21st Jan 2016 08:00
LONDON (Alliance News) - Nostrum Oil & Gas PLC on Wednesday detailed plans designed to ensure it can "prosper" whether oil prices remain at depressed levels or move up, with the package of measures including new a new hedging deal and ways of preserving cash.
"First, we have purchased a new hedge using the proceeds of the sale of our previous hedge, with a strike price of USD49.16, covering almost all our exported liquids for 2016 and 2017," Chief Executive Kai-Uwe Kessel said.
The new hedge currently has a market value of over USD150.0 million. That measured up against the USD92.0 million value of the previous hedge, which was two months from maturity.
Nostrum, whose main producing asset is the Chinarevskoye field in Kazakhstan, said average daily production for 2015 was 40,402 barrels of oil equivalent per day, somewhat lower than expected as a result of repairs on an export gas pipeline operated by Intergas Central Asia that is used by the company. Revenue for 2015 is expected to exceed USD445.0 million, Nostrum said.
Production is expected to amount to 45,000 barrels in 2016, between 45,000 and 60,000 the following year, and roughly 60,000 to 100,000 barrels in 2018.
In addition, Nostrum detailed how it plans to protect the cash on its balance sheet. The company had net debt of about USD790.0 million at the end of 2015, the result of subtracting cash of USD170.0 million from total debt of USD960.0 million.
The company plans to phase payments on its GTU3 project in Kazakhstan - the third unit of its gas treatment facility - across 2017 and by reducing drilling in 2016 to three production wells in order to maintain current production levels. The phasing of payments will involve no additional cost for Nostrum and the total budget remains at USD500.0 million.
"These steps will ensure that Nostrum has a stable financial base during any prolonged downturn in oil prices," Kessel said.
Meanwhile, the Nostrum said it expects a proposed USD200.0 million facility with VTB to be finalised before the end of the opening quarter of 2016, which is designed to enabled the company to ramp up drilling in the event of a recovery in the oil price or to fund acquisitions or mergers.
By Samuel Agini; [email protected]; @samuelagini
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