Kamenistoye

oil field

Almaty
December 2011
 Kamenistoye

Brief information on Caspian oil

 Caspian oil and gas reserves account for 4% - 5% of the world’s total reserves, but
remain largely undeveloped.
 Caspian oil reserves are on average very productive.
Wells at mature fields yield 200-400 bpd, compared to the Russian average of around
65bpd. At new onshore fields well flow ranges from 900 to 6,000 bpd (Tengiz field).
 Caspian oil is of very good quality.
API gravity of 35-47, sulfur content of 0.1%- 0.6%, compared to API of 38.5 and 0.4% sulfur
content for Brent and API of 31-36, sulfur content of 0.6%-1.3% for Russian crudes. This
leads to $0.3/bbl-$1.2/bbl premium for Tengiz crude over Brent, while Russian blends
typically sell at a $0.5/bbl-$2.5/bbl discount.
 Very low full cycle cost of production.
Lifting costs are very low at $1.5/bbl-$2.5/bbl due to the high productivity of the reserves.
Including F&D cost of around $2/bbl, full cycle (finding, development and production)
expense for most producers in the region ranges between $3.5/bbl-$4.5/bbl per barrel, well
below the $7/bbl-$12/bbl for developed and emerging market peers.
Source: Aton research (now Unicredit Securities)
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 Kamenistoye

Company Overview
 Kamenistoye-Neft LLP produces oil on
the Kamenistoye field under trial
production permit within an oil
exploration contract. Produced oil is
exported (80%) and sold at the domestic
market (20%)

 The Company has an exclusive right to

sign an oil production contract due to the
commercial discovery which was
approved by State Committee on
Reserves on December 2008

 The exploration contract will be ended

and turned into production contract in
* Kamenistoye field is located in the Caspian region of
October 2012. By that time the Company
Kazakhstan 85km east of Aktau city
plans to explore potential oil reserves at
the remaining contract territory where no
drilling has been done. Meanwhile, the
Company will continue to produce and
export oil
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 Kamenistoye

Kamenistoye – Producing Asset

 Kamenistoye produces oil from two
wells
 Produced oil is transported by trucks
to Zhetybai railway station, which is 4
km away from the wells. The oil is
stored and accumulated at the
terminal. Then it is loaded to railway
cars and either transported to
Mangyshlak railway station for the
export buyer or is handed over to
domestic buyers
 Currently the Company exports about
80% of produced oil at price of Brent
less $12.5 on terms FCA Mangyshlak
railway station, which is 80 km away
from the field
 Domestic sales of 20% produced oil
are sold at $34-40/bbl FCA Zhetybai
railway station

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 Kamenistoye

Reserves
 Reservoir Evaluation Services Kazakhstan Ltd, a subsidiary of AGR Petroleum, Norway, an independent
reserve appraiser, prepared a geological evaluation report for the Kamenistoye oil&gas field in March 2011:

Reserve type Recoverable oil reserves,

mmbbls
Proved + Probable 62.3

Proved + Probable + Possible 128.5

 Kazakhstan State Committee on Reserves,

December 2008

Recoverable oil ‘000 tons equivalent in millions

reserves of barrels
С1 (proved) 1’124 8.5
С2 (probable) 8’193 62.1

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 Kamenistoye

Proximity to Large Oil Fields

The field is adjacent to the giant Zhetybai field with 1.1 billion barrels of recoverable oil reserves
and surrounded with smaller South Zhetybai, Pridorozhnoe, Severo-Pridorozhnoe, W.Aktas and
Bekturly fields. Such proximity to large oil fields indicate the potential for further reserve upside.

The next slides show some perspectivity of the field in different horizons:
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 Kamenistoye

Average model grid A-B

Segment
Well 1 Segment Segment
Well 5 Well 3

Segment
Prospect 1

Геологические
2P Reserves byзапасы
horizons2Р
по горизонтам
Segment
BW+W Well 4
2.8% T3
19.3%

B Геологические запасы нефти 2P

2P Reserves
30.0%
4%
13%
25%
T32
20.7% Скважина 3
Well
G0+G1+
D Скважина
Well 5
0.4%
Проспект 1
Prospect
A1 A
5.8% Скважина
Well 1
21.0%
Скважина 4
Well
17%
41%
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 Kamenistoye

Jurassic Horizon

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 Kamenistoye

Upper Triassic Horizon

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 Kamenistoye

Middle Triassic Horizon

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 Kamenistoye

Excellent Infrastructure
 The field site of 88.6 sq.km. is ideally
located, only 85 km south-east from Aktau
city, in Mangystau region
 The field is in an area with very well
developed infrastructure due to high
concentration of oil companies operating
in the region:
 Zhanozen–Aktau and Zhetybai–
Quryk asphalt roads
 Developed network of clay roads.
 Several electricity lines
 The following pipelines cross the field:
 Zhanozen–Aktau–Atyrau trunk oil
pipeline
 Zhanozen–Aktau gas pipeline .
 The connection point to the export oil
pipeline is 1 km away from well #5
 Field is located only 4 km from Zhetybai
railway station with an oil transshipment
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facility
 Kamenistoye

Available Export Routes

There are two main export routes for the oil
produced at Kamenistoye field:
a) via Atyrau-Samara and CPC pipelines that
end at Odessa and Novorossiisk, the Black Sea
ports. The trunk pipeline going to Aktau and
Atyrau crosses the field territory and is 1km
away from wells. The Company has received a
permit to connect to that pipeline.
b) via the Caspian sea to Mahachkala and Baku
and then via their pipelines to the Black sea
ports. Oil transported to Aktau port from the field
either via the trunk pipeline or by railway at
Zhetybai railway station.

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Kamenistoye Senior Management
Arman Kabdrgaliyev
General Director (CEO)
17 years of experience in Business
Development. Developed and sold
Mobile Telecom Service, a mobile
communication company (Tolkyn
brand), one chrome and one
titanium fields.
Diploma in Applied Mathematics,
Institute of Shipbuilding,
S-Petersburg, Russia
Kamenistoye
Viktor Shish
Executive Director
5 years of experience in oil
and gas business, mostly
supervising over drilling, well
workover and construction of
field facilities.
Diploma in Law,
Adilet Law School,
Almaty, Kazakhstan
Kamenistoye
Kim Boranbayev
Head of Geology
40 years of experience in oil
geology. Vast experience in oil
exploration and development in
Kazakhstan, especially in
Mangyshlak province.
Phd in Geology,
Institute of Geology and
Exploration, 1976, Moscow,
Russia
Viktor Podkolzin
Counsellor, Geology
30 years of experience in
geophysics in oil and gas, mostly
in seismics and reserve
evaluation. Last years in
supervising positions.
Diploma in Geophysics, 1979
Institute of Geology and
Exploration, Moscow, Russia
Diploma in Seismics, 1985
Institute of Oil and Chemistry,
Moscow, Russia
Kamenistoye
David Blackmore
Drilling Consultant
37 years of drilling experience in
oil and gas of which 29 years
have been in supervisory
positions. Recent managerial
positions in operations and area
management functions.
19 industry related courses from
Shell, Hughes, Exxon etc.
Member of the Society of
Petroleum Engineers
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 Kamenistoye

Investment Highlights
Already Producing  Trial production commenced in April2009 and production rate will increase with more
Asset wells put into production

Potential Value  Currently 128.5mln bbls of 3P reserves and 62.3mln bbls of 2P reserves
Upside  Proximity to large oilfields indicates that reserves can be significantly higher

Infrastructure in  Availability of all necessary infrastructures. The export oil pipeline is 1km away from the
Place wells

Proximity to Export  Proximity to various export routes via oil pipelines and via the Caspian Sea to
Routes Azerbaijan and Russian ports

 Oil quality superior to Brent with API of 40 (lighter than Brent API of 38) and low sulfur
High Oil Quality content of 0.2% (lower sulfur content than of Brent 0.4%)

 High productivity: oil flow reached 1000bopd per well during testing in 2008 and the trial
Productivity production in September 2009. Now producing at a stable rate of 320-500 bopd.
Productivity can be further increased with horizontal drilling and other techniques

Export Permit and  Oil export permit within the exploration contract has been signed in December 2009.
Production License The production license is expected to be signed in October 2010

High Export  Brent less $12.5 FCA Mangyshlak railway station, which is 80 km away from the field
Netbacks
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 Kamenistoye

Key Milestones
• The oil bearing structure comprising Kamenistoye field was discovered in September
1985 during drilling of the well Kamenistoye-1
1985
• Four prospective wells Kamenistoye-1,2,3 and 4 were drilled out on the field and
exposed deposits from Quaternary to Lower Triassic age

• Award of license by the government. Exploration contract was entered into on

1997 September 12, 1997 by a preceding company

2005 • Acquisition of working interest in Kamenistoye field by Kamenistoye Ltd.

• Acquisition of 3D Seismic
2008 • New well Kamenistoye-5 was drilled and tested
• Reserve evaluation done by Kazakhstan State Committee on Reserves

• Trial production commenced in April 2009

2009 • An oil export permit is approved

2010 • Kamenistoye-3 well is worked over and put into production

2011 • Reservoir Evaluation Services Kazakhstan produced an independent oil reserve

report
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 Kamenistoye

Work Program Commitment

 The Company has took commitments under the working program to be fulfilled by
October 2012 with subsequent signing of the production contract.
 The Company has been complying with its work program to date and some years has
overperformed its work commitment
 2011 work program includes the commitment to drill a new well which is now being
transferred for the next year. The new work program with the commitment to drill the
new well in 2012 should be completed by the end of 2011
 The 2012 commitment until the signing of the production contract includes:
 drilling of a new well and testing
 obtaining an approval of the commercial reserve discovery at the State
Commission on Reserves
 obtaining an approval of the field development program at the Ministry of Oil
and Gas
 Total work commitment for 2012 is estimated at $7mln, consisting mainly of drilling
cost of around $6mln

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 Kamenistoye

Production and price projections

Years 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total

Working wells 3 7 15 23 32 34 35 35 33 33 33 33 33 32 32 32 32
incl. new wells 0 4 8 8 9 2 1 0 -2 -1

Total oil production

oil, '000 tons 3.0 69.5 231.2 437.1 645.8 757.9 756.8 728.5 686.8 649.0 613.3 560.4 478.6 374.8 263.4 179.3 80.7 7515.9
oil, '000 bbls 23 524 1 743 3 296 4 869 5 714 5 706 5 493 5 178 4 893 4 624 4 225 3 609 2 826 1 986 1 352 608 56 670

Pricing, $/bbl net of VAT

Brent 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2 110.2
Urals (97% of Brent) 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9 106.9
Average of Brent + Urals 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5 108.5

Domestic price in Kazakhstan (40% of

40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8 40.8
Brent)

Truck costs to Oil Terminal and

3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4
transshipment to railway tanks

Transportation to Mangyshlak 0.6 0.6 Connection to pipeline from 2013

Gas separation costs 0 0 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Trader's margin 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7
Domestic price at the Oil Terminal 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4
Export price at Mangyshlak station 105.5 105.5 109.2 109.2 109.2 109.2 109.2 109.2 109.2 109.2 109.2 109.2 109.2 109.2 109.2 109.2 109.2

Domestic sales, % 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20%

Export sales, % 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80%

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 Kamenistoye

Financial projections
Income Statement Projections '000 $
Years 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total
Sales 2 107 48 134 165 303 312 563 461 772 541 932 541 166 520 897 491 066 464 057 438 534 400 718 342 224 267 980 188 350 128 217 57 675 5 372 693
incl. export sales 1 935 44 215 152 260 287 901 425 337 499 172 498 466 479 796 452 319 427 441 403 932 369 099 315 221 246 835 173 488 118 100 53 124 4 948 641
domestic sales 172 3 919 13 043 24 662 36 436 42 761 42 700 41 101 38 747 36 616 34 602 31 618 27 003 21 145 14 862 10 117 4 551 424 052
Export duty ($ 5.277/bbl) 97 2 223 7 398 13 988 20 665 24 252 24 218 23 311 21 976 20 767 19 625 17 933 15 315 11 993 8 429 5 738 2 581
Export Rent Tax 394 11 386 37 896 71 656 105 863 124 240 124 064 119 418 112 579 106 387 100 536 91 866 78 456 61 435 43 180 29 394 13 222 1 231 975
Export Rent Tax rate 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0%
Pipeline export costs 240 5 488 13 945 26 367 38 954 45 716 45 651 43 941 41 425 39 147 36 993 33 803 28 869 22 606 15 889 10 816 4 865 454 716
Crude Production Tax 154 3 526 11 737 31 069 52 458 61 564 61 477 59 174 55 786 52 717 49 818 45 522 38 877 26 637 18 722 12 745 4 095 586 078
export rate 5.0% 5.0% 5.0% 7.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 7.0% 7.0% 7.0% 5.0%
domestic rate 2.5% 2.5% 2.5% 3.5% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 3.5% 3.5% 3.5% 2.5%

Operating costs
Fixed 118 510 510 510 510 510 510 510 510 510 510 510 510 510 510 511 512 8 281
Variable 73 1 676 5 578 10 547 15 582 18 286 18 260 17 577 16 570 15 659 14 797 13 521 11 548 9 042 6 355 4 326 1 946 181 344
0
EBITDA 1 030 23 325 88 240 158 426 227 741 267 363 266 984 256 966 242 220 228 870 216 254 197 562 168 649 135 756 95 265 64 686 30 453 2 574 651
$/bbl 44.9 44.5 50.6 48.1 46.8 46.8 46.8 46.8 46.8 46.8 46.8 46.8 46.7 48.0 48.0 47.8 50.1 45.4
Depreciation 7 756 11 519 23 475 15 300 15 300 13 600 13 600 13 600 13 600 13 600 13 600 13 600 13 600 13 600 13 570 209 321
Total deductions 980 22 587 77 422 151 669 236 842 265 616 265 263 254 220 240 469 228 019 216 254 198 823 171 860 133 831 98 256 71 393 38 210 2 671 715
EBIT 1 030 23 325 80 484 146 907 204 266 252 063 251 684 243 366 228 620 215 270 202 654 183 962 155 049 122 156 81 665 51 086 16 883 2 460 469
interest payments
Taxable income 1 030 23 325 80 484 146 907 204 266 252 063 251 684 243 366 228 620 215 270 202 654 183 962 155 049 122 156 81 665 51 086 16 883 2 460 469
Income tax 0 0 16 097 29 381 40 853 50 413 50 337 48 673 45 724 43 054 40 531 36 792 31 010 24 431 16 333 10 217 3 377 487 223
Net income before superprofit tax 1 030 23 325 64 387 117 525 163 412 201 651 201 347 194 693 182 896 172 216 162 123 147 170 124 039 97 725 65 332 40 869 13 506 1 973 246
Superprofit tax 19 474 31 974 39 372 52 153 52 069 50 645 47 349 44 364 41 544 37 365 30 902 25 571 15 919 8 629 1 328 997 315
Net income after superprofit tax 1 030 23 325 44 913 85 551 124 041 149 497 149 279 144 048 135 548 127 852 120 579 109 804 93 137 72 153 49 413 32 241 12 179 1 474 589

Cash flow from Operations 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total
Net income after superprofit tax 1 030 23 325 44 913 85 551 124 041 149 497 149 279 144 048 135 548 127 852 120 579 109 804 93 137 72 153 49 413 32 241 12 179 1 474 589
adding back depreciation 0 0 7 756 11 519 23 475 15 300 15 300 13 600 13 600 13 600 13 600 13 600 13 600 13 600 13 600 13 600 13 570 209 321
Cash flow from Operations 1 030 23 325 52 669 97 071 147 516 164 797 164 579 157 648 149 148 141 452 134 179 123 404 106 737 85 753 63 013 45 841 25 749 1 612 320
Capital expenditures 60 27 800 45 900 45 340 46 200 11 000 6 000 0 0 0 0 0 0 0 0 0 0 182 300
Free cash flow 970 -4 475 6 769 51 731 101 316 153 797 158 579 157 648 149 148 141 452 134 179 123 404 106 737 85 753 63 013 45 841 25 749 1 501 609

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