Nostrum Expands, Starts Strategic Review
Kazakhstan-focused Nostrum Oil & Gas has begun a strategic review, it said June 24. It needs more money to develop the growth opportunities available. Among the options it is considering is a company sale, although no offer has yet been received, it said. Goldman Sachs is the bank handling the sale.
Nostrum announced the same day its $500,000 agreement to buy initially half of Kazakh exploration company Positive Invest from two local businessmen, It owns 100% of the Soviet-era Stepnoy Leopard licences which expire next year and will need 25-year extensions for the deal to go ahead, Nostrum said. There will also need to be approval for the raw gas to be processed at Nostrum’s processing plant, as well as ministerial approval for the sale of the stake. If these conditions are not met by next March, the deal will be unwound and the money repaid.
The licences hold the largest remaining undeveloped gas-condensate fields in northwest Kazakhstan and have been extensively explored and appraised but never developed as there was no infrastructure. Nostrum estimates the licences could hold up to 452mn barrels of oil equivalent (boe) in place and up to 200mn boe of contingent resources, of which over a fifth are estimated to be liquids. The licences are within 60-120 km of Nostrum's infrastructure. If it exercises the option, the second 50% would be priced at $0.27/boe of proven and probable reserves.
Of the eight fields, four fields are gas condensate fields and four are gas condensate fields with oil rims.
Over the past 12 months, Nostrum has also completed the GTU3 gas treatment unit; signed a gas tolling contract with Ural Oil and Gas, and found more resources in the northern part of the Chinarevskoe licence area, 20km from the acquisition.
Funding these projects includes further throughput agreements with third party gas suppliers; bolt-on acquisitions in existing and adjacent fields; farming down stakes in some assets to expedite their development, and a corporate transaction.
Ryder Scott is working on a competent person's report to provide an estimate of reserves and resources for Positive Invest and it will deliver a second updated report once both licences have been extended to determine the proven and probable reserves in the fields.
Nostrum CEO Kai-Uwe Kessel said that Nostrum will not only be able to leverage synergies with its treatment facilities but also the proximity to its Rostoshinskoye licence. This “will allow us to consider the joint development of these licences which can further enhance the economics of the transaction,” he said.
In the event of a full field development management expects the all in finding and development costs to be under $3/boe of proven plus probable reserves.