Press Releases

Аstana, 2 June 2014. JSC КаzМunaiGas Exploration Production (“КМG EP” or the “Company”) is pleased to announce the result of the verification of reserves at 31 December 2011 and 2012 in the Ozenmunaigas, Embamunaigas and Ural Oil and Gas (50% ownership) fields. 

In summary, KMG EP will continue to use the reserves assessment made by Miller and Lents Ltd. (“M&L”) as of 31 December 2012 and the reserves assessment made by Gaffney, Cline & Associates (“GCA”) as of 31 December 2011 as final assessments.  The estimation of the Company’s reserves at 31 December 2013, announced on 11 April 2014, is unaffected by this review.

As announced on 18 October 2013, given significant differences in KMG EP reserves estimations made by “M&L”and “GCA”, the Board of Directors of KMG EP resolved to work with a third party reserves consultant to provide an independent estimation of reserves for the years ended 31 December 2011 and 2012.  DeGolyer and MacNaughton Corporation (“D&M”) was appointed to that role and the result of their work is set out below.

Reserves at 31 December 2011

The material differences in reserve assessments by D&M, compared to the assessments by GCA were as follows:

• 1Р reserves were 112.2 million tonnes (812.8 million barrels) which was 47% higher (or 35.9 million tonnes);
• 2Р reserves were 145.7 million tonnes (1.05 bn barrels) which was 35% lower (or 80.1 million tonnes); and
• 3Р reserves were estimated at 199.1 million tonnes (1.4 bn barrels) which was 25% lower (or 67.7 million tonnes).

The principal reasons for the discrepancies between the two estimates are:

• 1P: D&M’s estimation includes reserves up to the end of the cost-effective field life (2012 – 2063, 52 years) whereas GCA’s estimation is up to the end of the contract term (2012 – 2021, 10 years max); and
• 2P and 3P: the estimation made by D&M was based on mapped in-place reserves and on methods to improve development, whereas the estimation made by GCA was based on production trends based on historical data with increased production levels from Ozenmunaigas.

Reserves at 31 December 2012

The material differences in estimations identified by D&M, compared to the assessment by M&L, were as follows:

• 1Р reserves were 112.2 million tonnes (818.7 million barrels) which is 3.9% lower (or 4.5 million tonnes);
• 2Р reserves were 146.7 million tonnes (1.07 bn barrels) which is 0.8% lower (or 1.2 million tonnes); and
• 3Р reserves were 201.1 million tonnes (1.4 bn barrels) which is 9.6% higher (or 17.6 million tonnes).

D&M and M&L applied a similar approach to estimate reserves:

• A decline trend was identified for each field horizon; and
• Reserve volume was determined based on duration of productive life of a field.

Notes
KMG EP is among the top three Kazakh oil and gas producers. The overall production in 2013 was 12.4 million tonnes (an average of 251 kbopd) of crude oil, including the Company’s share in Kazgermunai, CCEL and PKI. The Company’s total consolidated volume of proved and probable reserves including shares in the associates, as at the end of 2013 was 200 million tonnes (1.5 bn bbl), out of which 148.8 million tonnes (1.1 bn bbl) relates to Ozenmunaigas, Embamunaigas, Kazakh Gas Processing Plant (“KazGPZ”) and UOG (Rozhkovskoye field, Fyodorovskiy block). 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. The International rating agency Standard & Poor's (S&P) confirmed KMG EP’s “BBB-” corporate credit rating in May 2013.

For further details please contact us at:
KMG EP. Investor Relations (+7 7172 97 5433)
Asel Kaliyeva
e-mail: ir@kmgep.kz

KMG EP. Public Relations (+7 7172 97 79 08)
Yelena Pak
e-mail: pr@kmgep.kz

Brunswick Group (+44 207 404 5959)
Andrew Mitchell
e-mail: KMGEP@brunswickgroup.com

Forward-looking statements 
This document includes statements that are, or may be deemed to be, ‘‘forward-looking statements’’. These forward-looking statements can be identified by the use of forward-looking terminology including, but not limited to, the terms ‘‘believes’’, ‘‘estimates’’, ‘‘anticipates’’, ‘‘expects’’, ‘‘intends’’, ‘‘may’’, ‘‘target’’, ‘‘will’’, or ‘‘should’’ or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They include, but are not limited to, statements regarding the Company’s intentions, beliefs and statements of current expectations concerning, amongst other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, potential acquisitions, strategies and as to the industries in which the Company operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur. Forward-looking statements are not guarantees of future performance and the actual results of the Company’s operations, financial condition and liquidity and the development of the country and the industries in which the Company operates may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. The Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements or industry information set out in this document, whether as a result of new information, future events or otherwise. The Company does not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved.