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Final Results.

    PetroKazakhstan Inc. - Fourth Quarter and Year 2004 Financial Results



    CALGARY, March 3 /CNW/ - PetroKazakhstan Inc. ("PetroKazakhstan" or the

"Company") announces its financial results for the three months and year ended

December 31, 2004. All amounts are expressed in U.S. dollars unless otherwise

indicated.



    HIGHLIGHTS:



    -  Record financial results; earnings up 58% over 2003 and cash flow up

       40% over 2003

    -  Significant increases in oil reserves attributed to exploration

       success and improved performance in the Kumkol and Akshabulak fields

    -  Reserve recognition of substantial Natural Gas Liquids and natural gas

    -  Exploration success in Kyzylkiya and Aryskum

    -  Increase of regular quarterly dividend to C$0.20 per quarter

    -  Shares begin trading on the Kazakhstan Stock Exchange

    -  Build up of oil and products inventories decreases fourth quarter

       income





    FINANCIAL HIGHLIGHTS:



    -------------------------------------------------------------------------

    (in thousands of US$

     except per share amounts     Three Months ended          Year ended

     and shares outstanding)          December 31             December 31

    -------------------------------------------------------------------------

                                    2004        2003        2004        2003

    -------------------------------------------------------------------------

    Gross Revenue                405,131     310,648   1,642,427   1,117,324

    -------------------------------------------------------------------------

    Net income                   114,937      88,808     500,668     316,940

    -------------------------------------------------------------------------

      Per share (basic)             1.51        1.14        6.40        4.06

    -------------------------------------------------------------------------

      Per share (diluted)           1.49        1.09        6.28        3.90

    -------------------------------------------------------------------------

    Cash flow                    118,850     110,339     560,491     399,975

    -------------------------------------------------------------------------

      Per share (basic)             1.56        1.42        7.16        5.12

    -------------------------------------------------------------------------

      Per share (diluted)           1.55        1.36        7.03        4.92

    -------------------------------------------------------------------------

    Weight Average Shares

     Outstanding

    -------------------------------------------------------------------------

      Basic                   76,089,557  77,827,328  78,285,025  78,149,904

    -------------------------------------------------------------------------

      Diluted                 76,922,009  81,110,704  79,708,905  81,292,206

    -------------------------------------------------------------------------

    Shares Outstanding at

     End of Period            76,223,130  77,920,226  76,223,130  77,920,226

    -------------------------------------------------------------------------



    The Company announces fourth-quarter 2004 net income of $114.9 million

($1.51 per share) compared with $88.8 million ($1.14 per share) for the same

period in 2003. Cash flow for the fourth quarter of 2004 was $118.9 million

($1.56 per share) versus $110.3 million ($1.42 per share) for the same period

in 2003.

    For the year ended December 31, 2004, net income was $500.7 million

($6.40 per share) compared with net income of $316.9 million ($4.06 per share)

in 2003. Cash flow for the year was $560.5 million ($7.16 per share) compared

to $400.0 million ($5.12 per share) for 2003.

    The Company generated both record net income and cash flow in 2004.

Improvements in the Company's transportation costs and higher prices

contributed to these record results.

    Fourth quarter earnings were affected by a build up of crude oil

inventory and in transit volumes of 1.7 million barrels and an increase in

refined product volumes of 630 thousand barrels as compared with inventory and

in transit volumes at September 30, 2004. Our refinery turnaround, which began

in the middle of October, was completed successfully, but with a build up of

crude inventories. We also moved the sales point for crude oil on one of our

export routes closer to the final destination. This build up of inventories

led to a deferral of earnings and reduced our net income for the fourth

quarter by an estimated $32.0 million compared to the third quarter of 2004,

an impact of $0.42 per share.

    There was also a build up of crude oil in transit and inventory levels

when comparing with December 31, 2003. There was an increase of 1.08 million

barrels with an estimated reduction in net income of $14.5 million.



    SHARE REPURCHASES



    The Company's substantial issuer bid share tender, which ended on

July 19, 2004, resulted in the repurchase and cancellation of 3,999,975 shares

at C$40.00 per share.

    The Company's Normal Course Issuer Bid program was renewed on August 13,

2004 and will terminate on August 12, 2005. Under the terms of this share

repurchase program, the Company is able to repurchase up to 7,091,429 Class A

common shares through the facilities of the TSX. In the third quarter of 2004,

the Company repurchased and cancelled 1,257,500 shares at an average price of

C$40.00. No repurchases were made in the fourth quarter of 2004.

    At the end of the fourth quarter, the Company had 76,223,130 common

shares and 2,086,656 options and convertible securities outstanding.

    Additional repurchases and cancellations of 459,100 shares at an average

price of C$42.62 have been executed in January 2005.



    LISTING ON THE KAZAKHSTAN STOCK EXCHANGE



    On December 27, 2004 PetroKazakhstan's common shares began trading on the

Kazakhstan Stock Exchange, being the first foreign company to be granted

approval for listing. The Company believes that this will create an excellent

opportunity for Kazakh investors to participate in the growth and success of

its business operations in Kazakhstan.



    UPSTREAM OPERATIONS REVIEW

    --------------------------



    PRODUCTION



    As announced, for the fourth quarter 2004, production averaged 152,510

barrels of oil per day ("bopd") and for the year as a whole production

averaged 151,102 bopd. Mechanical pump failures on some high rate wells as

well as allocation of capacity at the Kumkol Central Processing Facility used

by both PetroKazakhstan and the neighbouring field operator, Turgai Petroleum,

and the delay in drilling of a number of Aryskum development wells negatively

affected overall production. As these problems either have or are being

addressed, and as the development program for the Kyzylkiya, Aryskum and

Maibulak ("KAM"), Akshabulak and Kumkol North fields progresses,

PetroKazakhstan's 2005 annual production target is 170,000 bopd. However, the

company recognizes that this target can only be achieved with the timely

receipt of various regulatory approvals and in the absence of unforeseen

marketing constraints.



    EXPLORATION AND APPRAISAL



    During 2004, the Company's successful exploration and appraisal program

resulted in the addition of some 25 mmbbls in the proved and probable

category. The extension of the Kyzylkiya field to the north and into the new

Kolzhan license is now an integral part of the field development as new wells

will be brought on to production quickly. Similarly, the drilling of wells to

locations below the Aryskum gas cap, resulted in the discovery of new

reservoirs in high quality channels sands. Production rates of up to 1,600

bopd confirm the similarity to sands in the Akshabulak field. This opens up a

whole new concept for development of channel sands in this geological trend in

our licenses, which will be pursued with further seismic and appraisal wells

in 2005. As in previous years, the Akshabulak field yields further reserves

additions as channel sands and extensions to the existing reservoirs are found

from successful appraisal drilling.

    In 2005, the Company will drill at least 17 E&A wells, acquire a minimum

of 400 kilometres ("kms") and 300 square kms of 2D and 3D seismic

respectively.

    The Company now has an exploration prospect inventory that includes 94

independent structures and over 1.1 billion barrels of unrisked reserves.



    RESERVES



    On February 23, 2005, PetroKazakhstan reported significant additions to

its oil and gas reserves in 2004. As of January 1, 2005, Proved and Probable

reserves totaled 549.8 million barrels oil equivalent ("mmboe"), compared to

last year's total of 495.4 mmboe. This year's total comprises 502.9 million

barrels of oil ("mmbo"), 32.1 mmboe of Natural Gas Liquids ("NGLs") and

88.4 billion cubic feet ("bcf") of natural gas representing a replacement of

production of 197%.

    Of the 549.8 mmboe reported, 71% (or 392.0 mmboe) is proven and 29% (or

157.8 mmboe) is probable. The proven reserves are further broken down into

229.7 mmboe of proved producing and 162.3 mmboe of proved undeveloped.

    Oil reserves have increased from 490.0 mmbo to 502.9 mmbo, replacing

production by 123%. Similarly, total oil and NGLs reserves have increased from

490.0 mmboe to 535.0 mmboe, replacing production by 180%.

    NGLs and gas reserves additions have been a result of PetroKazakhstan

programs for the full utilization of its gas resources: extraction of

Liquefied Petroleum Gas ("LPG") at plants in the Akshabulak and KAM fields,

efficient use of produced gas at the Kumkol Power Plant and conservation of

dry gas by re-injection into reservoirs for future extraction and sale.

    These reserve additions and the low associated capital cost translate

into finding and development costs that are extremely low at $1.08/bbl and

$1.53/bbl for the one and five year periods, respectively.

    Finally, the independent reserves evaluator, McDaniels and Associates

Consulting Ltd, has estimated that the Company's proved, probable and possible

reserves are in excess of 800 mmboe.



    DOWNSTREAM MARKETING, TRANSPORTATION AND REFINING

    -------------------------------------------------



    CRUDE OIL PRICES AND TRADING



    Throughout 2004 the international crude oil markets remained nervous

about the lead up to the elections in Iraq, production interruptions, and the

level of US inventories. At the same time strong demand from China and

transportation capacity limits in Russia added further upward pressure to an

already upward market. As a consequence of these issues, international crude

oil prices remained at extremely high levels with an enormous level of

volatility. The highest recorded daily mean for Brent dated in 2004 was

$52.03/bbl with a low of $29.13/bbl producing a price spread over the year of

$22.90/bbl.

    In response to the supply concerns OPEC increased their output of heavier

sour crudes. While this addressed the overall supply demand balance it caused

a distortion of the heavy sour/light sweet differentials. Crude grades such as

Urals saw their discount against Brent rise from around $1.60/bbl at the

beginning of 2004 to a high of $7.50/bbl by October 2004. This generated a

strong incentive for European refineries to buy the cheaper heavier grades and

consequently the Mediterranean market became long on sweet crude and prices

for sweet crudes began to slide against Brent in November 2004. Grades like

CPC Blend and Siberian Light faired worst recording a discount to Brent of up

to $4.50/bbl. While Kumkol performed better, the premium against Brent which

typically was between $0.50 to $0.80/bbl slipped to a discount of between

$0.10 and $2.00/bbl during the last 6 weeks of 2004. Kumkol closed the year at

a discount to Brent of $0.12/bbl.



    DIFFERENTIALS



    Our export netback differential to Brent constitutes our largest single

expenditure and the management of this cost is one of our primary objectives.

    On a yearly basis, our average 2004 differential was $12.62/bbl,

$1.49/bbl lower than the $14.11/bbl achieved in 2003. This was the result of

the elimination of FCA contracts, the higher utilization of cheaper routes and

our KAM pipeline and Dzhusaly terminal.

    However, the fourth quarter of 2004 saw a deterioration of the

differential (to $13.83) reflecting the changes in the crude oil markets above

and the seasonal impact of night time shipping restrictions in the Bosphorous

Straits, increased demurrage costs and shipping rates. This situation is

expected to continue for the first quarter of 2005.

    On a go forward basis, the Company anticipates the average differential

to return to the $12.00/bbl range.

    New pipeline infrastructure currently being built in or near Kazakhstan,

namely the Baku-Tbilisi-Ceyhan ("BTC") pipeline to the Mediterranean and the

pipeline from Atasu to Western China expected to be operational by mid-2006

are anticipated to have a positive impact on differentials.



    REFINING AND REFINED PRODUCT SALES

    ----------------------------------



    The ongoing continuous improvement program at our Shymkent refinery

continues to yield significant value benefits. By measuring the change in

product yield value on a fixed crude and product price basis (thus eliminating

the variations of market prices) we obtain indications of a steady trend of

improvements over the last two years which have generated efficiencies in

excess of $2.00/bbl. This trend has shown an on going improvement as well as a

significant reduction in volatility.

    By the second quarter of 2004 the Vacuum Distillation Unit ("VDU") was

operating at maximum capacity and regular sales were being made through the

Baltic port of Tallinn. During 2005 we expect to be able to increase the yield

and to develop additional outlets for our Vacuum Gasoil ("VGO").

    Refinery unit costs showed an increase from $0.58/bbl in 2003 to

$0.80/bbl which is line with the equivalent figures in 2002. The primary

reasons for the increase was lower throughput reflecting partially the

maintenance turnaround in 2004 and the additional operating costs associated

with the start up of the VDU.



    DIVIDEND POLICY

    ---------------



    PetroKazakhstan introduced a regular quarterly dividend policy on

March 4, 2004. The initial dividend was for C$0.15 per share per quarter. In

the year 2004, a total amount of C$0.45 per share was paid.

    On December 13, 2004, the Company's Board of Directors approved an

increase in its regular quarterly dividend for 2005. The first 2005 quarterly

dividend was increased by 33% to C$0.20 per share per quarter and was paid on

February 3, 2005.

    The second 2005 regular quarterly dividend has been declared at C$0.20

per share to shareholders of record on April 15, 2005 and will be paid on

May 2, 2005.

    The Company anticipates that its regular quarterly dividend will continue

to be reviewed quarterly.



    ANNUAL GENERAL MEETING

    ----------------------



    PetroKazakhstan advises that the Annual General Meeting of Shareholders

will be held at 11:00 am Eastern (9:00 am Mountain) on Tuesday, May 3, 2005 at

the AlbanyClub of Toronto, 91 King Street East, Toronto, Ontario. Only

shareholders of record on March 16, 2005 will be entitled to vote.



    MANAGEMENT DISCUSSION AND ANALYSIS ("MD&A")

    -------------------------------------------



    A full MD&A of the Fourth Quarter of 2004 is available on the Company's

website and can also be obtained on application from the Company.



    PetroKazakhstan is a vertically integrated, international energy company,

celebrating its eighth year of operations in the Republic of Kazakhstan. It is

engaged in the acquisition, exploration, development and production of oil and

gas, refining of oil and the sale of oil and refined products.

    PetroKazakhstan shares trade in the United States on the New York Stock

Exchange, in Canada on The Toronto Stock Exchange, in the United Kingdom on

the LondonStock Exchange and in Germany on the Frankfurt Exchange under the

symbol PKZ. Its shares also trade in Kazakhstan on the Kazakhstan Stock

Exchange under the symbol CA_PKZ. The Company's website can be accessed at

www.petrokazakhstan.com.



    The Toronto Stock Exchange has neither approved nor disapproved the

    information contained herein.



    This news release contains statements that constitute forward-looking

statements within the meaning of the U.S. Private Securities Litigation Reform

Act of 1995. Forward-looking statements are not guarantees of future

performance and involve risks and uncertainties, and actual results may differ

materially from those in the forward-looking statements as a result of various

factors. You are referred to our Annual Report on Form 40-F and our other

filings with the U.S. Securities and Exchange Commission and the Canadian

securities commissions for a discussion of the various factors that may affect

our future performance and other important risk factors concerning us and our

operations.





    INTERIM CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

    (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS,

     EXCEPT PER SHARE AMOUNTS)

    UNAUDITED

    -------------------------------------------------------------------------



                                  Three Months Ended          Years Ended

                                      December 31             December 31

                                    2004        2003        2004        2003

                                         (Restated -             (Restated -

                                          see Note 2)             see Note 2)

    REVENUE

    Crude oil                    257,640     180,754     992,880     621,126

    Refined products             143,931     121,557     639,405     481,326

    Service fees                   2,318       7,341       6,484      11,532

    Interest income                1,242         996       3,658       3,340

                              ----------- ----------- ----------- -----------

                                 405,131     310,648   1,642,427   1,117,324

                              ----------- ----------- ----------- -----------

    EXPENSES

    Production                    18,831      15,555      89,339      65,516

    Royalties and taxes           29,231      28,146     126,444      82,295

    Transportation                83,938      53,396     271,809     224,987

    Refining                       6,429       4,862      21,646      17,760

    Crude oil and refined

     product purchases            18,892      14,066     111,339      56,460

    Selling                        9,866       8,196      37,934      28,529

    General and administrative    16,422      17,085      60,915      54,279

    Interest and financing

     costs                         4,566       6,818      24,330      35,579

    Depletion, depreciation

     and accretion                25,456      23,165     105,520      82,352

    Foreign exchange gain         (3,558)     (1,757)     (9,919)     (5,333)

                              ----------- ----------- ----------- -----------

                                 210,073     169,532     839,357     642,424



                              ----------- ----------- ----------- -----------

    INCOME BEFORE INCOME TAXES   195,058     141,116     803,070     474,900

                              ----------- ----------- ----------- -----------



    INCOME TAXES (Note 12)

    Current provision            101,846      56,236     356,249     165,379

    Future income tax

     recovery                    (21,793)     (4,444)    (55,166)     (9,757)

                              ----------- ----------- ----------- -----------

                                  80,053      51,792     301,083     155,622

                              ----------- ----------- ----------- -----------



    NET INCOME BEFORE

     NON-CONTROLLING INTEREST    115,005      89,324     501,987     319,278



    NON-CONTROLLING INTEREST          68         516       1,319       2,338



                              ----------- ----------- ----------- -----------

    NET INCOME                   114,937      88,808     500,668     316,940



    RETAINED EARNINGS,

     BEGINNING OF PERIOD         591,286     290,019     378,819      73,143



    Substantial issuer bid

     (Note 11)                         -           -    (111,335)          -

    Normal course issuer bid

     (Note 11)                         -           -     (35,528)    (11,232)

    Common share dividends       (12,878)          -     (39,253)          -

    Preferred share dividends         (9)         (8)        (35)        (32)



                              ----------- ----------- ----------- -----------

    RETAINED EARNINGS,

     END OF PERIOD               693,336     378,819     693,336     378,819

                              ----------- ----------- ----------- -----------

                              ----------- ----------- ----------- -----------

    BASIC NET INCOME PER

     SHARE (Note 13)                1.51        1.14        6.40        4.06

                              ----------- ----------- ----------- -----------

                              ----------- ----------- ----------- -----------

    DILUTED NET INCOME

     PER SHARE (Note 13)            1.49        1.09        6.28        3.90

                              ----------- ----------- ----------- -----------

                              ----------- ----------- ----------- -----------



    See accompanying notes to the interim consolidated financial statements.







    INTERIM CONSOLIDATED BALANCE SHEETS

    (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)

    UNAUDITED

    -------------------------------------------------------------------------



                                                          As at        As at

                                                    December 31, December 31,

                                                           2004         2003

                                                                 (Restated -

                                                                  see Note 2)

                                                    ------------ ------------

    ASSETS

    CURRENT

      Cash                                              199,105      184,660

      Accounts receivable (Note 6)                      198,504      150,293

      Inventory (Note 7)                                 61,242       36,920

      Prepaid expenses (Note 8)                          62,179       44,901

      Current portion of future income tax asset

       (Note 12)                                         65,431       14,697



                                                    ------------ ------------

                                                        586,461      431,471



    Deferred charges                                      4,662        6,729

    Restricted cash (Note 5)                             47,741       35,468

    Future income tax asset (Note 12)                    28,470       25,466

    Property, plant and equipment                       601,747      542,317



                                                    ------------ ------------

    TOTAL ASSETS                                      1,269,081    1,041,451

                                                    ------------ ------------

                                                    ------------ ------------



    LIABILITIES

    CURRENT

      Accounts payable and accrued liabilities

       (Note 9)                                         161,759       88,422

      Short-term debt (Note 10)                          15,541       73,225

      Prepayments for crude oil and refined products      9,916        6,652



                                                    ------------ ------------

                                                        187,216      168,299



    Long-term debt (Note 10)                            134,862      246,655

    Asset retirement obligations (Note 2)                32,499       28,625

    Future income tax liability (Note 12)                 9,936       13,012



                                                    ------------ ------------

                                                        364,513      456,591

                                                    ------------ ------------



    Non-controlling interest                             14,411       13,091

    Preferred shares of subsidiary                           80           80



    COMMITMENTS AND CONTINGENCIES (Note 16)



    SHAREHOLDERS' EQUITY

      Share capital (Note 11)                           191,529      191,695

      Contributed surplus                                 5,212        1,175

      Retained earnings                                 693,336      378,819



                                                    ------------ ------------

                                                        890,077      571,689

                                                    ------------ ------------



    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        1,269,081    1,041,451

                                                    ------------ ------------

                                                    ------------ ------------



    See accompanying notes to the interim consolidated financial statements.







    INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW

    (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)

    UNAUDITED

    -------------------------------------------------------------------------



                                  Three Months Ended          Years Ended

                                      December 31             December 31

                                    2004        2003        2004        2003

                                         (Restated -             (Restated -

                                          see Note 2)             see Note 2)

                              ----------- ----------- ----------- -----------

    OPERATING ACTIVITIES

      Net income                 114,937      88,808     500,668     316,940

      Items not affecting

       cash:

        Depletion,

         depreciation and

         accretion                25,456      23,165     105,520      82,352

        Future income tax

         recovery                (21,793)     (4,444)    (55,166)     (9,757)

        Non-controlling

         interest                     68         516       1,319       2,338

        Compensation cost          1,236       1,175       4,037       1,175

        Amortization of

         deferred charges            262         374       3,572       3,936

        Other non-cash items      (1,316)        745         541       2,991



                              ----------- ----------- ----------- -----------

    Cash flow                    118,850     110,339     560,491     399,975



    Changes in non-cash

     operating working capital

     items                       (76,128)    (13,918)    (24,899)    (60,625)



                              ----------- ----------- ----------- -----------

    Cash flow from operating

     activities                   42,722      96,421     535,592     339,350

                              ----------- ----------- ----------- -----------

    FINANCING ACTIVITIES

        Short-term debt

         proceeds                      -           -      98,006      77,411

        Short-term debt

         repayment               (14,802)    (69,278)   (171,231)   (154,528)

        Long-term debt

         proceeds                      -           -           -     312,986

        Long-term debt

         repayment                (1,366)     (3,473)    (97,016)   (217,699)

        Deferred charges paid       (974)        (42)     (1,674)     (3,642)

        Common share dividends    (9,093)          -     (26,665)          -

        Preferred share

         dividends                    (9)         (8)        (35)        (32)

        Purchase of common

         shares under a normal

         course issuer bid

         (Note 11)                     -           -     (38,648)    (14,848)

        Purchase of common

         shares under a

         substantial issuer bid

         (Note 11)                     -           -    (121,117)          -

        Proceeds from issue of

         share capital, net of

         share issuance costs      2,503         796      12,736       1,588



                              ----------- ----------- ----------- -----------

        Cash flow (used in)

         from financing


         activities              (23,741)    (72,005)   (345,644)      1,236

                              ----------- ----------- ----------- -----------



    INVESTING ACTIVITIES

        Restricted cash            2,950           -     (12,273)    (35,468)

        Capital expenditures     (68,801)    (74,990)   (163,230)   (196,470)

        Proceeds from sale of

         fixed assets                  -           -           -       1,258

        Acquisition of PKOP,

         net of cash acquired          -         (38)          -         (38)

        Purchase of preferred

         shares of subsidiary          -           -           -          (4)



                              ----------- ----------- ----------- -----------

        Cash flow used in

         investing activities    (65,851)    (75,028)   (175,503)   (230,722)

                              ----------- ----------- ----------- -----------



    (DECREASE) / INCREASE IN

     CASH                        (46,870)    (50,612)     14,445     109,864



    CASH, BEGINNING OF PERIOD    245,975     235,272     184,660      74,796



                              ----------- ----------- ----------- -----------

    CASH, END OF PERIOD          199,105     184,660     199,105     184,660

                              ----------- ----------- ----------- -----------

                              ----------- ----------- ----------- -----------



    See accompanying notes to the interim consolidated financial statements.







    NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

    (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, TABULAR AMOUNTS IN

     THOUSANDS OF DOLLARS, UNLESS OTHERWISE INDICATED)

    UNAUDITED

    -------------------------------------------------------------------------





    1   SIGNIFICANT ACCOUNTING POLICIES



        The interim consolidated financial statements of PetroKazakhstan Inc.

        ("PetroKazakhstan" or the "Corporation") have been prepared by

        management in accordance with generally accepted accounting

        principles in Canada. Its main operating subsidiaries are

        PetroKazakhstan Kumkol Resources ("PKKR") and PetroKazakhstan Oil

        Products ("PKOP"). Certain information and disclosures normally

        required to be included in the notes to the annual financial

        statements have been omitted or condensed. The interim consolidated

        financial statements should be read in conjunction with the

        consolidated financial statements and the notes thereto in

        PetroKazakhstan's Annual Report for the year ended December 31, 2003.

        The accounting principles applied are consistent with those as set

        out in the Corporation's annual financial statements for the year

        ended December 31, 2003, except for the changes in accounting

        standards as described in Note 2.



        The presentation of certain amounts for previous periods has been

        changed to conform with the presentation adopted for the current

        period.





    2   CHANGES IN ACCOUNTING STANDARDS



        Asset Retirement Obligations



        Effective January 1, 2004, the Corporation adopted the new

        recommendation of the Canadian Institute of Chartered Accountants

        ("CICA") regarding asset retirement obligations. This new standard

        changes the method of estimating and accounting for future site

        restoration costs. Total estimated asset retirement obligations are

        discounted to estimate the fair value of the obligation and recorded



        as a liability when the related assets are constructed and

        commissioned. The fair value of the obligation increases the value of

        property, plant and equipment and depleted using the unit-of-

        production method based upon estimated proved reserves before

        royalties. Accretion expense, resulting from increase in the present

        value of the liability due to the passage of time is recorded as part

        of depletion, depreciation and accretion expense.



        Estimated cash flows are discounted at 8.5%. The total undiscounted

        estimated cash flows required to settle the obligations are

        $77.4 million with the expenditures being incurred over ten years

        commencing in 2014.



        The new standard has been applied retroactively, and the financial

        statements of prior periods have been restated.



        Adoption of the new standard of accounting for asset retirement

        obligations resulted in the following changes in the consolidated

        balance sheet and statement of income and retained earnings.



        Changes in consolidated balance sheets:



                                                          As at        As at

                                                    December 31, December 31,

        Increase / (decrease)                              2004         2003



        Future income tax asset                             377          651

        Property, plant and equipment                    14,457       15,181

                                                    ------------ ------------

        Total assets                                     14,834       15,832

                                                    ------------ ------------

                                                    ------------ ------------



        Asset retirement obligations                     21,527       22,058

        Retained earnings                                (6,693)      (6,226)

                                                    ------------ ------------

        Total liabilities and shareholders' equity       14,834       15,832

                                                    ------------ ------------

                                                    ------------ ------------





        Changes in consolidated statements of income and retained earnings

        for the three months and years ended December 31, 2004 and 2003:





                                    Three months ended        Years ended

                                       December 31             December 31

        Increase / (decrease)       2004        2003        2004        2003



        Accretion expense            608         585       2,433       2,124

        Depletion and

         depreciation               (529)      1,473      (2,240)     (1,757)

                              ----------- ----------- ----------- -----------

        Income before income

         taxes                       (79)     (2,058)       (193)       (367)

        Income taxes                  59        (546)        274         181

                              ----------- ----------- ----------- -----------

        Net income                  (138)     (1,512)       (467)       (548)

                              ----------- ----------- ----------- -----------

                              ----------- ----------- ----------- -----------



        Basic net income

         per share                     -       (0.02)          -       (0.01)

        Diluted net income

         per share                     -       (0.02)          -       (0.01)





        The change in asset retirement obligations is as follows:





        Asset retirement obligations

         liability as at January 1, 2004                              28,625

        Revisions                                                      1,578

        Accretion expense                                              2,433

        Settlements                                                     (137)

                                                                  -----------

        Asset retirement obligations liability as at

         December 31, 2004                                            32,499

                                                                  -----------

                                                                  -----------



        Full Cost Accounting



        In September 2003 the CICA issued Accounting Guideline 16 "Oil and

        Gas Accounting - Full Cost" ("AcG 16"), which replaced Accounting

        Guideline 5 "Full Cost Accounting in the Oil and Gas Industry"

        ("AcG 5"). The most significant change between AcG 16 and AcG 5 is

        that under AcG 16 the carrying value of oil and gas properties should

        not exceed their fair value. The fair value is equal to estimated

        future cash flows from proved reserves, unproved properties and major

        development projects using future price forecasts and costs

        discounted at a risk-free rate. This differs from the cost recovery

        ceiling test under AcG 5 that used undiscounted cash flows, and

        constant prices, less general and administrative, financing costs and

        taxes. The Corporation adopted AcG 16 effective January 1, 2004 and

        as at December 31, 2004 there were no indications of impairment.



        Impairment of Long-Lived Assets



        Effective January 1, 2004, the Corporation adopted the new

        recommendation of the CICA issued in December 2002 on impairment of

        long-lived assets. This recommendation provides guidance on the

        recognition, measurement and disclosure of impairment of long-lived

        assets. There is a requirement to recognize an impairment loss for a

        long-lived asset when its carrying amount exceeds the sum of the

        undiscounted cash flows expected from its use and eventual

        disposition. The impairment loss is measured as the amount by which

        carrying amount of the asset exceeds its fair value. As at

        December 31, 2004 there were no indications of impairment of

        long-lived assets.



        Hedge Accounting



        Effective January 1, 2004, the Corporation adopted Accounting

        Guideline 13 "Hedging Relationships" ("AcG 13"). AcG 13 provides

        guidance regarding the identification, designation, documentation and

        effectiveness of hedging relationships for the purposes of applying

        hedge accounting. This guideline establishes certain conditions for

        when hedge accounting may be applied. The Corporation has applied

        hedge accounting for the financial instruments disclosed in Note 14.





    3   SEGMENTED INFORMATION



        On a primary basis the business segments are:

        -  Upstream comprising the exploration, development and production of

           crude oil and natural gas.

        -  Downstream comprising refining and the marketing and

           transportation of refined products and the management of the

           marketing and transportation of crude oil.



        Upstream results include revenue from crude oil sales to Downstream,

        reflected as crude oil purchases in Downstream, as this presentation

        properly reflects segment results. This revenue is eliminated on

        consolidation.



        Corporate income tax for the three months and the year ended December

        31, 2004 includes withholding tax on dividends paid to Canada.



        The Corporation does not disclose export revenue attributable to

        individual countries as it is impractical to obtain the information.





        Three months ended December 31, 2004



                                                           Elimin-    Consol-

                        Upstream  Downstream  Corporate    ations     idated



        REVENUE

        Crude oil        278,054          -          -    (20,414)   257,640

        Refined products  62,982     89,930          -     (8,981)   143,931

        Service fees       1,047      1,074        197          -      2,318

        Interest income      968        116        158          -      1,242

                        ---------  ---------  ---------  ---------  ---------

                         343,051     91,120        355    (29,395)   405,131

                        ---------  ---------  ---------  ---------  ---------



        EXPENSES

        Production        18,831          -          -          -     18,831

        Royalties and

         taxes            27,293      1,938          -          -     29,231

        Transportation    83,938          -          -          -     83,938

        Refining               -      6,429          -          -      6,429

        Crude oil and

         refined product

         purchases        14,294     33,993          -    (29,395)    18,892

        Selling            4,698      5,168          -          -      9,866

        General and

         administrative   10,277      3,624      2,521          -     16,422

        Interest and

         financing costs   4,558          4          4          -      4,566

        Depletion,

         depreciation

         and accretion    19,892      5,253        311          -     25,456

        Foreign exchange

         loss (gain)       3,663     (5,733)    (1,488)         -     (3,558)

                        ---------  ---------  ---------  ---------  ---------

                         187,444     50,676      1,348    (29,395)   210,073

                        ---------  ---------  ---------  ---------  ---------

        INCOME (LOSS)

         BEFORE INCOME

         TAXES           155,607     40,444       (993)         -    195,058

                        ---------  ---------  ---------  ---------  ---------



        INCOME TAXES

        Current

         provision        84,660     12,168      5,018          -    101,846

        Future income

         tax recovery    (21,466)      (327)         -          -    (21,793)

                        ---------  ---------  ---------  ---------  ---------

                          63,194     11,841      5,018          -     80,053



        NON-CONTROLLING

         INTEREST              -         68          -          -         68



                        ---------  ---------  ---------  ---------  ---------

        NET INCOME

         (LOSS)           92,413     28,535     (6,011)         -    114,037

                        ---------  ---------  ---------  ---------  ---------

                        ---------  ---------  ---------  ---------  ---------




        Eliminations are intersegment revenue.



        Included in Upstream crude revenue are sales to one customer in the

        amount of $46.9 million.





        As at December 31, 2004



                        Upstream  Downstream  Corporate          Consolidated



          Total assets 1,038,727    180,081     50,273             1,269,081

          Total

           liabilities   333,591     29,431     15,982               379,004

          Capital

           expenditures

           in the quarter 59,186      7,855        211                67,252





        Three months ended December 31, 2004



                                     Export   Domestic          Consolidated



          Crude oil                 226,045     31,595               257,640

          Refined products           60,628     83,303               143,931







        Three months ended December 31, 2003



                                                           Elimin-    Consol-

                        Upstream  Downstream  Corporate    ations     idated



        REVENUE

        Crude oil        192,072          -          -    (11,318)   180,754

        Refined products  33,943    101,934          -    (14,320)   121,557

        Service fees       5,868      1,256        217          -      7,341

        Interest income      217        112        667          -        996

                        ---------  ---------  ---------  ---------  ---------

                         232,100    103,302        884    (25,638)   310,648

                        ---------  ---------  ---------  ---------  ---------

        EXPENSES

        Production        15,555          -          -          -     15,555

        Royalties and

         taxes            29,160     (1,014)         -          -     28,146

        Transportation    53,421        (25)         -          -     53,396

        Refining               -      4,862          -          -      4,862

        Crude oil and

         refined product

         purchases        22,826     16,878          -    (25,638)    14,066

        Selling            2,630      5,566          -          -      8,196

        General and

         administrative    9,185      5,325      2,575          -     17,085

        Interest and

         financing costs   6,109        695         14          -      6,818

        Depletion,

         depreciation and

         accretion        18,321      4,744        100          -     23,165

        Foreign exchange

         loss (gain)       4,910     (7,840)     1,173          -     (1,757)

                        ---------  ---------  ---------  ---------  ---------

                         162,117     29,191      3,862    (25,638)   169,532

                        ---------  ---------  ---------  ---------  ---------

        INCOME (LOSS)

         BEFORE INCOME

         TAXES            69,983     74,111     (2,978)         -    141,116

                        ---------  ---------  ---------  ---------  ---------



        INCOME TAXES

        Current

         provision        28,727     24,944      2,565          -     56,236

        Future income

         tax              (5,454)     1,010          -          -     (4,444)

                        ---------  ---------  ---------  ---------  ---------

                          23,273     25,954      2,565          -     51,792



        NON-CONTROLLING

         INTEREST              -        516          -          -        516



                        ---------  ---------  ---------  ---------  ---------

        NET INCOME

         (LOSS)           46,710     47,641     (5,543)         -     88,808

                        ---------  ---------  ---------  ---------  ---------

                        ---------  ---------  ---------  ---------  ---------





        Eliminations are intersegment revenue.



        There were no sales to an individual customer in excess of 10% of

        consolidated revenue.





        As at December 31, 2003



                        Upstream  Downstream  Corporate         Consolidated



          Total assets   737,691    157,474    146,286             1,041,451

          Total

           liabilities   409,145     58,554      2,063               469,762

          Capital

           expenditures

           in the quarter 71,362      7,509        248                79,119





        Three months ended December 31, 2003



                                     Export   Domestic          Consolidated



          Crude oil                 164,544     16,210               180,754

          Refined products           35,286     86,271               121,557







        Year ended December 31, 2004



                                                           Elimin-    Consol-

                        Upstream  Downstream  Corporate    ations     idated



        REVENUE

        Crude oil      1,090,815          -          -    (97,935)   992,880

        Refined

         products        219,348    480,318          -    (60,261)   639,405

        Service fees       3,018      3,040        426          -      6,484

        Interest income    1,765        638      1,255          -      3,658

                       ---------- ---------- ---------- ---------- ----------

                       1,314,946    483,996      1,681   (158,196) 1,642,427

                       ---------- ---------- ---------- ---------- ----------

        EXPENSES

        Production        89,339          -          -          -     89,339

        Royalties and

         taxes           120,042      6,402          -          -    126,444

        Transportation   271,809          -          -          -    271,809

        Refining               -     21,646          -          -     21,646

        Crude oil and

         refined product

         purchases        86,943    182,592          -   (158,196)   111,339

        Selling           18,083     19,851          -          -     37,934

        General and

         administrative   34,955     14,493     11,467          -     60,915

        Interest and

         financing costs  23,848        473          9          -     24,330

        Depletion,

         depreciation and

         accretion        83,927     20,338      1,255          -    105,520

        Foreign exchange

         loss (gain)       3,963    (13,767)      (115)         -     (9,919)

                       ---------- ---------- ---------- ---------- ----------

                         732,909    252,028     12,616   (158,196)   839,357

                       ---------- ---------- ---------- ---------- ----------

        INCOME (LOSS)

         BEFORE INCOME

         TAXES           582,037    231,968    (10,935)         -    803,070

                       ---------- ---------- ---------- ---------- ----------



        INCOME TAXES

        Current

         provision       272,863     75,770      7,616          -    356,249

        Future income

         tax recovery    (54,649)      (517)         -          -    (55,166)

                       ---------- ---------- ---------- ---------- ----------

                         218,214     75,253      7,616          -    301,083



        NON-CONTROLLING

         INTEREST              -      1,319          -          -      1,319



                       ---------- ---------- ---------- ---------- ----------

        NET INCOME

         (LOSS)          363,823    155,396    (18,551)         -    500,668

                       ---------- ---------- ---------- ---------- ----------

                       ---------- ---------- ---------- ---------- ----------





        Eliminations are intersegment revenue.



        Included in Upstream crude revenue are sales to one customer in the

        amount of $167.4 million.





        As at December 31, 2004



                        Upstream  Downstream  Corporate         Consolidated



          Total assets 1,038,727    180,081     50,273             1,269,081

          Total

           liabilities   333,591     29,431     15,982               379,004

          Capital

           expenditures

           for the year  148,993     15,687      1,272               165,952





        Year ended December 31, 2004



                                     Export   Domestic          Consolidated



          Crude oil                 912,854     80,026               992,880

          Refined products          219,508    419,897               639,405







        Year ended December 31, 2003



                                                           Elimin-    Consol-

                        Upstream  Downstream  Corporate    ations     idated

        REVENUE

        Crude oil        719,009          -          -    (97,883)   621,126

        Refined products  76,885    441,200          -    (36,759)   481,326

        Services fees      9,086      2,191        255          -     11,532

        Interest income      936        416      1,988          -      3,340

                       ---------- ---------- ---------- ---------- ----------

                         805,916    443,807      2,243   (134,642) 1,117,324

                       ---------- ---------- ---------- ---------- ----------

        EXPENSES

        Production        65,516          -          -          -     65,516

        Royalties and

         taxes            80,046      2,249          -          -     82,295

        Transportation   223,000      1,987          -          -    224,987

        Refining               -     17,760          -          -     17,760

        Crude oil and

         refined product

         purchases        55,161    135,941          -   (134,642)    56,460

        Selling           10,508     18,021          -          -     28,529

        General and

         administrative   32,721     16,075      5,483          -     54,279

        Interest and

         financing costs  24,226      2,576      8,777          -     35,579

        Depletion,

         depreciation and

         accretion        63,321     18,849        182          -     82,352

        Foreign exchange

         loss (gain)       2,632     (9,863)     1,898          -     (5,333)

                       ---------- ---------- ---------- ---------- ----------

                         557,131    203,595     16,340   (134,642)   642,424

                       ---------- ---------- ---------- ---------- ----------

        INCOME (LOSS)

         BEFORE INCOME

         TAXES           248,785    240,212    (14,097)         -    474,900

                       ---------- ---------- ---------- ---------- ----------



        INCOME TAXES

        Current provision 86,803     74,217      4,359          -    165,379

        Future income

         tax recovery     (7,910)    (1,847)         -          -     (9,757)

                       ---------- ---------- ---------- ---------- ----------

                          78,893     72,370      4,359          -    155,622



        NON-CONTROLLING

         INTEREST              -      2,338          -          -      2,338



                       ---------- ---------- ---------- ---------- ----------

        NET INCOME

         (LOSS)          169,892    165,504    (18,456)         -    316,940

                       ---------- ---------- ---------- ---------- ----------

                       ---------- ---------- ---------- ---------- ----------





        Eliminations are intersegment revenue.



        There were no sales to an individual customer in excess of 10% of

        consolidated revenue.





        As at December 31, 2003



                        Upstream  Downstream  Corporate         Consolidated



          Total assets   737,691    157,474    146,286             1,041,451

          Total

           liabilities   409,145     58,554      2,063               469,762

          Capital

           expenditures

           for the year  183,134     19,070      1,009               203,213





        Year ended December 31, 2003



                                     Export   Domestic          Consolidated



          Crude oil                 596,673     24,453               621,126

          Refined products          112,316    369,010               481,326




    4   JOINT VENTURES



        The Corporation has the following interests in two joint ventures:



        a) a 50% equity shareholding with equivalent voting power in Turgai

           Petroleum CJSC ("Turgai"), which operates the northern part of the

           Kumkol field in Kazakhstan.



        b) a 50% equity shareholding with equivalent voting power in LLP

           Kazgermunai ("Kazgermunai"), which operates three oil fields in

           Kazakhstan: Akshabulak, Nurali and Aksai.



        The following amounts are included in the Corporation's consolidated

        financial statements as a result of the proportionate consolidation

        of its joint ventures before consolidation eliminations:



        Three months ended

        December 31, 2004                     Turgai  Kazgermunai      Total



        Cash                                  34,678      50,800      85,478

        Current assets, excluding cash       103,183      57,495     160,678

        Property, plant and equipment         86,791      62,555     149,346

        Current liabilities                   77,849      24,343     102,192

        Long-term debt                             -           -           -



        Revenue                               81,353      71,859     153,212

        Expenses                              53,174      46,310      99,484

        Net income                            28,179      25,549      53,728



        Cash flow from operating activities   (6,345)     12,216       5,871

        Cash flow used in financing

         activities                          (46,204)     (1,366)    (47,570)

        Cash flow used in investing

         activities                          (11,523)     (3,731)    (15,254)



        Revenue for the three months ended December 31, 2004 for Turgai

        includes $18.4 million of crude oil sales made to Downstream and

        $12.3 million of crude oil sales made by Turgai to Upstream. These

        amounts were eliminated on consolidation.



        Revenue for the three months ended December 31, 2004 for Kazgermunai

        includes $0.1 million crude oil sales to Downstream. This amount was

        eliminated on consolidation.





        Three months ended

        December 31, 2003                     Turgai  Kazgermunai      Total



        Cash                                   8,370      10,432      18,802

        Current assets, excluding cash        26,890      32,875      59,765

        Property, plant and equipment         82,682      66,397     149,079

        Current liabilities                   76,533      11,260      87,793

        Long-term debt                             -      37,743      37,743



        Revenue                               28,325      36,400      64,725

        Expenses                              22,721      27,339      50,060

        Net income                             5,604       9,061      14,665



        Cash flow from operating activities   10,701      13,419      24,120

        Cash flow used in financing activities     -      (3,301)     (3,301)

        Cash flow used in investing

         activities                          (20,436)    (10,789)    (31,225)



        Revenue for the three months ended December 31, 2003 includes

        $5.4 million of crude oil sales made by Turgai to Downstream. This

        amount was eliminated on consolidation.





        Year ended

        December 31, 2004                     Turgai  Kazgermunai      Total



        Revenue                              310,221     225,882     536,103

        Expenses                             206,869     140,312     347,181

        Net income                           103,352      85,570     188,922



        Cash flow from operating activities   66,634      77,968     144,602

        Cash flow used in financing

         activities                          (46,204)    (25,632)    (71,836)

        Cash flow used in investing

         activities                          (18,328)    (11,967)    (30,295)



        Revenue for the year ended December 31, 2004 for Turgai includes

        $72.9 million of crude oil sales made to Downstream and $29.9 million

        of crude oil sales made by Turgai to Upstream. These amounts were

        eliminated on consolidation.



        Revenue for the year ended December 31, 2004 for Kazgermunai includes

        $8.1 million of crude oil sales made to Upstream and $4.6 million

        crude oil sales to Downstream. These amounts were eliminated on

        consolidation.





        Year ended

        December 31, 2003                     Turgai  Kazgermunai      Total



        Revenue                              118,167     111,860     230,027

        Expenses                              81,623      76,675     158,298

        Net income                            36,544      35,185      71,729



        Cash flow from operating activities   58,566      39,089      97,655

        Cash flow used in financing activities     -      (9,317)     (9,317)

        Cash flow used in investing

         activities                          (50,503)    (22,193)    (72,696)



        Revenue for the year ended December 31, 2003 for Turgai includes

        $35.9 million of crude oil sales made to Downstream and $2.5 million

        of crude oil sales made to Upstream. These amounts were eliminated on

        consolidation.



        Revenue for the year ended December 31, 2003 for Kazgermunai includes

        $0.5 million of crude oil sales made to Upstream and no crude oil

        sales to Downstream. This amount was eliminated on consolidation.





    5   RESTRICTED CASH



        Restricted cash comprises:



        a) Cash dedicated to a debt service reserve account for the

           Corporation's term facility of $8.7 million at December 31, 2004

           ($10.5 million as at December 31, 2003). On September 30, 2004 the

           term facility was repaid in full. The Corporation discharged all

           hedging liabilities related to this facility as at December 31,

           2004. The debt service reserve account was repaid in January 2005.



        b) Cash dedicated to a margin account for the Corporation's hedging

           program being $39.0 million at December 31, 2004 ($25.0 million as

           at December 31, 2003).



        Restricted cash is not available for current purposes.





    6   ACCOUNTS RECEIVABLE



        Accounts receivable consist of the following:



                                                           2004         2003



        Trade                                           150,462       70,282

        Value added tax recoverable                      29,316       22,864

        Due from Turgai                                   6,942       37,231

        Other                                            11,784       19,916



                                                    ------------ ------------

                                                        198,504      150,293

                                                    ------------ ------------

                                                    ------------ ------------





    7   INVENTORY



        Inventory consists of the following:



                                                           2004         2003



        Refined products                                 16,682        6,626

        Crude oil produced                               25,275       12,502

        Materials and supplies                           19,285       17,792



                                                    ------------ ------------

                                                         61,242       36,920

                                                    ------------ ------------

                                                    ------------ ------------





    8   PREPAID EXPENSES



        Prepaid expenses consist of the following:



                                                           2004         2003



        Advances for services and equipment              16,825       10,930

        Prepayment of transportation for crude

         oil sales                                       40,911       30,422

        Prepayment for pipeline tariff                    4,443        3,549



                                                    ------------ ------------

                                                         62,179       44,901

                                                    ------------ ------------

                                                    ------------ ------------





    9   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES



        Accounts payable and accrued liabilities consist of the following:



                                                           2004         2003



        Trade                                            70,160       66,115

        Due to Turgai                                    19,668            -

        Royalties                                        18,259       16,133

        Income taxes                                     30,175            -

        Common share dividends                           12,588            -

        Other                                            10,909        6,174



                                                    ------------ ------------

                                                        161,759       88,422

                                                    ------------ ------------

                                                    ------------ ------------





    10  INDEBTEDNESS



        SHORT-TERM DEBT

                                                           2004         2003



        Current portion of term facility                      -       35,692

        Current portion of term loans                     2,039        2,039

        Joint venture loan payable                            -       11,000

        PKOP bonds                                            -       24,494

        Kazgermunai debt                                 13,502            -



                                                    ------------ ------------

                                                         15,541       73,225

                                                    ------------ ------------

                                                    ------------ ------------



        LONG-TERM DEBT

                                                           2004         2003



        Long-term portion of term facility                    -       71,384

        Long-term portion of term loans                   9,862       12,528

        9.625% bonds                                    125,000      125,000

        Kazgermunai debt                                      -       37,743



                                                    ------------ ------------

                                                        134,862      246,655

                                                    ------------ ------------

                                                    ------------ ------------



        Committed credit facility



        On May 25, 2004 the Corporation entered into a five and one half year

        $100.0 million committed credit facility. This facility is unsecured,

        bears interest at LIBOR plus 2.65% and is subject to annual review.

        $30.0 million of this facility has been dedicated to cover margin

        calls under the Corporation's hedging program. This amount is not

        available for general corporate purposes. Costs related to this

        facility amounting to $1.5 million are recorded as deferred charges

        and amortized over the life of the facility.



        Term facility



        On January 2, 2003, PetroKazakhstan Kumkol Resources ("PKKR") entered

        into a $225.0 million term facility secured by crude oil export

        contracts. This facility was repayable in 42 equal monthly

        installments commencing July 2003. The facility bore interest at a

        rate of LIBOR plus 3.25% per annum. PKKR drew $190.0 million under

        this facility and chose not to utilize the remainder. On

        September 30, 2004 the Corporation had fully repaid the term

        facility. Unamortized issue costs of $2.1 million related to the term

        facility have been expensed.



        Joint venture loan



        The joint venture loan was fully repaid on October 7, 2004.



        PKOP bonds



        On February 16, 2001 PetroKazakhstan Oil Products ("PKOP") registered

        250,000 unsecured bonds (par value $100) in the amount of

        $25.0 million with the National Securities Commission of the Republic

        of Kazakhstan (the "PKOP bonds"). The PKOP bonds had a three-year

        maturity and bore a coupon rate of 10% per annum. The PKOP bonds were

        listed on the Kazakh Stock Exchange.



        The PKOP bonds were fully redeemed on February 26, 2004.



        Term loans



        PKKR has obtained secured term loans guaranteed by Export Credit

        Agencies for certain equipment related to the KAM pipeline and Gas

        Utilization Facility. The loans are secured by the equipment

        purchased, bear interest at LIBOR plus 4% per annum, are repayable in

        equal semi-annual installments and have final maturity dates ranging

        from five to seven years.



        9.625% Notes



        On February 12, 2003, PetroKazakhstan Finance B.V., a wholly owned

        subsidiary of PKKR issued U.S. $125.0 million 9.625% Notes due

        February 12, 2010. The Notes are unsecured, unconditionally

        guaranteed by the Corporation, PKKR and PKOP, and were issued at a

        price of 98.389% of par value. Each of the guarantors has agreed to

        certain covenants, including limitations on indebtedness,

        restrictions on payments of dividends, repurchase all or any part of

        the notes at the holders' discretion in the case of a change of

        control. On March 15, 2004 the Corporation's Notes were approved for

        listing on the Kazakhstan Stock Exchange.



        As at December 31, 2004 issue costs and the discount on the sale of

        the Notes of $3.2 million are recorded as deferred charges and are

        amortized over the term of the Notes.



        Kazgermunai debt



        The Kazgermunai debt is non-recourse to the Corporation. On June 24,

        Kazgermunai repaid $24.3 million of its outstanding subordinated debt

        and as at December 31, 2004 the subordinated debt was repaid in full.

        Kazgermunai expects to repay the government loan in 2005.





    11  SHARE CAPITAL



        The Corporation's common shares are listed on the New York, Toronto,

        London and Frankfurt Stock Exchanges. On October 21, 2004

        PetroKazakhstan shares were listed on the Kazakhstan Stock Exchange.



        Authorized share capital consists of an unlimited number of Class A

        common shares, and an unlimited number of Class B redeemable

        preferred shares, issuable in series.



        Issued Class A common shares:



                                  Three months ended     Three Months ended

                                  December 31, 2004      December 31, 2003

                                ---------------------- ----------------------

                                     Number    Amount       Number    Amount

                                ---------------------- ----------------------



        Balance, beginning of

         period                  76,023,141   189,026   77,771,788   190,899

        Stock options exercised

         for cash                   199,989     2,503      137,525       816

        Corresponding convertible

         securities, converted            -         -       10,913       (20)

                                ------------ --------- ------------ ---------

        Balance, end of period   76,223,130   191,529   77,920,226   191,695

                                ------------ --------- ------------ ---------

                                ------------ --------- ------------ ---------







                                     Year ended             Year ended

                                  December 31, 2004      December 31, 2003

                                ---------------------- ----------------------

                                     Number    Amount       Number    Amount

                                ---------------------- ----------------------



        Balance, beginning of

         period                  77,920,226   191,695   78,956,875   193,723

        Shares repurchased and

         cancelled pursuant to

         Normal Course Issuer

         Bid (a)                 (1,257,500)   (3,120)  (1,477,400)   (3,616)

        Shares repurchased and

         cancelled pursuant to

         Substantial Issuer

          Bid (b)                (3,999,975)   (9,782)           -         -

        Stock options exercised

         for cash                 3,531,821    12,726      411,275     1,608

        Corresponding convertible

         securities, converted       28,558        10       29,476       (20)



                                ------------ --------- ------------ ---------

        Balance, end of period   76,223,130   191,529   77,920,226   191,695

                                ------------ --------- ------------ ---------

                                ------------ --------- ------------ ---------



        (a)  The Corporation's Normal Course Issuer Bid program was renewed

             on August 5, 2003. Under the program up to 5,775,028 common

             shares may be repurchased for cancellation, during the period

             from August 7, 2003 to August 6, 2004. In August 2004 the

             Corporation again renewed this program which enabled the

             Corporation to repurchase 7,091,429 Class A common shares

             during the period from August 13, 2004 to August 12, 2005. The

             Corporation purchased and cancelled 1,477,400 shares at an

             average price of C$14.69 per share during the year ended

             December 31, 2003 and 1,257,500 shares at an average price of

             C$40.0 per share during the year ended December 31, 2004. The

             excess of cost over the book value for the shares purchased was

             applied to retained earnings.



        (b)  In June 2004 the Corporation commenced a Substantial Issuer Bid

             to repurchase, for cancellation, up to C$160 million of its

             Class A common shares. As at December 31, 2004, the Corporation

             had purchased and cancelled 3,999,975 shares at an average

             price of C$40.0 per share. The excess of cost over the book

             value for the shares purchased was applied to retained earnings.



        A summary of the status of the Corporation's stock option plan as of

        December 31, 2004 and the changes during the years ended December 31,

        2004 and 2003 are presented below (weighted average exercise price

        expressed in Canadian dollars):



                                                                    Weighted

                                                                     Average

                                                                    Exercise

                                                       Options         Price

                                                    ------------ ------------



        Outstanding at December 31, 2003              5,115,460         8.17



        Granted                                         724,100        42.50

        Exercised                                    (3,560,379)        4.77

        Forfeited                                      (192,525)       15.94

                                                    ------------ ------------

        Outstanding at December 31, 2004              2,086,656        25.17

                                                    ------------ ------------

                                                    ------------ ------------

        Options exercisable as at:

        December 31, 2003                             2,816,683         5.14

        December 31, 2004                               866,903        16.29





        The pro forma net income per share for the three months and the years

        ended December 31, 2003 and 2004, had the Corporation recognized

        compensation expense using the fair value of common stock options

        granted for all stock options outstanding prior to January 1, 2003

        follows:



                                   Three Months Ended         Years Ended

                                      December 31,            December 31,

                                    2004        2003        2004        2003



        Net income

          As reported            114,937      88,808     500,668     316,940

          Pro forma              113,944      86,905     499,532     314,752

        Basic net income

         per share

          As reported               1.51        1.14        6.40        4.06

          Pro forma                 1.50        1.12        6.38        4.03

        Diluted net income

         per share

          As reported               1.49        1.09        6.28        3.90

          Pro forma                 1.48        1.07        6.27        3.87





    12  INCOME TAXES



        The provision for income taxes differs from the results, which would

        have been obtained by applying the statutory tax rate of 30% to the

        Corporation's income before income taxes. This difference results

        from the following items:



                                   Three Months Ended         Years Ended

                                      December 31,            December 31,

                                    2004        2003        2004        2003



        Income before

         income taxes            195,058     141,116     803,070     474,900



        Statutory Kazakhstan

         income tax rate             30%         30%         30%         30%



        Expected tax expense      58,517      42,335     240,921     142,470

        Higher tax rate in

         Kazgermunai               4,676       3,334      12,165       2,444

        Excess profit

         tax provision             9,943           -      35,000           -

        Withholding tax

         on dividends              4,850           -       6,849       1,384

        Non-deductible

         amounts, net              2,067       6,123       6,148       9,324



                              ----------- ----------- ----------- -----------

        Income tax expense        80,053      51,792     301,083     155,622

                              ----------- ----------- ----------- -----------

                              ----------- ----------- ----------- -----------



        The following are the major future income tax assets and liabilities

        arising from temporary differences between the carrying values and

        tax basis of the following assets and liabilities:



                                                           2004         2003



        Future income tax assets:

          Fixed assets                                   34,487       23,126

          Excess profit tax                              36,647            -

          Provision for inter-company profit

           eliminations                                  15,516        9,087

          Provision for royalties                         5,448        4,831

          Provision for obsolete inventories              1,310        1,180

          Provision for doubtful debts                        6        1,515

          Other                                             487          424



                                                    ------------ ------------

        Total future income tax assets                   93,901       40,163



          Less: current portion of future income

           tax assets                                   (65,431)     (14,697)

                                                    ------------ ------------

          Long-term future income tax assets             28,470       25,466

                                                    ------------ ------------

                                                    ------------ ------------



          Future income tax liabilities:            ------------ ------------

          Fixed assets                                    9,936       13,012

                                                    ------------ ------------

                                                    ------------ ------------



        Excess profit tax is in addition to statutory income taxes, which are

        at a rate of 30%, and excess profit tax takes effect after the field

        has achieved a cumulative internal rate of return higher than 20% for

        the specific field. The excess profit tax ranges from 0% to 30% of

        taxable income for the year for PKKR and from 0% to 50% for Turgai.



        A provision has been made for expected excess profit tax for the 2004

        tax year for Turgai. Excess profit tax paid in one year is deductible

        in the calculation of the excess profit tax liability in the

        following year.





    13  NET INCOME PER SHARE



        The net income per share calculations are based on the weighted

        average and diluted numbers of Class A common shares outstanding

        during the period as follows:



                                   Three Months Ended         Years Ended
                                      December 31             December 31

                                    2004        2003        2004        2003



        Weighted average number

         of common shares

         outstanding          76,089,557  77,827,328  78,285,025  78,149,904

          Dilution from

           exercisable options

           (including

           convertible

           securities)           832,452   3,283,376   1,423,880   3,142,302

                              ----------- ----------- ----------- -----------

        Diluted number of

         shares outstanding   76,922,009  81,110,704  79,708,905  81,292,206

                              ----------- ----------- ----------- -----------

                              ----------- ----------- ----------- -----------



        No options were excluded from the calculation of diluted number of

        shares outstanding for the three months ended December 31, 2004 as

        the market price was in excess of the exercise price. 649,100 options

        were excluded from the calculation of diluted number of shares

        outstanding for the year ended December 31, 2004 as the exercise

        price was in excess of the average market price for the year. 100,000

        options were excluded from the calculation of diluted number of

        shares outstanding for the three months ended December 31, 2003 and

        774,000 options for the year ended December 31, 2003.





    14  FINANCIAL INSTRUMENTS



        The nature of the Corporation's operations and issuance of long-term

        debt exposes the Corporation to fluctuations in commodity prices,

        foreign currency exchange rates, interest rates and credit risk. The

        Corporation recognizes these risks and manages operations in a manner

        such that exposure to these risks is minimized to the extent

        practical.



        The Corporation's financial instruments include cash, accounts

        receivable, all current liabilities and long-term debt. The fair

        value of cash, accounts receivable and current liabilities

        approximates their carrying amounts due to the short-term maturity of

        these instruments. The fair value of Kazgermunai debt and the term

        loans approximates their carrying value as they bear interest at

        market rates. The fair value of the 9.625% Notes is $139.5 million

        versus the carrying value of $125.0 million as at December 31, 2004

        as determined through reference to the market price.



        The Corporation has entered into a commodity-hedging program where it

        is utilizing derivative instruments to manage the Corporation's

        exposure to fluctuations in the price of crude oil. The Corporation

        has entered into the following contracts with major financial

        institutions.



        Contract

         Amount

        (bbls per   Contract         Contract       Price Ceiling or   Price

         month)      Period            Type         Contracted Price   Floor



        362,000    January 2004 to

                    March 2004       Dated Brent         29.80-29.82       -

         75,000    January 2004 to

                    December 2004    Zero cost collar          28.00   17.00

         75,000    January 2004 to

                    December 2004    Zero cost collar          29.00   17.00

         75,000    January 2004 to

                    December 2004    Zero cost collar          29.25   17.00

         37,500    January 2004 to

                    December 2004    Zero cost collar          29.60   17.00

        110,000    January 2004 to

                    December 2004    Zero cost collar          30.20   18.00

        120,000    January 2005 to

                    March 2005       IPE Future          26.30-26.52       -

         40,000    April 2005 to

                    June 2005        IPE Future                25.92       -

        458,333    January 2005 to

                    December 2005    IPE Future          25.65-25.90       -





        During the three months ended December 31, 2004, the Corporation has

        foregone revenue of $16.6 million through these contracts

        ($42.1 million during the year ended December 31, 2004).



        The unrealized loss under these hedges as at December 31, 2004 is

        $60.9 million. This amount is deferred and recognized in the

        consolidated statement of income when the related contract is

        settled. The fair value of these hedges was determined based on

        forward prices as at December 31, 2004.





    15  CASH FLOW INFORMATION



        Interest and income taxes paid:



                                   Three Months Ended         Years Ended

                                      December 31,            December 31,

                                    2004        2003        2004        2003



        Interest paid              4,310       3,005      22,111      33,988

                              ----------- ----------- ----------- -----------



        Income taxes paid        146,382      68,621     322,907     173,275

                              ----------- ----------- ----------- -----------





    16  COMMITMENTS AND CONTINGENCIES



        Agency for Regulation of Natural Monopolies and Protection of

        Competition ("ARNM")



        PKOP



        The ARNM alleged that PKOP charged prices for refined oil products

        that in total were $6.3 million in excess of ARNM authorized maximum

        prices. PKOP initiated legal proceedings to annul the ARNM claim and

        the court of first instance reduced the ARNM claim to approximately

        $1.1 million. PKOP and the ARNM appealed this decision to the Supreme

        Court. The Supreme Court recognized approximately $3.6 million of the

        ARNM's original assessment. This amount has been paid and recorded in

        the financial statements. The Corporation has no plans to appeal.



        PKOP received an additional assessment from ARNM in the amount of

        $8.8 million for allegedly charging prices for refined products in

        excess of ARNM authorized maximum prices. PKOP appealed this

        assessment. The ARNM revoked approximately $5.2 million of the

        assessment and the court of the first instance recognized

        approximately $1.4 million of the remaining $3.6 million. PKOP

        appealed this decision and was unsuccessful. $1.4 million has been

        recorded in the financial statements as a final settlement.



        PKOP's position remains that the ARNM does not have the right to

        establish prices for the refinery, and the Corporation, as the party

        in interest under the Privatization Agreement for the Shymkent

        Refinery, has notified the Government of Kazakhstan that it is in

        breach of provisions of the Privatization Agreement. The Corporation

        has the right to proceed to international arbitration under the terms

        of the Privatization Agreement.



        Group companies



        The ARNM claimed $34.1 million ($31.0 million at December 31, 2003)

        from a group company for allegedly violating Kazakhstan's competition

        law. The group company initiated legal proceedings and the court of

        first instance dismissed the ARNM claim. The ARNM appealed this

        decision; the appellate court upheld the decision of the lower court.

        The ARNM has filed a motion to re-open the court case on the basis of

        new information.



        The ARNM claimed approximately $96.4 million ($91.4 million at

        December 31, 2003) from group companies for allegedly violating

        Kazakhstan's competition law. The group companies initiated legal

        action, and at the Astana City Court were unsuccessful in their

        challenge of allegations by the ARNM that these companies had

        violated Kazakhstan competition laws. The initial trial court

        judgment upheld the ARNM determination that these group companies had

        received unjustified revenues totaling approximately $96.4 million.



        The group companies appealed this judgment to the Supreme Court. The

        initial Supreme Court hearing on the matter was held in the second

        quarter of 2004 and the Court suspended the case and instructed the

        parties to seek an agreed settlement. During the period from April to

        May 13, 2004 the parties did engage in discussions aimed at a

        settlement, but were unable to resolve the matter through

        negotiations.



        On May 13, 2004, after a hearing on the merits, the Supreme Court

        overturned the lower court decision which was in favour of the ARNM

        and sent the case back to the Astana City Court for a new trial.

        During the third quarter of 2004, the General Prosecutor's office

        filed a protest regarding the May 13 decision of the Supreme Court

        with the Supreme Court Supervisory Panel. On August 25, 2004, the

        Supervisory Panel issued an opinion upholding the May 13, 2004

        decision and returned the case to the Astana City Court. In September

        2004, the Astana City Court issued a ruling suspending further

        consideration of the merits of the case pending the completion of

        parallel investigations being conducted by the "Agency of the

        Republic of Kazakhstan for Fight Against Economic and Corruption

        Criminality". This suspension was removed in late 2004 and the case

        is currently being reviewed by economic and financial experts under

        order of the Court.



        It is currently expected that the economic and financial expertise


        will be concluded during the spring of 2005 and that the case will,

        at that point, be subject to further review and decision by the

        Astana City Court. No provision has been made in the consolidated

        financial statements for these assessments.



        It remains the Corporation's view that the allegations leveled

        against the group companies are without justification. A highly

        competitive market exists for oil products within Kazakhstan and the

        current level of prices reflects current world crude oil prices.

        Also, the prices charged by the group companies are competitive with

        Russian imports and with those charged by distributors of the other

        two refineries in Kazakhstan.



        The Corporation is considering its recourse rights under the terms of

        the Shymkent refinery Privatization Agreement, which clearly

        stipulates the right to sell any and all its products in Kazakhstan

        and abroad at free market prices.



        The Corporation will continue to seek a dialogue with the appropriate

        authorities to address the concerns related to the pricing of refined

        products and possible measures to be taken to further promote

        transparency and effective monitoring of the dynamics of competition,

        consistent with market economy principles.



        Tax matters



        The local and national tax environment in the Republic of Kazakhstan

        is subject to change and inconsistent application, interpretation and

        enforcement. Non-compliance with Kazakhstan laws and regulations, as

        interpreted by the Kazakh authorities, can lead to the imposition of

        fines, penalties and interest.



        In response to the Corporation's submission, the Minister of Finance

        initiated the creation of a high-level Working Group between its

        officials and the Corporation's representatives to address and seek

        resolution of all outstanding tax issues through dialogue and

        negotiations. On January 22, 2004, the Working Group signed a

        memorandum that sets out the agreed resolution of several important

        tax issues which were pending. Certain actions, such as the approval

        of the amendments to hydrocarbon contracts and issuance of

        instruction letter, were required to fully implement the terms of the

        memorandum. The hydrocarbon contract amendments were approved on

        July 21, 2004, but the instruction letter has not been issued. The

        terms of this memorandum are reflected in the following discussion of

        the Corporation's tax matters.



        Tax assessments 1998 and 1999



        PKKR received tax assessments for 1998 and 1999. The assessments were

        for a total of approximately $10.5 million including taxes, fines,

        interest and penalties. PKKR was successful in challenging the

        assessments at the first level of the court system and was

        unsuccessful on the majority of the issues at the Supreme Court

        level. Specifically, PKKR was unsuccessful in obtaining agreement of

        the Supervisory Panel of the Supreme Court to hear its appeal on the

        assessed taxes. Accordingly, the Corporation provided for

        $2.9 million of the $10.5 million total assessment in the

        consolidated financial statements for the year ended December 31,

        2002.



        PKKR has been disputing the remaining $7.6 million (currently

        $8.0 million due to strengthening of the tenge), which relates to

        fines and penalties assessed, because PKKR believes there was an

        incorrect application of the provisions of tax legislation. However,

        PKKR paid this amount to stop the further accumulation of fines and

        penalties and recorded this payment as an account receivable pending

        resolution of the issue. The Working Group agreed with PKKR's

        position and determined that there was an incorrect application of

        the provisions of the tax legislation. This matter was simultaneously

        appealed to the Supervisory Panel of the Supreme Court ("Supervisory

        Panel") due to time limitations. The Supervisory Panel remanded the

        case back to the lower court for a retrial. The lower court rejected

        the Supervisory Panel's instruction, a retrial was not held, and the

        lower court let the original decision stand. The lower court's

        refusal to comply with the Supervisory Panel's instruction was

        appealed to the Supervisory Panel. The Supervisory Panel refused to

        hear the appeal.



        The Ministry of Finance has requested that the Working Group

        memorandum be revised to reflect the Court's decision. The

        Corporation does not agree and intends to pursue this matter with the

        Ministry of Finance. The Corporation believes, and the Ministry of

        Finance has previously agreed, that there was an incorrect

        application of the provisions of the tax legislation. Due to the

        uncertainty of the outcome, the Corporation has recorded, as an

        expense, the remaining amount of approximately $8.0 million in the

        consolidated financial statements for the year ended December 31,

        2004.



        Tax assessments 2000 and 2001




        PKKR also received assessments for 2000 and 2001. Challenges to the

        assessments were divided into two court cases. The first case was for

        amounts totaling approximately $13.0 million and at the first level

        of the court system PKKR was successful on $6.8 million of the

        $13.0 million and was unsuccessful on the remainder. The major issue

        on which PKKR was unsuccessful was the assessment of royalties on

        flared associated gas. PKKR believes the claim for royalties on

        flared associated gas, which has no commercial value, contravenes the

        provisions of its hydrocarbon contracts. PKKR appealed to the Supreme

        Court and the Supervisory Panel of the Supreme Court and was

        unsuccessful. Royalties on flared gas were recorded in the

        consolidated financial statements as follows: $2.2 million in 2002,

        $0.2 million in 2003 and $2.1 million in 2004. As a result of the

        lost cases, the Corporation recorded additional $2.9 million related

        to royalties on gas for 2002 and 2003 in its consolidated financial

        statements for the year ended December 31, 2004. Additionally, the

        Corporation has provided for $1.6 million relating to interest

        charges on this tax assessment. A further provision of $1.7 million

        was made regarding other issues, which was recorded in 2003.



        The second case was for $13.5 million, with $6.9 million related to

        transfer pricing sent back by the court for re-negotiation. The final

        assessment resulting from the court hearing held in September 2003

        totalled $783,000 including the transfer pricing issue. The Ministry

        of Finance appealed to the Supreme Court, approximately $2.1 million

        of the assessment relating to the methodology used to revalue tax

        pools for currency fluctuations ($1.7 million) and the accelerated

        write-off of certain assets ($0.4 million). PKKR was unsuccessful at

        the Supreme Court. The Corporation had provided for these amounts in

        its consolidated financial statements for the year ended December 31,

        2003.



        Excess profit tax



        The Corporation, through its subsidiary PKKR and joint venture

        Turgai, is subject to excess profit tax under the terms of the

        Hydrocarbon Exploration and Production contracts they have for oil

        and gas production. The contracts are specific to each field.



        As at December 31, 2004 the Corporation through Turgai provided for

        excess profit tax of $35.0 million for 2004. PetroKazakhstan did not

        incur excess profit tax in any of its other fields in 2004. It may,

        however be subject to excess profit tax for the year ended

        December 31, 2005 and subsequent years in certain of its fields.



        Turgai tax assessments



        During 2004, Turgai was subject to a tax audit for the years

        2002-2003 and received a tax assessment for approximately

        $148.0 million including penalties and interest (the Corporation's

        50% share is $74.0 million). The major issue was an assessment for

        excess profit taxes of approximately $100.0 million including fines

        (the Corporation's 50% share is $50.0 million). The Ministry of

        Finance had adopted the position that expenditures relating to

        construction in progress are not allowed as a cash outflow when

        computing the internal rate of return. The Corporation believes this

        position is contrary to the concept of an internal rate of return

        calculation and counter to the legislation of the Republic of

        Kazakhstan. The Corporation, fellow shareholder Lukoil and Turgai

        entered into discussions regarding this assessment with the Ministry

        of Finance. As a result, the assessment was re-issued for

        $27.0 million (the Corporation's 50% share is $13.5 million) and

        discussions will be held to determine the correct method of

        calculating excess profit tax and to clarify the interpretation of

        current legislation. A further revised assessment may be issued

        depending on the outcome of the discussions. The Corporation will

        continue to work with government authorities, Turgai, and Lukoil to

        resolve the dispute. No provision has been made in the financial

        statements for this assessment.



        Commitments



        The Corporation has entered into a number of operating leases for

        rail cars, certain oil field equipment and office space. As at

        December 31, 2004 such commitments totalled $104.0 million. The

        obligations for each of the next five years and in total are as

        follows:



        $ millions           2005  2006  2007  2008  2009  Thereafter  Total



        Operating leases     43.0  38.8  21.0   1.0   0.2      -       104.0

        Work commitments      3.5   2.1   0.5     -     -      -         6.1

        Total                46.5  40.9  21.5   1.0   0.2      -       110.1





    17  SUBSEQUENT EVENTS



        In February 2005 the Corporation, through one of its operating

        subsidiaries in Kazakhstan received a court claim filed by Turgai for

        $17.0 million in damages. This claim relates to the temporary

        production curtailment of Turgai in late December 2004. The

        Corporation believes the claim is without merit and, accordingly, no

        provision has been made in the financial statements.



        In February 2005 the Corporation, through its joint venture

        Kazgermunai, received a court claim filed by the Kyzylorda Akimat for

        failure to fulfill infrastructure obligations. The claim is for

        approximately $102.0 million (our 50% share is $51.0 million),

        $28.1 million relating to infrastructure obligations with the

        remainder being interest charges.



        The Corporation believes the claim is without merit as a substantial

        portion of the obligation has been met and the agreement does not

        impose deadlines. Accordingly, no provision has been made for this

        claim in the financial statements.







    For further information: Clayton J. Clift, Chief Financial Officer,

+7 (3272) 58-18-48; Ihor P. Wasylkiw, Vice President Investor Relations,

(403) 221-8658, (403) 383-2234 (cell); Jeffrey D. Auld, Vice President,

Treasurer, +44 (1753) 410-020, +44 79-00-891-538 (cell)

    (PKZ. PKZ)











END

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