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Genel gets a soupçon from the KRG

Genel Energy has received another payment from the KRG - but there is still a long way to go
October 29, 2015

Genel Energy (GENL) has received another payment from the Kurdistan Regional Government (KRG) for production linked to the Iraqi Tawke field, in which Genel holds a 25 per cent stake. The $9m remittance is Genel's second payment from Tawke following an earlier sum of $8.5m paid last month. Encouragingly, the frontier oil and gas driller has also started to receive regular payment from the Taq Taq field, where it has a 44 per cent interest.

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But there's still a long way to go. Genel had around $444m in receivables on its balance sheet at the half-year mark, equivalent to 116p a share. The collapse in oil prices has drained the Iraqi state of resources. It has responded by withholding payments to the KRG, which in turn has halted the transfer of funds to oil companies operating within Kurdistan. As a consequence of the payment delays, Genel will only be able to produce 85,000 to 90,000 barrels per day (bopd) this year, down from its previous forecast of 90,000 to 100,000 bopd.

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The KRG decided to bypass its agreement with Baghdad over the summer and begin exporting independently. This has facilitated partial payments to oil companies, including Gulf Keystone Petroleum (GKP) and Norway's DNO ASA as well as Genel.