The number of oil producers in the Kurdistan region of Iraq is set to shrink drastically over the next five years, to the benefit of the largest operators, such as Genel, Exxon and Chevron. That is according to Genel's chief executive officer Tony Hayward, in an interview given to Bloomberg News on 21 November, on the side-lines of the Atlantic Council conference in Istanbul, Turkey. The British outfit is a joint-operator in seven of Kurdistan's oil and gas fields and recently made off with a 36% stake in the Bina Bawi gas field, from rival OMV, giving it full ownership. "Having made four or five investments in the region, we are continuously looking for opportunities," Hayward added. The company expects the Kurdistan Regional Government (KRG) to approve the development of the Miran and Bina Bawi gas fields before the end of the year. Combined they are expected to supply 4bn cubic metres of gas per year starting in 2018, with the potential for output to more than double by the end of the decade. Genel expects to earn a return on its investment through the condensate which would be extracted from the gas and the associated oil. In turn, the KRG would gain access to production which it would sell on to Turkey at a price of $7 per million Btu, making it a match for Russian supplies.
19 Nov '14
Video interview with Tony Hayward
http://tinyurl.com/lr2l2sl Tony Hayward, the chief executive of Genel Energy (LON:GENL), insists Kurdistan, where Genel operates, is a ‘secure and stable’ place to do business despite the threat of terrorism in the region. Ex-BP CEO Hayward explains how he ‘wouldn’t for a moment change 29 years’ at the oil giant, hints at possible acquisitions for Genel, and also talks about the differences of working for a smaller oil group.
14 Nov '14
RE: Capital Mkts Day
I calculate the Miran gas field will pay them around $10 billion over its lifetime (fixed price of 78 c per thousand cf). 100% of oil from the field is used to pay Genel's development costs, thereafter 50%. Oil production from Tawke and Tak Tak up 50% over last year and projected to be up 50% next year. Extraction costs among the lowest anywhere. Pipeline capacity well in excess of production potential (no $25 per barrel trucking costs). The share price went down initially - of course. Stands to reason, doesn't it?
13 Nov '14
RE: Middle East and Kurdistan
Concur. I do the same.
13 Nov '14
Although the KRG have said they will start to pay I don't think this will be realised until mid/late next year. I hope the increased production will directly increase cash flow generation which will obviously negate the need for fund raising. Realising the invoices submitted to KRG in a timely manor is still a cause for concern IMO. Nonetheless, I am invested and hope my reservations are proven incorrect!!
13 Nov '14
Capital Mkts Day
Morocco is not particularly good news, but outweighed to the commercialisation of its 11 TCF of gas contained within KRI. Genel confident enough to acquire OMV's 34% interest in Bina Bawi for $150mm and combining that with Miran, they'll have 100% interest and operation. Released guidance for next year (90-100k boepd) and Capex ($300mm-$350mm). Can't see any need for a fund raising; oil exports, payment mechanism and this gas agreement nullify need IMHO.
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