Genel Energy, one of the
main oil producers in Iraqi Kurdistan, has cut its full-year
production and revenue forecasts after reducing investment
because of weak prices and a debt it says is owed by the
Kurdistan Regional Government (KRG).
The London-listed company, which says is owed around $400
million, said on Tuesday it will not invest in increasing
production at its oilfields until the KRG makes regular payments
for exports.
There are signs that the payments are starting to flow.
The oil producer said on Tuesday it had received a net
payment of $16.5 million for oil exported from its Taq Taq field
and said it expected payments for exports from its other fields
imminently.
Genel received $24.5 million from the KRG last month,
improving the producer's cash position and raising expectations
for more stable payments.
"As the payments come through we can restart the capital
expenditure programme and that will then have a consequent
impact on production," Genel Chief Financial Officer Ben
Monaghan told Reuters.
Shares in Genel, chaired by former BP Chief Executive
Tony Hayward, were down 5 percent at 318 pence by 0905 GMT,
cutting their losses on details of the latest payments.
Oil producers across the globe are trying to deal with the
financial fallout of a sharp decline in crude prices.
In Iraqi Kurdistan, that has been compounded by a dispute
with Baghdad, which slashed funds to the region last year,
rendering it unable to pay its own employees' salaries, let
alone oil company dues.
Genel cut its 2015 production forecast by 5,000-10,000
barrels per day (bpd) to 85,000-90,0000 bpd. It also lowered its
revenue estimate for the year to $350-375 million from a range
of $350-400 million, assuming Brent prices of $50 per barrel.
As a result of lower investments in its oilfields Genel also
reduced its capital expenditure forecast for 2015 to $150-175
million, down from $150-200 million.
"Continued regular payments will strengthen the balance
sheet, allow for new development planning and increase momentum
on the gas project, which should help Genel recover from recent
sector underperformance," said analysts at J.P. Morgan Cazenove.
Last month, Genel purchased OMV's partner stake in the Bina
Bawi gas field, a project set to help Iraqi Kurdistan meet its
gas supply agreement with Turkey.
(Reuters)