London-listed independent oil firm Genel Energy is adding to its burgeoning interests in the Kurdish region of Iraq with offshore farm-ins agreements in Malta and Morocco.
The deals put Genel outside Kurdistan and away from dry land for the first time, diversifying the company’s activities as it spends down its initial $2.2 billion endowment following the company’s reverse takeover of Vallares last year.
The company is taking a 75% stake in Mediterranean Oil & Gas’s Area 4 Offshore Malta Production Sharing Contract for up to $30 million.
The consideration comprises an initial payment of $10 million in recognition of past costs, plus a 100% carry on the first exploration well and a 100% carry on the second well of up to a maximum of $30 million gross cost.
Genel says Area 4 comprises four contiguous license blocks in the southern part of the Maltese offshore adjacent to acreage in Libya, and claims the blocs are “geologically analogous to the Libyan Sirte Basin, containing analogues to proven producing fields in Libya in addition to those offshore Tunisia.”
Genel and Mediterranean Oil & Gas will also agree to assess and acquire further assets in Malta, Libya and Tunisia.
In Morocco, Genel has agreed to farm in for 60% of the license interests to explore for and produce oil and gas in the Sidi Moussa Offshore Block.
The deals follow Genel’s acquisition of a further 26% stake in the gas-prone Miran block in Iraqi Kurdistan, under a $450 million cash and loan deal with Heritage Oil. Before that, the company hiked its interest in the Bina Bawi and Chia Surkh blocks.
Even after its recent splurges, Genel is estimated to retain around $1 billion cash to be invested, and retains an ambitious exploration and production in the Kurdish region, where it will drill seven wells through to 2013 and hike net output capacity at Taq Taq and Tawke to 140,000 bpd in 2014.
In its half-yearly results, Genel reported a profit before tax of $22.3 million, compared with a loss of $5.7 million for H1 2011.
The difference has come from part payments for deliveries from its fields in Kurdistan, where exports have resumed under a temporary initiative from the regional government to try to settle a long-running dispute with Iraq’s central government.
Working interest production for the half averaged 39,000 bpd, which mostly flowed to the local market.
“Genel has had a successful year to date, with strong operational progress across our business, further acquisitions in the Kurdistan Region and early steps taken to develop a high impact African exploration portfolio,” commented Genel’s CEO Tony Hayward. “We continue to build production capacity at both Taq Taq and Tawke and we are pleased that the construction of the pipeline infrastructure in the Kurdistan Region, which will allow us to more efficiently access the export market, has begun. We continue to add proven reserves as our two producing fields are further appraised and our high impact Kurdistan exploration programme is progressing to plan with considerable activity planned through the second half and into 2013.”
