BoD results

PRESS RELEASE

Results of the KMG EP Board of Directors' meeting

Astana, 5 December, 2013. JSC KazMunaiGas Exploration Production ("KMG EP" or the "Company") held its regular Board of Directors ("the Board") meeting. Among the major decisions the Board approved the 2014 budgetand business plan for the period of 2014-2018.

Production

In the first eleven months of 2013 production at Ozenmunaigas (OMG) increased by 5% compared with the corresponding period of 2012. However, having considered all factors, the Board approved a new production plan at OMG for 2014 at 5.35 million tonnes (108kbopd). Embamunaigas (EMG) production plan for 2014 was kept at 2.8 million tonnes (57kbopd). The revision of production profile at OMG reflects the lower production levels during the preceding three years, including 2011 when production was hit by labour strikes at Ozenmunaigas.

By 2018 KMG EP anticipates increasing production at OMG and EMG by 3%, including an increase by 5% to 5.57 million tonnes at OMG.

The Company's share in the planned production of Kazgermunai (KGM), CCEL (CCEL), PetroKazakhstan Inc. (PKI) and Ural Oil and Gas (UOG)[1] in 2014 is estimated at 4.1 million tonnes (84kbopd) and is expected to decline gradually to 3.4 million tonnes (68kbopd) by 2018 due to natural decline of production at KGM and PKI.

Domestic oil supplies

The Company expects annual volume of oil supply to the domestic market in 2014 to be 1.9 million tonnes (38kbopd) that will be supplied to Atyrau refinery. Additional 100 thousand tonnes of oil will be processed at Atyrau refinery for the Company's own use. The budgeted price for the domestic supply is 48,000 Tenge per tonne (US$43.4 per barrel) which is 20% higher than in 2013. It is anticipated that over the period of 2015-2018 domestic oil supplies may increase up to 50% of the total sales from OMG and EMG.

Capital expenditure

The Board of Directors approved capital expenditure for 2014 at 133bn tenge (US$870m)[2]. It is expected that total investments in 2014-2018 will amount approximately to US$4.1bn, of which US$290m will be allocated to the modernisation programme. As a result, the total investments into the modernisation programme in 2012-2018 will amount to US$570m.

Following the results of exploration activities in 2011-2013 the Company has reassessed prospectivity of its existing exploration acreage. The approved business plan anticipates reduced exploration activity at the existing exploration portfolio. However, the Company reconfirms its appetite to spend up to US$300m annually in exploration activities in appearance of the perspective exploration projects.

Treasury policy

The Board has also made a decision to introduce temporary changes to the Company's Treasury Policy. The limit of cash deposited with domestic Kazakh banks will be temporarily increased to US$2.1bn (See notes to editors).

Dividends from joint ventures and associates

The Board also approved the distribution of KGM's 9M2013 net income in the form of dividends in the amount of US$150 million, of which KMG EP's share in accordance with the ownership interests will be US$75 million. Considering dividends already received, KMG EP's share in dividends from KGM in 2013 will be US$200 million.

As announced, during 9M2013 PKI has paid KMG EP US$125.4 million in dividends.

NOTES TO EDITORS

KMG EP is among the top three Kazakh oil and gas producers. The overall production in 2012 was 12.2mt (an average of 247kbopd) of crude oil, including the Company's share in Kazgermunai, CCEL and PKI. The Company's total consolidated volume of proved and probable reserves including shares in the associates, as at the end of 2012 was 204 mt (1.5bn bbl), out of which 148 mt (1.1bn bbl) relates to Ozenmunaigas and Embamunaigas. 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. The International rating agency Standard & Poor's (S&P) confirmed KMG EP's "BBB-" corporate credit rating in May 2013.

The Company's Treasury Policy provides guidelines for managing the Company's financial resources. According to the changes approved in 2010 the policy requires that the Company will deposit its cash resources with domestic Kazakh banks that have a credit rating not lower than two notches below the sovereign level of the Republic of Kazakhstan, and international banks with a credit rating of at least 'A-'. The policy would exclude several largest

Kazakh banks, which have historically held the bulk of the Company's deposits, but the Company's Board of Directors can grant exceptions to this.

For further details please contact us at:

«KMG EP». Investor Relations (+7 7172 97 5433)

Asel Kaliyeva

e-mail: [email protected]

«KMG EP». Public Relations (+7 7172 97 7915)

Yelena Pak

e-mail: [email protected] 

Bell Pottinger Pelham (+44(0)207 861 3147)

Elena Dobson

email: edobson@bell-pottinger.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.