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Operations
Operationally, Kuwait Energy continued to be extremely active in 2011. Exploration and development
drilling continued apace with 8 exploration wells and 49 development wells being completed at a cost
of US$36.3 million and US$108.4million respectively. In 2011 development wells drilled added an initial
working interest production of 5,575 boepd.The majority of these wells being in Oman with the resulting
production rate exceeding budget expectations. Our exploration success rate of 62% continued to be well
above the industry average of 24%, an outstanding achievement.
Average daily working interest production increased over the year by 2.8% to 13,624 boepd, with record
2011 exit production volume achieved of over 17,700 on 31
st
December, 23% higher than 2010. This was
primarily due to the successful dilineation / appraisal drilling results of the Shahd field in ERQ, Egypt. Drilling
of the Shahd-2 sidetrack proved a major extension in the Lower Bahriya reservoir with massive productive
sand. Initial production from Shahd-2 sidetrack exceeded 4,000 boepd. This was followed by drilling Shahd
SE-5 which proved better reservoir development and produced at a rate exceeding 5,000 boepd. These
naturally flowing wells are considered one of the highest producers in the Western Desert of Egypt.
In Egypt, the Company recorded five new hydrocarbon discoveries from eight wells spud during the year.
These successes brought the number of discoveries for the Company in Egypt, since 2008, from 11 to 16,
an excellent achievement. In October, two discoveries in Abu Sennan produced very encouraging flow rates
which augur well for commercialization, and the onset of production during 2012.
In June, our entry into Iraq was formalized with the signing of two, 20 year gas development and production
service contracts with the Iraqi ministry of oil.
Kuwait Energy maintained its programme of active portfolio management during 2011 by completing the
divestments of a 22% stake in the Abu Sennan concession and 15% in the Mesaha concession, both in
Egypt to Beach Energy Limited. We also completed a full year of operatorship in Russia.
In Yemen, a feasibility plan was submitted to the country’s Petroleum Exploration and Production Authority
following an assessment of Yemen’s gas resources, and discussions on the way forward are progressing.
Despite the recent events in Yemen, the Company’s existing production activity continued unaffected
during 2011.
Corporate Development
Kuwait Energy retains its ambition to seek a listing on the London Stock Exchange and continues to work
closely with its external advisors to prepare for this event. The timing of the listing will be subject to market
conditions.
Corporate Governance and Board Changes
High standards of corporate governance remain at the core of the Company’s operations and Kuwait
Energy continues to implement international best practices and the requirements of the UK Combined
Code. The Board comprises three independent directors.
Corporate Social Responsibility
Kuwait Energy observes high standards of Corporate Social Responsibility (“CSR”).
Implementing international best practices, Kuwait Energy maintains high safety standards, respects the
environment and works very closely with its communities to address important aspects of local needs and
ensure Kuwait Energy contributes to the areas where it operates.
The Company also completed its annual, two-month internship programme for a group of Kuwaiti and
international students offering first-hand experience of the oil and gas industry. It also completed its fourth
consecutive year of involvement in the Kuwait Science Fair, which generates student interest in math and
science from an early age.
The Company seeks to enhance its CSR reputation, year-on-year and is particularly proud of the initiatives
it implements.
Employees
Kuwait Energy enjoys a multinational, multicultural workforce and at year end 2011 had almost 500
employees from over 25 countries.
Outlook
The Middle East remains the main focus of Kuwait Energy’s operations and the Company looks forward to
consolidating the significant progress made in 2011, through 2012, especially in Egypt and Iraq. In Egypt,
we plan to drill 7 exploration wells and 12 development wells during 2012, whilst in Iraq, 2012 will be a
critical year in our development of the Siba gas field and the Company will also be evaluating opportunities
available in the country’s fourth bidding round. Discussions are also progressing in Yemen on how to
develop the country’s gas resources. The Company intends to complement this organic growth strategy by
the exploitation of attractive M&A opportunities as they arise.
As such, 2012 is looking to be another year of significant progress for Kuwait Energy.
On behalf of the Board, I would like to offer my sincere thanks and appreciation to everyone at Kuwait
Energy for their continued dedication and professionalism without which the Company’s sustained growth
would not be possible.
Dr. Manssour Aboukhamseen
Executive Chairman
