KMG EP’s Board of Directors Approves 2015 Revised Budget – Costing Brent at $51
JSC KazMunaiGas Exploration Production (“KMG EP” or the “Company”) announces the approval by the Board of Directors (“the Board”) of a revision to the Company’s 2015 budget.
The 2015 budget was revised assuming the average annual Brent price of US$51 per barrel and an average annual exchange rate of 208 Tenge per US$.
Production
Planned production in 2015 is expected to be 5,530 thousand tonnes (112 kbopd) from JCS OzenMunaiGas (OMG), 52 thousand tonnes or 1% more than the planned volume approved in May. Upwards revision of the production plan at OMG is due to both production drilling being ahead of schedule from the beginning of the year at OMG fields, as well as the planned drilling of an additional 57 wells.
The production plans at JSC EmbaMunaiGas (EMG) remain unchanged and is expected to be 2,800 thousand tonnes (56 kbopd). Therefore, the total planned production volume in 2015 from OMG and EMG is expected to be 8,330 thousand tonnes (168 kbopd).
The Company’s share in the planned production of Kazgermunai (KGM), CCEL (CCEL) and PetroKazakhstan Inc. (PKI) in 2015 remains unchanged at 1,499 thousand tonnes (32 kbopd), 1,050 thousand tonnes (19 kbopd) and 1,439 thousand tonnes (31 kbopd), respectively.
Export and domestic supply volumes
The Company has revised its domestic and export supply volumes planned for 2015.
The Company expects to supply 916 thousand tonnes (18 kbopd) to Russia, substituting export supplies, of which 566 thousand tonnes (11 kbopd) were supplied in 1H2015.
Planned volume of oil supply to the domestic market in 2015 remains unchanged at 2,340 thousand tonnes (47 kbopd). It is expected currently that 110 thousand tonnes will be redirected from Pavlodar refinery to Atyrau refinery. As a result 2,010 thousand tonnes (40 kbopd) of oil will be supplied to the Atyrau refinery and 330 thousand tonnes (7 kbopd) to the Pavlodar refinery. As planned earlier an additional 100 thousand tonnes of oil will be processed at the Atyrau refinery for the Company’s own use.
Prices for domestic supply have yet to be approved by independent directors.
It is expected that the Company’s share in the volume of oil supply to the domestic market in 2015 from KGM, CCEL and PKI will increase to 2.1 million tonnes (43 kbopd) or 52% of total sales from these companies. This compares to 1.9 million tonnes in the approved budget from May 2015. As previously planned, KGM and PKI will supply oil to the Pavlodar and Shymkent refineries and CCEL will supply oil to the Aktau bitumen plant.
Capital expenditures
Capital expenditure in 2015 is expected to be 106 billion Tenge (US$511m[1]), 11 billion Tenge or 12% more than the capital expenditure plan for 2015 approved in May 2015. Higher capital expenditure is due to the drilling of 57 additional wells at OMG. Finally, 274 wells are now planned to be drilled in 2015 at both OMG and EMG, in comparison to the 217 wells previously approved in May 2015. The additional expenditure on wells was approved after assessment of its economic value.
