KMG EP announces acquisition of four contracts for exploration of hydrocarbons

The acquisition cost of the four contracts is USD$40 million. The transactions will be financed from KMG EP’s own funds. According to the Company’s estimates, the geological resources on four blocks are around 1.5 billion barrels of oil equivalent.
Temir and Teresken blocks are located in the Aktobe region in close proximity to the assets of Kazakhoil Aktobe LLP and Kazakhturkmunai LLP, as well as other assets, which may be of interest to KMG EP. The geographic location of the contract area has several advantages, including infrastructure and logistics.
The territory adjacent to Uzen and Karamandybas is located in the area of operations of Uzenmunaigas production facility. Block Karaton-Sarkamys is located in the Atyrau region 100km south-west of the Kulsary deposit in the area of operations of Embamunaigas production facility.
The terms of the contracts on the territory adjacent to Uzen and Karamandybas, Karaton-Sarkamys block and Temir, is 6 years from 2010, with the right of extension until 2019. With regard to the Teresken block, the license is for 6 years, starting in 2006, with the right of extension until 2015.
Significant synergies can be achieved through the use of the existing infrastructure of Embamunaigas and Uzenmunaigas production facilities in Atyrau and Mangistau regions, which will help to optimize capital and operating costs.
It is anticipated that the acquired assets will enhance the quality of the Company’s on-shore projects portfolio and, in case of successful exploration, will increase the Company’s recoverable reserves in the medium term, including Uzen and Emba groups of fields.
The acquisition was approved by the Board of Directors of KMG EP and the Board of Directors of NC KMG. Approvals of the Government regulators have been received.
The closing of the deal is expected in the second quarter of the current year.