ALMATY, Kazakhstan, June 16 /PRNewswire-FirstCall/ -- BMB Munai, Inc.
(Amex: KAZ) announced filing of its annual report on Form 10-K with the US
Securities and Exchange Commission for the fiscal year ended March 31, 2008.
The Company reported net income of $31.6 million and basic EPS of $0.71
(diluted EPS $0.70) on revenues of $60.2 million. This marks a substantial
increase over 2007 when the Company had net income of $1.04 million and basic
and diluted EPS of $0.02 on revenues of $15.79 million. Production in 2008
almost tripled production in 2007, increasing from 321,993 to 907,823 barrels
on average daily production of 2,487 barrels.
Company President, Askar Tashtitov, said, "Several factors contributed to
our financial performance, including our expanding oil production, our ability
to make international export oil sales and the continuation of high oil prices
in the international oil market. During this past fiscal year, 96% of
Company's total sales volume was exported to the international market with the
balance sold in Kazakhstan's local market."
"In addition to the increases in production and net income, the Company
realized significant improvement in several key financial categories. In 2007
the Company's general and administrative expenses were 68.15% of revenues and
were reduced to 24.50% of revenues for 2008. Also, in 2008 the Company's
operating margin increased 19.5 times to 49.87% and the net profit margin
increased almost eight times to 52.51%," noted Tashtitov.
The Company's 2008 fiscal year drilling program was its largest since
inception. The Company completed three wells, Kariman-3, Kariman-4 and Emir-6
wells that were commenced in fiscal year 2007. In addition, four new wells
were drilled and completed during the year, Dolinnoe-5, Kariman-5, Kariman-6,
and Kariman-7 and the Aksaz-3 well was deepened and also put into production.
Before the end of the fiscal year, the Company began drilling four new wells
slated for completion within the next six months.
During 2008 the Company realized a net increase of 36.84% to its total
proved reserves over figures reported in 2007. The increase of 5.63 million
barrels in proved reserves was allocated among the Company' oilfields as
follows:
Field Fiscal Year 2007 Fiscal Year 2008
Oil MSTB Oil MSTB
Aksaz 2,247 3,338
Dolinnoe 10,264 9,462
Kariman 2,770 8,111
Total 15,281 20,911
Cautionary Note to U.S. Investors -- The United States Securities and
Exchange Commission permits oil and gas companies, in their filings with the
SEC, to disclose only proved reserves that a company has demonstrated by
actual production or conclusive formation tests to be economically and legally
producible under existing economic and operating conditions. We use certain
terms in this press release, such as probable reserves and resources, that the
SEC's guidelines strictly prohibit us from including in filings with the SEC.
U.S. Investors are urged to consider closely the disclosure in our Form 10-K,
File No. 001-33034, available from us at 202 Dostyk Ave, 4th Floor Almaty,
Kazakhstan 050051. You can also obtain this form from the SEC by calling
1-800-SEC-0330.
In 2006 the Emir field reserves were re-categorized from proved to
probable as a result of the limited production we obtained following reworking
of the Emir-1 well, a well that existed when we acquired the property. The
Emir-6 well that was completed during fiscal year 2008 is yielding limited
quantities of oil. Therefore, the Reserve and Economic Evaluation prepared,
as of March 31, 2008, by Chapman Petroleum Engineering, Ltd, the Company's
independent petroleum engineers, reduced the amount of probable reserves in
the Emir field until additional data and production results are obtained.
"The Company has completed a third well, Emir-2, but that well will not be
perforated until mid-summer because our completion and workover rig has been
committed to scheduled activities in other fields. Therefore the Emir-2 well
was excluded from consideration in the decision to re-evaluate the Emir field
reserve estimate," stated Gamal Kulumbetov, Company CEO.
There was also a reduction made to the Dolinnoe field probable reserves.
The Dolinnoe-5 well was drilled during the last year to determine the outer
boundary of the Dolinnoe field. The Company does not consider that additional
wells in this area will be commercially productive and therefore, some
reduction was required where the probability of commercial producing wells is
in doubt. However, Kulumbetov stated, "Despite this reduction our engineers
have increased confidence regarding our proposed expenditures to drill in the
Yessen structure."
The Dolinnoe-5 well is located near the mid-point between the Dolinnoe
field and Yessen structure and has yielded valuable geologic and geophysical
data that confirms our analysis of the nearby Yessen structure. The Yessen
structure is categorized as a resource currently, since no drilling has taken
place on the structure. The first well in the Yessen structure will be
commenced later this year. The new proved plus probable reserve estimates
showing gross and net of royalty amounts from the Chapman reserve report are
summarized below:
Oil Mbbls Gas MMscf Total MBOE
Gross Net Gross Net Gross Net
73,264 71,797 67,500 66,149 84,064 82,597
Kulumbetov stated, "We expect that there will continue to be periodic
revisions to our probable reserves and resource categories as new information
emerges from the results of our drilling activities. We deem accretions and
reductions to probable reserve estimates to be a natural process associated
with exploration stage activities. Further developments in the Dolinnoe and
Emir fields may result in adding back some portions of the reductions made in
the current report."
"It is our strategy to continue to develop our properties in order to
transition resource categories to reserve categories and probable reserves to
proved reserves and finally proved undeveloped reserves to proved developed
producing reserves. As we continue to increase daily production rates from
wells in the Aksaz, Dolinnoe and Kariman fields, we will be able to drill
exploratory wells in our remaining resource structures and thereby expect to
continue to enlarge our reserve base," said Kulumbetov.
BMB Munai is an independent oil and gas company engaged in the
exploration, development and production of crude oil and natural gas in
Western Kazakhstan. Company maintains administrative offices in Salt Lake
City, Utah and Almaty, Kazakhstan.
The information contained in this release includes forward-looking
statements that are subject to risks and uncertainties that could cause actual
results to differ materially. Certain statements contained herein constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward -looking statements involve known
and unknown risks, uncertainties and other factor s, which may cause the
actual results, performance or achievements of the Company to be materially
different from those expressed or implied. Forward -looking statements involve
risks and uncertainties, including but not limited to, risks described in the
Company's periodic reports on file with the Securities and Exchange
Commission.
SOURCE BMB Munai, Inc.
In the US, Adam R. Cook, Corporate Secretary, +1-801-355-2227,
USoffice@bmbmunai.com, or in Kazakhstan, Daniyar Uteulin, Vice President for
Investor Relations, +7 (3272) 375-125, KZoffice@bmbmunai.com, both of BMB
Munai, Inc.
