Kuwait Energy reports record net profit of US$34.8 million for 2011, up 58.9%

2011 results:

  • Record year-end proven and probable reserves: 235.3 mmboe, up 382.5% from 2010
  • Record operating cash flow: US$111.9 million, up 30.7% from 2010
  • Record daily average production: 13,624 boepd, up 2.8% from 2010
  • Record exit production: 17,733 boepd, up 23% from 2010

Kuwait Energy plc, one of the fastest growing independent oil and gas companies in the Middle East, today announced its financial and operational results for the year 2011 during its annual meeting of shareholders.  The Company recorded a record net profit of US$34.8 million in 2011, up 58.9% from 2010, a record year-end proven and probable reserves of 235.3 million barrels of oil equivalent (mmboe), up 382.5% from 2010, a record US$111.9 million in operating cash flow, up 30.7% from 2010, and a record high exit production by year-end of 17,733 barrel of oil equivalent per day (boepd), up 23% from 2010.

Shareholders approved cash dividend of 4.5 pence (Sterling) per share.

Speaking to shareholders, Kuwait Energy Chairman, Dr. Manssour Aboukhamseen, said: “I am delighted to report 2011 was another year of significant progress for Kuwait Energy with record profits, reserves, cash flow and production.”

2011 highlights

  • Sales revenue: US$178.9 million, up 26.2% from 2010
  • Proven and probable (2P) reserves increased to 235.3 mmboe, a significant rise of 382.5% on 2010
  • Total assets: US$884.1 million, up 14.6% from 2010
  • Average working interest production: 13,624 boepd, up 2.8% from 2010
  • Year-end 2011 exit production: 17,733 boepd
  • Above industry average exploration success rate of 62% at a finding cost of US$3.90 per barrel of oil.
  • Total exploration wells drilled: eight
  • Total development wells drilled: 49

Operationally, Kuwait Energy continued to be very active in 2011.  Exploration and development drilling continued apace with eight exploration wells and 49 development wells being completed at a cost of US$36.3 million and US$108.4 million respectively. In 2011, development wells drilled added an initial working interest production of 5,575 boepd.  The Company has also recorded an exploration success rate of 62%, an outstanding achievement.

In terms of reserves and production, Kuwait Energy reported year-end 2011 proven and probable working interest reserves of 235.3 mmboe, a significant rise of 382.5% year-on-year (2010: 48.77 mmboe).

Average daily working interest production increased over the year by 2.8% to 13,624 boepd, and the Company achieved a record 2011 exit production volume of over 17,700 on 31st December 2011, 23% higher than 2010.  This was primarily due to successful drilling results in the Shahd field in the East Ras Qattara concession located in the Western Desert in Egypt, where two separate wells initially produced over 4,000 boepd and 5,000 boepd respectively.  These wells are two of the highest producers in the Western Desert.

In Egypt, the Company recorded five new hydrocarbon discoveries from eight wells spudded during the year.  These successes brought the number of discoveries for the Company in Egypt, since 2008, from 11 to 16, an excellent achievement in fields that are mature or geographically challenging.  In October, two discoveries in Abu Sennan produced very encouraging flow rates which bode well for commercialization, and production will start during 2012.

In June, Kuwait Energy’s entry into Iraq was formalized with the signing of two 20-year gas development and production service contracts with the Iraqi Ministry of Oil.

2012 outlook

Presenting the Company’s operational milestones to shareholders, Kuwait Energy Chief Executive Officer, Sara Akbar, said: “2012 is looking to be another year of significant progress for Kuwait Energy.  We remain committed to our business plans.  This will be achieved by a mix of both organic and acquisition growth, by fulfilling the potential of existing exploration and production assets and complementing this with selective, attractive M&A opportunities which could involve further geographical diversity within the Middle East and North Africa region.”

The Middle East remains the main focus of Kuwait Energy’s operations and the Company looks forward to consolidating the significant progress made in 2011, through 2012, especially in Egypt and Iraq.  In Egypt, the Company plans to drill seven exploration wells and 12 development wells during 2012, while in Iraq, 2012 will be a critical year as Kuwait Energy moves forward in the development of the Siba gas field and will also be participating in opportunities available in the country’s fourth bidding round.  Discussions are also progressing in Yemen on how to develop the country’s gas resources.  The Company intends to complement this organic growth strategy by the exploitation of attractive M&A opportunities as they arise.

General Assembly outcome

Last year, Kuwait Energy embarked in the restructuring of the Company’s ownership structure.

Shares were allocated on a 90%-10% basis in Kuwait Energy plc (Jersey) and Kuwait Energy Company KSCC respectively, in preparation of a possible listing on the London Stock Exchange.  The nominal value of the Kuwait Energy plc shares is £1, while for Kuwait Energy Company KSC.C, it remains at 100fils.

Based on the new capital structure, shareholders now directly own 90% of Kuwait Energy plc (Jersey) while the remaining 10% is held by Kuwait-based Kuwait Energy Company K.S.C.C. 

Kuwait Energy plc Annual General Assembly (AGM) and Extraordinary General Assembly (EGM):

Shareholders approved the appointment of the following board directors: Dr. Manssour Aboukhamseen (Executive Chairman), Sara Akbar (Chief Executive Officer), Roger Phillips (Chief Financial Officer), Mohamed Yusof Rafie (independent director), Dr. Yousef A. Al Awadi (independent director) and Rachel English (independent director).

The EGM also approved the increase of the authorized share capital to GBP395,974,374 (an increase of GBP70,974,374) and also the related disapplication of shareholder pre-emption rights, to meet Kuwait Energy’s commitments in respect to the financing facility signed with Abraaj Capital in which GulfMerger acted as financial advisor to Kuwait Energy, the agreement signed with Concorde Oil and Gas Limited and Altima Partners for its full acquisition of Russian assets in 2010, and a provision for the potential issue of shares to International Finance Corporation (IFC).


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