For Nostrum Oil & Gas (NOG), three narratives were at play in the first half of 2017; two welcome, one less so. From an investor’s perspective, the most critical was operational. On that front, the Kazakh energy group did well: sales volumes edged up 6 per cent to 7.4m barrels of oil equivalent (boe), while an extension to a key crude pipeline was completed in June and should now lower transportation costs. Even better, the GTU3 gas treatment project is expected to complete before 2017 closes, with no increase in the $532m (£411m) capital expenditure declared.
Of course, operational progress matters little without resources to draw on. Just as well then that Nostrum was able to return to debt markets shortly after the financial half-year-end to sell $725m of five-year commercial paper. Not only has the refinancing helped to repay $607m of existing bonds maturing in two years’ time, but it removes a distraction for management, which can now focus on the heady target of doubling production to 100,000 barrels of oil equivalent per day (boepd) by the end of 2020.
The company had little control of a third narrative. In April, executive chairman Frank Monstrey stepped down after Claremont – the holding company through which Mr Monstrey owns Nostrum shares – was named as a party in litigation brought by BTA Bank.
On average, City analysts expect a full-year pre-tax profit of $56.2m and adjusted EPS of 19.1¢, rising to $188m and 56.4¢ in 2018.
| NOSTRUM OIL & GAS (NOG) | ||||
| ORD PRICE: | 375.1p | MARKET VALUE: | £706m | |
| TOUCH: | 375.0-375.8p | 12-MONTH HIGH: | 535p | LOW: 255p |
| DIVIDEND YIELD: | NIL | PE RATIO: | N/A | |
| NET ASSET VALUE: | 376¢ | NET DEBT: | 122% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend share (¢) |
| 2016 | 163 | -56.6 | -30.0 | nil |
| 2017 | 210 | 34.4 | 8.0 | nil |
| % change | +28 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.30 | ||||
