JPMorgan - KASE

plan. The CCAA plan was implemented on March 31, 2000, under which we made payments to
the holders of our Notes totaling $203.6 million in 2000. In addition, creditors with undisputed
claims amounting to $3.3 million plus interest were paid in full in 2000. See note 2 to our
consolidated financial statements. In 2001, we paid $5.5 million to defend against a potential
takeover.
Income Before Income Taxes
As a result of the foregoing factors, we had income before income taxes of $239.7 million for the
year ended December 31, 2001, as compared to $264.6 million for the year ended December 31,
2000.
Income Taxes
The following table sets out the breakdown of total income tax charges:
2001 2000
($000’s)
Upstream .............................................................. 49,515 55,576
Downstream ........................................................... 16,294 40,371
Corporate ............................................................. 2,585 3,710
Total.................................................................. 68,394 99,657
The corporate segment tax expense in 2001 was comprised of 5% withholding taxes on the
dividend of $50.0 million paid by Turgai Petroleum to us. In 2000 there was a charge of $3.0
million for a tax audit of HOSI for previous years and current taxes paid by HOSI.
Net Income
As a result of the foregoing factors, we had net income for the year ended December 31, 2001 of
$169.3 million compared to net income of $154.9 million for the year ended December 31, 2000.
Year Ended December 31, 2000 Compared to Year Ended December 31, 1999
The HOP acquisition was completed on March 31, 2000. Our financial statements include net
income and cash flow from operations of HOP for the nine months ended December 31, 2000.
Our acquisition of HOP, combined with a 30% increase in production, cost reductions and higher
world oil prices, were the major contributors to our results in 2000. As our 1999 results of
operation do not include the results of HOP, these results are not fully comparable to our 2000
results.
For 2000, we generated net income of $154.9 million and $179.4 million of cash flow ($211.0
million after giving effect to changes in non-cash operating working capital items) compared to
net income of $8.5 million and cash flow of $17.0 million ($45.4 million after giving effect to
changes in non-cash operating working capital items) in 1999.
Production
Production averaged 84,090 BOPD for 2000 compared to 64,027 BOPD for 1999. The following
table sets out our total production from our operations:
2000 1999
(MMbbls) (MMbbls)
Opening inventory of crude oil ....................................... 0.04 1.20
Production ......................................................... 30.69 23.37
Crude oil purchased from third parties ................................. 0.08 —
Salesortransfers.................................................... (30.38) (24.50)
Pipelinelosses ...................................................... (0.04) (0.03)
Closing inventory of crude oil ......................................... 0.39 0.04
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