On Friday, KMG EP reported operating results for 2017. As a result of last year, the Company's production including its stakes in JV, fell by 2% yoy, to 11.9mn tons.
Ozenmunaigas (OMG) produced 5.5ths tonnes, a 1% decrease as compared to 2016 mainly due to lower level of production from the existing well stock. Embamunaigas (EMG) produced 2.8ths tonnes, a 0.3% increase as compared to 2016. The total volume of oil OMG and EMG produced was 8.3ths tonnes, a 1% decrease compared to production for 2016.
The sales volume of OMG and EMG in 2017 amounted to 8.2mn tons of crude oil, of which 69% were sold for export (in 2016 - 59%).
The Company’s stake in production from KGM, CCEL, and PKI for 2017 amounted to 3.5ths tonnes of crude oil, 6% less than in 2016. This was mainly driven by a natural decline in oil production at PKI and KGM.
Production levels at OMG and EMG coincided with our forecasts of 5.5mn tons and 2.8mn tons. We also positively estimate the company's preservation by the end of the year of the correlation of export and domestic sales according to the plans announced in the budget, and noting the strengthening of oil prices in 4Q2017, we maintain the "Hold" of KMG EP preferred shares.