Shares in Genel Energy fell more than 10 per cent after analysts cast doubts over production
Shares in Genel Energy plummeted 11 per cent in afternoon trading after analysts cast doubt over its output levels.
In a trading update today, Genel said its net production for 2016 averaged 53,300 barrels per day (bpd), and this year's guidance has been set at 35,000 to 43,000 bpd. However, analysts say this is based on the completion of its programme to stop the decline of its Taq Taq field, which depends on receiving regular and predictable export payments from the Kurdistan Regional Government (KRG).
The work programme at Taq Taq is subject to change depending on the results of development drilling and payments from the KRG for current sales and receivable recovery, Genel said.
Shares were down 10.94 per cent at 73.25p in afternoon trading.
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Murat Özgül, chief executive of Genel, is confident the KRG payments will go through.
"We received $207m in cash proceeds for oil sales and receivable recovery. These payments in turn allowed for work programmes to resume at Taq Taq and Tawke. The KRG has confirmed that payments will continue, allowing us to plan with confidence for 2017," he said.
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Daniel Slater, an analyst at Arden Partners, said:
"Genel continues to proactively progress Taq Taq with its redevelopment plan, though the export payments are largely out of the company’s hands, and depend on the wider financial position of the KRG (which will have been helped by the improving oil price).
"Taq Taq and the outlook for production here are for us the factor most likely to move the shares, though there is little evidence at present of a sustained improvement in the export payments, leading us to expect further declines in the near term," he added.