UPDATE 1-Genel cuts forecasts as Iraqi Kurdistan owes more than $400M 12/20
OCT 20 2015
UPDATE 1-Genel cuts forecasts as Iraqi Kurdistan owes more than $400 mln
By Karolin Schaps
LONDON, Oct 20 ( Reuters ) - Genel Energy , one of the main oil producers in Iraqi Kurdistan, has cut its full-year production and revenue forecasts because it has had to cut investment due to weak prices and the $409 million it is owed by the Kurdistan Regional Government (KRG).
The London-listed company said on Tuesday it will not invest in increasing production at its oilfields until the KRG makes regular payments.
Shares in Genel fell 7 percent to 312 pence by 0752 GMT.
"As the payments come through we can restart the capital expenditure programme and that will then have a consequent impact on production," Genel Chief Financial Officer Ben Monaghan told Reuters .
Genel received $24.5 million from the KRG last month, improving the producer's cash position and raising expectations for more stable payments.
It said it was expecting another payment of the same value imminently.
The company cut its 2015 production forecast by 5,000-10,000 barrels per day (bpd) to 85,000-90,0000 bpd and lowered its revenue estimate for the year to $350-375 million from $350-400 million, assuming Brent prices of $50 per barrel.
As a result of lower investments in its oilfields Genel also reduced its capital expenditure forecast for 2015 to $150-175 million, down from $150-200 million.
"Continued regular payments will strengthen the balance sheet, allow for new development planning and increase momentum on the gas project, which should help Genel recover from recent sector underperformance," said analysts at J.P. Morgan Cazenove.
Last month, Genel purchased OMV's partner stake in the Bina Bawi gas field, a project set to help Iraqi Kurdistan meet its gas supply agreement with Turkey.
Genel said on Tuesday it had appointed ING Bank as financial advisor for the midstream debt financing, expected to be in place by the end of 2016.