‘Diversion’ is a loaded charge to make against a company. But scan through preliminary results for Nostrum Oil & Gas (NOG), and it’s hard to feel that its gloss on events adequately addresses the repeated resets of production targets. In the middle of 2014, we were told that GTU3 plant – and 100,000 barrels of oil-equivalent production a day (boepd) – was just over two years’ away. It’s now 2018, and the best assurance Nostrum can give us is that independent consultant Ryder Scott “assumes average production of 68,211 boepd” in 2020, and an indeterminate amount thereafter.
But wait! The financial picture, we are told, is positive. Or at least, “more positive” than a dreadful operational performance which saw a big delay in the completion of GTU3 and problems with existing production in 2017. So why is chief executive Kai-Uwe Kessel “very pleased”? Because that parallel exercise in can-kicking – a staggered refinancing of borrowings – has resulted in the extension of debt maturities to 2022.
It’s unlikely equity investors will feel the same enthusiasm as the bond buyers who showed “significant demand” in February’s sale of $400m (£282m) of new notes. After all, those notes were sold at a discount to par and carry a coupon of 7 per cent. There was no explanation, however, as to why net debt of $961m came in $11m above the comprehensive guidance provided at the end of January.
This year, consensus forecasts are for adjusted pre-tax profits of $74m and EPS of 22.9¢ (from $46.1m and 5¢ in FY2017).
NOSTRUM OIL & GAS (NOG) | ||||
ORD PRICE: | 307p | MARKET VALUE: | £578m | |
TOUCH: | 300-307p | 12-MONTH HIGH: | 535p | LOW: 244p |
DIVIDEND YIELD:nil | IL | PE RATIO: | na | |
NET ASSET VALUE: | 356¢ | NET DEBT: | 144% |
Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
2013 | 895 | 362 | 118 | 35 |
2014 | 782 | 312 | 79.0 | 27 |
2015 | 449 | 72.3 | -51.0 | nil |
2016 | 348 | -65.5 | -45.0 | nil |
2017 | 406 | 26.0 | -13.0 | nil |
% change | +17 | - | - | - |
Ex-div: | n/a | |||
Payment: | n/a | |||
£1=$1.42 |