KazMunaiGas Exploration Production (KMG EP), one of three largest oil producing companies in Kazakhstan, has approved the company’s 2017 budget and 2017-2021 business plan, the company reported Dec. 21.
The budget for 2017 assumes a Brent price of $45 per barrel and an exchange rate of 360 tenges per US dollar.
The company expects free cash flows to be positive in the 2017-2021 period, in contrast to the business plan for 2016-2020, as a result of the independent crude oil processing scheme and the reduced volume of domestic oil supplies, as well as changed assumptions on the price of Brent and the exchange rate of tenge per dollar, partially offset by increased capital expenditures.
KMG EP capital expenditure in 2017 is planned at 119 billion tenges ($330 million), 15 percent higher than the expected one for 2016. The increase is mainly due to investment in fixed assets (primarily oilfield equipment and machinery) and higher expenditures on production and exploration drilling, partially offset by lower expenditures on construction and modernization of production facilities.
The increase in expenditures on production drilling is due to the higher cost of drilling per well at OzenMunaiGas (KMG EP’s subsidiary), partly offset by a decline in drilling activity. The company expects to drill 191 wells in 2017 compared to 249 wells in 2016.
Annual average capital expenditure in 2018-2021 is expected to be around 100 billion tenge ($279 million).
KMG EP is among the top three Kazakh oil producers. The overall production in 2015 was 12.4 million tons of oil, including the company’s shares in joint ventures.
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