Kazakhstan greenlights Nostrum’s next big leap with Stepnoy Leopard project

The energy landscape of Kazakhstan is undergoing a notable transformation, with Nostrum Oil & Gas PLC now at the centre of a significant upstream expansion. The recent approval of a comprehensive full-field development plan for the Stepnoy Leopard Fields by the Ministry of Energy of the Republic of Kazakhstan marks a pivotal moment for the company. This long-term authorisation—spanning until 2044—enables phased development of a large reserve base and integrates efficiently with Nostrum’s existing infrastructure, particularly its Chinarevskoye processing facilities, which have long served as a core component of the company’s operational base in north-west Kazakhstan.

This state-backed endorsement of the Stepnoy Leopard Fields project, granted on April 3, 2025, not only supports Nostrum’s ambition to become a mixed-asset energy company, but also signals confidence in its ability to monetise underutilised gas processing capacity through a scalable development model. The company holds an 80% working interest in the project through its subsidiary Positive Invest LLP, with the remaining stake held by a minority partner.

What does the Stepnoy Leopard full-field development plan involve?

The newly approved full-field development plan allows for the staged development of key reservoir zones located across the Kamensko-Teplovsko-Tokarevskoe area. Initial activity will be concentrated in the Eastern part of the field, where earlier appraisal work provided encouraging results. Nostrum is set to drill four development wells targeting an initial recoverable resource base between 30 and 50 million barrels of oil equivalent (mmboe), with production from these wells expected to commence between late 2026 and early 2027.

A central component of this upstream tie-back project is a 120-kilometre multiphase trunkline that will carry unprocessed hydrocarbons—both gas and liquids—from the field to Nostrum’s Chinarevskoye processing facilities. These facilities are among the most advanced in the region, capable of processing up to 4.2 billion cubic metres annually. The integration of the Stepnoy Leopard Fields with this infrastructure presents a capital-efficient solution that mitigates risk, enhances asset returns, and improves cash generation.

The gross capital cost for the initial development phase stands at US$100 million. This amount includes carry costs for the minority partner and will be funded entirely through Nostrum’s cash reserves and projected project revenues. The company has confirmed that capital commitments will begin ramping up later in 2024 and continue over a three-year execution period.

How does this development reshape Nostrum’s reserve base and valuation?

The approval of the Stepnoy Leopard full-field development plan builds on the findings of a Competent Person’s Report (CPR) prepared by Xodus Group Limited in July 2024. This independent third-party assessment certified proved plus probable reserves of 138 mmboe at the field, approximately 25% of which are liquids. With this certification, Nostrum’s total working interest reserves increased more than fivefold—from 23 mmboe to 133 mmboe—transforming the company’s resource profile.

According to internal estimates, the project holds an after-tax net present value (NPV10) of approximately $220 million at an internal rate of return (IRR) of 34%. These metrics are expected to be materially value-accretive for shareholders, particularly when coupled with higher utilisation of Nostrum’s existing infrastructure. In addition to the booked reserves, the field also holds 67 mmboe in discovered but undeveloped contingent resources (2C), presenting further upside potential through future drilling and exploration activity.

This dramatic shift in resource inventory comes at a time when Nostrum’s legacy Chinarevskoye field is entering natural decline. The integration of the Stepnoy Leopard Fields as a satellite development is therefore not just an expansion move, but a strategic necessity. It represents a new chapter in the company’s evolution from a single-asset operator to a more diversified player in Kazakhstan’s upstream and midstream sectors.

Why is infrastructure integration critical to project success?

The success of the Stepnoy Leopard full-field development plan hinges on its ability to leverage Nostrum’s gas processing infrastructure in a cost-effective and technically efficient manner. The Chinarevskoye hub, which includes stabilisation, dehydration, sulphur removal, and fractionation capabilities, was previously underutilised due to declining output from its namesake field. By feeding new volumes from Stepnoy Leopard into this existing facility, Nostrum can significantly increase throughput while avoiding the capital costs associated with building a new processing centre.

Furthermore, this infrastructure-led strategy allows the company to implement phased development without compromising on production timelines or financial stability. The recent commencement of processing for the Rozhkovskoye field owned by Ural Oil & Gas already increased utilisation of Chinarevskoye’s capacity. Adding the Stepnoy Leopard Fields into this network further strengthens the economic foundation of the asset and enhances export readiness in a region increasingly reliant on energy infrastructure for long-term growth.

From a national policy perspective, the Kazakhstan Ministry approval supports government efforts to reduce energy imports, enhance domestic production, and monetise stranded or underdeveloped reserves. For Nostrum, the project’s approval not only enhances its operating footprint but also reinforces its alignment with Kazakhstan’s broader energy strategy.

What is the current market sentiment around Nostrum Oil & Gas?

Despite the operational momentum generated by the Stepnoy Leopard Fields project, Nostrum’s market performance over the past year has been underwhelming. The company’s shares, listed under the ticker NOG on the London Stock Exchange, have dropped by more than 52% year-on-year, closing at 3.00 GBX on April 4, 2025. This represents a steep fall from the 52-week high of 7.16 GBX observed in April 2024.

However, the recent approval announcement sparked a modest rebound in investor sentiment, with the stock climbing 5.9% in subsequent trading. Analysts tracking Nostrum’s fundamentals have issued a 12-month average price target of 11 GBX, with estimates ranging from 8 to 14 GBX. This suggests a significant upside from current levels, although sentiment remains cautious due to macroeconomic uncertainties and the company’s debt load.

Nostrum Oil & Gas currently carries a market capitalisation of approximately £4.78 million, while its enterprise value stands closer to £298.8 million, reflecting the capital-intensive nature of its operations. Its five-year beta of 1.27 also signals higher-than-average volatility.

Analyst consensus at this stage leans towards a ‘Hold’ rating. While the project’s economics and reserve profile are favourable, execution risks—particularly around financing the full development and maintaining production timelines—are factors investors are closely watching. If early production from the Stepnoy Leopard Fields materialises on schedule, and cashflows begin to stabilise, this outlook could shift in favour of accumulation over the next 12 to 18 months.

How does this project position Nostrum for long-term growth?

The advancement of the Stepnoy Leopard full-field development plan represents a critical inflection point for Nostrum Oil & Gas. Beyond increasing reserves and production, the project reflects a larger shift in strategy. The company is repositioning itself as a more resilient player capable of integrating upstream and midstream operations, maximising infrastructure efficiency, and aligning with evolving national energy priorities.

In a resource-rich but infrastructure-constrained environment like Kazakhstan, Nostrum’s model—centred on cost-effective tie-backs to underutilised processing assets—may serve as a template for future developments in the region. The company’s ability to self-fund its initial field development, coupled with the scalability of the project, puts it in a favourable position as exploration and production in the Caspian Basin regain investor attention.

As industry focus sharpens on capital discipline, infrastructure reuse, and regional energy security, projects like the Stepnoy Leopard Fields are likely to attract greater scrutiny and potential third-party interest. If Nostrum successfully delivers on this project, it may not only recover shareholder value lost in recent years but also establish itself as a strategic operator with relevance far beyond the borders of its current acreage.