Page 7 - MEOG Week 01 2021

MEOG PRICES & PERFORMANCE MEOG

Complexities see Genel

suspend Qara Dagh well

KURDISTAN UK-LISTED Genel Energy this week announced of the QD-2 well and its results would be carried
that it and licence partner Chevron had sus- out in 2022 to inform next steps on the licence.
pended drilling operations at their QD-2 well at The news follows Genel’s December farm-out
Qara Dagh in the Kurdistan Region of northern of 49% stake in the SL10B13 block in Somaliland
Iraq. Genel said that the well had been “side- to Taiwan’s CPC Corp. for a cash consideration
tracked in response to encountering more com- towards back costs and a cash premium. Fol-
plex geology above the target reservoir than lowing the transaction, Genel remains the oper-
expected”. ator, holding a 51% stake in SL10B13, which it
However, despite another two side-tracks views as “highly prospective”, having identified
having been carried out, the licence partners more than 5bn barrels of prospective resources
have “concluded that it is impractical to continue through interpretation of 2D seismic acquired
the drilling operations from this wellbore in an in early 2020.
attempt to reach the primary objective because of The partners now intend to drill a well next
insurmountable technical problems”. year at an anticipated gross cost of around
Having fulfilled the minimum work obliga- $40mn.
tion, the partners have now taken the decision to
suspend QD-2. GKP receipts
The drilling campaign at Qara Dagh began in Also this week, fellow Kurdistan explorer Gulf
April 2021, with Genel and Chevron seeking to Keystone Petroleum (GKP) received a payment
build on the discovery of oil there in 2011. of $69.7mn comprising September and October
Genel CEO Bill Higgs said: “This has been a crude sales from its Shaikan field in the region
very challenging operation, and the decision to and $12.3mn of arrears relating to unpaid
suspend drilling at this stage is prudent. It is, of invoices between December 2019 and January
course, not the outcome that we wanted, but the 2020.
geological case for Qara Dagh remains intact and The oil revenues from Shaikan were $24.7mn
attractive. We will work with Chevron to ascer- in September and $32.6mn in October. It added
tain the best way forward on the licence.” that following receipt of these arrears payments,
The company said that a thorough evaluation the company’s net arrears balance is $28.6mn.™

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