Nostrum Stems OutFlow, Seeks Creditors' Patience

Kazakhstan-focused Nostrum Oil & Gas saw revenues tumble in the first half of this year but it has slowed down both its cash burn and output decline economically, it said August 18. As it tightened its belt, drilling was halted for the period but “workover and well intervention activity has reduced the expected rate of decline of production,” it said. The company ended the period with just $75.7mn in cash, while its total debt as of that date was $1.14bn. Net debt is $1.064bn.

It has asked its creditors for their patience regarding interest payments and has appointed PJT Partners  as financial advisers and Akin Gump Strauss Hauer & Feld, as legal advisers to a steering committee of creditors. It hopes to achieve a restructuring arrangement for the 8.0% senior notes due 2022 and 7.0% senior notes due 2025.

First-half revenues were halved, at $92.6mn, down from $174.2mn in H1 2019; net operating cashflow was down more, at $47.0mn, from $116.9mn. Pretax earnings (Ebitdax) of  $38.7mn were also down, from$110.2mn last year.

H1 2020 average production after treatment was 23,528 barrels of oil equivalent (boe)/day with average sales volumes for the period of 22,624 boe/d. Of that, just under half was gas (47%), while crude was 39.7%. The rest was liquid petroleum gas. It expects 20,000 boe/d for the year, in line with its December 2019 guidance, which would be down by almost a  third on 2019 output.

CEO Kaat Van Hecke said that the company’s cost cutting and successful well intervention and work-over programme have, and will continue to, help it reduce its cash burn which is “currently very low.” Oil and product prices have also risen in recent months. Gas prices though have been lower since May and they might not rise much for the remainder of the year and possibly beyond.

Van Hecke is to step down at the end of the month, given the completion of the strategic review which might have led to the sale of the company. If no replacement is appointed, the role will fall to the executive chairman, Atul Gupta, on an interim basis.