Genel Energy expects revenues ahead of previous guidance

Genel Energy expects last year's revenues to be ahead of previous guidance following strong oil output in the Kurdistan regions of Iraq and Africa, the company announced in a trading update Friday.

The company said its average net working interest production for the full-year was 44,500 barrels of oil per day (bopd).

Total sales revenue for 2012 was pegged at $330m, including £132m to be reviewed from Iraq's Kurdistan Regional government.

The news comes as the oil company, run by the former BP Chief Executive Tony Hayward, was hit by claims it illegally exported some of the oil it produced in Kurdistan.

Last week Genel received permission from the Kurdistan Regional government to export crude oil from Taq Taq into Turkey by truck. It did so, making it the first company to export oil directly from the region as Kurdistan's oil trades have traditionally gone through Baghdad.

However, Iraq's Oil Minister, Abdul Kareem Luaibi, said Baghdad intended to file a lawsuit against Genel for the exports, according to UK newspaper The Independent.

The company reiterated that it was granted approval to export the oil, saying the authority was "consistent with the Iraqi Constitution of 2006, the Kurdistan oil and gas law of 2007 and the PSC governing operations at Taq Taq".

Genel began reducing exports in November in response to the uncertainty over the receipt of the second payment for historic exports owed from Iraq's federal government.

In the first two weeks of January, Taq Taq production averaged 89,000 bopd gross, hitting a high of 109,000 bopd.

Genel's exploration in Kurdistan region includes three high impact wells which will be completed in the first half of 2013, targeting over 750m barrels of oil equivalent of gross unrisked resource.

The operations in Kurdistan generated enough cash to fully fund last year's capital expenditure in line with previous guidance at $230m. Capital expenditure for 2013 was forecast between $400m and $500m.

"[Last year] saw a strong production performance and a materially expanded exploration portfolio which will provide us with significant opportunities in 2013, both in the Kurdistan Region of Iraq and Africa," Chief Executive, Tony Hayward, said.

"We expect revenues to be ahead of previous guidance and all development and exploration activities in Kurdistan to be funded from cash flow generated locally in line with our stated strategy.

"We are today exporting oil to Turkey in accordance with the authority granted to us by the Kurdistan Regional government and as the largest independent operator in Kurdistan, are well placed to take advantage of regional opportunities for a broader export market as the political situation continues to develop."

Shares were up 0.90% to 787.00p at 9:08 Friday.

RD