any impact on operations. To date, no production has been
lost because of COVID 19.
-- As previously reported, drilling was halted for 2020. The
successful workover and well intervention activity, completed in
August 2020, reduced the rate of decline previously expected in the
field.
-- We continue our focus on ways to monetise spare capacity in
the gas treatment facility through processing third party
volumes.
-- On 8 October 2020, the Company announced the disposal of the
Darinskoye and Yuzhno-Gremyachenskoye licences.
Financial
-- 2020 revenues expected to be in excess of US$175 million (2019: US$322.1 million).
-- The cash position as at 31 December 2020 was in excess of
US$78 million (31 December 2019: US$93.9 million). As at 31
December 2020, the balance excludes US$12.9 million placed into a
secured cash account under the terms of the Forbearance Agreement
(see below).
-- Total debt(1) expected not to exceed US$1,187 million and net
debt expected not to exceed approximately US$1,109 million as at 31
December 2020.
-- Continued focus on cost optimization to help manage our liquidity.
(1 Total debt does not include finance lease liabilities under
IFRS16 Leases)
Reserves
The Group has carried out an internal review of its reserves as
at 31 December 2020. As a result, Management estimate that t he
Chinarevskoye total 2P (Proven plus Probable) reserves as at 31
December 2020 are 39 mmboe. This represents a reduction of 91
million barrels of oil equivalent versus the levels reported
previously, after adjusting for production in 2020. The revisions
in reserves are mainly due to the downgrade of reserves attributed
to the development of the Biyski-Afoninski West & North-West
reservoirs to the Contingent Resources category. In addition, there
has been a reduction in the development drilling programme across
the Chinarevskoye reservoirs due to reservoir performance concerns
and a less favourable product pricing outlook.
Nostrum estimates the Chinarevskoye 1P (Proven) case at 28.9
mmboe, comprising 27.7 mmboe for Proved Developed Producing (PDP)
from 45 current wells and 1.2 mmboe in the Proved Undeveloped (PUD)
category.
Management's estimates of the reserves as at 31 December 2020
are currently being audited by Ryder Scott with results expected in
mid-February 2021.
Bond Restructuring
-- As previously announced, Rothschild & Cie were appointed
as financial advisers and White & Case as legal advisers to
assist the Company in the restructuring of the 8.0% Senior Notes
due 2022 and 7.0% Senior Notes due 2025 (together, the "Notes")
issued by Nostrum Oil & Gas Finance B.V.
-- PJT Partners (UK) Limited were appointed as financial
advisers and Akin Gump Strauss Hauer & Feld as legal advisers
to an informal ad hoc committee of holders of the Notes.
-- On 24 July 2020, Nostrum announced that it planned to utilise
the applicable grace periods for the interest payments due on 25
July 2020 and 16 August 2020 with respect to the Notes. The 30-day
grace period allowed the Company to continue active discussions
with the financial and legal advisers to an informal ad hoc
committee of holders of the Notes with a view to entering into a
forbearance agreement with the holders of the Notes in relation to
those interest payments.
-- On 23 October 2020, the Company announced that, together with
certain of its subsidiaries (the "Note Parties"), the Company had
entered into a forbearance agreement (the "Forbearance Agreement")
with members of an ad hoc committee of noteholders (the "AHG"). The
forbearance period initially expired at 4 p.m. GMT on 20 December
2020 (the "Initial Expiration Date"), at which time the Initial
Expiration Date automatically extended to 4 p.m. GMT on 18 February
2021 and will again extend to 4 p.m. GMT on 20 March 2021 unless
the Forbearance Agreement has been terminated by a majority
decision of the forbearing members of the AHG. A final extension
period from 20 March to 19 May 2021 requires the approval of all of
the forbearing members of the AHG. Pursuant to the Forbearance
Agreement, members of the AHG have agreed to forbear from the
exercise of certain rights and remedies that they have under the
indentures governing the Notes. The agreed forbearances include
agreeing not to accelerate the Notes' obligations as a result of
the missed interest payments (or the next missed interest periods
if they occur prior to the expiry of the Forbearance
Agreement).
-- The Forbearance Agreement is subject to certain conditions, including:
Ø Any representation or warranty made by any of the Note Parties
under the Forbearance Agreement continuing to be true and complete
in all material respects as of the date of the Forbearance
Agreement;
Ø A portion of the missed interest payments will be paid into a
secured account opened for the benefit of the holders of the
Notes;
Ø The appointment by the AHG of an observer who shall be
entitled to attend and speak, but not vote, at any meetings of the
Board or Committees of the Company where certain defined matters
are to be discussed;
Ø The engagement of certain professional and technical advisors
on behalf of the AHG;
Ø The observance by the Company and its subsidiaries of certain
operating and other restrictions and limitations; and
Ø The provision of certain financial and operating information
to the advisors of the AHG.
The Company agreed to pay, or procure the payment by the issuer
of, certain consent fees in cash (a "Consent Fee") to each
forbearing holder. The Consent Fees are payable by reference to the
total aggregate principal amount of the Notes outstanding. The
first Consent Fee was 29.7866 basis points, equating to
US$3,350,992, paid on 19 November 2020. The second consent fee for
19.8577 bps, totalling US$ 2,233,991 was paid on 22 December 2020.
The final consent fee for 9.9288 bps equating to US$1,116,990 is
payable on or around February 20, 2021. In this regard, the Company
will communicate shortly, through the clearing systems, an
announcement inviting all other holders of the Notes to join the
Forbearance Agreement in order to participate in the third consent
fee payment.
Atul Gupta, Executive Chairman of Nostrum Oil & Gas,
commented:
"The Group has faced a number of challenges in 2020, but with
prompt and decisive action we have been able to manage our
liquidity and reduce reservoir decline. Signing the Forbearance
Agreement has provided the time to engage with our bondholders and
shareholders to restructure the debt and we are very hopeful of a
successful conclusion to this process in the coming months. We will
continue discussions with third parties to secure additional
volumes to commercialise our world-class infrastructure whilst
proactively managing our cost base and liquidity.
Further reductions in our proven and probable reserves are, of
course, disappointing. This reflects the productivity issues
encountered in our undeveloped reservoirs and the adjustment to 2P
reserves is considered to be prudent at this time.
COVID 19 continues to be of concern. We have not lost any
production in 2020 because of COVID 19 and we continue to exercise
extreme caution to ensure the safety of our people and contractors,
while minimising the disruption to production and operations.
Finally, and as announced recently, we are delighted to welcome
Arfan Khan as Chief Executive Officer of the Group and a member of
the Company's Board. Arfan will take over from myself as CEO and I
will now revert to my previous role as Executive Chairman. We are
extremely confident that Arfan has the breadth and depth of
experience and operational expertise to lead us through the next
stage as we focus on delivering the bond restructuring for all our
stakeholders, whilst also continuing to pursue opportunities to
commercialise our world class infrastructure."
Sales volumes
The sales volumes split for 2020 was as follows:
Products 2020 sales volumes 2020 product mix
(boepd) (%)
Crude Oil 3,700 1 7.2%
------------------ ----------------
Stabilised Condensate 5,249 24.4 %
------------------ ----------------
LPG (Liquid Petroleum Gas) 2,797 13.0%
------------------ ----------------
Dry Gas 9,768 45.4%
------------------ ----------------
Total 21,514 100.0%
------------------ ----------------
The difference between production and sales volumes is primarily
due to the internal consumption of gas
2020 Well Stock
-- As at 31 December 2020, the Company had 45 wells in
production (24 oil wells and 21 gas-condensate wells).
2021 Drilling and sales volume guidance
-- The Company has not planned a drilling programme in 2021 but
will conduct a targeted well work-over and intervention programme
in Q2 and Q3 2021, similar to that conducted in 2020.
-- The average daily production forecast for 2021 is 17,000
boepd, corresponding to an average daily sales v olume of 16,000
boepd.
Release of Nostrum's Annual Financial Results
Nostrum plans to release its Annual Report, including the
consolidated accounts for 2020 on 20 April 2021.
LEI: 2138007VWEP4MM3J8B29
Further information
For further information please visit www.nog.co.uk
Further enquiries
Martin Cocker - Chief Financial Officer
ir@nog.co.uk
Instinctif Partners - UK
Mark Garraway
Sarah Hourahane
Galyna Kulachek
+ 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
Comp any 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 oil and gas field through the same
subsidiary. Located in the pre-Caspian basin to the north-west of
Uralsk, this exploration and development field is situated
approximately 100 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 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 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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END
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