News Column

Q1 2013 Operational Update - Outperforming Targets

Apr 22 2013 12:00AM



AMSTERDAM, THE NETHERLANDS -- (Marketwired) -- 04/22/13 --

Q1 2013 Operational Update - Outperforming TargetsAmsterdam, 22 April 2013- Zhaikmunai L.P. (LSE: ZKM) ("Zhaikmunai"),the oil and gas exploration and production enterprise with assets innorth-western Kazakhstan, today announces record operational results inrespect of its first quarter ended 31st March 2013.The financial information in this operational update is being issued inadvance of the release of Zhaikmunai's Q1 2013 unaudited andconsolidated accounts, which is scheduled for the week of May 20, 2013,as a consequence of certain regulatory requirements in the Republic ofKazakhstan. The financial information in this update has not yet beenaudited and remains subject to further review.RECORD FIRST QUARTER RESULTS (Q1 2013)* Record total average daily production of 46,273 boepd, an increase of 25% compared to FY2012 average (36,940 boepd);* Record total revenue of US$ 228 million, up 40% compared to Q1 2012 (US$ 163 million);* Record EBITDA expected to be above US$ 140 million (Q1 2012: US$ 110 million);* Total cash position of US$ 287 million (including short-term deposits) up 14% compared to the end of FY 2012 (US$ 251 million);* Total net debt fell to approximately US$ 363 million;* Net debt to EBITDA ratio fell below 0.75x;* Excess cash to be deployed through a GDR Buy-Back Programme of up to US$ 50 million;* Appointment of Deutsche Bank AG, London Branch ("Deutsche Bank") and VTB Capital plc ("VTB Capital") as joint corporate brokers.OPERATIONS AT AN ALL TIME HIGHRecord Production Drives Revenue and EBITDA Higher* Total average daily production for Q1 2013 was 46,273 boepd, an increase of approximately 24% compared to Q4 2012 (37,184 boepd);* Q1 2013 total average daily production was above the 2012 guidance of 45,000 boepd;* The product split for Q1 2013 was as follows:PRODUCTS Q1 2013 Average Q1 2013 Product Production Mix %Crude Oil & Stabilised 19,705 boepd 43%CondensateLPG (Liquid Petroleum Gas) 3,651 boepd 8%Dry Gas 22,917 boepd 49%TOTAL 46,273 boepd 100%Kai-Uwe Kessel, Chief Executive Officer of Zhaikmunai, commented:"I am delighted with the outstanding performance we have achievedoperationally in the first quarter of 2013. Our production is above ourtarget for the year, our cash flows are ahead of the budget and wecontinue to enhance the operations at the field site. I am pleased withthe progress made on the drilling side as we continue to develop thereserves of the Chinarevskoye field. As a result, we have built astrong and stable cash position, which allows us to return cash toshareholders through both dividends and GDR buy-backs whist stillproviding us the room to execute all of our strategic initiatives. Inaddition, we are delighted to appoint Deutsche Bank and VTB Capital asour joint corporate brokers and we look forward to working with them toenhance recognition of the Zhaikmunai success story in the market."Drilling activities* A total of three extra new wells have been completed in the course of Q1 2013: 2 gas condensate production wells and 1 crude oil appraisal well;* Wells # 216 and # 410 are the two gas condensate wells completed in Q1 2013: o Well # 216 (Biski-Afoninski) was drilled as a deviated directional gas condensate production well for the Biski- Afoninksi reservoirs about 3 km west of production Well # 119. Reservoir pressure is in line with expectations and the well is currently under test operations and has been connected to the GTF, producing some 300,000 m3 of raw gas per day on a 10 mm choke, which is approximately 3,500 boepd. The well is under preparation for further testing with larger choke sizes; o Well # 410 (Tournaisian) was drilled using the same successful directional drilling technology previously applied for Tournaisian gas condensate wells. It has found the top of the Southern Tournaisian reservoir approximately 20 metres lower than expected and is currently under test operations;* Well # 701 is the appraisal well completed in the Middle Carboniferous Bashkirian oil reservoir in Q1 2013: o Well # 701 was drilled in the northeastern part of the Chinarevskoye field about 600 metres southeast of Well # 51, which had tested oil from the Bashkirian reservoir in a drill stem test. Drilling of Well # 701 was finalised in March 2013. The planned test for the Bashkirian horizon will start at the end of April and will test flow rates from a 9 m oil bearing reservoir interval at different choke sizes.* Zhaikmunai is on target to achieve its planned drilling programme for 2013, i.e. 15 - 17 wells, 9 of which will be appraisal wells, 1 exploration well and 5 to 7 production wells. The field currently has 15 oil wells and 12 gas condensate wells in operation.Other NewsInitiation of GDR Buy-Back ProgrammeOn 22 April 2013, Zhaikmunai also announces the terms of commencementof a long-term GDR Buy-Back programme to assist in driving shareholdervalue. The details of this programme are featured in a separateannouncement. The programme will commence following the release of theQ1 2013 Results, which are scheduled during the week of May 13, 2013.This follows the announcement made on 2 April 2013 that on Thursday, 28March 2013 the limited partners of Zhaikmunai duly passed all proposedresolutions at the Special General Meeting of limited partners. Theseresolutions approved amendments to Zhaikmunai's limited partnershipagreement to provide for a GDR Buy-Back Programme and theimplementation of such programme by Zhaikmunai Group Limited,Zhaikmunai's general partner.Appointment of Joint Corporate BrokersOn 18 April 2013, Zhaikmunai appointed Deutsche Bank AG, London Branch("Deutsche Bank") and VTB Capital plc ("VTB Capital") as jointcorporate brokers with immediate effect. In addition to the standardbroking role the two banks are expected to implement Zhaikmunai's GDRBuy-Back Programme.Gas Flaring ClaimOn 11 April 2013, Zhaikmunai LLP received a statement of claim from theWest Kazakhstan Inter-regional Geology and Subsoil Use Departmentrequesting a Kazakh court to impose damages on Zhaikmunai LLP in theamount KZT 1,758,171,972 (approximately US$ 11 million) for allegedlyflaring gas without the appropriate permit during Q4 2010 and July2011.Zhaikmunai believes that the claim is unfounded, has filed a petitionchallenging the basis for the claim in the Kazakh courts and intends tovigorously contest the claim. The claim does not affect Zhaikmunai'songoing operations.KASE (Kazakshtan Stock Exchange) Presents Zhaikmunai with Special AwardOn March 29 2013, Zhaikmunai was presented with a special award by KASEfor its transparency record.Arnat Abzhanov, Member of the Management Board, JSC Halyk Finance,commented:"Companies who are listed on more than one stock exchange arefacedwith different and sometimes conflicting reporting requirements. TheKASE award demonstrates that Zhaikmunai manages these challengesefficiently every day and is fully committed to all of its securityholders."Expansion of Processing Capacity with Additional Train to Gas TreatmentFacilityDesign of the third train of Zhaikmunai's Gas Treatment Facility (GTF)has been completed and has received approval from the Kazakhauthorities. Zhaikmunai is currently analyzing and evaluating the bidsfor the final selection of the main process and auxiliary equipmentvendors. The tender for civil and construction works has been launchedand results are expected in the course of Q2 2013.RELEASE OF ZHAIKMUNAI'S Q1 2013 RESULTSZhaikmunai L.P. plans to release its unaudited consolidated accountsfor its first quarter ended 31st March 2013 in the week of May 13,2013. Zhaikmunai's management team will be available for analysts andinvestors for a Q&A session following the release. Registration detailsfor the conference call will be provided well in advance of thescheduled release date.Further informationFor further information please visit www.zhaikmunai.comFurther enquiriesZhaikmunai LP - Investor RelationsBruno G. MeereKirsty + 31 20 737 2288Deutsche Bank + 44 (0) 207 545 8000Ben LawrenceJM HafnerRob AbbottVTB Capital plc + 44 (0) 203 334 8000Alexander MetherellMarcus BrownGiles CoffeyPelham Bell Pottinger + 44 (0) 207 861 3232Philip DennisElena DobsonAbout ZhaikmunaiZhaikmunai is an independent oil and gas enterprise currently engagingin the production, development and exploration of oil and gas innorth-western Kazakhstan. Its Global Depositary Receipts (GDRs) arelisted on the London Stock Exchange (Ticker symbol: ZKM). Zhaikmunai'sprincipal producing asset is the Chinarevskoye field, in which it holdsa 100% interest and is the operator, through its wholly-ownedsubsidiary Zhaikmunai LLP. In addition, Zhaikmunai holds a 100%interest in and is the operator of the Rostoshinskoye, Darinskoye andYuzhno-Gremyachenskoye oil and gas fields. Located in the pre-Caspianbasin to the north-west of Uralsk, these exploration and developmentfields are approximately 60 and 120 kilometres respectively from theChinarevskoye 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, the words"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.Deutsche BankDeutsche Bank AG is authorised under German Banking Law (competentauthority: BaFin - Federal Financial Supervisory Authority) andauthorised and subject to limited regulation by the Financial ConductAuthority (the "FCA"). Details about the extent of Deutsche Bank AG'sauthorisation and regulation by the FCA are available on request.VTB CapitalVTB Capital Plc is authorised by the Prudential Regulation Authorityand regulated by the Financial Conduct Authority and the PrudentialRegulation Authority. This information is provided by RNS The company news service from the London Stock ExchangeEND

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