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Genel Sees Output Rising 50% Once Turkey Pipeline in Use

Oct. 30 (Bloomberg) -- Genel Energy Plc, the biggest oil producer in the Kurdistan region of northern Iraq, said output will rise more than 50 percent when a new export pipeline to Turkey becomes operational next year.

“If we had the pipeline immediately, we could get to 80,000 barrels” a day, Chief Financial Officer Julian Metherell said in a telephone interview. Output was about 53,000 barrels a day in the third quarter, the company said today in a statement.

The new pipeline, undergoing commissioning, will give Kurdistan unhindered access to international markets for the first time after years of disputes with the government in Baghdad over export revenue. Genel has so far had to use trucks to send oil into neighboring Turkey, where it receives higher prices than in Iraq.

Genel will be able to increase production further once its two biggest fields, Taq Taq and Tawke, ramp up to 200,000 barrels a day each, of which 140,000 barrels are net to Genel, Metherell said. The Jersey, Channel Islands-based company maintained its forecast for 2013 production of 45,000 barrels to 55,000 barrels a day.

Genel has $805 million in cash on its books that may be returned to shareholders once the pipeline starts, depending on whether the company finds a partner for its Miran gas development and whether it raises debt, Metherell said. Genel is currently debt-free.

While the company may also consider acquisitions, the returns on its current assets are “difficult to beat in the mergers and acquisitions market,” he said.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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