Even with hedges in place, a 12 per cent drop in Nostrum Oil & Gas ' (NOG) first-half average production was never going to be good for the top line in the current price environment. So with the expansion of the GTU3 project and accompanying 150 per cent increase in daily production to 100,000 barrels still at least three years away, the Kazakhstan-based company is doing all it can to manage costs.
On that front, Nostrum is making the right noises, having brought down operating expenditure by 30 per cent in the period to just $3.30 (£2.50) per barrel of oil equivalent, which in turn raised cash margins to 62 per cent and softened the accompanying year-on-year profit decline from $153m to $101m. The principle reason for the swing to a negative return in the period was a $40.7m loss on a derivative financial instrument, wiping out the accrued benefits from lower administrative expenses and lower transportation costs.
Meanwhile, "steady progress" has been made on the construction of the GTU3 gas treatment facility, with more than 60 per cent of the $500m budget already incurred by the end of June. Against this backdrop, consensus analyst forecasts are for $19.3m in pre-tax profits and 0.1¢ adjusted EPS for the December year-end, rising to $109m and 43¢ in 2017.
NOSTRUM OIL & GAS (NOG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 300p | MARKET VALUE: | £553m | |
| TOUCH: | 299-300p | 12-MONTH HIGH: | 546p | LOW: 203p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 389¢ | NET DEBT: | 118% | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 274 | 51.8 | 8.0 | nil |
| 2016 | 163 | -56.7 | -30.0 | nil |
| % change | -40 | - | - | - |
Ex-div: na Payment: na £1 = $1.31 | ||||
