Gas reserves rise may fuel Genel’s recovery

GENEL Energy has a chance to relaunch its floundering fortunes amid an unexpected Kurdish gas boom that is set to test investor confidence in the politically turbulent region.

The troubled company said that fresh data from an independent resource assessment at its Miran and Bina Bawi gas fields in Kurdistan have revealed 40pc more gas reserves than previously thought.

Industry analysts at RBC Capital said the boom could relaunch Genel’s business under its new leadership team, but a series of technical, political and commercial hurdles remain.

The group’s share price, which plummeted 90pc in the last four years, climbed by 8.7pc in response to the news to 138p but remains well below the £11 a share price in 2014.

Genel will need to find a partner to develop the field, but ongoing political turbulence in the region, combined with the group’s cash flow woes, could scupper its chances.

“Although the security outlook for the region has improved, Kurdistan’s relationships with Baghdad and the outlook for gas sales to Turkey remain uncertain,” RBC warned.

In the past week, major oil majors have signalled a revived interest in the region. BP marked its return to the oilfields of northern Iraq on Thursday with an ambitious deal to help Iraq more than double crude flows from its “super-giant” field in the north of the country.

The findings are a rare glimmer of hope for the producer that was abandoned by its founders in a boardroom exodus last summer, just six years after founding the Kurdistan-focused group.

Genel’s biggest hit was due to a major downward revision of reserves at Taq Taq, its biggest Kurdistan oilfield in which it cut its forecast to 59m barrels from the field, down from 172m at the end 2015, and 683m when Genel listed. City financier Nat Rothschild stepped down from the board in the same week as chairman and former BP boss, Tony Hayward.

Genel will offer a full trading update to the market on Thursday.