Genel Energy Plc GENL Interim Management Statement

  Genel Energy Plc (GENL) - Interim Management Statement

RNS Number : 0379Q
Genel Energy PLC
01 November 2012

1November 2012


                               Genel Energy plc


                         Interim Management Statement


Genel Energy  plc  ("Genel  Energy"  or  the  "Company")  issues  its  Interim 
Management Statement for the period from 1 July 2012 to 31 October 2012.


· 2012  production  guidance  increased  to  c45,000  bopd  following  the 
resumption of export sales in August. Sales revenue guidance for 2012  remains 
unchanged at c $250 - 300 million

· Following the resumption of exports in August, gross production from Taq
Taq is now c90,000 bopd, and Tawke c75,000 bopd

· Construction of the first phase of the new export pipeline
infrastructure in the Kurdistan Region is on track to be completed by the year

· Resource base increased  by over 200% from  total reserves and  unrisked 
resources of 1.4 bn boe a year ago to 4.4 bn boe today

· Acquisition of an additional 26% interest in Miran and a 44% interest in
Bina Bawi, will allow Genel  Energy to create a  material gas position in  the 
Kurdistan Region to meet the growing needs of the Turkish market

· Exploration programme  to continue  throughout 2012 and  into 2013:  key 
wells are currently drilling  at Tawke Deep  and Chia Surkh  10, Taq Taq  Deep 
will spud in Q1 2013

· Strong cash position with cash of $0.9 billion

· Continuing to pursue further opportunities to deepen resource  potential 
both in the Kurdistan Region and  through further acquisitions of high  impact 
exploration assets within the Middle East and Africa

Production and Development

Genel Energy's net working interest production  for the year to date  averaged 
42,000 bopd.

Following the resumption  of export  sales from  the Kurdistan  Region in  the 
first week of August, total  exports commenced at 100,000  bopd. As part of  a 
subsequent agreement reached between  the Kurdistan Regional Government  (KRG) 
and the Federal Government of Iraq (FGI)  on the 13 September, this number  is 
expected to rise to 200,000 bopd by the end of the year.

Genel Energy is now selling 100% of the Company's production at  international 
prices and our production guidance for  2012 has increased to 45,000 bopd.  In 
2013, assuming the Company  continues to export our  production from both  Taq 
Taq and Tawke, average daily production is expected to be in excess of  70,000 

As part of the agreement  between the KRG and the  FGI, the FGI agreed to  pay 
the KRG for historic exports owed to contractors in the Kurdistan Region.  The 
KRG received an initial  payment of $530  million on 8  October 2012, and  the 
Company expects to receive its first payment shortly. This payment is expected
to reflect part of the total amount  owed to Genel Energy for unpaid  historic 
export revenues, and will be  in accordance with the contractor's  entitlement 
under its PSCs. The outstanding balance  is expected to be received in  early 

For current  exports, we  expect  all revenue  payments  will be  received  in 
accordance with the  PSC entitlement.  Under the  terms of  the 13  September 
agreement export payments are  to be received quarterly  in arrears, with  the 
first payment due  in the first  quarter of 2013.  Sales revenue guidance  for 
2012 remains unchanged at c$250-300 million as the Company's accounting policy
is to account for export revenues only on receipt of cash.

Taq Taq

The Company has continued to progress the appraisal and development  programme 
at Taq Taq. Gross production capacity is currently 120,000 bopd and remains on
track to deliver production capacity of 200,000  bopd by 2014. As part of  the 
ongoing development, the EPC contract for the second phase of construction  of 
the central processing facility has been awarded to Ventech USA. The  facility 
will add an additional 90,000  bopd and is expected  to be operational in  the 
first quarter of 2014.

Field development drilling  has continued with  3 of the  5 wells planned  for 
2012 completed and 2 more  planned before the year  end. Taq Taq 17  initially 
flowed at 26,000 bopd from multiple,  independently tested zones and is now  a 
producing well. Taq  Taq 19  completed, appraising  a previously  unpenetrated 
area of the  field further  north. It  flowed at  15,000 bopd  from the  Upper 
Cretaceous Shiranish formation.

Pipeline Update

The first  phase  of  the  KRG's export  pipeline  infrastructure  is  nearing 
completion. The construction of  a 20" pipeline from  the Taq Taq oilfield  to 
Khurmala is expected  to be operational  by the  end of 2012,  giving Taq  Taq 
access to  the  Erbil  refinery  and the  existing  Kirkuk  to  Ceyhan  export 
infrastructure. KAR  Group,  the  private  Kurdish  construction  company,  is 
building the pipeline, which has an  initial capacity of 150,000 bopd that  it 
is planned  to increase  to some  200,000  bopd with  the addition  of  pumps. 
Assuming exports continue, we expect production from Taq Taq at the  beginning 
of 2013 to reach levels closer to the current field capacity of 120,000 bopd.

The second phase, where construction  is expected to start  in 2013, is a  one 
million bopd capacity pipeline from Khurmala to the Fishkabur pump station  on 
the border with Turkey.  This pipeline will  be controlled by  the KRG and  it 
will allow Taq Taq crude to be exported directly to Turkey.


Genel Energy and DNO International are on track to deliver production capacity
of 100,000 bopd at Tawke  by the end of 2012  with the completion of  facility 
and pipeline capacity upgrades and  further development drilling. Studies  are 
underway to support production capacity of 200,000 bopd by the end of 2014.

The planned 2012  development drilling programme  of 3 wells,  in addition  to 
Tawke 16, is on track. Tawke 14 drilled through the main field bounding  fault 
and entered  the  Tertiary  Gercus  formation. The  well  is  currently  being 
side-tracked. Tawke 18 was  completed at the Cretaceous  reservoir as part  of 
the target to achieve production  capacity of 100,000 bopd  by the end of  the 
year, and  will  shortly be  put  on production.  Tawke  19, the  last  Tawke 
development well  under the  100,000  bopd production  enhancement  programme, 
spudded on 6 October. It is currently drilling at c1,000 metres with a  target 
depth of c2,500 metres.

Exploration and Appraisal - Kurdistan


Genel Energy's current exploration programme in the Kurdistan Region comprises
three further high impact wells to be completed during the second half of 2012
and the early  part of  2013, targeting over  750 mmboe  of unrisked  resource 
potential. Tawke Deep and Chia Surkh 10 have spudded since the half year and a
further well (Taq Taq Deep) is expected to spud in the first quarter of  2013. 
Drilling at Miran East-1 continues.



As  previously  announced,  Genel  Energy  completed  its  acquisition  of  an 
additional 26 per cent interest in the Miran exploration block for $156m on 22
August 2012 and became joint operator. At the same time the Company provided a
bilateral loan to Heritage Oil Plc ("Heritage") of $294 million, which subject
to Heritage shareholder approval, can be repaid by the transfer of  Heritage's 
remaining stake in the Miran exploration block to Genel Energy rather than  in 
cash. Assuming this transfer takes place, Genel Energy's interest in the Miran
block will increase  to 100 per  cent from the  51 per cent  the Company  owns 
today, prior to the KRG's 25 per cent back-in right.

In the  second  half of  2012,  the appraisal  programme  for the  Miran  West 
discovery has  continued. The  Miran West-4  deviated appraisal  well  reached 
target depth on  16 July.  The well  was drilled to  a target  depth of  1,905 
metres and tested 1,350 bopd of 16-18  degree API oil in the Upper  Cretaceous 
oil reservoir similar to Miran West 1 and Miran West 3. During the first  half 
of 2013, an additional  2 appraisal wells are  planned along with an  Extended 
Well Test on the oil bearing lower Cretaceous reservoirs. It is expected  that 
this will produce up to 5,000 bopd starting at the end of 2012.

The Miran Block (51 per cent  working interest) is a commercial gas  discovery 
and the intention is  undertake a phased approach  to field development.  Over 
the course of the  next 12 to  15 months multiple elements  of the full  field 
development  project  will  be  progressed  including  completing  FEED  work, 
continuing discussions with customers to secure long term gas sales agreements
and working with  the KRG to  ensure appropriate export  infrastructure is  in 

Bina Bawi

Further appraisal of the Bina Bawi  field (44 per cent working interest)  will 
continue for the rest of 2012 and into the first half of 2013. Bina Bawi-4  in 
the north of the field  spudded on 17 June 2012  and is currently drilling  at 
circa 2,300 metres  with a target  depth of  circa 4,200 metres.  The well  is 
designed to test the  Jurassic, Triassic and  Permian reservoirs with  results 
expected in the  first quarter of  2013. Bina Bawi-5  spudded on [14]  October 
2012, with a target depth of c 2,400 metres. It is targeting the Jurassic  and 
Triassic reservoirs, as well as testing closure of the structure to the  North 
West. 3D seismic  will be shot  over the  field during 2013  to build  further 
understanding of the reservoir, ahead of full field development.

In common with other fields successfully developed in the Kurdistan Region,  a 
phased approach is being taken to field development. An extended well test  is 
expected to come on  stream in early  2013 with an  initial capacity of  5,000 
bopd from the Bina Bawi 3  well. Ahead of full field development,  Declaration 
of Commerciality is planned  for 1Q of 2013,  with the Field Development  plan 
expected to be submitted in the second half of 2013.

Exploration - Africa

Over the last  6 months, Genel  Energy has  built a portfolio  of high  impact 
exploration assets  within Africa,  in line  with our  stated strategy.  These 
interests were  acquired  through  a  combination  of  small  scale  corporate 
acquisitions, farm-ins and license activity.

The African portfolio  consists of  two blocks  in Somaliland,  two blocks  in 
Morocco, four blocks in Malta, and  one block in Cote d'Ivoire. The  portfolio 
is in  four  countries covering  three  specific geological  trends  where  we 
believe that there  are opportunities  to make material  new discoveries:  the 
rift basins of central and east Africa, an analogue to the Libyan Sirte  basin 
in southern Malta, and  the Jurassic carbonate  plus Cretaceous submarine  fan 
plays of  northwest Africa.  Each of  these areas  has potential  for  further 
deepening of the Company's position.

Currently Genel  Energy  is  acquiring seismic  or  reprocessing  existing  3D 
seismic, and is  developing work  programmes, in most  of the  acreage. It  is 
intended to deliver an 8 well exploration campaign targeting over 2.2  billion 
boe of net  unrisked prospective  resources, with drilling  commencing in  the 
fourth quarter of 2013/first quarter of  2014. The capital programme for  this 
is $400  million over  3 years,  with a  minimum work  commitment of  $200-250 


Capital expenditure for 2012 is expected to be in line with previous  guidance 
of c$200-250  million,  and  we expect  it  to  remain fully  funded  by  cash 
generated from current operations in the Kurdistan Region. At 31 October 2012,
the Company had $0.9 billion of net cash.

Future announcements

Genel Energy's 2012 Full Year Results will be announced on Thursday 28
February 2013.


For further information, please contact:

Genel Energy                              +44 20 7659 5100

Julian Metherell, Chief Financial Officer

Natalie Fortescue, Investor Relations

M: Communications +44 20 7920 2330

Patrick d'Ancona

Andrew Benbow

Notes to editors:

Genel Energy is an independent oil and gas exploration and production  company 
listed on  the main  market of  the  London Stock  Exchange (LSE:  GENL).  The 
company, with  headquarters in  London and  additional offices  in Ankara  and 
Erbil, is  the largest  independent oil  producer and  the largest  holder  of 
reserves in  the Kurdistan  Region of  Iraq. For  further information,  please 
refer to

Forward looking statements:

This statement includes forward-looking statements that reflect the  Company's 
intentions,  beliefs  or  current  expectations.  Forward-looking   statements 
involve all matters  that are not  historical fact. The  Company has tried  to 
identify those forward-looking  statements by using  the words "may",  "will", 
"would", "should",  "expect", "intend",  "estimate", "anticipate",  "project", 
"believe", "seek", "plan",  "predict", "continue" and  similar expressions  or 
their negatives. Such  statements are  made on  the basis  of assumptions  and 
expectations that the  Company currently  believes are  reasonable, but  could 
prove to  be wrong.  Such  forward-looking statements  are subject  to  risks, 
uncertainties and assumptions and other factors that could cause the Company's
actual results  of operations,  financial condition,  liquidity,  performance, 
prospects or  opportunities, as  well as  those of  the markets  it serves  or 
intends to serve, to differ materially  from those expressed in, or  suggested 
by, these forward-looking statements. Important factors that could cause those
differences include, but are not limited to: changing business or other market
conditions, general economic conditions, and the Company's ability to  respond 
to trends  in its  industry. Additional  factors could  cause actual  results, 
performance or achievements to differ materially. The Company and each of  its 
directors, officers, employees and advisors expressly disclaim any  obligation 
or undertaking to release  any update of or  revisions to any  forward-looking 
statements in  the presentation  or these  materials, and  any change  in  the 
Company's expectations or any change in events, conditions or circumstances on
which these  forward-looking  statements  are based,  except  as  required  by 
applicable law or regulation. No information included in this presentation  is 
intended to be a profit forecast or a financial projection or prediction.

                     This information is provided by RNS
           The company news service from the London Stock Exchange


IMSLFFIIILLLVIF -0- Nov/01/2012 07:00 GMT
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