JSC NC KazMunayGas Operating and Financial Results for 2018
Alik Aidarbayev, Chairman of the Management Board of KMG: “In 2018 KMG significantly improved its financial performance, exceeded operational metrics plan and fulfilled a number of strategic tasks set by shareholder and the Government of the Republic of Kazakhstan. During 2018 we signed a contract to increase Kazakh gas export to China from 5 bln m³ to 10 bln m³ per year. Complex modernisation of refineries has been completed, bringing fuels production of Euro-4 and Euro-5 standards. KMG has taken a number of measures to strengthen financial sustainability. In 2018, KMG reduced its gross debt as a result of Eurobond redemption in the amount of USD 1.6 bln and prepayment of loan obtained from PJSC Sberbank of Russia in the amount of USD 400 mln. Now, we can proudly state that KMG results for 2018 fully met expectations of the main shareholder.”
Operating Highlights for 2018:
- Oil and gas condensate production was up 1.0% year-on-year to 23,606 thous. tonnes (484.2 thous. barrels of oil per day);
- Natural and associated gas production was up 1.8% year-on-year to 8,137 mln m³;
- Oil transportation slightly increased by 0.3% year-on-year to 75,038 thous. tonnes;
- Gas transportation was up 10.6% year-on-year to 111.6 bln m³;
- Refinery volume was up 8.3% year-on-year to 19,715 thous. tonnes mainly due to refinery volumes increase at Kazakh refineries. Volume includes refinery volume in Kazakhstan of 13,384 thous. tonnes and KMG International (“KMGI”) of 6,331 thous. tonnes. Total oil products production was up 6.7% year-on-year to 18,337 thous. tonnes;
- Sales volume of crude oil produced by KMG were up 1,3% year-on-year to 23, 735 thous. tonnes.
Financial Highlights for 2018:
- Revenue was up 45.8% year-on-year to 6,989 bln tenge (USD 20,275 mln);
- Net profit was up 32.0% year-on-year to 694 bln tenge (USD 2,012 mln);
- Capital expenditure was down 6.1% year-on-year to 628 bln tenge (USD 1,822 mln);
- EBITDA was up 53.2% year-on-year to 1,863 bln tenge (USD 5,404 mln);
- Net debt amounted to 2,167 bln tenge (USD 5,639 mln);
- FCF adjusted was up 23.3% year-on-year to 352 bln tenge (USD 1,022 mln).
Key corporate events:
- KMG EP’s LSE and KASE delisting occurred on May 10, 2018. KMG owns 99.6% of KMG EP’s common equity;
- On 22 February 2019, KMG EP completed preferred shares buyback programme. Therefore, KMG EP repurchased preferred shares in the amount of 15.9 bln tenge;
- In November 2018, S&P Global Ratings upgraded its rating on KMG from BB-/kzA to BB/kzA+ with stable outlook and upgraded KMG's stand-alone credit profile to b+;
- In March 2019, the international rating agency Fitch confirmed its rating at the level BBB-/Forecast stable”, noting the increase in the individual rating (stand-alone credit profile) from b to bb;
- In November 2018, Alik Aidarbayev was appointed as a Chairman of the Management Board of KMG. His working experience includes his appointments as a member of KMG’s Board of Directors as a representative of Samruk-Kazyna, CEO of KMG EP and akim of Mangistau region, where an important role in the region development is attributable to Ozenmunaygas;
- On March 29, 2019, KMG obtained the consent of the holders of Eurobonds to be redeemed in 2022, 2023, 2027, 2004. (Eurobonds issued before 2018) for (1) alignment of the covenant package with the terms of the issue of Eurobonds of 2018 and (2) early repayment of Eurobonds in the amount of USD 30.1 million due for repayment in 2044;
- During 2018 within privatisation program KMG sold the following assets: KTG-Tbilisi in the amount of USD 40 million, Kazakh-British Technical University (KBTU) in the amount of 11,370 mln tenge and KMG Retail LLP in the amount of 60,512 mln tenge, KMG-Service Georgia in the amount of USD 10.3 million.
Operating results of 2018
During 2018 KMG oil and condensate production increased by 1% year-on-year to 23,606 thous. tonnes. Natural and associated gas production increased by 1.8% to 8,137 mln m³.
During 2018 Kashagan oil production was up by 59.5% year-on-year to 13,219 thous. tonnes or 287 kbopd. KMG’s share in Kashagan oil and gas production increased by 59.5% and 60.3% to 1,094 thous. tonnes of oil and 637 mln m³ of gas, respectively. Kashagan oil production was positively impacted by commissioning of crude gas reinjection system in August 2017, reliability improvement of equipment and production efficiency increase. The operator of project is working on exploring options for expanding the capacity for gas re-injection for a subsequent production increase at the field.