Overview

The main operational facilities of Nostrum Oil & Gas are located in Chinarevskoye field. They include:

  • Oil Processing Facility (OTF) capable of processing 400,000 tpa (tones per annum) of crude oil;
  • 120-kilometer crude oil and stabilised condensate pipeline (Chinarevskoye field to the rail terminal in Rostoshi, near Uralsk)
  • Oil gathering and transportation lines, tank farm for the storage of crude oil, etc.
  • Gas Treatment Facility (GTF) with two "trains" each having a capacity of 850 mmcm per year and each capable of treating gas-condensate, associated gas or a mix of both, to produce stabilised condensate, LPG and dry gas;
  • LPG loading facility (Chinarevskoye field) and rail terminal;
  • 17-kilometre dry gas pipeline (Chinarevskoye field to the junction point with the pipeline in Orenburg);
  • Power generation station;
  • Numerous wells (crude oil, gas-condensate, water-injection and appraisal);
  • Various office buildings and office camp facilities.

Unfolding

The history of Nostrum Oil & Gas started with its main producing asset, the Chinarevskoye field, and continued more recently with the acquisition of three new fields in its vicinity in north-western Kazakhstan thereby offering direct operational synergies, i.e. the Rostoshinskoye field, the Darzhinskoye field, and the Yuzhno-Gremyachenskoye field.

Chinarevskoye Field

Oil and gas operations in the Chinarevskoye field began during the Soviet era with the drilling of 9 wells. Hydrocarbons were subsequently discovered in the Biski and Afoninski reservoirs in 1991. The discovery of the Tournaisian reservoir followed in 1992, but drilling came to a halt in 1993 due to a lack of government funding.

In 1997, Nostrum Oil & Gas was granted the exploration and production license of the Chinarevskoye field and the associated grandfathered Production Sharing Agreement (PSA) and commenced exploration activities. Three of the wells that had been drilled during Soviet times were reactivated between 2000 and 2002. In 2003, Nostrum Oil and Gas discovered the Givetian (Mullinski) accumulation, and, in 2004, the Lower Permian reservoir was successfully tested. The Oil Treatment Facility (OTF) was completed in July 2006. In 2007, gas condensate was discovered in the Givetian (Adatovski) and Southern Tournaisian reservoirs and during the same year, crude oil was discovered in the Bashkirian formation.

In May 2008, commercial prospects were declared for the Mullinsky oil and gas condensate pool, the Ardatovsky gas condensate pool, the Famenian oil and gas condensate pool and the Biski-Afoninski oil and gas pool. New commercial discoveries were also made in the south and west regions of the Tournaisian reservoir.

Based on the Ryder Scott report, dated December 2015, the proved and probable reserves for the Chinarevskoye field amount to 383 mboe (2014: 473 mboe). Proven reserves amount to 147 mboe (2014: 192 mboe) and probable reserves to 236 mboe (2014: 281 mboe). Oil and condensate amount to 148 mbbl of proven and probable reserves (2014: 198mbbl), LPG to 51 mbbl (2014: 68mbbl) and gas to 184 mboe (207 mboe). The decrease in reserves from 2014 was primarily a result of the fall in oil price, but was also impacted by a number of other factors, including production in 2015, the deferral of development projects.

Rostoshinskoye, Darzhinskoye and Yuzhno-Gremyachenskoye Fields

Nostrum Oil & Gas acquired these three fields for a total purchase price of US$ 16 million. These acquisitions were completed in March 2013.

It's estimated that it will cost approximately US$ 85 million to conduct the necessary appraisal activities in the three fields over the next 2 - 3 years. These activities will include the acquisition of new 3D seismic data and/or the reprocessing of existing 2D and/or 3D seismic data, as well as appraisal drilling in order to validate and expand on the existing older reserves reports by Chapman.

Reserves

An update of Nostrum’s reserves report was completed by Ryder Scott in December 2016. This report includes the reserves at Chinarevskoye and the three additional licence areas acquired in 2013. An overview of the reserves is provided below.

Nostrum’s total combined reserves and resources

Total combined reserves
At Nostrum, we have an outstanding track record of converting reserves. An updated reserve report by Ryder Scott, as at 1 January 2017, has shown 466 mmboe of proved and probable reserves for the Chinarevskoye and adjacent Trident fields. In line with our strategy, we will continue to look to increase our reserve base and secure production growth.

Contingent resources
In addition to the estimated 2P reserves, contingent resources have been identified in the Chinarevskoye, Rostoshinskoye, Darjinskoye and Yzhno-Gremyachenskoye licence areas. The 1C+2C contingent resources estimated as of 1 January 2017 for the Chinarevskoye area amount to 105.4 million barrels of liquids and 419.5 billion cubic feet of sales gas. For the three additional licences the contingent resources amount to 12.7 million barrels of liquids and 202.5 billion cubic feet of sales gas.