Genel Energy Shares Fall 10% After Warning on Output -- Update
26 October 2016 - 10:47PM
Dow Jones News
By Alex MacDonald
LONDON--Genel Energy PLC's (GENL.LN) shares fell after the
U.K.-listed energy company warned that oil output and revenue this
year would be at the lower end of its guidance range, largely due
to lower production from its Taq Taq field in Kurdistan.
The company, chaired by BP PLC's (BP.LN) former chief executive
Tony Hayward, reported a 38% drop in production to 53,100 barrels
of oil a day for the three months ended Sept. 30 compared with the
same period a year before. This reflected a 24,000 decline in daily
oil barrel output at its 44%-owned Taq Taq field and a 9,000 drop
in daily output at its 25%-owned Tawke field in Kurdistan.
The company now expects 2016 oil output and revenue to be at the
lower end of its previously cut guidance range of 53,000 to 60,000
barrels a day and $200 million to $230 million in revenue.
Genel said oil payments owed by the Kurdistan Regional
Government of Iraq had risen to $437 million at the end of
September from $412 million in June. This reflected a delayed
payment in August, as the regional government grapples with the
need to pay fighters to battle against Islamic State militants and
pay public salaries.
Genel's shares were down 10% at 83.75 pence share at 1027 GMT,
resulting in a market capitalization of 233 million pounds ($284
million). The company's shares have fallen 51% this year,
reflecting a $1 billion write-down of the company's Taq Taq
reserves earlier this year.
Genel CEO Murat Ozgul said he remained optimistic about
receiving future payments from the Kurdistan government.
"With export volumes at [the] Ceyhan [pipeline] having increased
following a new deal with the federal government, and the recent
recovery in the oil price, this bodes well for the region's cash
flows," he said.
However, brokerage Stifel said Genel's trading update was
uninspiring.
"The key news is Taq Taq, which continues to decline in
production and which, unless it can be remediated, seems to be
undershooting the...production profile established earlier in the
year," it said in a note.
The brokerage said Genel would need to offset Taq Taq's lower
production with more oil from Tawke's recent three-well drilling
campaign to reach the bottom of its output guidance range.
Genel is working on a Taq Taq development plan, which is due to
be completed at the start of 2017.
The company said it had cut this year's capital expenditure to
below the previous range of $90 million to $110 million, with
reduced spending at Taq Taq and Tawke as well as lower forecast
expenditure on its Miran and Bina Bawi gas prospects, whose
pre-front end engineering and design studies are due to be
completed around year-end.
-Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
October 26, 2016 07:32 ET (11:32 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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