Genel Rises to Record as Kurdistan Starts Pipeline Crude Sales
Genel Energy Plc (GENL), the biggest oil and gas operator in Kurdistan, rose to a record after the semi-autonomous region of Iraq said it will sell its first crude through a new pipeline to Turkey this month.
Shares in the company run by former BP Plc (BP/) Chief Executive Officer Tony Hayward rose as much as 6 percent and traded up 5 percent at 1,133 pence as of 9:46 a.m. in London trading. The stock has surged 46 percent since the beginning of last year.
The Kurdistan Regional Government said yesterday that the first 2 million barrels of crude to pass through the pipeline will be sold at the end of January. The new export route gives Kurdistan its first unfettered access to international markets after years of disputes over oil payments with the federal government in Baghdad.
The sale announcement “provides confidence that the prospect of pipeline exports are becoming an increasing reality,” Deutsche Bank AG analysts led by Lucas Herrmann said in an e-mailed note. “Our 2014 production and earnings estimates for Genel assume a gradual ramp-up of exports.”
Norway’s DNO International ASA (DNO), which holds a stake in the Tawke field with Genel, also rose to a record today before pairing gains to 24.86 kroner, up 2 percent, at 10:57 a.m. Oslo time. Gulf Keystone Petroleum Ltd. (GKP), holder of the Shaikan field, advanced after saying it will start exporting by truck.
The pipeline will carry 4 million barrels of oil to Turkey in February and 6 million by the end of March, with shipments rising to 10 million to 12 million barrels a month by December, the KRG said in a statement on its website. The initial shipments are from Tawke, and crude from Taq Taq will be added later.
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. After slumping to as low as 595 pence in June 2012, the shares exceeded the IPO price of 1,000 pence in November last year.
Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries, exported 2.4 million barrels a day in November, according to the Oil Ministry. The Kurds had been sending as much as 50,000 barrels a day by truck into Turkey before the pipeline became operational.
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