Annual Meeting of Shareholders May 3rd, 2005 Toronto, Ontario, Canada

Transcription

1 Annual Meeting of Shareholders May 3rd, 2005 Toronto, Ontario, Canada

2 Forward Looking Statement Disclaimer Advisory In the Interest of providing PetroKazakhstan s shareholders and potential investors with information regarding the Company, including management s assessment of the Company s future plans and operations, certain statements and graphs throughout this presentation are forward-looking statements and represent the Company s internal projections, expectations or beliefs concerning, among other things, future operating results and various components thereof or the Company s future economic performance. The projections, estimates and beliefs contained in such forward looking statements necessarily involve known and unknown risks and uncertainties which may cause the Company s actual performance and financial results in future periods to differ materially from any estimates or projections. These risks, uncertainties and other factors are described in PetroKazakhstan s Annual Report to Shareholders and Annual Information Form. 2

3 Presentation Outline 2004 Highlights First Quarter 2005 Performance Current Challenges Strategic Update Management Succession Plans 3

4 Year 2004: Going Beyond Boundaries Record financial results Reserves growth: replaced 180% of production Exploration success in three fields Quadrupled existing exploration acreage Completed Gas Power Plant at Kumkol Full operation of VGO unit at Shymkent Further diversification of export routes and markets Introduction of a regular quarterly dividend policy Share repurchases Shares listed on the KASE 4

5 Performance in 2004 (in US$ Millions) EBITDA CASH FLOW NET INCOME

6 Working Capital Balances 2004 year-end crude oil inventories (including oil shipped but still in transit) were 3.98 MM bbls 2004 year-end refined product inventories were 1.66 MM bbls Inventories are reflected at cost in the financial statements. The ultimate realizable value of crude and refined products is not reflected in the working capital balances At year-end 2004, the total of working capital, cash, restricted cash and unrealized value of inventories was in excess of $500 MM 6

7 PetroKazakhstan s Reserves MILLION BARRELS OF OIL EQUIVALENT (GROSS WORKING INTEREST) Proved Probable Dec-96 Sep-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 7

8 Finding and Development Costs For Oil & NGLs 2004 Average Production Replacement Ratio (APRR) 5yr 3yr 1yr APRR APRR APRR Proved 147% 121% 160% Proved plus Probable 133% 114% 180% 2004 Average Reserve Replacement Costs (ARRC) ARRC ARRC ARRC $/bbl $/bbl $/bbl Proved Proved plus Probable

9 Upstream Costs (in US$/bbl) $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $ $ $ 2.16 $2.12 $ 1.97 $ $ Production Costs G&A 9

10 Export Differentials 18 PetroKazakhstan Differential to Brent $/bbl Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q

11 Refinery Equipment Vacuum Distillation Unit Boiler Plant 11

12 Downstream Costs (in US$/bbl) $2.50 $ 2.15 $2.00 $ $ 1.46 $ 1.44 $ 1.33 $ $ $ $ * Refining Costs G&A 12 * The Shymkent Refinery was acquired in March 2000 and as such 2000 figures reflect the 9-months from acquisition date

13 Dividend Policy and Share Repurchases Regular Quarterly Dividend Initiated in March 2004 Quarterly payments have increased by 33% from C$0.15/share to C$0.20/share Current dividend yield is ~ 2.0% Share Repurchases Substantial Issuer Bid: 4.0 MM shares at C$40 Normal Course Issuer Bid: MM shares at C$40 13

14 Total Return to Shareholders $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $ PetroKazakhstan TSX Energy Index TSX Composite Index 14

15 First Quarter 2005 Performance

16 First Quarter 2004 and 2005 CASH FLOW PER SHARE EARNINGS PER SHARE 2.50 US$ 2.50 US$

17 Key Performance Indicators - Corporate 1Q05 1Q04 Net Income ($ 000) $165,639 $87,485 Cash from Operations ($ 000) $186,384 $110,829 EPS basic $2.18 $1.11 CFPS basic $2.46 $1.41 EBITDA ($ 000) $297,873 $160,446 ROACE (annualised) 89.4% 53.2% Net Debt ($ 000) * ($120,000) $73,400 * Excludes restricted cash of $89.4 MM 1Q05 and $36.9 MM 1Q04 17

18 18 First Quarter Key Points Financial Outstanding financial results even with: Inventory build-up Deterioration of export differential Foregone revenue from hedging of $38.3 MM Turgai Excess Profit Tax provision of $12.3 MM Normal course issuer bid repurchased 732,800 shares in 1Q05 and 1,137,500 in April 2005 Cash position increased to $294.9 MM by end of 1Q05 (excludes $89.4 MM of restricted cash)

19 Inventory In-transit and other inventory CRUDE OIL REFINED PRODUCTS (MM bbls) (MM bbls) December 31, March 31, Estimated deferred income at March if all inventory was realized is $111 million - Included are in transit volumes of 1.9 MM bbls of crude oil and 0.7 MM bbls of refined products in transit ($43.6 MM) 19

20 Key Expense Items US$ 000 1Q05 Per bbl 1Q04 Per bbl Production Costs 22,396 $ ,464 $1.73 Refining Costs 4,447 $0.63 4,088 $0.58 G&A DD&A Upstream Downstream Upstream Downstream 10,047 3,796 25,244 3,157 $0.75 $0.54 $1.87 $0.45 7,343 3,164 16,761 4,869 $0.56 $0.44 $1.29 $

21 Net Return Table (in US$/bbl) 1Q Average Brent Price for period 2003 $47.62 $38.27 $ (in US$/bbl) 1Q Net Return: Exported Crude 1 $24.00 $18.39 $10.68 Net Return: Own Refined Crude 2 $22.87 $13.99 $ Net Return Exported Crude calculated as net selling price less transportation costs, production costs, purchases of crude oil, royalty, selling costs, and G&A Net return is shown net of hedging expenses of $5.40/bbl in 1Q05, $1.30 in 2004 and $0.16 in Net return Refined Crude calculated as net sales price received less transportation costs, refining costs, royalty, selling costs, and G&A 21

22 Current Challenges

23 Current Challenges: Disputes with Lukoil Financial commitments made by Lukoil to earn 50% of the Kumkol North field and unfulfilled by Lukoil Corporate Governance of the JV Border wells issues Marketing of crude oil (domestic and export) 23

24 Current Challenges: Regulatory Refined products pricing issues Gas utilization issues; impact on production 24

25 Strategic Update

26 Growth Strategy Update - Upstream Current production and Reserves 59% of existing reserve base yet to be developed Additional Identified Reserve Enhancements Possible Reserves of 255 million barrels Enhanced Oil Recovery/Fraccing/Horizontal Drilling Exploration Potential Testing unexplored concepts (stratigraphic traps) Horizons beneath current producing reservoirs Acquired new exploration licenses resulting in a fourfold increase in acreage Significant reserve potential more than 90 leads and over 1.1 billion bbls (unrisked) potential identified Exploitation of LPG and Gas Resources 26

27 27 Oil Fields and Exploration Lands

28 Kumkol Miscible Hydrocarbon Flooding Inverted 9 Spot Pattern Water Alternating Gas Kumkol South Object 250% LPG and Gas Connate Water Water Flood Residual Oil Saturation Sand Grains Original Oil Saturation EOR Miscible Solvent Towards Producers Pilot project for Kumkol South initiated with LPG injection anticipated mid 2005 in 4 to 6 patterns at a cost of $15-20 MM Full Kumkol South EOR project costs under $30 MM Mobile Oil Saturation from Miscible Contact 28

29 Growth Strategy Update Refined Products Further optimization of VGO production and sales Further yield improvements - mild form of hydrocracking Equipment, storage and transportation upgrades Increase export sales of refined products Processing Russian domestic crude 29

30 30 Growth Strategy Update Transportation

31 Key Capital Projects for Capital Projects 2005 Capital Budget Kyzylkiya, Aryskum, Maybulak Full Field Development Exploration, Drilling & Seismic Continued Development at Akshabulak and East Kumkol Phase 1 EOR at Kumkol South Refinery Equipment Installation & Process Optimization Upgrading Distribution Centres Retail Station Expansion Total (in US$ MM) - $243 Upstream (inc. JVs) - $211 Downstream - $14 Marketing & Trading - $2 Corporate - $16 31

32 Management Succession Plans

33 Management Succession Plans Graeme Phipps appointed Executive V.P. Corporate Development effective May 3, 2005 and a Director of the Company Bernard Isautier will retire from President & CEO position on September 16, 2005 but will remain Chairman of the Board of Directors Graeme Phipps to assume President & CEO role on September 16,

34 Graeme Phipps 30 years experience in the Canadian & international oil & gas industry including: Yemen/North Africa/Nigeria/Indonesia/Malaysia/ Australia Mexico/Columbia/Beaufort Sea & Arctic Islands Professional Geologist & Geophysicist Previous positions: V.P. Exploration and International, Petro-Canada V.P. Corporate Planning & Business Development, Nexen Exploitation Manager, Esso Resources 34

35 Graeme Phipps 35 "As President and CEO of Canadian Occidental Petroleum Ltd. until December 1995, I had the great satisfaction of employing Mr. Graeme Phipps as Vice-President in charge of the Canadian Oil and Gas Division. Mr. Graeme Phipps achieved spectacular results: he quickly turned around the operation from a semi-liquidation mode to a high growth mode. This turnaround was achieved under stringent economic criteria and was entirely financed by the cashflow of the Division: by all performance benchmarks (particularly value creation, asset value growth, finding and development costs), the Canadian Oil and Gas Division ranked among the best in the Canadian Industry under Graeme Phipps management. I attribute his success to the following qualities: first a personal attraction for challenges, a clear strategic mindset and an absolute commitment to performance; second a very broad professional expertise (geology, geophysics, production, reservoir, economics) and an amazing ability to identify profitable opportunities; and third his ability to attract, direct and motivate excellent people." July 21st, 1997 Bernard F. Isautier

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