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(Alliance News) - No takeover bids have yet been received, Nostrum Oil & Gas PLC said Wednesday, as a strategic review continues.
Kazakhstan-focused energy firm Nostrum first announced a potential sale in June, but no binding offers have yet been received for the company itself nor any of its assets.
As part of the strategy review, Nostrum has decided to focus on commercialising spare gas processing capacity, lower reservoir management risk, and moving to a lower cost base, Nostrum said on Wednesday.
The company recently completed a new train at its gas processing plant, and it is planning to use the extra capacity by processing third-party production. It has already announced one contract, and is in talks over more.
London-based Nostrum is also to halt all drilling in 2020, deciding that, though "significant" discoveries remain to be found, well productivity in some areas is challenging. As a result, it expects a material downgrade in proven and probable reserves, leading to an impairment to be taken in 2019 results.
The firm said it does not yet know how large this impairment will be.
The completion of the processing expansion and the halting of drilling will reduce Nostrum's costs. On top of this, to further lower expenses, Nostrum is reviewing the acquisition of Positive Invest LLP.
Nostrum announced the USD500,000 purchase of 50% of Positive Invest in June. Positive Invest holds the subsoil use rights at the Stepnoy Leopard licences in Kazakhstan.
Nostrum also has the right to buy the remaining 50% at USD0.27 per barrel of oil of proven and probable reserves. The price for all of Positive Invest is capped at USD52.9 million.
Looking to 2020, Nostrum has guided for average sales of 19,000 barrels of oil equivalent per day and production of 20,000 barrels per day. It has not yet reported 2019 performance, but nine-month sales volumes were 27,515 barrels per day, down 9.9% year-on-year.
Executive Chair Atul Gupta said: "Following a period of intense review of all aspects of our business on how to maximise value for all stakeholders, we have embarked on a strategy to transform the business by seeking to commercialise our world-class infrastructure, adopting a lower-risk sub-surface work programme and an aggressive approach to cost management.
"Whilst continuing to explore a full sale of the company, we see significant value in our unique infrastructure and we also recognise the need to prudently manage risk and liquidity."
Nostrum's former chief executive, Kai-Uwe Kessel, left the firm in December. He was replaced by non-executive director Kaat van Hecke.
Shares were 1.4% lower on Tuesday morning in London at 16.00 pence each.
By George Collard; georgecollard@alliancenews.com
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