Dedication across the board
Annual Report 2012

Consolidated Financial Statements

12. Partnership capital

The ownership interests in Zhaikmunai LP consist of (a) Common Units, which represent a fractional entitlement in respect of all of the limited partner interests in Zhaikmunai LP and (b) the interest of the General Partner. At any general meeting every holder of Common Units shall have one vote for each Common Unit of which he or she is the holder. Under the Partnership Agreement, distributions to limited partners will be made either as determined by the General Partner in its sole discretion or following the approval of a majority of limited partners provided such amount does not exceed the amount recommended by the General Partner. Any distributions to Zhaikmunai LP's limited partners will be made on a pro rata basis according to their respective partnership interests in Zhaikmunai LP and will be paid only to the recorded holders of Common Units.

In September 2012, the Board of Directors of the General Partner approved the payment of Zhaikmunai LP's inaugural distribution of U.S.$ 0.32 per Common Unit to the holders of Zhaikmunai LP Common Units, representing a cash distribution of U.S.$ 60,219 thousand (equal to approximately 20% of retained earnings at June 30, 2012). The distribution (in the amount of US$ 59,498 thousand, since the ESOP Trustee referenced in the following paragraph declined the distribution) was paid on October 2, 2012 to Common Unit holders on the register of partners and interests at the close of business on October 1, 2012.

As at December 31, 2011 Zhaikmunai LP had issued 186,761,882 common units, all but 10 of which are represented by GDRs. During the year ended December 31, 2012 Zhaikmunai LP issued 1,421,076 new common units (represented by GDRs) to support its obligations to employees under the Employee Share Option Plan (ESOP). The issued GDRs are held by Ogier Employee Benefit Trustee Limited ("the Trustee"), which upon request from employees to exercise options, sells GDRs on the market and settles respective obligations under the ESOP. This trust constitutes a special purpose entity under IFRS and therefore, these newly issued GDRs are recorded as treasury capital of Zhaikmunai LP. During the year ended December 31, 2012 735,894 share options were exercised by employees (year ended December 31, 2011: 315,341 GDRs).

The movements in GDR's during the years ended December 31, 2012 and 2011 were as follows:

In thousands of US dollar 2012 2011
     
Balance at January 1, 186,761,882 185,000,000
Issued during the year 1,421,076 1,761,882
Balance at December 31, 188,182,958 186,761,882