Annual Financial Report 2015

KMG EP. Annual report 2015

CONTENTS:

3. Strategic reporting

3. About the Company

3. Company background

3. Mission and strategy

4. Financial and operational highlights

4. Ownership structure (schematic)

5. Chairman's statement

6. Competitive advantages and industry position

7. Share listings

7. Evaluations of independent observers

9. Overview of the Kazakhstan oil & gas sector

11. Milestones of the year

14. Chief Executive's Statement

15. Independent Directors' Statement

19. Operational activities overview

19. Interview with Chief Executive

21. Oil Production

22. Capital expenditures

23. Supplies for export and domestic markets

24. Programme of business transformation

25. Extension of subsoil use contracts

26. Reserves

27. Exploration

29. Operating and financial review

57. Risk factors

64. Social policy

61. Social responsibility

65. Our people

67. Health, safety and environment

72. Corporate Governance

89. Consolidated Financial Statements

133. Information for Shareholders

134. Contact details

136. Reference Information

STRATEGIC REPORTING

ABOUT THE COMPANY

Company background

JSC "KazMunaiGas Exploration Production" ("KMG EP" or "The Company") was formed in March 2004 through the merger of JSC "Ozenmunaigas" (OMG) and JSC "Embamunaigas" (EMG).

The Company retained its position as one of the top three oil producers in Kazakhstan last year as can be seen from the 2015 results. Last year the Company produced 12,351,000 tonnes of crude oil (251,000 bopd) including its share in production from LLP JV "Kazgermunai (KGM), CCEL and PetroKazakhstan Inc. (PKI). The volume of KMG EP's proven and probable reserves, as of year-end 2015, audited by DeGolyer and McNaughton, increased to around 152 million tonnes (1,115 billion barrels), some 15% more than at year-end 2014. This was mainly due to bringing more probable and possible reserves into development and through more efficient production techniques, including well drilling.

The shares of the Company are listed on the Kazakhstan stock market (KASE) and its global depositary receipts are traded on the London Stock Market (LSE).

Mission and Strategy

Mission The Mission of KMG EP is to produce hydrocarbons efficiently and rationally with the aim of maximizing benefits to shareholders of the Company, creating long-term economic and social benefits in the regions of operation and also to assist in realizing the potential of every employee.

Strategy Since listing on the London and Kazakhstan Stock Exchanges in 2006 the activities of KMG EP have been pursued in accordance with the strategy approved by its shareholders. After successfully meeting medium term targets in 2006-2009, the longer term Strategy 2020 was adopted in 2010.

The Company's strategy for operational fields is geared towards supporting levels of production, working towards optimizing costs, raising the efficiency of business and technological processes, the increase of production and raising the recovery factors of the producing reservoirs. All these measures are geared towards optimization of production processes.

KMG EP is focused on realizing the maximum potential of the Company. Further development will take place in line with good oil field practices and established market trends and will be in the interests of the Company's shareholders and involves searching for opportunities to raise the level of resources in line with delivery of the Company's strategy.Click on, or paste the following link into your web browser, to view the associated PDF document.http://www.rns-pdf.londonstockexchange.com/rns/0862X_-2016-5-3.pdf