Genel Energy, a major oil investor in the Kurdish region in Iraq, said that it was optimistic about its economic prospects for 2016 in spite of the decline in oil prices and the security situation in Iraq, reported Reuters. The company was taking cost saving initiatives including cutting capital expenditure and overhead expenses to keep production costs per barrel at $2. Genel expects revenues ranging from $200 to $275m in 2016, albeit below the $342m in revenues recorded last year. The company forecasts this year’s production at 60,000-70,000 b/d.
The market, however, thought otherwise following the announcements as Genel stocks fell by 9.3%. The reason being that the projected figure of 70,000b/d is 17.5% lower than the 84,900b/d Genel was producing on average in 2015.
UPI also quoted Genel CEO, Murat Ozgul, as saying that the company was in a “healthy cash position” having received $100m in payments from the Kurdistan Regional Government (KRG). The bigger problem is funding the security effort against ISIS, Ozgul explained. There was also the “influx of refugees into the Kurdish region” and the still outlying “cessation of budget transfers from Baghdad,” placing further constraint on the KRG’s ability to repay the remainder of what it owes to companies operating in northern Iraq. In July last year, the KRG owed $400m to Genel alone, and $409m reported in October 2015.