KazMunaiGas EP sees IFRS earnings plummet 67% in 2014
ASTANA. March 3 (Interfax) - KazMunaiGas Exploration and Production (KMG EP) saw its net profit to International Financial Reporting Standards (IFRS) plummet 67% in 2014 to 47 billion tenge ($254 million at the current rate), the Kazakh oil and gas producer said in a statement.
The decrease in the profit is largely due to a significant impairment charge in relation to JSC Ozenmunaigas recognized in the fourth quarter of 2014, the press release says.
The company also recorded 53 billion tenge foreign currency translation difference, thus total comprehensive income, net of tax was 100 billion tenge (185.05 tenge/$1 on March 3).
The company's revenue in 2014 was 846 billion tenge or a 4% increase compared to 2013.
"This was mainly due to an increase in the average domestic sale price from 40,000 tenge per tonne in 2013 to 48,000 tenge per tonne in 2014 and also to the higher realized export price in tenge as a result of an 18% increase in the average tenge-US dollar exchange rate due to the tenge devaluation in February 2014," the press release says.
Taxes, other than on-income, in 2014 were 328 billion tenge, which is 5% higher than in 2013.
"This was largely due to an increase in export customs duty in April 2013 from $40 per tonne to $60 per tonne and a second increase from $60 per tonne to $80 per tonne in April 2014, as well as the 18% higher average tenge-US dollar exchange rate, which was partly offset by lower rent tax caused by lower export volumes," the press release says.
Production expenses in 2014 were 212 billion tenge or 31% higher than in 2013, mainly due to higher expenses for production personnel employee benefits.
"Expenses for employee benefits in 2014 increased by 41% compared to 2013. This was largely due to an indexation of salary for production personnel by 7% in January 2014, the introduction of a Unified System of Wages for production employees from April 2014 and a 10% increase in wages related to the devaluation of the Tenge from April 2014 in addition to one-off bonuses for milestone events in 2014," the press release says.
Selling, general and administrative expenses in 2014 were 103 billion tenge, which is 11% higher than in 2013.
"This was largely due to an increase in transportation expenses and higher expenses for employee benefits. Transportation costs increased by 11% due to the increase of Kaztransoil (KTO) domestic and export tariffs, higher transportation expenses on the Caspian Pipeline Consortium (CPC) route, resulting from the transportation of larger volumes, and the increase in the average Tenge and the US dollar exchange rate, as the CPC tariff is denominated in US dollars. KTO tariffs on domestic routes increased by 50% from January 2014 and on export routes by 20% on average from April 2014," the press release says.
Operating cash flows in 2014 was 196 billion tenge compared with 98 billion tenge in 2013 mainly as a result of improved collection of trade receivables in second half of 2014. As at December 31, 2014, trade and other receivables declined to 57 billion tenge compared to 153 billion tenge for the same period in 2013.
Capital expenditure in 2014 was 128 billion tenge, which is 11% less compared to 2013 as a result of a decrease in construction expenses and reduced fixed assets investments partly offset by an increase in production drilling expenses due to increase in drilling cost per well. In 2014 the company drilled 297 wells compared to 311 wells in 2013.
Cash and cash equivalents as at December 31, 2014 amounted to 180 billion tenge compared to 119 billion tenge as at December 31, 2013. Other financial assets as at December 31, 2014 were 554 billion tenge compared to 504 billion tenge as at December 31, 2013.
As at December 31, 2014, 94% of cash and financial assets were denominated in foreign currencies and 6% were denominated in Tenge. Finance income accrued on cash, financial, and other assets in 2014 was 21 billion tenge compared to 21 billion tenge in 2013, mainly due to income from NC KMG Bond in 2013.
Borrowings as at December 31, 2014 were 7.2 billion tenge compared to 6.8 billion tenge as at December 31, 2013. The net cash position as at December 31, 2014 amounted to 727 billion tenge compared to 616 billion tenge as at December 31, 2013.
In 2014, KMG EP's share of results of associate and joint ventures was 60 billion tenge compared to 51 billion tenge in 2013.
KMG EP is among the top three Kazakh oil producers.
The overall production in 2014 was 12.3 million tonnes (250 kbopd) of crude oil, including the company's share in Kazgermunai, CCEL and PKI.
The company's total consolidated volume of proved and probable reserves including shares in the associates, as at the end of 2013 was 200 million tonnes (1.5 bn bbl), out of which 148.8 million tonnes (1.1 bn bbl) relates to Ozenmunaigas, Embamunaigas, and Ural Oil and Gas (Rozhkovskoye field, Fyodorovskiy block).