On 7 January 2013, Genel Energy received permission from the Kurdistan Regional Government to export crude oil from Taq Taq into Turkey by truck. This authority is consistent with the Iraqi Constitution of 2006, the Kurdistan oil and gas law of 2007 and the PSC governing operations at Taq Taq. Initial volumes are small but the Company expects these to grow to c20,000 bopd over the next six to eight weeks.
Total sales revenue for 2012 is expected to be c$330 million, which is ahead of previous guidance. This includes $132 million received on 3 December 2012 from the KRG, which represents part of the total amount owed to Genel Energy for unpaid historic export revenues. This receipt has been recognised as revenue in 2012 in accordance with the Company’s accounting policy for export revenues, which are recognised only on receipt of cash.
Capital Expenditure
Capital expenditure for 2012 was in line with previous guidance at c$230 million, and was fully funded by cash generated from current operations in the Kurdistan Region. Based on current plans, capital expenditure for 2013 is forecast to be circa $400-$500 million. In line with the Company’s stated strategy, Genel Energy will continue to fund development and exploration in the Kurdistan Region with cash from current operations. Capital expenditure in 2013 for the African portfolio is expected to be in the region of c$110 million which will be funded from the Company’s existing cash resources of c$1 billion.
Exploration – Kurdistan
Genel Energy’s current exploration programme in the Kurdistan Region comprises three high impact wells which will complete in the first half of 2013, targeting over 750 mmboe of gross unrisked resource. Tawke Deep and Chia Surkh 10 are currently drilling on schedule with results expected by the end of the first quarter. A third well (Taq Taq Deep) will spud in the next couple of months.
Genel Energy has issued the following trading and operational update in advance of the Company’s 2012 full year results, which are scheduled for release on 28 February 2013. Information contained within this release is un-audited and may be subject to further review.
Tony Hayward (pictured), Chief Executive said:
“2012 saw a strong production performance and a materially expanded exploration portfolio which will provide us with significant opportunities in 2013, both in the Kurdistan Region of Iraq and Africa. We expect revenues to be ahead of previous guidance and all development and exploration activities in Kurdistan to be funded from cash flow generated locally in line with our stated strategy.
“We are today exporting oil to Turkey in accordance with the authority granted to us by the Kurdistan Regional Government and as the largest independent operator in Kurdistan, are well placed to take advantage of regional opportunities for a broader export market as the political situation continues to develop.“
Production
Genel Energy’s average net working interest production for the full year 2012 was in line with guidance at 44,500 bopd (2011: 42,000 bopd). During the course of the year production from Genel Energy’s two producing assets, Taq Taq and Tawke, has been sold into both domestic and export markets.
In response to the uncertainty regarding the receipt of the second payment for historic exports owed from the Federal Government of Iraq, Genel Energy, along with other international operating companies, began reducing exports in mid-November and switched sales of production back into the domestic market realising prices through December above $70/bbl. Through the first two weeks of January, Taq Taq production has averaged 89,000 bopd gross and on 4 January hit a high of 109,000 bopd.
