Nostrum Group

KYCO: Know Your Company

Reveal Profile

30 December 2025

1) Overview of the Company

Nostrum Oil & Gas plc is an independent mixed-asset energy company founded in 1997 and listed on the London Stock Exchange under ticker symbol NOG. The company operates primarily in Kazakhstan’s pre-Caspian Basin with world-class gas processing facilities and export hub infrastructure in north-west Kazakhstan.

Nostrum’s principal producing asset is the Chinarevskoye field, operated by its wholly-owned subsidiary Zhaikmunai LLP, which holds the sole subsoil use rights for field development. The company also owns an 80% interest in Positiv Invest LLP, which holds subsoil use rights for the Kamenskoe and Kamensko-Teplovsko-Tokarevskoe areas in the West Kazakhstan region, known as the Stepnoy Leopard fields. The company’s product portfolio comprises crude oil, stabilised condensate, liquefied petroleum gas (LPG), and dry gas, as well as third-party hydrocarbons.

Following a major financial restructuring completed in February 2023, Nostrum transformed from a single-asset to a mixed-asset company. The restructuring replaced US$1.125 billion of existing notes with US$250 million Senior Secured and US$300 million Senior Unsecured notes due in 2026, with existing ordinary shareholders diluted to 11.11% of the enlarged share capital.

The company employs 600-650 personnel and reported trailing twelve-month revenue of US$121.2 million as of September 2025. Nostrum’s shares are also listed on the Kazakhstan Stock Exchange (KASE). The company’s strategy focuses on evaluating and investing in both upstream and midstream opportunities, leveraging its 4.2 billion cubic metres per annum dry gas processing infrastructure to support Kazakhstan’s transition to cleaner energy.

Recent transformational activities include securing approximately 138 million barrels of undeveloped proven reserves in the Stepnoy Leopard fields, extending gas processing agreements with Ural Oil & Gas to May 2031, and implementing field rejuvenation campaigns at Chinarevskoye.

2) History

Nostrum Oil & Gas plc traces its origins to 1997, when the company was established as Zhaikmunai LP to exploit hydrocarbon opportunities in Kazakhstan’s pre-Caspian Basin. The company commenced production at its first field in October 2000, marking the beginning of its operational history in Kazakhstan.

A significant corporate milestone occurred in December 2013, when the company changed its name from Zhaikmunai L.P. to Nostrum Oil & Gas LP to reflect its development into a multi-asset operator. The name change accompanied the partnership’s expansion strategy of growing its portfolio of producing assets beyond the single Chinarevskoye field.

The company underwent a major corporate restructuring in June 2014, dissolving its partnership structure and replacing its Global Depositary Receipts with shares listed on the main board of the London Stock Exchange. This transformation involved cancelling existing GDRs and establishing Nostrum Oil & Gas plc as a public limited company incorporated in England and Wales, completing the transition to premium listing status by June 20, 2014.

Strategic portfolio expansion began in March 2013 through the acquisition of 100% subsoil use rights for three additional oil and gas fields – Rostoshinskoye, Darjinskoye, and Yuzhno-Gremyachenskoye – for US$16 million. These fields, located 60-120 kilometres from the Chinarevskoye field, marked Nostrum’s evolution from a single-asset to multi-asset company.

Major operational infrastructure milestones included the completion and commissioning of GTU3, the company’s third gas treatment unit, by 2019. This expansion doubled the company’s gas processing capacity to 4.2 billion cubic metres per annum, creating substantial spare capacity for third-party processing opportunities.

In July 2023, Nostrum completed another transformational acquisition, purchasing an 80% stake in Positiv Invest LLC for US$20 million. This acquisition provided subsoil use rights for the Kamenskoe and Kamensko-Teplovsko-Tokarevskoe areas, known as the Stepnoy Leopard fields, adding approximately 138 million barrels of undeveloped proven reserves to the company’s portfolio.

The most significant corporate restructuring in the company’s history occurred in February 2023, addressing substantial financial challenges. The restructuring replaced US$1.125 billion of existing 8.0% Senior Notes due 2022 and 7.0% Senior Notes due 2025 with US$250 million Senior Secured Notes and US$300 million Senior Unsecured Notes due 2026. This debt-for-equity conversion diluted existing ordinary shareholders to 11.11% of the enlarged share capital while strengthening the company’s balance sheet.

Key leadership transitions have shaped the company’s development, including the appointment of Viktor Gladun as Chief Executive Officer in July 2025, replacing Arfan Khan who stepped down in June 2025 following stakeholder discussions about the company’s future direction and the approaching 2026 bond maturities.

3) Key Executives

Viktor Gladun serves as Chief Executive Officer of Nostrum Oil & Gas plc effective July 15, 2025, while continuing as a director of the Board. Mr. Gladun brings extensive energy sector experience from his previous role as CEO and executive director at JKX Oil and Gas plc, a UK-headquartered hydrocarbon exploration company, from 2019 through 2022, having also served as Acting CEO during 2017-2018. He previously held executive financial roles at DTEK energy group and NIKO/Mitsubishi Motor in Ukraine, as well as a senior auditor position at TNK-BP and a tax consultant position at Arthur Andersen.

Yelena Zhuravleva serves as Chief Financial Officer effective September 19, 2025, following the departure of Petro Mychalkiw who stepped down from the CFO position on September 16, 2025 by mutual agreement with the Company. Ms. Zhuravleva joined through a service agreement with Nostrum Oil & Gas B.V., a wholly-owned indirect subsidiary of the Company, and reports directly to the Chief Executive Officer.

David Roberts was appointed as Chief Operating Officer effective September 16, 2025, replacing Robert Tinkhof who retired on September 3, 2025 after serving in the role since February 12, 2019. Mr. Roberts is a seasoned international oil and gas executive with over 30 years of operational, technical, and leadership experience across Africa, Central Asia, and North America. His compensation under the employment agreement is USD 396,000 per annum plus customary benefits. Mr. Roberts has a 50% shareholding in RD Energy Caspian Holdings Limited, which holds 31,975,192 ordinary shares of Nostrum, representing 18.88% of the Company’s ordinary share capital.

Thomas A. Hartnett serves as Chief Legal Officer and Company Secretary, having been appointed as General Counsel of the Nostrum Group on September 5, 2008, Company Secretary on October 3, 2013, and Acting Head of Human Resources on January 13, 2020. Mr. Hartnett brings more than 30 years of post-qualification experience, including 16 years with White & Case LLP as a Partner specializing in cross-border corporate and M&A transactions. He holds a Bachelor of Arts degree in Comparative and Developmental Politics from the University of Pennsylvania and a Juris Doctor degree from New York University School of Law, and is a member of the New York Bar and the Association of International Energy Negotiators.

Zhomart Darkeyev serves as Adviser to the CEO, having been appointed as General Director of Zhaikmunai LLP on November 14, 2016. Mr. Darkeyev has held various positions within Zhaikmunai LLP including Administrative Director, Assistant General Director, Chief Administrative Manager, Engineer Manager and Deputy General Manager. He previously worked for Derkl Oil & Gas drilling as assistant driller and for Kazakhgas State Holding Company as a leading reservoir engineer.

Askhat Seitkazin serves as General Director of Zhaikmunai LLP effective November 14, 2024, having been appointed as Deputy General Director in March 2022. He previously held positions as PR manager from 2013-2015 and Head of PR department from 2015-2022 at Zhaikmunai LLP. Mr. Seitkazin graduated from the Institute of International Law & Economics Moscow with a specialization in Financial and Enterprise Management.

4) Ownership

Following a major debt restructuring completed in February 2023, Nostrum Oil & Gas plc transformed from a heavily indebted single-asset company to a mixed-asset operator with significantly altered ownership structure. The restructuring replaced US$1.125 billion of existing notes with US$250 million Senior Secured Notes and US$300 million Senior Unsecured Notes due 2026, while existing ordinary shareholders were diluted to 11.11% of the enlarged share capital through a debt-for-equity conversion that allocated 88.89% of equity to former bondholders.

The company’s current ownership structure reflects this dramatic recapitalization, with 169.38 million ordinary shares outstanding as of December 2024. The largest shareholder is ICU Investment Management Ltd., holding 42.14 million shares representing 25.6% of the company, followed by RD Energy LLC with 31.98 million shares (19.4%). Other significant shareholders include Armstrong Investments Limited with 11.39 million shares (6.9%), First Equity Limited with 11.17 million shares (6.77%), and NOG Holding Trust with 9.45 million shares (5.23%).

A notable ownership concentration exists among insiders and related parties, with 45.21% of shares held by insiders according to market data as of December 2025. This includes Chief Operating Officer David Roberts, who holds a 50% stake in RD Energy Caspian Holdings Limited, which owns 31.98 million ordinary shares representing 18.88% of the company’s share capital. The appointment of Roberts as COO was classified as a material related party transaction under DTR 7.3.8R due to this significant shareholding.

Institutional ownership represents 21.12% of the outstanding shares, with 38.54% of the float held by institutions as of December 2025. Key institutional investors include Amundi Asset Management SAS with 8.63 million shares (5.23%), AMA Capital Partners LLC with 5.80 million shares (3.52%), and various other fund management entities holding smaller positions. The free float comprises 90.37 million shares, representing approximately 55% of total issued capital.

The ownership structure includes provisions for Sanctions Disqualified Persons – two Russian financial institutions holding 7.1% of the original notes who were subject to sanctions in the UK, EU, US and Guernsey. Under the restructuring scheme, consideration for these entities is held in a bare trust structure with the ability to claim scheme consideration within 60 days of no longer being subject to sanctions.

As of June 2025 AGM results, total voting shares outstanding were 165.24 million ordinary shares of £0.01 each, with voting participation of 52.32% of issued share capital during key governance resolutions. The company maintains no treasury shares in its own name, with shares referred to as “Treasury capital” being held by the trustee of the company’s employee benefit trust, which retain voting rights.

5) Financial Position

Nostrum Oil & Gas plc trades on the London Stock Exchange under ticker NOG with a current market capitalization of £6.04 million as of December 2024. The company’s shares are also listed on the Kazakhstan Stock Exchange (KASE). The stock price traded at 3.51p as of December 30, 2025, representing a 26.42% increase over the previous year despite significant volatility. The 52-week trading range spans from 2.40p to 5.40p, reflecting the substantial price movements characteristic of the small-cap energy sector.

The company’s financial health reflects the transformational debt restructuring completed in February 2023, which replaced US$1.125 billion of existing notes with US$550 million of new debt instruments. This restructuring significantly improved the capital structure, though the company maintains negative shareholders’ equity of -$92.5 million as of December 2024. Total debt stands at $571.4 million while total assets equal $606.0 million, resulting in a debt-to-equity ratio of -6.2x due to the negative equity position. Net debt increased to $404.2 million as of December 2024 from $293.5 million in December 2023, primarily due to capitalised interest and fair value adjustments.

Revenue performance demonstrates operational resilience despite challenging market conditions, with the company reporting $137.1 million in FY 2024 compared to $119.6 million in FY 2023, representing a 14.6% increase. This growth occurred despite lower average Brent crude oil prices of $80.6/barrel in 2024 versus $82.2/barrel in 2023. EBITDA improved to $48.9 million in 2024 from $42.1 million in 2023, with margins expanding to 35.7% from 35.2%. Operating cash flow turned positive at $33.1 million in 2024 compared to negative $2.2 million in 2023, demonstrating improved operational efficiency.

Profitability metrics reveal ongoing challenges with the company reporting a net loss of $26.1 million in 2024, though this represents an improvement from the exceptional gain of $831.7 million in 2023 related to debt restructuring effects. Return on assets stands at 1.11% while the company maintains a negative return on equity due to its negative equity position. Operating margins improved to 15.90% in 2024 from -6.85% in 2023, reflecting enhanced cost management and increased processing volumes from third-party operations.

The company’s balance sheet demonstrates improved liquidity management with unrestricted cash and cash equivalents of $150.4 million as of December 2024, down from $161.7 million in December 2023 but sufficient to fund operations and growth initiatives. Current assets of $203 million exceed current liabilities of $28 million, yielding a current ratio of 7.33, indicating strong short-term liquidity. The company also maintains restricted cash of $25.9 million in debt service retention accounts and asset liquidation funds.

Key business risks disclosed in financial filings include commodity price volatility, operational challenges at the mature Chinarevskoye field, regulatory and fiscal risks in Kazakhstan, and concentration risk from reliance on a single production asset. The company faces approaching bond maturities in 2026, creating refinancing risk that management continues to address through stakeholder discussions. Environmental liabilities include $27.3 million in asset retirement obligations for site restoration and abandonment. Currency exposure exists through operations in Kazakhstan, though natural hedging occurs as revenues and costs are both primarily denominated in US dollars.

6) Market Position

Nostrum Oil & Gas plc operates as a niche player in Kazakhstan’s energy sector, positioned strategically in the pre-Caspian Basin with world-class gas processing infrastructure that differentiates it from regional competitors. The company leverages its 4.2 billion cubic metres per annum gas processing capacity, currently operating at approximately 20% utilization, to establish itself as a leading third-party gas processor in the region. This substantial spare capacity positions Nostrum to capitalize on Kazakhstan’s growing demand for marketable gas, which is forecast to potentially reach a shortage of up to 8 billion cubic metres by 2025.

The company’s competitive positioning centers on its proximity to major hydrocarbon resources in the Former Soviet Union, with assets located close to the Russian border and in proximity to significant discoveries including the Rozhkovskoye field. Nostrum’s advantageous location provides access to multiple export markets through established pipeline networks including the Atyrau-Samara, Caspian Pipeline Consortium, Baku-Tbilisi-Ceyhan, and Atasu-Alashankou pipelines, as well as Kazakhstan’s extensive rail network reaching markets throughout the FSU and beyond. This geographic advantage creates natural co-dependency with regional exporters and positions the company as a strategic processing hub.

Nostrum’s product portfolio comprises crude oil, stabilized condensate, liquefied petroleum gas (LPG), and dry gas, with the company achieving 98% processing facility uptime in 2024. The product mix has evolved significantly, with dry gas and LPG accounting for 53.3% and 17.0% of total titled production respectively in 2024, up from 41.3% and 12.8% in 2023, driven by increased processing of raw gas from third-party sources. This shift toward gas processing provides revenue streams less dependent on commodity price volatility through tolling arrangements.

Key strategic partnerships underpin Nostrum’s market position, most notably the extended processing agreement with Ural Oil & Gas LLP signed in March 2025, extending third-party hydrocarbon processing until May 2031. This agreement provides a fixed processing fee structure across all products, generating sustainable cash flows and positioning Nostrum as a reliable business partner in the region. According to KazMunayGas, approximately 0.53 billion cubic metres of raw gas feed is expected from Ural O&G in 2025.

The competitive landscape in the Caspian region includes Kazakhstan and Azerbaijan as the main oil-producing countries, while Turkmenistan and Uzbekistan dominate gas production. Russia serves as a critical transportation corridor between the Caspian Sea and Black Sea. Nostrum’s operational capabilities distinguish it through continuous GTU-3 operation since September 2023, yielding additional 26% LPG recovery through cutting-edge turbo-expander technology, and gas-lift system expansion that has performed above management expectations.

Customer concentration presents both opportunities and risks, with the company serving international customers through established distribution networks. Nostrum maintains 98% local hiring in Kazakhstan, providing deep regional knowledge and strengthening relationships with local communities and regulatory authorities. The company’s infrastructure investments totaling over US$2 billion since 2004 have created substantial barriers to entry for potential competitors seeking to establish similar processing capabilities in the region.

Brand recognition has been enhanced through Nostrum’s role as Bronze Sponsor of Kazakhstan Energy Week 2025 and the XVI KAZENERGY Eurasian Forum, reinforcing its commitment to contributing to Kazakhstan’s energy sector dialogue and collaboration. The company’s ESG performance, ranking in the 11th percentile among oil and gas producers according to Sustainalytics with a risk rating of 31.0, supports its reputation as a responsible operator seeking long-term partnerships.

7) Legal Claims and Actions

Based on the available regulatory and litigation research, no significant legal claims, regulatory enforcement actions, or material litigation has been identified involving Nostrum Oil & Gas plc or its subsidiaries during the 10-year review period ending December 2025.

The SEC Claims Information database shows no enforcement actions, sanctions, or regulatory proceedings involving the company or its executives. Similarly, no material civil litigation, employment-related lawsuits, or workplace discrimination claims have been identified in available court records and regulatory databases.

The company’s operational presence in Kazakhstan and its international structure through subsidiaries including Nostrum Oil & Gas Coöperatief U.A., Nostrum Services N.V., and Positiv Invest LLP have not resulted in identified cross-border legal challenges or international compliance violations during the review period.

No criminal convictions, regulatory sanctions, or professional misconduct involving current or former executives have been documented in available regulatory databases. The company’s leadership transitions, including recent appointments of Chief Executive Officer Viktor Gladun and Chief Operating Officer David Roberts, occurred without identified legal or regulatory impediments.

The absence of material legal proceedings represents a notable aspect of the company’s regulatory profile, particularly given its operations in Kazakhstan’s energy sector and the complex international ownership structure resulting from the 2023 debt restructuring. This clean legal record may reflect effective compliance management and operational oversight, though it should be noted that information availability may vary across different jurisdictions where the company and its subsidiaries operate.

8) Recent Media

Media coverage of Nostrum Oil & Gas plc from 2023 to 2025 has been dominated by its financial restructuring, subsequent defaults, significant regulatory penalties in Kazakhstan, and persistent leadership instability. In February 2023, the company completed a major financial restructuring of US$1.125 billion in senior notes, a process that involved navigating complex legal hurdles related to some noteholders being sanctioned entities. The English High Court’s sanctioning of the scheme in August 2022, despite the involvement of two sanctioned Russian financial institutions holding 7.1% of the notes, was a notable legal development reported by legal and financial media. The court approved placing the sanctioned creditors’ consideration into a holding trust until sanctions are lifted.

The company’s financial stability remains a subject of negative media focus. In April 2025, auditor MHA MacIntyre Hudson issued an unqualified opinion on the 2024 annual report but included a statement expressing doubt about the company’s ability to continue as a going concern. This followed a similar disclaimer of opinion from Ernst & Young on the 2019 financials. Subsequently, in July 2025, the company’s subsidiary, Nostrum Oil & Gas Finance B.V., failed to make an interest payment on its notes due by June 30, 2025, resulting in an “Event of Default”. The company attributed the delay to a “payment administration issue” related to sanctioned bondholders that prevented payments through clearing systems without additional regulatory licenses. The default was resolved in October 2025 after the company secured bondholder approval for a resolution.

In September 2023, media outlets reported that Nostrum’s subsidiary, Zhaikmunai, was fined $4 million and paid $18.8 million in back taxes for corporate income tax and VAT violations in Kazakhstan committed between 2016 and 2021. Due to changes in Kazakhstani security market regulations that made its secondary listing no longer mandatory, the company announced in December 2023 that it would delist from the Astana International Exchange (AIX), a process that became effective in February 2024, with its primary listing remaining on the London Stock Exchange.

Significant leadership and board turnover has been a recurring theme. On June 30, 2025, Nostrum announced that CEO Arfan Khan and Independent Non-Executive Director Chris Hopkinson had stepped down from the board amid stakeholder discussions regarding the company’s future direction ahead of its June 2026 bond maturities. The company confirmed the appointment of director Viktor Gladun as the new CEO, effective July 16, 2025. This followed the October 2025 retirement of Chairman Stephen Whyte, who was replaced by Nikolay Ivin, and a significant CFO turnover, with Petro Mychalkiw stepping down in September 2025 after just over a year in the role, to be replaced by Yelena Zhuravleva.

Nostrum has also been the subject of reports concerning fraud and historical misconduct by former executives. The company issued a fraud warning on its website regarding third parties misusing its brand for phishing and employment scams. This was corroborated by a January 2024 WIPO decision (Case No. D2023-4425), which ordered the transfer of the domain zhaikmunaillp.com to Nostrum after it was used in a phishing campaign impersonating company employees. Separately, historical articles from 2017 resurfaced, detailing the resignation of then-Chairman Frank Monstrey after a UK High Court injunction froze assets of his holding company, Claremont Holdings, in connection to legal proceedings by BTA Bank against Kazakh oligarch Mukhtar Ablyazov. Reports indicated the settlement of the dispute involved Claremont transferring its shares in Nostrum to BTA Bank, with some media outlets positing that Claremont had acted as a front for Ablyazov.

On the operational and strategic front, Nostrum finalized its acquisition of an 80% stake in Positive Invest LLP for $20 million in July 2023, gaining subsoil use rights for the Stepnoy Leopard fields in Kazakhstan. In its 2023 annual results, the company disclosed one contractor fatality from a height-related incident and reported an improvement in its ESG Risk Rating from Sustainalytics, from 40.1 in 2022 to 30.1.

9) Strengths

World-Class Gas Processing Infrastructure

Nostrum Oil & Gas plc operates world-class gas processing facilities with a combined nameplate capacity of 4.2 billion cubic metres per annum, representing substantial infrastructure investments totaling over US$2 billion since 2004. The company achieved 98% processing facility uptime in 2024 and operates at approximately 20% utilization, providing significant spare capacity for third-party processing opportunities. The third gas treatment unit (GTU-3) operates continuously since September 2023, delivering additional 26% LPG recovery through cutting-edge turbo-expander technology and enhancing overall operational efficiency.

Strategic Geographic Positioning

The company benefits from an advantageous location in Kazakhstan’s pre-Caspian Basin, positioned close to the Russian border and in proximity to significant hydrocarbon resources in the Former Soviet Union. This strategic positioning provides access to multiple export markets through established pipeline networks including the Atyrau-Samara, Caspian Pipeline Consortium, Baku-Tbilisi-Ceyhan, and Atasu-Alashankou pipelines, as well as Kazakhstan’s extensive rail network. The company maintains full control of liquid transportation logistics through its 120-kilometre liquids pipeline and automated rail loading terminal.

Successful Financial Restructuring and Enhanced Balance Sheet

Following the completion of a major debt restructuring in February 2023, Nostrum transformed from a heavily indebted single-asset company to a mixed-asset operator with significantly improved financial stability. The restructuring replaced US$1.125 billion of existing notes with US$550 million of new debt instruments, reducing annual coupon payments from US$86 million to approximately US$16 million. The company maintains unrestricted cash reserves of US$150.4 million as of December 2024 and generated positive operating cash flows of US$33.1 million in 2024.

Operational Excellence and Cost Efficiency

Nostrum demonstrates strong operational capabilities with a 41% reduction in operating expenses per barrel of processed volumes in 2024 to US$5.8 compared to US$9.8 in 2023. The company achieved a 48% increase in average daily titled production volumes to 14,935 boepd in 2024, driven by successful third-party processing, gas-lift system expansion, and new well production. Operating margins improved to 15.90% in 2024 from -6.85% in 2023, reflecting enhanced operational efficiency and disciplined cost management.

Leading Third-Party Gas Processing Capabilities

The company has established itself as a reliable business partner for third-party gas processing, successfully ramping up processing of raw gas and condensate volumes from Ural Oil & Gas LLP since December 2023. In March 2025, Nostrum secured an extension of its processing agreement with Ural O&G until May 2031 under improved terms, providing a fixed processing fee structure that generates sustainable cash flows independent of commodity price volatility. Total processed volumes increased by 94% in 2024 to 19,831 boepd.

Transformational Reserve Growth Through Strategic Acquisitions

Through the July 2023 acquisition of an 80% stake in Positiv Invest LLP for US$20 million, Nostrum gained subsoil use rights for the Stepnoy Leopard fields, adding approximately 138 million barrels of undeveloped proven reserves. An independent Competent Person’s Report confirmed 138 mmboe of proved plus probable gross reserves, increasing Nostrum’s reserves base over fivefold from 23 mmboe to 128 mmboe working interest reserves and representing material value creation of approximately US$220 million of after-tax net present value.

Strong ESG Performance and Safety Record

Nostrum ranks in the 11th percentile among oil and gas producers according to Sustainalytics’ ESG Risk Ratings with a score of 31.0, demonstrating strong environmental, social, and governance performance. The company achieved a zero-fatality record and zero lost time injury incidents in 2024, while reducing greenhouse gas emissions intensity by 28% to 35,282 tCO₂/mmboe of processed volumes. The company maintains 98% local hiring in Kazakhstan, providing deep regional knowledge and strengthening community relationships.

Advanced Technology Infrastructure and Digital Capabilities

Nostrum implemented SAP S/4HANA Model Company for Upstream Oil & Gas operations, becoming one of the first companies to deploy this advanced enterprise resource planning system in the industry. The technology implementation included integrated end-to-end workflow thinking, enhanced master data management, and improved business process optimization. The company leverages technology as an extension of expertise rather than replacement, maintaining human discernment in an increasingly data-driven industry.

10) Potential Risk Areas for Further Diligence

Approaching 2026 Bond Maturities and Refinancing Risk

The company faces significant refinancing risk with US$250 million Senior Secured Notes and US$300 million Senior Unsecured Notes maturing in June 2026. Current stakeholder discussions regarding the company’s future direction specifically address these approaching bond maturities, and the company has not yet announced concrete refinancing plans. Net debt increased to US$404.2 million as of December 2024 from US$293.5 million in December 2023, primarily due to capitalised interest and fair value adjustments, creating additional pressure on the refinancing process.

Executive Leadership Instability and Governance Turnover

The company has experienced significant leadership instability with multiple C-suite changes in 2025, including CEO Arfan Khan stepping down in June 2025 amid stakeholder discussions, CFO Petro Mychalkiw departing in September 2025 after just over one year in the role, and COO Robert Tinkhof retiring in September 2025. Chairman Stephen Whyte also retired in October 2025. This executive turnover occurs during a critical period as the company approaches 2026 bond maturities and implements major growth projects.

Going Concern Qualification and Auditor Uncertainties

Auditor MHA MacIntyre Hudson issued an unqualified opinion on the 2024 annual report but included a statement expressing doubt about the company’s ability to continue as a going concern, reflecting concerns about the approaching 2026 bond maturities and refinancing challenges. This follows previous auditor disclaimers, indicating persistent concerns about the company’s long-term financial sustainability and raising questions about operational continuity and access to capital markets.

Complex Debt Structure and Sanctions-Related Complications

The company’s debt structure includes complications related to sanctioned bondholders, with two Russian financial institutions holding 7.1% of original notes subject to sanctions in the UK, EU, US, and Guernsey. These sanctions-related issues have previously caused payment administration challenges, including a technical default in July 2025 when the company failed to make an interest payment due to restrictions on payments through clearing systems. The company required specific regulatory licenses to resolve the default, highlighting ongoing operational complexity that could recur.

Single Asset Production Dependency and Field Maturity Risk

Despite diversification efforts, the company remains heavily dependent on the mature Chinarevskoye field for current production, which continues to experience natural decline due to field maturity. Production from the Chinarevskoye field is forecast at only 5,500-6,500 boepd in 2025, representing a significant decline from historical levels. The unsuccessful drilling of well No.41 in 2024, which missed the primary target horizon and was temporarily suspended, highlights ongoing subsurface risks and drilling challenges at the mature field.

Concentration Risk in Customer and Partner Relationships

The company faces concentration risk through its dependence on key third-party processing partnerships, particularly the extended agreement with Ural Oil & Gas LLP that runs until May 2031. According to KazMunayGas, approximately 0.53 billion cubic metres of raw gas feed is expected from Ural O&G in 2025, representing a substantial portion of the company’s processing volumes. Any disruption to this key partnership could significantly impact revenue and operational performance, particularly given the company’s current utilization of only 20% of its processing capacity.

Operational and Regulatory Risks in Kazakhstan

The company operates exclusively in Kazakhstan through subsidiary Zhaikmunai LLP, exposing it to country-specific regulatory, fiscal, and political risks. In September 2023, Zhaikmunai was fined US$4 million and paid US$18.8 million in back taxes for corporate income tax and VAT violations committed between 2016 and 2021. The company faces ongoing regulatory complexity, including environmental compliance requirements and potential changes to Kazakhstan’s energy sector policies that could impact operations and profitability.

Early-Stage Development Projects Execution Risk

The Stepnoy Leopard fields development represents a significant capital commitment with target production start between late 2026 and early 2027, requiring substantial execution capabilities during a period of leadership transition and approaching debt maturities. While the Ministry of Energy approved the development plan in April 2025, the project involves inherent subsurface risks, capital cost escalation potential, and execution challenges that could impact projected returns and timeline commitments. The project requires pipeline construction to Chinarevskoye and sour gas treatment infrastructure implementation.

Limited Financial Flexibility and Negative Equity Position

Despite positive operating cash flows, the company maintains negative shareholders’ equity of -US$92.5 million as of December 2024, limiting financial flexibility for growth investments and strategic initiatives. The debt-to-equity ratio of -6.2x reflects the challenging capital structure, while the company’s small market capitalization of £6.04 million constrains access to capital markets for potential refinancing or growth funding requirements. This negative equity position creates additional challenges for securing additional financing or strategic partnerships.

Standard Energy Sector Considerations

Nostrum faces typical oil and gas industry risks including commodity price volatility, with Brent crude averaging US$80.6/barrel in 2024 versus US$82.2/barrel in 2023, directly impacting revenue streams. Environmental liabilities include US$27.3 million in asset retirement obligations for site restoration and abandonment. The company operates in a capital-intensive industry subject to cyclical downturns, regulatory changes, and ongoing energy transition considerations that may affect long-term demand for hydrocarbon products.

Sources

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