Nostrum Oil & Gas H1 2026 Results: Cash Flow Improves but Debt Keeps Rising

Nostrum Oil & Gas has reported a stronger first-half operating and financial performance, helped by higher oil prices, additional third-party feedstock and tight cost control.

Revenue and EBITDA both increased, while the group moved from an operating cash outflow to positive operating cash flow. However, investors still have a substantial balance-sheet challenge to consider: net debt climbed to US$606.1 million despite the improvement in unrestricted cash.

The results therefore contain genuine operational progress, but they do not remove the financial risks surrounding the business.

Nostrum's H1 2026 figures at a glance

Metric	H1 2026	H1 2025	Change
Revenue	US$72.6 million	US$64.1 million	13.3%
EBITDA	US$27.7 million	US$23.8 million	16.4%
EBITDA margin	38.1%	37.1%	1.0 percentage point
Operating cash flow	US$22.6 million	US$10.0 million outflow	Improved
Average processed volumes	25,898 boepd	24,619 boepd	5.2%
Average sales volumes	15,837 boepd	15,555 boepd	1.8%

EBITDA means earnings before interest, tax, depreciation and amortisation, with Nostrum's definition also excluding several other items. It is useful for assessing underlying operating performance, but it does not account for the full cost of debt or capital investment.

Investors can review the figures in the original company announcement.

Higher prices and third-party volumes support revenue

Revenue increased by 13.3% to US$72.6 million. Nostrum attributed this to stronger Brent crude oil prices, a higher oil export ratio and increased product volumes from Ural Oil & Gas feedstock.

The average Brent price was US$92.2 per barrel during H1 2026, up 28.2% from US$71.9 per barrel a year earlier. That favourable price environment provided a meaningful tailwind.

EBITDA rose faster than revenue, increasing by 16.4% to US$27.7 million. The EBITDA margin consequently improved from 37.1% to 38.1%, despite inflationary pressure and operational demands.

That margin improvement is encouraging. It suggests the company retained some benefit from stronger revenue rather than allowing higher costs to absorb all of the gain.

For context on the prior-year period, see the earlier analysis of Nostrum's H1 2025 financial results.

Operating cash flow turns positive

The clearest financial improvement was in cash generation.

Nostrum produced US$22.6 million of operating cash flow, compared with an operating cash outflow of US$10.0 million in H1 2025. Cash and cash equivalents increased by a net US$11.1 million, reversing the US$14.5 million reduction recorded in the comparable period.

This was achieved after US$25.2 million of cash coupon payments. Of that amount, US$15.6 million was funded from the debt service retention account, or DSRA, which is restricted cash reserved for debt-related payments.

Unrestricted cash stood at US$154.4 million on 30 June 2026, up from US$143.3 million at the end of 2025 and US$151.3 million at 31 March 2026.

That gives Nostrum a useful liquidity buffer. However, restricted cash fell to US$11.0 million from US$26.6 million at the end of 2025, mainly reflecting the use of the DSRA.

Why net debt still increased

The improvement in operating cash flow did not translate into lower net debt.

Net debt rose to US$606.1 million at 30 June 2026, compared with US$541.5 million at the end of 2025 and US$576.2 million at 31 March 2026.

The company identified several reasons:

• A US$31.6 million payment-in-kind coupon was added to the Senior Unsecured Notes. A payment-in-kind coupon is interest paid by increasing the outstanding debt rather than using cash.
• US$45.7 million arose from the amortisation of fair-value adjustments and arrangement fees.
• The DSRA balance reduced by US$15.6 million.
• These movements were partly offset by the US$11.1 million increase in unrestricted cash and a US$16.6 million payment for accrued FY 2025 cash coupons.

This is the main tension in the results. The operating business generated cash, but financing-related movements caused the debt burden to increase further.

Nostrum launched a consent solicitation in June concerning amendments intended to implement a long-term standstill, including provisions relating to non-payment of principal on its Senior Secured Notes and Senior Unsecured Notes. The required approvals were obtained in July, and a tender offer was launched on 24 July 2026.

Management describes this as providing a more stable platform and greater financial flexibility. That may reduce immediate pressure, but it does not make the debt disappear. The eventual terms and implementation of the wider transaction remain important for investors.

Processing growth offsets the field decline

Average daily processed volumes increased by 5.2% to 25,898 barrels of oil equivalent per day, or boepd. The improvement came from increasing Ural O&G feedstock, including condensate tolling.

Meanwhile, Chinarevskoye field production fell from 7,028 boepd to 6,182 boepd. Nostrum said this was within the expected decline range and was being managed through well workovers and servicing.

Titled output product volumes increased by 4.8% to 17,790 boepd. The mix shifted further towards dry gas:

Product	H1 2026	H1 2025	Change
Crude oil	1,917 boepd	2,476 boepd	-22.6%
Stabilised condensate	1,691 boepd	1,598 boepd	5.8%
LPG	3,370 boepd	3,165 boepd	6.5%
Dry gas	10,812 boepd	9,735 boepd	11.1%

Dry gas represented 60.8% of the product mix, up from 57.4%. Crude oil's share fell to 10.8% from 14.6%.

Average sales volumes increased by a more modest 1.8% to 15,837 boepd. The difference between output and sales reflected internal dry-gas consumption and the timing of product deliveries.

Development spending remains cautious

Nostrum completed planned maintenance on Gas Treatment Unit 3 in June within the timetable and without cost overruns.

The company is also reviewing potential Chinarevskoye workovers and new drilling prospects. A separate review of the Stepnoy Leopard fields is considering project economics, infrastructure, sales delivery points, regulatory requirements and capital-allocation priorities.

No development timetable, budget or expected production contribution was disclosed. With debt still elevated, management is prioritising liquidity and disciplined capital allocation rather than committing to large-scale expenditure prematurely.

More background on the listed company is available on the Nostrum Oil & Gas share page.

Safety performance needs attention

There were zero fatalities among employees and contractors, matching H1 2025.

However, the Total Recordable Incident rate increased to 3.0 incidents per million working hours from 1.3. The Lost Time Injury rate also rose to 2.3 from zero.

Air emissions totalled 1,871 tonnes during the half, against 4,954 tonnes permitted for the full year under Kazakhstan's Environmental Code.

The absence of fatalities is positive, but the increase in recordable incidents and lost-time injuries is a clear negative. Investors will want to see these measures improve in subsequent reporting periods.

What matters after these results

Nostrum's H1 2026 performance shows that its processing infrastructure can support growth even while output from Chinarevskoye declines. Higher prices, third-party feedstock and cost control produced stronger revenue, margins and operating cash flow.

The cash position also improved, offering some financial breathing room.

The unresolved issue is leverage. Net debt of US$606.1 million remains far above half-year revenue, and payment-in-kind interest means part of the financing cost continues to accumulate rather than being settled in cash.

Future updates should be judged on whether Nostrum can maintain positive cash generation, stabilise its own-field production, keep increasing third-party throughput and implement the bond standstill arrangements successfully. Those factors will determine whether the operating progress can eventually translate into a more sustainable balance sheet.