Kazakhstan’s KMG EP sees decrease in profit
Baku, Azerbaijan, Nov. 17
By Elena Kosolapova – Trend:
Kazakhstan’s KazMunaiGas Exploration Production had 76 billion tenges ($220 million) of net profit in January-September 2016 compared to 138 billion tenges ($703 million) in the same period of 2015, the company reported Nov. 17.
The net profit in the third quarter of 2016 was 58 billion tenges ($170 millions) compared to the net profit of 0.9 billion tenges ($3 million) and 16 billion tenges ($47 million) in the first and second quarters of 2016, respectively. This increase in net profit is largely a result of the company’s switch to the new processing scheme in April 2016, as well as lower taxes related to court rulings and positive changes in tax legislation.
KazMunaiGas Exploration Production’s revenue in the first nine months of 2016 was 515 billion tenges ($1.5 billion), which is 47 percent more compared to the same period in 2015. This increase is the result of the company’s switch to the new processing scheme, as well as a 76-percent increase in the average tenge-USD exchange rate, which was partly offset by a 24-percent decrease in the Brent price.
Production expenses in January-September 2016 increased by 22 percent compared to the same period of 2015 to 195 billion tenges ($568 million). This was mainly due to additional expenses related to the new processing scheme, partially offset by a 5-percent reduction in employee benefit expenses.
Selling, general and administrative expenses totaled 95 billion tenges ($275 million) in January-September 2016, up 4 percent year-on-year. This was largely a result of increased transportation expenses, partially offset by a reduction of accruals for fines and penalties.
The increase in transportation expenses resulted mainly from the 76 percent increase in average tenge-USD exchange rate (given the Caspian Pipeline Consortium (CPC) transportation tariff is mostly US dollar denominated). In addition, domestic expenses increased because of a 21-percent domestic transportation tariff increase.
Capital expenditure in the first nine months of 2016 totaled 72 billion tenges ($209 million), down 4 percent year-on-year. This was primarily due to a reduction in volumes and costs of production drilling at Ozenmunaigas subsidiary, including a 15-percent discount obtained from the drilling service contractor. This was partially offset by an increase in capital expenditure directed towards construction and modernization of production facilities and exploration drilling at Embamunaigas subsidiary.
The company expects to spend 103 billion tenges ($286 million) on capital expenditure for the full year.