14th May 2008 08:00
PRESS - RELEASE
JSC KazMunaiGas Exploration Production announces
its financial results for the three months ended March 31, 2008
Astana, 14 May 2008, JSC KazMunaiGas Exploration Production ("KMG EP" or "the company"), announced today its unaudited, condensed consolidated interim financial results for the three months ended 31 March 2008.
26.4% increase of crude oil production, including the Company's share in associates
166% growth in net income to 63.5bn Tenge (US$526.8m)
9.7bn Tenge (US$80.7m) increase in net income contributed from the Company's recent acquisitions
Commenting on the financial results for the first three months of 2008, Askar Balzhanov, the CEO of the Company, said: "A combination of acquisition-led growth, favourable market environment and stringent cost control have allowed us to achieve a record level of net income in the first quarter this year."
Production Highlights
The Company produced 2,892 thousand tonnes of crude oil (233.5kbopd). This is 604 thousand tonnes more than in the first three months of 2007, representing a 26.4% year on year increase. The increase is primarily due to the acquisition of a 50% stake in JV Kazgermunai LLP ("Kazgermunai") completed in April 2007 and a 50% stake in CITIC Canada Energy Limited ("CCEL") from CITIC Group completed in December 2007.
Excluding the Company's share in the production of the assets acquired in 2007, KMG EP's production in the first three months of 2008 was 2,304 thousand tonnes of crude oil (186.3kbopd). Based on preliminary data, in the first three months of 2008 the Company supplied 2,156 thousand tonnes of crude oil (174.3kbopd) to customers. Out of this amount, approximately 1,636 thousand tonnes (132.8kbopd) were supplied to export markets.
Financial Highlights
Profit after tax (net income) for the first three months of 2008 was 63.5bn Tenge (US$526.8m). This is 166% higher than for the first three months of 2007. The net income increase is attributable to higher crude oil prices, inclusion of Kazgermunai results, increased financial income, including the accrual of the return on investment in CCEL. These positive factors were partially offset by a reduction in sales volumes with reduced export sales and an increase in inventory.
KMG EP's revenues for the first three months of 2008 increased by 46% to 143bn Tenge (US$1,191m). This was primarily due to an increase in the average realised oil price by 67.3% from US$44.68 per bbl to US$74.94 per bbl, partly offset by the effect of the inventory build-up.
Operating expenses were 49bn Tenge (US$409m) for the first months of 2008, approximately at the same level as in the first three months of 2007.
Operating cash flow was 64.9bn Tenge (US$538m) for the first three months of 2008, approximately 167% higher than for the first three months of 2007.
Purchases of property, plant and equipment (capital expenditures, not including purchases of intangible assets, as per Cash Flow Statement) for the first three months of 2008 were 8.7bn Tenge (US$71.9m) which is 4% lower than the first three months of 2007. This indicator is subject to seasonal factors and reflects the schedule of purchasing of goods and services. The Company's capital expenditure in 2008 is expected to be 46bn Tenge (US$376 million), excluding the capital expenditure of Kazgermunai and CCEL.
Impact of acquisition of a 50% stake in Kazgermunai
On April 24, 2007 KMG EP finalised the acquisition of a 50% stake in Kazgermunai. In the first three months of 2008 the Company accrued 9.1bn Tenge (US$75.6m) as its 50% share in the 23.7bn Tenge (US$196.5m) of Kazgermunai's net income adjusted for non-cash amounts under IFRS accounting.
During the first three months of 2008, Kazgermunai produced 774 thousand tonnes of oil (64.84kbopd), 5.9% up compared to the first three months of 2007. In the first three months of 2008, crude oil exports by Kazgermunai were 86% of the sales volumes. KMG EP received US$75m in dividends from Kazgermunai in March 2008.
Impact of acquisition of a 50% stake in CCEL
On December 12, 2007 the Company completed the acquisition and received from State Alliance Holdings Limited (a holding company ultimately belonging to CITIC Group, a company listed on the Hong Kong stock exchange) a 50% participation interest in a holding company, CCEL, whose investments are involved in oil and natural gas production in western Kazakhstan, in particular from Karazhanbas field.
The Company has recognized the amount of US$150m (18,478m Tenge) as a receivable from jointly controlled entity.
KMG EP has accrued 622m Tenge (US$5.16m) in the first three months of 2008 representing one quarter of the interest portion of the US$26.2m annual priority return as interest income.
During the first three months of 2008, CCEL produced 403 thousand tonnes of oil (29.58kbopd). Crude oil exports by CCEL were 85% of its sales volumes in this period.
***
The full condensed consolidated interim financial information for the 3 months ended 31 March 2008 (unaudited) and the notes thereto are available at the Company's website (www.kmgep.kz).
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 March 31, |
||
|
thousand tonnes |
2008 |
2007 |
|
Crude oil production |
2,304 |
2,289 |
|
Crude oil exports |
1,639 |
1,935 |
|
Crude oil domestic |
520 |
455 |
Summary of Condensed Consolidated Statements of Income
|
Three months ended March 31, |
||
|
Tenge Millions |
2008 unaudited |
2007 unaudited |
|
Revenue |
143,483 |
98,184 |
|
Operating expenses |
(49,312) |
(49,169) |
|
Profit from operations |
94,171 |
49,015 |
|
Finance income (expense) |
9,731 |
1,637 |
|
Gain (loss) on disposal of subsidiaries |
- |
0 |
|
Share of result of associates |
9,050 |
(95) |
|
Profit before tax and minority interest |
112,952 |
50,558 |
|
Income tax expense |
(49,493) |
(26,710) |
|
Profit for the period |
63,459 |
23,847 |
|
Attributable to: |
||
|
Equity holders of the Company |
63,459 |
23,847 |
|
Minority interest |
- |
- |
Summary of Consolidated Statements of Cash Flows
|
Three months ended March 31, |
||
|
Tenge Millions |
2008 unaudited |
2007 unaudited |
|
Net cash generated from operating activities |
64,860 |
24,329 |
|
Cash flows from investing activities |
||
|
Purchases of property, plant and equipment (PPE) |
(8,671) |
(9,048) |
|
Proceeds from sale of PPE |
512 |
15 |
|
Purchases of intangible assets |
(5) |
(19) |
|
Dividends received from joint ventures and associates |
(9,064) |
- |
|
(Purchases) / sale of financial assets held to maturity, net |
(37,432) |
108,081 |
|
Sales (purchases) of available-for-sale financial |
6,449 |
(2,462) |
|
Interest received |
6,868 |
7,121 |
|
Net cash provided used in investing activities |
23,216 |
103,688 |
|
Net cash used in financing activities |
18 |
(1,108) |
Summary of Condensed Consolidated Balance Sheets
|
Tenge Millions |
March 31, 2008 unaudited |
December 31, 2007 audited |
|
ASSETS |
||
|
Non-current assets |
380,600 |
379,699 |
|
Current assets |
556,649 |
472,153 |
|
Total assets |
937,249 |
851,852 |
|
EQUITY |
||
|
Equity holders of the Company |
710,856 |
646,442 |
|
Minority interest |
- |
- |
|
Total equity |
710,856 |
646,442 |
|
LIABILITIES |
||
|
Non-current liabilities |
64,094 |
70,077 |
|
Current liabilities |
162,298 |
135,333 |
|
Total liabilities |
226,392 |
205,410 |
|
TOTAL EQUITY AND LIABILITIES |
937,249 |
851,852 |
The following tables show the Company's realised sales prices adjusted for oil and oil products transportation and other expenses for the full year ended December 31, 2007 and 2006.
Netback analysis*, for the first three months of 2008
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Netback analysis*, for the first three months of 2007
|
UAS |
CPC |
Other |
Total |
|
|
(US$/bbl) |
||||
|
Benchmark end-market quote |
54.11 |
58.34 |
- |
- |
|
Realized price |
49.63 |
53.68 |
18.69 |
44.68 |
|
Transportation |
6.03 |
6.48 |
0.79 |
5.14 |
|
Sales commission |
0.06 |
0.06 |
- |
0.05 |
|
Adjusted realized price |
43.54 |
47.14 |
17.90 |
39.49 |
Reference information
|
Three months ended March 31, |
||
|
2008 |
2007 |
|
|
Average exchange rate $/KZT* |
120.45 |
124.90 |
|
Exchange rate $/KZT as of 31 March 2007* |
123,84 |
|
|
Exchange rate $/KZT as of 31 March 2008* |
120.69 |
|
*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 |
7.36 |
|
Barrels to tonnes conversion ratio for Kazgermunai crude oil |
7.62 |
|
Barrels 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 (215kbopd) of crude oil production in 2007 including shares in production of Kazgermunai and CCEL, 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's shares are listed on Kazakhstan Stock Exchange and the GDRs are listed on London Stock Exchange. The Company raised approximately US$2bn in its IPO in September of 2006.
For additional information please contact:
KMG EP, Public Relations (+7 717 297 7600, +7 717 297 7924)
Zukhra Sultanova
E-mail: [email protected]
KMG EP, Investor Relations (+7 717 297 5433)
Alexander Gladyshev
E-mail: [email protected]
WMC Communications Ltd / Pelham PR (+44 20 3178 4418)
Elena Dobson
E-mail: Elena.dobson@pelhampr.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 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.
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