Zhaikmunai L.P.
(the "Company")
Zhaikmunai LP - EBITDA FIRST NINE MONTHS UP TO US$ 71.24 MM
(+86.3 % YoY)
London - 16 December 2010 - Zhaikmunai LP (LSE : ZKM ) ("Zhaikmunai"),
the oil and gas exploration and production business based in
northwestern Kazakhstan, today announces its full financial results for
the three and nine months ended 30 September 2010.
THIRD QUARTER SUMMARY
All figures in US$ millions unless otherwise stated
Q3 2010 Q3 2009 Change YoY
Revenues from oil sales 53.126 32.750 +62.2%
EBITDA 26.027 20.377 +27.7%
Net income 10.636 (357)
Production (bopd) 8,972 6,979 +28.6%
Debt 381.677 381.677 Unch.
Average Realised oil price (US$ per bbl) 78.64 71.67 +9.7%
Discount (US$ per bbl) 12.24 14.91 -17.9%
Weighted average netback (US$ per bbl) 66.40 56.76 +17.0%
NINE MONTHS ENDED 30 SEPTEMBER 2010 SUMMARY
All figures in US$ millions unless otherwise stated
9M 2010 9M 2009 Change YoY
Revenues from oil sales 127.780 77.430 +65.0%
EBITDA 71.238 38.234 +86.3%
Net income 30.213 (20.458)
Production (bopd) 7,683 7,239 +6.1%
Debt 381.677 381.677 Unch.
Average Realised oil price (US$ per bbl) 78.33 57.42 +36.4%
Discount (US$ per bbl) 13.44 15.29 -12.1%
Weighted average netback (US$ per bbl) 64.89 42.11 +54.1%
FINANCIAL HIGHLIGHTS
Revenue
The company has realized higher netback prices as the Brent price
recovered to a level above US$ 80 per barrel late in the third quarter.
Zhaikmunai was also able to reduce its discount thanks to better rail
tariffs and further diversification in its customer base. In July 2010,
Zhaikmunai made its first shipment of crude oil through the Black Sea
port of Feodosia (Ukraine). A total of 233,444 bbl was transported by
rail to Feodosia and sold loaded on a tanker on a Free on Board
(FOB-sale) basis.
Cost of Sales
Cost of sales increased by US$6.9million, or 21.83%, to
US$38.2million in the nine months ended 30 September 2010 from
US$31.4million in the nine months ended 30 September 2009, due
primarily to an increase in depreciation, royalties and government
profit share.
Cash
Zhaikmunai ended the third quarter of 2010 with US$ 80.88 million of
cash and cash equivalents, of which US$ 21.601 million was restricted
cash. As a result of the refinancing of its senior debt through the
issuance of a bond in October 2010, there is no longer any obligation
for Zhaikmunai to retain any of its cash in a restricted cash account.
OPERATIONAL HIGHLIGHTS
Q3 2010 Q3 2009 Change
YoY
Average daily oil production (bopd) 8,972 6,979 +28.6%
Weighted Average Netback for crude oil US$66.40/ US$56.76/ +17.0%
sales bbl bbl
9M 2010 9M 2009 Change
YoY
Average daily oil production (bopd) 7,683 7,239 +6.1%
Weighted Average Netback for crude oil US$64.89/ US$42.11/ +54.1%
sales bbl bbl
The increase in production during the first nine months of 2010
(compared to the first nine months of 2009) was driven primarily by the
surge in test production experienced during Q3 2010 in conjunction with
the completion of new gas-condensate production wells in that period.
As a result, production jumped in the third quarter to a daily rate of
8,972 bbl. This compares with a daily production of 6,979 bbl during
the same period last year; an increase of 28.6%.
As at 30 September 2010, inventory comprised 4.4% of the Group's
current assets compared to 1.9% as at 30 September 2009.
GAS TREATMENT FACILITY
The commencement of liquid and gas production from Zhaikmunai's Gas
Treatment Facility is imminent.Following the achievement of Mechanical
Completion on September 30th 2010, Zhaikmunai and its contractors KSS
and Exterran have been commissioning the Gas Treatment Facility during
the months of October and November. Black Start (the process whereby
reverse gas from the gas pipeline is brought into the system) has taken
place and the Gas Treatment Facility has been powered up, as part of a
comprehensive ongoing commissioning and testing schedule. An extensive
fire safety testing program is also currently under way. The State
Acceptance Committee review (the process whereby the Kazakh authorities
conduct a final technical and safety inspection) is currently ongoing.
The Gas Treatment Facility will enable Zhaikmunai to process associated
gas and gas condensateup to 48,000 boe per day from its current levels
of 7.400 boe per day. The Gas Treatment Facilityconsists of two Gas
Treatment Units each with a capacity of 850 mmcm per year. Zhaikmunai's
management expects to bring the first unit ("Train 1") on stream before
year-end and the second unit ("Train 2") shortly thereafter.
POST 9 MONTHS UPDATE
- On 30 September 2010 Zhaikmunai achieved mechanical completion of
its Gas Treatment Facility.
- On 14 October 2010 Zhaikmunai placed a US$ 450 million bond due
2015.
- On 15 November 2010 Zhaikmunai announced the successful test of
new well 115.
Kai-Uwe Kessel, Chief Executive Officer, commented:"Zhaikmunai realized
operational growth and further improvement in
margins and financial performance during the third quarter of the year.
We ended the quarter with the mechanical completion of our Gas
Treatment Facility and this will bring further growth in 2011.
During the first months of the fourth quarter, market conditions have
continued to be favourable. The Brent crude oil price remained firm but
did not reach the upper level of the price in our hedging contract,
that is set at US$ 89.25. The hedging contract will end on December
31st.
The refinancing of the company's senior debt in October 2010 has put
Zhaikmunai in a stronger financial position. Looking ahead we plan for
accelerated production growth in coming years with the objective to
reach a daily production of 120,000 boe in 2016. With a strong focus on
financial and operational efficiency we intend to drill 6 new
production wells in 2011 to reach this long-term target."
For further information please visit www.zhaikmunai.com.
CONFERENCE CALL
Zhaikmunai's management team will give a presentation, followed by a Q&
A session for analysts and investors on Thursday 16 December 2010 at 2
pm GDT (=UK time).
If you would like to participate in this call, please register by
e-mail: investor_relations@zhaikmunai.com. After registration you will
receive dial-in details.
Further enquiries
Zhaikmunai LP
Bert Jordens, Investor Relations Officer
Investor_relations@zhaikmunai.com +44 (0) 1624 68 21 79
Pelham Bell Pottinger
Philip Dennis
Elena Dobson +44 (0) 207 861 32 32
About Zhaikmunai
Zhaikmunai is an independent oil and gas enterprise currently engaging
in the exploration and development and production of oil and gas. It is
listed on the London Stock Exchange (Ticker symbol: ZKM). Its principal
producing asset is the Chinarevskoye Field located in northwestern
Kazakhstan. Zhaikmunai L.L.P., a wholly-owned subsidiary of Zhaikmunai
L.P., holds a 100% interest in and is the operator of the Production
Sharing Agreement for the Chinarevskoye Field.
Forward-Looking Statements
Some 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 with
respect 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 to
identify forward-looking statements. Such statements are not promises
or guarantees, and are subject to risks and uncertainties that could
cause actual outcomes to differ materially from those suggested by any
such statements.
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