Genel Energy PLC Definitive receivables agreement reached with KRG (8750O)
August 24 2017 - 3:54AM
UK Regulatory
TIDMGENL
RNS Number : 8750O
Genel Energy PLC
24 August 2017
24 August 2017
Genel Energy plc
Definitive agreement reached with KRG on receivables
Genel Energy plc ('Genel' or 'the Company') is pleased to
announce a definitive agreement with the Kurdistan Regional
Government ('KRG') relating to unpaid entitlements for past oil
sales from the Taq Taq and Tawke fields.
Cash flow is expected to be materially enhanced over the course
of the agreement, delivering significant value creation for all
stakeholders.
A Receivable Settlement Agreement ('RSA') has been signed
between Genel and the KRG, with a Tawke Production Sharing Contract
('PSC') Amendment also being executed. In return for cancelling and
waiving its rights to outstanding receivables relating to unpaid
entitlements for past oil sales, Genel will benefit from the
following:
-- In addition to proceeds for current sales, Genel will receive
4.5% of Tawke gross field revenues for the five year period from 1
August 2017 to 31 July 2022 ('the Genel Override')
-- Genel's capacity building payments ('CBP') on the profit
share element of its Tawke entitlement will be eliminated over the
entire life of the Tawke field
-- The KRG has agreed with all audit adjustments on the
petroleum costs on the Tawke PSCs and on Genel's share of petroleum
costs in the Taq Taq PSC for the period up to 31 July 2017
-- Outstanding production bonuses and PSC liabilities on the Taq
Taq and Tawke fields totalling c.$30 million net to Genel have been
set off against the receivable and as a result are no longer
payable
Under the previous mechanism for repaying the receivable, Genel
received its pro-rata share of 5% of monthly field revenue from the
Tawke field, which was liable for CBP. This mechanism will
terminate effective 1 August 2017. Proceeds received for current
sales from the Taq Taq field will continue to be liable for CBP.
Going forward, invoices for current sales from the Taq Taq and
Tawke fields will be issued and paid on the basis of the R-factor
calculation in the respective PSCs, instead of the proxy
formulation which has been in place since the beginning of
2016.
Tawke and Taq Taq unpaid invoices for June and July 2017 are
expected to be paid in September and October 2017 respectively, in
line with the payment track record established by the KRG during
2017.
Tawke field gross production has averaged c.109,000 bopd in the
year to 31 July 2017, with Brent prices averaging c.$51/bbl.
Assuming similar production and oil prices over the period from 1
August 2017 to 31 December 2017, the Genel Override would generate
proceeds of c.$30 million and the Tawke CBP elimination would
result in c.$12 million of savings in the period.
Murat Özgül, Chief Executive of Genel, said:
"A key part of our strategic focus in 2017 was the acceleration
of the recovery of the receivable for unpaid oil sales, and this
agreement successfully achieves this through significantly
increasing cash generation from the Tawke PSC over the next five
years. This definitive agreement is the positive culmination of a
constructive dialogue with the KRG, and promises to generate value
for all stakeholders."
-ends-
For further information, please contact:
Genel Energy
Phil Corbett, Head of Investor
Relations
Andrew Benbow, Head of Public
Relations +44 20 7659 5100
Vigo Communications
Patrick d'Ancona +44 20 7830 9700
This announcement includes inside information.
Notes to editors:
Genel Energy is an independent oil and gas exploration and
production company listed on the main market of the London Stock
Exchange (LSE: GENL). The Company, with headquarters in London and
offices in Ankara and Erbil, is one of the largest London-listed
independent oil producers, and is the largest holder of reserves
and resources in the Kurdistan Region of Iraq. Through its Miran
and Bina Bawi gas fields, the Company is positioned to be a
cornerstone provider of KRI gas to Turkey under the KRI-Turkey Gas
Sales Agreement. Genel also continues to pursue further growth
opportunities within the Middle East and Africa. For further
information, please refer to www.genelenergy.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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