Following the start of commercial production at the Kashagan oil field, North Caspian Operating Company N.V. (“NCOC”), which was the Group’s largest client, has been cutting costs, which has had an effect on its occupancy of Chagala facilities, as seen in the 2017 figures.
The Group will undoubtedly continue to feel the decline in business from NCOC during 2018 as it impacts for a full year. Compensating for this, to an extent, is an increased level of business from the other major oil consortia, Tengizchevroil LLP and Karachaganak Petroleum Operating B.V. , some cost cutting in certain areas and a higher level of marketing for shorter stay business. Nevertheless, we see revenues falling by nearly $2.5m in 2018 before improvement feeds through from the better economic conditions within the country.
The major focus for investors’ attention remains the anticipated offer of $2.15 per share from a special purpose vehicle (“SPV”) to be procured by TIPP Investments PCC (“TIPP”). The SPV Offer will equate to a substantial discount of 38% to December 2017’s NAV of $3.48.