Genel Energy Plc (GENL), the oil explorer headed by former BP Plc Chief Executive Officer Tony Hayward, said production jumped in June after Iraq’s Kurdistan region opened an export pipeline to Turkey.
Net production averaged 84,000 barrels a day in June compared with a 63,000 barrels-a-day rate for the whole of the first half, the company said today in a statement.
The opening of the pipeline in May allowed the autonomous region to increase exports through Turkey, bypassing the central Iraqi network. While the government in Baghdad disputes Kurdistan’s right to sell oil directly, the regional administration has sold a cargo of oil at international prices and deposited the proceeds in a Turkish bank, Genel said.
Kurdistan, which plans a referendum on independence from Iraq, has largely remained calm as Islamist militants fight the central government for control of large parts of the country. London-based Genel said its operations remain safe and secure.
“Genel Energy looks well placed either as an early producer or as an M&A target by one of the super-majors,” analysts at Bernstein Research said today. “The upside is starting to look more compelling as the probability of a Kurdistan breakaway from Iraq increases.”
The shares gained as much as 2.4 percent to 1,048 pence in London, the highest in a month. The stock traded at 1,040 pence at 1:10 p.m. London time.
Genel maintained a forecast for average output in 2014 of 60,000 to 70,000 barrels a day and said revenue would be $500 million to $600 million.
The pipeline will allow Kurdistan to raise exports to 200,000 to 250,000 barrels a day this month from 125,000 barrels early last month, Ashti Hawrami, the regional natural resources minister, said on June 18. Daily shipments may increase to 400,000 barrels by the end of the year, he said.
Iraq, excluding the Kurdish region, holds 150 billion barrels of proven crude reserves in the world’s fifth-biggest deposits. The Kurdistan regional government controls 45 billion barrels and has attracted international oil companies including Genel, Exxon Mobil Corp. (XOM) and Total SA (FP) with financial terms many see as more generous than those in the rest of the country.
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