2011-03-30-2011-03-17

To acquire 50% WI in Ural Group Ltd., which owns an exploration license in Western Kazakhstan.

KazMunaiGas Exploration Production (KMG EP) plans to acquire 50% of Ural Group Ltd. from Kazakhstan-based Exploration Venture Ltd. for US$149.1 million in cash.

KMG EP will acquire US$61.3 million in shares and US$87.8 million in shareholder loans, to be paid back to KMG EP after commercial production starts. The deal will be financed with the KMG EP's own funds.

Ural Group owns the exploration license for the block Fedorovskiy through 100% stake in Ural Oil and Gas LLP. The block is in Western Kazakhstan near Uralsk city in close proximity to a number of large producing fields.

UOG operates a subsoil exploration contract that expires in May 2014 with the right to extend the contract for production of hydrocarbons. In 2008 Rozhkovskoye oil and gas field was discovered at the Fedorovskiy block. Currently UOG is in the process of evaluating the hydrocarbons deposit.

The block's total recoverable gas and condensate reserves of category C1 + C2 are 203.4 million barrels of oil equivalent, according to RK State Commission. Gazprom's Orenburg-Western Europe gas pipeline lies through the territory of Fedorovskiy block and the main export oil pipeline Atyrau-Samara lies within close proximity of the block as well as the Karachaganak-Atyrau oil pipeline that provides access to world markets via Caspian Pipeline Consortium.

KMG EP chief executive Kenzhebek Ibrashev says, "We assess the Fedorovskiy block as a very promising and attractive asset. Acquisition of a stake in the block gives us access to a new region, where we intend to develop actively. This transaction is a good addition to our portfolio of exploration assets. This is another step in implementation of KMG EP's strategy which puts a strong emphasis on organic growth through exploration."