BMB Munai: A micro bet on Kazakhstan

Staying with Kazakhstan for a moment, punters’ interest might be piqued by BMB Munai (KAZ), an independent oil and gas company engaged in the exploration, development and production of crude oil and natural gas. The company’s operations are primarily focused onshore in proven oil and gas producing territories of Caspian Sea region within the Republic.

The case could be made that KAZ is still very undervalued based on reserves, production, forward price earnings and cash flow ratios. This despite the relatively new tax on crude oil exports which was implemented this past May.  Speaking about the export duty, company president, Askar Tashtitov stated, “We expect the imposition of the export duty to have a significant impact on our exploration operations due to a sharp increase in our oil and gas operating expenses resulting from payment of the export duty.  However, we believe the extension of our exploration contract [allowing it to explore and develop approximately 460 square kilometers in western Kazakhstan located onshore in the Mangistau Oblast, approximately 50 kilometers from the Kazakhstan city of Aktau, a seaport on the Caspian Sea] will provide us the necessary time and flexibility to modify our exploration schedules and activities to adjust to the effects of the duty imposed recently by the government.”