Revised Circular and Shareholder Letter on KMG EP

JSC National Company KazMunayGas (“NC KMG”) has today published an updated version (the “Revised Circular”) of its circular to shareholders of JSC KazMunaiGas Exploration Production ("KMG EP” or “the Company”) dated 17 June (the “Original Circular”).

The Revised Circular is attached to this announcement.

The Revised Circular contains the amendments announced by NC KMG on 13 July 2016, namely that:
- NC KMG will increase the consideration for the offer to purchase Common Shares and Preferred Shares of KMG EP listed on the Kazakhstan Stock Exchange and GDRs of KMG EP listed on the London Stock Exchange (the “Purchase Offer”), in the event that the proposals in the Revised Circular are accepted, from $7.88 per GDR to $9.00 per GDR and equivalent increases to $54.00 per Common Share in KZT equivalent calculated on a daily basis, and $31.55 per Preferred Share in KZT equivalent calculated on a daily basis. All other terms and conditions applicable to the Purchase Offer remain as described in the Original Circular. This is a firm offer to buy all shares that are offered to KMG NC and is not conditional on anything apart from the proposed changes in the Charter and Relationship Agreement being approved. In the event that NC KMG fails to meet its obligations under the Purchase Offer in full following approval of the proposals contained in the Revised Circular, none of the proposals will take effect.
- NC KMG will not have a veto over future nominations of EP INEDs by the Nominations Committee of the KMG EP Board, to ensure that minority investors can have the maximum possible confidence in the full independence of the EP INEDs in future.
The Revised Circular will be voted on at the general meeting of shareholders of KMG EP ("EGM") in Astana, Kazakhstan on 3 August 2016.
NC KMG reiterates again that this is not a buyout offer; that it is not seeking a significant increase in its stake; and that it is committed to maintain the listing of KMG EP.
Finally, NC KMG is publishing a letter to all shareholders in KMG EP, as NC KMG has been denied access to the full shareholder register of KMG EP. This letter contains three commitments to KMG EP Shareholders concerning NC KMG’s approach to its role as the majority shareholder in KMG EP in future:
1. If and when KMG EP achieves a positive operational result, whether as a result of our proposed turn around program and/or an improvement in the oil price environment, KMG EP will resume paying dividends at a minimum level of 15% of that result.
2. Moreover, if such a result is triggered by an improvement in the operational practices of KMG EP, NC KMG will support the acquisition by KMG EP of further assets and exploration acreage.
3. Finally, in the event that NC KMG’s proposed changes to the Relationship Agreement and Charter are accepted, and the independent non-executive directors of KMG EP JSC KazMunaiGas Exploration Production ("KMG EP” or “the Company”) (“EP INEDs”) EP INEDs resign as they have announced they will (or indeed if NC KMG’s proposals are declined and KMG EP INEDs leave for other reasons) then NC KMG proposes to form a committee made up solely of minority shareholders to identify three new INEDs for EP whom minority shareholders consider suitable and who have their trust.

Note:
NC KMG, Central Asia's largest oil and gas company, is Kazakhstan's national operator for exploration, production, refining and transportation of hydrocarbons. The Company accounts for 28.6% of oil and 16% of gas production in Kazakhstan and is one of the country's largest employers, with over 76,000 employees. The consolidated oil and gas condensate output in 2015 amounted to 22,670 thousand tons, gas production - 7,255 MMcm, 16,317 thousand tons of oil were sent to the refineries for processing; the proven oil and gas condensate reserves are 801.2 mn tons. The Company represents the Government in the oil and gas sector, 90% of it is owned by the "Samruk-Kazyna" JSC, Kazakhstan's sovereign wealth fund, and 10% by the National Bank of the Republic of Kazakhstan. NC KMG has participatory interests in 38 oil & gas businesses in Kazakhstan and abroad.

Enquiries:

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Oliver Pauley +44 (0)207 554 1608

This announcement does not constitute an offer or invitation to purchase any securities. Any offer (if made) will be made solely by certain offer documentation which will contain the terms and conditions of any such offer (if made) and details of how to accept it.

The purchase offer contemplated in the documentation referred to in this announcement will be made in compliance with, to the extent applicable, Regulation 14E ("Regulation 14E") under the US Securities Exchange Act of 1934, as amended (the "Exchange Act"). NC KMG is analyzing whether any such offer is exempt from certain of the requirements of Regulation 14E pursuant to Rule 14d-1(c) or 14d-1(d) under the Exchange Act (the "Cross-Border Tender Offer Exemptions").

In the event that NC KMG determines that such offer is exempt from certain of the requirements of Regulation 14E pursuant to a Cross-Border Tender Offer Exemption, it and any covered person may rely on any exemption or relief provided for by such Cross-Border Tender Offer Exemption, including any available exemption from the requirements of Rule 14e-5 that permits brokers undertaking the offer or their affiliates to acquire, or make arrangements to acquire, Shares or GDRs outside the United States other than pursuant to such offer, on or off the Kazakhstan Stock Exchange or the London Stock Exchange or otherwise, before or during the timeframe of the offer, so long as those acquisitions or arrangements comply with applicable Kazakhstan Laws and practice and the provisions of such exemption. In such event, information about any such acquisitions or arrangements which is made public in Kazakhstan will be made available, including in the United States.

This communication is only being distributed to and is only directed at persons who are (i) outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) persons who are holders of the Securities or who otherwise fall within Article 43 of the Order or (iv) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order or (v) any other persons to whom this communication may lawfully be communicated (all such persons together being referred to as "relevant persons"). Any person who is not a relevant person should not act or rely on this document or any of its contents.

This announcement, including information included in the documentation referred to in this announcement, may contain "forward-looking statements" concerning NC KMG. All statements other than statements of historical facts included in this document may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward looking statements. Such forward looking statements involve risks and uncertainties that could significantly affect expected results or outcomes and are based on certain key assumptions. Many factors could cause actual results or outcomes to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. NC KMG assumes no obligation and does not intend to update these forward-looking statements, except as required pursuant to applicable law.