17th Sep 2007 08:00
JSC KazMunaiGas Exploration Prod17 September 2007 PRESS - RELEASE JSC KazMunaiGas Exploration Production announces its financial results for the first half of 2007 Astana, 17 September 2007, JSC KazMunaiGas Exploration Production ("KMG EP" or "the Company"), has today released its unaudited, condensed consolidated interimfinancial results for the first half of 2007 reviewed by Ernst & Young. • An increase of crude oil production by 288 thousand tonnes to 4,939 thousand tonnes • 15.7% growth in net income to 58.1 bn Tenge (US$472 mn)(1) • A 2.7 bn Tenge (US$22 mn) increase in profit before tax arising from the Company's 50% share of JV Kazgermunai LLP ("Kazgermunai") for the period between the acquisition date and 30 June 2007 The Company produced 4,939 thousand tonnes (200.84 kbopd) of crude oil that was288 thousand tonnes more than in the first half of 2006. The increase wasprimarily due to the acquisition of a 50% stake in Kazgermunai completed on 24April 2007. In the period of 67 days between the acquisition date and 30 June2007 the Company's share in Kazgermunai production was 278 thousand tonnes(31.66 kbopd). Excluding Kazgermunai, in the first six months of 2007 the Company's productionwas 4,661 thousand tonnes of crude oil (189.52 kbopd), 10 thousand tonnes morethan in the same period in 2006. In the first half of 2007, excluding oilproduced by Kazgermunai, the Company supplied 4,764 thousand tonnes of crude oil(193.68 kbopd) to the market, including 3,725 thousand tonnes (151.48 kbopd)supplied to export markets, an increase of 13.1% over the first half of 2006.Such a significant increase of export sales was due to the temporary reductionof supply to domestic market and is not expected to be sustained in the secondhalf of 2007. Profit after tax (net income) in the first half of 2007 was 58.1 bn Tenge(US$472 mn)1, 15.7% higher than in the first half of 2006. The increase in netincome was mainly due to an increase in revenues of 7.2 bn Tenge, an increase infinance income of 11.3 bn Tenge, and a decrease of income tax expense of 5.6 bnTenge as well as an addition of 2.7 bn Tenge (US$22 mn) from the Company's 50%share in Kazgermunai for the period between the acquisition date and 30 June2007. This was partly offset by the 17.2 bn Tenge increase in operatingexpenses, driven primarily by the non recurrence of the one off release of aprovision for an environmental fine of 11.4 bn Tenge in the first half of 2006. Commenting on the financial results for the first half of 2007, Askar Balzhanov,the CEO of the Company, said: "These results clearly demonstrate the successfulstrategy put in place to optimise production from our producing fields and togrow our business by acquisitions. The addition of the profits from our stake inKazgermunai has been very satisfactory during the first half and we look forwardto seeing this trend continue into the second half of the year." KMG EP's revenues for the first half of 2007 increased by 3.6% to 209.9 bn Tenge(US$1,705 mn). This was primarily due to an increase in sales volume of 2.9% and0.5% increase in the average realised price from 43,046 Tenge per tonne(US$46.83 per bbl) to 43,268 Tenge per tonne (US$48.60 per bbl). In the firsthalf of 2007 exports accounted for 78% of the sales in volume terms (versus 71%in the first half of 2006). In US dollar terms, revenues increased by 6.9 %year-on-year. Operating expenses were 99.9 bn Tenge (US$811 mn) in the first half 2007, 5.8 bnTenge higher than in the first half 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, higherenergy tariffs, a growth in reserves for fines and penalties, an increase ofdepreciation, depletion, amortisation and other expenses. Profit from operationswas 110.0 bn Tenge (US$894 mn) in the first half of 2007, 1.4 bn Tenge up incomparison with the first half of 2006, adjusted for the environmental finereversal. Operating cash flow was 54.2 bn Tenge (US$440 mn) for the first half of 2007,approximately 41.5% higher than for the first half of 2006. During the firsthalf of 2007 the Company acquired Kazgermunai for the amount of 118.3 bn Tenge(US$960 mn) 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 first halfof 2007 were 20.7 bn Tenge (US$168 mn) or 7.2% lower than in the first half of2006. KMG EP's full year capital expenditures in 2007, calculated on a cashbasis, are expected to decrease to 39.8 bn Tenge compared to 2006 actual capitalexpenditures of 49.3 bn Tenge. Cash, cash equivalents and financial assets at the end of the first half of 2007amounted to 321.1 bn Tenge (US$2,625 mn) compared to 391.8 bn Tenge (US$3,085mn) at the end of 2006. Borrowings were 49.1 bn Tenge (US$401 mn) at the end ofthe first half of 2007 compared to 59.7 bn Tenge (US$470 mn) at the end of 2006. Impact of acquisition of a 50% stake in Kazgermunai On 24 April 2007 KMG EP finalised the acquisition of a 50% stake in Kazgermunaifor 118.7 bn Tenge (approximately US$ 975 mn) including costs directlyattributable to the acquisition. The 83.1 bn Tenge difference between theconsideration and the carrying value of Kazgermunai's net assets acquired wasprimarily attributed to the value of the license of Kazgermunai based on itsproved reserves. KMG EP recognised 2.7 bn Tenge (US$22 mn) as its 50% share of financial resultsof Kazgermunai as an equity investment in the Company's condensed consolidatedinterim financial information for the six months ended 30 June 2007. The amountof 2.7 bn Tenge is the 6.7 bn Tenge of the Company's 50% stake in Kazgermunai'snet income for the period between the acquisition date and 30 June 2007 adjustedfor the 2.1 bn Tenge of one-off effect of the fair valuation of inventory andthe 1.9 bn Tenge of the effect of the fair valuation of the license amortisationover the proved reserves of Kazgermunai using the unit-of-production method. During the first six months of 2007, Kazgermunai produced 1,485 thousand tonnesof oil (62.52 kbopd), 7.3% up compared to the first six months of 2006. *** The full condensed consolidated interim financial information for the six monthsended 30 June 2007 (unaudited) and the notes thereto as well as Operating andFinancial Review are available at the Company's website (www.kmgep.kz ). Appendix Key operating and financial indicators of KMG EP for the first half of 2007 2 Summary Operating Data, excluding Kazgermunai Three months ended June 30, Six months ended June 30,thousand tonnes 2007 2006 2007 2006 Crude oil production 2,372 2,375 4,661 4,651Crude oil exports 1,790 1,652 3,725 3,295Crude oil domestic 583 744 1,038 1,334 Summary of Condensed Consolidated Balance Sheets Tenge Millions June 30, December 31, 2007 2006 unaudited auditedASSETSNon-current assets 398,471 376,824Current assets 385,770 358,114Total assets 784,241 734,937EQUITY Equity holders of the Company 549,376 525,752Minority interest - 6Total equity 549,376 525,758LIABILITIESNon-current liabilities 81,934 100,844Current liabilities 152,931 108,336Total liabilities 234,865 209,180TOTAL EQUITY AND LIABILITIES 784,241 734,937 Summary of Condensed Consolidated Statements of Income Three months ended June 30, Six months ended June 30,Tenge Millions 2007 unaudited 2006 unaudited 2007 unaudited 2006 unaudited Revenue 111,755 102,215 209,939 202,723Operating expenses 50,731 (43,557) (99,899) (82,697)Profit from operations 61,025 58,657 110,040 120,026Finance income (expense) 3,299 (2,589) 4,936 (4,533)Share of result of associates 2,755 227 2,660 (147)Profit before tax and minority interest 67,078 56,295 117,636 115,346Income tax expense (32,830) (30,868) (59,541) (65,126)Profit for the period 34,248 25,427 58,095 50,219 Attributable to:Equity holders of the Company 34,248 25,426 58,095 50,219Minority interest - 1 - - Summary of Consolidated Statements of Cash Flows Six months ended June 30,Tenge Millions 2007 2006 unaudited unaudited Net cash generated from operating activities 54,240 38,328Cash flows from investing activitiesPurchases of property, plant and equipment (PPE) (20,745) (22,348)Sale of held-to-maturity and (8,186) (15,179) available-for-sale financial assets, netDisposal of subsidiaries, net of cash disposed 10,613 3,568Investments in associates (118,250) -Loan repayments received from related parties 97,440 9,639Interest received and other 14,028 (6,690)Net cash provided used in investing activities (25,100) (31,010)Net cash used in financing activities (4,638) (3,254) The following tables show the Company's realised sales prices adjusted for oiland oil products transportation and other expenses for the six months ended June30, 2007 and 2006. Netback analysis*, for the first half of 2007 CPC UAS Domestic Total Sales volume, thousand tonnes 1,038 2,687 1,038 4,764Estimated market quote**, US$/bbl 63.69 59.80 n/a n/aAverage realized price, US$/bbl 59.85 55.73 18.85 48.60Adjusted realized price, net of 53.65 49.56 18.05 43.59transportation and selling expenses, US$/bbl Netback analysis*, for the first half of 2006 CPC UAS Domestic Total Sales volume, thousand tonnes 733 2,562 1,334 4,628Estimated market quote**, US$/bbl 65.03 61.20 n/a n/aAverage realized price, US$/bbl 63.06 57.55 17.34 46.83Adjusted realized price, net of 57.24 51.53 15.97 42.18transportation and selling expenses, US$/bbl * Excluding gas products, other sales and services ** CPC Blend for shipments via Caspian Pipeline Consortium pipeline (CPC) and Urals RCMB for shipments via Uzen-Atyrau-Samara pipeline (UAS). Reference information Six months ended June 30, 2007 2006 Average exchange rate US$/KZT* 123.15 127.13Exchange rate US$/KZT as of 31 December 2006* 127.00Exchange rate US$/KZT as of 30 June 2007* 122.31 *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 7.36Barrels to tonnes conversion ratio for Kazgermunai crude oil 7.62 - ENDS - Notes to Editors KMG EP was the 3rd 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. The Company's shares are listedon Kazakhstan Stock Exchange and the GDRs are listed on London Stock Exchange.The Company raised approximately US$2 billion in its IPO in September of 2006. Kazgermunai is the 8th largest Kazakh oil and gas producing company, operatingthe Akshabulak, Nuraly and Aksai fields in the Kyzilorda region of the country.In 2006, its production of crude was approximately 3.0 mmt per year (60.72kbopd); and at the end of September 2006 it had 40.7 mmt (310 million bbl) ofproved and provable reserves. 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 (+44 207 930 9030) 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 identifiedby the use of forward-looking terminology, including, but not limited to, theterms ''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 have been translated solely for the convenienceof the reader at the average rate over the applicable period for informationderived from the consolidated statements of income and consolidated statementsof cash flows and the end of the period rate for information derived from theconsolidated 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:
Kazmunaigaz Exploration