17th Nov 2016 07:00
JSC KazMunaiGas Exploration Production
Financial Results for the first nine months of 2016
Astana, 17 November 2016. JSC KazMunaiGas Exploration Production ("KMG EP" or "the Company") announces its consolidated interim financial results for the nine months ended 30 September 2016.
· Revenue for the first nine months of 2016 was up 47% year on year and amounted to 515bn Tenge (US$1,496m[1]). This was largely a result of the switch to a processing scheme and a 76% increase in the average Tenge - US dollar exchange rate, which was partly offset by a 24% Brent price decrease.
· Net profit for the first nine months of 2016 was 76bn Tenge (US$220m) and net cash generated from operating activities was 108bn Tenge (US$314m).
· Net cash position[2] at 30 September 2016 was 1,145bn Tenge (US$3.4bn), representing an 81bn Tenge (US$240m) increase over the net cash position as of 30 June 2016.
Production
KMG EP's total crude oil production in the first nine months of 2016, including its stakes in Kazgermunai ("KGM"), CCEL ("CCEL") and PetroKazakhstan Inc. ("PKI"), amounted to 9,134,000 tonnes of crude oil (246 kbopd), down 1.2% over the same period of 2015.
Production at Ozenmunaigas JSC ("OMG") for the first nine months of 2016 increased by 2% year on year to 4,181,000 tonnes (112 kbopd). Production at Embamunaigas JSC ("EMG") increased by 1% year on year to 2,122,000 tonnes (57 kbopd). In total, OMG and EMG produced 6,303,000 tonnes (169 kbopd) of oil in the first nine months of 2016, up 1% year on year.
The Company's share in production from KGM, CCEL, and PKI for the first nine months of 2016 amounted to 2,831,000 tonnes of crude oil (77 kbopd), down 6% against the same period last year, predominantly due to reduced production at PKI.
Crude oil sales and sales of refined oil products
During the first nine months of 2016, the Company's combined sales of crude oil from OMG and EMG totaled 6,283,000 tonnes (166 kbopd), of which 60% or 3,743,000 tonnes (99 kbopd) were for export and 2,540,000 tonnes (67 kbopd) were sold to the domestic market. Additional 4,000 tonnes of oil products were sold to the domestic market but were not included in the volumes pertaining to the new independent crude oil processing scheme because they were processed before the scheme was implemented in April 2016.
Of the 2,540,000 tonnes (67 kbopd) of oil supplied by OMG and EMG to the domestic market, 1,981,000 tonnes (52 kbopd) were directed to the Atyrau Refinery (ANPZ) and 559,000 tonnes (15 kbopd) were directed to the Pavlodar Refinery (PNHZ).
In the first quarter of 2016, before the Company switched to an independent oil refining scheme, domestic supplies of crude oil amounted to 830,000 tonnes. In the second and third quarters of 2016, 1,710,000 tonnes of crude oil were supplied to the domestic market for further refining.
As previously announced, in April 2016 the Company switched to an independent oil processing scheme as part of its domestic supply obligations. Under this framework, KMG EP supplies oil directly to the Atyrau and Pavlodar refineries for processing into oil products to be sold through KazMunaiGas Refining & Marketing ("KMG RM") under an agency agreement.
Under the new processing scheme, the Company sold 1,519,000 tonnes of refined oil products in the second and third quarters of 2016.
The Company's share of KGM, CCEL, and PKI sales amounted to 2,769,000 tonnes of crude oil (75 kbopd), of which 51% or 1,416,000 tonnes (37 kbopd) were exported and 1,353,000 tonnes (38 kbopd) were sold domestically.
Net Profit for the Period
Net profit for the first nine months of 2016 was 76bn Tenge (US$220m) compared with 138bn Tenge (US$703m) in the same period of 2015. However, net profit for the first nine months of 2015 included a foreign exchange gain of 262bn Tenge (US$1,336m).
Net profit in the third quarter of 2016 was 58bn Tenge (US$170m) compared with a net profit of 0.9bn Tenge (US$3m) and 16bn Tenge (US$47m) in the first and second quarters of 2016 respectively. The increase in net profit is largely a result of the Company's switch to the new processing scheme in April 2016, as well as lower taxes related to court rulings and positive changes in tax legislation.
Revenue
The Company's revenue in the first nine months of 2016 was 515bn Tenge (US$1,496m), up 47% compared to the same period in 2015. This increase is the result of the Company's switch to the new processing scheme, as well as a 76% increase in the average Tenge - US dollar exchange rate, which was partly offset by a 24% decrease in the Brent price.
Net revenue achieved from the sale of refined oil products (net of all processing and marketing costs[3]) in 2Q-3Q 2016 was 39,859 Tenge per tonne at ANPZ and 48,433 Tenge per tonne at PNHZ.
In October 2016 the Company agreed the domestic prices for 1Q2016 at 14,421 Tenge per tonne at ANPZ and 28,384 Tenge per tonne at PNHZ. These prices are subject to final approval by the Company's Independent Non-Executive Directors.
Production Expenses
Production expenses in the first nine months of 2016 were 195bn Tenge (US$568m), up 22% compared to the same period of 2015. This was mainly due to additional expenses related to the new processing scheme, partially offset by a 5% reduction in employee benefit expenses. The Company pays a processing fee of 20,501 Tenge per tonne at ANPZ and 14,895 Tenge per tonne at PNHZ.
Employee benefit expenses were down 5% due to the absence of annual bonus provision in the first nine months of 2016 and additional actuary obligations in the 1Q 2015 of 4.8bn Tenge as a result of subsoil contracts' extensions at OMG and EMG. This was partially offset by a 7% salary indexation of production units' personnel since January 2016.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the first nine months of 2016 totaled 95bn Tenge (US$275m), up 4% year on year. This was largely a result of increased transportation expenses, partially offset by a reduction of accruals for fines and penalties.
The increase in transportation expenses resulted mainly from the 76% increase in average Tenge - US dollar exchange rate (given the Caspian Pipeline Consortium (CPC) transportation tariff is mostly US dollar denominated). In addition, domestic expenses increased because of a 21% domestic transportation tariff increase.
In the 2Q-3Q 2016, the Company accrued an agency fee of 3.6bn Tenge related to the agency agreement between the Company and KMG RM for sales of oil products. The Company expects that the annual agency fee to KMG RM will be at the level of 5.4bn Tenge in 2016.
Taxes other than on Income
Taxes, other than on income, for the first nine months of 2016 were 116bn Tenge (US$337m), down 12% year on year. This was largely due to a decline in rent tax and Mineral Extraction Tax (MET), partially offset by higher Export Customs Duty (ECD).
The increase in ECD expenses was due to increase in export volumes of crude oil by 13% and export of oil products after the Company switched to an oil processing scheme in April 2016, as well as an increase in average Tenge - US dollar exchange rate. This was partially offset by a decline of the average ECD rate to US$37 per tonne in the first nine months of 2016 compared to US$66 per tonne in the same period of the previous year.
The decrease in the average Brent price resulted in a decrease in the floating rate of rent tax and a decline in the tax base for both rent tax and MET, which was partly offset by higher average Tenge - US dollar exchange rate. In the third quarter of 2016, MET and rent tax decreased by 11.5bn Tenge and 6.3bn Tenge respectively (see below).
MET rate reduction for OMG
In September 2016, the MET rate for the OMG fields was set at 9.0% (compared to 13.0% in 2015) for 2016 on the condition that the OMG fields record losses under tax accounting for the year. The Company is currently forecasting that OMG will claim a taxable loss in its 2016 tax filing and have therefore recorded reduced MET rate for OMG at 9.0%.
This reduction in MET rate resulted in an 11.5bn Tenge decrease in taxes for the nine months of 2016, which was recorded in the third quarter of 2016. The Company expects the maximum benefit available at approximately 17bn Tenge in 2016, which may ultimately be reduced in accordance with current legislation should OMG have taxable profit for 2016.
Rent tax review for 2012-2013
The tax legislation in relation to methodology of calculating the rent tax changed in 2016. Based on these changes, and following collaboration with the tax authorities, the Company has reviewed its rent tax declarations for the period of 2012-2013. As a result, in August 2016 the Company filed a rent tax return that reduced its current rent tax payable by 6.3bn Tenge.
2006-2008 tax audit
As announced earlier, it was expected that the tax charge related to the 2006-2008 tax audit will be decreased by 5.4bn Tenge, including 4.1bn Tenge according to the decision of the Supreme Court and 1.3bn Tenge according to the decision of the Administrative Court of Astana.
In August 2016, the Supreme Court ruled to decrease the tax charge related to the 2006-2008 tax audit by 4.1bn Tenge, including 2.4bn Tenge principal (income taxes) and 1.7bn Tenge penalty. Based on the decision of the Supreme Court, in October 2016 the Administrative Court of Astana decided to decrease the administrative fine by 3.6bn Tenge. Thus, the overall decrease of the tax charge during 2016 amounted to 7.7bn Tenge.
The Company has included the reduction by 4.1bn Tenge in its financial statements for nine months of 2016. The reduction in administrative fine by 3.6bn Tenge will be recognised at the time when the decision of the Administrative Court of Astana comes into legal force.
More information related to the 2006-2008 tax audit can be found in Note 17 of the Company's financial statements.
VAT recoverable
The Company recovered 24.6bn Tenge (US$71m) in October 2016 after a positive decision was made regarding the Company's claim on VAT recoverability in an amount of 57.4bn Tenge (US$174m). This VAT claim was related to the period of 2012-2015, including the formation of OMG and EMG in 2012. KMG EP intends to further engage with the relevant parties to work on the recoverability of the remaining amount.
In the fourth quarter of 2015, the Company created the valuation allowance for 46.6bn Tenge in its profit and loss statement related to VAT recoverability. The Company has reversed 24.6bn Tenge of previously accrued VAT allowance in its financial statements for the nine months of 2016.
Capital expenditure
Capital expenditure[4] in the first nine months of 2016 totaled 72bn Tenge (US$209m), down 4% year on year. This was primarily due to a reduction in volumes and costs of production drilling at OMG, including a 15% discount obtained from the drilling service contractor. This was partially offset by an increase in capital expenditure directed towards construction and modernization of production facilities and exploration drilling at EMG.
The Company expects to spend 103bn Tenge (US$286m[5]) on capital expenditure for the full year.
Cash Flows from Operating Activities
Net cash generated from operating activities in the first nine months of 2016 was 108bn Tenge (US$314m), against net cash outflow of 15bn Tenge (US$76m) in the same period in 2015. The increase was mainly due to higher profit adjusted for non-cash items and a decrease in trade and other receivables during 3Q 2016.
Trade and other receivables
In July 2016, KMG RM paid the full amount of its overdue trade receivable amounting 44bn Tenge. As a result, the Company's trade receivables decreased during the third quarter of 2016 to 59bn Tenge (US$176m), from 117bn Tenge (US$346m) as at the end of 2Q 2016.
Cash and Debt
Cash and cash equivalents at 30 September 2016 amounted to 213bn Tenge (US$0.6bn), compared with 237bn Tenge (US$0.7bn) at 31 December 2015. Other financial assets at 30 September 2016 totaled 942bn Tenge (US$2.8bn) compared with 868bn Tenge (US$2.6bn) on 31 December 2015.
At 30 September 2016, 97% of cash and financial assets were denominated in foreign currencies (predominantly US dollars) and 3% were denominated in Tenge. Finance income accrued on cash, financial, and other assets in the first nine months of 2016 totaled 22bn Tenge (US$64m), compared with 18bn Tenge (US$93m) in the first nine months of 2015.
Borrowings at 30 September 2016 stood at 10bn Tenge (US$30m), compared with 12bn Tenge (US$34m) at 31 December 2015.
The net cash position[6] at 30 September 2016 was 1,145bn Tenge (US$3.4bn), compared with 1,093bn Tenge (US$3.2bn) on 31 December 2015. The net cash position at 30 September 2016 was 81bn Tenge higher than the net cash position at 30 June 2016.
Share of results of associate and joint ventures
During the first nine months of 2016, KMG EP reported a loss of 7.6bn Tenge (US$22m) in its share of the results of associate and joint ventures, compared to a loss of 3.5bn Tenge (US$18m) in the first nine months of 2015.
Kazgermunai
KMG EP recognized 4.0bn Tenge (US$12m) of income from its share in KGM in the first nine months of 2016. This represents the Company's 50% share in KGM's net profit of 7.1bn Tenge (US$21m) adjusted for the 3.1bn Tenge (US$9m) amortization of the fair value of licenses and the related deferred tax benefit.
KGM's net profit in US dollar terms for the first nine months of 2016 declined by 50% compared to the same period in 2015. This was largely driven by a 24% decline in Brent price, lower domestic prices and a decrease in sales volumes.
In the first nine months of 2016, KGM made a dividend payment of US$37.5m for the year of 2015 to KMG EP.
PetroKazakhstan Inc.
KMG EP recognized a loss of 10.6bn Tenge (US$31m) from its share in PKI in the first nine months of 2016. This represents the Company's 33% share in PKI's net loss of 2.2bn Tenge (US$6m) adjusted for the 8.4bn Tenge (US$24m) amortization of the fair value of licenses.
PKI's net loss in US dollar terms for the first nine months of 2016 amounted to US$19m, compared to a net loss of US$102m in the same period in 2015. This is largely due to lower transportation and operating expenses, lower income taxes and penalties, partially offset by a decline in revenue due to a 24% drop in Brent price and a decrease in sales volumes resulting from lower production levels.
In the third quarter of 2016 PKI reported a positive net profit of US$6m, for the first time in seven consecutive quarters.
CCEL
As of 30 September 2016, the Company had 33.4bn Tenge (US$99m) as a receivable from CCEL, a jointly controlled entity with CITIC Resources Holdings Limited. The Company has accrued 3.6bn Tenge (US$10.4m) of interest income in the first nine months of 2016, which is a part of the annual priority return in an amount of US$26.87m from CCEL.
***
The condensed consolidated interim financial statements for the nine months ended September 30, 2016, the notes thereto, and the operating and financial review for the period is available on the Company's website (www.kmgep.kz).
APPENDIX
Consolidated Interim Statement of Comprehensive Income (unaudited)
Tenge million
|
| Three months endedSeptember 30, | Nine months endedSeptember 30, | ||
|
| 2016 | 2015 | 2016 | 2015 |
Revenue |
| 201,340 | 108,232 | 514,706 | 349,337 |
Share of results of associate and joint ventures |
| (893) | (5,393) | (7,603) | (3,486) |
Finance income |
| 7,750 | 6,560 | 22,025 | 18,295 |
Total revenue and other income |
| 208,197 | 109,399 | 529,128 | 364,146 |
Production expenses |
| (72,155) | (50,865) | (195,364) | (160,037) |
Selling, general and administrative expenses |
| (31,917) | (37,068) | (94,514) | (91,118) |
Exploration expenses |
| (51) | (1,186) | (51) | (1,663) |
Depreciation, depletion and amortization |
| (9,175) | (4,538) | (22,524) | (15,158) |
Taxes other than on income |
| (36,493) | (49,011) | (115,803) | (131,584) |
Net reversal of allowance for VAT recoverable |
| 20,298 | − | 13,362 | − |
(Loss)/gain on disposal of property, plant and equipment |
| (250) | 4 | (532) | (71) |
Finance costs |
| (836) | (14,809) | (2,702) | (16,740) |
Foreign exchange (loss)/gain, net |
| (8,733) | 243,029 | (7,284) | 261,663 |
Profit before tax |
| 68,885 | 194,955 | 103,716 | 209,438 |
Income tax expense |
| (10,411) | (60,071) | (27,993) | (71,665) |
Profit for the period |
| 58,474 | 134,884 | 75,723 | 137,773 |
Foreign currency translation difference |
| (7,139) | 153,433 | (6,256) | 155,018 |
Other comprehensive (loss)/income for the period to be reclassified to profit and loss in subsequent periods |
| (7,139) | 153,433 | (6,256) | 155,018 |
Total comprehensive income for the period, net of tax |
| 51,335 | 288,317 | 69,467 | 292,791 |
Earnings per share - Tenge thousands |
|
|
|
|
|
Basic and diluted |
| 0.86 | 1.98 | 1.11 | 2.02 |
|
|
|
|
|
|
Consolidated Interim Statement of Financial Position
Tenge million
|
| September 30, 2016 | December 31, 2015 |
| Unaudited | Audited | |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment |
| 280,420 | 234,367 |
Intangible assets |
| 10,014 | 9,619 |
Investments in joint ventures |
| 157,126 | 154,453 |
Investments in associate |
| 143,319 | 154,241 |
Receivable from a jointly controlled entity |
| 24,641 | 21,602 |
Loans receivable from joint ventures |
| 31,517 | 27,941 |
Other financial assets |
| 35,973 | 33,760 |
Deferred tax asset |
| 62,279 | 71,904 |
Other assets |
| 2,940 | 5,717 |
Total non-current assets |
| 748,229 | 713,604 |
Current assets |
|
|
|
Inventories |
| 26,330 | 23,102 |
Income taxes prepaid |
| 48,967 | 36,225 |
Taxes prepaid and VAT recoverable |
| 41,123 | 16,132 |
Mineral extraction and rent tax prepaid |
| 6,064 | 6,064 |
Prepaid expenses |
| 25,848 | 30,135 |
Trade and other receivables |
| 59,071 | 105,443 |
Receivable from a jointly controlled entity |
| 8,717 | 8,822 |
Other financial assets |
| 905,952 | 833,912 |
Cash and cash equivalents |
| 213,357 | 237,310 |
Total current assets |
| 1,335,429 | 1,297,145 |
Total assets |
| 2,083,658 | 2,010,749 |
EQUITY |
|
|
|
Share capital |
| 165,324 | 163,004 |
Other capital reserves |
| 2,471 | 3,945 |
Retained earnings |
| 1,387,932 | 1,311,759 |
Other components of equity |
| 326,885 | 333,141 |
Total equity |
| 1,882,612 | 1,811,849 |
LIABILITIES |
|
|
|
Non-current liabilities |
|
|
|
Borrowings |
| 4,596 | 5,990 |
Deferred tax liability |
| 138 | 240 |
Provisions |
| 46,377 | 45,264 |
Total non-current liabilities |
| 51,111 | 51,494 |
Current liabilities |
|
|
|
Borrowings |
| 5,519 | 5,585 |
Provisions |
| 71,467 | 70,010 |
Income taxes payable |
| 13 | 13 |
Mineral extraction tax and rent tax payable |
| 17,139 | 22,249 |
Trade payables and other liabilities |
| 55,797 | 49,549 |
Total current liabilities |
| 149,935 | 147,406 |
Total liabilities |
| 201,046 | 198,900 |
Total liabilities and equity |
| 2,083,658 | 2,010,749 |
Consolidated Interim Statement of Cash Flows (unaudited)
Tenge million
|
| Nine months ended September 30, | |
|
| 2016 | 2015 |
Cash flows from operating activities |
|
|
|
Profit before tax |
| 103,716 | 209,438 |
Adjustments to add/(deduct) non-cash items |
|
|
|
Depreciation, depletion and amortisation |
| 22,524 | 15,158 |
Share of result of associate and joint ventures |
| 7,603 | 3,486 |
Loss on disposal of property, plant and equipment (PPE) |
| 532 | 71 |
Dry well expense on exploration and evaluation assets |
| − | 695 |
Recognition of share-based payments |
| 1,350 | − |
Unrealised foreign exchange loss/(gain) on non-operating activities |
| 7,406 | (253,008) |
Change in provisions |
| 1,108 | 28,093 |
Net reversal of allowance for VAT recoverable |
| (13,362) | − |
Other non-cash income and expense |
| 2,442 | 954 |
Add finance costs |
| 2,702 | 16,740 |
Deduct finance income |
| (22,025) | (18,295) |
Working capital adjustments |
|
|
|
Change in other assets |
| (872) | 429 |
Change in inventories |
| (3,308) | 506 |
Change in taxes prepaid and VAT recoverable |
| (12,689) | 6,032 |
Change in prepaid expenses |
| 4,287 | 202 |
Change in trade and other receivables |
| 34,874 | 11,106 |
Change in trade and other payables |
| 4,746 | (3,468) |
Change in mineral extraction and rent tax payable and prepaid |
| 5,890 | (5,169) |
Income tax paid |
| (38,988) | (27,868) |
Net cash generated from/(used in) operating activities |
| 107,936 | (14,898) |
Cash flows from investing activities |
|
|
|
Purchases of PPE |
| (67,107) | (72,645) |
Proceeds from sale of PPE |
| 384 | 270 |
Purchases of intangible assets |
| (1,442) | (1,241) |
Loans provided to joint ventures |
| (2,538) | (2,605) |
Dividends received from joint ventures and associate, net of withholding tax |
| 13,083 | 13,822 |
(Placement)/withdrawals of term deposits, net |
| (88,841) | 23,639 |
Repayments of loan receivable from related parties |
| − | 2,495 |
Interest received |
| 11,903 | 7,111 |
Net cash used in investing activities |
| (134,558) | (29,154) |
Cash flows from financing activities |
|
|
|
Repayment of borrowings |
| (1,526) | (918) |
Dividends paid to Company's shareholders |
| (123) | (28,781) |
Net cash used in financing activities |
| (1,649) | (29,699) |
Net change in cash and cash equivalents |
| (28,271) | (73,751) |
Cash and cash equivalents at the beginning of the period |
| 237,310 | 180,245 |
Exchange gain on cash and cash equivalents |
| 4,318 | 34,365 |
Cash and cash equivalents at the end of the period |
| 213,357 | 140,859 |
The following tables show the Company's realized sales prices adjusted for oil transportation and other expenses for the nine months ended 30 September 2016[7].
| 9М2016 | ||||||||
(US$/bbl.) | UAS | CPC | ANPZ 2-3Q | PNHZ 2-3Q | ANPZ 1Q | PNHZ 1Q | |||
Benchmark end-market quote | 41.9 | 41.9 | - | - | - | - | |||
Quality bank | - | -3.2 | - | - | - | - | |||
Price differential | -2.5 | -0.7 | - | - | - | - | |||
Realized price | 39.4 | 38.0 | 16.3 | 19.8 | 5.7 | 10.7 | |||
Rent tax | -2.2 | -0.5 | - | - | - | - | |||
Export customs duty | -5.2 | -5.2 | - | - | - | - | |||
MET | -3.7 | -3.7 | -0.8 | -0.8 | -0.9 | -0.9 | |||
Transportation | -5.5 | -7.3 | -1.0 | -3.9 | -1.4 | -4.0 | |||
Netback | 22.8 | 21.3 | 14.5 | 15.1 | 3.4 | 5.8 | |||
Premium of bbl. difference | - | 3.9 | - | - | - | - | |||
Effective netback incl. premium of bbl. difference | 22.8 | 25.2 | 14.5 | 15.1 | 3.4 | 5.8 | |||
|
|
|
|
| |||||
| 9М2015 | ||||||||
(US$/bbl.) | UAS | CPC | ANPZ | PNHZ |
| Russia | |||
Benchmark end-market quote | 55.3 | 55.3 | - | - |
| - | |||
Quality bank | - | -5.1 | - | - |
| - | |||
Price differential | -3.2 | -2.0 | - | - |
| - | |||
Realized price | 52.1 | 48.2 | 26.1 | 26.1 |
| 35.5 | |||
Rent tax | -6.5 | -6.9 | - | - |
| - | |||
Export customs duty | -9.2 | -9.1 | - | - |
| - | |||
MET | -5.9 | -5.9 | -1.9 | -1.9 |
| -3.8 | |||
Transportation | -6.9 | -7.9 | -1.1 | -6.9 |
| -5.1 | |||
Netback | 23.6 | 18.4 | 23.1 | 17.3 |
| 26.6 | |||
Premium of bbl. difference | - | 4.5 | - | - |
| - | |||
Effective netback incl. premium of bbl. difference | 23.6 | 22.9 | 23.1 | 17.3 |
| 26.6 | |||
Reference information | 9М2015 | 9М2016 |
Average exchange US$/KZT rate | 195.90 | 344.00 |
End of period US$/KZT rate | 270.40 | 335.46 |
Coefficient barrels to tonnes for KMG EP crude (production) | 7.36 | |
Coefficient barrels to tonnes for KMG EP crude (sales) | 7.23 | |
Coefficient barrels to tonnes for KGM crude | 7.70 | |
Coefficient barrels to tonnes for CCEL crude | 6.68 | |
Coefficient barrels to tonnes for PKI crude | 7.75 | |
For further details please contact us at:
KMG EP. Investor Relations (+7 7172 97 5433)Saken Shoshanove-mail: [email protected]
KMG EP. Public Relations (+7 7172 97 79 08)Bakdaulet Tolegene-mail: [email protected]
Brunswick Group (+44 207 404 5959)
Carole Cable
e-mail: [email protected]
Bell Pottinger (+44 203 772 2500)
Gavin Davis
Henry Lerwill
e-mail: [email protected]
Notes to Editors
KMG EP is among the top three Kazakh oil producers. The overall production in 2015 was 12.4 million tonnes (251 kbopd) of crude oil, including the Company's share in Kazgermunai, CCEL and PKI. The Company's volume of proved and probable reserves excluding shares in the associates, at the end of 2015 was 193 million tonnes (1,409 mmbbl). 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$2bn at its IPO in September 2006.
Forward-looking statements
This document includes statements that are, or may be deemed to be, ''forward-looking statements''. These forward-looking statements can be identified by the use of forward-looking terminology including, but not limited to, the terms ''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'', ''may'', ''target'', ''will'', or ''should'' or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They include, but are not limited to, statements regarding the Company's intentions, beliefs and statements of current expectations concerning, amongst other things, the Company's results of operations, financial condition, liquidity, prospects, growth, potential acquisitions, strategies and as to the industries in which the Company operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur. Forward-looking statements are not guarantees of future performance and the actual results of the Company's operations, financial condition and liquidity and the development of the country and the industries in which the Company operates may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. The Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements or industry information set out in this document, whether as a result of new information, future events or otherwise. The Company does not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved.
[1] Amounts shown in US dollars ("US$" or "$") have been translated solely for the convenience of the reader at the average rate over the applicable period for information derived from the consolidated statements of income and consolidated statements of cash flows and the end of the period rate for information derived from the consolidated balance sheets (average rates for 9M2016 and 9M2015 were 344.00 and 195.90 Tenge/US$, respectively; period-end rates at September 30, 2016 and December 31, 2015 were 335.46 and 339.47 Tenge/US$, respectively).
[2] Cash, cash equivalents and other financial assets less borrowings.
[3] Except cost of production of crude oil and oil transportation expenses to the refineries.
[4] The Company revised its approach to calculation of capital expenditure. Starting from 4Q 2013 the Capex represents the amount of additions to property, plant and equipment and intangible assets. Formerly it represented purchases of property, plant and equipment and intangible assets according to the Cash Flow Statement.
[5] Amounts shown in US dollars ("US$" or "$") have been translated solely for the convenience of the reader at the budgeted rate of 360 Tenge per US dollar.
[6] Cash, cash equivalents and other financial assets less borrowings.
[7] As of first quarter 2015 the netback calculation methodology has been amendment and now includes a subtraction pertaining to the netback MET.
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