Kazmunaigaz Exploration Regulatory News (KMG)

17 Mar 2008 14:09

JSC KazMunaiGas Exploration Prod17 March 2008 PRESS - RELEASE JSC KazMunaiGas Exploration Production announces its financial results for the year ended December 31, 2007 Astana, 17 March 2008, JSC KazMunaiGas Exploration Production ("KMG EP" or "theCompany"), has released today its audited consolidated financial results for theyear ended 31 December 2007. • 11.64% increase of crude oil production, including the Company's share in associates • 28% growth in net income to 157bn Tenge (US$ 1,282m)(1) • 17.9bn Tenge ($146m) increase in net income contributed from the Company's 50% share of Kazgermunai Commenting on the financial results for 2007, Askar Balzhanov, the CEO of theCompany, said: "The fact that KMG EP achieved significant production and netincome growth during 2007 is a reflection of the success of the Company'sambitious acquisition strategy combined with a technical operational programmeimplemented on the core fields. The Company is confident of continuing this growth in future, through furthervalue-adding acquisitions, operational activities and an expanding explorationprogramme". Production Highlights The Company produced 10,639 thousand tonnes (216.91kbopd) of crude oil that was1,118 thousand tonnes or 11.64% more than in 2006. The increase is primarilydue to the acquisition of a 50% stake in JV Kazgermunai LLP ("Kazgermunai")completed on 24 April 2007. Excluding Kazgermunai and CCEL, for the full year ended of 2007 the Company'sproduction was in line with the production plan, at 9,530 thousand tonnes ofcrude oil (192.17 kbopd), approximately the same level as for the full year of2006. For the full year of 2007, the Company supplied 9,585 thousand tonnes ofcrude oil (193.28kbopd) to the customers excluding oil produced by Kazgermunaiand CCEL. Out of this amount, approximately 7,354 thousand tonnes (148.29kbopd)were supplied to export markets, 9.13% more than in 2006. Financial Highlights Profit after tax (net income) for the full year of 2007 was 157bn Tenge($1,282m). This is 28% higher than for the full year of 2006. The net incomeincrease is attributable to higher prices received for crude, a favourablemovement in the export to domestic sales mix, inclusion of Kazgermunai results,increased financial income. These positive factors were partially offset byincreases in foreign exchange loss and operating expenses as well as an increasein the effective tax rate. KMG EP's revenues for the full year of 2007 increased by 18% to 487bn Tenge($3,974m). This was primarily due to an increase in sales volume of 3.2% and13.9% increase in the average realised price from 43,498 Tenge per tonne ($47.71per bbl) to 49,554 Tenge per tonne ($55.93 per bbl). For the full year of 2007exports accounted for approximately 77% of the sales in volume terms (73% forthe full year of 2006). Operating expenses were 211bn Tenge ($1,720m) for the full year of 2007,increased by 17.4bn Tenge ($142m), or 9% mainly due to release of a provisionfor an environmental fine of 11.4bn Tenge ($93m) in the first half of 2006.Excluding the environmental fine reversal, operating expenses were 3% or 6.0bnTenge higher than in 2006. The increase was mainly caused by an increase intransportation, materials, depreciation, depletion and amortization, fines andpenalties, stock option expenses, partly offset by a reduction in the consultingservices, social infrastructure expenses, other taxes and other expenses. Operating cash flow was 173bn Tenge ($1,411m) for the full year of 2007,approximately 42% higher than for the full year of 2006. Cash outflow used ininvesting activities related to acquisitions of stakes in Kazgermunai and CCELin 2007 was 137bn Tenge ($1,119 m). Purchases of property, plant and equipment (capital expenditures, not includingpurchases of intangible assets, as per Cash Flow Statement) for the full year of2007 were 40.1bn Tenge ($327m) which is 19% lower than the full year of 2006. Dividends paid to the Company's shareholders in 2007 were 35.7bn Tenge ($291m). Impact of acquisition of a 50% stake in Kazgermunai On 24 April 2007 KMG EP finalised the acquisition of a 50% stake in Kazgermunai.For the year ended 31 December 2007 following the acquisition of a 50% interestin Kazgermunai, the share of KMG EP of 27.6 bn Tenge in the net income of thisjoint venture was adjusted for non-cash fair value differences and recorded as17.9bn Tenge ($146m). During the full year of 2007, Kazgermunai produced 3,055 thousand tonnes of oil(63.78 kbopd), 5.9% up compared to the full year of 2006. For the 251 daysbetween the acquisition date and 31 December 2007 the Company's share inKazgermunai crude oil production was 1,062 thousand tonnes (32.23kbopd). KMG EP received $300 million and a further $75 million in dividends fromKazgermunai in November 2007 and March 2008 respectively. Impact of acquisition of a 50% stake in CCEL On 12 December 2007 the Company completed the acquisition and received fromState Alliance Holdings Limited (a holding company ultimately belonging to CITICGroup, a company listed on the Hong Kong stock exchange) a 50% participationinterest in a holding company, CCEL, whose investments are involved in oil andnatural gas production in western Kazakhstan, in particular from Karazhanbasfield. The Company has recognized the amount of US$150 million (18,478 million Tenge)as a receivable from jointly controlled entity. During the full year of 2007, CCEL produced 1,942 thousand tonnes of oil(35.54kbopd). A 50% share in CCEL crude oil production from the acquisition dateto the end of the year 2007 was 48 thousand tonnes (15.88kbopd). *** The full consolidated financial statements for the year ended 31 December 2007(audited) and the notes thereto are available at the Company's website(www.kmgep.kz ). The full version Annual Report containing additionalinformation on the company operations, corporate governance and risk factorswill be published before the Annual General Meeting of shareholders. Thefinancial statements for the year 2007 are subject to the Board of Directors'and shareholders' approval. Appendix(2) Key operating and financial indicators of KMG EP for the full year of 2007 Summary Operating Data, excluding Kazgermunai, CCEL Three months ended December 31, Year ended December 31,thousand tonnes 2007 2006 2007 2006Crude oil production 2,422 2,408 9,530 9,530Crude oil exports 1,793 1,750 7,354 6,739Crude oil domestic 611 539 2,230 2,551 Summary of Condensed Consolidated Statements of Income Three months ended December Year ended December 31, 31,Tenge Millions 2007 unaudited 2006 unaudited 2007 2006 audited auditedRevenue 148,137 98,483 486,975 412,208Operating expenses (58,582) (58,147) (210,834) (193,398)Profit from operations 89,555 39,204 276,140 218,810Finance income (expense) 4,435 4,095 13,200 (40)Gain (loss) on disposal of subsidiaries - 0 860 -Share of result of associates 8,537 74 17,430 (328)Profit before tax and minority interest 102,526 44,505 307,630 218,366Income tax expense (48,888) 10,233 (150,511) (95,805)Profit for the period 53,639 54,738 157,119 122,561 Attributable to:Equity holders of the Company 53,639 54,738 157,119 122,561Minority interest - - - - Summary of Consolidated Statements of Cash Flows year ended December 31,Tenge Millions 2007 2006 audited auditedNet cash generated from operating activities 172,961 122,210 Cash flows from investing activities Purchases of property, plant and equipment (PPE) (40,095) (49,286)Sale of held-to-maturity and available-for-sale financial assets, net (138,310) (170,235)Disposal of subsidiaries, net of cash disposed 10,347 3,653Purchases of in a joint venture (137,158) -Loan repayments received from related parties 97,540 37,012Interest received and other 42,997 (119,534)Net cash provided used in investing activities (164,679) (298,389)Proceeds from borrowings 1,995 7,681Repayment of borrowings (8,175) (1,695)Dividends paid to Company's shareholders (35,705) (17,631)Interest paid and other (3,089) (230,905)Net cash used in financing activities (44,974) 219,260 Summary of Condensed Consolidated Balance Sheets Tenge Millions December 31, December 31, 2007 2006 audited auditedASSETSNon-current assets 379,699 376,824Current assets 472,153 358,114Total assets 851,852 734,937 EQUITYEquity holders of the Company 646,442 525,752Minority interest - 6Total equity 646,442 525,758 LIABILITIESNon-current liabilities 62,735 100,844Current liabilities 135,333 108,336Total liabilities 205,410 209,180 TOTAL EQUITY AND LIABILITIES 851,852 734,937 The following tables show the Company's realised sales prices adjusted for oiland oil products transportation and other expenses for the full year endedDecember 31, 2007 and 2006. Netback analysis*, for the full year of 2007 UAS CPC Other (US$/bbl)Benchmark end-market quote(1) 69.53 73.02 -Realized price(2) 65.75 70.61 18.93Transportation (6.13) (6.89) (0.83)Sales commissions (0.07) (0.07) -Processing fees - - -Adjusted realised price 59.55 63.65 18.10 Netback analysis*, for the full year of 2006 UAS CPC Other (US$/bbl)Benchmark end-market quote(1) 60.99 65.23 -Realized price(2) 57.57 61.32 19.22Transportation (6.16) (5.93) (0.80)Sales commissions (0.07) (0.07) (0.02)Processing fees - - (0.55)Adjusted realised price 51.34 55.32 17.85 * Excluding gas products, other sales and services Reference information Full year ended December 31, 2007 2006Average exchange rate $/KZT* 122.55 126.09Exchange rate $/KZT as of 31 December 2006* 127.00Exchange rate $/KZT as of 31 September 2007* 120.30 *Source: The National Bank of Kazakhstan, the average exchange rates for the periods are calculated on the basis of the daily exchange rates Barrels to tonnes conversion ratio for KMG EP crude oil 7.36Barrels to tonnes conversion ratio for Kazgermunai crude oil 7.62Barrels to tonnes conversion ratio for CCEL crude oil 6.68 - ENDS - Notes to Editors KMG EP is the 2nd largest Kazakh oil producer with over 10.6 mmt (217 kbopd) ofcrude oil production in 2007 including shares in production of Kazgermunai andCCEL, and 240 mmt (1.8bn bbl) of proved and probable reserves at the end of 2007(over 2 bn bbl including interests in Kazgermunai and CCEL). The Company'sshares are listed on Kazakhstan Stock Exchange and the GDRs are listed on LondonStock Exchange. The Company raised approximately US$2bn in its IPO in Septemberof 2006. For additional information please contact: KMG EP, Public Relations (+7 717 297 7600, +7 717 297 7924)Zukhra SultanovaE-mail: pr@kmgep.kz KMG EP, Investor Relations (+7 717 297 5433)Alexander GladyshevE-mail: ir@kmgep.kz WMC Communications Ltd / Pelham PR (+44 20 3178 4418)Elena DobsonE-mail: Elena.dobson@wmccommunications.com Forward-looking statements This document includes statements that are, or may be deemed to be, ''forward-looking statements''. These forward-looking statements can be identifiedby the use of forward-looking terminology, including, but not limited to, theterms ''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'', ''may'', ''target'', ''will'', or ''should'' or, in each case, their negative orother variations or comparable terminology, or by discussions of strategy,plans, objectives, goals, future events or intentions. These forward-lookingstatements include all matters that are not historical facts. They include, butare not limited to, statements regarding the Company's intentions, beliefs andstatements of current expectations concerning, amongst other things, theCompany's results of operations, financial condition, liquidity, prospects,growth, potential acquisitions, strategies and as to the industries in which theCompany operates. By their nature, forward-looking statements involve risk anduncertainty because they relate to future events and circumstances that may ormay not occur. Forward-looking statements are not guarantees of futureperformance and the actual results of the Company's operations, financialcondition and liquidity and the development of the country and the industries inwhich the Company operates may differ materially from those described in, orsuggested by, the forward-looking statements contained in this document. TheCompany does not intend, and does not assume any obligation, to update or reviseany forward-looking statements or industry information set out in this document,whether as a result of new information, future events or otherwise. The Companydoes not make any representation, warranty or prediction that the resultsanticipated by such forward-looking statements will be achieved. -------------------------- (1) Amounts shown in US dollars ("US$" or " $") have been translated solely forthe convenience of the reader at the average rate over the applicable period forinformation derived from the consolidated statements of income and consolidatedstatements of cash flows and the end of the period rate for information derivedfrom the consolidated balance sheets. (2) Rounding adjustments have been made in calculating some of the financialinformation included in the Appendix. As a result, figures shown as totals insome tables may not be exact arithmetic aggregations of the figures that precedethem. This information is provided by RNS The company news service from the London Stock Exchange