Genel Energy, the company to be formed following the completion of Vallares’s $2.1 billion reverse takeover of Turkey’s GeneEnerji, will be looking to spend big on Kurdish assets, according to ex-BP CEO Tony Hayward.
Hayward – who will become CEO of Genel once the takeover is complete – told reporters in Instanbul yesterday that Kurdistan is ripe for mergers and acquisitions activity, and Genel will be looking to apply part of Vallares’s $2.2 billion cash pile to work.
The bold approach taken by Valares – and the clear appetite for their model from investors – raises questions about whether investors prefer Kurdistan to oil projects in the South, despite the legal and economic uncertainties arising from the fractious relationship between Erbil and Baghdad.
“Consolidation is going to take place in the region. There are 41 different entities operating in the Kurdistan region today,” Hayward said. “Time is right for consolidation in the Kurdistan region. You should expect to see some action around the place.”
Many independents have had great success in discovering commercial reserves around the Tawke and Taq Taq blocks in Iraqi Kurdistan, but few have the financial clout to invest the tens – or even hundreds – of millions in cap ex required to get a rapid production program underway.
Hayward said one third of the $2.2 billion cash will be spent on consolidation, one third on “new focus” areas and the rest on accelerating the developments of new discoveries. One focus for Genel will be to establish a second exploration and production base in the region, a startegy that may mean that Vallares’s disclosed interest in Dana Gas may be continuing.
Hayward is also reported in an interview in the London Telegraph to be confident that the production and sharing agreements signed with the Kurdish Regional Authority are legal and will be eventually upheld by Baghdad.
Once constituted, Genel Energy Plc will apply for a premium listing on the London Stock Exchange around October, and is expected to enter the FTSE 100, giving it access to liquidity from funds and investments that use the index as an investment benchmark.
Hayward has emphasised Genel’s efforts to put the misdeeds of its current executive behind it it by restricting their voting rights in the company and recruiting establish industry and City boardroom talent. As Tom Gara from the Financial Times comments, the firm’s Turkish background could give it a competitive advantage in the Middle East, where Recep Erdogan’s government has been adeptly been increasing its influence.
