UPDATE: Genel Energy Gets Further Kurdistan Payment As Earnings Soar

LONDON (Alliance News) - Oil producer Genel Energy PLC on Thursday received a further payment for oil produced in Kurdistan, as it reported a profit for 2017 after a huge loss in the year before as exploration costs plummeted and it received consistent payments for oil produced.

Genel said partners from the Tawke field in Iraqi Kurdistan have received USD62.5 million for oil produced from the region's government, and Genel's net share is USD15.6 million.

It has also received an override payment of USD7.9 million as per the terms of an agreement signed last year concerning oil produced in the past for which Genel was not paid.

Genel posted a pretax profit of USD272.0 million in 2017, after a USD1.25 billion loss in 2016. Exploration costs have plunged to just USD1.9 million from USD815.1 million, while impairments have fallen to USD58.2 million from USD409.6 million.

Earnings before interest, taxes, depreciation, amortisation, exploration, and impairment totaled USD475.5 million in 2017 compared to USD130.7 million the prior year, and free cash flow before interest almost tripled to USD141.8 million from USD59.1 million.

Revenue in 2017 was USD228.9 million, up from 2016's USD190.7 million.

Total net production for 2017 was 35,200 barrels of oil per day, down from 53,300 bopd in 2016. In 2018, combined Taq Taq and Tawke production is guided at an unchanged 32,800 barrels of oil per day.

Production at Tawke increased, boosted by the new Peshkabir field, while Taq Taq declined, though this was arrested by a well intervention programme.

Tawke and Taq Taq, both in Iraq's Kurdistan region, are Genel's producing oil assets. It also has the Miran and Bina Bawi gas fields in Kurdistan, not yet under development, as well as exploration sites in Somaliland and Morocco.

The results, Genel said, were boosted by consistent payments from the Kurdistan regional government for oil produced at Tawke and Taq Taq, which totalled USD263.0 million in 2017.

Further, in August, the Iraqi oil producer finally struck a definitive deal with Kurdistan over amounts owed to the business for previous oil exports out of the country, marking a significant moment for the firm

Genel was owed large amounts of cash by Kurdistan for long periods of oil exports out of the country that were yet to be paid for. Although it was receiving consistent monthly payments for ongoing oil exports as well as monthly payments of arrears owed to them from the government, no formal system had been put in place.

Genel said Thursday this had been a "very positive" development during the year, boosting earnings during 2017, and it will likewise to do so in future. The consistent payments have also allowed Genel to conduct its drilling programme on other assets.

Chief Executive Murat Ozgul said: "Another year of consistent payments by the KRG and a disciplined capital allocation strategy helped to generate material free cash flow in 2017. This was enhanced in the latter part of the year by the receivable settlement agreement, from which Genel expects to generate sustainable and significant free cash flow going forward."

"The strong financial performance of 2017, and the promise of more to come, facilitated the successful refinancing in December, which solidified a significant improvement in the balance sheet and provides a strong platform for growth," Ozgul added.

Genel shares were down 1.1% on Thursday at 157.80 pence each.