Genel Energy has announced that the Taq Taq partners have received a gross payment of $8.30 million from the Kurdistan Regional Government (KRG) for oil sales during January 2018. Genel’s net share of the payment is $4.57 million.

Genel also notes the announcement from DNO ASA, as operator of the Tawke PSC, that the Tawke partners have received $56.44 million from the KRG as payment for January 2018 crude oil deliveries to the export market from the Tawke licence. Genel’s net share of the payment is $14.07 million.

The Company has received an override payment of $7.86 million from the KRG, representing 4.5% of Tawke gross licence revenues for the month of January 2018, as per the terms of the Receivable Settlement Agreement.

In total, Genel’s net share of payments relating to January 2018 exports totals $26.50 million.

(Source: Genel Energy)

Genel Energy has announced a return to profit.

In its audited results for the year ended 31 December 2017, Murat Özgül (pictured), Chief Executive of Genel, said:

Another year of consistent payments by the KRG and a disciplined capital allocation strategy helped to generate material free cash flow in 2017. This was enhanced in the latter part of the year by the Receivable Settlement Agreement, from which Genel expects to generate sustainable and significant free cash flow going forward.

“The strong financial performance of 2017, and the promise of more to come, facilitated the successful refinancing in December, which solidified a significant improvement in the balance sheet and provides a strong platform for growth.

“We will continue with our strategy of maximising free cash flow as we focus investment on our producing assets, specifically on the Tawke PSC, where the performance of Peshkabir remains highly encouraging. Prudent expenditure will also be made on the other assets within our portfolio that provide material value creation opportunities.

“We will continue to construct the building blocks for value creation from Bina Bawi and Miran, while cost-effectively progressing our exploration assets in Africa.”

Results summary ($ million unless stated)

2017

2016

Production (bopd, working interest)

35,200

53,300

Revenue

228.9

190.7

EBITDAX1

475.5

130.7

  Depreciation and amortisation

(117.4)

(128.9)

  Exploration expense

(1.9)

(815.1)

  Impairment of property, plant and equipment

(58.2)

(218.3)

  Impairment of receivables

(191.3)

Operating profit / (loss)

298.0

(1,222.9)

Cash flow from operating activities

221.0

131.0

Capital expenditure

94.1

61.2

Free cash flow before interest2

141.8

59.1

Cash3

162.0

407.0

Total debt

300.0

674.6

Net debt4

134.8

241.2

Basic EPS (¢ per share)

97.1

(448.6)

1.     EBITDAX is earnings before interest, tax, depreciation, amortisation, exploration expense and impairment which is operating profit / (loss) adjusted for the add back of depreciation and amortisation ($117.4 million), exploration expense ($1.9 million) and impairment of property, plant and equipment ($58.2 million)

2.     Free cash flow before interest is net cash generated from operating activities less cash outflow due to purchase of intangible assets and purchase of property, plant and equipment (oil and gas assets only)

3.     Cash reported at 31 December 2017 excludes $18.5 million of restricted cash

4.     Reported debt less cash

Highlights

  • $263 million of cash proceeds received in 2017 (2016: $207 million), with strong free cash flow generation of $142 million (2016: $59 million)
  • Year-end net debt of $135 million, a 44% reduction year-on-year (2016: $241 million)
  • Year-end gross debt of $300 million, a 56% reduction year-on-year (2016: $675 million), with debt extended until 2022 and interest cost reduced by 40%
  • Receivable Settlement Agreement resulted in cash benefit of $26 million in Q4 2017
  • Focused capital allocation – 66% of capital expenditure was spent on cash-generative producing assets, and has been cost recovered
  • Drilling success at Peshkabir, with gross production rising to c.15,000 bopd at year-end
  • Taq Taq field production stabilised in H2 2017, with Q4 average of 14,035 bopd in line with Q3 average of 14,080 bopd
  • In January 2018 Bina Bawi and Miran CPRs confirmed c.45% uplift to gross 2C raw gas resources to 14.8 Tcf

Outlook

  • Combined net production from the Tawke and Taq Taq PSCs during 2018 is expected to be close to Q4 2017 levels of 32,800 bopd, unchanged from previous guidance
  • Genel expects to continue the generation of material free cash flow in 2018
  • Tangible steps to be taken to further de-risk gas resources and unlock value from Bina Bawi and Miran, including the high-value oil resources
  • Capital allocation discipline to continue, with ongoing prioritisation of spend on cash-generative producing assets. Capital expenditure guidance unchanged at c.$95-140 million net to Genel
  • Opex and G&A cash cost guidance unchanged at c.$30 million and c.$15 million respectively

More here.

(Source: Genel Energy)

Genel Energy plc has announced that it has received an override payment of $7.05 million from the Kurdistan Regional Government (KRG).

The payment represents 4.5% of Tawke gross field revenues for the month of November 2017, as per the terms of the Receivable Settlement Agreement. 

Taken together with the monthly entitlement payments for Taq Taq and Tawke announced yesterday, Genel’s net share of payments relating to November 2017 exports totals $26.81 million.

(Source: Genel Energy)

By John Lee.

Genel Energy has announced the completion of competent person’s reports (‘CPRs’) relating to the oil reserves and resources at Taq Taq, Bina Bawi, and Miran.

McDaniel and Associates have updated the CPR relating to the Taq Taq field (Genel 44% working interest, joint operator).

RPS Energy Consultants Ltd. (‘RPS’), as part of its work on the updated CPRs for the Bina Bawi and Miran West fields (Genel 100% and operator), has finalised its evaluation of the oil resources at both fields.

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

“The 40% replacement of 1P reserves at Taq Taq follows the success of well TT-29w, and reflects the stability in cash-generative production that we have seen from the field in the second half of 2017. The significant increase in high-value Bina Bawi 2C oil resources offers a tangible opportunity for near-term value creation.”

Taq Taq oil reserves

Taq Taq gross 2P reserves as of 31 December 2017 are estimated by McDaniel at 54.7 MMbbls, compared to 59.1 MMbbls as of 28 February 2017, with the difference being production in the intervening period, partly offset by a small upward technical revision.

The CPR results in a 12% reserves replacement for 2P and 40% reserves replacement at the higher confidence 1P level as a result of stabilising production and the integration of well TT-29w. A reconciliation from the reserves reported in the CPR released in February 2017 to the updated estimates in the CPR published today, is shown in the following table:

Gross oil reserves (MMbbls – McDaniel)

1P

2P

3P

28 February 2017

25.8

59.1

95.0

Production

(5.0)

(5.0)

(5.0)

Technical revisions

2.0

0.6

0.1

31 December 2017

22.8

54.7

90.1

Bina Bawi and Miran oil resources

Bina Bawi gross 2C light (c.45◦ API) oil resources as of 31 December 2017 are estimated by RPS at 37.1 MMbbls, compared to 13 MMbbls as of July 2013. The increase reflects higher recovery factors than initially estimated due to integrating learnings from analogue carbonate fields of similar oil quality. As the high-quality Bina Bawi oil is in close proximity to export infrastructure, the field represents a potentially attractive near-term development candidate for the Company.

Miran West gross 2C heavy (c.15◦ API) oil resources as of 31 December 2017 are estimated by RPS at 23.7 MMbbls, compared to 52 MMbbls as of April 2013. Volumes have reduced as RPS has adjusted its view on the oil water contact uncertainty range and also adjusted its view on reservoir properties, including data from MW-5 drilled in July 2013.

Because of field experience at Taq Taq, Genel management has taken the view that it is unlikely that any matrix will contribute to primary depletion at Miran and, as such, has taken a more conservative view and will only record 18.5 MMbbls of viable 2C contingent resources at the field.

Gross 2C Contingent Resources oil (MMbbls – RPS)

2013

31 December 2017

Bina Bawi

12.9

37.1

Miran West

52.0

23.7

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

Oil (MMbbls – RPS)

Miran West

Oil (MMbbls – RPS)

1C

15.2

1C

6.1

2C

37.1

2C

23.7

3C

78.4

3C

67.6

(Source: Genel Energy)

Genel Energy has issued a trading and operations update in advance of the Company’s full-year 2017 results, which are scheduled for release on 22 March 2018. The information contained herein has not been audited and may be subject to further review.

Murat Özgül, Chief Executive of Genel, said:

A strong final quarter of 2017 completed a very positive year for Genel. During the quarter, the successful Peshkabir-3 well result tripled production at the field to c.15,000 bopd, a figure that is expected to grow in 2018, while at Taq Taq the TT-29w well was brought on production.

“Payments for oil sales were received from the Kurdistan Regional Government (‘KRG’) in every month of 2017, totalling over $260 million net to Genel and leading to $140 million of free cash flow in the year. The 2017 payments were bolstered by the receipt of override payments in the fourth quarter under the Receivable Settlement Agreement (‘RSA’), and payments have continued in early 2018.

“The recently announced CPRs reaffirmed the potential of the Bina Bawi and Miran fields, with combined 1C gross raw gas resource estimates higher than the gas volumes agreed under the Gas Lifting Agreements. The upstream field development plans are expected to complete shortly, and will help define the roadmap to unlocking the value in these major resources.

“The successful debt refinancing in late 2017, and the expectation of ongoing material free cash flow, provides us with a solid platform and financial flexibility to execute our growth plans during 2018 and beyond.

2017 OPERATING PERFORMANCE AND 2018 ACTIVITY OUTLOOK

  • 2017 net production averaged 35,200 bopd, with Q4 averaging 32,760 bopd. Production and sales by asset during 2017 was as follows:

(bopd)

Export via pipeline

Refinery sales

Total      sales

Total production

Genel net production

Taq Taq

11,700

6,350

18,050

18,050

7,940

Tawke PSC

108,250

10

108,260

109,050

27,260

Total

119,950

6,360

126,310

127,100

35,200

Note: Difference between production and sales relates to inventory movements

  • Tawke PSC (Genel 25% working interest)
    • Tawke PSC production averaged 109,050 bopd in 2017, with aggregate production from the Peshkabir-2 and Peshkabir-3 wells contributing 3,590 bopd to this figure. Combined production from the two fields currently averages c.110,000 barrels of oil per day
    • Preparations are underway to drill the Peshkabir-4 well. Additional drilling activity is planned on both the Tawke and Peshkabir fields during 2018, with overall activity levels dependent on production performance, drilling results, field studies, and ongoing payments from the KRG
  • Taq Taq PSC (Genel 44% working interest and joint operator)
    • Taq Taq field production averaged 18,050 bopd in 2017
    • Production in Q4 2017 averaged 14,035 bopd (Q3 2017 14,080 bopd). Ahead of the completion of a number of wells in Q4 2017, the overall rate of production decline slowed during the year due to the implementation of a proactive well intervention and production optimisation programme
    • In 2018 to date, production from Taq Taq has averaged 14,540 bopd, with the TT-29w, TT-30, and TT-31 wells contributing to the stabilisation in production from the beginning of Q4
    • As previously announced in late 2017, the TT-29w well was brought onto production after encountering a deeper free water level and more extensive oil bearing cretaceous reservoirs on the northern flank of the field than previously forecast. The results of the well will be analysed ahead of finalising the 2018 drilling programme, with field activity likely to be weighted towards the second half of the year. The ongoing Taq Taq well intervention programme, focused on the provision of artificial lift and water shut off in existing wells, will continue throughout 2018
    • Going forward, the Company will revert to reporting Taq Taq field production on a quarterly basis, as part of its corporate level disclosures
  • Bina Bawi and Miran (Genel 100% and operator)
    • As announced on 23 January 2018, Genel has agreed a 12 month extension to the conditions precedent schedule contained within the Gas Lifting Agreements for the Bina Bawi and Miran PSCs
    • CPRs for the Bina Bawi and Miran West gas fields concluded a c.40% increase in the combined 2C gas resources compared to the pro-forma end-2016 2C resource
    • The field development plans, being carried out by Baker Hughes, are on schedule to be completed shortly, and will help define the roadmap to unlocking the value of the assets
    • Genel will continue its systematic efforts to maximise the value of Bina Bawi and Miran, which includes optimising the cost and schedule of the proposed upstream developments
      • § In 2018 Genel expects to undertake an extended well test of Bina Bawi-4, which will provide valuable data on well deliverability and gas composition
    • The Company will continue to build momentum behind the development of Bina Bawi and Miran, and will continue engagement with potential farm-in partners for upstream participation at an optimal time to secure maximum value for Genel shareholders
  • African exploration update
    • Onshore Somaliland, the acquisition of 2D seismic data on the SL-10B/13 (Genel 75%, operator) and Odewayne (Genel 50%, operator) blocks has now completed – the first time that seismic has been obtained in this highly prospective area for over 25 years. The project acquired c.3,150 km in total, including infill 2D seismic acquisition of targeted high-graded areas. Processing of the data has commenced, and will facilitate seismic interpretation and the associated development of a prospect inventory, in turn guiding the optimal strategy to maximise future value
    • As announced in November 2017, Genel’s prior commitment to drill one well on the Sidi Moussa licence, offshore Morocco (Genel 60% working interest), has been replaced by an obligation to carry out a 3D seismic campaign across the Sidi Moussa acreage, significantly reducing anticipated expenditure. Planning is ongoing, with seismic acquisition set to begin in 2018, which is expected to materially de-risk the prospectivity of the Sidi Moussa licence

FINANCIAL PERFORMANCE

  • $263 million of cash proceeds were received in 2017 ($207 million in 2016), of which $72 million was received in Q4
  • Following the signing of the Receivable Settlement Agreement, effective 1 August 2017:
    • $19 million in override payments for the Tawke field were received in Q4
    • An additional $7 million of cash flow was generated from the elimination of the capacity building payment on Genel’s profit oil from the Tawke PSC
  • $19 million in payments for oil sales during October 2017 received post-period in January 2018
  • Free cash flow (pre interest payments) totalled $140 million in 2017 
  • In December 2017, the Company successfully completed the refinancing of its existing bonds, reducing the outstanding bond debt from $421.8 million to $300 million by way of an early redemption of a notional amount of $121.8 million. The new 5 year bond has a coupon of 10% per annum
  • Following the successful refinancing, unrestricted cash balances at 31 December 2017 stood at $162 million ($268 million at 30 September 2017). IFRS net debt at 31 December 2017 stood at $135 million ($138 million at 30 September 2017)
  • Capital expenditure for 2017 totalled $95 million (in line with guidance), with the majority of spend on the Taq Taq and Tawke PSCs ($64 million)

2018 GUIDANCE

  • Combined net production from the Tawke and Taq Taq PSCs during 2018 is expected to be close to Q4 2017 levels (as disclosed above)
  • Capital expenditure net to Genel is forecast to be c.$95-140 million, spanning a range of firm and contingent spend, with activity levels dependent on ongoing drilling results and progress on Miran and Bina Bawi. It is expected that capex  will be funded entirely from operational cash flow, and includes:
    • Tawke and Taq Taq net to Genel of $60-85 million
    • Miran and Bina Bawi capex of $25-40 million
    • African exploration cost of $10-15 million
  • Opex: c.$30 million
  • G&A: c.$15 million cash cost
  • Based on a continuation of payments throughout 2018, Genel expects to generate material free cash flow in 2018

(Source: Genel Energy)

Genel Energy has announced the receipt of payments from the Kurdistan Regional Government (KRG) for oil sales during September 2017 from the Tawke and Taq Taq PSCs.

DNO ASA, as operator of the Tawke PSC, has announced the receipt of $54.32 million from the KRG as payment towards September 2017 crude oil deliveries to the export market from the Tawke licence. Genel’s net share of the payment is $13.58 million.

The Taq Taq field partners have received a gross payment of $9.70 million from the KRG for oil sales during September 2017. Genel’s net share of the payment is $5.33 million.

Genel has also received an override payment of $6.55 million from the KRG, representing 4.5% of Tawke gross field revenues for the month of October 2017, as per the terms of the Receivable Settlement Agreement.

Combined, Genel’s December 2017 net receipts total $25.46 million.

(Source: Genel Energy)

Genel Energy has announced an update on activity at the Taq Taq field (Genel 44% working interest).

The TT-29w well, which was drilled to appraise the northern flank of the Taq Taq field, has been completed as a producer after successfully encountering oil bearing Cretaceous reservoirs.

The well, which was drilled to a measured depth of 3,100 metres, encountered good quality oil bearing Cretaceous Shiranish and Kometan reservoirs. Six zones were subsequently tested over a 20 day period, with test rates of up to 6,400 bpd (40/64 inch choke) of 48° API oil delivered from individual zones.

Four of the five tests in the Shiranish produced dry oil, with one test tight. The Kometan reservoir test produced oil with a 40-50% water cut, confirming the oil water contact within the Kometan reservoir at this location in the field. TT-29w production has commenced from the Lower Shiranish reservoir at a rate of 3,200 bpd of dry oil on a restricted 24/64 inch choke, with the expectation that this rate will increase following an initial observation period.

The TT-29w well has proved a current oil water contact at this location on the northern flank of the field at a level at least 145 metres deeper than pre-drill estimates. Combined with the testing results, management is optimistic for the potential of the northern flank of the Taq Taq field.

However, it is too early to estimate what impact the well result will have on reserves, long-term production rates or future investment activity in the northern flank and the field as a whole.

In addition to the positive result from TT-29w, the TT-30 Pilaspi well was also successfully drilled as a producer in November and is currently producing around c.650 bopd. A further Pilaspi development well (TT-31) is planned before the end of 2017.

Gross production from the Taq Taq field is currently 15,100 bopd. Gross field production averaged 13,700 bopd in November 2017 and has averaged 18,300 bopd in 2017 to date.

(Source: Genel Energy)

Genel Energy has issued a trading and operations update for Q3 2017. The information has not been audited and may be subject to further review.

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

During the quarter Genel executed a landmark settlement agreement with the KRG over historical receivables, which we expect to materially enhance our cash flows going forward. Ahead of those payments commencing we continued to generate meaningful free cash flow, resulting in a further 13% reduction in net debt during the period.

“Our operations in the Kurdistan Region of Iraq are progressing as normal – exports are continuing from Taq Taq and Tawke, payments are being received on time, and operations are proceeding at both fields, with testing now underway on the TT-29w well.

Q3 2017 OPERATING PERFORMANCE

  • Q3 2017 net production averaged 33,810 bopd, with production for the nine months ending September 2017 averaging 36,030 bopd
  • Production and sales by field during Q3 2017 were as follows:

  • Tawke PSC (Genel 25% working interest)
    • Tawke PSC production in Q3 averaged 110,460 bopd, including long-term test production from the Peshkabir-2 well of 4,670 bopd.
    • In 2017 to date, the Tawke partners have drilled ten wells, including the Peshkabir-2 and 3 wells, four Cretaceous producers, three Jeribe producers and a Jeribe water injector
    • A further four development wells are planned on the Tawke PSC by year-end 2017 – two Cretaceous producers, one Jeribe producer and a Jeribe water disposal well
    • Peshkabir-3 well operations are ongoing, with results expected later in Q4. The Peshkabir early production facility remains on track to be installed by the end of 2017
  • Taq Taq PSC (Genel 44% working interest)
    • Taq Taq field production in Q3 averaged 14,080 bopd, and production has averaged 13,570 bopd during October 2017 to date
    • The TT-29w well, which is appraising the northern end of the Taq Taq field, reached target depth of 3,100 metres in early September 2017. A testing programme is now underway. Further development of the Cretaceous reservoir has been deferred pending results of the TT-29w testing programme
    • The EDC-24 rig has moved to the TT-30 well location, with two shallow horizontal wells set to be drilled in the Pilaspi reservoir before the end of the year

Genel Energy has announced that the Taq Taq field partners have received a gross payment of $10.39 million from the Kurdistan Regional Government for oil sales during July 2017.

Genel’s net share of the payment is $5.71 million.

Gross oil sales from the Taq Taq field in July 2017 averaged 14,873 bopd, including both exports and Bazian refinery deliveries.

DNO ASA, as operator of the Tawke field, has also announced that the Tawke field partners have received a payment of $39.50 million from the Kurdistan Regional Government as payment towards July 2017 crude oil deliveries to the export market from the Tawke licence. The funds will be shared pro-rata by DNO and Genel.

(Source: Genel Energy)