Continuing strong progress in the first half of the year
Zhaikmunai L.P. (LSE:ZKM) (‘Zhaikmunai’), the independent oil and gas enterprise operating in northwestern Kazakhstan, today announces its interim results for the six months to 30 June 2008.
Financial highlights
- Revenue up 93 per cent to US$76.9 million (1H07: US$39.9 million);
- Operating profitup98 per cent to US$42.1 million (1H07: US$21.3 million);
- EBITDA up 68 per cent to US$42.1 million (1H07: US$25.0 million);
- Net income up 22 per cent to US$17.6 million (1H07: US$14.4 million);
- Average realised oil price ofUS$91.92/bbl (1H07: US$52.56/bbl);
Operational highlights
- Average daily production for the six months up to 4,930 barrels per day (1H07: 4,639 bbls per day);
- End June 2008 daily oil production up to 6,700 bbls per day;
- Long-term rail cars agreement obtained;
- Progress with detailed engineering and procurement for the Gas treatment
plant
Key developments
- New internal reserve estimates report submitted to Ministry of Energy & Mineral Resources (MEMR)
- New drilling programme launched for production wells to increase production under existing production permit
Commenting on the results, Kai-Uwe Kessel, Chief Executive, said:
“The first half of the year has shown strong progress financially and operationally. Following the announcement of six commercial discoveries in May, we have now submitted new internal reserves estimates for the whole license area for approval. This is a new important stage of growing the company’s production and financial performance.”
Chairman and Chief Executive’s Review
In June 2008, Zhaikmunai announced that it made six commercial discoveries in the Chinarevskoye license. The Company issued six declarations on May 15 and May 17 which were subsequently submitted to the Kazakh ministry of Energy & Mineral Resources (MEMR) on May 19, 2008. This followed successful drilling and test operations of four drilled exploration wells and new interpretation of existing seismic, production and well data.
Revised reserve estimates have now been finalised for the entire license area and have been submitted to MEMR, for approval in order to obtain the development lease for all gas-condensate reservoirs. Approvals of the reserve estimates and subsequently, the development plans are expected to be obtained by the end of 2008.
In May 2008, Zhaikmunai launched a new drilling campaign for production wells in order to increase current level of oil production under the existing production permit. We continue to develop transportation and treatment infrastructure for the future anticipated ramp up of production.
Financial Results
Revenue
Revenues from Oil Sales for the first 6 months of 2008 were $76.9 million, up 93% on the corresponding period (1H 07: $39.9 million). Sales volumes for the first 6 months of 2008 were 837,275 bbls, up 10% (1H07: 759,424 bbls).
Net price received
The weighted average Brent crude oil price on which Zhaikmunai based its sales for the first 6 months of 2008 was US$105.55/bbl (1H07: US$65.1/bbl). The discount, accounting for the trader’s costs and fee, was US$13.63/bbl for the first 6 months of 2008 (1H07: US$12.53/bbl). Accordingly, the average netback for crude oil sales on FOB Uralsk basis during the first 6 months of 2008 was US$91.92/bbl (1H07: US$52.56/bbl).
Capex
Total net cash used for capital expenditures for the first 6 months of 2008 amounted to US$90.8 million, as compared to US$55.1 million for the first 6 months of 2007.
Operational Review
Production
Production volumes increased 7 per cent for the first 6 months of 2008 to 892,000 barrels, compared to 835,000 barrels for the first 6 months of 2007.
Daily crude oil production increased to 4,930 barrels per day during the first six months of 2008 in comparison to an average of 4,639 barrels per day in first half of 2007.
At the end of June 2008, there were 9 producing wells, an increase from 7 producing wells in the corresponding period. Daily oil production reached 6,700 barrels per day.
Drilling
During the second quarter, the company continued to deploy 4 drilling rigs. At the end of June, one UNGG rig and two Saipem rigs were drilling well numbers 51, 57 and 115. The second UNGG rig was being moved to its new location at well 121.
During the quarter the company employed 4 work-over rigs. Work-over operations have been carried out on wells 23, 27, 56 and 61.
Finally, an additional rig from KazBurgaz has been employed for drilling water wells that will form part of the reservoir pressure maintenance system.
Sales & Marketing
The second quarter saw some discontinuity in the supply of rail cars for shipment of crude. The shortage of railcars effectively caused a lowering of the production down to 2,000 bbls per day. By August, the railcar shortage was resolved and production was back up to 6,700 bbls per day.
Gas Treatment Plant
During the first half of the year, project activity continued to make progress, focused primarily on basic and detailed engineering and procurement.
Construction
The main other ongoing construction projects are: the oil pipeline (from the field to the city of Uralsk), construction of an oil loading terminal, the gas pipeline (from the field to the Intergas Central Asia Gas pipeline), infield pipelines and roads, expansion of the existing Oil Treatment Unit, construction of a reservoir pressure maintenance system and the construction of a 90 flat residential building in the city of Uralsk. The first project to be commissioned (end of Q3) will be the expansion of the Oil Treatment Unit.
Financial Statements
The reviewed consolidated financial statements for the period through to 30 June 2008 are appended to this release.
Conference call
Zhaikmunai’s management team will be holding a conference call for analysts and investors to discuss this development at 2pm BST on 2 September 2008. Dial in details for the conference call and the replay facility, which will be available for one week, are below.
Participants International Dial In: +44 (0) 1452 561 263
Conference ID 62589379
Replay Details:
International Dial In: +44 (0) 1452 55 00 00
Replay Access Number: 62589379#
For further information please visit our website www.zhaikmunai.com or contact:
Zhaikmunai
info@zhaikmunai.com
Analysts/Investors
Frank Monstrey, Chairman
+44 1624 682 179
Kai-Uwe Kessel, CEO
Jan-Ru Muller, CFO
Media
Brunswick Group LLP:
Michael Harrison +44 207 404 5959
Carole Cable
Notes to Editors
Zhaikmunai is an independent oil and gas enterprise engaged in the exploration, production and sale of crude oil and gas condensate in northwestern Kazakhstan. The Company’s licence area is the Chinarevskoye field, which is located in the northern part of the oil-rich Pre-Caspian Basin. Zhaikmunai entered into a Production Sharing Contract with the Republic of Kazakhstan in 1997. Based on a reserve report prepared by Ryder Scott Company L.P., Zhaikmunai’s estimated gross proven plus probable hydrocarbon reserves as at 1 July 2007 were 397 million boe. Zhaikmunai’s GDRs are listed on the London Stock Exchange under the ticker symbol ‘ZKM’.
Forward looking statements
In the interests of providing Company current and potential investors with information regarding the Company, including the Company’s assessment of its and its subsidiaries’ future plans and operations, certain statements included in this press release may constitute forward-looking information or forward looking statements (collectively, “forward-looking statements”). All statements contained herein that are not clearly historical in nature are forward-looking, and the words “anticipate”, “believe”, “expect”, “estimate” and similar expressions are generally intended to identify forward-looking statements. Many factors could cause the Company’s actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. These forward-looking statements made as of the date hereof disclaim any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise.
- Download
- Press Release
