Nostrum Calls Off Buyer Search

Kazakhstan-focused producer Nostrum Oil & Gas has called off its "meritless" search for a buyer for its business, after failing to attract one in more than nine months, it said on March 31.

It has also dropped plans to discuss with its shareholders a proposed acquisition of Positive Invest, another Kazakh subsoil operator, "given the current oil price environment and constraints on liquidity."

Nostrum, which has been grappling with low prices and output decline for years, said last week it had also delayed the publication of its financial results for 2019 under instruction from the Financial Conduct Authority, which had been due to be realised on March 31. Its cash balance was at $65mn on March 25.

"At current oil prices we are able to cover our next coupon payment in Q3 2020 but recognise the precarious liquidity position of the company and will therefore look to engage with our bondholders," CEO Kaat Van Hecke said in a stock exchange statement.

Production averaged a little over 23,000 boe/d on March 25, versus an average of 28,587 boe/d in 2019 and 31,254 boe/d in 2018. Its proven and probable reserves had also shrunk to 138mn boe by the end of 2019, versus 410mn a year earlier. The company warned it would book a hefty impairment charge to reflect this reserve downgrade once it does report its 2019 results.

Nostrum will continue trying to recover as much oil and gas as possible from its flagship Chinarevskoye field in western Kazakhstan, Van Hecke said. To protect cash flow, however, it suspended all drilling in January. Its main focus will remain on attracting third parties to use its under-utilised processing infrastructure. Nostrum suffered a setback in early March when local firm Ural Oil & Gas delayed deliveries of gas to the company.