Additional Information
Market: LSE
Sector: Energy
EPIC: GENL
Latest Price: 640.00p  (3.23% Ascending)
52-week High: 1,080.00p
52-week Low: 591.50p
Market Cap: 1,366.27M
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Genel Energy
www.genelenergy.com

As the largest oil producer in the Kurdistan Region of Iraq, the union of Vallares plc with Genel Energy International places us among the top two independent UK-listed E&P companies by 2P reserves, with an estimated unrisked resource base of 1.4 billion barrels of oil equivalent – including proved and probable reserves of 356 million barrels.

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Investec bullish on Genel Energy as Kurdistan risks diminish

13th Jan 2012, 10:58 am by Sergei Balashov Genel's 2012 drilling programme is targeting more than half a billion barrels of oil of unrisked reserves

Investment bank Investec (LON:INVP) says the political and financial risks in Iraqi Kurdistan are shrinking, which bodes well for oil explorers operating in the region such as Genel Energy (LON:GENL).

Investec analyst noted Stuart Joyner sees the recent news flow from the semi-autonomous Kurdistan region of northern Iraq as positive with export payments being processed and ExxonMobil (NYSE:XOM) signing exploration contracts in the region.

“Whilst a permanent Oil Law for the country as a whole is a ways off yet, we are cautiously optimistic that the political and financial risks are diminishing and it is against this backdrop that Genel's growth will come,” said Joyner.

The 2012 drilling programme planned by Genel, which is led by former BP (LON:BP.) boss Tony Hayward, is targeting more than half a billion barrels of oil of unrisked reserves.

According to Joyner’s estimates, the Genel’s production, mainly from Taq Taq and Takwe fields, could double to 260,000 barrels of oil equivalent per day net to the group.

Furthermore, he said the current estimate of the company’s resource base of 1.3 billion barrels of oil equivalent is “conservative” and the 2012 drilling programme represents an organic upside of 85 pence per share.

The analyst has set a target price 1,175 pence for Genel based on a Brent crude price of US$100 per barrel, a substantial premium to Thursday’s closing price of 746 pence.

This estimate does not include potential M&A activity, while Genel has US$2 billion in the bank that it could spend on value enhancing acquisitions.

Calling Genel an “obvious regional consolidator”, Joyner named Longford Energy, Shamaran, Dana Gas and Heritage Oil (LON:HOIL) as possible takeover targets for the group.

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