Genel Energy (LSE:GENL) was up 4pc to 192p on Monday after announcing production increases from its Taq Taq field. Genel is joint operator and holds a 44% working interest in the asset. The recently drilled TT-32 well has now entered production and is contributing at an initial flow rate of 3,100 barrels of oil per day (bopd). It is flowing oil at three separate zones from a 169m oil column.
The Taq Taq field produced an average 12,350bopd in 2018, although this figure fell to 11,640bopd in the last quarter of the year. Output has been now increased to 13,750bopd through the addition of TT-32. The company stated: ‘TT-32 has further demonstrated the remaining potential on the flanks of Taq Taq Field.”
Meanwhile, Genel has also spudded a horizontal sidetrack well called TT-20z, with drilling expected to complete in mid-February. Following this, the firm will focus on drilling three further wells targeting the flanks of the field.
As part of its guidance for 2019, Genel is expected to spend $100m on developing Taq Taq and the larger Tawke field. The company’s operating expenditure for 2019 is forecast to be around $30m, which puts it in the enviable position of being able to generate positive free cash flow at oil prices of $20/bbl and above.
Commenting in mid-January on Genel’s progress, Chief Executive Murat Özgül, said:
“2018 was a very positive year for Genel, which saw us generate material free cash flow and further transform the balance sheet. An expected year-on-year increase in production means we are set to continue this performance in 2019, with low-cost assets forecast to generate over $100 million in free cash flow even if the oil price averages $45/bbl.
As we generate cash we will continue to invest in the business to maximise the value of our existing portfolio. We are also working hard to bring in new assets that are complementary to our cash generation story. We are focused on building a stronger company with sustainable and material cash flow and multiple growth opportunities from which to create significant shareholder value.”
Genel also recently announced the acquisition of stakes in Chevron operated Sarta and Qara Dagh blocks. The assets add to its interests in the Kurdistan Region of Iraq (KRI).
Genel will acquire 30pc of the Sarta license, which includes the Sarta-2 and Sarta-3 wells. Both wells have been tested at rates of around 7,500bopd and will be put on production. Meanwhile, it will take on operatorship and a 40pc at Qara Dagh. It plans is to drill the Qara Dagh-2 well at the appraisal licence sometime next year.