10th Dec 2007 07:40
JSC KazMunaiGas Exploration Prod10 December 2007 PRESS - RELEASE JSC KazMunaiGas Exploration Production announces its financial results for the 9 months ended September 30, 2007 Astana, 10 December 2007, JSC KazMunaiGas Exploration Production ("KMG EP" or "the Company"), has today released its unaudited, condensed consolidated interimfinancial results for the 9 months ended 30 September 2007 reviewed by Ernst &Young. • An increase of crude oil production, including the Company's share in production of JV Kazgermunai LLP ("Kazgermunai"), by 641 thousand tonnes to 7,763 thousand tonnes o Average daily production of over 209.93 kbopd • 52.6% growth in net income to 103.5 bn Tenge (US$840m)(1) o 25.1bn Tenge (US$252m) growth in revenues o 8.9bn Tenge ($72m) increase in net income contributed from the Company's 50% share of Kazgermunai • 291.1bn Tenge ($2.4bn) of net cash as of 30 September 2007 o On 28 November KMG EP received $300m in dividends from Kazgermunai Commenting on the financial results for the 9 months of 2007, Askar Balzhanov,the CEO of the Company, said: "The strength of our financial results for thefirst nine months of the year reflects the ability of our strategy to deliverstrong returns for shareholders. We have seen an immediate financial andproduction benefit from the acquisition of our stake in Kazgermunai, and weexpect the growth trend enjoyed during the first nine months of the year tocontinue going forward." Production Highlights The Company produced 7,763 thousand tonnes (209.93 kbopd) of crude oil that was641 thousand tonnes more than for the 9 months of 2006. The increase wasprimarily due to the acquisition of a 50% stake in Kazgermunai completed on 24April 2007. In the period of 159 days between the acquisition date and 30September 2007 the Company's share in Kazgermunai production was 656 thousandtonnes (31.43 kbopd). Excluding Kazgermunai, for the 9 months of 2007 the Company's production was inline with the production plan, at 7,108 thousand tonnes of crude oil (191.62kbopd), approximately the same level as for the 9 months of 2006. For the 9months of 2007, excluding oil produced by Kazgermunai, the Company supplied7,180 thousand tonnes of crude oil (193.56 kbopd) to the market, including 5,561thousand tonnes (149.91 kbopd) supplied to export markets, an increase of 11.5%over the 9 months of 2006. Financial Highlights Profit after tax (net income) for the 9 months of 2007 was 103.5bn Tenge($840m). This is 52.6% higher than for the 9 months of 2006. The net incomeincrease is attributable to higher prices received for crude, a favorablemovement in the export to domestic sales mix, inclusion of Kazgermunai results,increased financial income and some decrease in the effective tax rate. Thesepositive factors were partially offset by increases in foreign exchange loss andoperating expenses. The latter was driven primarily by the non recurrence of theone off release of a provision for an environmental fine of 11.4 bn Tenge in2006. KMG EP's revenues for the 9 months of 2007 increased by 8.0% to 338.8bn Tenge($2,751m). This was primarily due to an increase in sales volume of 7.9% and2.5% increase in the average realised price from 43,894 Tenge per tonne ($48.37per bbl) to 46,184 Tenge per tonne ($51.87 per bbl). For the 9 months of 2007exports accounted for 77% of the sales in volume terms (versus 71% for the 9months of 2006). In US dollar terms, revenues increased by 10.1 % year-on-year. Operating expenses were 152.3bn Tenge ($1,236m) for the 9 months of 2007, 5.6bnTenge higher than for the 9 months of 2006, net of the reversal of theenvironmental fine in 2006. The increase in operating expenses was drivenprimarily by an increase in transportation costs associated with export, anincrease in employee benefits expenses, a growth in reserves for fines andpenalties and an increase of depreciation, depletion and amortisation. Profitfrom operations was 186.6bn Tenge ($1,515m) for the 9 months of 2007, 19.5bnTenge up in comparison with the 9 months of 2006, adjusted for the environmentalfine reversal. Operating cash flow was 109.3bn Tenge ($888m) for the 9 months of 2007,approximately 67.7% higher than for the 9 months of 2006. During the 9 months of2007 the Company acquired Kazgermunai for the amount of 118.3bn Tenge ($960m)that was recognised as cash outflow used in investing activities. Purchases of property, plant and equipment (capital expenditures, not includingpurchases of intangible assets, as per Cash Flow Statement) for the 9 months of2007 were 28.4bn Tenge ($231m) which is 20.0% lower than the 9 months of 2006.KMG EP's full year capital expenditures in 2007, calculated on a cash basis, areexpected to decrease to 40bn Tenge compared to 2006 actual capital expendituresof 49.3bn Tenge. Dividends paid to the Company's shareholders for the 9 months of 2007 were35.6bn Tenge ($289m). Net cash (cash, cash equivalents and financial assets net of borrowings) at theend of the 9 months of 2007 amounted to 290.8 bn Tenge ($2,404m) compared to332.1 bn Tenge ($2,615m) at the end of 2006. Impact of acquisition of a 50% stake in Kazgermunai On 24 April 2007 KMG EP finalised the acquisition of a 50% stake in Kazgermunai.KMG EP recorded 8.9bn Tenge ($72m) in its net income for the 9 months ended 30September 2007 representing its 50% share of Kazgermunai 31.6bn Tenge net incomefor the corresponding period adjusted for non-cash fair value differencesreflecting accounting of Kazgermunai acquisition. During the first 9 months of 2007, Kazgermunai produced 2,240 thousand tonnes ofoil (62.52 kbopd), 5.6% up compared to the first 9 months of 2006. On 28 November 2007 KMG EP received $300m in dividends from Kazgermunai. *** The full condensed consolidated interim financial information for the 9 monthsended 30 September 2007 (unaudited) and the notes thereto are available at theCompany's website (www.kmgep.kz ). Appendix Key operating and financial indicators of KMG EP for the first 9 months of 20072 Summary Operating Data, excluding Kazgermunai Three months ended September 30, 9 months ended September 30,thousand tonnes 2007 2006 2007 2006 Crude oil production 2,447 2,472 7,108 7,123Crude oil exports 1,835 1,694 5,561 4,989Crude oil domestic 581 679 1,619 2,012 Summary of Condensed Consolidated Statements of Income Three months ended September 30, 9 months ended September 30,Tenge Millions 2007 unaudited 2006 unaudited 2007 unaudited 2006 unaudited Revenue 128,899 111,001 338,838 313,725Operating expenses (52,353) (52,554) (152,253) (135,251)Profit from operations 76,546 58,448 186,586 178,474Finance income (expense) 4,045 322 8,765 (4,135)Gain (loss) on disposal of subsidiaries 644 - 860 (76)Share of result of associates 6,233 (255) 8,893 (402)Profit before tax and minority interest 87,468 58,515 205,104 173,861Income tax expense (42,083) (40,911) (101,624) (106,038)Profit for the period 45,386 17,604 103,480 67,823 Attributable to:Equity holders of the Company 45,386 17,604 103,480 67,823Minority interest - - - - Summary of Consolidated Statements of Cash Flows 9 months ended September 30,Tenge Millions 2007 2006 unaudited unaudited Net cash generated from operating activities 109,322 65,174Cash flows from investing activitiesPurchases of property, plant and equipment (PPE) (28,438) (36,250)Sale of held-to-maturity and (25,010) (98,146)available-for-sale financial assets, netDisposal of subsidiaries, net of cash disposed 10,347 3,645Purchases of in a joint venture (118,713) - Loan repayments received from related parties 97,440 10,641Interest received and other 12,733 (29,404)Net cash provided used in investing activities (51,641) (149,515)Proceeds from borrowings 1,995 101,629Repayment of borrowings (8,136) (1,628)Dividends paid to Company's shareholders (35,560) (39)Interest paid and other (2,606) (2,015)Net cash used in financing activities (44,307) 97,947 Summary of Condensed Consolidated Balance Sheets Tenge Millions September 30, December 31, 2007 2006 unaudited auditedASSETSNon-current assets 395,140 376,824Current assets 394,658 358,114Total assets 789,798 734,937EQUITY Equity holders of the Company 593,714 525,752Minority interest - 6Total equity 593,714 525,758LIABILITIESNon-current liabilities 78,861 100,844Current liabilities 117,223 108,336Total liabilities 196,084 209,180TOTAL EQUITY AND LIABILITIES 789,798 734,937 The following tables show the Company's realised sales prices adjusted for oiland oil products transportation and other expenses for the 9 months endedSeptember 30, 2007 and 2006. Netback analysis*, for the 9 months of 2007 CPC UAS Domestic Total Sales volume, thousand tonnes 1,577 3,984 1,619 7,180Estimated market quote, $/bbl 67.75 64.09 n/a n/aAverage realized price, $/bbl 64.49 60.31 18.81 51.87Adjusted realized price, net of 57.83 54.14 18.00 46.80transportation and selling expenses, $/bbl Netback analysis*, for the 9 months of 2006 CPC UAS Domestic Total Sales volume, thousand tonnes 1,141 3,848 2,012 7,002Estimated market quote, $/bbl 66.82 62.58 n/a n/aAverage realized price, $/bbl 63.98 58.88 19.42 48.37Adjusted realized price, net of 58.01 52.83 18.16 43.72transportation and selling expenses, $/bbl * Excluding gas products, other sales and services Reference information 9 months ended September 30, 2007 2006 Average exchange rate $/KZT* 123.15 125.51Exchange rate $/KZT as of 31 December 2006* 127.00Exchange rate $/KZT as of 30 September 2007* 120.96 *Source: The National Bank of Kazakhstan, the average exchange rates for theperiods 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 7.62 - ENDS - Notes to Editors KMG EP is one of the largest Kazakh oil and gas producing company with over 9.5mmt (192 kbopd) of crude production in 2006 and 203.2 mmt (1.5 billion bbl) ofproved and probable reserves at the end of 2006. In 2007 the Company announcedacquisition of 50% stakes in Kazgermunai and Karazhanbasmunai that made theCompany the 2nd oil producer in Kazakhstan. The Company's shares are listed onKazakhstan Stock Exchange and the GDRs are listed on London Stock Exchange. TheCompany raised approximately US$2 billion in its IPO in September of 2006. For further details please contact us at: KMG EP, Public Relations (+7 717 2 977 908, +7 7172 977 924) Lyazzat Kokkozova E-mail: [email protected] KMG EP, Investor Relations (+7 7172 975433) Alexander Gladyshev E-mail: [email protected] WMC Communications Ltd (+44 203 178 44 18) 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 theuse 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 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 ExchangeRelated Shares:
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