Karazhanbasmunai OJSC (Kazakhstan): brief characteristics
12.12.00 00:00
/IRBIS, Dec.12, 00/ - Following is brief characteristics of Karazhanbasmunai
OJSC (company), prepared by the IRBIS specialists on the basis of the
materials of the Listing commission of the Kazakhstan Stock Exchange
(KASE), Karazhanbasmunai OJSC, the National Securities Commission
(NSC). The characteristics is published due to the entering the first issue
bonds of Karazhanbasmunai OJSC into official list of the KASE securities
under category "A".
The management of Karazhanbasmunai OJSC is fully liable for the reliability
of the information presented to the Listing commission of the KASE.
GENERAL INFORMATION
The date of initial state registration - May 15, 1995. Legal status - open
joint stock company. Ownership - private. Legal address of the head office -
23rd microdistrict, Aktau, Mangistau region, 466200, Kazakhstan, actual address
- 15th microdistrict, building 18, Aktau, Mangistau region, 466200,
Kazakhstan.
PRIMARY ACTIVITIES, MEMBERSHIP
Primary activities of the company are the development of "Karazhanbas"
deposit site, extraction, preparation, realization and processing of oil,
introduction of thermal methods of oil productivity, construction of wells,
purification and processing of crude oil, construction of facilities for oil
preparation, exporting, marketing and sales of hydrocarbons and
hydrocarbon products. The major goal of the company, based on the
Charter, is the extraction of oil and gas in Kazakhstan, as well as by
attracting different investments into oil and gas industry, and receiving
income from such activities.
Karazhanbasmunai OJSC is a member of the Kazakhstani oil and gas
association (KOA), which is a forum aimed at the exchange of commercial
information in order to develop exploration and production activities in oil
industry.
From 1997 the company is also a constant participant of an annual exhibition
"Oil and gas of Kazakhstan" (KIOGE).
LICENSES
- Of the government of Kazakhstan to use the mineral resources in order to
extract hydrocarbons on oil and gas deposit site "Karazhanbas" in
Tupkaragan district of Mangistau region for 25 years; enacted on June 7,
1995.
- Of the government of Kazakhstan to use the mineral resources in order to
extract building sand at the open-pit mine #9 in Tupkaragan district of
Mangistau region for 15 years; enacted on April 7, 1995.
- State license of the Committee on construction affairs of Kazakhstan to
conduct construction and design works in Kazakhstan, enacted on June
5, 2000; to be validated annually.
RESERVES
Based on the license of the government of Kazakhstan to use the mineral
resources in order to extract hydrocarbons on oil and gas deposit site
"Karazhanbas" in Tupkaragan district of Mangistau region, as of January 1,
1997, and on the basis of the approval of the State committee of Kazakhstan
on the reserves industrial reserves equaled:
- oil:
geological - 238,535 th. tons; extractable - 96,983 th. tons;
- dissolved one:
geological - 1,908 mln cubic meters; extractable - 776 mln cubic meters;
- gas from gas caps: geological - 25 mln cubic meters.
Remaining reserves as of indicated date (by the company prospectus -
categories A+B+C1) equal:
- oil:
geological - 225,811 th. tons; extractable - 84,259 th. tons;
- dissolved one: extractable - 675 mln cubic meters;
- gas from gas caps: geological - 25 mln cubic meters.
The mountain allotment has an area of 16,001 ha. The extraction is allowed
within the deposits of lower cretaceous and mid Jurassic layers till the mark
negative 500 meters.
"Karazhanbas" deposit site is located on Buzachi peninsula to the north of
Aktau port. As of late September 2000, from the beginning of extraction
works 15 mln tons of oil was extracted (15% of extractable reserves),
remaining extractable reserves equal 82 mln tons. Based on the re-
evaluation, conducted in August 1999 by Mille and Lenz Ltd. consulting
company, remaining extractable reserves equal 17.5 mln tons. Another 30
mln, based on the estimates of Mille and Lenz Ltd. and Nation Energy Co.
Ltd. specialists, can be extracted beyond the boundaries of current
developed area.
BRIEF ESTABLISHMENT HISTORY
In 1986 the Administration of experimental oil and gas extraction of
Kazakhstan was established as a separate enterprise - NGDU
Karazhanbasneft. In 1994 NGDU Karazhanbasneft was reorganized into
joint stock company Karazhanbasmunai. On March 20, 1996 the company
was registered with the Justice department of Aktau as joint stock company
Karazhanbasmunai.
According to the purchase and sale agreement of the state block of shares of
Karazhanbasmunai JSC, signed between the government of Kazakhstan
and the Canadian Triton-Wuko Energy Group Ltd. (renamed into Nations
Energy Co. Ltd.) on April 10,1997, 94.622% of the company shares (100% of
voting shares) were bought by Triton-Wuko Energy Group Ltd. On
September 8, 1999 the company was re-registered as open joint stock
company Karazhanbasmunai.
As of September 30, 2000 the number of Karazhanbasmunai OJSC workers
equaled 1,941.
CAPITAL AND SHAREHOLDERS
As of September 30, 2000 announced authorized capital of
Karazhanbasmunai OJSC equaled KZT2,161,251 mln and was fully paid.
Total of 2,045,035 common inscribed (KZ1C00160225) and 116,216
preferred inscribed (KZ1P00160220) shares were issued with KZT1,000 face
value. The share issue was registered with the NSC on Jan.10,97 under the
number A0016-1. The floatation report was approved by the NSC on
Oct.21,97. The issuer's register is maintained by the Tsentr Dar LLP
(Almaty).
Based on the extract from the securities holders register, as of May 30, 2000
the shares of Karazhanbasmunai OJSC were held by 1,457 shareholders.
The Nations Energy Co. Ltd. holds 100% of common shares, which is
94.62% of all the shares. The Nations Energy Co. Ltd. was registered in
Canada, and has a head office in Houston, USA and representatives in
Aktau, Almaty, Geneva and Calgary. The company develops new production
companies on the basin of the Caspian Sea, Central Asia and Far East. The
company's major shareholder is the Cyprus based corporation, Ekolo
Investments Ltd., who has 90% of the Nations Energy Co. Ltd. shares. Total
capitalization of the Nations Energy Co. Ltd. reached about $70 mln as of
May 1, 2000.
ACTIVITIES
Karazhanbasmunai OJSC is an integral company without subdivisions and a
single operator of the "Karazhanbas" oil site.
After the breakup of the Soviet Union and until the privatization of the
company, the drilling works were completely shut down at the "Karazhanbas"
sited, and part of the equipment was broken. As of April 1999 only 450 wells
out of 1,052 wells were in working condition, but actually, less than 100 was
in operation. The program of major overhaul of the wells, that began in May
1999, increase the number of working wells up to 235.
In May 2000 a new program for drilling 50 wells was launched. As of today
20 wells have been drilled, of which 19 is being used. The volume of daily
production from one well varies from 60 to 1,200 barrels (8.2 - 164 tons),
which proves that average daily production can by 250 barrels (31 tons), that
is the volume used when the project was developed.
The most of produced oil has a high degree of viscosity and in order to
increase the oil productiveness the pressure is maintained within the layers
by pumping a steam into the wells. Also, the oil production is increased by
optimizing the drilling grid, mechanical impact on the layer and washing the
collectors with chemicals.
The company sells all the oil by itself, and from June 1997 more than 2 mln
tons were sold. A regional company was established on the basis of the
marketing department of the Karazhanbasmunai OJSC, which markets crude
oil extracted from "Karazhanbas" site and by other companies on the basis of
offering paid services. The location of the site allows the company to use
several oil transportation routes, which enables it to redirect the crude oil
to the most favorable market.
The company has a direct access to the pipelines of NOTC KazTransOil
CJSC in the south of the deposit site, and using it the company transports its
crude oil to Aktau port. The most of the oil then goes through Aktau -
Makhachkala - Novorossiisk by tankers, railroads and pipelines. The oil is
also sent to Samara through the KazTransOil systems passing by Uzen and
Atyrau. From Samara the oil goes through Russian TransNeft system to the
Black Sea ports and to the European countries. Part of the oil is exported by
the tankers to Baku and Makhachkala with further transportation to Europe
by railroads or pipelines.
Average indicators per ton of oil sold by Karazhanbasmunai OJSC (KZT/ton)
--------------------------------------------------------
In 1998 In 1999 In III Q 2000
Indicator
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Sales price 66 96 140
Cost 47 24 22
Transportation expenses 16 22 28
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Crude oil sales volumes of Karazhanbasmunai OJSC
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Sales volume, Weighted average price
Period tons gross (USD/ton)
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July 31.97 - Dec.31.97 246,000 89
1998 455,600 66
1999 485,000 96
Jan.1.00 - Oct.31.00 650,000 140
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Additional transportation and marketing opportunities are the use of the
Caspian Pipeline Consortium (CPC), which will be put into operation by June
30, 2001, as well as the possibility of increasing the oil price by selling
high grade blends. Presently, Karazhanbasmunai OJSC works with
Tengizchevroil to develop the market for "Light Ural Export Blend", which
consists of the blends of oils from Buzachi peninsula and Tengiz. The
company is still developing new markets. For example, in July 1999
Karazhanbasmunai OJSC shipped the first batch of crude oil to Lithuanian oil
refinery "Majeikju Nafta".
IMPORTANT DEVELOPMENT PROJECTS
"Karazhanbas" deposit site rehabilitation project
Rehabilitation of oil fields on developed sides of "Karazhanbas" deposit site
is the high priority task for Karazhanbasmunai OJSC. Estimated general
expenses of the project equals $209 mln. Financing will be conducted
through the use of reinvested funds, produced by Karazhanbasmunai OJSC,
long-term financing of the Kazakhstani banks and through bond issue on the
stock market of Kazakhstan.
The major goals of the project are:
- to change the development system of "Karazhanbas" deposit site in order
to use the reserves in hardly accessible collectors and increase the oil
production coefficient in mid and high productive collectors;
- to drill 50 wells on the deposit site and their development in order to
increase the production volumes (16 wells were drilled in 2000);
- to reconstruct the deposit site in order to increase the technological
effectiveness and the life of the layer pressure maintaining and collector
facilities;
- to reconstruct the transportation within the field, storage tanks and oil
purification tanks.
As a result of these works the production on the deposit site and on its
boundaries can be increased up to 60,000 barrels a day, or 3 mln tons a
year within the next three years.
In order to finance the project the Karazhanbasmunai OJSC has signed
credit agreements with several Kazakhstani banks for a total of $27 mln. As
of September 30, 2000, the company completely used the funds.
Restoration of existing and preserved wells
It is planned to increase the number of facilities for conducting major
overhaul of the wells from 5 to 9, which should allow the company to restore
the production at all economically viable wells.
Development of Eastern sector
After drilling exploration wells in Eastern sector, the plot with the area of
22.4 square km was identified for the production drilling. The development plan
of the Karazhanbasmunai OJSC includes the development of 276 new wells
(138 production and 138 pumping wells). It is planned to construct a new
processor for the preparation of about 15,000 barrels of oil a day (750 th.
tons a year). Based on the drilling results and work experience on
"Karazhanbas" deposit site, geological reserves of the Eastern sector are
estimated at 81 mln tons, extractable - 29 mln tons.
Development of Western sector
By drilling exploration wells it was proved that it is possible to produce oil
up to six kilometers off the development site borders and the plot usable for
the production drilling was outlined. The development of the Western sector,
including the drilling of 176 wells, was planned for the year 2002.
Development of other sites
After the drilling of two exploration wells Karazhanbasmunai OJSC estimates
the sizes of other perspective sites located to the north of the field, as 33
square kilometers. These sectors are to be developed in 2004. It will require
the drilling of about 350 wells.