KMG EP will pay US$ 35m for the 100% stake in NBK and US$ 30m for 100% of SBS. The deals are financed with the Company’s own funds.
NBK develops the “Novobogatinskoe West” field under a Subsoil Exploration and Production Contract expiring in 2027 with an option to extend. The field adjoins the licence area of “Embamunaigas” and uses its existing infrastructure for oil treating, storage and transportation. Currently, the field is at the production testing stage. In the future, KMG EP plans to merge the assets of NBK with the assets of “Embamunaigas” in order to realize synergies in exploration and production.
SBS operates under a Subsoil Exploration Contract that expires at the end of 2012. According to KMG EP’s geological service, this license area has significant exploration potential in subsalt structures. Accordingly, in the future the Company plans to drill a deep subsalt well.
It should be noted that the assets being acquired are located in a close proximity to the assets of Kazakhoil Aktobe LLP and Kazakhturkmunai LLP, as well as other exploration assets, which may be of interest for KMG EP. The geographical location of the newly acquired assets provides an opportunity for further synergies.
Kenzhebek Ibrashev, the CEO of KMG EP, said, “KMG EP’s exploration strategy and investment decisions, in particular related to drilling of subsalt wells, will be based on comparative analysis of the Company’s expanding exploration portfolio. Further to our recently announced acquisitions of shares in JSC Mangistaumunaigas (“MMG”), Kazakhturkmunai Ltd (“KTM”) and Kazakhoil Aktobe LLP (“KOA”), we are pleased to announce the acquisitions of 100% stakes in NBK and SBS. These assets will enhance the quality of the Company’s onshore exploration portfolio and further strengthen our position as a top oil company in Kazakhstan.”
The acquisitions were unanimously approved by the KMG EP Board of Directors.
NOTES TO EDITORS
KMG EP is among the top three Kazakh oil and gas producers. The overall production in 2009 was 11.5mmt (an average of 232kbopd) of crude oil, including the Company’s share in Kazgermunai and CCEL. The total volume of proved and probable reserves, as at the end of 2009 was 234mt (1.7bn bbl), including shares in the associates - about 2.2 bn barrels. The Company’s shares are listed on the Kazakhstan Stock Exchange and the GDRs are listed on The London Stock Exchange. The Company raised over US$2bn in its IPO in September 2006. In December 2009, the International rating agency Standard & Poor's (S&P) assigned the Company a “GAMMA-6” rate and confirmed KMG EP’s “BB+” corporate credit rating in July 2010.
NBK holds the license rights, under Subsoil Use Contract Number 992 (issued in September 2002) for hydrocarbon exploration and production at the “West Novobogatinskoe field” in the Atyrau region. Recoverable reserves (2P) of this field are estimated to be 13 million barrels of oil equivalent (according to KMG EP’s technical experts’ evaluation). Cost of acquired barrel of this asset is $2.7/bbl. According to independent evaluation recoverable volumes are estimated at 12.9 million barrels.
SBS holds the license rights, under Subsoil Use Contract Number 2193 (issued in November 2006) for oil and gas exploration at the “East Zharkamys -1 block” in the Aktobe region. Extension of the contract is a condition precedent to closing. Prospective resources of this block considering risks are estimated at 123-146 million barrels of oil equivalent (according to KMG EP’s evaluation) and at 232 million barrels according to independent evaluation. Cost of acquired barrel of this asset in a conservative scenario is $0.24/bbl.
NBK develops the “Novobogatinskoe West” field under a Subsoil Exploration and Production Contract expiring in 2027 with an option to extend. The field adjoins the licence area of “Embamunaigas” and uses its existing infrastructure for oil treating, storage and transportation. Currently, the field is at the production testing stage. In the future, KMG EP plans to merge the assets of NBK with the assets of “Embamunaigas” in order to realize synergies in exploration and production.
SBS operates under a Subsoil Exploration Contract that expires at the end of 2012. According to KMG EP’s geological service, this license area has significant exploration potential in subsalt structures. Accordingly, in the future the Company plans to drill a deep subsalt well.
It should be noted that the assets being acquired are located in a close proximity to the assets of Kazakhoil Aktobe LLP and Kazakhturkmunai LLP, as well as other exploration assets, which may be of interest for KMG EP. The geographical location of the newly acquired assets provides an opportunity for further synergies.
Kenzhebek Ibrashev, the CEO of KMG EP, said, “KMG EP’s exploration strategy and investment decisions, in particular related to drilling of subsalt wells, will be based on comparative analysis of the Company’s expanding exploration portfolio. Further to our recently announced acquisitions of shares in JSC Mangistaumunaigas (“MMG”), Kazakhturkmunai Ltd (“KTM”) and Kazakhoil Aktobe LLP (“KOA”), we are pleased to announce the acquisitions of 100% stakes in NBK and SBS. These assets will enhance the quality of the Company’s onshore exploration portfolio and further strengthen our position as a top oil company in Kazakhstan.”
The acquisitions were unanimously approved by the KMG EP Board of Directors.
NOTES TO EDITORS
KMG EP is among the top three Kazakh oil and gas producers. The overall production in 2009 was 11.5mmt (an average of 232kbopd) of crude oil, including the Company’s share in Kazgermunai and CCEL. The total volume of proved and probable reserves, as at the end of 2009 was 234mt (1.7bn bbl), including shares in the associates - about 2.2 bn barrels. The Company’s shares are listed on the Kazakhstan Stock Exchange and the GDRs are listed on The London Stock Exchange. The Company raised over US$2bn in its IPO in September 2006. In December 2009, the International rating agency Standard & Poor's (S&P) assigned the Company a “GAMMA-6” rate and confirmed KMG EP’s “BB+” corporate credit rating in July 2010.
NBK holds the license rights, under Subsoil Use Contract Number 992 (issued in September 2002) for hydrocarbon exploration and production at the “West Novobogatinskoe field” in the Atyrau region. Recoverable reserves (2P) of this field are estimated to be 13 million barrels of oil equivalent (according to KMG EP’s technical experts’ evaluation). Cost of acquired barrel of this asset is $2.7/bbl. According to independent evaluation recoverable volumes are estimated at 12.9 million barrels.
SBS holds the license rights, under Subsoil Use Contract Number 2193 (issued in November 2006) for oil and gas exploration at the “East Zharkamys -1 block” in the Aktobe region. Extension of the contract is a condition precedent to closing. Prospective resources of this block considering risks are estimated at 123-146 million barrels of oil equivalent (according to KMG EP’s evaluation) and at 232 million barrels according to independent evaluation. Cost of acquired barrel of this asset in a conservative scenario is $0.24/bbl.
Date:
Monday, September 27, 2010
