Nostrum Oil & Gas in Advanced Sale Talks for Kazakhstan Business Amid Debt Crisis

Why Nostrum Is Racing to Sell Its Kazakhstan Business

London-listed Nostrum Oil & Gas has entered active negotiations to sell its entire business in Kazakhstan, the company disclosed, as it races to resolve a prolonged debt overhang. A potential buyer—whose identity remains confidential—recently revived interest and both sides are now conducting due diligence while discussing possible transaction terms. No binding agreement has been reached, but the move marks the most concrete exit path yet for the distressed upstream and midstream operator.

The proposed sale covers the Chinarevskoye oil and gas condensate field in West Kazakhstan, associated gas processing infrastructure, and an 80% stake in Positiv Invest, which holds subsoil use rights for the Kamenskoye and Kamensko-Teplovsko-Tokarevskoye blocks. Nostrum has been under severe financial pressure, weighed down by approximately $702 million in outstanding secured and unsecured notes as of end-2025, against only $143.3 million in free cash.

Efforts to restructure the debt have stumbled. A maturity extension to December 2030 agreed with noteholders in March 2026 provided temporary relief, but the company could not pay coupons that fell due in June and December 2025 because of sanctions-related restrictions on fund transfers. Adding to the logjam, Kazakhstan’s tax authority has placed liens on a significant portion of the collateral backing the secured notes, following a dispute over roughly $71 million in withholding tax assessments for 2018–2020. Nostrum’s appeal was rejected in February 2026, and the matter is now in court.

If the sale closes on the currently discussed terms, Nostrum expects to fully repay the $250 million secured notes and partially repay unsecured creditors. It warned that shareholders should not anticipate any meaningful payout. Should the deal collapse and restructuring remain incomplete, management says it will discuss with creditors alternative paths—including potentially filing for bankruptcy in relevant jurisdictions, where recovery would likely be substantially lower than in an out-of-court scenario.

Behind the Deal: Debt, Tax Disputes, and the Stakes for Creditors

A $702 Million Debt Crisis With Few Exit Ramps

Nostrum’s capital structure is largely a legacy of its 2023 restructuring, when bondholders converted pre-existing debt into equity, massively diluting prior shareholders. The company then issued $250 million in senior secured notes and $345 million in senior unsecured notes. With revenue insufficient to service this burden and sanctions blocking coupon payments, the arithmetic pointed toward another restructuring or a sale. The debt load explains why earlier offers—priced below the face value of the notes—were rejected; management now appears to have found a bid that could at least cover the secured piece.

The Tax Dispute as a Deal Breaker—or Maker

The $71 million withholding tax dispute is more than a financial irritant. Because property securing the notes has been encumbered, the tax liens could complicate any asset transfer and may deter a buyer who inherits unresolved liabilities. Resolving this dispute—either through settlement or court victory—is likely a condition precedent for closing. Without a clean path, even a willing buyer could walk away.

What a Successful Sale Would Look Like

Based on Nostrum’s own assessment, a transaction would give secured noteholders par recovery and unsecured creditors a partial haircut. Equity holders—including the top shareholders Westal Holdings (24.88%), RD Energy Caspian Holdings (18.88%), Amundi (9.74%) and Armstrong Investments (6.89%)—stand to receive nothing. For the acquirer, the prize is a producing field with gas processing capacity plus exploration upside, acquired at a distressed price. However, the buyer would need deep expertise in navigating Kazakh regulatory and sanctions compliance, as well as the capital to deal with any residual tax claims.

The alternative, bankruptcy, would likely see secured creditors recover less than in a negotiated sale and unsecured creditors left with even lower returns, as the company itself has acknowledged.

What Next for Nostrum’s Bondholders, Shareholders and Potential Acquirers

• Secured noteholders: The revived sale process offers the most credible path to full repayment. Watch for news of a binding agreement and confirmation that proceeds exceed $250 million. A failure of talks would rapidly increase the risk of a bankruptcy filing.
• Unsecured creditors: Expect a significant haircut even in a best-case sale scenario. The company has flagged partial repayment only; any recovery in bankruptcy would almost certainly be lower. Engage with the ad-hoc bondholder group that negotiated the maturity extension for collective leverage.
• Common shareholders: Management has explicitly warned that no substantial distribution is anticipated. Given the massive net loss in 2025 and priority of debt claims, shares are likely to be wiped out or severely diluted in any restructuring or insolvency.
• Potential acquirer and board: Due diligence must resolve the tax liens and confirm sanctions-related payment channels. Securing regulatory approvals will be critical, especially after the company’s failure to transfer bond payments due to restrictions. A structured deal that ring-fences tax liabilities could be key to closing.
• Kazakh authorities: The outcome will test the investment climate. A forced bankruptcy could deter future upstream investment; a clean sale, conversely, would signal that distressed foreign-owned assets can be resolved commercially, albeit with careful regulatory navigation.