JSC KazMunaiGas Exploration Productionkmgep.kz/data/nws/kaz/fil_329_166.pdf · They include, but...

JSC KazMunaiGas Exploration Production

Bank of America Merrill LynchRussia & CIS 1-1 ConferenceRussia & CIS 1 1 Conference

November 2011

Important Notice

FORWARD-LOOKING STATEMENTSThis 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 termsidentified 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 JSC KazMunaiGas Exploration Production (“Company”) intentions, beliefs and statements of current expectations concerning, amongst other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, 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-lookingstatements 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.

CAUTIONARY NOTE TO US INVESTORSCAUTIONARY NOTE TO US INVESTORSThe US SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that the company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The crude oil reserves of Company within this document have been estimated by Gaffney, Cline & Associates (‘‘GCA’’) according to standards established by the Society of Petroleum Engineers (‘‘SPE’’) and the World Petroleum Congresses (‘‘WPC’’) and thus proved reserves may differ from those estimated according to the definitions of the US SEC. Further, the Company uses certain terms in this document in referring to the Company’s reserves, such as ‘‘probable’’ or ‘‘possible’’ reserves, that the US SEC’s guidelines would prohibit it from including in filings with the US SEC if the Company were subject to reporting requirements under the US Exchange Act. Prospective investors should read ‘‘The Company—Company’s Reserves’’ section in IPO prospectus and the report of GCA, an international oil and gas consultant, on the Company’s reserves, included in this document (the ‘‘GCA Report’’) for more information on the Compan ’s reser es and the reser es definitions the Compan ses

2

Report’’), for more information on the Company’s reserves and the reserves definitions the Company uses.

Kazakhstan at a glanceKazakhstan at a glance

3

Kazakhstan macro indicators

148

171

160

180 US$ bn

81

105

133

115

100

120

140

57

81

2434

24 29 3028 25 30 352523

3145

40

60

80

16 19 24 24 2915 17 22 28 25

5 9 7 11 14 21 25

5 9 1523 22

0

20

2005 2006 2007 2008 2009 2010 2011E*005 006 00 008 009 0 0 0

GDP Budget receipts Budget expenditures Public debt National fund

2005 2006 2007 2008 2009 2010 2011E*

Average KZT/USD 132.9 126.1 122.6 120.3 147.5 147.4 146-148

Real GDP growth 9.7% 10.7% 8.7% 3.3% 1.2% 7.0% 7.0%

CPI inflation 7.5% 8.4% 18.8% 9.5% 6.2% 7.8% 6-8%

Note: Budget receipts and expenditures according to the law "On Republican Budget for 2011-2013", as amended on 06.10.2011; Public debt and assets of the National Fund as at 30.09.2011, according to the Ministry of Finance; Average tenge/$ rate estimated based on actual data to October 17 and corridor 145-155 tenge/$ till the end of the year; Nominal GDP for 2011 is calculated based on the forecast of real GDP growth of 7% and inflation of 8%. GDP growth and inflation according to the updated forecast of socio-economic development in 2011 4

Kazakhstan Oil Industry

Aktobemunaigaz,

123

2010 Production in Kazakhstan, kbopd Foreign oil and oil service companies operating in Kazakhstan:CITIC - Canada Energy Ltd

KMG EP, 270

MMG, 116

KPO, 229

3 CITIC - Canada Energy LtdCNPCCICSinopecBPBG G

Pavlodar refinery4.8 (7.5) mtpa

Other producers,

349TCO, 520

BG GroupMaerskChevronTotal ExxonMobil

Atyrau refinery4.3 (4.9) mtpa

ENIMOL (Hungary)FIOC LLC (China)LukoilSchlumberger

Kashagan

SchlumbergerSaipemBaker HughesWeatherford

Shymkent refinery4.6 (7.0) mtpa

Oil pipelinesRefinery 2010 throughput (Capacity)

51) Current total pipeline capacity2) Ministry of oil and gas

Recoverable reserves – 39 bn bbl(2) (3% share of the World 2P reserves)

Crude oil tax regime since 2009

Rent tax and MET are linked to oil price

Export Rent tax: progressive scale from 7% Export Rent tax: progressive scale from 7% to 32%

Mineral Extraction Tax (MET): depends on d ti b t t 12% D ti

60

production by contract, ~12%. Domestic supplies half taxed

Corporate Income Tax (CIT): from 30% to 20%30

40

50

bbl

20%

Excess Profit Tax (EPT): applies to profits exceeding 25% of relevant expenses10

20

30

US$

/

Rent tax

Export duty: US$5.4/bbl from 01/01/2011 0

10

20 30 40 50 60 70 80 90 100 110 120 130 140 150

Brent priceBrent price

Note: Estimated taxes for barrel of exported oil. Calculations based on varying oil prices and 2009 EMG & UMG cost structure excluding non-operating income/expenses and unusual/extraordinary items

6

Crude oil export taxation regime

17th May 2008Export duty $15/bbl

1st J 2011

Taxes on oil exports, except taxes on income and excess profit

140

160

($109.9/ton)

11th October 2008Export duty $28/bbl($203.8/ton) 16th August 2010

1st January 2011Export duty $5.4/bbl ($40/ton)

100

120

1401st January 2009New Tax Code: Rent and MET replace export duty and royalty respectively

gExport duty reintroduction at $2.7/bbl ($20/ton)

60

80$/bb

l

20

40

0

02/0

1/08

09/0

2/08

18/0

3/08

25/0

4/08

02/0

6/08

10/0

7/08

17/0

8/08

24/0

9/08

01/1

1/08

09/1

2/08

16/0

1/09

23/0

2/09

02/0

4/09

10/0

5/09

17/0

6/09

25/0

7/09

01/0

9/09

09/1

0/09

16/1

1/09

24/1

2/09

31/0

1/10

10/0

3/10

17/0

4/10

25/0

5/10

02/0

7/10

09/0

8/10

16/0

9/10

24/1

0/10

01/1

2/10

08/0

1/11

15/0

2/11

25/0

3/11

Royalty/MET Rent tax Export duty Brent

7

Strategic outlookStrategic outlook

8

KMG EP Investment Case

The largest listed Kazakh oil producer Republic of Kazakhstan

Preferential access to reserves and infrastructure through NC KMG

100%

100%

Holding Samruk-Kazyna

Corporate governance in line with international standards to ensure protection of minority shareholders63%

FreeFloat

100%

NC KMG

Strong FCF generation

Diverse growth opportunities

37%Including CIC 11%

Diverse growth opportunities

KMG EP

KMG EP offers a unique investment opportunity in Kazakhstan’s oil sector

9

KMG EP today vs. IPO

Cash returned

2011 2006 IPO

• > US$2bn (~US$$1bn tominority shareholders)

Cash returned to shareholders

since 2006Strategy 2006:Grow through M&A and ExplorationMaintain production and reduce costs at l t • US$3.8bnNet cash

• White Bear 35%• MoU with NC KMGOffshore

legacy assetsImprovement in HSE practices

• MoU with NC KMG(5 potential blocks)

Offshore

• 9 blocks (100%) and UGL (50%)Onshore exploration

• ~US$2bnCash raised( ) ( )exploration

• KGM 50%• CCEL 50%

PKI 33%Production JVs

• 3 blocksOnshore exploration 2P reserves:

449 mmbbl• PKI 33%

• UMG• EMG

Production legacy assets

• UMG• EMG

Productionlegacy assets

2P reserves:1,495 mmbbl

2P reserves:1,707 mmbbl

449 mmbbl

10

g y

2011-2020 Strategy

Maximisation of shareholder value

Reserves increase

Production increase

Profitability improvement

M&A Onshore Offshore Mature legacy M&A exploration projectsOnshore consolidation in Kazakhstan

Expansion of exploration portfolio, including

Agreement with NC KMG signed in May 2011 –

assetsModernisationRecover and maintain Kazakhstan

Selective international acquisitions

portfolio, including subsalt, new regions, gas and condensateSignificant increase in exploration expenditures

signed in May 2011 access to Caspian offshore blocks

Recover and maintain productionControl costs

11

exploration expenditures

Production growth outlook

58 MMG

- M&A- Exploration

50 5193

9192

pd

Completed acquisitions

51 91

kbop

UMG rehabilitation

192 192 190 181 177 159 173 UMG and EMG –current profile

2006 2007 2008 2009 2010 9М11 2012E 2020The chart not to scale, intended to illustrate direction of expected trends

12

2006 2007 2008 2009 2010 9М11 2012E 2020

Strong financial position supporting future investments

Significant net cash Possible uses of cash

3,0204,426

3,404 3,905 4,0664,000

5,000

8,000

10,000

Maintenance capex* ~ US$2bn see p.16-20

3,085 3,2884,595 4,332 4,736 4,653

2,615

1,000

2,000

3,000

4,000

6,000 Exploration expenditures* ~ US$1bn see p.25-35

Current acquisition

pipeline worth ~ US$2bn 2 5bn** see p 37 42

-470 -269 -169 -928 -831 -586 -2 000

-1,000

0

-2 000

0

2,000pipeline worth ~ US$2bn-2.5bn see p.37-42

Share buyback, dividends see p.14

2,0002,000

2006 2007 2008 2009 2010 9M11Cash and financial assets, US$mBorrowings, US$mNet cash US$mNet cash, US$m

13

* Over the period of 3 years** Not including potential stakes in strategic projects

Cash Distributions to Shareholders

2007 18 May 2007 (AGM): dividend of US$300m, including special dividend of US$150m

2008 28 May 2008 (AGM): dividend of US$344m 500 563 656(0 91)

704(0 80)

800(0.91)

Declared Dividends, KZT per share (US$ per GDR)

2008 28 May 2008 (AGM): dividend of US$344m, including special dividend of US$152m

8 October 2008 (BoD): 12 month buyback program, US$148m

2009 28 May 2009 (AGM): dividend of US$322m

500(0.66) (0.77) (0.91) (0.80) (0.91)

2006 2007 2008 2009 20102009 28 May 2009 (AGM): dividend of US$322m,

including special dividend of US$80m

2010 26 February 2010 (BoD): listing of preferred shares with further buy-back program, up to 100% of issued preferred shares 3% 3%

7%

3%5%

Dividend Yield1, %

25 May 2010 (AGM): dividend of US$346m,including special dividend US$132m

2011 5 May 2011 (AGM): approved dividend of US$389m, including special dividend of US$148m

2006 2007 2008 2009 2010

Payout ratio, %

Preferred shares buyback program: 46.2% bought back for US$238m as of 09/11/11

Ordinary shares buyback program till 31 December 2012 for up to US$300m; currently 322,787 GDRs

30% 27%20% 24% 24%

Over US$2bn paid to the shareholders since IPO

bought back for about US$5m 2006 2007 2008 2009 2010

Over US$2bn paid to the shareholders since IPO

(1) Calculated based on share prices as at the end of corresponding periods

14

Operating OverviewOperating Overview

15

Legacy assets overview

UMGJVs

Production, 270 kbopd, in 2010

300

350

UMG and EMG production profile, kbopd

UMGSteps to increase production by new

drilling and

Production decreaseCost increaseUMG

45%

EMG21%

34%

150

200

250Period of underinvestment

genhanced recovery

Cost increaseLabour actions

0

50

100 EMG

1966 1971 1976 1981 1986 1991 1996 2001 2006 2011E

JVs21%

2P reserves 2010

Reserves, 2010 year end UMG EMG Total

UMG58%

EMG21%

21% 1P, mmbbl 452 149 600

2P, mmbbl 1,259 447 1,707

3P, mmbbl 1,396 559 1,955

Significant reserves upside potential via supplemental exploration and application of new technologies

2P reserves life(1), years 29 22 26

16

g p p pp p pp g

Note: (1) Based on 2010 production

Uzen field: labour and capital intensive operation

Well stock, end of 2010Production - 3,613 wellsInjection - 1,204 wellsAverage well flow rate - 39 bopd

Well repairs and workovers in 2010:On average 1,084 wells were repairedWorkovers performed on 915 wells

Drilling program:In 2010 - 158 wellsAverage well flow rate 39 bopd Workovers performed on 915 wells

Oil lit

In 2010 - 158 wellsIn 2011 – 180 wells

Oil quality:API 33o

Paraffin ~20%Tar ~15%Asphaltene 3%Asphaltene~3%Sulphur~0.18%

120130140150

Production recovery after power cuts

Power cuts

5060708090

100110

17

501 2 3 4 5 6 7 8 9 10 11 12

Daily production, 06-17 Aug 2010, kbopdDaily production, 8-19 Mar 2011, kbopd

Enhance performance of mature fields

1 4501,650140

160

Daily production on UMG, kbopdkbopd kbopd wellswells

250250

Production and drilling profile

4506508501,0501,2501,450

406080

100120

100

150

200

100

150

200

50250450

02040

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Actual kbopd Plan kbopd Undergroung repairs

Actual Plan0

50

0

50

2010 2011E 2012E 2013E 2014E 2015E 2016E

EMG kbopd UMG kbopd Production drilling

Current situation:•Contract termination of illegal

Sh t t

Short-term measures:•Optimisation and

Rehabilitation of Uzen field (from 2012):•Revision of development plan

Actual, kbopd Plan, kbopd Undergroung repairs EMG, kbopd UMG, kbopd Production drilling

glabour action participants•Management holds firm position with the support of local authorities on labour actions

Short-term measures:•Optimisation and reinforcement of workover and underground well repair programmes•Involvement of additional units for

preinforcement of workover and underground well repair programmes•Involvement of additional crews for underground well

•Revision of development plan•Reserves growth via modeling and supplemental exploration•Increase time between•Improvement of social situation

and order by authorities and with participation of KMG EP and NC KMG

underground well repairs •2011 Capex programme realisationcrews for underground well repairs •No disruption to 2011 capexprogramme

•Increase time between repairs•Production > 120 kbopd•Productivity improvement

18

Rebuilding mutual trust between management and personnel

Enhance performance of mature fields

Production and capex profile*192 192 191

181 1772001,000

562614

161

120

140

160

180

600

700

800

900

391327 348

27960

80

100

300

400

500

kbopdUS$

m

0

20

40

0

100

200

2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E

Production at Uzen > 120 kbopd Emba 57 kbopd**

Target for mature assets:Construction, modernisation and other, US$m Production drilling, US$m Production, kbopd

Production at Uzen > 120 kbopd, Emba ~ 57 kbopd**

Reserves: achieve increase through application of new technologies

19*Not including exploration expenditures** Tonnes to barrels conversion factor for UMG and EMG – 7.36

Production unit costs trend – below inflation

Technological base for modernization of mature assets

Collecting and interpreting dataModelling

Modern technologies

Technology Effect

T l t l t f O ti i ti f d dTerritorial database

UMG

KMG EP (headquarter)

Telecontrol system for underground repair crews

Optimisation of underground repairs performance, decrease in idle time

GPS-monitoring of transport vehicles

Fuel costs savingsEMG

Engineering center

JV’s

vehicles

Enhanced security system Property damage prevention

Hydraulic drive for the depthpump

Production stabilisation due to increased effectiveness

Recommendation of well intervention

techniques, drilling etc

Logging jobsinterpretation

Well interventiontechniques

realization and efficiency analyses

Self-regulating casing centraliser Oil leakage prevention

Linear drive for the depthpump Smaller size and versatile compared to traditional drive

Deep analysis of development stage Geological modeling

Bridle spanner Underground repairs decrease by7%

Better quality pumps Increase in between overhaul period

Hydrodynamic modelingp

G l I i d ti d d i ti b l

20

Goal: Increasing production and decreasing operating expenses per barrel

Kazgermunai (KGM)

5 oilfields: Akshabulak (Central, South and East), Nuraly and Aksai

140160180200

60

80Production and Capex profile, 100%

kbopd US$m

Gas utilization program implementation is at final stage: completed construction of second facility for gas utilization with a 40

6080100120140

20

40

second facility for gas utilization with a capacity of 310 mln m3 of associated gas and 150 thous. tonnes of liquified gas

020

02007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E

Production, kbopd Capex, US$m

Low lifting costs

Low capex requirements

, p p , $

Start of production 1996

2P reserves, GCA 31/12/10, mmbbl 180

Number of fields 5

Average well flow rate – 655 bopd

2P reserves life – 8 years

Number of fields 5

Well stock 103

Watercut, % ~11%

API gravity (density) API 38o2P reserves life 8 years

Well depth (min-max) – 1450-2200m

~0.83 g/cm3

Paraffin content,% ~12-15%

Sulfur content, % ~0.1-0.2%

21

Karazhanbasmunai (CCEL)

One of the biggest oilfields in Kazakhstan

High lifting costs200

250

300

40


kbopd US$m

g g

Long reserves life

L i t 50

100

150

200

10

20

30


Hot steam technology

002007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E



2P reserves life – 33.5 years

, p p , $


2P reserves, ML 31/12/10, mmbbl 449

Number of fields 1


Number of fields 1

Well stock 2,151

Watercut, % ~90%

API gravity (density) API 17o

~0.94 g/cm3

Paraffin content,% ~0.7-1.4%

Sulfur content, % ~1.6-2.2%

22

PetroKazakhstan Inc. (PKI)

100% PKKR, 50% Turgai Petroleum, 50% KGM

500

600

120


kbopd US$m

Exploration upside: 2P reserves of Kolzhan field ~ 55 mmbbl

100

200

300

400

40

80

Low lifting costs


0

100

02007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E



2P reserves life – 9 years

, p p , $


2P reserves, GCA 31/12/10, mmbbl 407

Number of fields 14y


Number of fields 14

Well stock 1,145

Watercut, % ~45%

API gravity (density) API 43o

~0.81 g/cm3

Paraffin content,% ~9%

Sulfur content, % ~0.15%

23

Exploration OverviewExploration Overview

24

Current portfolio overview

2009 2010 2011E

Recent exploration activity: Current exploration assetPending acquisitionAssets under MoU with NC KMG

2009 2010 2011E

Overall expenditure, US$ m 17 47 150-180

Number of blocks 3 5 10

Fedorovsky block

Temir

Stepnoi Leopard

Acreage, km2 21,697 23,300 41,118

Number of wells 4 8 24*

TereskenTaisoigan block

Liman block

Bobek, Makhambet

Urikhtau

Kolzhan

E.Zharkamys

R-9 block

Ustyurt (Mertvyi Kultuk)

Overall depth, m 9,100 18,600 67,750

2D seismic, km 400 240 2,510

Zhambyl

Ustyurt (Mertvyi Kultuk)

C1 block

Karaton-Sarkamys

Uzen-Karamandyba

C2 block

Zhenis

3D seismic, km2 300 855 739

Current status of projects in 2011:

Godina

Estimated recoverable resources of the current exploration portfolio ~ 1 billion barrelsp j

13 wells completed, 7 wells drilling/testing, 4 wells postponed/cancelled Supplemental exploration: hydrocarbons confirmed at 2 wells Post-salt: hydrocarbons confirmed at 1 well (Liman)

exploration portfolio ~ 1 billion barrels

25

Post salt: hydrocarbons confirmed at 1 well (Liman) Pre-salt: hydrocarbons confirmed at wells (Fedorovskiy)

* Including 5 pre-salt wells and 1 offshore well in North Sea

Exploration Strategy

Long-term Short-term Supplemental gportfolio

expansion program

portfolio expansion program

ppexploration and exploration of

existing projects

Maintain recoverable reserve increment at existing fields

Active exploration at the most perspective blocks

Acquisitions and exploration of pre-salt deposits in the Pre-Caspian depression edge

Expansion into new regions and prospects of sedimentary basins in Kazakhstan and abroad









Increase recoverable reserve at existing fields

Active exploration at the most prospective blocks


Expansion into new regions and sedimentary basins in Kazakhstan and abroad

perspective blocks abroadperspective blocks abroadperspective blocks abroadprospective blocks

Expected cost of addition of 1 bbl of recoverable reserves by exploration ~ $0.3 – $1.5

26

p y p $ $

Supplementary exploration, exploration of the existing projectsShort-term exploration portfolio expansion

FEDOROVSKYZHARKAMYS EAST

North-Kazakhstan KARPOVSKY NORTH

TEPLOVSKO

URIKHTAU

NORTH SEA

LIMAN

TAISOIGANTEMIR

ASTANA

oblastPavlodar

oblastKostanai

oblastAkmolaoblast

WestKazakhstan

TEPLOVSKO-TOKAREVSKOYE

R-9

Aktobe oblast

East-Kazakhstan oblast

Karagandybl t

Atyrauoblast

Kazakhstanoblast

Mangistau Kyzylorda

oblast

Almatyoblast

KARATON-SARKAMYS

UZEN-KARAMANDYBAS

goblast

y yoblast Zhambyl

oblast

South-Kazakhstan oblast

oblast

Exploration projects

South Kazakhstan oblast

Caspian

27

Exploration projects

* No fields for supplementary exploration are indicated on the map

Caspiansea

27

Projects of short-term exploration portfolio expansion

Kazakhstan exploration potential

Kazakhstan borders

Oblasts borders

Sedimentary basins

Sedimentary basins

Kazakhstan

PrecaspianUsturstko-BuzashinskiyMangishlakskiyAralskiySyrdariynskiySouth TurgaiNorth Turgai

y

North TurgaiNorth KazakhstanTenizShu-SarysuIliyskiyBalkhashAlakolZaisanZaisanPreirtyshskiy

28

Current exploration program(including supplemental exploration and short-term portfolio expansion)

Estimated cumulative additions of recoverable reserves, mmbbl

Geological exploration costs, US$m

1,2481,358 1,398

1,462

6937

341

375

331

545611

611 611611

708

1,097 8337

180

248

214

552 637747 787 851

284

231 180

258306 294

248214

424552

117

2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016

Current portfolio Short-term expansion Current portfolio Short-term expansion

29

Scheduled scope of geological exploration works

Liman 2011 2012 2013 Total

No. wellsfirm 2 2 4contingent 2 2

Low 10.4

B 51

Forecast recoverable reserves increment, mmbbl

Scheduled scope of geological exploration works

contingent 2 2

Total depthfirm 3,050 3,000 6,050contingent 2,500 2,500

3D seismic, km2 165 1652D seismic, linear km

Karaton-Sarkamys 2012 2013 2014 2015 Total

Base 51

High 104.1

Estimated probability of success 35%

Low 50 2Karaton Sarkamys 2012 2013 2014 2015 TotalNo. wells firm 3 3

contingent 5 5 5 15

Total depth firm 9,600 9,600contingent 17,500 17,500 17,500 52,500

3D seismic, km2 160 500 500 1,1602D seismic linear km

Low 50.2

Base 136

High 203

Estimated probability of success 33%2D seismic, linear km

Ozen-Karamandybas 2011 2012 2013 2014 TotalNo. wells firm 1 4 5

contingent 3 3

Total depth firm 2,200 9,000 11,200contingent 10,500 10,500

Low 11.6

Base 58

High 87

3D seismic, km2 715 715

Zharkamys East 1 2011 2012 2013 TotalNo. wells firm 2 2

contingent 2 4 6

Total depth firm 6,150 6,150contingent 9 000 12 400 21 400


Low 38

Base 134

High 190contingent 9,000 12,400 21,4003D seismic, km2 200 2002D seismic, linear km 610 610

Fedorovskiy block 2011 2012 2013 2014 TotalNo. wells firm 3 3 6

contingent 2 2

g


Low 32.4

Base 162

30

g

Total depth firm 13,500 13,500 27,000contingent 10,800 10,800

3D seismic, km2 150 150

High 243


Liman

Geological data:

Post-salt, Middle Trias with terrigenous reservoir

Works performed:2008-2010: 2D seismic - 800 km New reservoir discovered at Novobogat South East based on well G-1 drilling

2011: 3D seismic of 165 sq.km - completed fully 2 scheduled wells drilled with interval of 2,900m. 1 well in process of testing:1 well in process of testing:

I Unit – production rate 37m3/day, II Unit – production rate 33 m3/day Moving to Unit III 1 well abandoned

Forecasted increase of recoverable reserves*51 mmbbl

Drilling (2010-2014)

Evaluation(2014)

Production testing (2015 )

75

2011 2012

3131* P50 estimate. Estimated probability of success 35%

Estimated exploration expenditures, US$m

Karaton-Sarkamys

Geological data:

Exploration block area: 2,462 km2

13 structures identified post salt 13 structures identified post-salt Target reservoir depth forecasted to be within 1,500-3,000m. Block accommodates 15 oil&gas fields confined to salt domes

(7 of them owned by KMG EP) and post-salt fields Tengiz and Korolevskoye

Works performed: Block purchased in 2011 from parent company NC KMG Old block studied at high 2D and 3D seismic and drilling density

i S i t tisince Soviet times

2011: Exploration works in progress

Forecasted increase of recoverable resources*136 mmbbl

47Drilling (2012-

2014)Evaluation

(2016)Production

testing (2017 )1630

4735

2011 2012 2013 2014



Ozen-Karamandybas

Geological data: Exploration block area: 2,100 km2

11 structures identified in the Mesozoic as a total Target reservoir depth: 650-2 300 m

N

E. Burmasha

Mangistau Oblast

B d i 1 Target reservoir depth: 650 2,300 m

Works performed:The Block was purchased in 2011 from parent company NC KMG1. 2D seismic – 1,600 linear km;

Bodrai

Ozen

Karamandybas

E. Zhetybai

Moldybai Ozen-Karamandybas

Bodrai-1 (2200 m)

, ;2. Geochemical study – 900 modules;3. GPS survey – 2,200 sq.km;4. Electrical prospecting – 800 km;5. Seismostratigraphic study along with 2D and 3D LEGEND

BlockTenge

EnortaW. Enorta

2011: Drilling of well scheduled for 2011 in progress

Prospect Oilfield Well

0 10 20 km

Forecasted increase of recoverable resources*Forecasted increase of recoverable resources58 mmbbl

3 6 7 16 19


Evaluation(2015)


3.6 7

2011 2012 2013 2014



Zharkamys East I

Geological data:

Prospect identified in the pre-salt (carbon), in carbonate reservoir КТ-II

N Aktobe Oblast E. Akzhar

Zhanatan

Works performed:2011:• Scheduled 2D/3D for 2011 completed in full confirming the structure

presence

Zharkamys East I Laktybai

Karatobe

presence• Pre-salt well drilling commenced

LEGEND Block Prospect

Kindysai

Berkut South

Shotykol

Kokbulak

TuskumRA-1-T

(4750 m)0 10 20 km

p Oilfield Well

Tuskum

Forecasted increase of recoverable resources*134 mmbbl

2435

19 17.6


Evaluation(2014)

Production testing (2015 )2011 2012 2013 2014



Fedorovskiy block 50%

Geological data:

New gas condensate field discovered in pre-salt carbonates Reserves appraisal in progress

LEGENDBlockProspectOilfieldWell

N

RussianFederation pp p g

Works performed:2008-2010: 4 pre-salt wells drilled (3 production wells):

R hk k d t fi ld (2 ll ) U10 4 806 233

Federation

d kiRozhkovskoe

Chinarevskoe

Rozhkovskoye gas condensate field (2 wells): U10 – 4,806 m, gas 233-236k m3/day, condensate 1,503-1,528 bbl/dayU12 – 4,500 m, gas 153k m3/day, condensate 1,289 bbl/dayZhaik: U1 – 5,844, hydrocarbon 26 bbl/dayZharsuat: U5 – 5,803 m, dry

FedorovskiyZharsuatZhaik

Karachaganak

, , y

2011: 3 appraisal wells drilled at Rozhkovskoye gas condensate field

Forecasted increase of recoverable reserves*

0 10 20 kmWest Kazakhstan Oblast

162 mmbbl46

35 38

11 11 18


Evaluation(2015)


2011 2012 2013 2014 2015 2016



M&AM&A

36

Acquisition driven growth

Targeted approachPast performance

IRR > 15%

Preferential access to onshore assets in KZ

Acquisitions YearProduction

Impact FY10(1)

Acquisitionprice cash

component(2)

US$m

Dividend payback

as of today(3)

US$m

Preferential access to onshore assets in KZ

High profitability of target assets

Conservative Brent assumption (Current

KGM 50% 2007 + 19% 971 1,225

CCEL 50% 2007 + 10% 150 81Co se at e e t assu pt o (Cu e t

Brent forecast of US$$80-90 / bbl)

Opportunities:

PKI 33% 2009 + 24% 101 90

NBK 100% 35

MMG 50%, КОА 50%, КТМ 51%(4)

Small and medium producing assets in KZ

Stakes in strategic projects

SBS 100%

WB 35%

2010Exploration

stage30

-

Stakes in strategic projects

Selective acquisitions abroadUGL 50% 2011Advancedexploration

stage164

37

(1) 100% - UMG and EMG production in 2010(2) Not including acquisition non-recourse debt for CCEL US$747m, PKI US$793m as at 30/06/2011(3) Not including dividends used to repay acquisition debt(4) At the stage of negotiation

Current project under negotiation: Mangistaumunaigas

NC KMG and KMG EP are in the process ofnegotiating the deal

MMG – Stepnoi Leopard

2P Reserves (100%) - 577 mmboe(1)

2010 Production (100%) 40 mmboeEMG PKKR (16.5%)

KGM (66.5%)(6)

TP (16.5%)

2010 Production (100%) – 40 mmboe

Reserve life >14 years based on 2P reserves

Atyrau refinery

UMG

CCEL (50%)MMG – Kalamkas (50%)

MMG – Atyraumunaigas

Two major producing fields Kalamkas and Zhetybai

MMG’s operations in close proximity tolegasy KMG EP assets (Uzen andKarazhanbas)

MMG – Zhetybai and satellites (50%)

100%FY 2010

US$m

1H 2011

US$m

Two major producing fields Kalamkas and Zhetybaicontribute almost 90% of the total production

Three exploration licenses, which are currentlyunder exploration and appraisal, 2 of these (Bobekand Makhambet) are offshore fields

Karazhanbas)

Revenue 2,879 1,989

EBITDA 1,095 746

Net Income 765 508

and Makhambet) are offshore fields

Crude is exported via the Atyrau-Samara pipeline(c.95%) and through the Aktau seaport (c.5%) toEurope (Poland, Slovakia, Italy and other)

38

MIBV Debt 1,998 1,396

(1) GCA reserves report as of December 2010

Estimated impact of near-term acquisition targets

MMG(50%)

KOA(50%)

KTM(51%) Total / Average(50%) (50%) (51%)

Impact on production(1)

+21%58 kb d

+4%10 kb d

+1%2 kb d

+26%69 kb dproduction(1) 58 kbopd 10 kbopd 2 kbopd 69 kbopd

Impact on +13% +5% +1% +19%Impact on2P reserves(2)

+13%278mmbbl

+5%109mmbbl

+1%21mmbbl

+19%408mmbbl

Note: (1) 100% - KMG EP consolidated production in 2010 (including KGM 50%, CCEL 50% and PKI 33%) (2) 100% - KMG EP consolidated 2P reserves as of the end of 2010 (including KGM 50%, CCEL 50% and PKI 33%)

39

Offshore opportunities

KMG EP and NC KMGsigned Memorandum providing access to the following offshore blocks in KZ:access to the following offshore blocks in KZ:

ZhambylWater depth: 4-9 mAcreage: 1,935 m2

GodinaWater depth: 20-50 m Acreage: 425 m2

ZhambylZhambyl

Ustyurt(former Mertvyi Kultuk)Water depth: 1-2.5 mAcreage: 7,273 m2

С1Water depth: 0-2 m Acreage: 1,584 m2

С1С1Acreage: 7,273 m

ZhenisWater depth: 75-100 m Acreage: 5,400 m2

С2Water depth: 5 mAcreage: 1,203 m2

Offshore international:

С2С2Ustyurt

(Mertvyi Kultuk)Ustyurt

(Mertvyi Kultuk)

35% share in White Bear (North Sea)GodinaGodina

ZhenisZhenis

40

Completed acquisitions

Asset, %Acquisition date

KGM(50%), April 2007

CCEL(50%), December 2007

PKI(33%), December 2009

Total

PRODUCING ASSETS

Deal price US$971m US$150m + US$782m non-recourse debt

US$100.5m + US$831m non-recourse debt

US$1,221.5m +US$1,613m non-recourse debt

Production +19% +10% +24% +53%impact1

19%33 kbopd

10%18 kbopd

24%42 kbopd

53%93 kbopd

2P Reserves impact2

+5%90 mmbbl

+13%224 mmbbl

+8%134 mmbbl

+26%448 mmbbl

Investment Dividends US$1,225m Dividends US$210m Dividends US$449m Dividends US$1,884mpayback as at 30/09/2011

, US$129m debt repayment US$81m priority return

US$359m debt repayment US$90m cash to KMG EP

, US$488m debt repayment US$1,396m cash to KMG EP

EXPLORATION ASSETS

NBK (100%), September 2010

SBS3 (100%), September 2010

White Bear (35%), August 2010

Fedorovskiy block (50%)March 2011

4 blocks NC KMG (100%)April 2011

Deal price US$35m cash 13 0 mmbbl (KMG EP

Deal price US$30m cash 138 mmbbl (P50) Exploration stage

The P1722 license covers - 213 km2

Drilling costs and other

Deal price US$164.4m,including US$87.8m of shareholder loans

Deal price US$40m cash As per preliminary

estimate prospective 13.0 mmbbl (KMG EP estimate) 12.9 mmbbl

(recoverable reserves as per TRACS)

Exploration stage Drilling costs and other project liabilities at the HC pre-discovery stage are estimated at US$25-30m

shareholder loans С1+С2 gas and condensate

reserves are 102 mmbl

estimate, prospective resources are approx. 1.5 bnbbl

(1) 100% = UMG & EMG production in 2010; (2) 100% = UMG & EMG 2P reserves as of 2010 year-end; (3) In 2011 the title was changed to LLP “KMG EP Exploration ventures”

41

Summary of JV’s financial results in 9M11(1)

9M 2011 CCEL 50% KGM 50% PKI 33% Sum/Average

Production volume th.tons 735 1,108 1,470 3,313mbbl 4,913 8,534 11,387 24,834

Sales by destination th.tons 756 1,108 1,855 3,719Export th.tons 688 1,098 1,262 3,048pDomestic th.tons 68 10 593 671

FinancialsRevenue US$m 530 896 1,319 2,745$ , ,Operating expenses US$m 390 517 828 1,735Income taxes US$m 36 134 162 332Profit for the period US$m 104 245 329 678Dividends received US$m - 100 132(3) 232Dividends received US$m 100 132 232

Capex (from cash flow statement) US$m 21 15 80 116Lifting costs $/bbl 14.29 1.75 5.01 5.73Conversion factor bbl/ton 6 68 7 70 7 75Conversion factor bbl/ton 6.68 7.70 7.75

(1) IFRS unaudited figures(2) Including priority return of US$54m for 2009-2010 from CCEL, remaining is used to repay debt(3) 80% of the dividends received are used to repay KMG PKI Finance BV non-recourse debt

42

Reference Information

ContactsShare information, 09/11/2011Corporate website: www.kmgep.kz

Investor relations e-mail:

Total Treasury

Number of ordinary shares 70,220,935 1,836,116

Number of preferred shares 4,136,107 1,912,793 Investor relations e-mail: [email protected]

Tel: +7 (7172) 975433

Number of preferred shares 4,136,107 1,912,793

GDRs per one ordinary share 6

TickersLSE KMG

KASE RDGZ

Tel: +7 (7172) 975433Reuters KMGq.L

Bloomberg KMG LI

Tickers

50

Abbreviations and Acronyms

UMG – Uzenmunaigas Production BranchEMG – Embamunaigas Production BranchKGM – JV Kazgermunai LLPKGM JV Kazgermunai LLPCCEL – CITIC Canada Energy Limited (holds 94% in JSC Karazhanbasmunai)PKI – KMG PKI Finance BV (holds 33% in PetroKazakhstan Inc.)KOA – Kazakhoil Aktobe LLPKTM – KazakhTurkMunai Ltd.MMG Mangistaumunaigaz JSCMMG – Mangistaumunaigaz JSCTP – Turgai Petroleum JSCSBS – SapaBarlau Service LLP

bbl – barrelmmbbl – million barrelsbnbbl – billion barrelskbopd thousand barrels per daykbopd – thousand barrels per dayUS$ m – million US dollarsUS$ bn – billion US dollarsKZT – Kazakh TengeKZT th. – thousand TengeKZT b billi TKZT bn – billion TengeNC KMG – National Company KazMunaiGas JSCKMG EP – KazMunaiGas Exploration Production JSC

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