As a result of 9M2017, Nostrum's revenue was $304mn, an increase of 24% compared to 9M2016 due to an increase in the average price of oil by 22% yoy.
The increase in production costs, however, was less rapid, during the reporting period the cost price was $146mn (+0.3%) as a result of growth in royalties and labor costs. The company's EBITDA for the year increased by 20% to $172mn.
Following the results of 9M2017, the Company received a profit before tax of $25mn against the loss a year earlier ($60mn) and reduced its net loss from $64mn to $9mn.
At the end of the reporting period, Nostrum has cash of $144mn (at the end of 2016: $101mn). The total debt is $1,057mn and net debt is $913mn (at the end of 2016: $858mn).
We view the financial results as neutral. Positive reflection of increased oil prices on the Nostrum revenue was expected by us. Also, we do not see any significant changes in the expenditure side and we maintain our BUY recommendation with 12M TP GBp502/share.