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KazMunaiGas Exploration Production IPO completed on KASE and LSE

JSC KazMunaiGas Exploration Production (KASE | RDGZ) (LSE | KMG) was officially traded on the Kazakhstan Stock Exchange and London Stock Exchange, completing its IPO process that sold 23,086,791 newly issued common shares of the company and raised over $2 billion.

KazMunaiGas Exploration Production is the third largest crude oil producer in Kazakhstan with proven and probable oil reserves of over 1.5 billion barrels as of the end of 2005 and an average daily oil production of 188,000 barrels from 44 onshore oil and gas fields. Revenues at KMG E&P increased from $1.2 billion in 2003 to $2.6 billion in 2005 and profits from operations increased from $275 million to $1.068 billion in the same period.

Visor Capital was the lead manager for the domestic share offering. For the international offering, the joint lead managers were ABN Amro and Credit Suisse. Merrill Lynch acted as co-manager for the deal.

On the local exchange, the shares closed at 12,600 KZT ($98.92), or 12.9% higher than the initial offering price. On the London exchange, GDR’s equivalent to one sixth of a common share closed at $14.55, down slightly from the offering price of $14.64. Based on current exchange rates, that price leaves the GDR’s at a discount of 11.7% to the local shares, a gap that we feel will eventually narrow. The last local share price implies a market capitalization of $6.95 billion.

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