Business leaders in Jordan have reportedly welcomed increased access to Iraq’s $88.2-billion reconstruction efforts.
According to a report from Jordan Tmes, a recent agreement to grant Jordanian construction contractors equal status to their Iraqi peers was described as “a God-sent miracle” by engineer and board member of the Jordan Construction Contractors Association (JCCA) Abdel Haleem Bustanji.
“It has only been two days since we signed the agreement, but I already received calls about the necessary papers. Contractors are thrilled to be working again,” he added.
Prime Minister Adil Abd Al-Mahdi received King Abdullah II of Jordan in Baghdad on Monday, to discuss improving relations between the two countries.
Genel Energy has issued the following trading and operations update in advance of the Company’s full-year 2018 results, which are scheduled for release on 20 March 2019. The information contained herein has not been audited and may be subject to further review.
Murat Özgül, Chief Executive of Genel, said:
“2018 was a very positive year for Genel, which saw us generate material free cash flow and further transform the balance sheet. An expected year-on-year increase in production means we are set to continue this performance in 2019, with low-cost assets forecast to generate over $100 million in free cash flow even if the oil price averages $45/bbl.
“As we generate cash we will continue to invest in the business to maximise the value of our existing portfolio. We are also working hard to bring in new assets that are complementary to our cash generation story. We are focused on building a stronger company with sustainable and material cash flow and multiple growth opportunities from which to create significant shareholder value.“
$335 million of cash proceeds were received in 2018 ($263 million in 2017), an increase of 27%, of which $98 million was received in Q4
Free cash flow totalled $164 million in 2018 ($99 million in 2017), an increase of 66%, representing a free cash flow yield of 27% on the year-end share price
Unrestricted cash balances at 31 December 2018 were $334 million ($162 million at 31 December 2017), with net cash at $37 million ($135 million net debt at 31 December 2017)
Capital expenditure for 2018 totalled $95 million, of which $70 million was cost recoverable spend on producing assets
2018 OPERATING PERFORMANCE AND 2019 ACTIVITY OUTLOOK
2018 net production averaged 33,690 bopd, with Q4 averaging 36,920 bopd. Production and sales by asset during 2018 was as follows:
Tawke PSC (Genel 25% working interest)
Tawke PSC production averaged 113,020 bopd in 2018, with production from Peshkabir contributing 27,660 bopd to this figure
Production in Q4 2018 averaged 127,220 bopd, of which Peshkabir contributed 50,130 bopd
The Peshkabir-8 well completed in December 2018, and is currently producing just under 10,000 bopd. Results of the Peshkabir-9 well are expected shortly
While further production wells are set to be drilled in 2019, Peshkabir activity in 2019 will focus on field management facilities and the utilisation of associated gas to enhance oil recovery at the Tawke field
Taq Taq PSC (Genel 44% working interest and joint operator)
Taq Taq field production averaged 12,350 bopd in 2018
Production in Q4 2018 averaged 11,640 bopd
Drilling operations on the TT-32 well have now been completed, and test production is underway. The well is currently flowing at a rate of over 3,000 bopd, and still cleaning up, with further zones to be tested ahead of an expected stabilised production rate of c.2,000 bopd
The rig has now moved to drill the horizontal sidetrack TT-20z well, which will drill the Shiranish in the western flank of the field with an aim to increasing productivity
Three further wells are scheduled to be drilled in 2019, as Genel continues to target the flanks of the field with the aim of delivering a year-on-year production increase
Bina Bawi and Miran (Genel 100% and operator)
Field development plans for both Bina Bawi and Miran oil and gas are under discussion with the KRG, and may entail a phased development approach in order to reduce initial capital expenditure and achieve the earliest date for first gas. An extension to the conditions precedent is expected to be granted shortly
Genel is reviewing the value of the Miran PSC carried in the Company accounts, and will update this as part of the year-end results process
African exploration update
Onshore Somaliland, seismic processing has now completed on the SL-10-B/13 block (Genel 75% working interest, operator) and analysis and interpretation is underway. Initial indications confirm the Company view that the block has hydrocarbon potential. Genel continues to develop a prospect inventory and assess next steps ahead of a farm-out process and potentially spudding a well in 2020. On the Odewayne block further seismic processing is being considered in order to complete the Company’s understanding of the prospectivity of the block
On the Sidi Moussa block offshore Morocco (Genel 75% working interest, operator), the acquisition of a c.3,500 km2 multi-azimuth broadband 3D seismic survey completed in November. PSTM and PSDM processing will continue through 2019. Genel has no additional work commitments relating to the licence. A decision will be made on whether to drill a well, and the appropriate equity level, once processing has progressed sufficiently
Genel expects to generate material free cash flow in 2019
Genel generates positive free cash flow at and above an oil price of $20/bbl
In light of the Company’s balance sheet strength and ongoing material cash generation, management is appraising the most effective model for balanced capital allocation in order to take advantage of growth opportunities, make value accretive additions to the portfolio, and pave the way to returning capital to shareholders at the appropriate time
Combined net production from the Tawke and Taq Taq PSCs during 2019 is expected to be close to Q4 2018 levels
Capital expenditure net to Genel is forecast to be c.$115 million, with the majority being cost-recoverable spend on current producing assets. Capex includes:
Tawke and Taq Taq net to Genel of c.$100 million
Bina Bawi and Miran maintenance capex of c.$10 million, with the potential for this figure to be updated should there be positive developments on Bina Bawi commercial discussions
African exploration cost of under $5 million, largely comprising processing costs relating to Moroccan seismic
Opex: c.$30 million
G&A: c.$20 million
The Company continues to actively pursue growth and appraise opportunities to make value-accretive additions to the portfolio
King Abdullah II of Jordan arrives in Baghdad today on an official visit to Iraq for talks with President Barham Salih, and Prime Minister Adil Abd Al Mahdi and senior officials, with a view to strengthening bilateral relations and regional development.
According to a report from The Arab Weekly, the two countries are planning a border industrial zone with a possible 50,000 jobs. It would also facilitate exports of tax-exempted Jordanian goods to the Iraqi market.
In recent weeks, the two countries have agreed a series of measures to increase cooperation between the two countries, including a plan to finalize the framework agreement for the Iraqi-Jordanian pipeline which will run from Basra through Haditha to Aqaba in the first quarter of 2019.
GardaWorld, a global leader in comprehensive security and risk management, has made its weekly security report available to Iraq Business News readers.
Prepared by GardaWorld’s Risk Analysis Team in Iraq, this essential report includes short- and medium-term outlooks on the security situation, reports and commentary on recent significant events, and a detailed overview of developments across the country.
World Bank report: Iraq will be the highest Arab economic growth by 2019
January 11, 2019
World Bank report: Iraq will be the highest Arab economic growth by 2019 The Middle East and North Africa (MENA) countries are expected to witness a rise in economic growth to 1.9 percent in 2019, according to a World Bank report. The show report recently released titled Figures (Global Economic Prospects: The Middle East and North Africa “bleak skies”) that growth in the GCC will rise to 2.6 percent , supported by the movement of an active investment at the level of the oil – exporting countries, the bank expects that growth declines in Algeria To 2.3 percent due to slower government spending than in 2018. Egypt will see a growth rate of 5.6 percent in 2019, boosted by investments and reforms in the expected business climate. The growth rate in Morocco and Tunisia will reach 2.9 percent in 2019 if tourism indicators improve and political reforms continue.
Although Iraq recorded modest growth in 2018 at 1.9 percent, reconstruction projects, according to the report, will be an important driver for the growth of its economy and neighboring economies, with an expected 6.2 percent, the highest in the Arab world. Growth in Jordan is likely to see a slight improvement of 2.3 percent. 2018 The 2018 estimates showed an improvement in growth to 1.7 percent amid improved economic activity in oil exporting and importing countries. Algeria registered a growth rate of 2.5 percent last year, Egypt with 5.3 percent, Morocco with 3.2 percent and Tunisia with 2.6 percent.
The World Bank has warned of the dangers facing the region, which can discourage growth, as conflicts can escalate and lead to greater damage to income and economic activity, not to mention health and social well-being.
Turkey has reportedly appointed a special envoy to Iraq to resolve the water sharing issues between the two countries.
According to Daily Sabah, former Forestry and Water Affairs Minister Veysel Eroğlu (pictured), who will take up the post, pointed to the “inefficient” use of water resources in Iraq, saying “Turkey will share its experience and know-how in the efficient management of water with the Iraqis.”
He added that Turkey will try to ensure an equitable share of water from the Tigris and the Euphrates rivers.
Russia’s Lukoilhas successfully completed testing of the fourth well as part of Eridu field (Block 10) appraisal phase in the south of Iraq.
The testing resulted in the commercial flow of dry crude oil that proves the current geological model of Eridu field as effective.
Lukoil continues geological exploration at Block 10. For instance, the company plans to drill and test several appraisal wells and to complete 3D and 2D seismic surveys for Eridu field and the block’s southern and central parts, respectively.
Block 10, covering 5.8 thousand square kilometers, is located 150 kilometers west of Basra, 120 kilometers away from West Qurna-2 field.
Interests in the project: Lukoil – 60% (operator), Inpex Corporation (Japan) – 40%. The Iraqi party to the agreement is represented by the state-owned Dhi Qar Oil Company (DQOC).