Genel En­ergy warns of lower-end 2016 rev­enue

Kuwait Times - - BUSINESS -

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

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