Stephen Whyte, Chairman of Genel Energy, gave the following update on the business at the Company’s Annual General Meeting, held in London on Thursday:

Genel had a very successful 2018, with free cash flow generation of $164 million even while making significant investment in growth.

2019 has seen us continue this success. We are delivering year-on-year production growth, we have made portfolio additions that perfectly complement our existing asset base, and our cash position continues to strengthen.

Genel is participating in 20 wells this year, the most of any IOC in the Kurdistan Region of Iraq (‘KRI’). Drilling on the Tawke and Peshkabir fields is ongoing, with activity ramping up as we progress through 2019. Year to date production from the Tawke PSC is currently c.126,800 bopd, with Peshkabir driving impressive growth compared to the prior year’s period.

The drilling programme at Taq Taq has now delivered three successful wells, and year to date production is currently c.13,300 bopd, an increase from the 2018 average of 12,350 bopd. We are continuing to achieve successful results from the flanks of the field, and are drilling ahead at pace.

Total Genel working interest production across all assets is 37,600 bopd, running slightly ahead of our expected 10% increase in year-on-year production.

Even as we invest to deliver this production increase we continue to improve our cash position, generating almost $50 million in free cash flow in the first four months of the year. We expect to keep up this impressive run rate. Our current expectation is that we will generate well over $100 million in free cash flow over the course of 2019, prior to the payment of the dividend, even after increasing expenditure on our growth opportunities.

The results at Peshkabir show the significant success that can be obtained from our low-cost, rapid return operations in the KRI. While investing to increase production from 12,000 bopd to 55,000 bopd over the course of the year, Genel still generated $50 million of free cash flow from the asset. This level of return is hard to match anywhere else in the world, and illustrates why we continue to look for further opportunities in the KRI.

Put simply, the KRI is a very good place in which to operate. Payments have been made on a monthly basis for over three and a half years now, the political situation continues to improve – with Baghdad having made budget payments to the Kurdistan Regional Government for over a year – and the low-cost of operations helping to set a breakeven oil price at an asset level of $20/bbl.

We are still looking to diversify the portfolio, but we will not ignore further opportunities in the KRI – and indeed continue to focus on these where our presence on the ground and regional expertise mean we can maximise their value potential for shareholders.

In that context, as you are probably aware by now, we were delighted to add Sarta and Qara Dagh to the portfolio. They tick all of the boxes, as we partner with Chevron on assets that offer a mixture of near-term production and long-term growth potential.

Sarta is expected to enter production in the middle of 2020, and we will develop the field utilising a similar strategy to the one that was so successful (and cash-generative) at Peshkabir. While we do not want to get ahead of ourselves there are hydrocarbons throughout the structure in all of the typical KRI reservoirs, from the Tertiary down to the Triassic.

We are focused on building an even stronger business with material growth potential, providing a clear and compelling investment case that offers the opportunity for a significant increase in shareholder value. As we prioritise that growth, we have also initiated a material and sustainable dividend, providing investors with a compelling mix of growth and returns.

I am delighted that Bill Higgs is now sitting alongside me as CEO, and that Esa Ikaheimonen, our CFO, has also joined the Board.

On a personal level, the transition that I was keen to oversee is now complete. As such I have decided that this will be my last AGM as Chairman of Genel, and I will leave the Company for new challenges once a suitable successor has been identified. When I joined the Board two years ago the share price was under 80p, production was declining, Genel had unpaid oil receivables of over $400 million and $142 million in net debt.

Genel’s production and net cash position is now rising, the portfolio is positioned to provide material organic growth, and Genel now has the right team to deliver that growth. Management has a wealth of experience in the sector, experience that can also be utilised to make further value-accretive portfolio additions and optimise our growing cash pile to generate value for shareholders.”

Genel will announce results for the six months ending 30 June 2019 on Tuesday 6 August 2019.

(Source: Genel Energy)

Advertising Feature

Rabee Securities Iraq Stock Exchange (ISX) market report (week ending: 16th May 2019).

Please click here to download a table of listed companies and their associated ticker codes.

The RSISX index ended the week at IQD622 (+4.3%) / $669 (+4.3%) (weekly change) (-5.7% and -5.7% YTD change, respectively). The number of week traded shares was 7.1 bn and the weekly trading volume was IQD2.6 bn ($2.1 mn).

ISX Company Announcements

  • Fallujah for Construction Materials (IFCM) will hold an AGM* on May. 29, 2019 to discuss and approve 2013, 2014, 2015 and 2016 annual financial results. The company has been suspended from trading since Jul. 6, 2015 by an ISC decision due to not disclosing 2013, 2014, 2015 and 2016 annual financial results.
  • According to the Board of Insurance, Ahliya for Insurance (NAHF) will resume trading on Sunday (May. 19, 2019).
  • Dar Al-Salam for Insurance (NDSA) completed its capital increase procedures from IQD5.0 bn to IQD7.0 bn through 40% rights issue.
  • Babylon Hotel (HBAY) invited its shareholders on May. 14, 2019 to receive their cash dividend for the years between 1997 and 2001 as well as the year of 2016.

Five One Labs is pleased to announce IGNITE, our very first entrepreneurship program focusing on achieving product market fit.

This program will help you better understand the market you are competing in and how you can create the most value for your customers.

We are now recruiting tech-entrepreneurs from communities all around Iraq to participate in this month long program.

If you are passionate about a tech-focused startup idea and want to learn the skills to turn it into a business, this program is right for you!

Apply by May 21 at 11:59pm to be considered.

More details here.

(Source: 51 Labs)

By Adnan Abu Zeed for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

The National Iranian Oil Company (NIOC) decided May 4 to open an economic representative office in Iraq.

The decision was made during a meeting bringing together executives at Iraq’s Oil Ministry and Iranian oil industry equipment producers, on the sidelines of the Iran Oil Show 2019.

Ramin Gholampour Dezfouli, NIOC’s director for support, construction and goods supply, said only Iranian companies approved by the NIOC will be able to partake in Iraqi Oil Ministry projects.

Click here to read the full story.

By Padraig O’Hannelly.

For much of Iraq’s recent history, the trend has been for educated and talented Iraqis to leave the country, and for Iraq to use its oil revenues to import the expertise it needs.

But that’s changing; to at least some extent, the Iraqi diaspora is returning, innovative home-grown Iraqi businesses are being created, and some are even exporting their goods and services abroad.

One prime example is Arab Payment Services (APS), which I visited on a recent trip to Baghdad. Founded by Ziad Khalaf in 2013, the company now employs 100 people, many of them Iraqis who have returned from overseas with new skills and experience.

The company provides a range of banking-related services, including ATMs, point-of-sale (POS) devices, and payment processing. In this business, proper security is essential. General Manager Haider Alobaidi, who has been with the company from the start, explained:

“Our processes all comply with international standards, such as PCI DSS [Payment Card Industry Data Security Standard] — our reputation depends on flawless execution, so there is no room for error.”

In a country so reliant on cash, is there really a need for such a business? “Most definitely“, says Roger Abhoud, Advisor to the Chairman:

“The demographics are all in our favour. Forty million people, 83 percent of them without bank accounts, increasing by one million people each year — more and more of those people want access to the sorts of services that we can provide, and that trend can only continue. It’s a huge opportunity!”

His vision doesn’t end there. APS has just opened an office in Dubai, and plans to expand internationally.

This is a new and positive phenomenon for Iraq, and one that will provide welcome opportunities in the years ahead.

From Al Jazeera. Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

Iraq is looking to strengthen its economy after decades of war, sanctions, sectarian division and the rise of the Islamic State of Iraq and the Levant (ISIL or ISIS).

It has achieved some progress in recent years thanks to its oil industry; Iraq is the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC) and oil provides roughly 85 percent of the government’s revenue.

As the country enters a period of relative calm, Iraq’s oil minister, Thamer Ghadhban, says the government is working to expand its oil industries and improve infrastructure, which includes building more refineries and investing in southern gas fields and export routes.

The U.S. Embassy in Baghdad hasd advised all U.S. citizens of heightened tensions in Iraq and the requirement to remain vigilant.

Actions to Take:

  • Do not travel to Iraq
  • Avoid places known as U.S. citizen gathering points.
  • Keep a low profile
  • Be aware of your surroundings

Assistance:

U.S. Embassy Baghdad
Al-Kindi Street, International Zone, Baghdad
Telephone (during business hours)

From Iraq:  0760-030-3000;

From the United States:  301-985-8841
U.S. Citizen Emergency After-Hours Telephone (ask for the duty officer)

From Iraq:  0760-030-3000;

From the United States:  301-985-8841

E-mail: BaghdadACS@state.gov
Website: https://iq.usembassy.gov/

U.S. Consulate General Erbil
413 Ishtar, Ankawa Erbil, Iraq
Telephone (during business hours)

From Iraq:  0760-030-3227;

From the United States:  240-264-3467 extension 4554
U.S. Citizen Emergency After-Hours Telephone (ask for the duty officer)

From Iraq:  066-211-4554;

From the United States:  240-264-3467

E-mail: ErbilACS@state.gov
Website: https://iq.usembassy.gov/embassy-consulates/erbil/

State Department – Consular Affairs
888-407-4747 or 202-501-4444

(Source: US Embassy)

IOM Iraq’s Enterprise Development Fund (EDF) encourages rapid, large-scale private sector job creation and economic recovery through tailored support to Small and Medium Enterprises (SMEs).

The EDF is a financing mechanism that provides SMEs with financial capital to contribute to their recovery and/or expansion.

To assess the capacity of the market to absorb medium-sized grants, the EDF market assessment was rolled out in Kirkuk, Fallujah, and Mosul in November 2018.

The assessment was led by IOM Iraq’s Return and Recovery Unit (RRU) and contributes to the necessary groundwork to introduce the EDF in any location.

Please see below the assessments for three governorates:

(Source: IOM)

By John Lee.

The China Petroleum Engineering and Construction Corporation (CPECC) has been awarded a contract to recover natural gas from the Halfaya oilfield.

Planned production is put at 300 million standard cubic feet of gas per day, according to a statement from Iraq’s Ministry of Oil.

(Source: Ministry of Oil)

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.

Please click here to download the latest report free of charge.

For more information on how GardaWorld’s services can support your business in Iraq, please contact Daniel Matthews, Senior Director Iraq, at daniel.matthews@garda.com