JSC KazMunaiGas Exploration Production

Transcription

1 JSC KazMunaiGas Exploration Production UBS Russia & CIS Annual Investment Conference September 2010, Moscow

2 2 Important Notice 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 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 forwardlooking 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 Investors The 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 Company s reserves and the reserves definitions the Company uses.

3 Company Overview 3

4 KMG EP Investment Case The largest listed Kazakh oil producer Top Kazakh Oil Producers (kbopd, 1H2010) Unique advantages in Kazakhstan based on relationship with the National Company KazMunaiGas (NC KMG) TCO KMG EP - cons Track record of delivering on strategic goals announced at IPO in 2006 Strong financial position and FCF generation, support from NC KMG and diverse investment opportunities provide the basis for the future growth KPO KMG EP (OMG+EMG) Aktobemunaigas Mangistaumunaigas KGM % Corporate governance in line with international standards to ensure protection of minority shareholders TurgaiPetroleum PKKR CCEL PKI 33% 50% KMG EP consolidated share in production in Kazakhstan 20% (based on 1H10) 1 ; share in 2P reserves - 6.6% (based on FY09) 1 KOA Other Source: MEMR; KMG EP production converted using a factor of 7.36 bbl per tonne., KGM - 7.7, Karazhanbasmunai , PKI 7.75 others KMG EP offers a unique investment opportunity in Kazakhstan s oil sector Notes: (1) including stakes in KOA, KTM, MMG. Acquisition process is expected to complete by the end of

5 5 Operating overview UAS: 351 kbopd (2) RUSSIA KAZAKHSTAN Pavlodar 4.1 (7.5) mtpa (*) PKI (33%) Astana CPC 564 kbopd (2) Atyrau 4.0 (4.9) mtpa EMG UMG Domestic 20% CPC 29% UAS 51% (*) Export 89% Kyzylorda Domestic 11% Domestic 29% KCP 38% Aktau 33% KGM (50%) (*) KCP 155 kbopd (2) CHINA Aktau BTC CCEL (50%) Oil pipeline Domestic 12% (*) Primorsk 19% Mahachk ala 69% UZBEKISTAN Oil Refinery, throughput 2009 (capacity) Shymkent 4.0 (7.0) mtpa Notes: (1) Source: Gaffney, Cline & Associates (KMG EP, KGM, PKI) and Miller and Lents (CCEL) reserves report; (2) Total pipeline capacity; (3) Sales, 1H10 Almaty 2P reserves, mln bbl (1) KYRGYZSTAN Core 1,725 Production 2009, kbopd Production 1H2010, kbopd KGM (50%) CCEL (50%) PKI (33%) 120 n/a 42 TOTAL 2,

6 KMG EP: a key subsidiary of National Company KazMunaiGas Trading on LSE (GDRs) and KASE Foreign institutions (including CIC) Local pension funds Other investors 37% (1) 63% (1) KMG EP Сore Assets UzenMG 100% EmbaMG 100% Acquisitions in Kazgermunai 50% (Apr 2007) CCEL 50% (Dec 2007) PKI 33% (Dec 2009) Acquisitions in 2010 Kazakhoil Aktobe 50% Kazakturkmunai 51% Mangistaumunaigas 50% Republic of Kazakhstan 100% Holding Samruk-Kazyna 100% National Company KazMunaiGas Notes: (1) Ordinary shares, excluding treasury shares as at 03/09/2010 Mining Kazakhmys (14.99%) ENRC (11.65%) Finance sector BTA (75.1% ) Halyk Bank (26.8%) Kazkommertsbank (21.3%) Alliance Bank (67%) Other largest National Companies KazAtomProm (100%) Kazakhtelecom (51%) Kazpost (100%) KEGOC (100%) Upstream TengizChevroil 20% Kashagan 16.81%; KazMunaiTeniz 100% Transportation KazTransOil 100% KazTransGas 100% CPC 19%; KCP 50% Refining, marketing, services KMG - refinery and marketing 100% Atyrau refinery 99.5% Shymkent refinery 50% Pavlodar petrochemical plant 58% KazRosGas 50% TenizService 49% KING (research institute) 90% Rompetrol 100% 6

7 Strategy and Acquisitions 7

8 8 Strategic Outlook Focus on Growth of Shareholder Value Kazakhstan International On-shore (short- to mid-term) Selective consolidation of exploration and producing assets Ongoing exploration on prospective areas Improvement of asset efficiency Off-shore* (mid- to long-term) Partnership with NC KMG and КazМunaiТeniz Significant potential for reserves and production growth On-shore and off-shore (mid- to long-term) Leading oil & gas company in the Caspian region: Potential synergy effect Knowledge of the region and methodology Strong relationship between the Caspian region states Priority countries: Russia, Turkmenistan. Outside the Caspian region: Screening for commercially attractive growth opportunities Development of expertise through partnership with world-class companies in international projects * KMG EP participation in the Caspian offshore developments is subject to negotiations between NC KMG and NWF Samruk-Kazyna

9 9 Completed acquisitions Asset KazGerMunai (50%), Apr 2007 Karazhambasmunai (50%), Nov 2007 PetroKazakhstan (33%), Dec 2009 Total Deal Value US$971m cash US$150m cash + US$782m nonrecourse debt US$100.5m cash + US$869m nonrecourse debt US$1,221.5m cash+ 1,651m non-recourse debt Impact on 33 kbopd (+17%) production 1 based on 2008FY 17 kbopd (+9%) based on 2008FY 42 kbopd (+19%) based on 1H10 92 kbopd (52%) based on 1H10 Impact on 2P reserves 118 mmbbl (+10%) 259 mmbbl (+15%) 120 mmbbl (+6%) 475 mmbbl (+28%) 2 Investment US$800m dividends US$54m dividends return 3 (priority return of US$27m per year) US$99m dividends US$953m dividends Notes: (1) Increase in production due to consolidation of appropriate share from acquired assets; (2) Based on reserves data for 2009 year-end. (3) Investment return from the date of acquisition to 30 June 2010.

10 10 Acquisitions in progress, 2010 Asset Kazkhoil-Aktobe (50%) Kazakhturkmunai (51%) Mangistaumunaygas (50%) Total Deal Value Total US$466m: US$350m cash + US$116m net debt Total US$123m: US$70m cash + US$53m net debt Total US$1,660m: US$330m cash + US$1,330m net debt Total US$2,249m: US$750m cash + US$1,499m net debt Impact on 9 kbopd (+3%) 2 kbopd (+1%) 57 kbopd (+21%) 69 kbopd (+26%) production (1) Impact on 2P reserves 109mmbbl (+5%) 21mmbbl (+1%) 278mmbbl (+13%) 407mmbbl (+19%) Expected close of transaction 4Q Q Q 2010 The deals structure is designed to minimise downside risks while preserving benefits related to increased reserves and production Note: (1) based on 1H10 results

11 11 Mangistaumunaigas (MMG) Overview MMG holds interest in 15 producing fields in Mangistau region, including two major producing fields Kalamkas and Zhetybai in close proximity to Uzen field MMG also holds three exploration licenses with significant exploration upside including two offshore blocks: Onshore (Stepnoi Leaopard) - Seven oil & gas fields in Teplov-Tokarev zone and Kamenskoye gas field in the Precaspian Basin Offshore (Atyraumunaigas) - two offshore licenses Bobek and Makhambet: Located in north part of Caspian sea Water depth is around 4-8m. Exploration upside Development upside from existing producing fields - ABC1 Reserves 1 of 1.28bn bbl is considerably higher than DG&M 2 2P Reserves estimate of 556mmbbl Notes: (1) State approved balance of recoverable reserves; (2) Technical advisor DeGloyer MacNaughton Location Stepnoi Leopard Atyraumunaigaz Kalamkas Exploration asset Zhetybai & Satellites Producing asset MMG key financials, US$mn 2008FY 2009FY 1H10 Revenue 3,549 2,465 1,388 Opex 2,079 1, EBIT 1, Net income Assets 2,109 1,863 2,111 Liabilities 1, Equity 937 1,208 1,327 Source: MMG financials prepared in accordance with IFRS

12 12 Exploration activity in 2010 Exploration during 1H2010 R9 testing of one postsalt exploration well completed. The well was dry and was consequently abandoned S. Nurzhanov field started drilling of two postsalt evaluation wells, with projected depth of 3,500m; Exploration expenditures was US$3.5m Kamyshitovoye Liman Atyrau Taisoigan Makat East R-9 Planned exploration in 2H2010 Drilling of five postsalt exploration wells 2D/3D seismic exploration and interpretation Exploration drilling budget US$24m (not including acquisition of new blocks) Caspian Sea Tengiz Akingen Nurzhanov Acquisition of exploration blocks Exploration blocks to be transferred from NC KMG: Uzen-Karamandybas, Karaton-Sarkamys, Temir and Teresken Additional exploration blocks to be acquired on the market Aktau Uzen Uzen field Uzen and Karamandybas adjacent territories Kazakhstan Turkmenistan Source: Gaffney Cline & Associates report

13 13 White Bear White Bear Overview White Bear licence covers 213 km 2 Water depth c.90 m Close to existing BG-operated infrastructure Several HPHT prospects expected within the licence White Bear BG 65%, KMG EP 35% Armada BG 76.4 % Expected Timeline White Bear exploration well expected to spud in first-half 2011 Drilling expected to last approximately 5 months If successful further exploration and appraisal wells likely Licence exploration phase ends 2015 Secondments of KMG EP technical staff to operator expected in Sep-Oct Transfer of offshore technology and expertise Everest BG 81.3%

14 Operational and Financial Overview 14

15 15 Strong Growth in 2P Reserves since IPO year, mmbbl , , Acquisitions in progress: MMG 50%, KOA 50%, KTM 51% 1,495 2,200 Existing assets: Core, KGM 50%, CCEL 50%, PKI 33% As at 31/12/2006 Production & Adjustments (1) KGM and CCEL acquisitions As at 31/12/2007 Production & Adjustm ents As at 31/12/2008 Production & Adjustm ents (1) (1) PKI 33% acquisition Proforma, as at 31/12/2009 including M&A (2) targets Since December P reserves up c.75% through exploration, revisions and acquisitions Source: Gaffney, Cline & Associates for KMG EP, KGM, PKI and Miller Lents for CCEL (1) As a result of exploration activity and revisions (2) Per GC&A reserves estimate as at 31 March 2009

16 16 Production growth % 336 kbopd H10 Acquisitions (1) impact Core assets KGM (50%) CCEL (50%) PKI (33%) KOA, KTM, MMG Source: MEMR, KMG EP data (1) Acquisitions impact was calculated based on 1H2010 results.

17 17 Capital expenditures 2010 Budget highlights: Base case budget based on Brent price of US$65/bbl and FX rate of 150 KZT/USD Production drilling in wells (vs. 95 in 2009) KMG EP CAPEX, US$bn E Capex at Core assets (EMG&UMG): Budgeted Capex in 2010 full year US$555m: Development drilling US$280m Construction, equipment and other US$248m Exploration drilling US$27m Actual Capex in 1H10 US$180m 26 Associates & JV s CAPEX, US$bn E KGM CCEL PKI

18 18 Financial Performance EBITDA per barrel ($/bbl) Net Cash (1) (US$bn) H H10 EBITDA, $/bbl Bre nt, $/bbl KZT/USD (1) Cash, cash equivalents and financial assets net of borrowings, end of period

19 Improvement of Balance sheet structure Cash balance 30/06/10 Cash $4.7bn Net Cash 1 $3.8bn Committed uses of cash in 2H10 Assuming no operating cash inflows/outflows M&A KOA, KTM, MMG NC KMG Bond 2 Capex in 2H10 (estimate) Dividends distribution Total $0.75bn $1.5bn $0.37bn $0.35bn $3.0bn Pro-forma cash balance 2010 year-end Cash $1.7bn NC KMG Bond 2 $1.5bn Cash+Bond 2 $3.2bn Net Cash 1 $2.3bn Treasury policy update: changes in cash allocation by banks 30/06/10, US$bn 31/12/11, US$bn KKB & Halyk Other Banks KKB & Halyk Other Banks Notes: (1) Cash, cash equivalents and financial assets net of borrowings, end of period; (2) NC KMG Bond is treated as cash component 19

20 20 Production costs per bbl (1) at core assets % 47% 45% 47% 51% 44% 51% 48% 66% 49% 52% 53% 61% 54% 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Employee benefits Energy Materials Repairs & maintenance KZT/USD (1) All costs for labour, materials, repairs, maintenance and electric power including those not directly related to oil production

21 21 Export and domestic sales (Core assets) Sales volume, kbopd 1H10 Netbacks US$/bbl UAS CPC Domestic Average Brent n/a n/a H10 Domestic CPC UAS Sales price Quality bank - (6.49) - (1.87) Premium of bbl difference (1) (0.18) Realized price Rent tax Transportation Sales commission Netback price Notes: (1) Reconciliation adjustment due to API gravity difference between KMG EP oil and average pipeline mix

22 Export economics in $/bbl 02/01/08 09/02/08 18/03/08 25/04/08 02/06/08 10/07/08 17/08/08 24/09/08 01/11/08 09/12/08 16/01/09 23/02/09 02/04/09 10/05/09 17/06/09 25/07/09 01/09/09 09/10/09 16/11/09 24/12/09 31/01/10 10/03/10 17/04/10 25/05/10 02/07/10 09/08/10 17th May 2008 Export duty introduced at the initial rate $15/bbl ($109.91/ tonne) 11th October 2008 Export duty Increased to $28/bbl ($203.8/tonne) 1 Jan 2009 New Tax Code: Rent tax and MET replace export duty and royalty respectively Royalty/MET Rent tax Export duty Brent 16 August 2010 Export duty reintroduced at the rate of $2.7/bbl ($20/tonne)

23 23 Tax Regime (US$/bbl) Estimated tax take 1 at different oil prices based on 2009 cost structure 25% 32% 37% 43% 47% 50% 53% Tax burden ($/bbl) $40/bbl $50/bbl $60/bbl $80/bbl $100/bbl $120/bbl $140/bbl CIT EPT Other taxes Oil price MET (US$/bbl) Rent Export duty 2 Export duty re-introduced effective since August 16, 2010 at the rate of $2.7/bbl Notes: (1) Estimated tax take 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. (2) Estimated for 2H10 from 16 August (date of introduction of export duty) with Export duty of $2.7/bbl

24 24 Turgai Petroleum resolution Background The dispute between Lukoil and PKI goes back to 2005 over Lukoils pre-emption right to acquire a 50% stake in Turgai Petroleum Agreed resolution On 16 August 2010 PKI and Lukoil entered into Amicable Agreement on the dispute PKI and Lukoil will continue to jointly own TP in equal shares CPC UAS Pre- Caspian basin RUSSIA KAZAKHSTAN PKI Turgai basin Kazgermunai CHIN A Negotiated benefits for KMG EP KMG EP will be held harmless in respect of any liability in relation to the payment of the compensation or any loss relating to such liability KMG EP will increase its presence in the management of PKI group of companies KMG EP will increase its share in exploration assets of PKI Distribution of TP s accumulated dividends BTC About Turgai Petroleum: UZBEKISTAN KYRGYZSTAN TP owns licenses to explore and produce hydrocarbons from Kumkol North and East Kumkol oil fields Production in 1H10: 63 kbopd KMG EP share 10 kbopd 2P oil reserves as at 31/03/2009: 104 mmbbl KMG EP share 17 mmbbl

25 25 Reference Information Share information, 03/09/2010 Total Treasury Number of ordinary shares 70,220,935 1,791,264 Number of preferred shares 4,136, ,260 GDRs per one ordinary share 6 Contacts Corporate website: Investor relations ir@kmgep.kz Tickers Tel: +7 (7172) LSE KMG Reuters KMGq.L KASE RDGZ Bloomberg KMG LI