JPMorgan - KASE

The following table sets out our total sales from our Upstream operations:
2000 1999
(MMbbls) (%) (MMbbls) (%)
Crude oil exports ...................................... 1.08 3.6 0.65 2.67
CrudeoiltransferredtoDownstream ..................... 6.83 22.5 — —
Crude oil transferred to Downstream and subsequently
exported ........................................... 9.58 31.5 — —
Crude oil transferred to Downstream by joint ventures (50%) 1.80 5.9 — —
Crude oil sold to HOP in Quarter 1, 2000 .................. 6.29 20.7 — —
Royalty payments ...................................... 1.32 4.3 — —
Crude oil domestic sales ................................ 3.48 11.5 23.85 97.33
Totalcrudeoilsalesortransfers ......................... 30.38 100.0 24.50 100.0
Revenue
Revenue increased significantly to $523.2 million in 2000 compared with $155.2 million in 1999.
Of the total increase of $368.0 million, $216.0 million reflects revenues of HOP, which we
acquired on March 31, 2000, $76.0 million was attributable to increased prices realized on crude
oil sales, $72.0 million was attributable to the increased crude oil production and the remaining
$4.0 million reflected an increase in interest and other income. Sales volumes, including sales
generated from crude purchased from third parties, were 31.7 MMbbls (86,651 BOPD) in 2000
with 34% exported, 34% sold domestically and 32% refined and sold as products through the
Downstream division compared to 24.1 MMbbls (65,971 BOPD) in 1999.
Our average realized price for total crude oil sales (after excluding the oil refined and sold as
products) was $14.12 per barrel in 2000 compared with $6.36 per barrel in 1999. Exporting 34%
of the sales volume and higher world oil prices led to this increase. The average realization for
exports was $19.34 per barrel in 2000 and the average realization for crude sold domestically or
for delivery to meet royalty-in-kind obligations was $8.90 per barrel in 2000. The average price
realized for domestic refined products was $19.59 per barrel in 2000.
Total crude oil revenue can be analyzed as follows:
2000 1999
Quantity
Sold
Net
Realized
Price
Revenue
Quantity
Sold
Net
Realized
Price
Revenue
(MMbbls) ($ per Bbl) ($000’s) (MMbbls) ($ per Bbl) ($000’s)
CrudesalessoldFCA ........... 10.66 19.52 208,078 0.65 6.80 4,419
Royalty payments ............. 1.32 8.60 11,358 — — —
Crude oil domestic sales ........ 9.77 8.37 81,780 23.85 6.23 148,628
Total ........................ 21.75 13.85 301,216 24.50 6.25 153,047
The increase in FCA differentials primarily resulted from increases in transportation tariffs.
Expenses
Production
Our production expenses were $34.4 million for the year ended December 31, 1999 and $35.3
million for 2000. Production expenses remained relatively constant between 1999 and 2000,
despite a 30% increase in production, due to operational efficiencies realized in 2000 and
resulting economies of scale. On a per barrel basis, production expenses decreased by 21% from
$1.46 per barrel in 1999 to $1.15 per barrel of oil produced in 2000.
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