Nostrum outlines oil price hedging plan

The oil and gas company has locked in a price of $49.16 a barrel for 15,000 barrels of oil per day until December 2017.

Nostrum said the current value of the new hedge is in excess of $150m, funded entirely from the sale of its previous hedge for $92m.

In addition, the group said it has decided to preserve the existing cash on its balance sheet for as long as possible by phasing payments for the GTU3 well development across 2017 and reducing drilling this year to three production wells to maintain current production levels.

It said these measures will ensure it has a stable financial base during any prolonged downturn in oil prices.

Chief executive officer Kai-Uwe Kessel said: "With the continued fall in the oil price and the increased belief that the low oil prices will last beyond Q1 2016 we have taken steps to ensure Nostrum is well positioned to prosper under any oil price environment through 2016 and 2017.”

Nostrum said it produced an average of 40,402 barrels of oil equivalent per day in 2015, a little below its targeted output due to unexpected repair work in October on an export gas pipeline.

For this year, it said it expects to maintain an average of around 45,000 boepd, adding that the drilling programme is reviewed on a quarterly basis and can be scaled up at short notice.

Meanwhile, full year revenue for 2015 is likely to be over $445m.

At 1150 GMT, Nostrum shares were down 1.5% to 297.0p.