jsc kazmunaigas exploration productionkmgep.kz/data/nws/kaz/fil_329_166.pdf · they include, but...
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JSC KazMunaiGas Exploration Production
Bank of America Merrill LynchRussia & CIS 1-1 ConferenceRussia & CIS 1 1 Conference
November 2011
Important Notice
FORWARD-LOOKING STATEMENTSThis 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 termsidentified 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 JSC KazMunaiGas Exploration Production (“Company”) intentions, beliefs and statements of current expectations concerning, amongst other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, 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-lookingstatements 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.
CAUTIONARY NOTE TO US INVESTORSCAUTIONARY NOTE TO US INVESTORSThe US SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that the company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The crude oil reserves of Company within this document have been estimated by Gaffney, Cline & Associates (‘‘GCA’’) according to standards established by the Society of Petroleum Engineers (‘‘SPE’’) and the World Petroleum Congresses (‘‘WPC’’) and thus proved reserves may differ from those estimated according to the definitions of the US SEC. Further, the Company uses certain terms in this document in referring to the Company’s reserves, such as ‘‘probable’’ or ‘‘possible’’ reserves, that the US SEC’s guidelines would prohibit it from including in filings with the US SEC if the Company were subject to reporting requirements under the US Exchange Act. Prospective investors should read ‘‘The Company—Company’s Reserves’’ section in IPO prospectus and the report of GCA, an international oil and gas consultant, on the Company’s reserves, included in this document (the ‘‘GCA Report’’) for more information on the Compan ’s reser es and the reser es definitions the Compan ses
2
Report’’), for more information on the Company’s reserves and the reserves definitions the Company uses.
Kazakhstan at a glanceKazakhstan at a glance
3
Kazakhstan macro indicators
148
171
160
180 US$ bn
81
105
133
115
100
120
140
57
81
2434
24 29 3028 25 30 352523
3145
40
60
80
16 19 24 24 2915 17 22 28 25
5 9 7 11 14 21 25
5 9 1523 22
0
20
2005 2006 2007 2008 2009 2010 2011E*005 006 00 008 009 0 0 0
GDP Budget receipts Budget expenditures Public debt National fund
2005 2006 2007 2008 2009 2010 2011E*
Average KZT/USD 132.9 126.1 122.6 120.3 147.5 147.4 146-148
Real GDP growth 9.7% 10.7% 8.7% 3.3% 1.2% 7.0% 7.0%
CPI inflation 7.5% 8.4% 18.8% 9.5% 6.2% 7.8% 6-8%
Note: Budget receipts and expenditures according to the law "On Republican Budget for 2011-2013", as amended on 06.10.2011; Public debt and assets of the National Fund as at 30.09.2011, according to the Ministry of Finance; Average tenge/$ rate estimated based on actual data to October 17 and corridor 145-155 tenge/$ till the end of the year; Nominal GDP for 2011 is calculated based on the forecast of real GDP growth of 7% and inflation of 8%. GDP growth and inflation according to the updated forecast of socio-economic development in 2011 4
Kazakhstan Oil Industry
Aktobemunaigaz,
123
2010 Production in Kazakhstan, kbopd Foreign oil and oil service companies operating in Kazakhstan:CITIC - Canada Energy Ltd
KMG EP, 270
MMG, 116
KPO, 229
3 CITIC - Canada Energy LtdCNPCCICSinopecBPBG G
Pavlodar refinery4.8 (7.5) mtpa
Other producers,
349TCO, 520
BG GroupMaerskChevronTotal ExxonMobil
Atyrau refinery4.3 (4.9) mtpa
ENIMOL (Hungary)FIOC LLC (China)LukoilSchlumberger
Kashagan
SchlumbergerSaipemBaker HughesWeatherford
Shymkent refinery4.6 (7.0) mtpa
Oil pipelinesRefinery 2010 throughput (Capacity)
51) Current total pipeline capacity2) Ministry of oil and gas
Recoverable reserves – 39 bn bbl(2) (3% share of the World 2P reserves)
Crude oil tax regime since 2009
Rent tax and MET are linked to oil price
Export Rent tax: progressive scale from 7% Export Rent tax: progressive scale from 7% to 32%
Mineral Extraction Tax (MET): depends on d ti b t t 12% D ti
60
production by contract, ~12%. Domestic supplies half taxed
Corporate Income Tax (CIT): from 30% to 20%30
40
50
bbl
20%
Excess Profit Tax (EPT): applies to profits exceeding 25% of relevant expenses10
20
30
US$
/
Rent tax
Export duty: US$5.4/bbl from 01/01/2011 0
10
20 30 40 50 60 70 80 90 100 110 120 130 140 150
Brent priceBrent price
Note: Estimated taxes for barrel of exported oil. Calculations based on varying oil prices and 2009 EMG & UMG cost structure excluding non-operating income/expenses and unusual/extraordinary items
6
Crude oil export taxation regime
17th May 2008Export duty $15/bbl
1st J 2011
Taxes on oil exports, except taxes on income and excess profit
140
160
($109.9/ton)
11th October 2008Export duty $28/bbl($203.8/ton) 16th August 2010
1st January 2011Export duty $5.4/bbl ($40/ton)
100
120
1401st January 2009New Tax Code: Rent and MET replace export duty and royalty respectively
gExport duty reintroduction at $2.7/bbl ($20/ton)
60
80$/bb
l
20
40
0
02/0
1/08
09/0
2/08
18/0
3/08
25/0
4/08
02/0
6/08
10/0
7/08
17/0
8/08
24/0
9/08
01/1
1/08
09/1
2/08
16/0
1/09
23/0
2/09
02/0
4/09
10/0
5/09
17/0
6/09
25/0
7/09
01/0
9/09
09/1
0/09
16/1
1/09
24/1
2/09
31/0
1/10
10/0
3/10
17/0
4/10
25/0
5/10
02/0
7/10
09/0
8/10
16/0
9/10
24/1
0/10
01/1
2/10
08/0
1/11
15/0
2/11
25/0
3/11
Royalty/MET Rent tax Export duty Brent
7
Strategic outlookStrategic outlook
8
KMG EP Investment Case
The largest listed Kazakh oil producer Republic of Kazakhstan
Preferential access to reserves and infrastructure through NC KMG
100%
100%
Holding Samruk-Kazyna
Corporate governance in line with international standards to ensure protection of minority shareholders63%
FreeFloat
100%
NC KMG
Strong FCF generation
Diverse growth opportunities
37%Including CIC 11%
Diverse growth opportunities
KMG EP
KMG EP offers a unique investment opportunity in Kazakhstan’s oil sector
9
KMG EP today vs. IPO
Cash returned
2011 2006 IPO
• > US$2bn (~US$$1bn tominority shareholders)
Cash returned to shareholders
since 2006Strategy 2006:Grow through M&A and ExplorationMaintain production and reduce costs at l t • US$3.8bnNet cash
• White Bear 35%• MoU with NC KMGOffshore
legacy assetsImprovement in HSE practices
• MoU with NC KMG(5 potential blocks)
Offshore
• 9 blocks (100%) and UGL (50%)Onshore exploration
• ~US$2bnCash raised( ) ( )exploration
• KGM 50%• CCEL 50%
PKI 33%Production JVs
• 3 blocksOnshore exploration 2P reserves:
449 mmbbl• PKI 33%
• UMG• EMG
Production legacy assets
• UMG• EMG
Productionlegacy assets
2P reserves:1,495 mmbbl
2P reserves:1,707 mmbbl
449 mmbbl
10
g y
2011-2020 Strategy
Maximisation of shareholder value
Reserves increase
Production increase
Profitability improvement
M&A Onshore Offshore Mature legacy M&A exploration projectsOnshore consolidation in Kazakhstan
Expansion of exploration portfolio, including
Agreement with NC KMG signed in May 2011 –
assetsModernisationRecover and maintain Kazakhstan
Selective international acquisitions
portfolio, including subsalt, new regions, gas and condensateSignificant increase in exploration expenditures
signed in May 2011 access to Caspian offshore blocks
Recover and maintain productionControl costs
11
exploration expenditures
Production growth outlook
58 MMG
- M&A- Exploration
50 5193
9192
pd
Completed acquisitions
51 91
kbop
UMG rehabilitation
192 192 190 181 177 159 173 UMG and EMG –current profile
2006 2007 2008 2009 2010 9М11 2012E 2020The chart not to scale, intended to illustrate direction of expected trends
12
2006 2007 2008 2009 2010 9М11 2012E 2020
Strong financial position supporting future investments
Significant net cash Possible uses of cash
3,0204,426
3,404 3,905 4,0664,000
5,000
8,000
10,000
Maintenance capex* ~ US$2bn see p.16-20
3,085 3,2884,595 4,332 4,736 4,653
2,615
1,000
2,000
3,000
4,000
6,000 Exploration expenditures* ~ US$1bn see p.25-35
Current acquisition
pipeline worth ~ US$2bn 2 5bn** see p 37 42
-470 -269 -169 -928 -831 -586 -2 000
-1,000
0
-2 000
0
2,000pipeline worth ~ US$2bn-2.5bn see p.37-42
Share buyback, dividends see p.14
2,0002,000
2006 2007 2008 2009 2010 9M11Cash and financial assets, US$mBorrowings, US$mNet cash US$mNet cash, US$m
13
* Over the period of 3 years** Not including potential stakes in strategic projects
Cash Distributions to Shareholders
2007 18 May 2007 (AGM): dividend of US$300m, including special dividend of US$150m
2008 28 May 2008 (AGM): dividend of US$344m 500 563 656(0 91)
704(0 80)
800(0.91)
Declared Dividends, KZT per share (US$ per GDR)
2008 28 May 2008 (AGM): dividend of US$344m, including special dividend of US$152m
8 October 2008 (BoD): 12 month buyback program, US$148m
2009 28 May 2009 (AGM): dividend of US$322m
500(0.66) (0.77) (0.91) (0.80) (0.91)
2006 2007 2008 2009 20102009 28 May 2009 (AGM): dividend of US$322m,
including special dividend of US$80m
2010 26 February 2010 (BoD): listing of preferred shares with further buy-back program, up to 100% of issued preferred shares 3% 3%
7%
3%5%
Dividend Yield1, %
25 May 2010 (AGM): dividend of US$346m,including special dividend US$132m
2011 5 May 2011 (AGM): approved dividend of US$389m, including special dividend of US$148m
2006 2007 2008 2009 2010
Payout ratio, %
Preferred shares buyback program: 46.2% bought back for US$238m as of 09/11/11
Ordinary shares buyback program till 31 December 2012 for up to US$300m; currently 322,787 GDRs
30% 27%20% 24% 24%
Over US$2bn paid to the shareholders since IPO
bought back for about US$5m 2006 2007 2008 2009 2010
Over US$2bn paid to the shareholders since IPO
(1) Calculated based on share prices as at the end of corresponding periods
14
Operating OverviewOperating Overview
15
Legacy assets overview
UMGJVs
Production, 270 kbopd, in 2010
300
350
UMG and EMG production profile, kbopd
UMGSteps to increase production by new
drilling and
Production decreaseCost increaseUMG
45%
EMG21%
34%
150
200
250Period of underinvestment
genhanced recovery
Cost increaseLabour actions
0
50
100 EMG
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011E
JVs21%
2P reserves 2010
Reserves, 2010 year end UMG EMG Total
UMG58%
EMG21%
21% 1P, mmbbl 452 149 600
2P, mmbbl 1,259 447 1,707
3P, mmbbl 1,396 559 1,955
Significant reserves upside potential via supplemental exploration and application of new technologies
2P reserves life(1), years 29 22 26
16
g p p pp p pp g
Note: (1) Based on 2010 production
Uzen field: labour and capital intensive operation
Well stock, end of 2010Production - 3,613 wellsInjection - 1,204 wellsAverage well flow rate - 39 bopd
Well repairs and workovers in 2010:On average 1,084 wells were repairedWorkovers performed on 915 wells
Drilling program:In 2010 - 158 wellsAverage well flow rate 39 bopd Workovers performed on 915 wells
Oil lit
In 2010 - 158 wellsIn 2011 – 180 wells
Oil quality:API 33o
Paraffin ~20%Tar ~15%Asphaltene 3%Asphaltene~3%Sulphur~0.18%
120130140150
Production recovery after power cuts
Power cuts
5060708090
100110
17
501 2 3 4 5 6 7 8 9 10 11 12
Daily production, 06-17 Aug 2010, kbopdDaily production, 8-19 Mar 2011, kbopd
Enhance performance of mature fields
1 4501,650140
160
Daily production on UMG, kbopdkbopd kbopd wellswells
250250
Production and drilling profile
4506508501,0501,2501,450
406080
100120
100
150
200
100
150
200
50250450
02040
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Actual kbopd Plan kbopd Undergroung repairs
Actual Plan0
50
0
50
2010 2011E 2012E 2013E 2014E 2015E 2016E
EMG kbopd UMG kbopd Production drilling
Current situation:•Contract termination of illegal
Sh t t
Short-term measures:•Optimisation and
Rehabilitation of Uzen field (from 2012):•Revision of development plan
Actual, kbopd Plan, kbopd Undergroung repairs EMG, kbopd UMG, kbopd Production drilling
glabour action participants•Management holds firm position with the support of local authorities on labour actions
Short-term measures:•Optimisation and reinforcement of workover and underground well repair programmes•Involvement of additional units for
preinforcement of workover and underground well repair programmes•Involvement of additional crews for underground well
•Revision of development plan•Reserves growth via modeling and supplemental exploration•Increase time between•Improvement of social situation
and order by authorities and with participation of KMG EP and NC KMG
underground well repairs •2011 Capex programme realisationcrews for underground well repairs •No disruption to 2011 capexprogramme
•Increase time between repairs•Production > 120 kbopd•Productivity improvement
18
Rebuilding mutual trust between management and personnel
Enhance performance of mature fields
Production and capex profile*192 192 191
181 1772001,000
562614
161
120
140
160
180
600
700
800
900
391327 348
27960
80
100
300
400
500
kbopdUS$
m
0
20
40
0
100
200
2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E
Production at Uzen > 120 kbopd Emba 57 kbopd**
Target for mature assets:Construction, modernisation and other, US$m Production drilling, US$m Production, kbopd
Production at Uzen > 120 kbopd, Emba ~ 57 kbopd**
Reserves: achieve increase through application of new technologies
19*Not including exploration expenditures** Tonnes to barrels conversion factor for UMG and EMG – 7.36
Production unit costs trend – below inflation
Technological base for modernization of mature assets
Collecting and interpreting dataModelling
Modern technologies
Technology Effect
T l t l t f O ti i ti f d dTerritorial database
UMG
KMG EP (headquarter)
Telecontrol system for underground repair crews
Optimisation of underground repairs performance, decrease in idle time
GPS-monitoring of transport vehicles
Fuel costs savingsEMG
Engineering center
JV’s
vehicles
Enhanced security system Property damage prevention
Hydraulic drive for the depthpump
Production stabilisation due to increased effectiveness
Recommendation of well intervention
techniques, drilling etc
Logging jobsinterpretation
Well interventiontechniques
realization and efficiency analyses
Self-regulating casing centraliser Oil leakage prevention
Linear drive for the depthpump Smaller size and versatile compared to traditional drive
Deep analysis of development stage Geological modeling
Bridle spanner Underground repairs decrease by7%
Better quality pumps Increase in between overhaul period
Hydrodynamic modelingp
G l I i d ti d d i ti b l
20
Goal: Increasing production and decreasing operating expenses per barrel
Kazgermunai (KGM)
5 oilfields: Akshabulak (Central, South and East), Nuraly and Aksai
140160180200
60
80Production and Capex profile, 100%
kbopd US$m
Gas utilization program implementation is at final stage: completed construction of second facility for gas utilization with a 40
6080100120140
20
40
second facility for gas utilization with a capacity of 310 mln m3 of associated gas and 150 thous. tonnes of liquified gas
020
02007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E
Production, kbopd Capex, US$m
Low lifting costs
Low capex requirements
, p p , $
Start of production 1996
2P reserves, GCA 31/12/10, mmbbl 180
Number of fields 5
Average well flow rate – 655 bopd
2P reserves life – 8 years
Number of fields 5
Well stock 103
Watercut, % ~11%
API gravity (density) API 38o2P reserves life 8 years
Well depth (min-max) – 1450-2200m
~0.83 g/cm3
Paraffin content,% ~12-15%
Sulfur content, % ~0.1-0.2%
21
Karazhanbasmunai (CCEL)
One of the biggest oilfields in Kazakhstan
High lifting costs200
250
300
40
50Production and Capex profile, 100%
kbopd US$m
g g
Long reserves life
L i t 50
100
150
200
10
20
30
Low capex requirements
Hot steam technology
002007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E
Production, kbopd Capex, US$m
Average well flow rate – 23 bopd
2P reserves life – 33.5 years
, p p , $
Start of production 1981
2P reserves, ML 31/12/10, mmbbl 449
Number of fields 1
Well depth (min-max) – 320-500m
Number of fields 1
Well stock 2,151
Watercut, % ~90%
API gravity (density) API 17o
~0.94 g/cm3
Paraffin content,% ~0.7-1.4%
Sulfur content, % ~1.6-2.2%
22
PetroKazakhstan Inc. (PKI)
100% PKKR, 50% Turgai Petroleum, 50% KGM
500
600
120
160Production and Capex profile, 100%
kbopd US$m
Exploration upside: 2P reserves of Kolzhan field ~ 55 mmbbl
100
200
300
400
40
80
Low lifting costs
Low capex requirements
0
100
02007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E
Production, kbopd Capex, US$m
Average well flow rate – 271 bopd
2P reserves life – 9 years
, p p , $
Start of production 1995
2P reserves, GCA 31/12/10, mmbbl 407
Number of fields 14y
Well depth (min-max) – 1100-2500m
Number of fields 14
Well stock 1,145
Watercut, % ~45%
API gravity (density) API 43o
~0.81 g/cm3
Paraffin content,% ~9%
Sulfur content, % ~0.15%
23
Exploration OverviewExploration Overview
24
Current portfolio overview
2009 2010 2011E
Recent exploration activity: Current exploration assetPending acquisitionAssets under MoU with NC KMG
2009 2010 2011E
Overall expenditure, US$ m 17 47 150-180
Number of blocks 3 5 10
Fedorovsky block
Temir
Stepnoi Leopard
Acreage, km2 21,697 23,300 41,118
Number of wells 4 8 24*
TereskenTaisoigan block
Liman block
Bobek, Makhambet
Urikhtau
Kolzhan
E.Zharkamys
R-9 block
Ustyurt (Mertvyi Kultuk)
Overall depth, m 9,100 18,600 67,750
2D seismic, km 400 240 2,510
Zhambyl
Ustyurt (Mertvyi Kultuk)
C1 block
Karaton-Sarkamys
Uzen-Karamandyba
C2 block
Zhenis
3D seismic, km2 300 855 739
Current status of projects in 2011:
Godina
Estimated recoverable resources of the current exploration portfolio ~ 1 billion barrelsp j
13 wells completed, 7 wells drilling/testing, 4 wells postponed/cancelled Supplemental exploration: hydrocarbons confirmed at 2 wells Post-salt: hydrocarbons confirmed at 1 well (Liman)
exploration portfolio ~ 1 billion barrels
25
Post salt: hydrocarbons confirmed at 1 well (Liman) Pre-salt: hydrocarbons confirmed at wells (Fedorovskiy)
* Including 5 pre-salt wells and 1 offshore well in North Sea
Exploration Strategy
Long-term Short-term Supplemental gportfolio
expansion program
portfolio expansion program
ppexploration and exploration of
existing projects
Maintain recoverable reserve increment at existing fields
Active exploration at the most perspective blocks
Acquisitions and exploration of pre-salt deposits in the Pre-Caspian depression edge
Expansion into new regions and prospects of sedimentary basins in Kazakhstan and abroad
Maintain recoverable reserve increment at existing fields
Active exploration at the most perspective blocks
Acquisitions and exploration of pre-salt deposits in the Pre-Caspian depression edge
Expansion into new regions and prospects of sedimentary basins in Kazakhstan and abroad
Maintain recoverable reserve increment at existing fields
Active exploration at the most perspective blocks
Acquisitions and exploration of pre-salt deposits in the Pre-Caspian depression edge
Expansion into new regions and prospects of sedimentary basins in Kazakhstan and abroad
Increase recoverable reserve at existing fields
Active exploration at the most prospective blocks
Acquisitions and exploration of pre-salt deposits in the Pre-Caspian depression edge
Expansion into new regions and sedimentary basins in Kazakhstan and abroad
perspective blocks abroadperspective blocks abroadperspective blocks abroadprospective blocks
Expected cost of addition of 1 bbl of recoverable reserves by exploration ~ $0.3 – $1.5
26
p y p $ $
Supplementary exploration, exploration of the existing projectsShort-term exploration portfolio expansion
FEDOROVSKYZHARKAMYS EAST
North-Kazakhstan KARPOVSKY NORTH
TEPLOVSKO
URIKHTAU
NORTH SEA
LIMAN
TAISOIGANTEMIR
ASTANA
oblastPavlodar
oblastKostanai
oblastAkmolaoblast
WestKazakhstan
TEPLOVSKO-TOKAREVSKOYE
R-9
Aktobe oblast
East-Kazakhstan oblast
Karagandybl t
Atyrauoblast
Kazakhstanoblast
Mangistau Kyzylorda
oblast
Almatyoblast
KARATON-SARKAMYS
UZEN-KARAMANDYBAS
goblast
y yoblast Zhambyl
oblast
South-Kazakhstan oblast
oblast
Exploration projects
South Kazakhstan oblast
Caspian
27
Exploration projects
* No fields for supplementary exploration are indicated on the map
Caspiansea
27
Projects of short-term exploration portfolio expansion
Kazakhstan exploration potential
Kazakhstan borders
Oblasts borders
Sedimentary basins
Sedimentary basins
Kazakhstan
PrecaspianUsturstko-BuzashinskiyMangishlakskiyAralskiySyrdariynskiySouth TurgaiNorth Turgai
y
North TurgaiNorth KazakhstanTenizShu-SarysuIliyskiyBalkhashAlakolZaisanZaisanPreirtyshskiy
28
Current exploration program(including supplemental exploration and short-term portfolio expansion)
Estimated cumulative additions of recoverable reserves, mmbbl
Geological exploration costs, US$m
1,2481,358 1,398
1,462
6937
341
375
331
545611
611 611611
708
1,097 8337
180
248
214
552 637747 787 851
284
231 180
258306 294
248214
424552
117
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016
Current portfolio Short-term expansion Current portfolio Short-term expansion
29
Scheduled scope of geological exploration works
Liman 2011 2012 2013 Total
No. wellsfirm 2 2 4contingent 2 2
Low 10.4
B 51
Forecast recoverable reserves increment, mmbbl
Scheduled scope of geological exploration works
contingent 2 2
Total depthfirm 3,050 3,000 6,050contingent 2,500 2,500
3D seismic, km2 165 1652D seismic, linear km
Karaton-Sarkamys 2012 2013 2014 2015 Total
Base 51
High 104.1
Estimated probability of success 35%
Low 50 2Karaton Sarkamys 2012 2013 2014 2015 TotalNo. wells firm 3 3
contingent 5 5 5 15
Total depth firm 9,600 9,600contingent 17,500 17,500 17,500 52,500
3D seismic, km2 160 500 500 1,1602D seismic linear km
Low 50.2
Base 136
High 203
Estimated probability of success 33%2D seismic, linear km
Ozen-Karamandybas 2011 2012 2013 2014 TotalNo. wells firm 1 4 5
contingent 3 3
Total depth firm 2,200 9,000 11,200contingent 10,500 10,500
Low 11.6
Base 58
High 87
3D seismic, km2 715 715
Zharkamys East 1 2011 2012 2013 TotalNo. wells firm 2 2
contingent 2 4 6
Total depth firm 6,150 6,150contingent 9 000 12 400 21 400
Estimated probability of success 43%
Low 38
Base 134
High 190contingent 9,000 12,400 21,4003D seismic, km2 200 2002D seismic, linear km 610 610
Fedorovskiy block 2011 2012 2013 2014 TotalNo. wells firm 3 3 6
contingent 2 2
g
Estimated probability of success 28%
Low 32.4
Base 162
30
g
Total depth firm 13,500 13,500 27,000contingent 10,800 10,800
3D seismic, km2 150 150
High 243
Estimated probability of success 78%
Liman
Geological data:
Post-salt, Middle Trias with terrigenous reservoir
Works performed:2008-2010: 2D seismic - 800 km New reservoir discovered at Novobogat South East based on well G-1 drilling
2011: 3D seismic of 165 sq.km - completed fully 2 scheduled wells drilled with interval of 2,900m. 1 well in process of testing:1 well in process of testing:
I Unit – production rate 37m3/day, II Unit – production rate 33 m3/day Moving to Unit III 1 well abandoned
Forecasted increase of recoverable reserves*51 mmbbl
Drilling (2010-2014)
Evaluation(2014)
Production testing (2015 )
75
2011 2012
3131* P50 estimate. Estimated probability of success 35%
Estimated exploration expenditures, US$m
Karaton-Sarkamys
Geological data:
Exploration block area: 2,462 km2
13 structures identified post salt 13 structures identified post-salt Target reservoir depth forecasted to be within 1,500-3,000m. Block accommodates 15 oil&gas fields confined to salt domes
(7 of them owned by KMG EP) and post-salt fields Tengiz and Korolevskoye
Works performed: Block purchased in 2011 from parent company NC KMG Old block studied at high 2D and 3D seismic and drilling density
i S i t tisince Soviet times
2011: Exploration works in progress
Forecasted increase of recoverable resources*136 mmbbl
47Drilling (2012-
2014)Evaluation
(2016)Production
testing (2017 )1630
4735
2011 2012 2013 2014
32* P50 estimate. Estimated probability of success 33%
Estimated exploration expenditures, US$m
Ozen-Karamandybas
Geological data: Exploration block area: 2,100 km2
11 structures identified in the Mesozoic as a total Target reservoir depth: 650-2 300 m
N
E. Burmasha
Mangistau Oblast
B d i 1 Target reservoir depth: 650 2,300 m
Works performed:The Block was purchased in 2011 from parent company NC KMG1. 2D seismic – 1,600 linear km;
Bodrai
Ozen
Karamandybas
E. Zhetybai
Moldybai Ozen-Karamandybas
Bodrai-1 (2200 m)
, ;2. Geochemical study – 900 modules;3. GPS survey – 2,200 sq.km;4. Electrical prospecting – 800 km;5. Seismostratigraphic study along with 2D and 3D LEGEND
BlockTenge
EnortaW. Enorta
2011: Drilling of well scheduled for 2011 in progress
Prospect Oilfield Well
0 10 20 km
Forecasted increase of recoverable resources*Forecasted increase of recoverable resources58 mmbbl
3 6 7 16 19
Drilling (2011-2014)
Evaluation(2015)
Production testing (2016 )
3.6 7
2011 2012 2013 2014
Estimated exploration expenditures, US$m
3333* P50 estimate. Estimated probability of success 43%
Zharkamys East I
Geological data:
Prospect identified in the pre-salt (carbon), in carbonate reservoir КТ-II
N Aktobe Oblast E. Akzhar
Zhanatan
Works performed:2011:• Scheduled 2D/3D for 2011 completed in full confirming the structure
presence
Zharkamys East I Laktybai
Karatobe
presence• Pre-salt well drilling commenced
LEGEND Block Prospect
Kindysai
Berkut South
Shotykol
Kokbulak
TuskumRA-1-T
(4750 m)0 10 20 km
p Oilfield Well
Tuskum
Forecasted increase of recoverable resources*134 mmbbl
2435
19 17.6
Drilling (2011-2014)
Evaluation(2014)
Production testing (2015 )2011 2012 2013 2014
Estimated exploration expenditures, US$m
3434* P50 estimate. Estimated probability of success 28%
Fedorovskiy block 50%
Geological data:
New gas condensate field discovered in pre-salt carbonates Reserves appraisal in progress
LEGENDBlockProspectOilfieldWell
N
RussianFederation pp p g
Works performed:2008-2010: 4 pre-salt wells drilled (3 production wells):
R hk k d t fi ld (2 ll ) U10 4 806 233
Federation
d kiRozhkovskoe
Chinarevskoe
Rozhkovskoye gas condensate field (2 wells): U10 – 4,806 m, gas 233-236k m3/day, condensate 1,503-1,528 bbl/dayU12 – 4,500 m, gas 153k m3/day, condensate 1,289 bbl/dayZhaik: U1 – 5,844, hydrocarbon 26 bbl/dayZharsuat: U5 – 5,803 m, dry
FedorovskiyZharsuatZhaik
Karachaganak
, , y
2011: 3 appraisal wells drilled at Rozhkovskoye gas condensate field
Forecasted increase of recoverable reserves*
0 10 20 kmWest Kazakhstan Oblast
162 mmbbl46
35 38
11 11 18
Drilling (2008-2014)
Evaluation(2015)
Production testing (2016 )
2011 2012 2013 2014 2015 2016
Estimated exploration expenditures, US$m
35* P50 estimate. Estimated probability of success 78%
M&AM&A
36
Acquisition driven growth
Targeted approachPast performance
IRR > 15%
Preferential access to onshore assets in KZ
Acquisitions YearProduction
Impact FY10(1)
Acquisitionprice cash
component(2)
US$m
Dividend payback
as of today(3)
US$m
Preferential access to onshore assets in KZ
High profitability of target assets
Conservative Brent assumption (Current
KGM 50% 2007 + 19% 971 1,225
CCEL 50% 2007 + 10% 150 81Co se at e e t assu pt o (Cu e t
Brent forecast of US$$80-90 / bbl)
Opportunities:
PKI 33% 2009 + 24% 101 90
NBK 100% 35
MMG 50%, КОА 50%, КТМ 51%(4)
Small and medium producing assets in KZ
Stakes in strategic projects
SBS 100%
WB 35%
2010Exploration
stage30
-
Stakes in strategic projects
Selective acquisitions abroadUGL 50% 2011Advancedexploration
stage164
37
(1) 100% - UMG and EMG production in 2010(2) Not including acquisition non-recourse debt for CCEL US$747m, PKI US$793m as at 30/06/2011(3) Not including dividends used to repay acquisition debt(4) At the stage of negotiation
Current project under negotiation: Mangistaumunaigas
NC KMG and KMG EP are in the process ofnegotiating the deal
MMG – Stepnoi Leopard
2P Reserves (100%) - 577 mmboe(1)
2010 Production (100%) 40 mmboeEMG PKKR (16.5%)
KGM (66.5%)(6)
TP (16.5%)
2010 Production (100%) – 40 mmboe
Reserve life >14 years based on 2P reserves
Atyrau refinery
UMG
CCEL (50%)MMG – Kalamkas (50%)
MMG – Atyraumunaigas
Two major producing fields Kalamkas and Zhetybai
MMG’s operations in close proximity tolegasy KMG EP assets (Uzen andKarazhanbas)
MMG – Zhetybai and satellites (50%)
100%FY 2010
US$m
1H 2011
US$m
Two major producing fields Kalamkas and Zhetybaicontribute almost 90% of the total production
Three exploration licenses, which are currentlyunder exploration and appraisal, 2 of these (Bobekand Makhambet) are offshore fields
Karazhanbas)
Revenue 2,879 1,989
EBITDA 1,095 746
Net Income 765 508
and Makhambet) are offshore fields
Crude is exported via the Atyrau-Samara pipeline(c.95%) and through the Aktau seaport (c.5%) toEurope (Poland, Slovakia, Italy and other)
38
MIBV Debt 1,998 1,396
(1) GCA reserves report as of December 2010
Estimated impact of near-term acquisition targets
MMG(50%)
KOA(50%)
KTM(51%) Total / Average(50%) (50%) (51%)
Impact on production(1)
+21%58 kb d
+4%10 kb d
+1%2 kb d
+26%69 kb dproduction(1) 58 kbopd 10 kbopd 2 kbopd 69 kbopd
Impact on +13% +5% +1% +19%Impact on2P reserves(2)
+13%278mmbbl
+5%109mmbbl
+1%21mmbbl
+19%408mmbbl
Note: (1) 100% - KMG EP consolidated production in 2010 (including KGM 50%, CCEL 50% and PKI 33%) (2) 100% - KMG EP consolidated 2P reserves as of the end of 2010 (including KGM 50%, CCEL 50% and PKI 33%)
39
Offshore opportunities
KMG EP and NC KMGsigned Memorandum providing access to the following offshore blocks in KZ:access to the following offshore blocks in KZ:
ZhambylWater depth: 4-9 mAcreage: 1,935 m2
GodinaWater depth: 20-50 m Acreage: 425 m2
ZhambylZhambyl
Ustyurt(former Mertvyi Kultuk)Water depth: 1-2.5 mAcreage: 7,273 m2
С1Water depth: 0-2 m Acreage: 1,584 m2
С1С1Acreage: 7,273 m
ZhenisWater depth: 75-100 m Acreage: 5,400 m2
С2Water depth: 5 mAcreage: 1,203 m2
Offshore international:
С2С2Ustyurt
(Mertvyi Kultuk)Ustyurt
(Mertvyi Kultuk)
35% share in White Bear (North Sea)GodinaGodina
ZhenisZhenis
40
Completed acquisitions
Asset, %Acquisition date
KGM(50%), April 2007
CCEL(50%), December 2007
PKI(33%), December 2009
Total
PRODUCING ASSETS
Deal price US$971m US$150m + US$782m non-recourse debt
US$100.5m + US$831m non-recourse debt
US$1,221.5m +US$1,613m non-recourse debt
Production +19% +10% +24% +53%impact1
19%33 kbopd
10%18 kbopd
24%42 kbopd
53%93 kbopd
2P Reserves impact2
+5%90 mmbbl
+13%224 mmbbl
+8%134 mmbbl
+26%448 mmbbl
Investment Dividends US$1,225m Dividends US$210m Dividends US$449m Dividends US$1,884mpayback as at 30/09/2011
, US$129m debt repayment US$81m priority return
US$359m debt repayment US$90m cash to KMG EP
, US$488m debt repayment US$1,396m cash to KMG EP
EXPLORATION ASSETS
NBK (100%), September 2010
SBS3 (100%), September 2010
White Bear (35%), August 2010
Fedorovskiy block (50%)March 2011
4 blocks NC KMG (100%)April 2011
Deal price US$35m cash 13 0 mmbbl (KMG EP
Deal price US$30m cash 138 mmbbl (P50) Exploration stage
The P1722 license covers - 213 km2
Drilling costs and other
Deal price US$164.4m,including US$87.8m of shareholder loans
Deal price US$40m cash As per preliminary
estimate prospective 13.0 mmbbl (KMG EP estimate) 12.9 mmbbl
(recoverable reserves as per TRACS)
Exploration stage Drilling costs and other project liabilities at the HC pre-discovery stage are estimated at US$25-30m
shareholder loans С1+С2 gas and condensate
reserves are 102 mmbl
estimate, prospective resources are approx. 1.5 bnbbl
(1) 100% = UMG & EMG production in 2010; (2) 100% = UMG & EMG 2P reserves as of 2010 year-end; (3) In 2011 the title was changed to LLP “KMG EP Exploration ventures”
41
Summary of JV’s financial results in 9M11(1)
9M 2011 CCEL 50% KGM 50% PKI 33% Sum/Average
Production volume th.tons 735 1,108 1,470 3,313mbbl 4,913 8,534 11,387 24,834
Sales by destination th.tons 756 1,108 1,855 3,719Export th.tons 688 1,098 1,262 3,048pDomestic th.tons 68 10 593 671
FinancialsRevenue US$m 530 896 1,319 2,745$ , ,Operating expenses US$m 390 517 828 1,735Income taxes US$m 36 134 162 332Profit for the period US$m 104 245 329 678Dividends received US$m - 100 132(3) 232Dividends received US$m 100 132 232
Capex (from cash flow statement) US$m 21 15 80 116Lifting costs $/bbl 14.29 1.75 5.01 5.73Conversion factor bbl/ton 6 68 7 70 7 75Conversion factor bbl/ton 6.68 7.70 7.75
(1) IFRS unaudited figures(2) Including priority return of US$54m for 2009-2010 from CCEL, remaining is used to repay debt(3) 80% of the dividends received are used to repay KMG PKI Finance BV non-recourse debt
42
Reference Information
ContactsShare information, 09/11/2011Corporate website: www.kmgep.kz
Investor relations e-mail:
Total Treasury
Number of ordinary shares 70,220,935 1,836,116
Number of preferred shares 4,136,107 1,912,793 Investor relations e-mail: [email protected]
Tel: +7 (7172) 975433
Number of preferred shares 4,136,107 1,912,793
GDRs per one ordinary share 6
TickersLSE KMG
KASE RDGZ
Tel: +7 (7172) 975433Reuters KMGq.L
Bloomberg KMG LI
Tickers
50
Abbreviations and Acronyms
UMG – Uzenmunaigas Production BranchEMG – Embamunaigas Production BranchKGM – JV Kazgermunai LLPKGM JV Kazgermunai LLPCCEL – CITIC Canada Energy Limited (holds 94% in JSC Karazhanbasmunai)PKI – KMG PKI Finance BV (holds 33% in PetroKazakhstan Inc.)KOA – Kazakhoil Aktobe LLPKTM – KazakhTurkMunai Ltd.MMG Mangistaumunaigaz JSCMMG – Mangistaumunaigaz JSCTP – Turgai Petroleum JSCSBS – SapaBarlau Service LLP
bbl – barrelmmbbl – million barrelsbnbbl – billion barrelskbopd thousand barrels per daykbopd – thousand barrels per dayUS$ m – million US dollarsUS$ bn – billion US dollarsKZT – Kazakh TengeKZT th. – thousand TengeKZT b billi TKZT bn – billion TengeNC KMG – National Company KazMunaiGas JSCKMG EP – KazMunaiGas Exploration Production JSC
51