Genel Energy warns of lower-end 2016 revenue
Genel Energy, one of the main oil producers in Iraqi Kurdistan, warned yesterday that full-year revenue would be at the lower end of its target because of weaker than expected production, sending its shares to a sevenmonth low.
Production at Genel’s main oil asset, the Taq Taq field that has reserves of more than 170 million barrels, fell in the third quarter to 58,600 barrels per day (bpd), against 68,800 bpd in the first half of the year, as output from existing wells declined.
This forced Genel to warn that 2016 revenue would hit the lower end of its $200 million to $230 million target, which it had already lowered in July from between $200 million and $275 million.
It also said that 2016 production levels would come in at the bottom of its target range of 53,000 bpd to 60,000 bpd. Genel shares were down 11 percent at 83 pence by 0919 GMT, having earlier touched 76.25p, their lowest since March. “We are disappointed to see the continued decline at Taq Taq and the delays in revenue from the KRG have not helped here,” said Daniel Slater, research director at Arden Partners, who rates the stock “neutral” with a price target of 93p.
Genel’s receivables from the Kurdistan Regional Government (KRG), which pays domestic oil producers for exports, rose to $437 million at the end of September, compared with $412 million at the end of June. The KRG, which had been paying foreign producers in monthly instalments for oil exports since September 2015, fell behind on payments this summer, raising concern among oil exporters.
“Despite the recent delay in payments, we remain optimistic that they will continue, facilitating further investment across our KRI assets,” said Genel Chief Executive Murat Oezguel.
Genel said later yesterday that it had received a net payment of $12.2 million from the KRG for August oil sales from Taq Taq. Fellow Kurdistan producer Gulf Keystone also said on Wednesday that it had received a gross payment of $15 million from the authority for August crude sales from its Shaikan field. Genel plans to submit a plan next year to expand Taq Taq and said that it has opened a tender to procure a more powerful rig to drill more wells. A spokesman said the extent of the field’s expansion will depend on oil export payments. —Reuters