20th Oct 2015 08:01
LONDON (Alliance News) - Genel Energy PLC Tuesday lowered its production guidance for the full year due to the delayed payments from the Kurdistan regional government in Iraq, and suggested full year revenue will be down by as much as USD170.0 million year-on-year.
Genel shares were down 7.2% to 311.00 pence per share on Tuesday morning.
The Iraqi oil producer said it generated USD77.0 million in revenue during the third quarter of 2015, pushing year-to-date revenue to USD276.0 million. During the quarter, the company received total payments of USD45.0 million from the Kurdistan regional government.
Those payments are significant as oil producers in the region have faced delays in payments, straining cashflow, leading companies such as Genel and Gulf Keystone Petroleum Ltd to try to establish a more regular payment system from the authorities.
Genel said it is expecting to receive a further USD24.5 million payment for exports from the Taq Taq and Tawke fields "imminently".
"The third quarter of 2015 has been a turning point for Genel. September's payment for exports, coupled with local sales, has stabilised the receivable owed to us by the Kurdistan regional government. An October payment for Taq Taq and Tawke is set to be received imminently," said Chief Executive Murat Ozgul.
"With total exports from the Kurdistan region of Iraq again hitting record levels, and pipeline uptime improving, we have confidence in the Kurdistan regional government commitment to make regular payments for oil exports," he added.
At the end of the quarter, the total owed to the company from the regional government was USD409.0 million.
To put those revenue figures into context, Genel generated USD519.7 million in revenue in 2014, suggesting full year revenue will be significantly down unless it has a bumper fourth quarter. The main reason for falling revenue is a weak oil price, which only averaged USD37 per barrel for Genel in the third quarter of 2015, less than half what it achieved a year ago.
On Tuesday, Genel revised down its full year revenue target to between USD350.0 million and USD370.0 million, based on a Brent oil price of USD50 per barrel, from previous guidance of USD350.0 million to USD400.0 million. On Tuesday, Brent was trading below USD49 per barrel. That implies a decline in annual revenue of as much as USD170 million.
Net working interest production in the third quarter averaged 86,100 barrels of oil per day, up 23% year-on-year but not enough of an increase to offset those substantially lower prices.
Of that production, 49,800 barrels per day came from the Taq Taq field with the remaining 36,300 barrels per day coming from Tawke. The majority of its production is exported via its pipeline, with the rest being sold either to the domestic market or to refineries.
Those figures have fallen from both fields since earlier in 2015, mainly because Genel reduced production because of those delayed payments from the regional government.
On Tuesday, Genel said it has revised its full-year guidance to 85,000 to 90,000 barrels of oil per day from its previous guidance of 90,000 to 100,000 barrels per day.
Capital expenditure in the third quarter totalled USD23.0 million, pushing expenditure since the start of 2015 to USD116.0 million. It adjusted its full year budget to USD150.0 to USD175.0 million from its previous estimate that it would total between USD150.0 to USD200.0 million.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Genel Energy