Nostrum Oil&gas Share Price (NOG)

Mayfair Investment down to 17.1%

Nostrum Oil & Gas (NOG) is another one which looks great if you ignore its debt. It announced EBITDA of $31.7 million in its RNS yesterday, but not its actual losses of over $25 million, which you have to dig to find out. People see their RNS numbers in contrast to a market cap of £16 million and https://www.share-talk.com/oil-man-jim-company-oil-gas-podcast-blog-20th-may-2020/

The NOG guidance for 2020 is 19 Mboe/d (or kboe/d, as preferred).

It is trivial to calculate that that represents a ±33% per annum decline in 2020. This means production at YE 2020 of =15 Mboe/d. As half the production is gas, it will be at limit that the two smaller gas trains can operate. So, by 2021 gas production can be expected to end and so will LPG and condensate production. Only oil production will be left and based on past product splits will be ±2 Mb/d, and declining.

Put the 2020 guidance production into a simple cashflow and NOG needs an average 2020 Brent price of ±$39 to end the year with zero cash in the bank. The message is clear.

As early as late 2017 the company had two options, 1) Rat’s wheel: spend $s drilling, and try to arrest production decline, or 2) Stop all activity: have a party on the $s in the bank until we are broke. It took them until the end of 2019 to change from 1) to 2).

And indeed a ‘party’ there is. The ex-CEO left in December with a package of $1.4 million, as thanks for building the GTU white elephant and destroying 99% of shareholder value. It has to be said, in all fairness, that does take a certain skill.

The Chairman in the annual report is smiling. He should be, he took $500,000 overseeing this exceptional performance.

To boot the NOG Board confirms NOG’s imminent demise in the conclusion of their 2019 Annual Report’s Viability Statement!

So you think they’ll go bust ?

Nostrum Oil & Gas (NOG) is finding itself in a difficult situation too. Per its announcement this week, they recognise the precarious liquidity position of the company and will therefore look to engage with their bondholders. They’ve also got a 272 million barrel of oil equivalent reserve downgrade, which will lead to a significant impairment being taken when they release their full year results.

https://www.share-talk.com/oil-man-jim-company-oil-gas-podcast-blog-5th-april-2020/#gs.2cs19h