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Genel Energy - Tawke sets new production record, capacity reaches 200,000 bopd

Published: 17:36 06 May 2015 AEST

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Genel Energy’s (LON:GENL) 25%-owned Tawke oilfield in the Kurdistan region of Iraq has doubled production capacity to 200,000 barrels of oil per day (bopd).

The field’s operator DNO today told investors that the new development milestone has been reached in less than two years. It was achieved through the drilling of ten new horizontal wells and with the construction of two new production facilities, with a combined capacity of 80,000 bopd.

Tawke’s output itself hit a new record earlier this week, at a daily rate of 156,379 bopd, and volumes are now expected to ramp up in the coming weeks.

DNO revealed that talks are currently underway with the Kurdish authorities in order to set future production levels, and those talks also aim to determine the split between production for export and for local sale.

Bijan Mossavar-Rahmani, DNO's executive chairman, said the higher production from Tawke and the higher deliveries into Ceyhan (an oil transportation hub in Turkey) should help unlock payments to oil companies such as DNO.

"The timing and extent of export payments will drive new investment at Tawke which will be required to sustain the high production rates," Mossavar-Rahmani added.

Tawke’s production averaged 104,925 bopd for the first quarter of 2015, and that comprised 90,172 bopd for export and 8,679 bopd for domestic sale. The remainder was used in the Tawke refinery.

DNO said that new local contracts have seen local sales increase to around 20,000 bopd. It did, however, warn that weak local sales in the first quarter as well as the lower crude price meant revenues reduced to US$26mln.

The Oslo listed oil company also told investors it had written off US$27mln from assets in Yemmen, following the suspension of operations due to a rapid deterioration to security in the country. It contributed to a US$69mln operating loss. DNO ended the first quarter with US$204mln in cash, and had US$28mln of marketable securities.

DNO projects 2015 capital expenditure of US$100mln for 2015, and it has spent US$35mln in the first quarter.