4 Sep 2009 13:42

KazMunayGas EP sees earnings fall 13% in H1

ALMATY. Sept 4 (Interfax) - Kazakh state-owned oil and gas producer KazMunayGas EP (KMG EP) saw net profit decline to 128.8 billion tenge in the first half of 2009 (150.76 tenge/$1 on September 4), down from 147.5 billion tenge in the same period last year, the company said in a statement on Friday.

The reduction in net profit from lower oil prices this year was partially offset by a pretax exchange rate gain of 101.6 billion tenge following the devaluation of the national currency in February 2009.

Excluding the exchange rate gain, net profit in the first half was down 66% year-on-year.

KMG EP's revenue fell 39% to 206.6 billion tenge ($1.428 billion) in the period. Revenue in dollar terms was down 53% year-on-year.

Revenue declined due to a 39% decrease in the average sale price to 44,631 tenge per tonne ($42.7 per barrel) from 72,829 tenge per tonne ($83.6 per barrel) and a 1.8% reduction in sales volume.

Exports accounted for approximately 80% of sales in volume terms in the first half (versus 75% in the first half of 2008) "as reduced domestic demand allowed the company to supply more to export markets (plans to sell 2.2 million tonnes to the domestic market in 2009 (44,400 bpd) remain unchanged)."

KMG EP posted a loss of 5 billion tenge ($34 million) from its share in Kazgermunai, the statement says.

"The financial results of Kazgermunai in the first half of 2009 were affected primarily by lower oil prices compared to the same period of 2008, a provision of $111.6 million related to ecology fines related to gas flaring above state norms and a change in the method of revenue recognition from the beginning of 2009 which has deferred sales by approximately 45-60 days," it says.

Assets stood at 1.132 trillion tenge at the end of the period, up from 1.020 trillion tenge at the end of 2008, liabilities rose to 204.248 billion tenge from 172.439 billion tenge, capital increased to 927.749 billion tenge from 847.093 billion tenge and charter capital was at 245.481 billion tenge, down from 259.725 billion tenge.

Operating expenses rose 22.8% in the period year-on-year to 149.6 billion tenge, mainly due to the replacement of royalties with a mineral extraction tax effective January 1, 2009 and the recognition of fines and penalties and rising payroll expenses.

Excluding tax-related factors and recognition of fines and penalties, operating expenses in the first six months of 2009 increased by 3.7% in tenge terms.

Capital expenditures (excluding purchases of intangible assets) totaled 12.9 billion tenge in the six months, 36% less than in the same period last year. KMG EP's full year capital expenditures in 2009 are expected to be approximately 45.3 billion tenge, 13% higher than the earlier guidance for 2009 of approximately 40 billion tenge. The primary use of the incremental budget is drilling of an additional 25 development wells. Actual capital expenditures in 2008 totaled of 41.9 billion tenge.

Net cash and equivalents at the end of the six months amounted to 603.8 billion tenge ($4.0 billion) compared with 534.5 billion tenge ($4.43 billion) as of December 31, 2008.

Borrowings as of June 30, 2009 were 14.2 billion tenge ($95 million) compared with 20.4 billion tenge ($169 million) as of the end of 2008. As of June 30, 2009, 86% were denominated in dollars and 14% in tenge.

Deposits with two of the largest Kazakh banks, Halyk and Kazkommertsbank account for approximately 82% of the financial assets at the end of the period.

Approximately 39.7 billion tenge was held at BTA Bank. This represents about 7% of KMG EP's cash held in banks. During the second quarter of 2009 the company made various payments from its accounts with BTA Bank totaling 4.4 billion tenge.

It was reported earlier that KMG EP produced 5.673 million tonnes of oil in the first half of 2009 (230.700 bpd), 3.8% less than in the same period last year.

KMG EP was created in March 2004 from the merger of two KazMunayGas subsidiaries: EmbaMunayGas and OzenMunayGas. It is the second largest oil producer in Kazakhstan. The company's shares are listed on the Kazakh Stock Exchange and the GDRs are listed on the London Stock Exchange.