“Our base case is that dividends from KMG EP would cover only half of the required capital for the parent company,” Moscow-based Renaissance analysts Ildar Davletshin and Artem Kvas wrote in a note today. They forecast a payout of about $1.9 per global depositary receipt, which equates to an 11 percent yield.
“There are other options available for KazMunaiGaz National Co. to raise money, including a new bond issued to KMG EP” to repay debt, Renaissance said.
RenCap downgraded KazMunaiGas EP to hold from buy, cutting the target price for its GDRs by 30 percent to $16. RenCap says KazMunaiGas EP has stabilized production at core fields at the cost of higher capital expenditure, without reaching pre-strike levels.
Bakdaulet Tolegen, a spokesman for KazMunaiGas EP, didn’t immediately reply to an e-mail seeking comment.
Police used armed force to suppress unrest in Zhanaozen last year after a strike over wages by employees of state- controlled KazMunaiGas EP sparked a riot during Dec. 16 Independence Day celebrations in 2011. KazMunaiGas EP’s oil output, which fell 7 percent in 2011, may only return to 2010 levels of 13.3 million metric tons by 2016, RenCap said.
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