News Column

Zhaikmunai 2013 Operational Update

Jan 30 2013 12:00AM



ISLE OF MAN, UNITED KINGDOM -- (Marketwire) -- 01/30/13 --

__________________________________________________ 2013 Operational Update 30 January 2013 ZHAIKMUNAI 2013 OPERATIONAL UPDATEDouglas, Isle of Man - 30 January, 2013: Zhaikmunai L.P. (LSE: ZKM)("Zhaikmunai") issues the following Operational Update summarizing keyactivities since the Q3 2012 Interim Results and Update on 21 November2012.KEY HIGHLIGHTS* Zhaikmunai's total average daily production has beenapproximately 46,500 boepd since January 21, 2013. This is a result oftying in 3 additional gas condensate wells between the end of 2012 andthe beginning of 2013 and bringing them towards full production overthe first few weeks of the year. Zhaikmunai is especially pleased withthe results from the Devonian gas condensate well #217 detailed below;* Fourth quarter total average daily production (Q4) averaged37,184 boepd, taking into account Zhaikmunai's two-week annualmaintenance shutdown of the GTF (Gas Treatment Facility) during October2012. In 2012, total daily production averaged 36,940 boepd.* In 2013, total average daily production is expected to be inexcess of 45,000 boepd and Zhaikmunai plans to more than double thistotal average daily production volume over the next 3-year period withthe increased gas processing capability of the planned third GTF train.* Drilling plans over the next 12 months include 15 - 17 wells, 9of which will be appraisal wells, 1 exploration well and 5 - 7production wells;Production Overview* Since 21 January 2013, the total average daily production hasbeen approximately 46,500 boepd, with the tie-in of 3 new gascondensate wells;* Q4 2012 total average daily production amounted to 37,184 boepd,representing an increase of approximately 83% compared with Q4 2011(20,355 boepd);* Total production for 2012 increased by approximately 181% to13,520,205 boe from 4,803,561 boe in 2011;* Total average daily production for 2012 was 36,940 boepd, anincrease of approximately 181% compared to 2011 (13,158 boepd);* The product split for 2012 was as follows:Products 2012 Average 2012 Average Product Production %Crude Oil & Stabilised 15,764 boepd 43%CondensateLPG (Liquid Petroleum Gas) 2,940 boepd 8%Dry Gas 18,237 boepd 49%TOTAL 36,940 boepd 100%* The average realized oil price for 2012 was US$ 107.46/bbl.Summary of New Wellsa) Devonian Gas Condensate Well #217Zhaikmunai reports the successful drilling and testing of the partiallyinsolated Biski-Afoninski reservoir compartment in the north-easternpart of the Chinarevskoye field. Well #217 was drilled as a deviateddirectional gas condensate production well for the Biski-Afoninskireservoirs at a structural high and in a partially separated faultcompartment at the north-eastern block of the Chinarevskoye field,southeast of production Well #218. The reservoir pressure in thiscompartment is near to initial reservoir pressures and about 40 barshigher compared to other producing Biski-Afoninski wells. The flow rateis approximately 4,000 boepd, which is significantly aboveexpectations.b) Tournaisian Gas Condensate Wells #404 and #406 (ChinarevskoyeSouthern Part)Gas condensate Wells #404 and #406 were drilled using the samesuccessful directional drilling technology previously applied forTournaisian oil production wells in the north-eastern block. Well #404also confirms the success of the selective multi-step perforation andstimulation technology, starting with the treatment of the lowpermeable reservoir intervals (0.5-5.0 mD) followed by higher permeableintervals. The production log of Well #404 proved that all potentialsub-layers of the reservoir interval were connected to production. Theflow rates of both wells were in line with expectations atapproximately 1,000 boepd.Well #404 - drilled as a deviated directional gas condensate productionwell for the Tournaisian reservoirs using the same drilling,perforation, and stimulation technologies as successful oil productionWell #116. The well was drilled in favourable geological conditionssoutheast of gas production Well #31 and was perforated at depths of4,472 - 4,549 meters after applying selective three-step perforationand stimulation technology.Well #406 - also drilled as a deviated directional gas condensateproduction well for the Tournaisian reservoirs southeast of Well #404,at the border of the mapped structure, with reduced reservoir thicknessand low permeabilities. This well was perforated at depths 4,504 -4,544 meters after one-step perforation and stimulation of allpotential reservoir intervals.2012 - KEY MILESTONES* Successful Pricing of US$ 560 Million Notes Due 2019 at a Couponof 7.125%In November 2012, Zhaikmunai successfully priced US$ 560 millionaggregate principal amount of senior bonds with a seven-year maturity(2019) at a fixed coupon of 7.125% per annum. The new notes were usedin part to repay US$ 357 million of its existing notes, which allowedZhaikmunai to extend 80% of its existing liabilities to 2019 and toreduce the interest rate of 10.5% on the previously issued bonds downto 7.125% on the new bonds.* Payment of Inaugural Dividend and Adoption of Dividend PolicyIn Q3 2012, Zhaikmunai announced the payment of its inaugural dividend,being a cash distribution of 32 cents per partnership interest (equalto US$ 60.2 million), and the adoption of a dividend policy by theBoard of Directors of its General Partner of not less than 20% of thePartnership's consolidated net profit per annum.* Acquisition of 3 New LicensesIn Q3 2012, Zhaikmunai signed Asset Purchase Agreements to acquire 100%of the subsoil use rights related to three new oil and gas fields(Rostoshinskoye, Darzhinskoye and Yuzhno-Gremyachenskoye) in thepre-Caspian basin to the northwest of Uralsk, located approximately 60-120 km away from the Chinarevskoye field, for a total purchase priceof US$ 16 million. In Q4 2012, the Antimonopoly Agency as well as theMinistry of Oil and Gas (MOG) of the Republic of Kazakhstan providedtheir consent for the acquisition of all three fields and thepartnership is currently finalizing the supplementary agreements withthe MOG to become the legal owner of the subsoil user rights.ZKM estimates that it will cost approximately US$ 85 million to conductthe necessary appraisal and development activities in the three fieldsover the next 2 - 3 years. These activities will include theacquisition of new 3D seismic data and/or the reprocessing of existing2D and/or 3D seismic data, as well as exploration/appraisal drilling inorder to validate and expand on the existing reserves reports. Thelatter include the following reserves estimates: 1P - 28 mmboe; 2P -131 mmboe; 3P - 187 mmboe for the three fields taken together.Zhaikmunai believes the upside potential for these fields to be verypromising.* DrillingDuring 2012, 9 wells were drilled and completed, bringing the totalnumber of producing wells to 29, i.e. 11 gas condensate wells and 18crude oil wells.* Expansion of Processing Capacity with Additional Train to GTFThe design of the second phase GTF has been completed and has receivedapproval from the Kazakh authorities. Zhaikmunai is currently analyzingand evaluating the response to proposals submitted last year tocontractors for the delivery of equipment and the construction of thenew gas plant.Kai-Uwe Kessel, Chief Executive Officer of Zhaikmunai commented:"2012 wasan excellent year for Zhaikmunai in which we managed toachieve a number of important goals. Our first year of operating theGTF and bringing it towards full capacity reinforces the track recordour team has built in successfully constructing and operating largeinfrastructure projects. With current average production within 5% offull capacity and our balance sheet showing a strong cash position,combined with the extension to our debt financing from our bondtransaction, we have an excellent platform from which to continue tobuild the business. We have an important programme ahead of us in 2013and I look forward to implementing the next stage of our development."Frank Monstrey, Chairman of Zhaikmunai commented:"I am delighted tocongratulate the management team on anotherexcellent 12 months. 2012 was a landmark year with the GTF fullyoperational and ramping up towards nameplate capacity consistently.2013 will be an exciting year as we take the first steps towards ournext goal of more than doubling production to over 100,000 boepd by theend of 2016. I have full confidence in the management team successfullyimplementing the next stage of our development and look forward to anexciting future for Zhaikmunai."Further informationFor further information please visit www.zhaikmunai.comFurther enquiriesZhaikmunai LP - Investor RelationsBruno G. MeereKirsty + 44 (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.Click on, or paste the following link into your web browser, to viewthe associated PDF document. This information is provided by RNS The company news service from the London Stock ExchangeEND

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