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(Alliance News) - Nostrum Oil & Gas PLC on Friday said it expects revenue for the first nine months of 2020 to plunge considerably as the effects of Covid-19 remains "of utmost concern".
For the nine months to the end of September, revenue is expected to be in excess of USD135 million, down 46% from USD250 million reported for the same period a year before.
Nostrum's cash position as at the end of September was USD88 million, down from USD91 million the prior year; however total net debt is not expected to exceed USD1.16 billion.
Average production after treatment for the period was 23,129 barrels of oil equivalent per day, while average sales volumes were 22,269 boepd. Nostrum, which operates in the pre-Caspian Basin in Kazakhstan, has halted drilling for 2020, but workover and well intervention activity has reduced the rate of decline previously expected in the field.
Looking ahead, following an internal review of its reservoir and production data, Nostrum said its undeveloped reserves are subject to significant productivity risk, while the outlook for hydrocarbon product prices at which the company sells products remains challenging.
As a result, Nostrum anticipates that its 2020 independent reserves audit may lead to a material downgrade in its proven and probable reserves when completed in the first quarter of 2021.
However, the company has increased its production forecast for the year to 21,000 boepd from 20,000 boepd forecast at the end of July. This still reflects a 27% fall from 28,589 barrels per day in 2019.
"Whilst the restructuring process is ongoing, we will continue discussions with third parties to secure additional volumes to commercialise our world class infrastructure whilst proactively managing our cost base and liquidity. Our successful well work-over programme during 2020 has allowed us to increase our sales volume guidance for this year from 19,000 boepd to 20,000 boepd," said Chief Executive Officer Atul Gupta.
"The impact of Covid-19 continues to be of concern. We have not yet lost any production because of Covid-19 but we continue to exercise extreme caution to ensure the safety of our people and contractors and minimize the disruption to production and operations," Gupta added.
Nostrum Oil & Gas will publish its nine-month results on November 17.
Shares in Nostrum were up 2.8% at 9.00 pence on Friday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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