EBITDA first nine months up to US$ 71.24 MM (+86.3 % YoY)

London – 16 December 2010 – Zhaikmunai LP (LSE: ZKM) (“Zhaikmunai”), the oil and gas exploration and production business based in northwestern Kazakhstan, today announces its full financial results for the three and nine months ended 30 September 2010.

THIRD QUARTER SUMMARY

All figures in US$ millions unless otherwise stated

NINE MONTHS ENDED 30 SEPTEMBER 2010 SUMMARY

All figures in US$ millions unless otherwise stated

FINANCIAL HIGHLIGHTS

Revenue

The company has realized higher netback prices as the Brent price recovered to a level above US$ 80 per barrel late in the third quarter. Zhaikmunai was also able to reduce its discount thanks to better rail tariffs and further diversification in its customer base. In July 2010, Zhaikmunai made its first shipment of crude oil through the Black Sea port of Feodosia (Ukraine). A total of 233,444 bbl was transported by rail to Feodosia and sold loaded on a tanker on a Free on Board (FOB-sale) basis.

Cost of Sales

Cost of sales increased by US$6.9 million, or 21.83%, to US$38.2 million in the nine months ended 30 September 2010 from US$31.4 million in the nine months ended 30 September 2009, due primarily to an increase in depreciation, royalties and government profit share.

Cash

Zhaikmunai ended the third quarter of 2010 with US$ 80.88 million of cash and cash equivalents, of which US$ 21.601 million was restricted cash. As a result of the refinancing of its senior debt through the issuance of a bond in October 2010, there is no longer any obligation for Zhaikmunai to retain any of its cash in a restricted cash account.

OPERATIONAL HIGHLIGHTS

The increase in production during the first nine months of 2010 (compared to the first nine months of 2009) was driven primarily by the surge in test production experienced during Q3 2010 in conjunction with the completion of new gas-condensate production wells in that period.

As a result, production jumped in the third quarter to a daily rate of 8,972 bbl. This compares with a daily production of 6,979 bbl during the same period last year; an increase of 28.6%.

As at 30 September 2010, inventory comprised 4.4% of the Group’s current assets compared to 1.9% as at 30 September 2009.

GAS TREATMENT FACILITY

The commencement of liquid and gas production from Zhaikmunai’s Gas Treatment Facility is imminent. Following the achievement of Mechanical Completion on September 30th 2010, Zhaikmunai and its contractors KSS and Exterran have been commissioning the Gas Treatment Facility during the months of October and November. Black Start (the process whereby reverse gas from the gas pipeline is brought into the system) has taken place and the Gas Treatment Facility has been powered up, as part of a comprehensive ongoing commissioning and testing schedule. An extensive fire safety testing program is also currently under way. The State Acceptance Committee review (the process whereby the Kazakh authorities conduct a final technical and safety inspection) is currently ongoing.

The Gas Treatment Facility will enable Zhaikmunai to process associated gas and gas condensate up to 48,000 boe per day from its current levels of 7.400 boe per day. The Gas Treatment Facility consists of two Gas Treatment Units each with a capacity of 850 mmcm per year. Zhaikmunai’s management expects to bring the first unit (“Train 1”) on stream before year-end and the second unit (“Train 2”) shortly thereafter.

POST 9 MONTHS UPDATE

– On 30 September 2010 Zhaikmunai achieved mechanical completion of its Gas Treatment Facility.

– On 14 October 2010 Zhaikmunai placed a US$ 450 million bond due 2015.

– On 15 November 2010 Zhaikmunai announced the successful test of new well 115.

Kai-Uwe Kessel, Chief Executive Officer, commented:

“Zhaikmunai realized operational growth and further improvement in margins and financial performance during the third quarter of the year. We ended the quarter with the mechanical completion of our Gas Treatment Facility and this will bring further growth in 2011.

During the first months of the fourth quarter, market conditions have continued to be favourable. The Brent crude oil price remained firm but did not reach the upper level of the price in our hedging contract, that is set at US$ 89.25. The hedging contract will end on December 31st.

The refinancing of the company’s senior debt in October 2010 has put Zhaikmunai in a stronger financial position. Looking ahead we plan for accelerated production growth in coming years with the objective to reach a daily production of 120,000 boe in 2016. With a strong focus on financial and operational efficiency we intend to drill 6 new production wells in 2011 to reach this long-term target.”

CONFERENCE CALL

Zhaikmunai’s management team will give a presentation, followed by a Q&A session for analysts and investors on Thursday 16 December 2010 at 2 pm GDT (=UK time).

If you would like to participate in this call, please register by e-mail: ir@nog.co.uk. After registration you will receive dial-in details.

Here you can download the pdf-file from this press release.

Further enquiries

Zhaikmunai LP
Bert Jordens, Investor Relations Officer
ir@nog.co.uk
+44 (0) 1624 68 21 79

Pelham Bell Pottinger
Philip Dennis
Elena Dobson
+44 (0) 1624 68 21 79

About Zhaikmunai

Zhaikmunai is an independent oil and gas enterprise currently engaging in the exploration and development and production of oil and gas. It is listed on the London Stock Exchange (Ticker symbol: ZKM). Its principal producing asset is the Chinarevskoye Field located in northwestern Kazakhstan. Zhaikmunai L.L.P., a wholly-owned subsidiary of Zhaikmunai L.P., holds a 100% interest in and is the operator of the Production Sharing Agreement for 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.