Nostrum Oil & Gas Reports Resilient FY 2025 Results Amid Production Decline and Lower Commodity Prices

Nostrum product mix shifted further towards gas in FY 2025

Product	FY 2025 volumes	FY 2024 volumes	Y-on-Y change
Crude oil	2,343 boepd	2,536 boepd	Down 7.6%
Stabilised condensate	1,664 boepd	1,897 boepd	Down 12.3%
LPG	3,162 boepd	2,537 boepd	Up 24.6%
Dry gas	9,698 boepd	7,965 boepd	Up 21.8%

Dry gas made up 57.5% of titled production in 2025, up from 53.3% in 2024. In simple terms, Nostrum is becoming more gas-heavy, which fits with its processing infrastructure model.

The Ural O&G agreement looks like the most important positive in this update

The standout strategic positive is the continued processing of Ural O&G volumes and the new agreement extending those terms through May 2031. That gives Nostrum longer visibility on third-party processing revenues and better utilisation of its facilities.

This is important because it helps answer a key investor worry: what happens as Chinarevskoye declines? The company is clearly trying to squeeze more value out of its existing infrastructure rather than relying solely on fresh drilling. That is a sensible approach when capital allocation is tight and debt is still a serious issue.

It also reduces the all-eggs-in-one-basket problem a bit. Not completely, but enough to matter.

Net debt jumped sharply – and that is the main reason to stay cautious

The weak spot in these results is the balance sheet. Net debt rose to US$541.5 million from US$404.4 million, which is a big move in the wrong direction.

Nostrum says this was mainly driven by US$57.5 million of payment-in-kind interest capitalised on its Senior Unsecured Notes, US$16.8 million of accrued cash coupon, and a US$66.0 million amortisation of the fair value adjustment. In plain English, debt-related costs kept building even though the company cancelled some notes in April 2025.

That debt increase matters more than the drop in revenue. A business can survive a softer commodity year if it has financial flexibility. That flexibility is narrower when net debt keeps climbing.

The unpaid note coupons are awkward, even if management says cash is available

Nostrum also says accrued interest due on 30 June 2025 and 31 December 2025 remains outstanding because of a payment administration issue through the clearing systems. The company says this is not a solvency or liquidity problem, and that the money is available and secured.

That is reassuring as far as it goes, but investors should not shrug it off. Even if the issue is administrative rather than financial, delayed bond coupon payments are never a great look. Until the regulatory licences are obtained and payments are made, this will remain an overhang.

Operationally, Nostrum is doing the sensible things

Management appears to be playing the hand it has. The company completed drilling on well 116_1 in October 2025, brought it into production on 21 November 2025, and says initial production rates were in line with expectations. It also carried out targeted workovers to slow decline and support efficiency.

That is encouraging, but there is no sign here of a dramatic production turnaround. A comprehensive review of workovers and new drilling prospects is underway, and the Stepnoy Leopard fields are still under strategic review. Investors looking for a major growth catalyst will not find one in this release.

Safety, ESG and operational discipline remain a quiet positive

There were zero fatalities and zero lost time injuries in 2025, which is genuinely important in this industry. Total Recordable Incidents Rate rose to 0.92 from 0.63, so it was not a perfect year on safety, but keeping lost time injuries at zero is a solid outcome.

Air emissions were 4,047 tonnes against a permitted 5,200 tonnes. That will not move the share price on its own, but it supports the broader message that operations stayed under control.

Nostrum 2026 outlook: stable enough, but not yet exciting

For 2026, Nostrum expects average daily production from the Chinarevskoye field to be in the range of 5,000 boepd to 6,000 boepd. That guidance underlines the basic issue: the legacy asset is still declining, and the company needs processing income, cost control and careful capital allocation to carry more of the load.

My view is that this was a respectable update, not a breakthrough one. The positives are clear – resilient cash generation, strong facility utilisation, a long-dated Ural O&G processing agreement, and good operational discipline. The negatives are just as clear – lower revenue, weaker EBITDA, rising net debt, and unresolved note payment administration issues.

For retail investors, the investment case looks increasingly tied to Nostrum’s infrastructure value and ability to preserve liquidity, rather than any near-term production growth story. If management can keep processing volumes strong and sort the bond payment issues cleanly, that would help confidence. Until then, this looks like a company managing decline intelligently rather than one yet moving into a fresh growth phase.