Genel racks up losses on fresh impairment

Genel Energy on Thursday announced its results for 2016, revealing a widened loss on account of impairment of exploration assets.

Genel saw losses increase from USD 1.04 billion in 2015 to USD 1.22 billion last year. Revenue was also down, falling by USD 153.2 million to USD 190.7 million.

Earlier this week, was forced to downgrade the reserves estimates for the Taq Taq field in the Kurdistan Region Iraq, resulting in an impairment of 180.8 million.

An updated Competent Person’s Report prepared by McDaniel and Associates put gross 2P reserves at 59 million barrels as of February 28, 2017, down from 172 million barrels at the end of 2015.

The downgrade also saw 1P gross oil reserves lowered from 60 million barrels to 25.8 million barrels. Gross 3P reserves for Taq Taq plunged by 77% to 95 million barrels.

Drilling results of the CS-12 well in the Chia Surkh licence and subsequent sale of the asset to Petoil resulted in a USD 197.7 million impairment for Genel. Finally, the company saw the carrying value of Tawke affected by changes in the discount rate and the price of oil. This led to a USD 37.5 million impairment.

More significant was the impairment charge for Genel’s Miran and Bina Bawi gas assets. With the gas development project progressing slower than anticipated, the company was forced to take a USD 581.3-million hit. The carrying value was revised down from USD 1.448 billion to USD 867 million.

“The signing of definitive agreements in February 2017 allows us to focus on concluding negotiations with potential partners, helping unlock the significant value in our gas assets,” CEO Murat Özgül said in comments on the results, adding that the company’s goals for 2017 would be to maximise value from oil assets, speed up the collection of receivables and build momentum for the continued development of Miran and Bina Bawi.