LONDON, Feb. 29 (UPI) -- Lower crude oil prices and a downward revision in the recoverable reserve estimate in the Kurdish north of Iraq means a charge on the books, Genel Energy said.
An internal review of the Taq Taq basin in the Kurdish north of Iraq put the estimated recoverable proven and probable reserves at 356 million barrels, about half as much as estimated in June 2011.
The company reported net production for the first half of 2015 was an average 88,800 barrels per day, a 41 percent increase year-on-year.
The company exports oil from the Kurdish north through the Turkish sea port of Ceyhan. Genel, which has headquarters in London, said it and its partners at the field, received a gross payment of $16.3 million from the semiautonomous Kurdistan Regional Government for oil exports as part of a regular distribution cycle.
In its latest statement, the company said it expects to take a $1 billion charge on operations at the Taq Taq field.
"The impairment includes the revised assumptions on recoverable reserves announced today and the impact of lower oil prices," the company said in a statement.
The company expects output from Taq Taq will be around 80,000 bpd for 2016, though it will fade off to as low as 50,000 bpd by 2018. Despite the downward revision, the company said it has no plans to adjust its operations for the year.
The Kurdish government faces dual economic and security problems. Violence attributed to Islamic State militants and, separately, to the separatist Kurdistan Workers' Party, known by its Kurdish acronym PKK, has been a persistent threat to the regional oil sector. The Kurdish government, meanwhile, said that with the federal government in Baghdad falling short of distributing budgetary concessions, it's falling short on the cash needed to support regional military forces.
Genel is expected to release its results for the fourth quarter Thursday.