Iraqi oil-focused Genel Energy said the low price of oil and a downward revision in reserve estimates are creating challenges for the company. Photo courtesy of Genel Energy.
LONDON, March 3 (UPI) -- Iraqi oil-focused Genel Energy said that, even though production was up 22 percent from 2014, revenues for the year fell 34 percent on oil price weakness.
"The Kurdistan Regional Government has since successfully increased exports to record levels, hitting over 650,000 barrels of oil per day and reaching a ready market of international purchasers," Chairman Tony Hayward said in a statement. "Unfortunately, the shortfall of revenue received in the first half of the year delayed payments to oil companies, a situation compounded by the low oil price and the necessity of funding the Peshmerga."
The Peshmerga is a Kurdish military force. The KRG uses revenue generated from oil exports to help fund the force tasked in part with fighting the terrorist group calling itself the Islamic State.
Despite recent attacks in Turkey, Genel, which has headquarters in London, said its operations in the Kurdish north of Iraq are secured from attacks by the Islamic State. Threats, however, linger in the form of energy sector declines and a lowered reserve estimate in the Kurdish north.
An internal review from Genel 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. Last week, the company said it expects to take a $1 billion charge on operations at the Taq Taq field.
In its latest statement, the company said full-year 2015 revenue of $344 million was down 34 percent from the previous year. Production of 81,900 barrels of oil per day, meanwhile, was 22 percent higher than for 2014.
For 2016, the company said it aims to spend between $80 million and $120 million for Kurdish operations. Full capital spending last year of $157 million was a 77 percent reduction from 2014 for Genel.
Hayward attributed much of the pressure to lower crude oil prices, which are down about 40 percent from this time last year.
"The sustained low oil price has placed a significant strain on both the industry and the economy of the Kurdistan region of Iraq," Hayward said.