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committed under the terms of its licences (mainly Iraq projects). Of these exploration and development capital
expenditures, the Group is contractually obligated to spend only $62.7 million of the total $377.6 million, which
represents $52.7 million in connection with Block 9 in Iraq, $7.5 million in relation to Mansuriya in Iraq and $2.5
million in connection with Block 82 in Yemen. The remaining $315.3 million in exploration and development capital
expenditures are subject to relinquishment if the Group decides not to continue exploration, appraisal and development
work in respect of its assets.
In addition, the Group currently plans an additional $207.5 million in discretionary capital expenditures through the end
of 2016, primarily focused on developing further production in Egypt and, in the longer term, in Iraq.
Effective operator in challenging geographies
The Group’s management team has an in-depth understanding of the oil and gas industry in the countries in which it
operates, particularly within the MENA region, and has extensive experience in operating its oil and gas assets
effectively including during periods of political instability. For example, in Iraq, despite periodic instability, terrorism
and sectarian violence, the Group has benefited from the award of three significant service contracts since 2010, on the
basis of its strong relationship with the Iraqi Oil Ministry. In Egypt, even in the face of political turmoil and civil unrest,
the Group has avoided significant interruptions to its field development programme. Although EGPC has typically
remitted payments due to the Group several months in arrears since 2011, the Group has continued to receive cash
payments from EGPC, and the Group’s receivables from EGPC have declined significantly from their peak of $188.8
million as at 30 June 2012 to $124.4 million as at 30 June 2014. The Group received an additional cargo payment of
$26.4 million on 9 July 2014. The Directors believe the Group’s ability to continue operations in circumstances of
political or civil unrest is due in large part to its understanding of the situation on the ground at the time and an accurate
assessment of risk by locally-based employees, as well as the Group’s good relations with local stakeholders.
Highly committed management team with significant experience in the MENA region through operational excellence
The Group’s executive management team has significant depth and breadth of oil and gas industry experience across the
exploration, appraisal and production sector, and especially in the MENA region. Dr Manssour Ahmed Mohammed Al-
Ali Aboukhamseen (Group Chairman), Sara Hussain Mohammed Akbar (Chief Executive Officer), Mohammad Al
Howqal (Chief Operating Officer) and Mohammad Aboush (Senior Vice-President for Iraq), as well as many of the
Group’s key business managers have spent the majority of their working careers with companies focused on the MENA
region. The four above-named individuals have, in aggregate, over 125 years of work experience in the oil and gas
industry in the MENA region.
Strategy
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.
Strengthen asset base in the core MENA region, leveraging existing relationships and track record
The Directors believe that the oil and gas industries in the greater MENA region, which have been dominated by national
oil companies and large integrated oil and gas companies to date, are undergoing a process of liberalisation, with certain
players intending to dispose of regional assets that they view to be non-core, thus creating opportunities for a broader
range of industry participants. In addition, the Directors believe that as oil and gas fields in the greater MENA region
mature, there will be increasing opportunities for independent oil and gas companies that are able to draw on their
technical expertise and operational experience to develop mature fields effectively and cost-efficiently, and turn around
underperforming fields. The Group aims to take advantage of these trends by emphasising its track record of being a
successful operator of a wide variety of oil and gas assets, including both mature producing assets and exploration and
appraisal assets, as well as its in-depth knowledge of the local oil and gas industries in various countries in the core
MENA region. The Group aims to continue presenting itself as a valued partner in the core MENA region for both local
governments and other oil and gas companies in order to enhance the value of the Group’s existing assets and operations,
as well as to secure access to new investment opportunities.
The Directors also believe that there is significant potential for the development of natural gas in the core MENA region
as a result of the unmet and growing need for natural gas in many countries, including Kuwait, Iraq, Bahrain, the United
Arab Emirates and Yemen. Although to date there has been a greater focus on the development of oil rather than gas in
the greater MENA region, the Directors believe that this is in the process of changing as local governments seek to
encourage the production of natural gas in order to meet increasing domestic and regional demand.
