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Chief Executive Officer’s Report
It is once again with great pleasure that I report on Kuwait Energy’s operational and financial highlights
for 2014.
2014 was the most successful year in Kuwait Energy since establishment. We made our largest discovery
in Block 9, yielding large reserves & resources that elevated the scale of the Company in terms of volume.
We are proud of our operational and financial performance. In 2014, we have achieved record production,
revenue and net profit post a challenging year in 2013 during which the Board took a strategic decision to
exit Russia and Ukraine and accordingly we booked impairment as a result of the discontinued operations.
We have consolidated our portfolio to focus on the MENA region where our core expertise and competency
can be leveraged as part of our strategic view as a Group. We have now benefited from this focus which has
translated into our operational and financial performance for the year 2014. I would like to share with you
here highlights of our accomplishments:
• We drilled 48 development and appraisal wells in Oman, Egypt and Iraq.
• We drilled six exploration wells, four of which led to significant discoveries. Specifically, Faihaa-1X well
in Block 9 in Iraq is considered the largest discovery there in the last 10 years
1
and three wells at Abu
Sennan in Egypt have yielded commercial volumes.
• Our record average production for 2014 was 25,252 boepd of which 24,484 boepd was from the
MENA region.
• We added substantial volumes to our certified 2P reserves due to the discovery in Block 9, which
contributed to an increase of 215% compared to 2013.
• We delivered record revenue of US$ 270.8 million.
• Our net profit was US$ 42.7million despite the collapse of oil prices since June 2014 and the impairment
on Yemen Block 5.
• We generated an operating cash flow of US$ 182.1 million.
• We maintained a healthy cash and cash equivalent closing of US$ 216 million as at 31 December 2014.
• We improved our access to capital through raising US$ 250 million in bonds in a record time.
Going forward, we have large-scale projects in Iraq on which we intend to focus, specifically the Siba
gas project and fast-tracking the development of Block 9, which is adjacent to large oil fields and nearby
existing infrastructure facilities. Our service contracts in Iraq, where revenue is based on remuneration
fee and is independent of oil prices, provide future cash flows immune to oil price volatility keeping into
consideration that our remuneration fees are the highest for Iraq contracts
2
.
As part of our business strategy, we genuinely believe that our people are our most important asset and
we are deeply committed to their on-going development in order to deliver technical and operational
excellence. Towards the end of 2014, we adopted a change in our organisational structure that would
support our business growth plans and large scale projects in Iraq.
We remain committed to serve the communities in which we operate, as we consider it part of our mission
statement to work for the benefit of our stakeholders. We also strive to achieve the highest standards of
HSSE, integrity, compliance and corporate governance.
1
. Source: Wood Mackenzie
2.
Source: Republic of Iraq Ministry of Oil
Sara Akbar
Chief Executive Officer