OREANDA-NEWS. September 06, 2011. KMG EP has reported its 1H11 financial results which are worse than consensus estimates on EBITDA and net income, reported the press-centre of ATON.
 
YoY production declined 3.4% resulting from the illegal strikes at the Uzen field. The figure was not a surprise for the market, given that the company began to report monthly production updates after the strike started in May 2011.

As the volumes lost were withdrawn primarily from the export markets, the company demonstrated significantly worse margins. EBITDA margin declined to 36.4% (vs 40.5% a year ago) and net margin to 24.6% (vs 33.7% in the base period).

The company also posted an increase in ‘fines and penalties’, which was largely due to the recognition of a penalty incurred as the result of a 2004-2005 tax audit dispute, a fine for late payment of its 2009 export customs duty and an accrued environmental fine.

Bottom line:
We expect the market to be disappointed by the company’s results.