Genel Energy Plc, the largest oil producer in Iraq’s Kurdistan region, expects output to rise once a pipeline to Turkey becomes available in the fourth quarter.
“There will be a substantial increase in production next year,” Chief Financial Officer Julian Metherell said today in an interview, without giving a specific forecast. “The pipeline is currently 15 kilometers short of the tie-in. We’re confident that we’ll have export capability through it, and that will allow us to utilize our capacity.”
The London-listed company run by former BP Plc Chief Executive Officer Tony Hayward, which has capacity to pump 80,000 barrels a day, is seeking to export its crude by pipeline to cut transportation costs. Genel has been sending cargoes to Turkey by truck since Iraq’s northern Kurdistan region halted exports through a central government-run pipeline in December.
Genel climbed 2.1 percent to 959 pence in London trading, the highest closing price since September 2011.
The company, which pumped 41,500 barrels a day in the first half, sends as much as 40,000 barrels a day to Turkey, where it sells for $75 a barrel after transportation costs. Genel’s two biggest producing fields, Tawke and Taq Taq, may both have capacity of 200,000 barrels a day by the end of 2014, Metherell said. Genel owns 44 percent of Taq Taq and 25 percent of Tawke.
The Kurds, sparring with the Oil Ministry in Baghdad over the sharing of revenue from crude sales and payments owed to international producers, have started building their own pipelines to neighboring Turkey as a step toward economic self-sufficiency.
Genel today raised estimates for its gas reserves at the Miran and Bina Bawi fields to 8 trillion cubic feet to 14 trillion cubic feet. The company is looking to sell a portion of Miran, where it holds a 100 percent interest, and negotiate deals to sell the gas in Turkey.
Genel has also added 500 million barrels of contingent resources through exploration this year, and is targeting another 500 million barrels with new wells at Taq Taq and off Morocco later this year.
The company’s output will rise to 45,000 barrels to 55,000 barrels of oil equivalent a day this year from 44,500 barrels in 2012, generating revenue of $300 million to $400 million, it said today.
Genel’s revenue rose to $160.6 million in the first six months of 2013 from $123.1 million a year earlier. It has $867.1 million in cash on its balance sheet.
Investors including Hayward and financier Nathaniel Rothschild bought Genel, a Turkish company, in 2011 with more than $2 billion raised through an investment vehicle in an initial public offering. It will consider returning cash to investors next year, Metherell said today.
If the company exports via pipeline for higher selling prices, and if it can take on debt and sell an interest in its Miran gas discovery, “there may be some scope for capital return,” Metherell said.