Higher sales prices help Nostrum to lift first half earnings

Independent oil and gas company Nostrum Oil & Gas said interim earnings rose to $119.8m from $100.9m.

Revenue was up to $210m from $163.5m as sales prices were higher than the company's own forecast of $45 a barrel.

Nostrum said it maintained a steady control on costs keeping them in line with the first half of 2016 while having slightly higher production and sales volumes.

“In addition, the completion of the KTO pipeline connection in June 2017 below budget will contribute to a reduction in our crude oil transportation costs in H2 2017,” the company said.

It added that it had re-entered the bond market with a $725m five year new issue. The proceeds will go towards repaying $607m of existing bonds maturing in 2019, moving close to two-thirds of the company's debt maturity profile from 2019 to 2022.

Average daily production for the six-month period ending 30 June 2017 was 46,685 barrels a day, with average daily sales volumes for the six-month period ending 41,107 barrels.

Nostrum said sales and production volumes were impacted by one week of maintenance shut in, adding that 44 wells were currently producing at the Chinarevskoye field - 23 oil wells and 21 gas condensate wells – in the pre-Caspian basin.

The company said construction of the third gas treatment unit (GTU3) continues in line with guidance and completion is expected before the end of 2017 at a total cost of $532m.

The KazTransOil pipeline connection was finalised in June 2017 at a cost of less than $7m, substantially reducing crude oil transportation costs. Previous guidance was less than $10m, Nostrum said.