Nostrum Oil & Gas confirms 550m barrels of P2 reserves

The level of proved and probable oil reserves at licences owned by Nostrum Oil & Gas was confirmed at more than 550m barrels, after an independent audit.

The FTSE 250 company, which is focused on north-west Kazakhstan, said the report by reservoir appraisal agency Ryder Scott showed proved reserves (1P) at 192.2m barrels of oil equivalent (mmboe), with production of approximately 21mmboe since the last report and a proven reserve replacement ratio of over 65%.

Total proved and probable reserves (2P) were recorded at 571.1mm boe, redcued from the 582mm boe in 2013 primarily a result of production exceeding 2P growth in the reserve base.

Nostrum, which said reserves at its three additional licenses remained unchanged at 98.2mmboe, recently revealed that production will remain subdued over the next two years due to the construction of a new gas plant to be completed in 2017.

Chief executive Kai-Uwe Kessel said: "We are very pleased that our independent auditors, Ryder Scott, have confirmed Nostrum's existing strong reserve base both at the Chinarevskoye field and the additional licenses acquired in 2013.

"The steady production of approximately 45,000 boe per day since August 2013 has been largely compensated by the conversion of further reserves into the Proven category at Chinarevskoye.

He said the stability of the reserve base allowed the company to focus on delivering its GTU3 project in the second half of 2016, which is expected to allow for the doubling of production to 100,000boe per day by the end of 2016.

GTU3 is expected to require expenditure in 2015 of $220m and recently safeguarded against falling oil prices via hedging 32% of its liquids production until February 2016. Around 7,500 barrels have been hedged at a price of $85 a barrel.