Nostrum blames difficult year as revenue falls 20 per cent
Nostrum, which focuses on oil and gas production in the Caspian basin, blamed a “very challenging” year as revenue dropped around 20 per cent.
Despite the news, shares rose over three per cent this morning.
The figures
Revenue for the first nine months of this year was $250.3m (£193.5m) in 2019, down from $311.4m in the same period last year.
The company said that a 10.9 per cent average decrease in the price of Brent crude was responsible for the drop.
In addition, in October firm reported sales volumes of 27,515 barrels of oil equivalent per day for the quarter, down 9.9% from 30,523 barrels a year before.
Profit for the period was $3.5m, with earnings before tax also down nearly 16 per cent to $158.3m.
As of 30 September, Nostrum’s net debt stood at $1021.7m.
Why it’s interesting
The company, which has 44 wells in production, faced production disappointment at two sites during the year.
Initial testing of well 361 in the Vorobyovsky reservoir failed to show any commercial flow of oil, whilst extensive testing of well 41 in the Frasnian reservoir has likewise been unable to sustain a commercial flow.
Nostrum said it did not expect any production from the well in 2019, but was considering whether it could take any other approach to the reservoir.
What Nostrum said
Kai-Uwe Kessel, chief executive officer of Nostrum Oil & Gas, commented:
“The first nine months of 2019 have been very challenging. We have seen quicker than expected decline in our core producing reservoirs resulting in a reduction in our sales guidance for 2019 by 1,000 boepd.
“We are analysing the reports provided by Schlumberger and PM Lucas. We continue to explore all options to maximise stakeholder value through our strategic review process. We hope to have concluded this process along with the conclusions from the reports on our reservoirs by year end.”
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