Kazakh KMG EP adjusts budget due to low oil prices
Baku, Azerbaijan, March 31
By Elena Kosolapova - Trend:
JSC KazMunaiGas Exploration Production (KMG EP) held its regular board meeting, the company said March 31.
During this meeting, the board approved the revised budget for 2016.
The revised budget for 2016 assumes an average annual Brent price of $30 per barrel and an average annual exchange rate of 360 tenge per US dollar. It also assumes an export duty rate linked to Brent price from March 1, 2016, the statement said.
After several rounds of negotiations and consultations with NC KMG and the Board of Directors, KMG EP's management has decided to change the process for domestic supply with the sale of oil products. The new processing scheme, which the Board of Directors endorses, will take effect in April 2016. Changes associated with this new scheme have already been included in the approved 2016 budget.
A transitional price is being agreed with respect to the first three months of the year on the basis of the netbacks generated by the new processing scheme, the statement said.
For the first time since the company's IPO, the Board of Directors has recommended not to pay dividends on ordinary shares. In accordance with KMG EP's Charter, an annual minimum guaranteed dividend of 25 tenge per share will be paid on preferred shares. This decision is subject to approval by the shareholders at the AGM on May 24, 2016.
The decision not to pay dividends is caused by sharp decline in oil prices since end of 2014, as a result of which the company's cash flow and operating profit turned negative, the statement said.
KMG EP is among the top three Kazakh oil producers. The overall production in 2015 was 12.4 million tons.
The volume of KMG EP's proved and probable reserves, excluding the shares in the joint ventures, amounted to 152 million tons as of late 2015.
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