JPMorgan - KASE

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Summary Operating Data The following tables set forth information with respect to our estimated proved crude oil and natural gas reserves and the Shymkent refinery’s refining capacity as of January 1, 2002, and production, sales, refining and other operating data for the year ended December 31, 2001 and the nine months ended September 30, 2002. The following tables, which are derived from the reports (the “McDaniel Reports”) of McDaniel & Associates Consultants Ltd. (“McDaniel”) on certain interests, set forth our estimated proved and proved plus probable oil and natural gas reserves in Kazakhstan and the present worth value of estimated future net pre-tax cash flows of those reserves effective as of January 1, 2002 on an escalating price assumption basis. The McDaniel Report prepared on an escalating price basis was dated March 7, 2002. McDaniel also calculated our estimated future net pre-tax cash flows and present value of estimated future net pre-tax cash flows discounted at 10% based on escalating price assumptions. These calculations of pre-tax cash flows are net of value added tax, but give no effect to income taxes, excess profit taxes or other applicable taxes attributable to estimated future net cash flows from the sale of oil and natural gas. Pre-tax disclosure is inconsistent with U.S. GAAP as prescribed by Statement of Financial Accounting Standards No. 69. In addition, except as otherwise indicated, all evaluations relating to our crude oil and natural gas reserves are based upon escalating price assumptions, which assume, among other things, price forecasts, political and economic stability in Kazakhstan and the continuance of current laws and regulations. See “Business and Properties — Oil and Gas Exploration and Development Operations — Estimates of Proved and Proved Plus Probable Reserves and Present Worth Values” and “Risk Factors — Risk Factors Relating to Our Industry — Volatility of oil and gas prices could adversely affect our results of operations”. For additional information relating to our reserves, production and refining capacity, see “Risk Factors — Risk Factors Relating to our Business”, “Business and Properties — Oil and Gas Exploration and Development Operations — Estimates of Proved and Proved Plus Probable Reserves and Present Worth Values”, “Business and Properties — Oil and Gas Exploration and Development Operations — Principal Oil and Gas Properties”, “Business and Properties — Downstream Operations — Refining” and the notes to our consolidated financial statements appearing elsewhere in this offering memorandum. As of January 1, 2002 Provedreservesofoil(MMbbls) .................................................... 348.1 Provedreservesofnaturalgas(Bcf)................................................. 32.8 Proved developed reserves of oil (MMbbls) .......................................... 243.2 Proved developed reserves of natural gas (Bcf) ....................................... 0 Present value discounted at 10% of estimated future net pre-tax cash flows (in thousands) $1,882,586 Pro forma net debt as a percentage of present value discounted at 10% of estimated future net pre-tax cash flows (1)(2) ................................................. 10.1% Pro forma total debt as a percentage of present value discounted at 10% of estimated future net pre-tax cash flows (2)(3) ................................................. 22.0% Rated crude oil throughput capacity of the Shymkent refinery (BOPD) .................. 140,000 12
Year Ended December 31, 2001 Nine Months Ended September 30, 2002 Gross production of crude oil (MMbbls) ......................... 36.8 35.0 Grosssales(MMbbls) ......................................... 36.5 36.7 Transfertorefinery(MMbbls) ................................. 18.3 15.5 Export sales (MMbbls) ........................................ 15.7 18.7 Royalty/domestic sales (MMbbls) ............................... 2.5 2.5 Average realized sales price per barrel of crude oil sold ........... 12.2 15.1 Net productive wells at end of period .......................... 369.5 395.5 Average throughput capacity of the Shymkent refinery (MBOPD) . . 72.1 73.1 (1) Pro forma net debt represents our pro forma total debt as of September 30, 2002, less pro forma cash, cash equivalents and short-term investments as of such date. (2) You should not consider the ratios of debt to present value of future cash flows in isolation or as a substitute for net income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with U.S. GAAP or Canadian GAAP or as a measure of our profitability or liquidity. We believe that you should review these ratios because we use them as one means of analyzing our ability to service our debt repayment obligations and other liabilities. These ratios may not be comparable to similarly-titled measures presented by other issuers. (3) Pro forma total debt represents our pro forma total debt as of September 30, 2002. 13
Page 1 and 2: Offering Circular Hurricane Finance
Page 3 and 4: Moscow RUSSIA SAMARA Ufa OMSK RUSSI
Page 5 and 6: Š Š you have made certain acknowl
Page 7 and 8: Unless otherwise indicated, all ref
Page 9 and 10: Notice to New Hampshire Residents N
Page 11 and 12: Offering Memorandum Summary This su
Page 13 and 14: have a network of sales, storage an
Page 15 and 16: Š our QAM pipeline construction pr
Page 17 and 18: a senior intercompany loan to HKM.
Page 19 and 20: Organizational Structure The follow
Page 21: Nine Months Ended Year Ended Decemb
Page 25 and 26: construction of the plant, anticipa
Page 27 and 28: Inadequate infrastructure could adv
Page 29 and 30: fully prohibit us from doing so. In
Page 31 and 32: Kazakhstan’s foreign investment,
Page 33 and 34: subsoil user and the Kazakhstani go
Page 35 and 36: In general, estimates of economical
Page 37 and 38: thereon and any other amounts owed
Page 39 and 40: Selected Historical Consolidated Fi
Page 41 and 42: Management’s Discussion and Analy
Page 43 and 44: (11,642 tonnes per day) in Septembe
Page 45 and 46: Adoption of Certain Accounting Stan
Page 47 and 48: The following table sets out the so
Page 49 and 50: The total royalty and tax expense f
Page 51 and 52: perform a quarterly ceiling test. T
Page 53 and 54: The increase in FCA differentials p
Page 55 and 56: In addition, we incurred production
Page 57 and 58: plan. The CCAA plan was implemented
Page 59 and 60: Royalties Royalties increased from
Page 61 and 62: Cash is managed centrally through t
Page 63 and 64: Š completion of the gas utilizatio
Page 65 and 66: Competitive Strengths We believe th
Page 67 and 68: Š refurbishing and recommissioning
Page 69 and 70: The daily business of Kazgermunai i
Page 71 and 72: Kumkol North. We have a 50% interes
Page 73 and 74:
are currently five producing wells.
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Estimated Reserves and Present Wort
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The following table sets forth a re
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The following tables show our avera
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amended in April 1999, required Kaz
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price we paid for the shares of HKM
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expenditures or investments. The ag
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Several investments with high profi
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In addition, we have opened new rou
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On January 8, 2003, the President o
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As a result of these discussions, H
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Management Directors and Senior Man
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and managerial positions. In 1992,
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approved by our shareholders in Nov
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Related Party Transactions Set fort
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Indebtedness of Directors and Senio
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Prepayments HKM may voluntarily pre
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guarantees any Indebtedness of an O
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will also (i) make such withholding
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The Change of Control Offer will re
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shown on the most recent balance sh
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(a) no Default or Event of Default
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Disqualified Stock and will not per
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transaction are at least equal to t
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in HKM or HOP respectively, from th
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Restricted Subsidiary sell, assign,
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(2) reduce the rate of interest on
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Issuer may, at its option and at an
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(g) waive a redemption payment with
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issue date of the Notes within the
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Exchange of Global Notes for Defini
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Luxembourg or their respective dire
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the Company or to a Guarantor, (e)
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“Consolidated Net Income” means
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excluded, and (iii) the Fixed Charg
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shall be deemed to make an “Inves
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or is liquidated into, the Company
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Value, as appropriate, of such prop
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“Wholly Owned Restricted Subsidia
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Sale, Redemption or Retirement of t
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Tax on Income and Capital Gains A h
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Plan of Distribution Subject to the
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Pre-Issue Trades Settlement It is e
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Regulation S Notes By purchasing no
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The issuer’s principal activities
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Lengesskoe Shosse, Shymkent, Yuzhna
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4 The issue of the notes was author
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Hurricane Hydrocarbons Ltd. Interim
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Hurricane Hydrocarbons Ltd. Interim
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3 months ended September 30, 2002 U
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3 months ended September 30, 2001 U
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9 months ended September 30, 2001 T
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Repayment Long term debt principal
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14 Net Income Per Share The income
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accordingly no compensation cost ha
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Management’s Report All informati
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Comments by auditor for U.S. reader
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Hurricane Hydrocarbons Ltd. Consoli
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Hurricane Hydrocarbons Ltd. Notes t
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accordance with current legislation
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In addition the Corporation has now
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Upstream Downstream Eliminations Co
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The crude oil sales elimination of
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The Canadian Notes contained certai
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Interest expense Interest expense f
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14 Income Taxes The Corporation and
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investments or other items that may
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19 Related Party Transactions Durin
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Consolidated Balance Sheets The app
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Legal Proceedings The Corporation h
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Non-FCA sales ................ Oil
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APPENDIX B: The Republic of Kazakhs
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Under the Constitution, the Preside
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International Organizations and Int
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The Kazakhstan Economy Overview Kaz
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Principal Sectors of the Economy Hi
Page 225 and 226:
Oil and Gas For Oil and Gas see Ann
Page 227 and 228:
Public Finance Introduction Fiscal
Page 229 and 230:
The exchange rate regime adopted in
Page 231 and 232:
The following table sets forth data
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(This page has been left blank inte
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Exports General In 2001, the export
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‰ preparing and implementing new
Page 239:
THE ISSUER Hurricane Finance B.V. S
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