4
5
Executive Chairman’s
Statement
On behalf of my colleagues on the Board, I am delighted to report that 2011 was another year of significant
progress for Kuwait Energy.
This report presents the 2011 financial statements of Kuwait Energy plc (“Kuwait Energy”), our new Jersey –
incorporated group holding company. In the second half of 2011, the Kuwait Energy group restructured to
Jersey for the purposes of a future listing on the London Stock Exchange. We achieved this ground-breaking
reorganisation by first making Kuwait Energy a wholly-owned subsidiary of Kuwait Energy Company K.S.C.C.,
the predecessor parent company (“KEC”), and transferring all of our subsidiaries and assets to Kuwait
Energy. We then actioned the capital reduction of KEC which had been approved by our shareholders at
the August 2011 General Assembly Meeting, as a result of which 90% of the shares in Kuwait Energy were
distributed to our shareholders. KEC continues to hold the remaining 10% of the shares in Kuwait Energy.
On behalf of the Board, I would like to thank you for your support on this ‘life-changing’ transaction.
In terms of reserves and production, we reported year end 2011 proven and probable working interest
reserves of 235.3 million barrels of oil equivalent (mmboe), a significant rise of almost 400% on the prior
year (2010: 48.8 mmboe). This increase came from signing two 20 year gas development and production
service contracts in Iraq, reserve revisions in Russia due to seismic interpretations, and Egypt exploration
additions. We also achieved an average daily working interest production of 13,624 barrels of oil equivalent
per day (boepd) and a record year end exit production of 17,773 boepd.
2012 is set to be another exciting year for Kuwait Energy. Activity and organic growth will concentrate
on the MENA region with further exploration and production anticipated in Egypt. In Iraq, development
activity for the Siba Gas field will continue as will technical evaluations of the 12 blocks to be offered by
the Iraqi Ministry of Oil, due in May 2012. We will also maintain our strategy of constantly evaluating M&A
opportunities which have the potential to generate value for shareholders and complement our organic
growth.
Financial Overview
Kuwait Energy increased revenue by 26.2% to US$178.9 million (2010: US$141.8 million), generating net
profits of US$34.8 million for 2011, an increase of 58.7% on 2010. This continues the Company’s outstanding
track record of reporting net profits each year since inception in August 2005.
The operating cash flow before working capital in 2011 was US$111.9 million up 30.7% on 2010, primarily
due to increased levels of production at higher realized product prices.
Capital expenditure during the year was US$144.7 million, an increase of 31.5% on 2010.
Watercolor on
paper; endless
is the strength
of people when
they decide to
stand up for
their rights. The
variation of colors
in this painting
implies the
individual diversity
that makes
society richer
when people
are treated
equally. It is a
denunciation for
all the attempts
to reduce
individuals into
a copy of each
other upon the
dictator's will. The
work celebrates
the diversity,
acceptance and
tolerance within
the Arab society.
Ziyad Ben Salama
Willing
of Life
