by Will Forbes
This is the first interim
results statement under Genel’s new management, with a new CEO and CFO taking
the reins. In the near-term, we expect them to focus on operational
delivery in Kurdistan rather than seeking expansionist acquisitions in/outside
the core area.
Genel’s interims add only
incrementally to the overall story. Revenue, production and capex guidance all
remain unchanged and operations at the fields continue, safe from ISIS. The
company has disclosed capex estimates for the Miran/Bina Bawi gas condensate
development, which highlights the very low development costs that KRG-focused
projects benefit from. Upstream full life costs are estimated at less than
$2/boe, with additional midstream capex (of $2.5bn) expected to be
funded/managed by the KRG. These are extremely low by global benchmarks and
underline the appeal of Kurdistan operations in a $50/bbl world.
Given the KRG statement a few
days ago on starting payments to contractors (see our previous blog post here),
the next few months will hopefully see positive news. Should the payments start
in September (and ramp up in early 2016) as promised, we should see a marked
increase in interest for Genel, DNO, GKP and others as they get paid for their
production and start to recoup past profits (the Genel net KRG receivable alone
now stands at $378.4m). The lack of payments visibility has been a major
obstacle to the long-term story for contractors and the KRG. Once cash is
flowing, the companies can start to invest more materially in other projects
(for Genel this includes at Peskabir, Ber Bahr and Chia Surkh) where
discoveries await appraisal and development.
African exploration has taken a
back seat as expected, with relinquishment of Juby Maritime and studies
continuing on the other two licences (Mir Left and Sidi Moussa). Somaliland
remains a longer-term play (one we remain positive on), Ethiopia has a
drill-or-drop decision due in January 2016 and the 24% interest in Cote
D’Ivoire is under consideration for a farm-down before a commitment well in 2H2015.
No comments :
Post a comment