TIDMNOG
RNS Number : 6506W
Nostrum Oil & Gas PLC
27 April 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
London, 27 April 2021
Full Year Results for the Year Ending 31 December 2020
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 full year financial results
for the twelve months ending 31 December 2020, together with the
publication of the 2020 Annual Report for Nostrum and its
subsidiaries taken as a whole ("the Group").
2020 highlights:
Operational
-- Average daily production after treatment for 2020 totalled
22,337 boepd (2019: 28,540 boepd) with average daily sales
volumes for the year of 21,514 boepd (2019: 26,626 boepd)
. This compares to our production and sales guidance for
2020 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. A similar targeted campaign for 2021 has already
started.
-- We continue our focus on ways to monetise spare capacity
in the gas treatment facility through processing third party
volumes.
-- Ryder Scott audited 2P reserves reduced to 39 mmboe as announced
on 11 March 2021.
-- On 8 October 2020, the Company announced the disposal of
the Darinskoye and Yuzhno-Gremyachenskoye licences.
Financial
-- 2020 revenue of US$175.9m (2019: US$322.1m).
-- 2020 EBITDA(1) US$80.4m (2019: US$199.6m).
-- Cash at 31 December 2020 of US$78.6m(2) with net debt of US$1,107.7m.
-- Cash position as of 31(st) March 2021 in excess of US$85m. We
continue to take active steps to manage liquidity.
-- Operating costs ([1]) of US$31.8 million for 2020 (2019:
US$41.4 million) general & administrative costs ([2]) of
US$14.1 million (2019: US$19.4 million) and selling and
transportation costs(2) of US$28.2 million (2019: US$41.4 million)
reflect the focus during 2020 on controlling costs and so managing
liquidity.
-- US$244.9 million impairment following from reduction in Group
2P reserves (2019: US$1,354.7 million).
-- Discussions continue with the advises to an informal ad-hoc
committee of noteholders (the "AHG") of the 8.0% Senior Notes due
2022 and 7.0% Senior Notes due 2025 issued by Nostrum Oil & Gas
Finance B.V. (together, the "Notes").
Reserves
The Group carried out an internal review of its reserves as at
31 December 2020. As a result, Management estimated that t he
Chinarevskoye total Proven plus Probable ("2P") reserves as at 31
December 2020 were 39 million barrels of oil equivalent ( mmboe).
This represents a reduction of 91 mmboe versus the reserves
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.
The 2P reserves of 39 mmboe assume 16 well interventions,
including one appraisal well, with a total estimated drilling cost
of US$75 million (2019: 138.1 mmboe requiring 45 interventions for
a total estimated drilling cost of $324 million).
The table below shows the 2P reserves by fluid:
Unit Proven Non-producing Total Probable Total
producing & undeveloped Proven Proven
and
Fluid Probable
Oil/Condensate Barrels 10,016,693 795,902 10,812,595 4,203,999 15,016,594
--------- ----------- -------------- ----------- ----------- -----------
Plant products Barrels 3,470,875 130,960 3,601,835 1,072,012 4,673,847
--------- ----------- -------------- ----------- ----------- -----------
Gas (after
shrink) mmcf 75,562 1,768 77,330 25,257 102,587
--------- ----------- -------------- ----------- ----------- -----------
Gas (after
shrink) Boe(3) 14,185,940 331,926 14,517,866 4,741,742 19,259,608
--------- ----------- -------------- ----------- ----------- -----------
Total 27,673,508 1,258,788 28,932,296 10,017,753 38,950,049
----------- -------------- ----------- ----------- -----------
(3) The gas boe totals are management estimates using
a conversion factor of 5.327 mcf per boe
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.
The Reserves Report as of 31 December 2020 looks purely
at the economics of a possible field development to
extract the maximum number of reserves at a US$60
oil price from 2022.
All of the information provided does not take into
account any short-term impact on the liquidity position
of Nostrum as a result of fluctuations in the oil
price.
CEO appointment
The Company announced the appointment of Arfan Khan as Chief
Executive Officer of the Group effective 26 January 2021. Mr Khan
assumed the role of chief executive of the Group from Executive
Chairman Atul Gupta, who had previously performed such duties on an
interim basis. Mr Gupta reverted to his previous role as Executive
Chairman, effective the same date. Mr Khan also joined the Board of
Directors of the Company at the same time.
Mr Khan has over 30 years' experience in the oil and gas
industry. A qualified petroleum engineer, he has held various
operational and senior management positions in the industry
throughout his career, including positions with ExxonMobil in the
US and roles at Shell, Enterprise Oil and Maersk Oil. Mr Khan also
has
strong emerging markets experience, having held operational
roles in Nigeria, Angola and Kazakhstan, where he acted as Kashagan
Well, Reservoir and Facilities Manager whilst with Shell. As Chief
Operating O ff icer, Executive Director and Special Advisor to the
Chairman and CEO at Amni International Petroleum from 2014 to 2019,
Arfan oversaw strategic growth plans and fundraising programmes.
Most recently he has served as President and Managing Director of
Stratum Energy Group.
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 Notes.
-- PJT Partners (UK) Limited were appointed as financial
advisers and Akin Gump Strauss Hauer & Feld as legal advisers
to the AHG.
-- 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 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, on which date it automatically extended
again to 4 p.m. GMT on 20 March 2021.
On 19 March 2021, by unanimous consent of the AHG, the
forbearance period was extended to 20 April 2021 and on that date
it was extended, again by unanimous consent of the AHG, to 20 May
2021.
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.
At 27 April 2021, the total held in the secured account in
accordance with the Forbearance Agreement was US$20,425,000;
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 was
paid on February 20, 2021.
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
Arfan Khan, Chief Executive Officer 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. A
robust bond restructuring will give the company a solid foundation
to build from. 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.
COVID 19 continues to be of concern. Whilst we have not lost any
production or people because of COVID 19, we continue to exercise
extreme caution to ensure their continued safety, at the same time
minimising the disruption to production and operations.
Looking forward, we are now pivoting towards growth and
transitioning into a multi-asset energy company. This will require
tremendous focus and resources. Our success in the near-term will
depend upon safeguarding the base business and liquidity, sweating
the producing asset and adding to PDP by exploiting low cost per
barrel, high-confidence infill opportunities with best-in-class
well & reservoir management, continuing to deliver on our HSE
performance and delivering on our promises and restoring investor
confidence."
Strategic focus for 2021:
-- Delivering on our strategies for growth:
Ø Concluding commercial contracts for the processing of
third-party hydrocarbons through our facilities and firming up
potential upstream development opportunities;
Ø Establishing a comprehensive ESG road-map.
-- Optimising future operational ability and capital efficiencies:
Ø Successful restructuring of the debt;
Ø Continue to manage costs and liquidity.
Ø Proactively managing technical and commercial risks.
-- Maximising output from the Chinarevskoye field :
Ø Targeted workover and intervention programme;
Ø Maximise uptime of existing wells and production
facilities.
Ø Achieve average production volumes of 17,000 boepd
corresponding to average sales volumes of 16,000 boepd; and
Ø Continue studies to identify economic ways to bring contingent
resources back into 2P.
Conference call
Nostrum's management team will present the FY 2020 Results and
will be available for a Q&A session with analysts and investors
today at 2pm UK time, 27 April 2021. If you would like to
participate in this call, please register by clicking on the
following link and following instructions: Results Call
Download: Results Presentation
Download: Consolidated Group Financials
Download: 2020 Annual Report
LEI: 2138007VWEP4MM3J8B29
Further information
For further information please visit www.nog.co.uk
Further enquiries
Nostrum Oil & Gas PLC
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
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 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.
[1] Cost of sales net of depreciation and inventory adjustment
[2] General & administrative and selling and marketing
expenses net of depreciation
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END
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