Genel Energy has confirmed the receipt of part-payment from the Kurdistan Regional Government for oil exports from the Tawke and Taq Taq fields in the Kurdistan Region of Iraq.
The Tawke field partners received a payment of $15.0 million from the KRG for oil sales during May, reflecting a part settlement of the invoiced amount of $39.28 million for Tawke oil sales for the month. This figure incorporates $32.95 million towards contractor monthly entitlement and $6.34 million towards recovery of historical receivables.
The Taq Taq field partners received a payment of $10 million from the KRG for oil sales during May. The payment reflects part settlement of the invoiced amount of $25.16 million and incorporates $21.02 million towards contractor monthly entitlement and $4.13 million towards recovery of historical receivables.
Genel stated in a company release that it expects the remaining the balance of the May 2016 Taq Taq invoice “to be paid shortly”. There was no mention of when the remaining balance would be settled for Tawke exports.
Gross oil sales from the Taq Taq field in May averaged 63,697 barrels of oil per day. Tawke production in May averaged 117,757 bopd, of which 114,848 bopd was earmarked for export.
The payment schedule from the KRG is “in line with last month”, said FirstEnergy in a brief research note sent to Rigzone, where “only a partial payment was received for May export at Taq Taq and Tawke”.
FirstEnergy outlined that, last month, the remaining balance for the invoices was received a few days after the initial payments. The oil and gas advisory firm revealed that market reaction to the news of the incomplete payments was “neutral” and stated that the story “remains a play on geopolitics in the region”.
Genel Energy posted impairment costs of $1.03 billion in relation to the Taq Taq PSC in 2015, following revised assumptions on recoverable reserves at the field in the Kurdistan Region of Iraq.
The results of an internal review found that proven and probable (2P) reserves from the field dropped to 356 million barrels of oil, from an initial estimate of 683 million barrels. As of December 31, 2015, the Taq Taq field had produced 184 million barrels gross. As a result, the remaining gross recoverable 2P reserves estimate as of December 31, 2015 is 172 million barrels of oil.
Genel stated February 29 that gross Taq Taq production will average around 80,000 barrels of oil per day in 2016, 65-75,000 bopd in 2017 and 50-70,000 bopd in 2018. In its latest financial statement, the company said that its production guidance for 2016, which encompasses both firm and contingent activity at the Taq Taq and Tawke fields, is 60-70,000 bopd. In 2015, Genel produced 84,900 bopd, which marked an increase of 22 percent compared to 2014.
The energy firm’s capital expenditure was $157 million in 2015, which was a reduction of 77 percent year on year. Genel’s capital expenditure guidance for the Kurdistan Region of Iraq in 2016 remains unchanged at $80-120 million. In 2015 the company posted revenues of $343 million and a loss, before tax, of $1.16 billion.
Genel, and other international oil companies operating in Kurdistan, have been historically subjected to a lack of payment over exported oil by the Kurdistan Regional Government. At the end of last year, this lack of payment was said to have resulted in dramatic combined CAPEX cut associated with the region among companies including Genel, DNO and Gulf Keystone.
In August 2015, the KRG’s Ministry of Natural Resources announced that the KRG would pay producing international oil companies a portion of the revenue from its direct crude oil sales, on a monthly basis, from September 2015 onwards. The government has so far kept this promise.
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