During the first quarter of 2023, Genel Energy PLC (LSE:GENL, OTC:GEGYY) reached net production of 26,000 barrels of oil per day (bopd), slightly lower than the 30,520 bopd achieved in the same period of the previous year, according to today’s trading update.
Tawke Production Sharing Contract (PSC), in which Genel Energy holds a 25% working interest, witnessed an average gross production of 93,880 bopd, compared to 106,470 bopd in the same period last year.
This decrease is attributed to planned well-intervention operations that temporarily impacted overall production. The company plans to scale back spending at the Tawke licence due to uncertainties in export resumption and payment delays.
At the Sarta field, where Genel Energy holds a 30% working interest, the average gross production was 3,160 bopd, lower than the 5,590 bopd recorded in 2022.
Taq Taq PSC, in which Genel Energy holds a 44% working interest and is a joint operator, reported an average gross production of 3,610 bopd in Q1 2023, compared to 5,070 bopd in 2022.
On the pre-production side, Genel Energy is actively preparing for the drilling of the Toosan-1 well in Somaliland, with a spud date targeted for the first half of 2024.
Genel Energy reported zero lost-time incidents out of four million recorded hours of work.
Capital expenditure in the first quarter was US$24mln, with US$21mln designated as cost-recoverable spend at the Tawke and Taq Taq fields.
As of 31 March, Genel Energy had a strong financial position with US$496mln in cash, with a net position of US$229mln.
During the quarter, the Kurdistan Regional Government (KRG) disbursed cash proceeds of US$61mln to the group, relating to operations in August and September 2022.
Due to the temporary closure of the Iraq-Turkey Pipeline on 25 March, Genel Energy's previous production guidance of 27,000 to 29,000 bopd is no longer valid, but the company will issue revised guidance once the pipeline reopens and investment plans are confirmed.
Chief executive Paul Weir said: “The prolonged closure of the Iraq-Turkey pipeline is very disappointing and, although there continues to be speculation regarding the timing of resumption of exports, we cannot predict with any certainty when exports will recommence.
“In anticipation of exports resuming we are seeking clarity on future arrangements and a mechanism in place for regular and predictable payments going forward.”
Weir noted delays in payments and the suspension of exports, which have resulted in significant cash generation being deferred.
“We are scaling back our planned activity accordingly. We continue to reduce costs so that the size and shape of the organisation matches the needs of the business,” he said, adding: “Our financial position is robust, and we remain focused on using our significant liquidity to add new assets to the portfolio that will fund the long-term payment of our established dividend.”