Exploration Extraction KazMunayGas JSC proclaimed price parameters and terms of its IPO

/INTERFAX-KAZAKHSTAN, Almaty, September 15, 06, title of IRBIS/ - Exploration Extraction KazMunayGas JSC (oil-production "daughter" of the national oil and gas company of Kazakhstan KazMunayGas) on Friday proclaimed price parameters and terms of its coming IPO. "Price range of global offer is set within the limits from USD12.75 to USD14.75 per GDR and from 9649 tenge 71 tiyins to 11163 tenge 39 tiyins per common share. One GDR is 1/6 of a common share - this means that the total amount of global offer will be USD1.9 bn. (KZT240 bn), not counting shares of redistribution. And company's market capitalization - USD6.1 bn. (KZT774 bn.) at full distribution of shares at average price of price range of the global offer," is reported in the press release of Exploration Extraction KazMunayGas JSC, spread on Friday on a press conference in Almaty. Current rate - KZT126.15/$1. According to the press release, Exploration Extraction KazMunayGas JSC declares indicative price range for new common shares. KazMunayGas also will offer for sale common shares (offered), recently acquired by itself, in accordance with the price range of the global offer. This is made for accordance of shares for redistribution and stabilization, is noted in the press release. According to the information, common shares, proposed for offering, and already offered common shares will be suggested to offering in the form of common shares, which are admitted to trades on Kazakhstan stock exchange, and in the form of global depository receipt to trades on London stock exchange. Shares of Exploration Extraction KazMunayGas JSC already have listing on Kazakhstan stock exchange. It is assumed that the global offer in the form of common shares and GDR will consist of 23086791 common shares, suggested to offering, and 3463019 already offered shares, which are sold by KazMunayGas as redistribution shares. It is planned that KazMunayGas will sell this amount of offered shares of Exploration Extraction KazMunayGas JSC (15% from the number of shares of the global offer) to underwriters with a view of providing redistribution and conducting stabilization activity both on common shares and on GDR. According to the press release on proposed scheme of redistribution, KazMunayGas will present underwriters the option, by which they will be able to sell back to KazMunayGas common shares or GDR, acquired on the market as a result of stabilization, during 30 days from the moment of beginning of trades. "Ratio of offered common shares and GDR, proposed in the process of redistribution and stabilization, may not correspond to the ratio of common shares and GDR, suggested to offering and sold in the course of the global offer," is reported in the press release. At the same time Askar Balzhanov, the director general of Exploration Extraction KazMunayGas JSC, emphasized on the press conference that "up to 40% we want to offer, but KazMunayGas will remain the owner of controlling interest in future". Bid book and date of trades "Collection and registration of bids for acquisition of shares starts from September 15. It is expected that trades of shares and GDR on Kazakhstan and London stock exchange will start on October 4. However, these dates may be changed," informed A. Balzhanov on the indicated press conference. "Today we start process of road-show and we start it exactly from Kazakhstan," he noted. A. Balzhanov informed that besides meetings with investors in Almaty, during the week such kind of meetings will be held in Europe, later on - in USA. According to his words, bid book will be closed on September 28, and on the next day the final offer price will be declared. A. Balzhanov reminded that the company assigned banks ABN AMRO, CREDIT SUISSE the joint global coordinators and joint managers on bids reception. Meanwhile company VISOR Capital was empowered to act as the leading national manager, Merrill Lynch is the international co-leading manager of forthcoming IPO of the company Exploration Extraction KazMunayGas. Test for Kazakhstan investors A. Balzhanov emphasized that the coming IPO will be the test for Kazakhstan investors. "Exactly now we will test the readiness of our home investors to become co-owners of an oil company. I hope that our investors will give higher price than foreign. (...) I think that there will be more of Kazakhstan investors," he said. In its turn Zhakyp Marabayev, the chairman of the Board of directors of Exploration Extraction KazMunayGas JSC, managing director on projects of exploration extraction KazMunayGas, who participated in the conference, emphasized that forthcoming offering of Kazakhstan oil company is "extremely important moment not only for our company but also for the whole Kazakhstan". "Kazakhstan investors must actively integrate into the world economy and be on leading exchange markets of the world. Offering our shares on Kazakhstan stock exchange, we present the Kazakhstan investment community, and also pension funds, which present the population of the republic, to actively take part in our offer and share the success of our company. Going on the listing of London stock exchange, Exploration Extraction KazMunayGas will be amongst leading international oil and gas concerns, such as Shell, BP and a lot other," he noted. "We are sure that the appearance of internationally recognized oil company in Kazakhstan be an important factor for reinforcement of the image of the country in the international economic community," noticed Z. Marabayev. A. Balzahnov, answering the question, whether this coming IPO can be called national, said, "Pension funds will, though indirectly will present such rights to the population of Kazakhstan. Both working people and pensioners are participants of these pension funds. As for the participation of individual people directly, Visor is our guide in Kazakhstan, but there exist particular rules for submitting bids and it is necessary to apply to this company for contacts. Talking about a possible purchase of shares by company's top managers in the framework of IPO, he noted that "it depends on the decision of each, but there are absolutely no privileges for the top management". "As a matter of principle, there is such a practice that after going on IPO the top management of the company for stimulating its work is offered so-called optional programs, which are usually given for three years, and later it has the right to purchase shares at its own expense by results of its work, which it carried out at least in a year," said the director general. Hopes for new purchases and enlargement of resource base Received from allocation funds, according to words of A. Balzhanov, are supposed to be spent on "financing the further growth and development of the company". "If to say about perspective, we have optional agreement with our national company (KazMunayGas - "IF-K"), which purchased 50% stake of part in JV KazGerMuanyGas this year. We are going to purchase this stake on our own under the terms, which completely satisfy us. It cost money. Besides that, KazMunayGas purchased from CNPC 33% shares of PetroKazakhstan. After introducing IPO, we will negotiate on purchase of this asset," he informed. Besides that, the company hopes to get meaningful increase in its resource base. "We see the question of how long our resources will be sufficient. We announced that we have more than 1.5 bn. barrels, extracted resources by the category 2P. Considering Uzen and Emba branches, it is sufficient to get resources for about 25 in Uzen field, in Emba field - 18-19 years. Nevertheless, we have enough good program of exploration. We got new blocks in the area of the republic, and I am convinced that we will make new discoveries and enlarge our resource base," - A. Balzhanov informed. As it was known, KazMunayGas made the deal in July of this year on purchase of 50% stake in JV Kazgermunaygas from RWE Dea AG, EEG - Erdgas Erdol GmbH (the daughter company of Gaz de France) and International financial Corporation (IFC). The amount of the deal makes $1 bn. JV KazGerMunay, which was founded in 1993, is occupied with exploration, extraction, transportation and sale of hydrocarbon from fields Akshabulak, Nuraly and Aksay in the South-Turgay cavity (in Kyzylorda oblast, in the south). Proven oil reserves on fields total about 43 m. tons. Technical capacities of the enterprise for today allow providing the level of oil extraction up to 3.3 m. tons per year. The rest 50% in JV KazGerMunay belong to the company PetroKazakhstan. Since October of last year PetroKazakhstan belongs to the daughter company of Chinese national oil corporation - CNPC International Ltd., which purchased all shares of PetroKazakhstan for $4,18 bn. In meantime, Kazmunaygas and Chinese National oil Corporation (CNPC) legally formed the deal in July month on purchase of 33% shares of PetroKazakhstan from China by Kazakhstan side and on establishing the joint enterprises (JE) on the basis of Shymkent OPP on the equal footing. The price for shares of in PetroKazakhstan was determined at the same stage, which was valid in October while purchasing shares of PetroKazakhstan CNPCI last year, that is $55 per a share. Financial purchase of 33% stake in by PetroKazakhstan Kazakhstan side will be provided by means of issue of debt securities with Floating Rate Notes, FRN by the special project company KMG PKI Finance BV for the total of $1.372 bn. with 10-year circulation term. At that, acquired stake in PetroKazakhstan and also 80% stake out of dividends, paid by PetroKazakhstan, will consider as a secure of the issue. The source of paying-off of the debt securities will, as it was supposed, 80% out of the total volume of dividends of PetroKazakhstan. PetroKazakhstan is an integrated energy company, which is engaged in exploration, mining, export and processing of oil, and also in realization of oil products. The main assets of PetroKazakhstan are Shymkent OPP (Southern Kazakhstan region) and Kumkol group of fields (Kyzylorda oblast, in the south of the republic). Since October of year 2005 PetroKazakhstan belongs to the daughter company CNPC International Ltd., which bought all shares of PetroKazakhstan at $4.18 bn. Exploring Mining KazMunayGas JSC was found in March of year 2004 as a result of merge of the daughter companies of KazMunayGas - Embamunaygas and Uzenmunaygas, extracting 188 th. barrels of oil a day. Income of KazMunayGas JSC grew from $1.2 bn. in year 2003 to $2.6 bn. in year 2005, the income increased within this period from $275 m. to $1.068 bn. Company is the third biggest producer of oil in Kazakhstan and deals with resources at 1.515 bn. barrels, according to data of year 2005. The head of KazMunayGas Uzakbay Karabalin confirmed in July that IPO is needed for financing the purchase of Kazakhstan and foreign oil-gas assets, and also investments projects by the oil-mining daughter. KazMunayGas is a vertically integrated oil-gas company with 100% part of the stake. It includes 40 diverse-specialized structures and enterprises, accomplishing the full cycle of works and services on exploring, mining, processing, transporting and realization of hydrocarbon raw materials, and also on constructing the objects of oil manufacture, telecommunication and transfers. KazMunayGas mined 9.4 m. tones of oil and gas condensate in year 2005. [2006-09-15]