Page 8 - MEOG Week 31 2021

MEOG PERFORMANCE MEOG

Genel maintains

guidance despite delays

KURDISTAN UK-BASED Genel Energy this week reported company’s financial performance “would have
that it had increased oil production in the Kurd- been stronger still without the KRG changing its
istan Region of northern Iraq by 2% during the payment schedule in May, which resulted in only
first six months of 2021, year-on-year, allowing five monthly payments being received.”
it to maintain its annual guidance. He added: “While this amendment, and
On August 3, the company reported that net the change to the receivable recovery payment
first half production averaged 32,760 barrels per method, is frustrating, it marks a deferral of
day (bpd), marginally higher than the 32,100 payment rather than a removal, and we are in
bpd achieved during the same period last year. discussions with the KRG regarding the pace of
The company said that its strong performance Genel’s receivable recovery payments.”
had been facilitated by increased output from the
Peshkabir field in the Tawke production-sharing DNO deal greenlighted
contract (PSC) area where Genel holds a 25% Elsewhere in the Kurdistan Region, Norway’s
working interest (WI) and by the Sarta asset DNO announced that its deal to acquire Exxon-
(30% WI) coming into operation. These addi- Mobil’s share in the Baeshiqa oilfield had been
tions offset a 2,700-bpd net reduction in output approved by the KRG.
from Tawke field to and a further drop in output In February, a deal was agreed that would
of nearly 50% at Taq Taq. The latter was once see it double its 32% stake in the 324 square km
the firm’s flagship asset, producing in excess of licence having also bought the first stake from
100,000 bpd in 2015. However, following major the American super-major in 2018, becoming
reserves downgrades, output has now fallen to the operator.
just 6,490 bpd, with Genel holding a 44% WI. It The remaining 36% in the field is split
also holds WIs in the Qara Dagh (40%, opera- between Ankara-owned Turkish Energy Co.
tor) and Bina Bawi and Miran (100%, operator) (TEC, 16%) and the Kurdistan Regional Govern-
assets. ment (KRG, 20% carried). Baeshiqa is located in
The company began a drilling campaign at south-west Kurdistan close to Mossul.
Qara Dagh in April, seeking to build on the dis- In a statement, DNO Executive Chairman
covery of oil there in 2011, and anticipates results Bijan Mossavar-Rahmani said: “This acquisition
by the end of Q3. and plans for fast-track development underscore
Meanwhile, discussions remain ongoing for our belief in the potential of the Baeshiqa license
Bina Bawi and Miran, progress on which has and more broadly our long-term commitment
been complicated by a lack of agreement for the to Kurdistan … Once we get the green light from
up- and midstream elements of the projects. the authorities to proceed, first production will
Genel said: “Progression of these projects be a matter of months rather than years.”™
is outside the control of management and is
dependent on the progress of government dis-
cussions … The KRG and the Company have
been focusing on progressing the Bina Bawi
asset first, with success on Bina Bawi likely to
inform both of the likely structure, midstream
and downstream solution for Miran.”
It added that a “lack of progress on Bina Bawi
could result in significant delays in value realisa-
tion and consequently a materially lower asset
value for both assets”.
The company reported production costs of
$3.7 per barrel, with the significant increase in
oil prices during the first half of the year and the
resumption of override payments by the Kurd-
istan Regional Government (KRG) facilitating
an overall production asset margin of $111mn.
It said: “Revenue at the half year of $152mn is
close to full year revenue last year, with margin
per barrel increasing from $6 per barrel in 2020
to $19 per barrel, benefitting from the resump-
tion of the override, which contributed $9 per
barrel.”
Genel’s CEO Bill Higgs said that the

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