Nostrum earnings climb in 9M 2021

Core earnings (EBITDA) at Nostrum Oil & Gas rose by 39.6% year on year to $84.1mn in the first nine months of the year, the Kazakhstan-focused producer reported on November 16, attributing the result to cost cutting and higher hydrocarbon prices.

Revenues were up 5% year on year at $142.7mn, despite a 29% slide in sales volumes to 15,838 barrels of oil equivalent/day. Net operating cash flow was up 25.6% at $85.4mn, while closing cash for the period increased by $63.5mn to $142.1mn.

Nostrum has endured a difficult few years, amid production setbacks, the delayed completion of a gas treatment unit and until recently, low oil prices, causing debt to pile up. The company said it was continuing to accrue interest on its 2022 and 2025 loan notes, but has not paid any interest since February 2020, the month before oil prices collapsed as a result of coronavirus lockdowns.

"We continue to show strong financial and operational resilience despite the ongoing restructuring process and COVID-19 pandemic," CEO Arfan Khan commented. "Our operating and free cash flow growth has continued through the year reflecting our proactive cost management, as well as favourable hydrocarbon pricing environment."

Khan said the company was continuing its well and reservoir management activities, supported by well workovers and interventions, noting that these operations were not capital intensive and offered reasonable reward versus the risk.

"The restructuring process is still ongoing, and we are hopeful of reaching an agreement in the near future," he continued. "The closing of the restructuring will enable us to move the group forward and continue our efforts to source third party gas to utilise the spare capacity in our gas processing facilities."

Nostrum now has significant gas processing capacity spare, as production has declined over the last few years. The company's main asset is the Chinarevskoye field in west Kazakhstan. It has given up other permits to save funds.