TIDMGENL
RNS Number : 4443N
Genel Energy PLC
26 October 2016
26 October 2016
Genel Energy plc
Trading and operations update
Genel Energy plc ('Genel' or 'the Company') issues the following
trading and operations update in respect of Q3 2016. The
information contained herein has not been audited and may be
subject to further review.
Murat Özgül, Chief Executive of Genel, said:
"Genel has received $163 million in cash proceeds during 2016,
underpinning the drilling of successful production wells across Taq
Taq and Tawke.
The KRG has made significant progress in restructuring the
region's economy. With export volumes at Ceyhan having increased
following a new deal with the federal government, and the recent
recovery in the oil price, this bodes well for the region's cash
flows. Despite the recent delay in payments, we remain optimistic
that they will continue, facilitating further investment across our
KRI assets."
Q3 2016 OPERATING PERFORMANCE
-- Q3 2016 net production averaged 53,100 bopd, an 8% decrease on the previous quarter
-- Production and sales by field during Q3 2016 were as follows:
(bopd) Export Domestic Refinery Total Genel
via pipeline sales sales production net production
-------- -------------- --------- --------- ------------ ----------------
Taq
Taq 44,700 - 13,800 58,600 25,800
Tawke 108,800 - - 109,200 27,300
-------- -------------- --------- --------- ------------ ----------------
Total 153,500 - 13,800 167,800 53,100
Note: Difference between production and sales relates to
inventory movements at both fields
-- Production by field for the nine months ending 30 September 2016 was as follows:
(bopd) Export Domestic Refinery Total Genel
via pipeline sales sales production net production
-------- -------------- --------- --------- ------------ ----------------
Taq
Taq 43,300 2,100 20,000 65,400 28,800
Tawke 103,800 1,400 600 106,000 26,500
-------- -------------- --------- --------- ------------ ----------------
Total 147,100 3,500 20,600 171,400 55,300
Note: Difference between production and sales relates to
inventory movements at both fields
-- At Taq Taq (Genel 44% working interest) two side-track wells,
TT-27x and TT-07z, were successfully drilled and completed during
the period, partially offsetting the decline from existing wells. A
third side-track, TT-16y, is in progress. Taq Taq production in
October to date has averaged 50,000 bopd
-- Through development drilling and reservoir management, the
focus at Taq Taq remains mitigating field declines and reducing the
concentration of production from the crest of the field
-- The Company is currently in the process of preparing a
revised Field Development Plan ('FDP') for Taq Taq, which is
expected to be completed in early 2017. The revised FDP will
establish the next phase of the development plan, notably with
respect to new development well locations and the overall reservoir
management strategy, while also identifying necessary resources and
technologies required to implement future activity. In advance of
the FDP completion, a tender has been initiated to procure a more
powerful drilling rig for the start of 2017, which would provide
greater optionality around development drilling at Taq Taq
-- Tawke (Genel 25% working interest) production in Q3 2016 was
in line with the first half of the year. Development activity
recommenced during the period, with the Tawke-32 (Jeribe water
injector), Tawke-33, Tawke-34 (Jeribe producers), and Tawke-31
(Cretaceous producer) wells all being drilled. The Tawke-37 (Jeribe
producer) was drilled post period end, with all wells in the
current campaign adding to field output capacity. Tawke production
in October to date has averaged 105,000 bopd, with current
production levels at 120,000 bopd
-- The Peshkabir-2 appraisal well on the Tawke licence commenced
drilling in early October and is expected to take around three
months to complete
-- On the Chia Surkh PSC, work continues to establish a low cost
development solution for the discovered Tertiary oil resources,
which are currently estimated at 3-10 mmbbls. An FDP submission is
targeted by the end of 2016. Consequently, the Company expects to
write down the Chia Surkh carrying value to a nominal amount. At
end 2015, the Chia Surkh carrying value was $198 million
KRI GAS BUSINESS
-- The mid-stream pre-FEED and upstream Gas Development Plan for
Miran and Bina Bawi are progressing, with work on both expected to
complete around the end of 2016
-- The Company remains of the view that the Miran and Bina Bawi
fields comprise a world-scale gas asset and an attractive
investment opportunity, although progress is subject to political,
commercial, technical and financing milestones, the nature and
timing of which are difficult to accurately predict
AFRICA EXPLORATION UPDATE
-- Offshore Morocco, the Company is continuing its efforts to
bring in partner(s) to its operated Sidi Moussa licence (Genel 60%)
and is in active discussions with a number of parties. The Company
has reached agreement with ONHYM regarding an extension of the
licence expiry date to Q3 2017. Genel forecasts a maximum future
exploration expense of c.$30 million associated with existing
commitments on its Morocco licences
-- The Somaliland government is expected to start a 2D seismic
acquisition project around the end of 2016, with the Company then
purchasing the associated data
FINANCIAL PERFORMANCE
-- $163 million of total cash proceeds received in 2016, of which:
o $116 million against 2016 production
o $24 million relates to the January 2016 payment for December
2015 sales
o $23 million relates to the recovery of historical
receivables
-- Under the terms of the Company's PSCs, capacity building
payments are due on the profit oil portion of monthly cash
proceeds, with $21 million paid to the KRG in the year to date
-- Revenue of $50 million for Q3 2016 brought total revenue for
the nine months ended 30 September 2016 to $141 million
-- Amounts invoiced for the nine months ended 30 September 2016,
after associated CBP payments, are $9 million less than PSC
entitlement, with the difference attributable to the proxy formula
used by the KRG to calculate payments for current sales (as stated
in the half year results of 28 July 2016)
-- Unrestricted cash balances at 30 September 2016 stood at $405
million ($407 million at 30 June 2016). Net debt at 30 September
2016 stood at $241 million ($237 million at 30 June 2016)
-- Capital expenditure for Q3 2016 totalled $20 million, with
the majority of spend on the development programmes at Taq Taq and
Tawke. Capex for the nine months ending 30 September 2016 totalled
$52 million
-- The net receivable with the KRG for unpaid production stood
at $437 million at 30 September 2016 ($412 million at 30 June
2016)
GUIDANCE AND OUTLOOK
-- Following production performance at both Taq Taq and Tawke
for the nine months ending 30 September 2016, and the near-term
activity outlook for both fields, 2016 production is now expected
to be at the lower end of the previously communicated 53-60,000
bopd guidance range
-- Capital expenditure for 2016 is now expected to be below the
previously communicated range of $90- 110 million. This is largely
due to the refined development programmes at Taq Taq and Tawke, as
well as lower forecast spend on Miran and Bina Bawi and the
remainder of the portfolio
-- Based on the revised production and capital expenditure
guidance above, 2016 revenue is now expected to be at the lower end
of the previously communicated $200-230 million guidance range
-- Production and G&A cost guidance are maintained at
$1.50-1.75/bbl and c.$25 million respectively
-- As previously announced, the Company intends to produce an
updated Competent Persons Report for the Taq Taq field in Q1
2017
-ends-
For further information, please contact:
Genel Energy
Phil Corbett, Head of Investor
Relations
Andrew Benbow, Head of Public
Relations +44 20 7659 5100
Vigo Communications
Patrick d'Ancona +44 20 7016 9573
Notes to editors:
Genel Energy is an independent oil and gas exploration and
production company listed on the main market of the London Stock
Exchange (LSE: GENL). The Company, with headquarters in London and
offices in Ankara and Erbil, is the largest independent oil
producer and the largest holder of reserves and resources in the
Kurdistan Region of Iraq and, through its Miran and Bina Bawi gas
fields, is set to be a cornerstone provider of gas to Turkey under
the KRI-Turkey Gas Sales Agreement. Genel also continues to pursue
further growth opportunities within the Middle East and Africa. For
further information, please refer to www.genelenergy.com.
Disclaimer
This announcement contains certain forward-looking statements
that are subject to the usual risk factors and uncertainties
associated with the oil & gas exploration and production
business. Whilst the Company believes the expectations reflected
herein to be reasonable in light of the information available to
them at this time, the actual outcome may be materially different
owing to factors beyond the Company's control or within the
Company's control where, for example, the Company decides on a
change of plan or strategy. Accordingly no reliance may be placed
on the figures contained in such forward looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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