Genel to Write Down Kurdish Gas
Genel Energy said January 24 it expects to write down the book value of its Miran and Bina Bawi gas fields in the Kurdish Regional Government (KRG) area of northern Iraq in final 2016 accounts, due for release March 30. It is also in the process of surrendering stakes in three oil licences.
At end-2015, the carrying value of the Miran and Bina Bawi fields in Genel’s accounts was $1.427bn; but the company said it expects to record a "material impairment" of the carrying value in its 2016 accounts. It has operated interests of 75% in Miran and 80% in Bina Bawi.
Earlier this decade, the fields were considered potential sources of gas supplies for Europe by 2020 through the Southern Gas Corridor.
Genel also said it agreed earlier this month to transfer its 40% interest in the Chia Surkh licence to its partner, Petoil, subject to goverment approval for up to $27mn, and will book an impairment on the asset of $198mn in 2016 accounts. It had now also formally relinquished its 40% interest in the Dohuk licence and was awaiting KRG approval of its relinquishment of its 40% operated interest in the Ber Bahr licence - all three being oil interests.
Pre-FEED and upstream gas development plan studies for Miran and Bina Bawi gas fields were expected to complete shortly, and talks were ongoing with the KRG to finalise Production Sharing Contract amendments and a gas lifting agreement. Efforts are also ongoing to bring in partners through a farm-down of both licences. Firm 2017 activity for the gas assets was expected to be largely technical and commercial in nature, added Genel. In the event of a successful farm-out, contingent activity could take the form of the environmental and social impact assessment and Front End Engineeering Design (FEED) for the gas treatment and processing facilities, as well as extended well tests and further 3D seismic on the Bina Bawi licence, it said.
Genel's website says Miran has resources of 4.3 trillion ft3 raw gas and 62mn bbls condensate and has tested 20-25mn ft3/d, while Bina Bawi has 7.1 trillion ft3 raw gas and 17mn bbls condensate.
CEO Murat Ozgul noted: “2016 was a major step forward for the monetisation of oil exports from the Kurdistan Region of Iraq. We received $207mn cash for oil sales and receivable recovery [which] allowed for work programmes to resume at Taq Taq and Tawke.” Its net 2016 production averaged 53,300 b/d but is expected to be only 35-43,000 b/d in 2017 due to scheduled work at both oilfields expected to cost Genel $50mn-$75mn.
In Africa, Genel expects 2D seismic acquisition on its 50% operated Odewayne block onshore Somaliland to start March 2017, and is in talks with the Moroccan government on the timing and scope of planned maximum $30mn exploration there.
Mark Smedley