99
THE GROUP’S BUSINESS
The following should be read in conjunction with the other information regarding the Group in this Offering
Memorandum, including “
Risk factors
”, “
Management’s discussion and analysis of financial condition and results of
operations
”, and the Group’s consolidated financial statements and the related notes included herein. Unless otherwise
stated, the financial information relating to the Group set out in this part of the document has been extracted without
material adjustment from the Group’s consolidated financial statements included herein.
This section includes forward-looking statements that reflect the current view of the Directors and involve risks and
uncertainties. The actual results of the Group could differ materially from those contained in any forward-looking
statements as a result of factors discussed below and elsewhere in this Offering Memorandum.
Except as otherwise indicated, all information in this section regarding the Group’s estimated oil, gas and condensate
reserves and resources has been extracted from the “
Competent Person’s Report
.” Investors should note that contingent
and prospective resources are speculative and a possibility exists that such resources may not be discovered and if
discovered may not result in commercially viable production.
Group overview
Kuwait Energy (including its subsidiaries and subsidiary undertakings (including the Guarantors) and, as the context
requires, joint ventures, the “
Group
”) is an independent oil and gas company actively engaged in the exploration,
appraisal, development and production of hydrocarbons across the MENA region and certain other jurisdictions. The
Group’s asset portfolio currently consists of 51 exploration and development licences in six countries, with the core
MENA region of Egypt, Iraq, Yemen and Oman accounting for 47 of these licences. The Group has rapidly grown its
overall MENA reserve base since inception with 2P working interest reserves increasing from 18.1 mmboe as at 31
December 2008 to 165.7 mmboe as at 31 May 2014 and 2P net entitlement reserves increasing from 6.1 mmboe as at 31
December 2008 to 37.0 mmboe as at 31 May 2014. The Group had a total average daily working interest production of
21,898 boepd for 2013 and 22,468 boepd for the three months ended 31 March 2014. The Group currently produces oil
from 30 of its licences, located in Egypt, Oman and Yemen. See “Risk factors—Risks relating to the jurisdictions in
which the Group operates—The Group operates in jurisdictions that are subject to significant political, economic, legal,
regulatory and social uncertainties”. Certain of the Group’s assets are operated as unincorporated joint ventures with
other oil and gas companies, and the Group’s working interests in the exploration and development licences granted over
its assets range from 15% to 100%. A Group company is the operator of 19 of the 51 licences in which it holds an
interest and a Group company is operator of at least one asset in each of its jurisdictions other than Oman and Pakistan.
The Group’s head office is in Bahrain, its operational hub is in Kuwait, and it has offices in Cairo, Sana’a, Baghdad,
Basra and Ukhta, with 602 full-time employees in the MENA region as at 31 March 2014. Since it was established in
Kuwait in 2005, the Group has built a high quality and diversified portfolio of oil and gas assets, with a significant focus
on the core MENA region.
Kuwait Energy’s aim is to become the leading independent oil and gas exploration and development company in the core
MENA region. The key elements of Kuwait Energy’s strategy for achieving this goal are set out below. In order to focus
management attention and Group financial resources on its exploration, appraisal and development assets in the core
MENA region, in 2013 the Group resolved to dispose of its operations in Russia and Ukraine, classifying them as
discontinued operations in the Group’s financial statements. In April 2014 the Group completed the sale of its assets in
Ukraine. The Group is engaged in active negotiations in respect of the sale of its assets in Russia and expects to complete
the sale during the third quarter of 2014. The Group has also ceased to pursue new projects in Pakistan and Latvia, and
plans to spend only the minimum capital expenditures required under its contracts in respect of its asset in Mansuriya in
Iraq. The Group is actively seeking to sell or monetise these assets or otherwise exit certain of these jurisdictions
altogether.
The map below sets out the locations of the Group’s assets, with the circle indicating the Group’s core MENA assets.
