JPMorgan - KASE

Kumkol North. We have a 50% interest in Kumkol North through Turgai Petroleum, which is
the operator of the field. LUKoil holds the other 50% interest in Turgai Petroleum. In 2001,
Kumkol North produced an average of approximately 15,900 BOPD attributable to us from 144
gross (72 net) wells. In the nine months ended September 30, 2002, Kumkol North produced an
average of approximately 21,641 BOPD attributable to us. 37 additional wells were drilled in the
first nine months of 2002. As of January 1, 2002, estimated proved reserves for Kumkol North
attributable to us were 78.7 MMbbls of crude oil and 11.1 Bcf of natural gas. It is currently
expected that Turgai Petroleum will drill a further 17 gross development wells in this area in the
fourth quarter of 2002 and another 17 wells in 2003. We, as the operator of Kumkol South,
provide Kumkol North with production and ancillary support facilities on a fee basis.
South Kumkol Field. The South Kumkol field was discovered in 1992 and has been in production
since December 1997. We own and operate 100% of the South Kumkol field. Production is from
three zones in the Cretaceous and Jurassic formations located at depths shallower than 5,000
feet. In 2001, average production from the South Kumkol field was 13,000 BOPD from 19 wells.
In the nine months ended September 30, 2002, the South Kumkol field produced an average of
approximately 19,467 BOPD. As of January 1, 2002, estimated proved reserves for the South
Kumkol field were 32.2 MMbbls of crude oil and 2.2 Bcf of natural gas.
Akshabulak Field. The Akshabulak field was discovered in 1988, and began production in July
1997 from the Jurassic-III formation. Through our interests in Kazgermunai, we own a 50%
interest in the field. Our partners in Kazgermunai, REW-DEA AG (25%), EEG (17.5%) and
International Finance Corporation (7.5%), hold the remainder of the interests in the Akshabulak
field. We have no obligation to fund capital expenditures relating to the costs of the initial
development phase of the central Jurassic-III formation. During 2001, the Akshabulak field
produced an average of 8,300 BOPD attributed to us. In the nine months ended September 30,
2002, the Akshabulak field produced an average of approximately 9,363 BOPD attributable to us.
Three new wells were drilled in the first nine months of 2002. Three dimensional (3D) seismic
data, acquired over the field, will assist in the 2003 drilling program.
The program of further development and production enhancement of the Akshabulak field
requires the installation this year of a new process facility. The purchase order for this new
facility is being delayed by our German joint venture partners, pending assurances from the
government of Kazakhstan on marketing and transportation issues.
In 2001, production commenced from the Cretaceous formation from a single well. Production is
currently being transported by pipeline to the Kumkol field where it ties into the lateral pipeline.
This, in turn, connects to the Central Pipeline, which delivers to the Shymkent refinery.
Funding for the development of the central part of the Jurassic-III formation of the Akshabulak
field is obtained by Kazgermunai from shareholder loans from its shareholders other than HKM.
These shareholder loans, which totalled approximately $63 million at September 30, 2002, are
non-recourse to us except to the extent of our interest in Kazgermunai. Kazgermunai is restricted
from paying dividends to its shareholders until all outstanding loans have been paid. As of
January 1, 2002, the Akshabulak field had estimated proved reserves of 73.2 MMbbls of crude oil.
Qyzylkiya Field. The Qyzylkiya field was discovered in 1988. Two productive zones in the
Cretaceous and Jurassic formations have been identified at depths less than 5,000 feet. As of
September 30, 2002, 19 wells in which we have an interest have been drilled in this field resulting
in nine current productive oil wells. Production commenced in this field in August, 2000.
Production facilities, road construction and other infrastructure projects were completed in
November 2000, creating all-weather access to the Kumkol field located approximately 55 km to
the east. In 2001 the Qyzylkiya field produced an average of 3,000 BOPD. In the nine months
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