13th May 2010 08:09
PRESS - RELEASE
JSC KazMunaiGas Exploration Production
1Q 2010 Financial results
Astana, May 13, 2010. JSC KazMunaiGas Exploration Production ("KMG EP" or "the Company") released its condensed consolidated interim financial statements for the three months ended March 31, 2010.
·; Operating profit increased by 174% to 54.6bn Tenge (US$370m) [1] compared to the first three months of 2009, mainly due to higher oil prices.
·; In the first three months of 2010 KMG EP made a profit of 51.7bn Tenge (US$350m) and earnings per share were 708 Tenge (US$0.8 per GDR).
·; Average Brent price in the first three months of 2010 increased by 72% compared to same period of 2009, from US$44 per barrel to US$76 per barrel.
Commenting on the financial results for the first three months of 2010, Kenzhebek Ibrashev, CEO of KMG EP, said: "Overall the Company has strong results this quarter, despite production setbacks related to the industrial action at Uzenmunaigas. There were significant advancements in operating profit, helped by increased oil prices, and increased contribution to the results from the Company's strategic investments in Kazgermunai (KGM), CCEL (Karazhanbasmunai) and PetroKazakhstan Inc. (PKI). Going forward, KMG EP will continue to strengthen the production line at current operations and grow through strategic acquisitions."
Production Highlights
In the first three months of 2010 the Company produced 2,085 thousand tonnes (171kbopd) of crude oil from its Uzen and Emba fields, 2% less than in the same period of 2009. The decline in production was mainly caused by the failure to perform well service operations and oilfield equipment repair on time amid an industrial action at Uzenmunaigas over the period from March 4 through March 18.
Consolidated production was 3,062 thousand tonnes (252kbopd) of crude oil, which is 319 thousand tonnes or 12% higher than in the same period of 2009. The increase is mainly due to the addition of 366 thousand tonnes (32kbopd) as a result of the acquisition of a 33% stake in PKI[2] in December 2009.
The Company supplied 2,078 thousand tonnes (170kbopd) of crude oil, excluding the share in supply from Kazgermunai, CCEL and PKI. Of this amount, 1,717 thousand tonnes (140kbopd) of crude oil were exported; 337 thousand tonnes (28kbopd) of crude oil and 24 thousand tonnes (2kbopd) of refined products in oil equivalent were supplied to the domestic market.
The Company's share in sales volumes from Kazgermunai, CCEL and PKI2, including re-sale of crude oil purchased by PKI from third parties was 1,117 thousand tonnes (93kbopd) of crude oil, including 768 thousand tonnes (64kbopd) supplied for export (69% of sales).
Financial Highlights
Profit After Tax
Profit after tax (net income) for the first three months of 2010 was 51.7bn Tenge (US$350m). This represents a 52% decrease from the corresponding period in 2009 which included a large foreign exchange gain made in 2009 as a result of Tenge devaluation, not recurring in 2010.
Revenue
Revenue for the first three months of 2010 increased by 76% to 146bn Tenge (US$989m) compared to the same period in 2009. This was due to an 83% increase in the average realised price per tonne, from 37,680 Tenge (US$37.53 per bbl) to 69,022 Tenge (US$64.64 per bbl) and a 2% reduction in sales volume. In US dollar terms, revenues increased by 65%.
Operating Expenses
Operating expenses were 91.4bn Tenge (US$619m) for the first three months of 2010, 45% higher compared to the same period in 2009. A significant part of this opex increase is due to higher rent and mineral extraction taxes (MET) resulting from the increased oil price. Excluding rent tax and MET expenses, operating expenses in the first three months of 2010 increased by 8% in Tenge compared to the same period of 2009. This was driven by an increase in repairs and maintenance expenses, social projects, payroll and energy expenses partly offset by decrease in transportation and materials expenses.
Growth in repairs and maintenance expenses was due to increased number of repaired wells and higher repair cost per well. Growth in social projects expenses reflects increased financing of projects in Mangistau region. Payroll expenses increase reflects salary indexation from 1 January 2010. Following the industrial action in March 2010 the Company is currently considering a further salary increase at the production units in the near future. Growth in energy expenses was mainly caused by increase in energy tariffs by 58% in February 2010 by AtyrauZharyk JSC, the main supplier of Embamunaigas.
In US dollar terms operating expenses per barrel excluding taxes increased by 4% compared to the same period of 2009 and increased by 6% versus the fourth quarter of 2009.
Cash Flow
Operating cash flow for the first three months of 2010 was 9.2bn Tenge (US$62m), which is 82% less than in the same period of 2009. The key reason for the decline was large foreign exchange gain in the first three months of 2009, not recurring in 2010, as well as an increase in working capital in 1Q10.
Capex
Purchases of property, plant and equipment (capital expenditure, not including purchases of intangible assets, as per Cash Flow Statement) in the first three months of 2010 were 10.6bn Tenge (US$72m) compared to 4.7bn Tenge (US$34m) in the same period of 2009, representing 126% increase. In US dollar terms, capital expenditure increased by 113% according to the approved capital expenditures budgeted for 2010.
Cash and debt
Net cash position[3] at 31 March 2010 amounted to 518.1bn Tenge (US$3.5bn) compared to 505.0bn Tenge (US$3.4bn) as at 31 December 2009.
Cash, cash equivalents and financial assets at 31 March 2010 were 656bn Tenge (US$4.4bn).
As at 31 March 2010, 71% of cash and deposits with banks were denominated in USD and 29% were denominated in Tenge. Cash and deposits with two of the largest Kazakh banks, Halyk and Kazkommertsbank, account for approximately 73% of the financial assets as at 31 March 2010. Interest accrued on deposits with banks for the first three months of 2010 was 9.8bn Tenge (US$67m).
Borrowings and obligations were 138bn Tenge (US$938m) as at 31 March 2010 compared to 138bn Tenge (US$928m) as at 31 December 2010. Borrowings include 129bn Tenge (US$880m) of non-recourse debt of KMG PKI Finance related to the acquisition of the 33% stake in PKI.
Fines and Penalties
As a result of the tax audit covering the period of 2004 - 2005, the tax authorities assessed additional amounts of 32.0bn Tenge (US$213m) including a principal of 16.2bn Tenge (US$107m) with the balance consisting of fines and penalties. The Company's management maintains that its interpretation of the tax legislation was correct. However, as the outcome of the dispute remains uncertain, the Company made appropriate provisions in 2009. As at 31 March 2010 the accrued balance of provision was 11.9 bn Tenge (US$81m).
Contribution from strategic acquisitions
In the first three months of 2010 the Company recorded a 6.8bn Tenge (US$46m) gain from its share in Kazgermunai. This amount represents 50% of Kazgermunai's net profit of 9.0bn Tenge (US$61m) and 1.2bn Tenge (US$8m) deferred income tax benefit adjusted for 2.6bn Tenge (US$17m) from the effect of purchase price premium amortization and 0.8bn Tenge (US$6m) deferred income tax amortisation. The financial results of Kazgermunai in the first three months of 2010 were primarily affected by the higher oil price compared to the corresponding period of 2009.
On 28 April 2010 the Company received US$150m in dividends from Kazgermunai. From the date of the acquisition, dividends received have amounted to US$800m.
In the first three months of 2010 KMG EP recorded a 5.5bn Tenge (US$37m) gain from its share in PKI. This amount represents 33% of PKI's net profit of 9.1bn Tenge (US$62m) adjusted for 3.6bn Tenge (US$25m) from the effect of purchase price premium amortization.
On 24 February 2010, KMG EP received dividends from PKI in the amount of US$16.5m. On 6 May 2010, the Company also received US$66m in dividends from PKI.
The Company has recognised the amount of 21.9bn Tenge (US$149m) as a receivable from CCEL, a jointly controlled entity. The Company has accrued 0.8bn Tenge (US$5m) of interest income for the first three months of 2010 related to the US$26.87m annual priority return from CCEL.
***
The condensed consolidated interim financial statements for the three months ended March 31, 2010 are available on the Company's website (www.kmgep.kz).
APPENDIX[4]
Condensed Consolidated Interim Statement of Comprehensive Income (unaudited)
Tenge (000s)
|
|
|
Three month ended March 31, |
|
|
|
|
2010 |
2009 |
|
|
|
|
|
|
Revenue |
|
146,056,663 |
83,155,102 |
|
Operating expenses |
|
(91,428,076) |
(63,190,478) |
|
Profit from operations |
|
54,628,587 |
19,964,624 |
|
Finance income |
|
10,690,463 |
11,999,692 |
|
Finance costs |
|
(1,964,536) |
(509,648) |
|
Foreign exchange (loss)/gain |
|
(4,239,971) |
101,571,495 |
|
Share of result of associates and joint ventures |
|
12,131,263 |
(1,050,513) |
|
Profit before tax |
|
71,245,806 |
131,975,650 |
|
Income tax expense |
|
(19,566,771) |
(23,964,065) |
|
Profit for the period |
|
51,679,035 |
108,011,585 |
|
|
|
|
|
|
Exchange difference on translating foreign operations |
|
(681,195) |
14,737,669 |
|
Other comprehensive income for the period, net of tax |
|
(681,195) |
14,737,669 |
|
Total comprehensive income for the period, net of tax |
|
50,997,840 |
122,749,254 |
|
EARNINGS PER SHARE |
|
|
|
|
Basic |
|
0.71 |
1.46 |
|
Diluted |
|
0.69 |
1.45 |
|
|
|
|
|
Condensed Consolidated Interim Statement of Financial Position
Tenge (000s)
|
|
|
March 31, 2010
|
December 31, 2009
|
|
|
|
Unaudited
|
Audited
|
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant and equipment
|
|
259,998,454
|
257,739,303
|
|
Other financial assets
|
|
871,673
|
797,931
|
|
Receivable from jointly controlled entity
|
|
19,860,060
|
20,268,928
|
|
Intangible assets
|
|
2,194,033
|
2,276,745
|
|
Investments in associates and joint ventures
|
|
262,432,686
|
254,147,918
|
|
Deferred tax asset
|
|
9,642,770
|
10,265,537
|
|
Other assets
|
|
14,498,387
|
7,291,870
|
|
Total non-current assets
|
|
569,498,063
|
552,788,232
|
|
Current assets
|
|
|
|
|
Inventories
|
|
15,431,525
|
15,525,704
|
|
Taxes prepaid and VAT recoverable
|
|
10,273,911
|
9,969,965
|
|
Prepaid and deferred expenses
|
|
24,060,481
|
21,595,622
|
|
Trade and other receivables
|
|
62,236,229
|
49,710,916
|
|
Receivable from jointly controlled entity
|
|
2,079,079
|
1,082,100
|
|
Other financial assets
|
|
546,934,951
|
534,288,078
|
|
Cash and cash equivalents
|
|
108,266,612
|
107,626,368
|
|
Total current assets
|
|
769,282,788
|
739,798,753
|
|
Total assets
|
|
1,338,780,851
|
1,292,586,985
|
|
EQUITY
|
|
|
|
|
Share capital
|
|
233,919,462
|
238,546,914
|
|
Other capital reserves
|
|
1,519,123
|
1,474,089
|
|
Retained earnings
|
|
799,499,786
|
747,820,751
|
|
Other components of equity
|
|
12,256,200
|
12,937,395
|
|
Total equity
|
|
1,047,194,571
|
1,000,779,149
|
|
LIABILITIES
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Borrowings
|
|
91,224,139
|
92,023,143
|
|
Provisions
|
|
36,397,786
|
35,319,443
|
|
Total non-current liabilities
|
|
127,621,925
|
127,342,586
|
|
Current liabilities
|
|
|
|
|
Borrowings
|
|
46,719,993
|
45,650,017
|
|
Income taxes payable
|
|
22,988,775
|
21,138,596
|
|
Mineral extraction and rent tax payable
|
|
39,643,852
|
36,177,299
|
|
Trade and other payables
|
|
26,834,717
|
34,402,259
|
|
Provisions
|
|
27,777,018
|
27,097,079
|
|
Total current liabilities
|
|
163,964,355
|
164,465,250
|
|
Total liabilities
|
|
291,586,280
|
291,807,836
|
|
Total liabilities and equity
|
|
1,338,780,851
|
1,292,586,985
|
Condensed Consolidated Interim Statement of Cash Flows (unaudited)
Tenge (000s)
|
|
|
Three months ended March 31,
|
|
|
|
|
2010
|
2009
|
|
Cash flows from operating activities
|
|
|
|
|
Profit before tax
|
|
71,245,806
|
131,975,650
|
|
Adjustments to add (deduct) non-cash items
|
|
|
|
|
Depreciation, depletion and amortisation
|
|
7,947,791
|
7,711,185
|
|
Share of result of associates and joint ventures
|
|
(12,131,263)
|
1,050,513
|
|
Settlement of crude oil under the terms of a pre-export financing agreement
|
|
−
|
(3,378,225)
|
|
Loss on disposal of property, plant and equipment (PPE)
|
|
26,637
|
297,249
|
|
Impairment of PPE
|
|
353,693
|
632
|
|
Recognition of share-based payments
|
|
39,402
|
73,439
|
|
Unrealised foreign exchange gain
|
|
(8,828,020)
|
(45,879,714)
|
|
Other non-cash expenses
|
|
289,589
|
2,852,536
|
|
Add finance costs
|
|
1,964,536
|
509,648
|
|
Deduct finance income relating to investing activity
|
|
(10,690,463)
|
(11,999,692)
|
|
Working capital adjustments
|
|
|
|
|
Change in other assets
|
|
(7,206,517)
|
(725,879)
|
|
Change in inventories
|
|
57,639
|
(1,191,392)
|
|
Change in taxes prepaid and VAT recoverable
|
|
(303,946)
|
(523,139)
|
|
Change in prepaid and deferred expenses
|
|
(2,502,054)
|
(1,685,265)
|
|
Change in trade and other receivables
|
|
(12,691,429)
|
(14,676,308)
|
|
Change in mineral extraction and rent tax payable
|
|
3,466,553
|
15,372,874
|
|
Change in trade and other payables
|
|
(4,674,571)
|
(8,963,172)
|
|
Change in provisions
|
|
553,209
|
−
|
|
Income tax paid
|
|
(17,716,592)
|
(18,464,416)
|
|
Net cash generated from operating activities
|
|
9,200,000
|
52,356,529
|
|
Cash flows from investing activities
|
|
|
|
|
Purchases of PPE
|
|
(10,597,636)
|
(4,691,118)
|
|
Proceeds from sale of PPE
|
|
18,046
|
628,831
|
|
Contribution to the capital of the joint venture
|
|
−
|
(580,044)
|
|
Dividends received from joint ventures and associates
|
|
2,434,080
|
−
|
|
Sale (purchases) of financial assets held-to-maturity, net
|
|
2,005,033
|
(61,409,660)
|
|
Interest received
|
|
2,506,835
|
2,726,365
|
|
Net cash used in investing activities
|
|
(3,633,642)
|
(63,325,626)
|
|
Cash flows from financing activities
|
|
|
|
|
Purchase of treasury shares
|
|
(4,640,640)
|
(6,609,944)
|
|
Repayment of borrowings
|
|
(231,682)
|
(1,865,698)
|
|
Dividends paid to Company’s shareholders
|
|
(38,261)
|
(32,917)
|
|
Interest paid
|
|
−
|
(52,399)
|
|
Net cash used in financing activities
|
|
(4,910,583)
|
(8,560,958)
|
|
Net change in cash and cash equivalents
|
|
655,775
|
(19,530,055)
|
|
Cash and cash equivalents at beginning of the period
|
|
107,626,368
|
285,131,743
|
|
Exchange loss (gain) on cash and cash equivalents
|
|
(15,531)
|
1,242,408
|
|
Cash and cash equivalents at end of the period
|
|
108,266,612
|
266,844,096
|
The following tables show the Company's realised sales prices adjusted for oil and oil products transportation and other expenses for the three months ended March 31, 2010 and 2009.
|
|
2010 |
||||||
|
|
UAS |
CPC |
Domestic |
Average |
|||
|
|
(US$/bbl) |
||||||
|
Benchmark end-market quote[5] |
76.36 |
76.36 |
- |
- |
|||
|
Sales price |
73.38 |
75.62 |
20.17 |
65.03 |
|||
|
Quality bank |
- |
(5.99) |
- |
(1.62) |
|||
|
Premium of bbl difference[6] |
(0.17) |
5.91 |
- |
1.51 |
|||
|
Realised price[7] |
73.21 |
75.55 |
20.17 |
64.92 |
|||
|
Rental tax |
12.08 |
12.04 |
- |
9.99 |
|||
|
Transportation |
7.70 |
6.76 |
1.58 |
6.37 |
|||
|
Sales commissions |
0.07 |
0.07 |
- |
0.06 |
|||
|
Adjusted realised price |
53.36 |
56.67 |
18.59 |
48.50 |
|||
|
|
|
||||||
|
|
2009 |
||||||
|
|
UAS |
CPC |
Domestic |
Average |
|||
|
|
(US$/bbl) |
||||||
|
Benchmark end-market quote3 |
42.28 |
44.32 |
- |
- |
|||
|
Sales price5 |
41.72 |
44.04 |
17.52 |
38.56 |
|||
|
Quality bank |
- |
(7.26) |
- |
(2.22) |
|||
|
Premium of bbl difference4 |
0.13 |
3.64 |
- |
1.04 |
|||
|
Realised price5 |
41.85 |
40.42 |
16.05 |
37.38 |
|||
|
Rental tax |
3.23 |
3.23 |
- |
2.69 |
|||
|
Transportation |
6.19 |
7.72 |
1.47 |
5.87 |
|||
|
Sales commissions |
0.06 |
0.06 |
- |
0.05 |
|||
|
Adjusted realised price |
32.37 |
29.41 |
16.05 |
28.77 |
|||
|
Reference information
|
For the three months ended March 31, |
|
|
2010 |
2009 |
|
|
Average exchange rate US$/KZT |
147.70 |
138.97 |
|
US$/KZT at balance sheet date |
147.11 |
151.40 |
|
Coefficient barrels to tones for KMG EP crude |
7.36 |
|
Coefficient barrels to tones for Kazgermunai crude |
7.70 |
|
Coefficient barrels to tones for CCEL crude |
6.68 |
|
Coefficient barrels to tones for PKI crude |
7.75 |
- ENDS -
NOTES TO EDITORS
KMG EP is among the top three Kazakh oil and gas producers. The overall production in 2009 was 11.5mmt (an average of 232kbopd) of crude oil, including the Company's share in Kazgermunai and CCEL. The total volume of proved and probable reserves, as at the end of 2009 was 234mt (1.7bn bbl), excluding the relevant proportion of reserves at Kazgermunai, CCEL and PKI; including the share of reserves from Kazgermunai, CCEL and PKI the 2P reserves were about 2.2 bn barrels. The Company's shares are listed on the Kazakhstan Stock Exchange and the GDRs are listed on The London Stock Exchange. The Company raised over US$2bn in its IPO in September 2006. In July 2009, the International rating agency Standard & Poor's (S&P) confirmed KMG EP's "BB+" corporate credit rating and assigned the Company a "GAMMA-6" rate.
For further details please contact us at:
«KMG EP». Public Relations (+7 7172 97 7600) Daulet ZhumadilE-mail: [email protected]
«KMG EP». Investor Relations (+7 7172 97 5433) Asel Kaliyeva E-mail: [email protected]
Pelham PR (+44207 337 15 17) Elena Dobson E-mail: [email protected]
Forward-looking statements
This document includes statements that are. or may be deemed to be. ''forward-looking statements''. These forward-looking statements can be identified by the use of forward-looking terminology. including. but not limited to. the terms ''believes''. ''estimates''. ''anticipates''. ''expects''. ''intends''. ''may''. ''target''. ''will''. or ''should'' or. in each case. their negative or other variations or comparable terminology. or by discussions of strategy. plans. objectives. goals. future events or intentions. These forward-looking statements include all matters that are not historical facts. They include. but are not limited to. statements regarding the Company's intentions. beliefs and statements of current expectations concerning. amongst other things. the Company's results of operations. financial condition. liquidity. prospects. growth. potential acquisitions. strategies and as to the industries in which the Company operates. By their nature. forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur. Forward-looking statements are not guarantees of future performance and the actual results of the Company's operations. financial condition and liquidity and the development of the country and the industries in which the Company operates may differ materially from those described in. or suggested by. the forward-looking statements contained in this document. The Company does not intend. and does not assume any obligation. to update or revise any forward-looking statements or industry information set out in this document. whether as a result of new information. future events or otherwise. The Company does not make any representation. warranty or prediction that the results anticipated by such forward-looking statements will be achieved.
[1] Amounts shown in US dollars ("US$" or " $") have been translated solely for the convenience of the reader at the average rate over the applicable period for information derived from the consolidated statements of income and consolidated statements of cash flows and the end of the period rate for information derived from the consolidated balance sheets.
[2] Excluding TurgaiPetroleum as per accounting information provided by PKI
[3] Cash, cash equivalents and other financial assets less borrowings.
[4] Rounding adjustments have been made in calculating some of the financial information included in the Appendix. As a result, figures shown as total in some tables may not be exact arithmetic aggregations of the figures that precede them.
[5] The following quoted prices are used as benchmarks:
[6] Coefficient of 7,23 barrels per tonne is used
[7] Average realized price by financial report converted at 7.23 barrels per tonne of crude oil
Related Shares:
Kazmunaigaz Exploration