Results of 1999 annual meeting of Mangistaumunaigas OJSC (Kazakhstan) shareholders

/IRBIS, Jan 16, 01/ - Mangistaumunaigas OJSC (Aktau), in accordance with the listing requirements, provided the Kazakhstan Stock Exchange (KASE) with the materials of its annual general shareholders meeting (minutes, report of the Board, report of the Revision commission), which was held on August 10, 2000. Based on approved agenda of the meeting, the shareholders of Mangistaumunaigas OJSC ratified financial statements and 1999 report of the Revision commission, changes and amendments to the company's charter, considered auditing report of Arthur Andersen made on its 1999 financial statements. Besides, at the meeting it was decided: - due to KZT1,760,981 th. loss incurred last year from the company's ordinary activities, and uncovered loss of previous years totaling KZT14,610,383 th., not to consider the matter on the distribution of net income received in 1999 and not to charge dividends to common shares for the year 1999; - approve dividends to preferred shares at KZT100 per share and pay them using KZT109 mln reserve fund, and declare December 24, 2000 as the dividend payment beginning date; - approve the assignment of Arthur Andersen as the company's international auditor for the year 2000. Krymkulov S.E., general director of the company, made a speech on Mangistaumunaigas OJSC results in 1999. It is said that in 1999 the company extracted 4,037 th. tons of oil, or 99.1% of planned volume (20.6% increase relative to 1998); 133 mln cubic meters of accompanying gas, with the plan of 135 mln cubic meters. The oil supplies in 1999 reached 4,419 th. tons, or by 121 th. tons, or 3.0% more than planned volume (799 th. ton, or 23.8% increase relative to 1998), including more than 3,134 th. tons exported. Compared to 1998 both the production volume and the product quality improved. High grade oil supplies equaled 81% of all supplies (14% growth relative to 1998), first grade oil - 18.8%, second grade - 0.2%. Of all the wells to be repaired, 94% has been already fixed, and 77% of capital construction works has been completed (KZT539.4 mln was used), construction and design works were done for a total of KZT510.4 mln (98.6%), KZT324.3 mln worth of fixed assets were put into service. More than KZT426 mln was spent on environment protection activities. Production and sales expenses of the company equaled KZT24.4 bln in 1999, whereas the planned amount was KZT17.5 bln. Excess of KZT6.9 bln was due to an increase in oil transportation expenses (KZT6.0 bln) as a result of NOTC KazTransOil CJSC tariff increase in the second half of 1999, which also resulted in 40.4% growth of cost of 1 ton of oil (KZT5,737, or $49.45, while the plan was KZT4,324, or $36.13). In 1999 budgetary and off-budgetary accounts were settled for a total of about KZT13 bln, including more than KZT8 bln is arrears for the years 1996-1998. As of late 1999 the company had no overdue amounts, all wages have been paid, actual average monthly wage increased from KZT23,618 to KZT31,238 within a year, or 132%. Based on auditing of Mangistaumunaigas OJSC 1999 financial statements, conducted by Arthur Andersen, the company's resulting income from its main activities equaled KZT45.8 bln, expenses for main activities - KZT39.9 bln, expenses for secondary activities - KZT3.4 bln, taxes - KZT4.2 bln. As a result, the company incurred KZT1.8 bln from its main activities. However, taking into consideration the set-off of tax liabilities for an amount of KZT9,851.1 mln, to be compensated to Mangistaumunaigas OJSC in compliance with the share purchase and sale agreement between Kazakhstan and Central Asia Petroleum Ltd., which is considered subsidies of executive bodies, the company has positive financial result for the year 1999, at KZT8,090.1 mln. The report also contains the reasons for which the company did not meet its oil extraction obligations in 1999. It reads that lack of financing became a common grounds for this, which was caused by the need to pay off the debts of previous years, which in turn stopped drilling works (no new wells were drilled out of 34 planned wells in 1999); caused the company to fall behind the plan of conducting geological activities regarding the effects on near well area; became a reason for putting into service only 56 wells instead of 140 wells; and switching the wells from gas-lift mode to mechanical extraction mode and maintaining the wells in working conditions. The management of Mangistaumunaigas OJSC believes that today the main problem is that noticeable number of extraction and pressure wells are idle or not in use (for Kalamkasmunaigas - 7% extraction and 17% pressure, for Jetybaimunaigas - 67% and 77%, respectively). Moreover, Jetybai deposit size has a problem of active development of main reserves due to high wear out rate of trunk pipelines and pressure lines making it impossible to reach projected pressure levels. In order to increase the effectiveness of Jetybai deposit site the layer pressure maintenance system should be reconstructed to keep the pressure at 170-200 atmosphere, whereas present pressure is at 90-110 atmospheres. Common inscribed (KZ1C05020218, trade code - MMGZ) and preferred inscribed (KZ1P05020213, trade code - MMGZp) shares of Mangistaumunaigas OJSC were entered into official list of the KASE securities under category "B" (from Oct.16,97 through July 14,98 they were in additional list).