News Column

Half Yearly Report (with Replacement Attachment)

Aug 29 2012 12:00AM



ISLE OF MAN, UNITED KINGDOM -- (Marketwire) -- 08/29/12 --

This is a replacement announcement of Zhaikmunai's H1 2012 Interim andUpdate. Only the attached Financial Accounts PDF file has been changed inrelation to the previous announcement as this file apparently suffereddamage when it was saved from Word into PDF format.All other details remain unchanged.The full amended text is shown below.Zhaikmunai L.P.(the "Partnership")H1 2012 INTERIM RESULTS AND UPDATEZhaikmunai LP (LSE: ZKM), the oil and gas exploration and productionenterprise with assets in north-western Kazakhstan today details thecontinued financial and operational progress made over the period from1January to 30 June 2012.FINANCIAL HIGHLIGHTSQ2 2012 SummaryAll figures in US$ millions unless otherwise stated Q2 2012 Q2 2011 Change YoYProduction (boepd) 37,285 12,673 +194.2%Revenue from hydrocarbon sales 160.0 73.5 +117.7%EBITDA1 101.9 45.3 +125.0%Net income 38.2 24.9 +53.5%Net cash used in investing activities (34.4) (15.7) + 119.1%Debt 450.0 450.0 0.0%Cash 162.8 128.5 +26.7%Average realised oil price (US$ per bbl) $104.26 $115.64 (9.8%)H1 2012 SummaryAll figures in US$ millions unless otherwise stated H1 2012 H1 2011 Change YoYProduction (boepd) 35,298 9,714 +263.4%Revenue from hydrocarbon sales 323.4 125.9 +156.9%EBITDA1 212.8 73.9 +187.8%Net income 86.6 36.0 +140.6%Net cash used in investment activities (99.9) (39.1) +155.5%Debt 450.0 450.0 0.0%Cash 162.8 128.5 +26.7%Average realised oil price (US$ per bbl) $109.05 $109.77 (0.7%)OPERATIONAL UPDATE* Production: July 2012 average total daily production amounted to40,036 boepd, an increase of 20.2 % compared to Q1 2012 (33,310 boepd);* Production: Q2 2012 average total daily production amounted to37,285 boepd, representing a close to three-fold increase compared withQ2 2011 (12,673 boepd);* Production: H1 2012 average total daily production amounted to35,298 boepd, representing a 263% production growth between H1 2011 andH1 2012;* Drilling: During H1 2012, a total of 2 gas-condensate wells (#401 and # 218) have been drilled and tied-in to the GTF and a total of4 new crude oil wells (# 24b, # 116, # 67 and # 45) have been drilled,with 3 currently producing and 1 in test production (# 45 withcommercial inflow of crude oil from the Bashkirian Reservoir).CORPORATE DEVELOPMENTS* Acquisitions: 3 neighbouring oil & gas license areas (cashamount of US$ 16 million);* Premium Share Listing: Exploring a possible premium listing inLondon and other alternatives to the current GDR listing throughextensive consultation with banks, lawyers as well as tax advisers toachieve the best possible result for shareholders, and currently in thefinal stages of selection of a sponsor;* Gas Treatment Facility: Basic design of the Phase II GTF approvedby the local authorities.OUTLOOK FOR H2 2012* Production: Zhaikmunai intends on pursuing its production ramp-upsteadily in H2 2012 from current levels (cfr. July 2012 total averagedaily production of 40,036 boepd) in line with its drilling and tie-inschedule;* Drilling: Expected additional drilling for H2 2012 of 6 wells, 5will be gas-condensate wells and 1 will be an appraisal well for crudeoil;* Capital Markets Day: This will be an opportunity to communicatethe appraisal and development programme for the 3 newly acquired fieldsand to provide further detail on the capex programme for theChinarevskoye field.COMMENTARYOPERATIONAL RESULTS* July 2012 average total daily production amounted to 40,036boepd, an increase of 20.2% compared to Q1 2012 (33,310 boepd);* Q2 2012 average total daily production amounted to 37,285 boepd,representing a close to three-fold increase compared with Q2 2011(12,673 boepd);* H1 2012 average total daily production amounted to 35,298 boepd,representing a 262% production growth between H1 2011 and H1 2012;* Product split for H1 2012 was as follows:Products Volumes PercentageCrude Oil and Stabilized Condensate 2,654,411 boe 41.3%LPG 534,131 boe 8.3%Dry Gas 3,235,620 boe 50.4%TOTAL 6,424,163 boe 100%* Total production for the first half of 2012 (H1 2012) increasedby 265% to 6,424,163 boe from 1,758,234 boe in H1 2011;* Well # 218, while it has shown some variable flow ratesinitially, is starting to show an encouraging stabilisation, aftermonitoring took place over the last 8 weeks. Further condensate wellswill be added to the GTF in order to achieve the targeted exit rateshould the flow rates of Well # 218 not prove sufficient in the future;* An annual maintenance shutdown of the GTF is scheduled for 14days in the early part of October 2012;* At the end of June 2012, a total of 13 crude oil wells and 10 gascondensate wells were been in production, whereas 4 more wells werebeing drilled and 3 wells were under test/work-over operations.Drilling Operations* During H1 2012, 6 wells have been drilled and completed: 2gas-condensate wells and 4 crude oil wells:o 5 wells (2 gas-condensate wells (# 401 and # 218) and 3 crude oilwells (# 24b, # 116 and # 67) are currently in production;o 1 crude oil well is currently in test operations (# 45 withcommercial inflow of crude oil from the Bashkirian Reservoir);* Currently 4 more gas-condensate wells are being drilled and willbe completed by year-end. 2 more wells are expected to be drilled andcompleted by year-end, 1 gas-condensate well and 1 appraisal well forcrude oil;* A contract for a fifth drilling rig has been awarded and willstart drilling operations in the course of Q4 2012 in order to increasethe flexibility of the overall drilling programme.Gas Treatment Facility - Phase II Update* Front-end engineering has been completed;* Adjustments to the FEED (Front-End Engineering and Design) havebeen initiated on the basis of lessons learned from the current GTFoperations and will be completed towards the end of September 2012;* Basic design of Phase II has been approved by the localauthorities;* Procurement of long lead items for Phase II of the GTF iscurrently on-going;* A final go-ahead decision on Phase II of the GTF is expectedtowards the end of 2012.Acquisitions* On 17 August 2012, Zhaikmunai LLP signed Asset PurchaseAgreements to acquire 100% of the subsoil use rights related to threenew oil & gas fields in Kazakhstan, namely Rostoshinskoye, Darjinskoyeand Yujno-Gremyachenskoe, located in the Pre-Caspian basin to thenorthwest of Uralsk, approximately 90 kilometres from the Chinarevskoyefield;* Completion of the acquisitions is subject to the approval of therelevant authorities in Kazakhstan, including the Ministry of Oil & Gasand the Anti-Monopoly Agency;* The size of the three licence areas combined is 139 squarekilometres and Zhaikmunai agreed to pay the current owners a total ofUS$ 16 million for the three fields;* Zhaikmunai is currently analysing the optimal appraisal anddevelopment programme for the fields and will hold a Capital MarketsDay in the Fall 2012 to present the results.FINANCIAL RESULTSRevenue and EBITDARecord revenue from sales of hydrocarbons stood at US$ 323.4 million,an increase of 156.9%, (or US$ 197.5 million) in comparison to lastyear's first half (US$ 125.9 million). The increase in GTF output overthe period in conjunction with the high oil price environment hascontributed to the outstanding first half 2012 revenue.EBITDA stood at US$ 212.8 million, an increase of 187.8% (or US$138.8million) in comparison to last year's first half (US$ 73.9 million).EBITDA margin for H1 2012 of 65.8% compared favourably with that of58.7% for H1 2011. The expansion of the EBITDA margin was driven, amongothers, by the increase of sales of stabilised condensate in theproduct mix and Zhaikmunai's large fixed cost basis.Note:In accordance with IFRS, sales from GTF test production were notincluded in the Zhaikmunai's 2011 revenue but were offset againstcapital expenditure. H1 2011 cumulative sales of GTF test production(stabilised condensate, LPG and dry gas), amounting to US$ 11.6 million(H1 2012: nil) hence did not feature in the revenue and EBITDA figuresreported at the time.Net IncomeNet income for the period increased 140.6% to US$ 86.6 million in H12012 from US$ 36.0 million for the same period in 2011. Net income as apercentage of total sales declined slightly to 26.8% from 28.6% ascompared to the same period last year. The decline in margins wasdriven by the lack of capitalized interest and increased depreciationlinked to the completion of GTF.CashZhaikmunai ended the first half of 2012 with US$ 162.8 million of cash,of which US$ 159.3 qualified as cash and cash equivalents and US$ 3.4million was restricted cash. As a result of the refinancing of itssenior debt through the issuance of a bond in October 2010, Zhaikmunaino longer has any obligation to retain any of its cash in a debtservice reserve account.Cost of Sales and General and Administrative ExpensesCost of sales increased by US$ 66.6million or 234.4% to US$95.0million compared to US$ 28.4million for the same period in 2011mainly due to the increased depreciation charge linked with thecompletion of the GTF and Zhaikmunai taking over in full the managementand operations of the GTF from its supplier.General and administrative expenses increased by US$ 12.8 million or81.9% to US$ 28.5 million compared to US$ 15.6 million for the sameperiod in 2011. This is in large part due to increased one-offexpenditures in the social programme related to the construction of the37 kilometre asphalt road leading to the field site (US$ 11.2 million).Capital ExpenditureIn H1 2012, Zhaikmunai's net cash used in investing activities grew toUS$ 99.9 million, from US$ 39.1 million in H1 2011. This increase wasdriven primarily by residual payments linked to GTF completion as wellas increased drilling.Kai-Uwe Kessel, Chief Executive Officer of Zhaikmunai commented:"Theacceleration in production over the second quarter furtherconsolidates the transformation of the Chinarovskoye field from anexploration asset into a significant production asset. The positiveimpact on Zhaikmunai's financials not only brings further momentum tothe second phase of the GTF and its associated drilling programme butalso opens the door for preparation work on a premium share listing aswell as acquisitions of additional prospective license areas to furtherimprove and strengthen Zhaikmunai's reserve base."CONFERENCE CALLZhaikmunai's management team will be available for a Q&A session foranalysts and investors on Wednesday, 29 August at 14:00 UK time (BST orGMT + 1:00).If you would like to participate in this call, please register by emailusing the following email address: provide your ID details (name, title, company, email address andtelephone number) in order to receive dial-in details.Further informationFor further information please visit www.zhaikmunai.comDownload the H1 2012 Consolidated Financial Statements the H1 2012 Management Report enquiriesZhaikmunai LPBruno Meere, Investor Relations (0) 1624 68 21 79Pelham Bell PottingerPhilip DennisElena Dobson+44 (0) 207 861 32 32About ZhaikmunaiZhaikmunai is an independent oil and gas enterprise currently engagingin the exploration and development and production of oil and gas. It islisted on the London Stock Exchange (Ticker symbol: ZKM). Its principalproducing asset is the Chinarevskoye Field located in northwesternKazakhstan. Zhaikmunai L.L.P., a wholly-owned subsidiary of ZhaikmunaiL.P., holds a 100% interest in and is the operator of the ProductionSharing Agreement for the Chinarevskoye Field.Forward-Looking StatementsSome 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 withrespect to various matters. When used in this document, thewords"expects,""believes,""anticipates,""plans,""may,""will,""should"and similar expressions, and the negatives thereof, are intended toidentify forward-looking statements. Such statements are not promisesor guarantees, and are subject to risks and uncertainties that couldcause actual outcomes to differ materially from those suggested by anysuch statements. This information is provided by RNS The company news service from the London Stock ExchangeEND

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