Kuwait Energy announces year-on-year increases in revenue, production and profits

Highlights

• Q4 revenue up 29.4%, year-on-year, to $59.0m (Q4 2011: $45.6m)
• Q4 production up 16.1% year-on-year, to 17,442 boepd (Q4 2011: 15,018 boepd)
• Q4 operating profit up 30.1% year-on-year to $38.9m (Q4 2011: $29.9m)
• Q4 operating profit up 3.2% quarter-on-quarter to $38.9m (Q3 2012: $37.7m)
• Kuwait Energy-led consortium selected by the Government of Afghanistan to negotiate Exploration and Production Sharing Contracts (EPSC) for two Blocks in Afghanistan
• Financial close reached on debt facility of up to $165m, with the International Finance Corporation and Deutsche Bank

Kuwait Energy Chief Executive Office, Sara Akbar, said: "I am pleased to announce another quarter of year-on-year increases in revenue, profits and production. The quarter also saw us make strategic progress in Afghanistan and extend our access to capital via a new reserve-based lending facility. These are very exciting times for the company and I look forward to the future with confidence."

Kuwait Energy participated successfully in the second Afghanistan Bid Round for hydrocarbon exploration licences and submitted bids for Block I (Sanduqli) and Block IV (Mazar-i-Sharif) in a consortium together with Dragon Oil (International) Limited (DOIL), Türkiye Petrolleri Anonim Ortaklığı (TPAO) and Ghazanfar Investment Limited. Both blocks are located in the Balkh province of Northern Afghanistan, at the border with Uzbekistan.

Subsequently, the consortium has been selected by the Government of Afghanistan to negotiate EPSCs for both Blocks with negotiations set to be concluded within the first half of 2013. Kuwait Energy is to operate the Sanduqli block jointly with DOIL, while the Mazar-i-Sharif block will be operated by TPAO. Kuwait Energy will take a 30% working interest in the operated block and 25% in the non-operated block.

Financially, the Company achieved financial close during the quarter (19 December) on a new reserve based lending facility of up to $165m with the International Finance Corporation and Deutsche Bank. The debt facility is to finance near-term capital activities although the first draw down of $60m has been used to repay the previous IFC reserve based lending facility.

At the end of the quarter, the Company had also drawn down $50m of its facility with Abraaj Capital and $33m with Qatar First Investment Bank to finance near-term development and growth plans. Both agreements are for a $150m convertible debt facility with mandatory conversion into ordinary shares of Kuwait Energy in the event of an IPO.

Operationally, no recordable incidents took place during the quarter in any of Kuwait Energy's operated areas whilst the Company's Cairo office and operations at Area A, Egypt were successfully certified with OHSAS18001 and 14001 environmental management standards.

In terms of drilling activity, 13 development wells were drilled, at a cost of $21.9m, primarily in Oman. Two exploration wells were also drilled and both will be carried over into 2013.