Q1 2013 Results – Outperforming Targets

Amsterdam, 20May 2013 – Zhaikmunai L.P. (LSE: ZKM) (“Zhaikmunai”), the oil and gas exploration and production enterprise with assets in north-western Kazakhstan, today announces its financial results for the period from 1 January to 31 March 2013.

HIGHLIGHTS FROM A RECORD FIRST QUARTER (Q1 2013)

• OPERATIONAL:
  • Record total average daily production of 46,273 boepd, an increase of 25% compared to FY2012 average (36,940 boepd);
  • Continued progress with drilling programme and expansion of processing ability;

• FINANCIAL:
  • Record revenue of US$ 229 million, up 7% compared to Q4 2012 (US$ 214 million);
  • Record EBITDA of US$ 153 million, up 30% compared to Q4 2012 (US$ 117 million);
  • Strong cash generation, net debt of US$ 365 million at 31 March 2013, down 9% compared to the end of FY 2012 (US$ 401 million);
  • Net debt to LTM EBITDA ratio fell below 0.75x;

• NEW DEVELOPMENTS:
  • Excess cash to be deployed through a GDR Buy-Back Programme of up to US$ 50 million commencing Monday, 20 May 2013.

Kai-Uwe Kessel, Chief Executive Officer of Zhaikmunai, commented:

“Our excellent first quarter results bear witness to the outstanding performance we have achieved operationally. Production levels have surpassed our average target for the year. Our revenue and EBITDA are again at record levels for the quarter and our cash position has never been stronger. While we will continue to make significant ongoing investment in future growth, we are pleased to be able to combine this with a US$ 50 million GDR Buy-Back Programme. We continue to focus on developing Zhaikmunai to deliver the best possible returns to our shareholders and remain confident about our strong prospects in 2013.”

Q1 2013: STRONGEST FINANCIAL RESULTS IN ZHAIKMUNAI’S HISTORY

All figures in US$ million (unless otherwise stated)

Revenue, EBITDA and Net Income

Revenue from sales of crude oil, stabilised condensate, LPG and dry gas stood at US$ 229 million. EBITDA stood at US$ 153 million. The EBITDA margin increased to 66.7% from 54.9% during the previous quarter, reflecting operational leverage from the capacity to handle increased production. Net income was also up for the period at US$ 66 million.

Cost of Sales

Cost of sales declined by US$ 10.7 million, or 12.9%, to US$ 72.4 million compared to US$ 83.1 million for Q4 2012. This decline was driven by a decrease in maintenance expenses of 44.2% from the previous period. The decline in maintenance expenses by US$ 9.7 million to US$ 12.3 million was due to increased GTF costs related to plant shut down in Q4 2012.

Cash

Zhaikmunai ended the first quarter of 2013 with US$ 287.3 million in cash and cash equivalents, which includes US$ 3.8 million of restricted cash and US$ 50.0 million of short-term deposits. This represents a US$ 35.9 million increase, or 14.3%, compared to the end of the 2012 financial year.

Initiation of GDR Buy-Back Programme

As announced on 22 April 2013, Zhaikmunai’s long-term GDR Buy-Back programme of up to US$ 50 million will commence following this Q1 2013 Results release.

OPERATIONS AT AN ALL TIME HIGH

Record Production Drives Revenue and EBITDA Higher

• Total average daily production for Q1 2013 was 46,273 boepd, an increase of approximately 24% compared to Q4 2012 (37,184 boepd);
• The product split for Q1 2013 was as follows:

Drilling activities

• A total of three new wells have been completed in the course of Q1 2013: 2 gas condensate production wells (Wells # 216 and # 410) and 1 crude oil appraisal well (Well # 701);
• Zhaikmunai is on target to achieve its planned drilling programme for 2013 of 15 to 17 wells comprising 9 appraisal wells, 1 exploration well and 5 to 7 production wells. The field currently has 15 oil wells and 12 gas condensate wells in operation.

Expansion of Processing Capacity with Additional Train to Gas Treatment Facility

Design of the third train of Zhaikmunai’s Gas Treatment Facility (GTF) has been completed and has received approval from the Kazakh authorities. Zhaikmunai is currently analyzing and evaluating the bids for the final selection of the main process and auxiliary equipment vendors. The tender for civil and construction works has been launched and results are expected in the course of Q2 2013.

Other News 

Zhaikmunai Hosting a Site Visit on Thursday, 27 June 2013

On Thursday, 27 June 2013, Zhaikmunai is hosting a site visit of its Chinarevksoye field for analysts and investors. Details and registration are available on www.zhaikmunai.com.

KASE (Kazakhstan Stock Exchange) Presents Zhaikmunai with Special Award

On March 29 2013, Zhaikmunai was presented with a special award by KASE for its transparency record.

Arnat Abzhanov, Member of the Management Board, JSC Halyk Finance, commented:

“Companies who are listed on more than one stock exchange are faced with different and sometimes conflicting reporting requirements. The KASE award demonstrates that Zhaikmunai manages these challenges efficiently every day and is fully committed to all of its security holders.”

CONFERENCE CALL

Zhaikmunai’s management team will be available for a Q&A session for analysts and investors on the day of the announcement, Tuesday, 21 May 2013 at 14:00 UK time (UTC/GMT+1 hour).

If you would like to participate in this call, please register by email using the following email address: ir@nog.co.uk. Please provide your ID details (name, title, company, email address and telephone number) in order to receive dial-in details.

Download the Q1 2013 Financial Statements

Further information

For further information please visit www.zhaikmunai.com

Further enquiries

Zhaikmunai LP – Investor Relations
Bruno G. Meere
Kirsty Hamilton-Smith
ir@nog.co.uk
+ 31 20 737 2288

Pelham Bell Pottinger
+ 44 (0) 207 861 3232
Philip Dennis
Elena Dobson

About Zhaikmunai

Zhaikmunai is an independent oil and gas enterprise currently engaging in the production, development and exploration of oil and gas in north-western Kazakhstan. Its Global Depositary Receipts (GDRs) are listed on the London Stock Exchange (Ticker symbol: ZKM). Zhaikmunai’s principal producing asset is the Chinarevskoye field, in which it holds a 100% interest and is the operator, through its wholly-owned subsidiary Zhaikmunai LLP. In addition, Zhaikmunai holds a 100% interest in and is the operator of the Rostoshinskoye, Darinskoye and Yuzhno-Gremyachenskoye oil and gas fields. Located in the pre-Caspian basin to the north-west of Uralsk, these exploration and development fields are approximately 60 and 120 kilometres respectively from the Chinarevskoye field.

Forward-Looking Statements

Some of the statements in this document are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of the Partnership or its officers with respect to various matters. When used in this document, the words “expects,” “believes,” “anticipates,” “plans,” “may,” “will,” “should” and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcomes to differ materially from those suggested by any such statements.

[1] Q4 numbers contain audit adjustments made to the full year 2012 and therefore are not a true reflection of the actual Q4 reality, i.e. they are obtained by deducting Q3 2012 results from full-year 2012 results). They are used here solely for comparative purposes in order to show the marginal changes from the third to the fourth quarter in the context of the full production ramp-up which took place in 2012.

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• Q1 2013 Financial Statements
• Q1 2013 Financial Statements - RU