Genel Buys Stakes in Chevron KRI Blocks

Genel Buys Stakes in Chevron KRI Blocks
Genel Energy reaches an agreement to acquire stakes in the Chevron operated Sarta and Qara Dagh blocks.

Genel Energy plc announced Monday that it has reached an agreement to acquire stakes in the Chevron operated Sarta and Qara Dagh blocks, which are located in the Kurdistan Region of Iraq (KRI).

The company said it will buy 30 percent equity in the Sarta license by paying a 50 percent share of ongoing field development costs “until a specific production target is reached”, together with a “success fee payable on achievement of a production milestone”.

Genel also said it will acquire 40 percent equity in the Qara Dagh appraisal license and become the operator through a carry arrangement.

Closing of the deals is subject to approval from the Kurdistan Regional Government (KRG). Should the transactions go through, Chevron will retain a 50 percent interest in the Sarta license and the KRG will hold the remaining 20 percent. As for the Qara Dagh appraisal license, Chevron would retain a 40 percent stake, with the KRG holding the remaining 20 percent.

“We are delighted to have been chosen as a partner to Chevron. The agreement provides access to a phased development opportunity with significant growth potential at Sarta, and an exciting appraisal opportunity at Qara Dagh,” Murat Ozgul, chief executive of Genel, said in a company statement.

“The additions to our portfolio are an important step in our diversification strategy, offering a further opportunity for near-term production and cash-generation,” he added.

Genel’s free cash flow totaled $164 million in 2018, marking an increase of 66 percent year on year, according to a trading update released by the company earlier this month. The update also revealed that $335 million of cash proceeds were received in 2018, marking an increase of 27 percent year on year.

“2018 was a very positive year for Genel, which saw us generate material free cash flow and further transform the balance sheet,” Ozgul said in the trading update.

“As we generate cash we will continue to invest in the business to maximize the value of our existing portfolio. We are also working hard to bring in new assets that are complementary to our cash generation story,” he added.

Genel is the largest holder of reserves and resources in the KRI, where it has been operating for over a decade.


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