UNITED
STATES
|
|||||
SECURITIES
AND EXCHANGE COMMISSION
|
|||||
Washington,
DC 20549
|
|||||
FORM
10-Q
|
|||||
[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
||||
For
the Quarterly Period Ended December 31, 2009
|
|||||
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
||||
For
the Transition Period From ________ to _________
|
|||||
Commission
File Number 001-33034
|
|||||
BMB MUNAI, INC.
|
|||||
(Exact
name of registrant as specified in its charter)
|
|||||
Nevada
|
30-0233726
|
||||
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
||||
incorporation
or organization)
|
Identification
No.)
|
||||
202
Dostyk Ave, 4th
Floor
|
|||||
Almaty, Kazakhstan
|
050051
|
||||
(Address
of principal executive offices)
|
(Zip
Code)
|
||||
+7 (727) 237-51-25
|
|||||
(Registrant's
telephone number, including area code)
|
|||||
|
Page
|
||
PART I — FINANCIAL INFORMATION | |||
Item
1. Unaudited Consolidated Financial Statements
|
|||
Consolidated
Balance Sheets as of December 31, 2009 and March 31,
2009
|
3
|
||
Consolidated
Statements of Operations for the Three and Nine Months Ended December 31,
2009 and 2008
|
4
|
||
Consolidated
Statements of Cash Flows for the Nine Months Ended December 31, 2009 and
2008
|
5
|
||
Notes
to Consolidated Financial Statements
|
7
|
||
Item
2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
|
41
|
||
Item
3. Qualitative and Quantitative Disclosures About Market
Risk
|
55
|
||
Item
4. Controls and Procedures
|
56
|
||
PART
II — OTHER INFORMATION
|
|||
Item
1. Legal Proceedings
|
57
|
||
Item
1A. Risk Factors
|
57
|
||
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
58
|
||
Item
4. Submission of Matters to a Vote of Security Holders
|
58
|
||
Item
6. Exhibits
|
59
|
||
Signatures
|
59
|
Notes
|
December
31, 2009
|
March
31, 2009
|
||
ASSETS
|
||||
CURRENT
ASSETS
|
||||
Cash
and cash equivalents
|
3
|
$
7,243,988
|
$
6,755,545
|
|
Trade
accounts receivable
|
5,514,368
|
3,081,573
|
||
Prepaid
expenses and other assets, net
|
4
|
3,398,136
|
3,054,078
|
|
Total
current assets
|
16,156,492
|
12,891,196
|
||
LONG
TERM ASSETS
|
||||
Oil
and gas properties, full cost method, net
|
5
|
238,622,602
|
238,728,413
|
|
Gas
utilization facility
|
6
|
13,569,738
|
13,470,631
|
|
Inventories
for oil and gas projects
|
7
|
13,847,712
|
14,002,146
|
|
Prepayments
for materials used in oil and gas projects
|
127,757
|
122,040
|
||
Other
fixed assets, net
|
3,110,263
|
3,629,108
|
||
Long
term VAT recoverable
|
8
|
2,749,792
|
2,423,940
|
|
Convertible
notes issue cost
|
1,921,984
|
2,490,370
|
||
Restricted
cash
|
764,060
|
588,217
|
||
Total
long term assets
|
274,713,908
|
275,454,865
|
||
TOTAL
ASSETS
|
$
290,870,400
|
$
288,346,061
|
||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||
CURRENT
LIABILITIES
|
||||
Accounts
payable
|
17
|
6,065,326
|
21,771,137
|
|
Accrued
coupon payment
|
1,391,667
|
641,667
|
||
Accrued liabilities and other payables
|
4,815,382
|
1,697,097
|
||
Total
current liabilities
|
12,272,375
|
24,109,901
|
||
LONG
TERM LIABILITIES
|
||||
Convertible
notes issued, net
|
9
|
61,965,781
|
61,331,521
|
|
Liquidation
fund
|
10
|
4,596,409
|
4,263,994
|
|
Deferred
taxes
|
15
|
6,516,444
|
6,516,444
|
|
Total
long term liabilities
|
73,078,634
|
72,111,959
|
||
COMMITMENTS
AND CONTINGENCIES
|
18
|
-
|
-
|
|
SHAREHOLDERS’
EQUITY
|
||||
Preferred
stock - $0.001 par value; 20,000,000 shares authorized; no shares issued
or outstanding
|
11
|
-
|
-
|
|
Common
stock - $0.001 par value; 500,000,000 shares authorized, 50,365,015 and
47,378,420 shares outstanding, respectively
|
11
|
50,365
|
47,378
|
|
Additional
paid in capital
|
11,
17
|
160,227,969
|
151,513,638
|
|
Retained
earnings
|
45,241,057
|
40,563,185
|
||
Total
shareholders’ equity
|
205,519,391
|
192,124,201
|
||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
290,870,400
|
$
288,346,061
|
|
Three
months ended December 31,
|
Nine
months ended December 31,
|
||||||
Notes
|
2009
(unaudited)
|
2008
(unaudited)
|
2009
(unaudited)
|
2008
(unaudited)
|
||||
REVENUES
|
12
|
$
13,894,712
|
$
4,883,790
|
$
41,735,735
|
$
62,469,174
|
|||
COSTS
AND OPERATING EXPENSES
|
||||||||
Export
duty
|
13
|
-
|
2,172,559
|
-
|
7,912,459
|
|||
Oil
and gas operating
|
5,785,214
|
1,449,981
|
13,685,411
|
6,065,686
|
||||
General
and administrative
|
2,946,160
|
6,764,698
|
10,750,099
|
17,350,218
|
||||
Consulting
expenses
|
-
|
-
|
-
|
8,662,500
|
||||
Depletion
|
2,840,787
|
2,686,439
|
7,953,515
|
9,105,564
|
||||
Interest
expense
|
1,159,268
|
-
|
3,452,646
|
-
|
||||
Amortization
and depreciation
|
161,943
|
71,870
|
454,756
|
218,610
|
||||
Accretion
expense
|
113,690
|
121,138
|
332,415
|
325,494
|
||||
Total
costs and operating expenses
|
13,007,062
|
13,266,685
|
36,628,842
|
49,640,531
|
||||
INCOME
/ (LOSS) FROM OPERATIONS
|
887,650
|
(8,382,895)
|
5,106,893
|
12,828,643
|
||||
OTHER
INCOME / (EXPENSE)
|
||||||||
Foreign
exchange (loss)/gain, net
|
(293,438)
|
90,769
|
(331,668)
|
132,344
|
||||
Disgorgement
funds received
|
14
|
-
|
-
|
-
|
1,650,293
|
|||
Interest
income
|
73,229
|
59,754
|
152,666
|
366,945
|
||||
Other
(expense)/income, net
|
(60,360)
|
(60,610)
|
(250,019)
|
(119,858)
|
||||
Total
other income/(expense)
|
(280,569)
|
89,913
|
(429,021)
|
2,029,724
|
||||
INCOME
/ (LOSS) BEFORE INCOME TAXES
|
607,081
|
(8,292,982)
|
4,677,872
|
14,858,367
|
||||
INCOME
TAX EXPENSE
|
15
|
-
|
-
|
-
|
-
|
|||
NET
INCOME / (LOSS)
|
$
607,081
|
$ (8,292,982)
|
$
4,677,872
|
$
14,858,367
|
||||
BASIC
NET INCOME / (LOSS) PER COMMON SHARE
|
16
|
$
0.01
|
$
(0.18)
|
$
0.09
|
$
0.32
|
|||
DILUTED
NET INCOME / (LOSS) PER COMMON SHARE
|
16
|
$
0.01
|
$
(0.18)
|
$
0.09
|
$
0.32
|
For
the Nine Months Ended December 31,
|
||||
Notes
|
2009
(unaudited)
|
2008
(unaudited)
|
||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||
Net
income
|
$
4,677,872
|
$
14,858,367
|
||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||
Depletion
|
5
|
7,953,515
|
9,105,564
|
|
Amortization
and depreciation
|
454,756
|
218,610
|
||
Interest
expense
|
3,452,646
|
-
|
||
Accretion
expense
|
10
|
332,415
|
325,494
|
|
Share
based compensation expense
|
11
|
2,744,133
|
12,731,285
|
|
Loss
on disposal of fixed assets
|
31,192
|
-
|
||
Changes
in operating assets and liabilities:
|
||||
(Increase)/decrease
in trade accounts receivable
|
(2,432,795)
|
5,150,711
|
||
(Increase)/decrease
in prepaid expenses and other assets
|
(344,058)
|
126,231
|
||
Increase
in VAT recoverable
|
(325,852)
|
(678,104)
|
||
(Decrease)/increase in
current liabilities
|
(6,614,341)
|
10,422,573
|
||
Net
cash provided by operating activities
|
9,929,483
|
52,260,731
|
||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||
Purchase
of oil and gas properties
|
5
|
(7,050,204)
|
(52,562,606)
|
|
Purchase
of other fixed assets
|
(311,679)
|
(4,160,814)
|
||
Cash
paid for convertible notes coupon, capitalized as oil and gas
properties
|
9
|
-
|
(1,500,000)
|
|
Increase
in inventories and prepayments for materials used in oil and gas
projects
|
(403,314)
|
(3,157,784)
|
||
Increase
in construction in progress
|
-
|
(580,000)
|
||
Increase
in restricted cash
|
(175,843)
|
(114,705)
|
||
Net
cash used in investing activities
|
(7,941,040)
|
(62,075,909)
|
||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||
Proceeds
from exercise of common stock options and warrants
|
-
|
50,001
|
||
Cash
paid for convertible notes coupon
|
9
|
(1,500,000)
|
-
|
|
Net
cash (used in)/provided by financing activities
|
(1,500,000)
|
50,001
|
||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
488,443
|
(9,765,177)
|
||
CASH
AND CASH EQUIVALENTS at beginning of period
|
6,755,545
|
17,238,837
|
||
CASH
AND CASH EQUIVALENTS at end of period
|
$ 7,243,988
|
$ 7,473,660
|
For
the Nine Months Ended December 31,
|
||||
Notes
|
2009
(unaudited)
|
2008
(unaudited)
|
||
Non-Cash
Investing and Financing Activities
|
||||
Asset
retirement obligation incurred in property development, net of estimate
revision
|
10
|
$ -
|
$
843,485
|
|
Coupon
payment on convertible notes, capitalized as part of oil and gas
properties
|
9
|
-
|
2,250,000
|
|
Accretion
of discount on convertible notes, capitalized as part of oil and gas
properties
|
9
|
-
|
596,654
|
|
Amortization
of convertible notes issue costs, capitalized as part of oil and gas
properties
|
-
|
568,386
|
||
Transfer
of inventory and prepayments for materials used in oil and gas projects to
oil and gas properties
|
477,031
|
-
|
||
Depreciation on other fixed assets capitalized as oil and gas properties |
344,576
|
169,895
|
||
Transfers
from oil and gas properties, construction in progress and other fixed
assets to gas utilization facility
|
99,107
|
-
|
||
Issuance
of common stock for the settlement of liabilities
|
17
|
$
5,973,185
|
$ - -
|
|
Buildings
and improvements
|
7-10
years
|
Machinery
and equipment
|
6-10
years
|
Vehicles
|
3-5
years
|
Office
equipment
|
3-5
years
|
Software
|
3-4
years
|
Furniture
and fixtures
|
2-7
years
|
●
|
Introduce
a new definition of oil and gas producing activities. This new definition
allows companies to include in their reserve base volumes from
unconventional resources. Such unconventional resources include bitumen
extracted from oil sands and oil and gas extracted from coal beds and
shale formations.
|
●
|
Report
oil and gas reserves using an unweighted average price using the prior
12-month period, based on the closing prices on the first day of each
month, rather than year-end prices. The SEC indicated that they will
continue to communicate with the FASB staff to align their accounting
standards with these rules. The FASB currently requires a single-day,
year-end price for accounting
purposes.
|
●
|
Permit
companies to disclose their probable and possible reserves on a voluntary
basis. In the past, proved reserves were the only reserves allowed in the
disclosures.
|
●
|
Requires
companies to provide additional disclosure regarding the aging of proved
undeveloped reserves.
|
●
|
Permit
the use of reliable technologies to determine proved reserves if those
technologies have been demonstrated empirically to lead to reliable
conclusions about reserves volumes.
|
●
|
Replace
the existing “certainty” test for areas beyond one offsetting drilling
unit from a productive well with a “reasonable certainty”
test.
|
●
|
Require
additional disclosures regarding the qualifications of the chief technical
person who oversees the company’s overall reserve estimation process.
Additionally, disclosures regarding internal controls over reserve
estimation, as well as a report addressing the independence and
qualifications of its reserves preparer or auditor will be
mandatory.
|
December
31, 2009
|
March
31, 2009
|
||
U.S.
Dollars
|
$
6,595,597
|
$
6,030,173
|
|
Foreign
currency
|
648,391
|
725,372
|
|
$
7,243,988
|
$
6,755,545
|
December
31, 2009
|
March
31, 2009
|
||
Advances
for services
|
$
1,809,004
|
$
2,740,915
|
|
Other
|
1,589,132
|
313,163
|
|
$
3,398,136
|
$
3,054,078
|
December
31, 2009
|
March
31, 2009
|
||
Cost
of drilling wells
|
$
96,278,242
|
$
96,203,705
|
|
Professional
services received in exploration and development activities
|
60,997,714
|
55,424,910
|
|
Material
and fuel used in exploration and development activities
|
52,018,937
|
51,273,747
|
|
Subsoil
use rights
|
20,788,119
|
20,788,119
|
|
Geological
and geophysical
|
7,883,856
|
7,870,516
|
|
Deferred
tax
|
7,219,219
|
7,219,219
|
|
Capitalized
interest, accreted discount and amortised bond issue costs on convertible
notes issued
|
6,633,181
|
6,633,181
|
|
Infrastructure
development costs
|
1,403,456
|
1,245,298
|
|
Other
capitalized costs
|
16,579,851
|
15,296,176
|
|
Accumulated
depletion
|
(31,179,973)
|
(23,226,458)
|
|
$
238,622,602
|
$
238,728,413
|
December
31, 2009
|
March
31, 2009
|
||
Construction
material
|
$
12,842,270
|
$
12,962,397
|
|
Spare
parts
|
87,922
|
84,524
|
|
Crude
oil produced
|
5,322
|
5,029
|
|
Other
|
912,198
|
950,196
|
|
$
13,847,712
|
$
14,002,146
|
|
As
of December 31, 2009 and March 31, 2009, the Company had long term VAT
recoverable in the amount of $2,749,792 and $2,423,940, respectively. The
VAT recoverable is a Tenge denominated asset due from the Republic of
Kazakhstan. The VAT recoverable consists of VAT paid on local expenditures
and imported goods. VAT charged to the Company is recoverable in future
periods as either cash refunds or offsets against the Company’s fiscal
obligations, including future income tax liabilities. Management cannot
estimate which part of this asset will be realized in the current year
because, in order to return funds or offset this tax with other taxes, a
tax examination must be performed by local Kazakhstan tax authorities.
During the nine months ended December 31, 2009, the Company received
refunds of VAT in the amount of $910,057.
|
NOTE
9 – CONVERTIBLE NOTES PAYABLE
|
Conversion Date
|
Percentage
|
On
or before July 13, 2008
|
81.6
|
Thereafter,
but on or before July 13, 2009
|
86.2
|
Thereafter,
but on or before July 13, 2010
|
90.9
|
Thereafter,
but on or before July 13, 2011
|
95.5
|
Thereafter,
and until Maturity Date
|
100.0
|
Conversion Date
|
Amount
|
On
or before July 13, 2008
|
$0.12239
|
Thereafter,
but on or before July 13, 2009
|
$0.07246
|
Thereafter,
but on or before July 13, 2010
|
$0.02250
|
Thereafter,
but on or before July 13, 2011
|
$0
|
Thereafter,
and until Maturity Date
|
$0
|
●
|
have
been effectively registered under the Securities Act and disposed of in
accordance with the registration statement relating
thereto;
|
●
|
may
be resold without restriction pursuant to Rule 144 under the Securities
Act or any successor provision
thereto;
|
●
|
(A)
are not subject to the restrictions imposed by Rule 903(b)(3)(iii) under
the Securities Act or any successor provision thereto and (B) may be
resold pursuant to Rule 144 under the Securities Act or any successor
provision thereto without being subject to the restrictions imposed by
paragraphs (e), (f) and (h) of Rule 144 under the Securities Act or any
successor provisions thereto; provided that
the requirements set forth in paragraph (c) of Rule 144 under the
Securities Act or any successor provision thereto are met as of such date;
or
|
●
|
have
been publicly sold pursuant to Rule 144 under the Securities Act or any
successor provision thereto.
|
December
31, 2009
|
March
31, 2009
|
||
Convertible
notes redemption value
|
$
64,323,785
|
$
64,323,785
|
|
Unamortized
discount
|
(2,358,004)
|
(2,992,264)
|
|
$
61,965,781
|
$
61,331,521
|
NOTE
10 – LIQUIDATION FUND
|
Total
|
|
At
March 31, 2009
|
$
4,263,994
|
Accrual
of liability
|
-
|
Accretion
expenses
|
332,415
|
At
December 31, 2009
|
$
4,596,409
|
Number
of Shares
|
Weighted
Average
Exercise Price |
||
As
of March 31, 2009
|
1,170,583
|
$
5.33
|
|
Granted
|
-
|
-
|
|
Exercised
|
-
|
-
|
|
Expired
|
(249,800)
|
$
6.40
|
|
As
of December 31, 2009
|
920,783
|
$
5.04
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||
Range
of
Exercise
Price
|
Options
|
Weighted
Average Exercise Price
|
Weighted
Average Contractual Life (years)
|
Options
|
Weighted
Average
Exercise Price |
|||||
$
4.75 – $ 7.40
|
920,783
|
$
5.04
|
5.00
|
920,783
|
$
5.04
|
Three
months ended
|
Nine
months ended
|
||||||
December
31, 2009
|
December
31, 2008
|
December
31, 2009
|
December
31, 2008
|
||||
Export
sales
|
$
13,182,284
|
$
2,490,840
|
$
40,596,215
|
$
59,406,817
|
|||
Domestic
sales
|
712,428
|
2,392,950
|
1,139,520
|
3,062,357
|
|||
$
13,894,712
|
$4,883,790
|
$
41,735,735
|
$
62,469,174
|
NOTE
13 – EXPORT DUTY
|
NOTE
14 – DISGORGEMENT FUNDS RECEIVED
|
NOTE
16 – EARNINGS PER SHARE
INFORMATION
|
Three
months ended
|
Nine
months ended
|
||||||
December
31, 2009
|
December
31,
2008
|
December
31,
2009
|
December
31,
2008
|
||||
Net
income/(loss)
|
$
607,081
|
$
(8,292,982)
|
$
4,677,872
|
$
14,858,367
|
|||
Basic
weighted-average common shares outstanding
|
50,365,015
|
47,378,420
|
49,420,165
|
46,607,184
|
|||
Effect
of dilutive securities
|
|||||||
Warrants
|
-
|
-
|
-
|
7,881
|
|||
Stock
options
|
-
|
-
|
-
|
6,832
|
|||
Unvested share grants
|
-
|
-
|
-
|
-
|
|||
Dilutive
weighted average common shares outstanding
|
50,365,015
|
47,378,420
|
49,420,165
|
46,621,897
|
|||
Basic
income/(loss) per common share
|
$
0.01
|
$
(0.18)
|
$
0.09
|
$
0.32
|
|||
Diluted
income/(loss) per common share
|
$
0.01
|
$
(0.18)
|
$
0.09
|
$
0.32
|
|||
●
|
make
additional payments to the liquidation fund, stipulated by the
Contract;
|
●
|
make
a one-time payment in the amount of $200,000 to the Astana Fund by the end
of 2010; and
|
●
|
make
annual payments to social projects of the Mangistau Oblast in the amounts
of $100,000 from 2010 to 2012.
|
Service
with the Employer
|
Severance
Amount
|
Less
than one (1) year
|
10%
of Basic Compensation Salary
|
At
least one (1) year but less than two (2) years
|
150%
of Basic Compensation Salary
|
More
than two years
|
299%
of Basic Compensation Salary
|
|
Economic
Environment
|
●
|
substantial
or extended decline in oil prices;
|
|
●
|
inaccurate
reserve estimates;
|
|
●
|
inability
to enter a production contract with the Republic of
Kazakhstan;
|
|
●
|
drilled
prospects may not yield oil or natural gas in commercial
quantities;
|
|
●
|
substantial
losses or liability claims as a result of operations;
|
|
●
|
insufficient
funds to meet our liquidity needs or to repay debts as they come
due;
|
|
●
|
complex
laws that could affect the cost of doing business;
|
|
●
|
substantial
liabilities to comply with environmental laws and
regulations;
|
|
●
|
the
need to replenish older depleting oil and natural gas reserves with new
oil and natural gas reserves;
|
|
●
|
inadequate
infrastructure in the region where our properties are
located;
|
|
●
|
unavailability
or high cost of drilling rigs, equipment, supplies, personnel and oil
field services;
|
|
●
|
unavailability
or high price of transportation systems;
|
|
●
|
competition
in the oil and gas industry; and
|
|
●
|
adverse
government actions, imposition of new, or increases in existing, taxes and
duties, political risks, expropriation of assets and risks of civil war,
primarily in the Republic of
Kazakhstan.
|
●
|
Reduce
current accounts payable;
|
|
●
|
Conduct
field operations focused on maximizing production and field delineation;
and
|
|
●
|
Commence
investigation of the Northwest
Block.
|
Three
months ended
December
31, 2009
to
the three months ended
December
31, 2008
|
|||||||||||
For
the three
|
For
the three
|
$
|
%
|
||||||||
months
ended
|
months
ended
|
Increase
|
Increase
|
||||||||
December
31, 2009
|
December
31, 2008
|
(Decrease)
|
(Decrease)
|
||||||||
Production
volumes:
|
|||||||||||
Natural
gas (Mcf)
|
-
|
-
|
-
|
-
|
|||||||
Natural
gas liquids (Bbls)
|
-
|
-
|
-
|
-
|
|||||||
Oil
and condensate (Bbls)
|
266,838
|
226,654
|
40,184
|
18%
|
|||||||
Barrels
of Oil equivalent (BOE)
|
266,838
|
226,654
|
40,184
|
18%
|
|||||||
Sales
volumes:
|
|||||||||||
Natural
gas (Mcf)
|
- | - | - | - | |||||||
Natural
gas liquids (Bbls)
|
- | - | - | - | |||||||
Oil
and condensate (Bbls)
|
279,605
|
209,758
|
69,847
|
33%
|
|||||||
Barrels
of Oil equivalent (BOE)
|
279,605
|
209,758
|
69,847
|
33%
|
|||||||
Average Sales Price
(1)
|
|||||||||||
Natural
gas ($ per Mcf)
|
- | - | - | - | |||||||
Natural
gas liquids ($ per Bbl)
|
- | - | - | - | |||||||
Oil
and condensate ($ per Bbl)
|
$
49.69
|
$ 23.28
|
$
26.41
|
113%
|
|||||||
Barrels
of Oil equivalent ($ per BOE)
|
$
49.69
|
$
23.28
|
$
26.41
|
113%
|
|||||||
Operating
Revenue:
|
|||||||||||
Natural
gas
|
- | - | - | - | |||||||
Natural
gas liquids
|
- | - | - | - | |||||||
Oil
and condensate
|
$
13,894,712
|
$
4,883,790
|
$
9,010,922
|
185%
|
|||||||
Gain
on hedging and derivatives (2)
|
-
|
-
|
-
|
-
|
For
the three months ended
December
31, 2009
|
For
the three months ended
December
31, 2008
|
|||
Expenses:
|
||||
Export
duty
|
$ -
|
$
2,172,559
|
||
Oil
and gas operating(1)
|
5,785,214
|
1,449,981
|
||
General
and administrative
|
2,946,160
|
6,764,698
|
||
Depletion(2)
|
2,840,787
|
2,686,439
|
||
Interest
expense
|
1,159,268
|
-
|
||
Accretion
expenses
|
113,690
|
121,138
|
||
Amortization
and depreciation
|
161,943
|
71,870
|
||
Total
|
$
13,007,062
|
$
13,266,685
|
||
Expenses
($ per BOE):
|
||||
Oil
and gas operating(1)
|
20.69
|
6.91
|
||
Depletion
(2)
|
10.16
|
12.81
|
||
For
the three months ended December 31,
|
|||||||
2009
|
2008
|
||||||
Total
|
Per
BOE
|
Total
|
Per
BOE
|
||||
Oil
and Gas Operating Expenses:
|
|||||||
Production
|
$
634,270
|
$
2.27
|
$
158,018
|
$
0.75
|
|||
Transportation
|
1,186,552
|
4.24
|
1,143,580
|
5.45
|
|||
Royalty
|
-
|
-
|
148,383
|
0.71
|
|||
Rent
export tax
|
2,966,025
|
10.61
|
-
|
-
|
|||
Mineral
extraction tax
|
998,367
|
3.57
|
-
|
-
|
|||
Total
|
$
5,785,214
|
$
20.69
|
$
1,449,981
|
$
6.91
|
|
●
|
a
100% decrease in non-cash compensation expense coupled
with;
|
●
|
a
77% decrease in other taxes;
|
|
●
|
a
65% decrease in professional services resulting from decrease in legal
fees incurred in our ongoing litigation;
|
|
|
●
|
a
34% decrease in rent expenses;
|
●
|
a
10% decrease in payroll expenses; and
|
|
●
|
a
90% decrease in environmental payments for flaring of unused natural gas
resulting from production. The amount of environmental payments
totaled $32,264 and $ 337,493 during the
three months ended December 31, 2009 and 2008,
respectively.
|
Nine
months ended
December
31, 2009
to
the nine months ended
December
31, 2008
|
||||||||||
For
the nine
|
For
the nine
|
$
|
%
|
|||||||
months
ended
|
months
ended
|
Increase
|
Increase
|
|||||||
December
31, 2009
|
December
31, 2008
|
(Decrease)
|
(Decrease)
|
|||||||
Production
volumes:
|
||||||||||
Natural
gas (Mcf)
|
-
|
-
|
-
|
-
|
||||||
Natural
gas liquids (Bbls)
|
-
|
-
|
-
|
-
|
||||||
Oil
and condensate (Bbls)
|
751,648
|
866,021
|
(114,373)
|
(13%)
|
||||||
Barrels
of Oil equivalent (BOE)
|
751,648
|
866,021
|
(114,373)
|
(13%)
|
||||||
Sales
volumes:
|
||||||||||
Natural
gas (Mcf)
|
- | - | - | - | ||||||
Natural
gas liquids (Bbls)
|
- | - | - | - | ||||||
Oil
and condensate (Bbls)
|
785,044
|
847,036
|
(61,992)
|
(7%)
|
||||||
Barrels
of Oil equivalent (BOE)
|
785,044
|
847,036
|
(61,992)
|
(7%)
|
||||||
Average Sales Price
(1)
|
||||||||||
Natural
gas ($ per Mcf)
|
- | - | - | - | ||||||
Natural
gas liquids ($ per Bbl)
|
- | - | - | - | ||||||
Oil
and condensate ($ per Bbl)
|
$
53.16
|
$
73.75
|
$
(20.59)
|
(28%)
|
||||||
Barrels
of Oil equivalent ($ per BOE)
|
$
53.16
|
$
73.75
|
$
(20.59)
|
(28%)
|
||||||
Operating
Revenue:
|
||||||||||
Natural
gas
|
- | - | - | - | ||||||
Natural
gas liquids
|
- | - | - | - | ||||||
Oil
and condensate
|
$
41,735,735
|
$
62,469,174
|
$(20,733,439)
|
(33%)
|
||||||
Gain
on hedging and derivatives (2)
|
-
|
-
|
-
|
-
|
For
the nine months ended
December
31, 2009
|
For
the nine months ended
December
31, 2008
|
|||
Expenses:
|
||||
Export
duty
|
$ -
|
$
7,912,459
|
||
Oil
and gas operating(1)
|
13,685,411
|
6,065,686
|
||
General
and administrative
|
10,750,099
|
17,350,218
|
||
Depletion(2)
|
7,953,515
|
9,105,564
|
||
Interest
expense
|
3,452,646
|
-
|
||
Accretion
expenses
|
332,415
|
325,494
|
||
Amortization
and depreciation
|
454,756
|
218,610
|
||
Consulting
expenses
|
-
|
8,662,500
|
||
Total
|
$
36,628,842
|
$
49,640,531
|
||
Expenses
($ per BOE):
|
||||
Oil
and gas operating(1)
|
17.43
|
7.16
|
||
Depletion
(2)
|
10.13
|
10.75
|
For
the nine months ended December 31,
|
|||||||
2009
|
2008
|
||||||
Total
|
Per
BOE
|
Total
|
Per
BOE
|
||||
Oil
and Gas Operating Expenses:
|
|||||||
Production
|
$
1,413,511
|
$
1.80
|
$
603,713
|
$
0.71
|
|||
Transportation
|
2,769,088
|
3.53
|
3,717,898
|
4.39
|
|||
Royalty
|
-
|
-
|
1,744,075
|
2.06
|
|||
Rent
export tax
|
6,945,938
|
8.85
|
-
|
-
|
|||
Mineral
extraction tax
|
2,556,874
|
3.25
|
-
|
-
|
|||
Total
|
$
13,685,411
|
$
17.43
|
$
6,065,686
|
$
7.16
|
●
|
a
76% decrease in environmental payments for flaring of decreased volumes of
unused natural gas resulting from decreased production. The
amount of environmental payments totaled $190,475 and $792,778 during the
nine months ended December 31, 2009 and 2008,
respectively;
|
|
●
|
a
69% decrease in other taxes;
|
|
|
●
|
a
56% decrease in professional services resulting from decreased legal fees
incurred in our ongoing litigation;
|
●
|
a
39% decrease in business trips and accommodation
expenses;
|
|
|
●
|
a
37% decrease rent expenses; and
|
|
●
|
a
17% decrease in payroll expenses.
|
Nine
months ended
December
31, 2009
|
Nine
months ended
December
31, 2008
|
|
Net
cash provided by operating activities
|
$
9,929,483
|
$
52,260,731
|
Net
cash used in investing activities
|
$
(7,941,040)
|
$
(62,075,909)
|
Net
cash (used in)/provided by financing activities
|
(1,500,000)
|
$
50,001
|
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
$
488,443
|
$
(9,765,177)
|
Payments
Due By Period
|
|||||
Contractual
obligations
|
Total
|
Less
than 1 year
|
2-3
years
|
4-5
years
|
After
5 years
|
Capital
Expenditure Commitment(1)
|
$63,700,000
|
$21,520,000
|
$ 42,180,000
|
$ -
|
$ -
|
Due
to the Government of the
Republic of Kazakhstan(2)
|
11,844,880
|
300,000
|
11,544,880
|
-
|
-
|
Liquidation
Fund
|
4,596,409
|
-
|
4,596,409
|
-
|
-
|
Convertible
Notes with Interest(3)
|
73,323,785
|
3,000,000
|
70,323,785
|
-
|
-
|
Total
|
$153,465,074
|
$24,820,000
|
$128,645,074
|
$ -
|
$ -
|
(1)
|
Under
the terms of our subsurface exploration contract we are required to spend
a total of $63.7 million in exploration activities on our properties,
including a minimum of $21.5 million by January 2011, $27.3 million by
January 2012 and $14.9 million by January 2013. The rules of
the MEMR provide a process whereby capital expenditures in excess of the
minimum required expenditure in any period may be carried forward to meet
the minimum obligations of future periods. Our capital
expenditures in prior periods have exceeded our minimum required
expenditures by more than $200
million.
|
(2)
|
In
connection with our acquisition of the oil and gas contract covering the
ADE Block, the Southeast Block and the Northwest Block, we are required to
repay the ROK for historical costs incurred by it in undertaking
geological and geophysical studies and infrastructure
improvements. Our repayment obligation for the ADE Block is
$5,994,200 and our repayment obligation for the Southeast Block is
$5,350,680. We anticipate we will also be obligated to assume a
repayment obligation in connection with the Northwest Block, although we
do not yet know the amount of such obligation. The terms of
repayment of these obligations, however, will not be determined until such
time as we apply for and are granted commercial production rights by the
ROK. Should we decide not to pursue commercial production
rights, we can relinquish the ADE Block, the Southeast Block and/or the
Northwest Block to the ROK in satisfaction of their associated
obligations. The recent addenda to our exploration contract which granted
us with the extension of exploration period and the rights to the
Northwest Block also require us to:
|
·
|
make
additional payments to the liquidation fund, stipulated by the
Contract;
|
·
|
make
a one-time payment in the amount of $200,000 to the Astana Fund by the end
of 2010; and
|
·
|
make
annual payments to social projects of the Mangistau Oblast in the amount
of $100,000 from 2010 to 2012.
|
(3)
|
On
July 16, 2007 the Company completed the private placement of $60 million
in principal amount of 5.0% convertible senior notes due 2012 (“Notes”).
The Notes carry a 5% coupon and have a yield to maturity of
6.25%. Interest will be paid at a rate of 5.0% per annum on the
principal amount, payable semiannually. The Notes are callable
and subject to early redemption in July 2010. Unless previously
redeemed, converted or purchased and cancelled, the Notes will be redeemed
by the Company at a price equal to 107.2% of the principal amount thereof
on July 13, 2012. The Notes constitute direct, unsubordinated and
unsecured, interest bearing obligations of the Company. For
additional details regarding the terms of the Notes, see Note 9 –
Convertible Notes Payable to the notes to our Unaudited Consolidated
Financial Statements.
|
Average
Price
Per
Barrel
|
Barrels
of Oil Sold
|
Approximate
Revenue from Oil Sold
(in
thousands)
|
Reduction
in
Revenue
(in
thousands)
|
|||||
Actual
sales for the three months ended December 31, 2009
|
$49.694
|
279,605
|
$13,895
|
$ -
|
||||
Assuming
a $5.00 per barrel reduction in average price per barrel
|
$44.694
|
279,605
|
$12,497
|
$1,398
|
||||
Assuming
a $10.00 per barrel reduction in average price per barrel
|
$39.694
|
279,605
|
$11,099
|
$2,796
|
●
|
to
elect two Class II directors to our Board of Directors;
and
|
●
|
to
ratify the selection of Hansen, Barnett & Maxwell, P.C. as the
independent registered public accounting firm of the Company for the 2010
fiscal year.
|
Votes
For
|
Votes
Withheld
|
||
Leonard
M. Stillman Jr.
|
17,885,722
|
6,467,314
|
|
Daymon
M. Smith
|
19,598,528
|
4,754,508
|
Exhibit
No.
|
Description
of Exhibit
|
||
Exhibit
12.1
|
Computation
of Earnings/(Loss) to Fixed Charges
|
||
Exhibit
31.1
|
Certification
of Principal Executive Officer Pursuant to
|
||
Section
302 of the Sarbanes Oxley Act of 2002
|
|||
Exhibit
31.2
|
Certification
of Principal Financial Officer Pursuant to
|
||
Section
302 of the Sarbanes-Oxley Act of 2002
|
|||
Exhibit
32.1
|
Certification
Pursuant to Section 906 of the Sarbanes-
|
||
Oxley
Act of 2002
|
|||
Exhibit
32.2
|
Certification
Pursuant to Section 906 of the Sarbanes-
|
||
Oxley
Act of 2002
|
BMB
MUNAI, INC.
|
|||||
Date:
|
February
9, 2010
|
/s/
Gamal Kulumbetov
|
|||
Gamal
Kulumbetov
Chief
Executive Officer
|
Date:
|
February
9, 2010
|
/s/
Evgeniy Ler
|
||
Evgeniy
Ler
Chief
Financial Officer
|