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OnbehalfofmyBoardcolleagues,IamdelightedtopresenttheGroup’sannualreportasat31December2014.
During the year, Kuwait Energy achieved record levels of production, reserves and resources volumes,
revenue and net profit. In addition, we made our largest hydrocarbon discovery to date in Block 9, which is
considered the largest discovery in Iraq in the last 10 years based on public information sources
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Strategy
We remain committed to our vision to focus our business operations in the MENA region, where we are
able to leverage our existing track record, knowledge and expertise.
On that front, we successfully exited from both Ukraine and Russia during the course of 2014 as part of our
portfolio rationalisation strategy. We are now focusing our activities on the large and diversified reserves
base that is in Egypt, Iraq and Yemen. Our vision to be one of the largest E&P companies in the Middle East is
demonstrated by our largest discovery in Block 9 and our commitment to operational excellence.
Developing our Iraq projects will be our core focus following the recent discovery in our Block 9 asset.
We continue our business operations adhering to a high level of HSSE and corporate governance standards.
We continue to monitor our portfolio to achieve a balanced mix of assets at production, development,
appraisal and exploration stages.
Financial
In 2014, Kuwait Energy delivered record sales revenue of US$ 270.8 million. This constitutes a 3% increase over
2013 as a result of larger production volumes from all of the Group’s Egyptian assets and a considerable 40%
increase since the Group began operations in 2006 – despite the recent collapse of oil prices since June 2014.
The record net profit of US$ 42.7 million in 2014 represents a significant turnaround from 2013’s financial
results for which the Group took a decision to record losses from the discontinued operations in Ukraine
and Russia. The 2014 results include a US$ 19.2 million impairment charge in relation to Yemen due to the
fall in oil prices.
This resulted in the recovery of the earnings per share, which is 13.0 US cents up from (91.0) US cents in 2013.
The Group’s total assets stood at US$ 935.5 million as at 31 December 2014 compared to US$ 791.1 million
as at 31 December 2013, representing approximately an 18% increase from 2013. The Group’s total equity
was US$ 416.5 million as at 31 December 2014 compared to US$ 370.2 million as at 31 December 2013,
representing approximately a 13% increase from 2013.
The Group continued to focus on collecting the money owed by its major customer in Egypt, the Egyptian
General Petroleum Corporation (EGPC), as evidenced by the significant amount collected during 2014 of
US$ 263.2 million.
The Group’s cash flow from operations was US$ 182.1 million in 2014 compared to US$ 189.9 million in
2013. The Group maintained a healthy cash position as at 31 December 2014 of US$ 216 million compared
to US$ 127.6 million as at 31 December 2013, representing an increase of 69% from 2013.
In 2014, Kuwait Energy received a credit rating of B- from both Fitch and Standard & Poor’s. This allowed
the Group to issue Senior Guaranteed Notes at a yield of 9.5% due in 2019. As a result, Kuwait Energy raised
US$250 million in bonds. The Bond was successfully completed in six weeks, which is considered record
time. The Notes are currently traded on the Irish Stock Exchange’s Global Exchange Market.
As oil prices look set to remain low throughout 2015, the Group has ensured that its financial position
remains stable through active cash flow management and capital spending optimisation.
We have adopted IFRS 11 Joint Arrangements and changed our accounting policy for intangible exploration
and evaluation assets from “modified full cost method” to “successful efforts method”. The historical
financial figures in this report have been restated accordingly.
1. Wood Mackenzie
Executive Chairman’s Statement
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Dr Manssour Aboukhamseen
Chairman