Construction of the third unit of the Gas Treatment Facility
Nostrum Oil & Gas plc (the “Company” and together with its subsidiaries, the “Group”), an independent oil and gas exploration and production company with assets in North-Western Kazakhstan, announces that the Group has entered into a contract with JSC “OGCC KazStroyService” (the “Contractor”) for the construction of the third unit of the Group’s gas treatment facility (“GTF”) for a consideration of US$150 million (the “Construction Contract”).
As the Contractor is an affiliate of KazStroyService Global B.V. (“KSS Global”), which currently owns approximately 26.6% of the Company’s ordinary shares, the Construction Contract is a related party transaction for the purposes of the Listing Rules. Accordingly, the Construction Contract is subject to the requirements of the Listing Rules and is conditional, inter alia, upon approval by the shareholders of the Company. As required by the Listing Rules, KSS Global has undertaken not to vote on the resolution to approve the Construction Contract at the general meeting of the Company’s shareholders to be convened in due course.
A further announcement regarding the posting of a circular to shareholders convening the necessary general meeting will be made in due course.
Commenting, Kai-Uwe Kessel, Chief Executive said:
“I am delighted that we continue to make good progress with the construction of GTU3. This Construction Contract forms a major part of the overall project. I believe we are now well positioned to deliver the plant on time and on budget. We look forward to working on the continued construction of GTU3 and doubling production by the end of 2016.”
Construction Contract details
Following the successful completion of the first phase of the GTF, consisting of two units, the Group proposed to build a third unit for the GTF (“GTU3”) by mid-2016. The construction of GTU3 is important for implementing the Group’s strategy to increase operating capacity and production of liquid hydrocarbons. Management estimates, based on the production profile of both proved and probable reserves reported in the 2013 Ryder Scott Report and assuming the successful completion of the second phase of the gas treatment facility by the middle of 2016, that the Company’s annual production will more than double by the end of 2016. Total construction costs for GTU3 are estimated to be not more than US$500 million.
Nostrum has appointed Ferrostaal Industrieanlagen GmbH, Kazakhstan Branch (“FIA”) and Rheinmetall International Engineering GmbH (a 50% subsidiary of Ferrostaal GmbH) as the project manager in charge of managing the engineering, procurement, construction and commissioning of GTU3 on behalf of Nostrum’s subsidiary Zhaikmunai LLP (“Zhaikmunai”). The Contractor was selected following a tender process carried out by FIA. Such choice reflected the Group’s determination of minimising the operational risks in building GTU3 and the financial and operating resources and relevant experience of the various bidders.
Payment of consideration
Total consideration to be paid under the Construction Contract is US$150 million cash (excluding VAT).
KSS Global has agreed to guarantee the performance of the obligations of the Contractor under the Construction Contract.
For further information please visit www.nog.co.uk
Nostrum Oil & Gas plc– Investor Relations
Bruno G. Meere
+ 44 (0) 203 740 7430
Instinctif Partners – UK
+ 44 (0) 207 457 2020
Promo Group Communications – Kazakhstan
+ 7 (727) 264 67 37
About Nostrum Oil & Gas
Nostrum Oil & Gas PLC is an independent oil and gas company currently engaging in the production, development and exploration of oil and gas in the pre-Caspian Basin. Its shares are listed on the London Stock Exchange (ticker symbol: NOG). The principal producing asset of Nostrum Oil & Gas PLC is the Chinarevskoye field, in which it holds a 100% interest and is the operator through its wholly-owned subsidiary Zhaikmunai LLP. In addition, Nostrum Oil & Gas holds a 100% interest in and is the operator of the Rostoshinskoye, Darinskoye and Yuzhno-Gremyachenskoye oil and gas fields through the same subsidiary. Located in the pre-Caspian basin to the north-west of Uralsk, these exploration and development fields are situated approximately 60 and 120 kilometres respectively from the Chinarevskoye field.
Some of the statements in this document are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of the Group or its officers with respect to various matters. When used in this document, the words “expects,” “believes,” “anticipates,” “plans,” “may,” “will,” “should” and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcomes to differ materially from those suggested by any such statements.
No part of this announcement constitutes, or shall be taken to constitute, an invitation or inducement to invest in the Company or any other entity, and shareholders of the Company are cautioned not to place undue reliance on the forward-looking statements. Save as required by the Listing Rules and applicable law, the Company does not undertake to update or change any forward-looking statements to reflect events occurring after the date of this announcement.