Just over a month ago, it was looking pretty bleak for Kazakh independent Nostrum Oil & Gas (NOG). A first quarter financial report revealed rising debts and transport costs. The first production well of the year encountered water. The ever-elusive GTU3 gas treatment unit still didn’t have a completion date. Despite a rising oil price, investors headed for the door, pushing the shares down to lows not seen even at the depths of the great oil market rout of 2014-2016.
As of mid-August, shareholders finally have some good news. Faced with declining post-treatment production chief executive Kai-Uwe Kessel set one goal for his company: stabilise output. And on that count, there has been some success. Two wells came online in July, and now pump over 2,500 barrels of oil-equivalent per day (boepd), which has in turn allowed Mr Kessel to re-iterate full-year sales volume guidance of 32,000boepd, rather than warn of another downgrade.
Better still, Nostrum has struck a deal to purchase and process third-party production from Ural Oil & Gas’ untested well stock at the Rozhkovskoye field, some 20km from Nostrum’s own licence at Chinarevskoye. Assuming output from the 34mmboe field will be entirely processed by Nostrum, Panmure Gordon believes the deal carries a 45p-a-share, un-risked post-tax value.
On average, analysts expect full-year adjusted pre-tax profits of $55m and EPS of 19.6¢, rising to $124m and 42.2¢ in 2019.
| NOSTRUM OIL & GAS (NOG) | ||||
| ORD PRICE: | 260p | MARKET VALUE: | £ 489m | |
| TOUCH: | 258-260p | 12-MONTH HIGH: | 416p | LOW: 166p |
| DIVIDEND YIELD: | NIL | PE RATIO: | N/A | |
| NET ASSET VALUE: | 359¢ | NET DEBT: | 148% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 210 | 34.6 | 8.0 | nil |
| 2018 | 191 | 11.9 | -1.0 | nil |
| % change | -9 | -66 | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.28 | ||||
