Kurdistan News – Page 20 – Cursor international

28 March, 2019

GKP Declares Dividend; Shares Rise

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were trading up more than three percent on Thursday morning after the company proposed issuing $50-million in dividends this year.

The company, which produces oil at the Shaikan field (pictured) in Iraqi Kurdistan, issued the following statement as part of its 2018 Full Year Results:

Financial

Record revenue of $250.6 million (FY 2017: $172.4 million)
EBITDA of $149.3 million (FY 2017: $104.3 million)
Profit after tax of $79.9 million (FY 2017: $14.1 million)
Net capital investment in Shaikan of $35.7 million (FY 2017: $8.1 million)
Cash balance of $295.6 million at year end (2017: $160.5 million)
The Company anticipates being fully funded for all phases of the Shaikan expansion
programme under its current set of assumptions
$100 million bond refinancing in July 2018

Dividend

The Board confirms a dividend policy to shareholders, which will comprise an annual dividend on the ordinary shares of the Company of no less than $25 million per financial year
The Company is therefore pleased to announce its intention to pay an ordinary dividend on the ordinary shares of $25 million in 2019 and, given its current financial strength, the Board is also proposing to complement the ordinary dividend in 2019 with a $25 million supplemental dividend to shareholders on the ordinary shares
The total dividend of $50 million will be subject to approval at the next AGM in June 2019. One third of the total dividend will be paid following approval at the Company’s AGM, with the balance payable following release of the Company’s half-year results

Operational

Full year gross average production of 31,563 bopd (2017: 35,298), at the upper end of guidance
GKP and its partner MOL reached agreement with the MNR in June 2018 to recommence investment into Shaikan, towards an initial production target of 55,000 bopd by Q1 2020
Common vision for a phased development that will grow gross Shaikan production to 110,000 bopd
The development vision described by the revised Field Development Plan (“FDP”) was submitted in October 2018. This revision has not been accepted by the MNR, specifically due to a request for additional assurances on the timing and commitment to eliminate gas flaring. As the parties aim to progress this matter and reach an agreement, investment on the ground continues as per the initial phases of this plan
On target to achieve plant de-bottlenecking by year-end and tie-in of the pipeline from PF-1 to the export system mid-year
GKP internal review indicates an upgrade in Proven (1P) reserves and no material changes to Probable reserves (2P). A revised Competent Person’s Report to be released following FDP approval
Robust HSSE performance with one LTI in 2018, the first in three years

Corporate

Signature of Crude Oil Sales Agreement in January 2018 normalised payments in line with oil prices and production. Renewed in February 2019 through to 2020 providing certainty over payments for the foreseeable future
Further strengthening of the Board in 2018 with Jaap Huijskes appointed as Non-Executive Chairman, Martin Angle as Senior Independent Non-Executive Director and Kimberley Wood as Non-Executive Director

Outlook

On track for material uplift in production to 55,000 bopd in Q1 2020
In 2019, gross Capex associated with 55,000 bopd phase of between $130 million and $150 million, in addition to $20 million to $45 million associated with the subsequent development phase
Dividend distribution from 2019 onwards
Gross production guidance for 2019 unchanged at 32,000 – 38,000 bopd

Jón Ferrier, Gulf Keystone’s Chief Executive Officer, said:

“Throughout 2018, our focus was on laying the foundations for the delivery of the Company’s phased growth plans, which envisages a step change in production profile. The Company is on track to achieve its near-term production target of 55,000 bopd in Q1 2020, and with our partner MOL continues to work towards delivering the staged investment programme. The remarkable Shaikan reservoir presents a straightforward, low-cost onshore development opportunity with unrivalled near-term upside.

“The new dividend policy represents another major milestone for the Company. It crystallises returns to shareholders while we preserve the ability to fully fund the Shaikan development and maintain a strong balance sheet; our platform for growth.“

More details here.

(Sources: GKP, Yahoo!)

20 March, 2019

Genel Energy Shares dip following Results

By John Lee.

Shares in Genel Energy were trading down four percent on Wednesday morning after the company announced its audited results for the year ended 31 December 2018, in which it wrote down its Miran asset by $424 million.

Despite this, Genel says it can now initiate “a material and sustainable dividend policy“, with payments starting in 2020.

The company’s shares are up 17 percent since the start of the year.

Murat Özgül, Chief Executive of Genel, said:

“Genel’s strategy at the start of 2018 was clear – generate material free cash flow from producing assets, build and invest in a rich funnel of transformational development opportunities, and return capital to shareholders at the appropriate time. We are delivering on this strategy.

“2018 was another year of material free cash flow generation, we continued to transform our balance sheet and the addition of assets with the potential of Sarta and Qara Dagh led to a very successful delivery on the first two parts of our strategy. We will continue to develop opportunities and invest ingrowth. As we do so, a robust cash flow outlook and our confidence in Genel’s future prospects underpins our initiation of a material and sustainable dividend policy.“

Results summary ($ million unless stated)

	2018	2017
Production (bopd, working interest)	33,700	35,200
Revenue	355.1	228.9
EBITDAX1	304.1	475.5
Depreciation and amortisation	(136.2)	(117.4)
Exploration credit / (expense)	1.5	(1.9)
Impairment of property, plant and equipment	–	(58.2)
Impairment of intangible assets	(424.0)	–
Operating (loss) / profit	(254.6)	298.0
Cash flow from operating activities	299.2	221.0
Capital expenditure	95.5	94.1
Free cash flow2	164.2	99.1
Cash3	334.3	162.0
Total debt	300.0	300.0
Net cash / (debt)4	37.0	(134.8)
Basic EPS (¢ per share)	(101.6)	97.1
Underlying EPS (¢ per share)5	109.0	65.1

EBITDAX is operating profit / (loss) adjusted for the add back of depreciation and amortisation ($136.2 million), exploration credit ($1.5 million) and impairment of intangible assets ($424.0 million)
Free cash flow is net cash generated from operating activities less cash outflow due to purchase of intangible assets ($39.7 million), purchase of property, plant and equipment ($65.3 million) and interest paid ($30.0 million)
Cash reported at 31 December 2018 excludes $10.0 million of restricted cash
Reported cash less ($334.3 million) less reported balance sheet debt ($297.3 million)
EBITDAX less net gain arising from the Receivable Settlement Agreement (‘RSA’) divided by the weighted average number of ordinary shares

Highlights

$335 million of cash proceeds were received in 2018 (2017: $263 million)
Strong cash flow generation, with free cash flow totalling $164 million in 2018 (2017: $99 million), an increase of 66%
Financial strength continues to increase,with unrestricted cash balances at 28 February 2019 of $378 million, andnet cash at $81 million

Addition of Sarta and Qara Dagh to the portfolio in 2019 brings further near-term production and material growth potential
Increase in 1P and 2P reserves as of 31 December 2018 to 99 MMbbls (31 December 2017: 97 MMbbls) and 155 MMbbls (31 December 2017: 150 MMbbls) respectively, including Sarta
As disclosed in our trading statement, the carrying value of the Miran licence has been under review. Due to the focus on the development of Bina Bawi, while Genel continues to see significant opportunity in the licence, this has resulted in an accounting impairment to the carrying value

Outlook

Production guidance maintained – net production during 2019 is expected to be close to Q4 2018 levels of 36,900 bopd, an increase of c.10% year-on-year
Capital expenditure guidance updated to include spend on Sarta and Qara Dagh, with net capital expenditure now forecast to be $150-170 million (from c.$115 million)
Opex and G&A guidance unchanged at c.$30 million and c.$20 million respectively
Genel expects to generate material free cash flow of over $100 million in 2019, inclusive of investment in Sarta and Qara Dagh
Given the strong free cash flow forecast of the business, even after investment in growth opportunities, Genel is initiating a material and sustainable dividend policy
- The Company intends to pay a minimum dividend of $40 million per annum starting in 2020, with the intention for this to grow
- The dividend will be split between an interim and final dividend, to be paid one-third/two-thirds
- The Company is set to approach bondholders to request a temporary waiver of the dividend restriction, which limits dividends to 50% of annual net profit, in relation to accelerating the start of distribution to 2019
The Company continues to actively pursue growth and appraise opportunities to make value-accretive additions to the portfolio

More details – 40 pages of them! – here.

(Sources: Genel Energy, Yahoo!)

11 March, 2019

GKP Maintains Production Guidance; Shares Up

Shares in Gulf Keystone Petroleum (GKP) were trading up 3 percent on Monday after the company provided an operational and corporate update on its operations in Iraqi Kurdistan.

Analyst Peel Hunt has reportedly re-issued its “Buy” rating during the morning.

Operational

Operational activity continues at the Shaikan Field (pictured) to complete the debottlenecking programme in 2019, in order to achieve the near-term production target of 55,000 bopd in Q1 2020
Progress is continuing with the export pipeline from PF-1 to the main export pipeline, which remains on schedule to become operational mid-year, at which point trucking of crude oil will be eliminated
The SH-1 workover to replace the existing tubing with larger bore tubing, has now been successfully concluded. The result was positive with an increase in production from the well of approximately 50% to over 6,500 bopd
The IOT Rig 1 has been demobilised. It will now complete a short workover for another operator nearby before returning to Shaikan for the remaining workovers in the 55,000 bopd expansion programme. This will include the SH-3 tubing change-out, along with installation of Electric Submersible Pumps (“ESPs”) in wells SH-5, SH-10 and SH-11
DQE’s Rig 40 is currently being prepared ahead of the imminent Jurassic drilling campaign, which remains on schedule to be mobilised for the SH-H well later this month

Corporate

A renewal of the crude oil sales agreement has been signed between Gulf Keystone Petroleum International Ltd and the Kurdistan Regional Government (“KRG”)
- The KRG will purchase Shaikan crude oil directly injected at PF-2 into the Atrush export pipeline at the monthly average Dated Brent oil price minus a total discount of c.$21 per barrel for crude
- Until the PF-1 pipeline is completed, the KRG will continue to purchase crude oil delivered by truck at a discount of c.$22 per barrel
- The above discounts account for quality, domestic and international transportation costs
- The agreement is effective from 1 January 2019 until 31 December 2020
The Company has received final clearance from Sonatrach in relation to the Ferkane Permit (Block 126). This officially marks Gulf Keystone’s exit from its Algerian operations.
- This positive development will allow the Company to release $10 million of past liabilities

Outlook

Despite Q1 production having been affected by SH-1 being offline for the workover, and the export system being shut-down for maintenance for a week earlier this month, the Company maintains its 2019 gross average production guidance in the range of 32,000 – 38,000 bopd

(Sources: GKP, Yahoo!, Financial Headlines)

7 March, 2019

$700m Investment in Kurdistan Gas Project

Pearl Petroleum Company Limited, the consortium led by Crescent Petroleum and Dana Gas of the UAE, has signed a new 20-year Gas Sales Agreement (GSA) with the Kurdistan Regional Government (KRG) to enable production and sales of an additional 250 MMscf/day that the consortium aims to produce by 2021 as part of their expansion plans in the Kurdistan Region of Iraq (KRI) in order to boost much needed local domestic electricity generation.

Pursuant to the Settlement Agreement reached between the parties in August 2017, this new gas sales agreement was signed on 19^th February 2019 by Dr. Ashti Hawrami, Minister of Natural Resources on behalf of the Kurdistan Regional Government, and Mr. Majid Jafar, CEO of Crescent Petroleum and Board Managing Director of Dana Gas, on behalf of Pearl Petroleum.

All approvals for the agreement, including by the the Kurdistan Region Council for Oil & Gas Affairs and the Board of Pearl Petroleum, have since been granted, with project work now under implementation.

The Kurdistan Gas Project was established in 2007 as Dana Gas and Crescent Petroleum entered into agreement with the Kurdistan Regional Government (KRG) for certain exclusive rights to appraise, develop, produce, market, and sell petroleum from the Khor Mor and Chemchemal fields in the Kurdistan Region of Iraq (KRI).

Production from the newly built plant in Khor Mor began just 15 months later, in October 2008. In 2009, Pearl Petroleum was formed as a consortium with Dana Gas and Crescent Petroleum as shareholders, and with OMV, MOL, and RWE joining the consortium subsequently with a 10% share each.

The $700 million expansion underway at the Khor Mor plant will include the addition of two new production trains at the Khor Mor plant, as well as drilling of new wells with plans to raise production from the current 400 MMscf/day to reach 650 MMscf/day by 2021 based on this latest GSA, and then to 900 MMscf/day beyond that by 2022.

This follows the 30% production increase from debottlenecking throughput at the Khor Mor plant, which brought current total production to 106,000 barrels of oil equivalent per day (boepd), making it the largest regional private sector upstream gas operation in Iraq today.

Gas sales commenced late in 2018 under a gas sales agreement signed in January of that year, and all payments have been received in a timely manner in full, which gives confidence for the investment and expansion plans currently underway by the Consortium. The Kurdistan Gas Project, which recently commemorated 10 years of continuous production, supplies natural gas from the Khor Mor field by pipeline to power plants in Bazian, Chemchemal and Erbil, as well as LPG and condensate, which are sold in the local markets.

In August 2017, Pearl Petroleum reached a full and final settlement with the KRG of the arbitration between them, including settlement of past receivables and committing to expand their investment and operations in the region. These expansion plans include the multi-well drilling program currently underway in both the Khor Mor & Chemchemal fields, as well as installation of additional gas processing and liquids extraction facilities. The fields are operated jointly by Crescent Petroleum and Dana Gas on behalf of Pearl Petroleum.

Total investment in the Kurdistan Gas Project to date exceeds $1.6 billion, with total cumulative production of over 260 million barrels of oil equivalent (boe), delivering billions of dollars in fuel cost savings and wider economic benefits for the Kurdistan Region and Iraq as a whole. That impact will continue to grow as production capacity expands in the coming years.

Dr. Ashti Hawrami, Minister of Natural Resources of the Kurdistan Regional Government (KRG) said:

“This agreement is an important step for us as we deliver improved services to the people of the Kurdistan Region of Iraq through enhanced electricity generation from the increase in gas production by the Consortium. The Kurdistan Region holds significant reserves of gas and the KRG is committed to playing a positive role in the growing gas and electricity needs of Iraq and the region.”

Mr. Majid Jafar, CEO of Crescent Petroleum and Board Managing Director of Dana Gas, commented:

“This gas sales agreement opens a new chapter in the expansion of the Kurdistan Gas Project that will see a further investment of over $700 million in coming years to expand production up to 900 MMscf/day, further fueling the Region’s economic growth and development. We look forward to developing the significant resources from these important fields, for the benefit of the Kurdistan Region and all of Iraq.”

Dr. Patrick Allman-Ward, CEO of Dana Gas, added:

“Dana Gas and our partners in Pearl Petroleum are particularly proud to be investing further in the gas sector of the Kurdistan Region of Iraq, delivering a reliable source of cleaner energy, and supporting local economic development. The continuing receipt of payments in a timely manner gives confidence for our continued investment commitment as we enter our second decade of production.”

As part of its work in the KRI, Pearl has implemented a corporate social responsibility program to support local communities, including providing school supplies, drinking water treatment, generators and fuel enabling 24-hour electricity for local villages, mobile medical units, and youth sports facilities, as well as financial support for 1,000 orphans from the Chemchemal area in partnership with a local charity Foundation.

These initiatives are assisting the local communities in improving their standard of living, health, well-being, security and stability and the development of human capital.

(Source: Dana Gas)

28 February, 2019

Genel Energy completes Acquisition of Chevron Fields

By John Lee.

Genel Energy has announced that approval has been given by the Kurdistan Regional Government (KRG) regarding the acquisition of stakes from Chevron in the Sarta and Qara Dagh (pictured) blocks, in the Kurdistan Region of Iraq.

According to a statement from the company, the acquisitions have now closed and Genel therefore has 30% equity in the Sarta PSC, with Chevron holding 50% and the KRG the remaining 20%. Final investment decision relating to Sarta phase 1A development has now been taken.

Phase 1A begins with two wells, recompleting the Sarta-2 well and placing the Sarta-3 well on production, both of which flowed approximately 7,500 bopd on test, and the construction of a central processing facility with a 20,000 bopd capacity. Another well is expected to follow within twelve months of first oil, and further production capacity will be added as the field is developed and production ramps up. First oil is expected in 2020, with a total cost to Genel estimated at $60 million to the end of 2020.

Genel has booked an initial 10 MMbbls of net 2P reserves relating solely to this preliminary phase of the project. Unrisked gross mid case resources relating to the Mus-Adaiyah reservoir only are estimated by Genel at c.150 MMbbls, with overall unrisked gross P50 resources currently estimated by the Company at c.500 MMbbls.

Genel now holds 40% equity in the Qara Dagh PSC and is the operator, with Chevron holding 40% and the KRG the remaining 20%. Work is underway on assessing the optimal location for the Qara Dagh-2 well, which is set to be drilled in 2020. Unrisked gross mean resources at Qara Dagh are currently estimated by Genel at c.200 MMbbls.

Shares in Genel Energy have risen 9 percent over the past 24 hours.

(Sources: Genel Energy, Yahoo!)

18 February, 2019

KRG “suspends Oil Exports to Iran”

By John Lee.

The Kurdish Regional Government (KRG) has reportedly suspended oil exports to Iran.

According to Anadolu Agency, the KRG’s Ministry of Finance and Economy did not specify a reason for the move, and “it remains unclear whether the suspension is linked to U.S. sanctions on Iran.”

(Source: Anadolu Agency)

(Source: Tasnim, under Creative Commons licence)

13 February, 2019

Taq Taq Oil Reserves Update

Genel Energy has announced that McDaniel and Associates (‘McDaniel’) has completed the competent person’s report (‘CPR’) relating to the oil reserves at Taq Taq as at 31 December 2018.

Field performance in 2018, and notably the success of the TT-29w well drilled on the northern flank of the field, has led to an upwards technical revision of reserves, resulting in a 62% reserves replacement at the 1P level.

This revision does not take into account the recent positive results from the TT-32 well, which completed in 2019 and is currently adding over 3,000 bopd to field production.

Drilling in 2019 is targeting opportunities on the flanks of the field, with the TT-20z well nearing completion and three others then to follow. Should the wells match the performance of TT-29w and TT-32, Taq Taq could deliver a significant year-on-year production increase, with room for further growth in 2020.

The Company expects to announce CPR reports for other assets in the portfolio prior to the announcement of full-year results on 20 March 2019.

(Source: Genel Energy)

11 February, 2019

DNO Increases Oil Reserves, Shares Rise

Shares in DNO ASA, the Norwegian oil and gas operator, were trading up five percent on Monday afternoon following the company’s announcemnt that it has replaced 2018 production through additions to reserves, marking the second consecutive year in which the Company’s replacement of proven reserves reached or exceeded 100 percent of production.

“DNO’s stellar record of reserves replacement through the drill bit is a result of stepped up spending on our portfolio of quality assets coupled with rapid-fire execution,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman. “And the barrels we continue to add are among the lowest cost in the industry, anywhere,” he expounded.

Yearend 2018 Company Working Interest (CWI) proven (1P) reserves stood at 240 million barrels of oil (MMbbls), unchanged from yearend 2017 after adjusting for production and technical revisions. On a CWI proven and probable (2P) reserves basis, DNO replaced 98 percent of its 2018 production, exiting the year with CWI 2P reserves of 376 MMbbls (384 MMbbls in 2017).

At 2018 production rates, DNO’s 1P reserves life is 8.2 years and its 2P reserves life is 12.9 years.

Significantly, the Company’s 1P reserves replacement ratio (RRR) has reached or exceeded 100 percent in eight of the past ten years.

On a gross basis, at the Tawke license in the Kurdistan region of Iraq containing the Tawke and Peshkabir fields, yearend 2018 1P reserves stood at 348 MMbbls, unchanged from 2017 after adjusting for production of 41 MMbbls and upward technical revisions of 41 MMbbls. Tawke license 2P reserves stood at 502 MMbbls (513 MMbbls in 2017) and proven, probable and possible (3P) reserves at 697 MMbbls (880 MMbbls in 2017).

Broken down by field, Tawke field gross 1P reserves stood at 294 MMbbls (335 MMbbls in 2017), 2P reserves at 376 MMbbls (438 MMbbls in 2017) and 3P reserves at 477 MMbbls (588 MMbbls in 2017). Peshkabir field gross 1P reserves stood 54 MMbbls (13 MMbbls in 2017), 2P reserves at 126 MMbbls (75 MMbbls in 2017) and 3P reserves at 220 MMbbls (292 MMbbls in 2017).

International petroleum consultants DeGolyer and MacNaughton carried out the annual independent assessment of the Tawke license. The Company internally assessed the remaining licenses in its portfolio.

The 2018 Annual Statement of Reserves and Resources, prepared and published in accordance with Oslo Stock Exchange listing and disclosure requirements (Circular No. 1/2013), is attached and is also available on the Company’s website at www.dno.no.

(Sources: DNO, Yahoo!)

11 February, 2019

DNO Increases Oil Reserves, Shares Rise

At 2018 production rates, DNO’s 1P reserves life is 8.2 years and its 2P reserves life is 12.9 years.

Significantly, the Company’s 1P reserves replacement ratio (RRR) has reached or exceeded 100 percent in eight of the past ten years.

(Sources: DNO, Yahoo!)

7 February, 2019

DNO Reports Record Revenues

DNO ASA, the Norwegian oil and gas operator, today announced 2018 net profit of USD 354 million on revenues of USD 829 million, the highest annual revenues in the Company’s 47-year history. Cash flow from operations increased 40 percent to USD 472 million in 2018, of which USD 334 million represented free cash flow.

Operated production averaged 117,600 barrels of oil equivalent per day (boepd) including 81,700 boepd on a Company Working Interest (CWI) basis, up from 113,500 boepd and 73,700 boepd, respectively, during 2017. January 2019 operated production averaged 128,000 barrels of oil per day (bopd) or 90,000 bopd on a CWI basis.

The Company stepped up its operational spend in 2018 to nearly USD 300 million to support the fast-track development of the Peshkabir field in the Kurdistan region of Iraq and the ongoing drilling program at the Tawke field within the same license.

Spending levels in 2019 are projected to rise more than 40 percent from 2018 levels to an estimated USD 420 million. DNO’s 2019 drilling program includes up to 20 exploration and production wells in Kurdistan, including up to 14 wells at the Tawke field, four at Peshkabir and two at the Baeshiqa license. Another five wells are planned in Norway on DNO’s licenses.

In Kurdistan, two recently completed wells, Peshkabir-9 and Tawke-52, will be placed on production in February. Testing of the first Baeshiqa exploration well targeting the Cretaceous reservoir has been delayed by extensive rainfall but is also expected to commence this month.

Already the leading international oil company in Kurdistan, with a 75 percent operating interest in fields contributing a third of the region’s total exports, the Company is now firmly establishing itself in Norway as it completes the takeover of Faroe Petroleum plc. With 90 licenses, of which 22 are operated, DNO will leapfrog to the ranks of the top five companies in total licenses held in Norway.

“The Faroe transaction transforms DNO into a more diversified company with a strong, second leg,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani. “This represents not a pivot away from Kurdistan but a pivot to Norway,” he added. “We are now well positioned in two areas in which we have a comparative, even competitive, advantage.”

The combination places DNO among the top three European-listed independent oil and gas companies in production and reserves.

DNO has acquired more than 96 percent of Faroe shares and initiated the compulsory acquisition of the remaining shares. The integration of the Faroe and DNO organizations is well underway; the new combined entity has over 1,100 employees and offices in Oslo, Stavanger, Erbil, Dubai, London, Aberdeen and Great Yarmouth.

The Company will release pro-forma financials and 2019 investment programs and budgets for the combined entity in February and March.

Separately, DNO’s Board of Directors have approved a dividend payment of NOK 0.20 per share to be made on or about 27 March 2019 to all shareholders of record as of 18 March 2019. DNO shares will be traded ex-dividend as of 15 March 2019.

(Source: DNO)