Revenue and earnings rise as Nostrum keeps lid on costs

Independent oil and gas company Nostrum Oil & Gas posted its financial results for the three months to 31 March on Tuesday, with revenue rising to $111.9m from $73.9m year-on-year, and net operating cash flows of $69.8m, rising from $27.0m.

The FTSE 250 firm reported EBITDA of $68.7m, up from $51.7m, with an EBITDA margin of 61.4% , narrower than the 70.0% posted in the first quarter of 2016.

Transport per barrel of oil equivalent reduced to $4.0/bbl from $4.6/bbl year-on-year, while opex per boe reduced to $3.4/bbl from $3.5/bbl.

Net income totalled $13.6m, swinging from net losses of $12.3m, while net debt decreased to $841.3m from $857.9m on 31 December.

On the operational front, Nostrum said average daily production for the three-month period was 48,743 barrels of oil equivalent per day, while average daily sales volumes was 43,279 boepd, up from 38,754 boepd a year earlier.

The board said 43 wells were currently producing at the Chinarevskoye field, consisting of 22 oil wells and 21 gas condensate wells.

Following board approval, the board said the GTU3 budget had increased to a total of $532m, which the board said was a result of the requirement to increase resources at the field site in order to ensure the completion of GTU3 and first gas through the plant before the end of 2017.

The KazTransOil pipeline connection had been completed by Nostrum, and successful practical internal functioning tests had been performed, the board reported.

It said the finalisation of the tie in to the KTO pipeline was awaiting execution from KTO systems and a required adjustment of the KTO automation systems.

That was due to be carried out by KTO in late May based on an agreed schedule with KTO, and the company anticipated being able to use the facility imminently.

An extension to the exploration license had been submitted for the Rostoshinskoye field, it added, and an appraisal well at Rostoshinskoye was pending a flaring permit before testing could start.

“Q1 was an excellent quarter with strong cash generation following a very consistent quarter of production and strong product prices relative to 2016,” said Nostrum CEO Kai-Uwe Kessel.

“In addition to the strongest revenues we have had for over a year, I am pleased that operating costs remain below $4 per barrel which is allowing us to maintain healthy margins.”

Kessel said the company would continue to keep operating costs at a minimum to ensure the business was protected in the event oil prices fall back below $50 in the near future.

“As we get closer to the deadline for GTU3 we have been analysing the project to ensure it can have first gas running through it before the end of the year.

“The board has approved an increase in the budget by $34m to ensure sufficient resources are available to achieve this,” Kessel explained.

“We remain focused on delivering GTU3 before year-end and will ensure we keep costs to an absolute minimum to meet our objectives."