I’ve been following Genel Energy of Turkey for a while now, not least because of my obsession with the potentially catastrophic but otherwise fantastic venue that is Iraqi Kurdistan. Every week I see this moving fast in two directions: towards potential all-out conflict with Baghdad and towards an oil and gas goldmine.
There are other juniors worth looking at in this venue, but it always comes back to Genel, whose CEO is—not incidentally—former BP exec Tony Hayward.
This week, Genel’s shares on the London stock exchange rose 7% on a significant new oil find in Iraqi Kurdistan. A test on Genel’s Chia Surkh-10 well has yielded flow rates up to 11,960 barrels per day, plus 15 million cubic feet of gas.
The company has a market cap of £1,816.76 million, closing on the London Stock Exchange at £850.00, with 213,736,679 shares in issue.
Genel is the largest producer in Iraqi Kurdistan, and its holdings are impressive. We’re talking about 7 production-sharing contracts with some nice geological diversity. Its largest producing fields in Kurdistan are Taq Taq and Tawke, which have an estimated gross proven and probable reserves of 1.4 billion barrels of oil and gross proven, probable and possible reserves of 1.9 billion barrels. By 2014, Genel is aiming for a production capacity of 140,000 net bopd.
That’s just existing capacity. It gets better. Juniors in Iraqi Kurdistan have had an amazing success rate for drilling.
Here’s where it gets interesting: Genel also has access to international markets, despite the ongoing spat with Baghdad, which refers to this market access as “smuggling”.
For some time, Genel has been trucking its Taq Taq production directly to Turkey in a barter deal, exchanging it for refined products for use on the domestic market in Kurdistan. Last week, however, it made its first entrance on the international market scene, trucking 30,000 barrels of Taq Taq crude to Turkey for sale via tender on the international market. This has seriously ruffled Baghdad’s feathers.
But trucking will soon become history. By the end of this year, and certainly by 2014, Genel will have completed a pipeline that sends its crude directly to Turkey.
Full Speed Ahead in Kurdistan
Genel is gaining ground—fast. On 4 April, it declared commercial viability at its Bina Bawi extended well test start…