Genel Energy PLC (LON:GENL) has signed a new deal with the Kurdistan Regional Government which is expected to improve payments for crude produced from the Taq Taq and Tawke fields.
The London-listed oil firm has agreed to cancel and waive its rights to outstanding receivables for past oil sales, in return it gets an additional share of revenue on current and future production (over a five year period until July 2022).
Genel, in a statement, detailed the agreement. It highlighted that the company will receive a further 4.5% of gross revenues from the Tawke field, in addition to the proceeds it receives for current oil sales.
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Generate value for all stakeholders
Using production stats for the financial year, ended July 31, the company illustrated that the new ‘override’ agreement would generate some US$30mln of additional proceeds from Tawke production from August 1 to the end of the calendar year, and it highlighted that the other arrangements would result in around US$12mln of savings.
“A key part of our strategic focus in 2017 was the acceleration of the recovery of the receivable for unpaid oil sales, and this agreement successfully achieves this through significantly increasing cash generation from the Tawke PSC over the next five years,” said Murat Özgül, Genel chief executive.
“This definitive agreement is the positive culmination of a constructive dialogue with the KRG, and promises to generate value for all stakeholders.”
Also, Genel noted that the company’s capacity building payments (CBP) on the profit share element of its Tawke entitlement will be eliminated and the KRG has agreed to all audit adjustments on petroleum costs at the Tawke field as well as for Genel’s share of petroleum costs at Taq Taq, this applies to the period up to July 31.
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Outstanding production bonuses and contract liabilities on the Taq Taq and Tawke fields, totalling around US$30mln net to
The mechanisms for determining invoices are also being adjusted.