27th Oct 2015 07:47
LONDON (Alliance News) - Nostrum Oil and Gas PLC on Tuesday lowered its full-year production guidance due to unexpected repair work and reported a fall in production during the first nine months of 2015 that also will see revenue almost halve.
The FTSE 250-listed oil and gas company reported a fall in production in the first nine months of 2015, averaging 44,042 barrels of oil equivalent per day compared to 45,204 barrels per day a year earlier.
Originally, the company was aiming to produce 45,000 barrels of oil equivalent per day for the full year, which would have been broadly flat from 2014. However, due to unexpected repair work on the export pipeline that Nostrum uses to transport its gas from the Chinarevskoye field in Kazakhstan, it has now reduced this to 40,000 to 42,000 barrels of oil equivalent per day.
That repair work was carried out by the third party that operates the pipeline, Intergas Central Asia, and Nostrum said the work is now completed and production is back up to "normal levels". The company said its production guidance for 2016 to return to around 45,000 barrels per day remains in place.
That production comes from 21 oil wells and 18 gas condensate wells on the Chinarevskoye field, which is then exported to Finland and Russian sea ports. It plans to drill a further two production wells and one appraisal well in the fourth quarter.
For the first nine months of 2015, Nostrum is expecting revenue to be "in excess" of USD370.0 million, compared to around USD620.0 million a year earlier, reflecting lower production levels and lower oil prices.
Total debt remains flat at USD960.0 million, with net debt at USD750.0 million at the end of September and with a cash balance of around USD210.0 million.
Nostrum said it is fully funded going forward, including its GTU3 gas plant expansion project in Kazakhstan, which is still on track to be constructed in 2016 at a cost less than USD500.0 million. To date, it has spent USD224.0 million on GTU3, and by the end of 2015 this will have risen to USD320.0 million, with the remaining USD180.0 million being spent in 2016.
A year ago, Nostrum said it was expecting to only spend USD220.0 million on GTU3 in 2015 and only USD70.0 million in 2016.
"Nostrum's operational results reflect another steady quarter for the company. We have maintained good production levels during the third quarter at the Chinarevskoye field whilst also undertaking the bi-annual maintenance at the gas plant. The Intergas Central Asia repair work on their own export pipeline has reduced our October production levels, resulting in a decrease to the overall 2015 production forecast," said Chief Executive Kai-Uwe Kessel.
"We remain on track to meet our drilling targets for the year. Our main focus continues to be the completion of the GTU3, which is on track to be delivered on budget before the end of 2016. Whilst we remain in a strong financial position with over USD200.0 million of cash on our balance sheet, we are also continuing to seek to reduce costs across the business and to ensure that we are operating as efficiently as possible in this low oil price environment," he added.
By Joshua Warner; [email protected]; @JoshAlliance
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