Genel Energy has announced that RPS Energy Consultants, as part of its work on the updated competent person’s reports (‘CPRs’) for the Bina Bawi and Miran West fields (Genel 100% and operator), has finalised its evaluation of the contingent gas resources at both assets:

  • The RPS evaluation confirms a significant upgrade to the combined 2C gross (100% working interest (‘WI’)) raw gas resource estimate for the Bina Bawi and Miran West fields:
    • The RPS assessment of the combined gross 2C raw gas resource for both fields now stands at 14,792 Bscf, a figure which excludes associated condensate volumes attributable to the upstream partners
    • The RPS assessment of the combined gross 2C condensate volumes potentially recovered from raw gas production at both fields totals 137 MMstb
    • As at end-2016 Genel’s reported 2C resources included net raw gas resources from Miran and Bina Bawi totalling 1,421 MMboe1, which related to Genel’s respective 80% and 75% interests in the Bina Bawi and Miran PSCs at that time
    • In February 2017 the Company increased its interest in both PSCs to 100%, resulting in a combined pro-forma end-2016 Genel 2C resource of 1,815 MMboe (10,530 Bscf2)
    • The 2018 RPS estimates of combined 2C resources from both fields have increased c.40% compared to the pro-forma end-2016 2C resource
  • The revised Bina Bawi 1C gross raw gas resource estimate is more than 50% higher than the gas volume agreed to for the field under the Gas Lifting Agreement (‘GLA’). The revised Miran West 1C gross raw gas resource estimate is in line with the volume agreed to for the field in the GLA

A comparison of the revised 2C gross contingent resource numbers for both fields and the Company’s end-2016 number, which was based on the 2013 RPS reports plus the addition of the Company’s assessment of non-hydrocarbon gases, is summarised in the following table. Further detail is provided in an appendix to this announcement.

Gross (100% WI) 2C Contingent Resources Raw gas (Bscf)

Previous

Revised

change

Bina Bawi

6,472

8,230

27%

Miran West

3,688

6,562

78%

RPS’s updated analysis of the raw gas resources on both fields has benefitted from updated reservoir simulation modelling combined with analogue analysis jointly created and developed by the Company and Baker Hughes since the original reports were produced. As a consequence, the recovery factors for the gas reservoirs in both fields have, in most resource categories, been increased to reflect a better understanding of potential reservoir performance. Further appraisal activity, which is currently under consideration, could help refine reservoir performance and these recovery factor estimates.

Volumes agreed under the GLAs total 2,800 Bscf from Bina Bawi, and 2,000 Bscf from Miran West over a 12 year period, consisting of a two year build-up period and 10 year plateau period. The revised 2C and 3C raw gas resources for both fields significantly exceed these volumes. Following the completion of the upstream field development plans (‘FDPs’), sufficient progress on the midstream facilities and sales gas export route, and subsequent final investment decision, the Company expects that a percentage of the contingent raw gas resources will be converted to reserves, dependent on the volumes set to be produced under the FDPs.

 

The upstream FDPs for the gas and oil fields in the Bina Bawi and Miran PSCs, which are being carried out by Baker Hughes, are expected to be completed shortly.

RPS is continuing its evaluation of the oil bearing reservoirs at both fields, the results of which will be announced once finalised.

Appendix

Summary of Contingent Resources – Development unclarified (Gross 100% working interest basis) attributable to the Bina Bawi and Miran West fields as of 31 December 2017

Gross (100% WI) Contingent Resources

Gross (100% WI) Contingent Resources

BINA BAWI

Raw gas (Bscf)

Condensate (MMstb)

MIRAN WEST

Raw gas (Bscf)

Condensate (MMstb)

1C

4,651

34

1C

1,967

18

2C

8,230

62

2C

6,562

75

3C

13,036

99

3C

18,429

233

1 Genel figure based on the 2013 RPS reports plus the addition of the Company’s assessment of non-hydrocarbon gases

2 Based on a conversion factor of 5.8 MMscf/bbl

(Source: Genel Energy)

Genel Energy has announced that RPS Energy Consultants, as part of its work on the updated competent person’s reports (‘CPRs’) for the Bina Bawi and Miran West fields (Genel 100% and operator), has finalised its evaluation of the contingent gas resources at both assets:

  • The RPS evaluation confirms a significant upgrade to the combined 2C gross (100% working interest (‘WI’)) raw gas resource estimate for the Bina Bawi and Miran West fields:
    • The RPS assessment of the combined gross 2C raw gas resource for both fields now stands at 14,792 Bscf, a figure which excludes associated condensate volumes attributable to the upstream partners
    • The RPS assessment of the combined gross 2C condensate volumes potentially recovered from raw gas production at both fields totals 137 MMstb
    • As at end-2016 Genel’s reported 2C resources included net raw gas resources from Miran and Bina Bawi totalling 1,421 MMboe1, which related to Genel’s respective 80% and 75% interests in the Bina Bawi and Miran PSCs at that time
    • In February 2017 the Company increased its interest in both PSCs to 100%, resulting in a combined pro-forma end-2016 Genel 2C resource of 1,815 MMboe (10,530 Bscf2)
    • The 2018 RPS estimates of combined 2C resources from both fields have increased c.40% compared to the pro-forma end-2016 2C resource
  • The revised Bina Bawi 1C gross raw gas resource estimate is more than 50% higher than the gas volume agreed to for the field under the Gas Lifting Agreement (‘GLA’). The revised Miran West 1C gross raw gas resource estimate is in line with the volume agreed to for the field in the GLA

A comparison of the revised 2C gross contingent resource numbers for both fields and the Company’s end-2016 number, which was based on the 2013 RPS reports plus the addition of the Company’s assessment of non-hydrocarbon gases, is summarised in the following table. Further detail is provided in an appendix to this announcement.

Gross (100% WI) 2C Contingent Resources Raw gas (Bscf)

Previous

Revised

change

Bina Bawi

6,472

8,230

27%

Miran West

3,688

6,562

78%

RPS’s updated analysis of the raw gas resources on both fields has benefitted from updated reservoir simulation modelling combined with analogue analysis jointly created and developed by the Company and Baker Hughes since the original reports were produced. As a consequence, the recovery factors for the gas reservoirs in both fields have, in most resource categories, been increased to reflect a better understanding of potential reservoir performance. Further appraisal activity, which is currently under consideration, could help refine reservoir performance and these recovery factor estimates.

Volumes agreed under the GLAs total 2,800 Bscf from Bina Bawi, and 2,000 Bscf from Miran West over a 12 year period, consisting of a two year build-up period and 10 year plateau period. The revised 2C and 3C raw gas resources for both fields significantly exceed these volumes. Following the completion of the upstream field development plans (‘FDPs’), sufficient progress on the midstream facilities and sales gas export route, and subsequent final investment decision, the Company expects that a percentage of the contingent raw gas resources will be converted to reserves, dependent on the volumes set to be produced under the FDPs.

 

The upstream FDPs for the gas and oil fields in the Bina Bawi and Miran PSCs, which are being carried out by Baker Hughes, are expected to be completed shortly.

RPS is continuing its evaluation of the oil bearing reservoirs at both fields, the results of which will be announced once finalised.

Appendix

Summary of Contingent Resources – Development unclarified (Gross 100% working interest basis) attributable to the Bina Bawi and Miran West fields as of 31 December 2017

Gross (100% WI) Contingent Resources

Gross (100% WI) Contingent Resources

BINA BAWI

Raw gas (Bscf)

Condensate (MMstb)

MIRAN WEST

Raw gas (Bscf)

Condensate (MMstb)

1C

4,651

34

1C

1,967

18

2C

8,230

62

2C

6,562

75

3C

13,036

99

3C

18,429

233

1 Genel figure based on the 2013 RPS reports plus the addition of the Company’s assessment of non-hydrocarbon gases

2 Based on a conversion factor of 5.8 MMscf/bbl

(Source: Genel Energy)

By Ahmed Tabaqchali. Originally published by Iraq in Context; re-published by Iraq Business News with permission. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Between February 2017 and mid-October, Rosneft signed a number of deals with the Kurdish Regional Government (KRG) that established for it, and by extension for Russia, a major position as both an investor and stakeholder in the Kurdish Region of Iraq (KRI)’s hydrocarbon resources and infrastructure.

The move was interpreted, especially by the KRG, as implicit support for the KRG in its bid for independence, especially in light of the latest deal signed following the reassertion of Iraq’s federal control over Kirkuk and other disputed territories. While there is an element of truth to this thinking, the deals are part of a wider geopolitical positioning for Russia as a major gas supplier to Europe and as an emerging power in the Middle East.

The deals provide Rosneft, and by extension Russia, effective control of the KRG’s Oil & Gas infrastructure, and a controlling stake in the region’s finances in more ways than one.

Within the oil space it has established this in three ways. The first was by providing USD 1.5bn in financing via forward oil sales payable over 3-5 years. This would be payable in kind from the KRG’s exports, until recently at about 550,000-600,000 barrels per day (bbl/d). However, the loss of the Kirkuk fields takes away about 430,000 bbl/d of production or eventually about half of the KRG’s exports.

This leaves the KRG with a tiny revenue stream after payments to International Oil Companies (IOC)’s, from which to make payments on forward oil sales of up USD 3.5 bn including Rosneft’s USD 1.5bn. A complicating factor is the repayment of other KRG debt, estimated at over USD 21bn by end of 2017, which will have to be factored into debt payment sustainability.

Genel Energy has announced that it has finalised documentation of previously agreed terms of Amended and Restated Production Sharing Contracts (‘PSC’s) and Gas Lifting Agreements (‘GLA’s) for both the Miran and Bina Bawi gas fields.

The Amended and Restated PSCs and GLAs for Miran and Bina Bawi incorporate the commercial terms as announced in the term sheets signed in 2015 by Genel and the Kurdistan Regional Government (‘KRG’) and reiterated in the Appendix below.

With the PSC and GLA terms formally confirmed, Genel will now be able to progress the project. The Company remains committed to developing these large scale, low-cost, onshore gas fields, which will form the cornerstone of gas exports to Turkey under the 2013 KRG-Turkey Gas Sales Agreement.

The GLAs contain conditions precedent, which, inter alia, include the execution of final agreements on the midstream gas processing facilities and pipeline transportation, the execution of the financing documents and the completion of updated competent person’s reports for Miran and Bina Bawi.

Both Genel and the KRG have the option to terminate the GLAs by February 2018. If the conditions precedent are not satisfied within 12 months, the KRG has a right to terminate the GLAs. In the event of termination, and a subsequent failure to conclude new gas lifting agreements within one year period, the KRG can also terminate the Miran and Bina Bawi PSCs.

During the three year period following such a termination, Genel would have a right of first refusal to participate in the development of the Miran and Bina Bawi gas fields with a 49% working interest on the same terms offered to any third party.

Murat Özgül, Chief Executive of Genel, said:

“We are very pleased to have signed definitive agreements for our gas project and are now focused on the next step of concluding negotiations with potential partners, and moving the gas project towards the FID. We are determined that 2017 will be a watershed year as we seek to create a gas business that will be transformational for both Genel and the KRG.”

(Source: Genel Energy)

By John Lee.

Genel Energy has issued the following trading and operations update in advance of the Company’s full-year 2016 results, which are scheduled for release on 30 March 2017.

In the statement (see below), the company said it expects a significant drop in production in 2017. Share were trading down 11 percent on Tuesday.

The information shown below has not been audited and may be subject to further review:

Murat Özgül, Chief Executive of Genel, said:

“2016 was a major step forward for the monetisation of oil exports from the Kurdistan Region of Iraq. We received $207 million in cash proceeds for oil sales and receivable recovery. These payments in turn allowed for work programmes to resume at Taq Taq and Tawke. The KRG has confirmed that payments will continue, allowing us to plan with confidence for 2017.”

 2016 PRODUCTION AND CURRENT PERFORMANCE

  • 2016 net production averaged 53,300 bopd. Production and sales by field for 2016 were as follows:

  • During 2016, Taq Taq natural field declines were partially offset by the three development sidetracks drilled and completed during the year. Taq Taq has averaged 35,300 bopd in January 2017 to date. A total of 18 wells are currently producing, with five of these wells accounting for c.80% of field production. Taq Taq field water production is currently 12,500 bopd, representing a water cut of 27%, significantly less than total water handling capacity of 55,000 bopd
  • Good progress is being made on the updated Field Development Plan and Competent Person’s Report for Taq Taq. Both are on track for completion in Q1 2017
  • At Tawke, the 2016 development programme helped offset natural well decline at the field. Tawke has averaged 113,900 bopd in January 2017 to date
  • Net production to Genel from Taq Taq and Tawke has averaged 44,000 bopd in January 2017 to date

FINANCIAL PERFORMANCE

  • $207 million cash proceeds (pre capacity building payments) were received in 2016, of which:
    • $153 million against 2016 sales
    • $24 million relates to the January 2016 payment for December 2015 sales
    • $30 million relates to the recovery of historical receivables
  • A total of $210 million was invoiced for 2016 sales, with almost all of the difference between this figure and the $153 million above representing amounts owed by the Kurdistan Regional Government (‘KRG’) for Q4 2016
  • In January 2017 the Tawke partners received a payment of $39 million related to October 2016 exports. Genel’s share of this amount is not included in end-2016 unrestricted cash balances
  • Capital expenditure for 2016 totalled $61 million, below the $90-110 million guidance range, as previously communicated
  • Similar to the process which occurred at the start of 2016, the Company is currently in discussions with the KRG regarding the pricing mechanism for crude sales from Taq Taq and Tawke, as well as the proxy formula used by the KRG to calculate payments for current sales from Taq Taq and Tawke
  • The carrying value of the receivable for unpaid production will be tested for impairment as part of the end-2016 results process, taking into account the latest views on historical netbacks, timing of recovery, future oil prices, and the production outlook at Taq Taq and Tawke
  • Unrestricted cash balances at 31 December 2016 stood at $408 million ($405 million at 30 September 2016)
  • Net debt at 31 December 2016 stood at $240 million ($241 million at 30 September 2016)

2017 ACTIVITY

Kurdistan Region of Iraq

  • KRI oil production assets
    • At Taq Taq (Genel 44% working interest, joint operator), the firm 2017 work programme consists of a workover of the TT-07z well and a new appraisal well, TT-29, in the north of the field. Both activities will be undertaken by a 1,500 bhp rig which is expected to be on location in February 2017. Additional activity, including further Cretaceous sidetracks, Cretaceous and Pilaspi development wells and installation of Electric Submersible Pumps in existing wells is contingent on regular and predictable export payments from the KRG for Taq Taq sales as well as partner approval. The Company expects production from the Taq Taq field to average 24-31,000 bopd in 2017
    • At Tawke (Genel 25% working interest), the operator DNO ASA expects production from the field to remain stable at the current rate of 115,000 bopd in 2017, based on expected investment levels
  • KRI gas assets (Miran 75% operated interest and Bina Bawi 80% operated interest)
    • The pre-FEED and upstream Gas Development Plan studies for the Miran and Bina Bawi gas fields are expected to complete shortly
    • Firm 2017 activity is expected to be largely technical and commercial in nature, with a strategy to enhance the value of the KRI gas project. In the event of a successful farm-out, contingent activity could take the form of the environmental and social impact assessment and FEED for the gas treatment and processing facilities, as well as extended well tests and further 3D seismic on the Bina Bawi licence
    • Discussions are ongoing with the KRG relating to the finalisation of the PSC amendments and gas lifting agreement. Efforts are also continuing in order to bring in partners to the KRI gas assets through a farm-down of the Miran and Bina Bawi licences
    • At end-2015, the carrying value of the Miran and Bina Bawi fields in the Company’s accounts was $1,427 million. The carrying value of the Miran and Bina Bawi fields will be tested for impairment as part of the end-2016 results process. Taking into account the latest views on discount rates and financing options, amongst other factors, management expects to record a material impairment of the carrying value in its 2016 accounts
  • KRI exploration and appraisal
    • As announced on 9 January 2017, the Peshkabir-2 well on the Tawke PSC flowed 3,800 bopd of 28° API oil from Cretaceous reservoirs in the southern flank of the Peshkabir field. The well, currently drilling ahead of schedule and under budget, is expected to reach total depth of 3,500 metres and will be completed, following evaluation of the Jurassic, by early February. The Tawke partners are considering a number of options to step up the appraisal of the new discovery, as well as the potential for early Peshkabir production via the existing Tawke facilities
    • In January 2017, the Company signed a Sales and Purchase Agreement to transfer its 40% interest in the Chia Surkh licence to its partner, Petoil, subject to approval by the Ministry of Natural Resources. Petoil will pay Genel an initial consideration of $2 million, and an additional $25 million in staged payments contingent on future crude oil production from the Chia Surkh licence. Genel will recognise an impairment of the Chia Surkh carrying value of $198 million in its 2016 accounts
    • The Company has formally relinquished its 40% interest in the Dohuk licence. The relinquishment of the 40% operated interest in the Ber Bahr licence is awaiting final approval from the KRG

Africa

  • The Company is currently in discussions with the Moroccan government over the nature, scope, and timing of the activity related to the maximum future exploration commitment of c.$30 million
  • Onshore Somaliland, the acquisition of 2D seismic data on the Odewayne (Genel 50%, operator) and SL-10B/13 (Genel 75%, operator) blocks is due to commence by March 2017. The data will be acquired as part of a Somaliland government owned speculative 2D seismic acquisition project, with the Company purchasing the associated data from the government

2017 OUTLOOK AND GUIDANCE

  • Company production guidance for 2017 is set at 35-43,000 bopd. This assumes the delivery of the Taq Taq work programme as stated above and a prudent level of contingency with respect to the Tawke operator’s current 2017 production expectation. The work programmes at Taq Taq and Tawke are subject to change depending on the results of development drilling and payments from the KRG for current sales and receivable recovery
  • Capital expenditure, net to Genel, at the Taq Taq and Tawke fields in 2017 is forecast at $50-75 million. Expenditure on the KRI gas business is estimated at $10 million. Capex on the 2017 Africa exploration programme is estimated at $40 million, which includes the c.$30 million Morocco exploration expense mentioned above
  • 2017 operating expenditure, net to Genel, at the Taq Taq and Tawke fields is estimated at $30-35 million

(Source: Genel Energy)

Genel Energy plc issues the following trading and operations update in respect of Q3 2016. The information contained herein has not been audited and may be subject to further review.

Murat Özgül (pictured), Chief Executive of Genel, said:

Genel has received $163 million in cash proceeds during 2016, underpinning the drilling of successful production wells across Taq Taq and Tawke.

“The KRG has made significant progress in restructuring the region’s economy. With export volumes at Ceyhan having increased following a new deal with the federal government, and the recent recovery in the oil price, this bodes well for the region’s cash flows. Despite the recent delay in payments, we remain optimistic that they will continue, facilitating further investment across our KRI assets.

Q3 2016 OPERATING PERFORMANCE

  • Q3 2016 net production averaged 53,100 bopd, an 8% decrease on the previous quarter
  • Production and sales by field during Q3 2016 were as follows:

screenhunter_4570-oct-26-10-09

  • Production by field for the nine months ending 30 September 2016 was as follows:

screenhunter_4571-oct-26-10-10

  • At Taq Taq (Genel 44% working interest) two side-track wells, TT-27x and TT-07z, were successfully  drilled and completed during the period, partially offsetting the decline from existing wells. A third  side-track, TT-16y, is in progress. Taq Taq production in October to date has averaged 50,000 bopd
  • Through development drilling and reservoir management, the focus at Taq Taq remains mitigating  field declines and reducing the concentration of production from the crest of the field
  • The Company is currently in the process of preparing a revised Field Development Plan (‘FDP’) for Taq  Taq, which is expected to be completed in early 2017. The revised FDP will establish the next phase of  the development plan, notably with respect to new development well locations and the overall  reservoir management strategy, while also identifying necessary resources and technologies required  to implement future activity.  In advance of the FDP completion, a tender has been initiated to  procure a more powerful drilling rig for the start of 2017, which would provide greater optionality  around development drilling at Taq Taq
  • Tawke (Genel 25% working interest) production in Q3 2016 was in line with the first half of the year.  Development activity recommenced during the period, with the Tawke-32 (Jeribe water injector),  Tawke-33, Tawke-34 (Jeribe producers), and Tawke-31 (Cretaceous producer) wells all being drilled.  The Tawke-37 (Jeribe producer) was drilled post period end, with all wells in the current campaign  adding to field output capacity. Tawke production in October to date has averaged 105,000 bopd, with  current production levels at 120,000 bopd
  • The Peshkabir-2 appraisal well on the Tawke licence commenced drilling in early October and is   expected to take around three months to complete
  • On the Chia Surkh PSC, work continues to establish a low cost development solution for the   discovered Tertiary oil resources, which are currently estimated at 3-10 mmbbls. An FDP submission is   targeted by the end of 2016. Consequently, the Company expects to write down the Chia Surkh   carrying value to a nominal amount. At end 2015, the Chia Surkh carrying value was $198 million

Genel Energy has set out details of the payments made to governments for the year ended 31 December 2015, as required under the Disclosure and Transparency Rules of the UK Financial Conduct Authority.

The DTRs require companies in the UK and operating in the extractive sector to publicly disclose payments made to governments in the countries where they undertake exploration, prospection, development and extraction of oil and natural gas deposits or other materials.

Basis for preparation

Total payments below £86,000 made to a government are excluded from this report as permitted under the Regulations.

All of the payments made in relation to licences in the Kurdistan Region of Iraq (‘KRI’) have been made to the Ministry of Natural Resources of the Kurdistan Regional Government (‘KRG’). 

Production entitlements

Production entitlements are the host government’s share of production during the reporting period from projects operated by Genel. Production entitlements from projects that are not operated by Genel are not covered by this report. The figures reported have been produced on an entitlement basis rather than on a liftings basis. Production entitlements are paid in-kind and the monetary value disclosed is derived from management’s calculation of revenue from the field.

Royalties

Royalties represent royalties paid in-kind to governments during the year for the extraction of oil. The terms of the Royalties are described within our Production Sharing Contracts and can vary from project to project. Royalties have been calculated on the same barrels of oil equivalent basis as production entitlements.                              

Licence fees

These are fees and other sums paid as consideration for acquiring a licence for gaining access to an area where activities are performed.

Infrastructure

These are payments that relate to the construction of infrastructure not substantially dedicated for the use of extractive activities. Payments that are social in nature are excluded.

Payments to Governments – 2015

ScreenHunter_3804 Jul. 01 14.36

(1) Under the lifting arrangements implemented by the KRG, the KRG takes title to crude at the wellhead and then transports it to Ceyhan in Turkey by pipeline.  The crude is then sold by the KRG into the international market.  All proceeds of sale are received by or on behalf of the KRG, out of which the KRG then makes payment for cost and profit oil in accordance with the PSC to Genel, in exchange for the crude delivered to the KRG. Under these arrangements, payments are in fact made by or on behalf of the KRG to Genel, rather than by Genel to the KRG. For the purposes of the reporting requirements under the Regulations however, we are required to characterise the value of the KRG’s entitlement under the PSC (for which they receive payment directly from the market) as a payment made to the KRG.

(Source: Genel Energy)

By John Lee.

In its trading update this morning, Genel Energy gave the following plans for its operations in Iraqi Kurdistan:

The majority of planned activity and capital expenditure in the KRI is discretionary, which confers significant flexibility. The Company will leverage this flexibility and match activity to the level of cash proceeds received from export payments and domestic KRI sales

KRI oil production assets

  • At Taq Taq (Genel 44% working interest, joint operator), the proposed 2016 work programme consists of installation of electric submersible pumps (‘ESPs’) in existing wells, sidetracks of existing wells and drilling of new horizontal wells. Final completion and commissioning of the second Central Processing Facility (‘CPF’) is expected in Q1 2016. The proposed 2016 Taq Taq work programme contains both firm and contingent elements
  • At Tawke (Genel 25% working interest), the proposed 2016 work programme includes drilling of new development and water disposal wells and the construction of water handling facilities at the existing CPF as part of contingent activity
  • Actual levels of activity across both assets in 2016 will depend on the regularity and quantum of export payments, as well as the technical results of the work programme
  • Capital expenditure net to Genel from the proposed work programmes across both Taq Taq and Tawke is estimated at $50-90 million

KRI gas business

  • At Miran (75% working interest, operator) and Bina Bawi (80% working interest, operator), 2016 activity will focus on delivering the upstream gas development plan and geological/geophysical studies. Work will also commence on the front end engineering design and financing plans for the midstream gas processing. Capital expenditure for the KRI gas project during 2016 is estimated at c.$25 million (which partly reflects capitalisation of pre-sanction development activity)

KRI exploration and appraisal

  • At Chia Surkh, the sale of a 20% interest in the licence to Petoil has completed after receipt of KRG approval. As a result, Genel now has a 40% working interest in the Chia Surkh PSC. The CS-12 appraisal well is scheduled to be drilled in H1 2016. The drilling will help refine the contingent resource estimate for the Chia Surkh licence, with Genel carried by Petoil for its costs on CS-12
  • Genel and its partner in the Ber Bahr PSC have decided to relinquish the licence in light of prevailing oil prices and an assessment of resource potential. The Company has also decided to exit its interest in the Dohuk PSC

(Source: Genel Energy)

By John Lee.

Genel Energy has announced that it signed a definitive sale and purchase agreement with OMV to acquire its 36% operated stake in the Bina Bawi field. Completion of the acquisition is subject only to government approval, which is expected shortly.

The consideration comprises an upfront payment of $5 million. A contingent payment of $70 million is payable once gas production exceeds agreed threshold volumes from the Miran and Bina Bawi fields. A further contingent payment of $75 million is payable two years after the date of the second payment.

In consideration of the Kurdistan Regional Government (‘KRG’) agreeing to the transfer of OMV’s stake in the Bina Bawi field, on completion of the acquisition Genel will offset US$25 million against monies owed by the KRG to Genel in respect of past expenses incurred on the Miran field.

(Source: Genel Energy)

Shares in Genel Energy were trading down 6 percent on Thursday morning, following the company’s announcement that revenues for the 6 months to 30 June 2015 were slightly below analysts expectations.

The shares are still up about 10 percent since the KRG announcement that it had put payment plans in place.

Highlights

  • Our operations in the Kurdistan Region of Iraq remain safe and secure
  • Strong operational momentum in the KRI resulted in net working interest production for H1 2015 averaging 88,800 bopd, an increase of 41% on H1 2014
  • H1 2015 revenue of $199 million, an increase of 4% on H1 2014
  • c.$50 million of cash proceeds received from domestic KRI sales
  • Capital expenditure in H1 2015 reduced by 70% year-on-year
  • De-risking of the Miran and Bina Bawi development continues, with signed term sheets in place with the Kurdistan Regional Government (“KRG”)
  • Cash balances at 30 June 2015 stood at $474 million, resulting in net debt of $216 million

Outlook

  • On 3 August 2015, the KRG issued a statement committing to pay contractors for oil exports on a sustainable basis from September 2015
  • The Company’s 2015 guidance is reiterated:
    • Production: 90-100,000 bopd
    • Revenue: $350-400 million on a Brent oil price of $50/bbl
    • Capital expenditure: $150-200 million  

Murat Özgül (pictured), Chief Executive of Genel, said:

Genel’s operating performance in the first half of 2015 was strong, with net working interest production up 41% to 88,800 bopd. In recent days the KRG has made a public commitment to pay international oil companies on a sustainable basis from September 2015. These regular and predictable payments will allow Genel to fully capitalise on our strategic opportunities.

“We remain committed to the Kurdistan Region of Iraq and will continue to invest in our existing oil fields while moving our major gas fields forward to development, creating significant value for both Genel and the KRG.”

(Source: Genel Energy, Yahoo!)