7th Jul 2016 07:38
LONDON (Alliance News) - Genel Energy PLC on Thursday said it has lowered its full year production guidance to take planned development work and first-half production into account, as the company reported its first update on drilling work on the Taq Taq field.
Genel produces oil from two fields in the Kurdistan region of Iraq, Taq Taq and Tawke, and reported overall net production of 56,000 barrels per day in the first half of 2016 - almost 37% lower than a year earlier when the company was producing 88,500 barrels each day.
Production was hampered by the shutdown of the Iraq-Ceyhan pipeline that is used to export oil out of the country. The pipeline was out-of-use for a total of 23 days over February and May.
However, Genel said production still would have been considerably lower in the first half even if the pipeline was not shut. Production would have averaged around 60,000 barrels per day - over 32% lower than production last year, due to natural field decline.
Genel has started conducting development activity on the Taq Taq field, completing the TT-27x sidetrack well targeting the Cretaceous Shiranish reservoir - the first of potentially three wells to be drilled this year.
However, based on lower-than-expected production in the first half, development work on Taq Taq and the outlook for the other field, Tawke, Genel has lowered its full-year guidance to 53,000 to 60,000 barrels of oil per day.
The new guidance is 12% to 24% lower than the previous guidance range of 60,000 to 70,000 barrels per day. All the production figures cited are net to Genel based on its share of ownership.
If the new guidance is delivered, Genel will produce between 29% to 38% less oil from Taq Taq and Tawke than it did in 2015, when the average production rate came in at 84,900 barrels per day.
A new sidetrack well has been drilled on the Taq Taq field. The well is the first to be drilled this year as part of a development programme that is aiming to distribute the production rate over the field more evenly.
The well is in the latter stages of the clean-up phase but is still flowing 3,000 barrels of oil per day, comfortably within the 1,500 to 5,000 barrel target. The rig has now moved to the next sidetrack well, TT-07z, which will take around 60 days to drill.
Importantly, the future development work on Taq Taq this year will be dependent on the success of that first well as Genel tries to offset the natural field decline.
"Key technical indications from Taq Taq year to date are in line with those underlying the ultimately recoverable reserves described in the Competent Person's Report issued on April 25, 2016. Full year 2016 data from Taq Taq will be incorporated into a new Competent Person's Report which the company intends to issue in the first quarter of 2017," said Genel.
Genel shares were up 2.8% to 127.25 pence per share on Thursday.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Genel Energy