The Board of Directors of JSC KazMunaiGas Exploration Production ("KMG EP" or the "Company") issues the following update as a clarification.
◾ Miller and Lents, Ltd. («MLL») clarified that they did not rely solely on the last three years of production in their estimates and confirmed that they assumed a long-term production decline rate of 10% for the period of 2021-2032 which is in line with the Company's expectations. This is an increase from 7% used by Gaffney, Cline & Associates (GCA) for the audit as at 31 December 2011.
◾ The major deviation between GCA and MLL assessments of 2P reserves relates to the period after 2021, when the subsoil use contracts at the Company's core assets expires, due to different entry production levels as well as differing assumptions about production decline rates.
◾ KMG EP used MLL production profile as a basis for the impairment valuation in 2012 and 1H2013.