Nostrum Oil & Gas swings to first half profit but from one-off gains

(Alliance News) - Nostrum Oil & Gas PLC said it swung to a profit in the first half of 2023, largely due to a one-off gain on debt-to-equity exchange, although loss widened in the second quarter of the year.

In the six months that ended June 30, the London-based, Caspian Basin-focused independent oil and gas company said it swung to a pretax profit of USD858.2 million from a loss of USD22.1 million a year earlier.

This was despite first half revenue falling 51% to USD52.8 million from USD107.8 million, as it benefitted from a one-off gain on debt-to-equity exchange of USD769.6 million, alongside a one-off fair value adjustment on recognition of debt instruments of USD163.5 million.

Nostrum Oil & Gas said first half earnings before interest, tax, depreciation and amortisation dropped 77% to USD15.5 million with a 29.4% margin from USD68.8 million with a 63.8% margin a year earlier.

In the three months that ended June 30, pretax loss widened to USD30.9 million from USD17.6 million a year earlier, with revenue falling 24% to USD32.3 million from USD42.6 million.

First half daily production after treatment fell 20% to 10,048 barrels of oil equivalent per day from 14,167 barrels a year earlier, while daily sales volumes fell 31% to 9,020 barrels from 13,102 barrels.

"We are continuing with the execution of our operational programme and pleased with the milestones we have achieved during this reporting period," said Chief Executive Officer Arfan Khan.

"The second half of 2023 has already started with the busy schedule with the launch of an appraisal programme at the Stepnoy Leopard fields, the initial production gains following the recent launch of our gas lift system expansion as well as the approval of the limited-scale drilling programme at our Chinarevskoye field.

"Our focus will remain on our cost optimisation to help manage liquidity while progressing with the execution of our mixed-asset energy strategy and realising value for all our stakeholders."

Nostrum Oil & Gas' unrestricted cash position at June 30 stood at around USD192 million, ticking up from USD191 million on March 31. Restricted cash stood at USD16.3 million, down 28% from USD22.6 million, which it said was due to USD6.2 million in interest payments for the period covering February 9 to June 29 and was then replenished to cover the next two interest payments.

Shares in Nostrum Oil & Gas were down 4.0% to 12.00 pence each in London on Tuesday late morning.

By Greg Rosenvinge, Alliance News reporter

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