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Tawke Oilfield: First Quarterly Production Increase since 2015

Genel Energy notes that DNO ASA, as operator of the Tawke PSC (Genel 25% working interest), has today issued an update on licence activity.

Gross production at the Tawke licence averaged 106,900 bopd during the second quarter, of which Peshkabir contributed 62,300 bopd and Tawke 44,600 bopd, the latter representing the first quarterly production increase since 2015 at this legacy field as new wells are drilled, workovers conducted on existing ones and gas injection continued.

In the second quarter, four new production wells were brought onstream on the Tawke licence with three at Tawke and one at Peshkabir. Together with wells drilled in the first quarter, natural field decline has been arrested and reversed, including at Tawke, raising DNO’s full-year projection to 107,000-109,000 bopd (previously 105,000 bopd).

Genel’s production guidance for 2022 is unchanged, with net portfolio production currently expected to be between 30-31,000 bopd for the full-year.

(Source: Genel Energy)

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Dana Gas: “Strong Operational and Financial Performance”

Dana Gas PJSC has announced its financial results for the half year ended 30 June 2022.

In the first six months of the year, the Company generated a net profit of AED 407 million ($111mm) or 5.8 fils per share, an 82% increase compared to an adjusted net profit (excluding reversal of impairment) of AED 225 million ($61mm) in H 1 2021.

The gains in Dana Gas’s profitability in the first half were driven by elevated hydrocarbon prices, the Company’s continued commitment to maintaining a low-cost base and strong operational performance in the Kurdistan Region of Iraq (KRI).

The Company’s revenue for the first six months of the year increased 31% to AED 1,041 million ($284mm) as compared to AED 792 million ($216mm) in H1 2021 and its operating costs dropped 16%. The Company’s realized prices during the first half of the year averaged $87/bbl for condensate and $44/boe for LPG compared to $48/bbl and $32/boe respectively in H1 2021.

Despite the challenging security situation, the Company’s current operations in the KRI have continued uninterrupted. Production from the KRI increased 1% in the first half and the KM250 expansion project has progressed well. During the first half, drilling of the project’s first development well was completed, and drilling operations for the second well are currently in progress. Whilst EPC construction work on KM 250 was suspended in June amid heightened security concerns, the Company is working with the authorities to address security concerns and to resume construction.

Given the strong operational and financial performance the Board expects to maintain its semi-annual dividend payment in keeping with the Company’s dividend policy.   The interim dividend will be decided by the Board at its meeting in September.

Dr Patrick Allman-Ward (pictured), CEO of Dana Gas, commented:

“Dana Gas delivered strong half year results, supported by our robust operational performance, low cost base and favourable energy market conditions. Despite an increased uncertainty around the global economy amid high inflation, the outlook for the remainder of 2022 is still encouraging with both energy prices and demand remaining high.”

Operations & Production

The Group’s overall production in H1 2022 was  61,100 boepd, a 5% reduction from 64,000 boepd in H1 2021. This was due to a 9% production drop in Egypt mainly as a result of natural field decline. Production output in the KRI increased by 1%, with production averaging 34,500 boepd in H1 2022 versus 34,300 in H1 2021.

Operations have continued as normal during the period. Heightened uncertainty in the region and subsequent precautionary security measures have impacted the Khor Mor expansion project. As a result, the KM250 project remains on temporary suspension. The Company and its partners are working closely with the KRG to address all concerns and all parties remain committed to implementing the expansion project and resume construction activities as soon as possible.

Liquidity and Collections

The Company’s cash position at the end of H1 2022 stands AED 759 million ($207mm) including AED 436 million ($119mm) held at the Pearl level.

The Group collected a total of AED 660 million ($180 mm) during the H1 2022, with the KRI and Egypt contributing AED 495 million ($135mm) and AED 165 million ($45mm) respectively.

(Source: Dana Gas)

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Heatwave in Iraq: Concern for Workers in 50C Heat

Effective measures are needed to ensure adequate Occupational Safety and Health for workers during extreme heat in Iraq

With temperatures in Iraq soaring up to 50 degrees Celsius [122 degrees Fahrenheit] in recent weeks, the ILO in Iraq is calling on its tripartite partners – the government, employers’ and workers’ organizations – to ensure that appropriate measures are taken to mitigate some of the risks associated with working under extreme heat and ensure that workers are provided with adequate care at their workplace.

The extreme heat is increasing concerns in relation to the Occupational Safety and Health (OSH) conditions of workers, especially those employed in construction and agriculture – a sector which is already considered as one of the most hazardous in the world.

According to the recent Labour Force Survey, one in four workers in Iraq is employed either in construction or agriculture – an extremely significant number.

The ILO released a report in 2019 which stated that the “rise in global temperatures caused by climate change will make the phenomenon of “heat stress” more common,” adding that “the higher heat levels caused by climate change threaten progress towards decent work by leading to a deterioration of working conditions and undermining the security, health and well-being of workers.”

Workers in some parts of the country have been given time off due to the heat. Yet, for workers who cannot afford to miss a day of work, such as those in informal, temporary, seasonal or day labour, measures must be taken to ensure their protection.

On the practical level, this could include ensuring workers are provided with appropriate clothing, access to drinking water and shaded areas; and are encouraged to work during cooler hours with appropriate break times.

It also includes ensuring that legislation related to OSH are being enforced through labour inspections – especially in sectors which face most risks.

Iraq has ratified a number of ILO Conventions which focus on the needs to ensure protection for workers in different sectors, and most recently through the ratification of the Safety and Health in Agriculture Convention, 2001 (No. 184), which re-affirms the country’s commitment to decent work and International Labour Standards.

The ILO is committed to supporting its partners in the development of Occupational Safety and Health and Labour Inspection polices and systems, that will contribute to modernizing those systems and improving conditions for workers and their employers, in line with International Labour Standards.

While these efforts are not specific to heat stress at work, they will nonetheless contribute to ensuring a more and better working environment for all workers in Iraq.

The safety and health of workers is the responsibility of everyone. We all have a role to play – even if small – to ensure that working conditions are decent and safe and that our environment is protected from further degradation.”

(Source: UN)

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Iraq Planning Increased Oil Production in “Coming Years”

By John Lee.

The First Vice President of the Iraqi National Oil Company (INOC), Hamid Younis, has said that oil production in Iraq can be increased to 5-to-8 million barrels per day (bpd) “during the coming years.“

He is quoted in a statement from the Iraqi Ministry of Oil, following a meeting that he chaired with officials from Iraqi oil companies to discuss plans to maintain and increase oil production and export.

The Director-General of the Iraqi Oil Exploration Company, Ali Jassim, said that the next phase will see remarkable activity in the exploration sector, including operations in the Western Desert and Nineveh Governorate.

(Source: Ministry of Oil)

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Pertamina to Increase Holding in West Qurna 1

By John Lee.

Pertamina, the Indonesian state-owned energy company, will reportedly buy an additional 10 percent stake in the West Qurna 1 oilfield from ExxonMobil.

The Deputy Director-General of the Basra Oil Company (BOC), Hassan Muhammad Hassan, told the official Iraqi News Agency (INA) that the agrreement, “is subject to the signing of the settlement agreement with the Basra Oil Company.“

Pertamina previously had a 10 percent holding.

The Iraqi cabinet had previously agreed to allow BOC to take over ExxonMobil‘s holding in the field, at a price of “up to $350 million.”

(Source: INA)

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MSF in Iraq annual report 2021

The effects of years of conflict and instability are still felt in Iraq, more evidently in regions that witnessed fighting between the Islamic State (IS) group and the Iraqi-led coalition. In 2021, Iraq continued to be severely affected by COVID-19, with the country experiencing its second and third COVID-19 waves, each recording a higher number of infections and deaths than the one before it.

The pandemic significantly impacted the ongoing recovery of the health system and people’s ability to access healthcare services. Many healthcare facilities across the country suspended their regular programmes to focus on treating COVID-19 patients.

MSF teams continued to provide a wide range of essential medical services and supported the response to health emergencies and health needs caused by the recent war against IS, the consequent displacement and return of millions of people, people’s under-served healthcare needs and the COVID-19 pandemic.

This annual report provides an overview and the highlights of our activities across Iraq during 2021.

Click here to read the full report.

(Source: MSF)

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Iraq Decreases Oil Exports in July

By John Lee.

Iraq’s Ministry of Oil has announced preliminary oil exports for July of 102,385,049 barrels, giving an average for the month of 3.303 million barrels per day (bpd), down from the 3.373 million bpd exported in June.

The exports from the oilfields in central and southern Iraq amounted to approximately 99,965,094 barrels, while exports from the Kirkuk fields through the port of Ceyhan amounted to 2,344,536 barrels.

While not explicitly stated by the Ministry, these figures seem to imply that exports by road to Jordan totalled 75,419 barrels for the month.

Revenues for the month were $10.608 billion, at an average price of $103.60 per barrel.

June’s export figures can be found here.

(Source: Ministry of Oil)

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Genel Energy: Strong Results, but Shares Down

By John Lee.

Shares in Genel Energy were trading down around 5 percent on Tuesday morning, despite significant increases in revenue and profit announceed in its unaudited results for the six months ended 30 June 2022.

Paul Weir, Interim Chief Executive of Genel, said:

“Our cash generation in the first half of the year has been exceptionally strong – driven by our low-cost, high-margin oil production and disciplined capital allocation. We remain focused on the delivery of our long-established strategy of putting capital to work to grow our production and cash generation, while retaining our resilience and paying a material and progressive dividend.

We generated $129 million in free cash flow and are well on track to generate over a quarter of a billion dollars of free cash flow for the full year. This continues to build our balance sheet strength and optionality, providing us with the funds to add the right assets at the right price. Our cash flow this year benefits from the recovery of receivables and our override payments, and we are focused on replacing these by building a portfolio that supports the resilience, sustainability, and progression of our material dividend.“

Results summary ($ million unless stated)

H1 2022 H1 2021 FY 2021
Average Brent oil price ($/bbl) 108 65 71
Production (bopd, working interest) 30,420  32,760 31,710
Revenue 245.6  151.5 334.9
EBITDAX1 212.3  123.1 275.1
  Depreciation and amortisation (84.4)  (81.8) (172.8)
  Impairment of oil and gas assets – – (403.2)
  Reversal of impairment of receivables 12.8 – 24.1
Operating profit / (loss) 140.7 41.3 (276.8)
Cash flow from operating activities 216.3 91.1 228.1
Capital expenditure 74.7 58.2 163.7
Free cash flow2 128.7 22.2 85.9
Cash 412.1 266.4 313.7
Total debt 280.0 280.0 280.0
Net cash / (debt)3 141.3 (2.2) 43.9
Basic EPS (¢ per share) 45.4 9.3 (111.4)
Dividends declared for the period (¢ per share) 6 6 18
  1. EBITDAX is operating profit / (loss) adjusted for the add back of depreciation and amortisation, impairment of property, plant and equipment, impairment of intangible assets and reversal of impairment of receivables
  2. Free cash flow is reconciled on page 8
  3. Reported cash less IFRS debt (page 8)

Summary

  • Material cash generation from low-cost and high-margin oil production:
    • Net production averaged 30,420 bopd in H1 2022 (H1 2021: 32,760 bopd)
    • Low production cost of $4.4/bbl and strength of oil price delivered a margin per barrel of $32/bbl (H1 2021: $20/bbl)
    • Free cash flow of $129 million (H1 2021: $22 million)
  • Financial strength provides options for capital allocation:
    • $75 million of capital expenditure in H1 2022, of which $41 million was spent at Taq Taq and Tawke, and $27 million on Sarta appraisal
    • Genel took on operatorship at Sarta on 1 January 2022, with Sarta-5 and Sarta-1D subsequently being completed
    • Cash of $412 million (31 December 2021: $314 million)
    • Net cash of $141 million (31 December 2021: net cash of $44 million)
  • A socially responsible contributor to the global energy mix:
    • Zero lost time injuries (‘LTI’) and zero tier one loss of primary containment events at Genel and TTOPCO operations
      • Two million work hours since the last LTI, as we seek to repeat the performance of six years without an LTI up to September 2021
    • As we mark 20 years of operations in the Kurdistan Region of Iraq (‘KRI’), the Genel20 Scholars initiative has launched, with Genel funding the opportunity for 20 economically disadvantaged students to have a life-enhancing education at the American University of Kurdistan

Outlook

  • Production guidance for 2022 maintained as around the same level as 2021, currently tracking between 30-31,000 bopd for the full-year
  • 2022 capital expenditure guidance of between $140 million and $180 million tightened to $150 million to $170 million
  • Genel expects free cash flow of over $250 million in 2022, pre dividend payments
  • Appraisal at Sarta is ongoing, with results of the Sarta-6 well expected around the end of the year
  • The Company continues to actively pursue new business opportunities, focused on production and cash generation
  • The London seated international arbitration regarding Genel’s claim for substantial compensation from the KRG following Genel’s termination of the Miran and Bina Bawi PSCs is ongoing
  • Interim dividend retained at 6¢ per share:
    • Ex-dividend date: 15 September 2022
    • Record date: 16 September 2022
    • Payment date: 14 October 2022

Full results here.

(Source: Genel Energy)

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Saudi Arabia allocates Grant for Renovation of Ibn Al Khatib Hospital

By John Lee.

Iraq and Saudi Arabia have signed a memorandum of understanding (MoU) regarding the allocation of a grant from the government of Saudi Arabia to finance the renovation of Ibn Al Khatib Hospital in Baghdad.

The Saudi embassy initially announced its support for the hospital last year, following a fire that killed at least 82 people, and left more than 100 injured.

The grant will be provided through the Saudi Fund for Development (SFD).

During the meeting, Iraq’s Ambassador to Saudi Arabia, Dr. Abdul Sattar Hadi Al-Janabi, praised the critical role played by the Kingdom through the SFD in supporting the health sector and the infrastructure in Iraq. He highlighted the importance of the present project in enhancing the livelihood of many Iraqis and their access to essential health services.

According to the official Saudi Press Agency, the Kingdom has allocated $1.5 billion for soft loans through SFD to support development in Iraq.

(Source: Saudi Press Agency)

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