TIDMNOG
RNS Number : 0365V
Nostrum Oil & Gas PLC
31 October 2017
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
Amsterdam, 31 October 2017
Operational Update for the Nine Months ended 30 September
2017
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 operational update for the
nine-month period ending 30 September 2017. This update is being
issued in advance of the release of Nostrum's consolidated accounts
for the same period. The information contained in this update
remains subject to review by the independent auditors.
Highlights:
Operational
-- 9M 2017 average production of 44,879 boepd
-- Q3 2017 average production of 41,265 boepd
-- 9M 2017 average sales volumes of 39,600 boepd
-- Q3 2017 average sales volumes of 36,635 boepd
Financial
-- 9M revenues in excess of US$303 million (9M 2016: US$241.5 million)
-- Cash position in excess of US$144 million (H1 2017: US$97.5 million)
-- Total debt of US$1,057 million and net debt of approximately
US$913 million as at 30 September 2017
Kai-Uwe Kessel, Chief Executive Officer of Nostrum Oil &
Gas, commented:
"Financially it was a strong quarter with the successful bond
refinancing completed, higher oil prices and continued
implementation of our cost saving programme. However, from an
operational perspective it was disappointing to announce earlier
this month the delay to the GTU3 tie-in due to the inability to be
able to complete hydro-testing prior to the winter period as a
result of the non-delivery of critical equipment. In addition the
loss of two production wells after the Q4 shut down last year and
the delay from Q1 in the drilling schedule has meant production is
behind our 2017 targets as we haven't yet been able to bring on the
new production wells. On the upside we have had some positive
appraisal results which mean our overall strategy looks like it
will be well supported by more reserves in the future to prolong
the production peak. I look forward to providing more details in
the coming months on the appraisal programme and our reserve growth
plans for 2018."
Sales volumes
The sales volumes split for 9M 2017 was as follows:
Products 9M 2017 Sales 9M 2017 Product
Volumes Mix (%)
(boepd)
---------------------------------- ------------- ---------------
Crude Oil & Stabilised Condensate 15,945 40%
---------------------------------- ------------- ---------------
LPG (Liquid Petroleum Gas) 4,841 12%
---------------------------------- ------------- ---------------
Dry Gas 18,814 48%
---------------------------------- ------------- ---------------
Total 39,600 100%
---------------------------------- ------------- ---------------
The difference between true production and the sales volumes are
as a result from part of the dry gas being used for internal
consumption (power generation), gas lift and some losses during raw
gas treatment.
Drilling
-- 44 wells currently producing at the Chinarevskoye field - 23
oil wells and 21 gas condensate wells
-- During Q3 2017 drilling activity was finished on 2 wells;
currently 2 other wells are being completed and stimulation and
testing is ongoing at 3 further wells
-- The 2017 drilling programme has been behind schedule from the
start of the year and also suffered from delayed results from both
appraisal and production wells
-- Appraisal work has had mixed results so far with successful
results from the northern area of the field, where we encountered
significant pressure and hydrocarbons that suggest there could be
material reserves in the north where currently no reserves are
booked. In the southern areas we have successfully drilled our
planned appraisal wells but have run into technical issues
resulting in a delay to testing. Workover is being performed to try
to resolve these issues and show the extent of additional proven
reserves within the southern area of the field
-- Production figures have been disappointing in 2017 as we have
been unable to return the two producing wells that we lost during
the 2016 shut down. We continue to analyse possible low cost
solutions to bring them back on but may have to consider
re-drilling the wells during 2018. In addition, the delay from Q1
in the drilling schedule has meant that the production wells
drilled in 2017 are not coming on until later than expected in Q4
so we will see continued decline in production without new
feedstock. The delay is running at approximately 30 days and will
mean the wells are only coming on in late November/December.
Sales volume schedule
-- 2017 and 2018 production is being recalculated due to the
delay of GTU3 and the drilling programme being behind schedule. For
2017, it is unlikely sales volumes will exceed 40,000 boepd given
the delay in completion of production wells. For 2018, we do not
foresee any increase in production for the first half of the year
until GTU3 is tied-in over three weeks in April. For H2 2018 we see
the potential to gradually ramp up production but will only be able
to guide on the scale of this once the drilling programme for 2018
has been finalised and the results from the existing wells have
been obtained. Our guidance for 2019 and 2020 is as follows:
-- 2019: 60,000 - 80,000+ boepd
-- 2020: 100,000 boepd
Should oil prices deviate materially the production guidance
will be updated accordingly.
Progress on development of GTU3
Due to the delayed delivery of some specially designed valves
required for the tie-in of GTU3 with GTU1&2 it will not be
possible to bring gas into GTU3 in 2017. The previously planned
three week shut down of GTU1&2 has therefore been postponed
until after the winter period. The shut down and tie-in are now
scheduled to be completed in April 2018. The tie-in will allow gas
to go from GTU1&2 into GTU3, for GTU3 to be connected with the
export gas pipeline and GTU3 commissioning to take place.
Commissioning is expected to be completed within approximately 60
days.
The main reason for the delay is due to the fact that once the
tie-in is completed the welding joints need to be hydro-tested
prior to any gas passing through it. This testing cannot take place
during the winter when temperatures are below zero. In order to
minimise the downtime of GTU1&2 it is more efficient to have
just one period of downtime to complete the tie-in and the
hydro-testing rather than to have two separate periods of shut down
for the tie-in and hydro- testing to be carried out. Therefore the
decision has been taken to move the three week shut down to the
period when temperatures move above freezing, which is now forecast
to be April 2018.
The result of this change in timing for the tie-in means there
will be a very short shut down of GTU1&2 in Q4 2017 as it will
be limited to the minimal required maintenance of only a few days.
The GTU3 plant on a standalone basis will be mechanically complete
well in advance of the forecast tie-in date in April. The
postponement of GTU3 commissioning does mean that production
guidance for the first six months of 2018 will be impacted as the
Company will not be able to increase production above current
capacity of 45,000 boepd however the target to ramp up production
to 100,000 boepd by 2020 has not changed. Revised full year
guidance for production will be given no later than year-end when
the 2018 drilling programme has been set and is under way. The
total cost of the plant is not impacted by the delay to the tie-in
and commissioning and remains at US$532 million, with a spend as at
30 September 2017 of US$459 million. The company remains fully
funded to complete GTU3 and ramp up production.
Release of Nostrum's 9M 2017 Financial results
Nostrum plans to release its unaudited consolidated accounts for
the nine months ending 30 September 2017 on 21 November 2017.
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
Instinctif Partners - UK
David Simonson
Laura Syrett
George Yeomans
+ 44 (0) 207 457 2020
Promo Group Communications - Kazakhstan
Asel Karaulova
Irina Noskova
+ 7 (727) 264 67 37
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 approximately 60 and 120
kilometres respectively 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 Partnership 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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