DNO Starts Gas Capture in Kurdistan

DNO ASA, the Norwegian oil and gas operator, today announced that the USD 110 million Peshkabir Gas Capture and Injection Project in its Tawke license in the Kurdistan region of Iraq is onstream and has reached the one billion cubic feet of gas injection milestone.

The project is expected to reduce annual emissions from the Company's operated production by over 300,000 tonnes of CO2 equivalent, offsetting the emissions from some 150,000 automobiles.

Engineering and construction were launched in mid-2018 and commissioning completed in mid-2020 in what is the first gas capture and storage project in Kurdistan. Some 20 million cubic feet a day of previously flared gas at the Peshkabir field is gathered, treated and transported 80 kilometers by pipeline to the Tawke field where it is injected for storage and reservoir pressure recharging.

Effective June 2020, the project halves the average carbon intensity of the Company's operated production from 14 kilograms CO2 equivalent for each barrel of oil equivalent produced (kg CO2e/boe) to an average of 7 kg CO2e/boe. This compares to the target set by a group of 12 of the world's largest oil companies comprising the Oil and Gas Climate Initiative (OGCI) to reduce the average carbon intensity of their aggregated upstream oil and gas operations to between 20-21 kg CO2e/boe by 2025 from a collective baseline of 23 kg CO2e/boe in 2017.

"Gas injection and the associated carbon capture and storage is proven, practical and potentially profitable," said Bijan Mossavar-Rahmani, DNO's Executive Chairman. "Our project was completed on schedule and on budget notwithstanding the challenges of working in what is still a frontier oil and gas operating environment and the obstacles posed in the late stages by the Covid-19 pandemic," he added.

Gas flaring at the Peshkabir field has been reduced by over 75 percent, with work underway to reduce it further. Any Peshkabir field injected gas produced at the Tawke field will be recovered and recycled into the latter or used as fuel to displace diesel.

Reservoir models suggest gas injection will increase gross Tawke field recoverable volume by 15 to 80 million barrels of oil, of which 23 million barrels are included in the gross proven and probable (2P) Tawke field reserves in the DNO 2019 Annual Statement of Reserves and Resources.

DNO's greenhouse gas emissions increased following commencement of production from the Peshkabir field in 2017 as the oil contains a relatively high associated gas content. Flaring from the Peshkabir field was the largest single contributor to DNO's total 2019 greenhouse gas emissions of 639,200 tonnes of CO2e.

Mr. Mossavar-Rahmani announced the launch of a new initiative to more actively measure, monitor and mitigate methane leakages at DNO's operated sites, noting that while CO2 emissions from oil and gas operations receive the greatest attention, methane emissions are a significant but underreported source of greenhouse gas with an impact 25 times greater than CO2 on a 100-year horizon.

DNO operates the Tawke license containing the Tawke and Peshkabir fields with a 75 percent interest; partner Genel Energy plc holds the remaining 25 percent.

The Company will publish its Corporate Social Responsibility Report, which covers greenhouse gas emissions developments and strategies, next week.

(Source: DNO)

The post DNO Starts Gas Capture in Kurdistan first appeared on Iraq Business News.

GKP Reports Loss for 1H 2020

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) were trading largely unchanged at lunchtime on Thursday, after the company announced a loss for the half year ended 30 June 2020.

Company statement:

Jón Ferrier, Gulf Keystone's Chief Executive Officer, said:

"We moved decisively to protect the business and preserve liquidity in response to COVID-19 and the decline in oil prices. We are actively managing the impact of COVID-19 and working to protect our staff. The Shaikan Field continues to perform well with production up more than 25% compared to H1 2019. 

"While waiting to resume the 55,000 bopd project, the Company has identified a number of simple, low-cost, high-impact investments that have the potential to increase the current base level of gross production by approximately 5,000 bopd and, subject to a satisfactory operating environment, could be implemented in the near-term.

"We continue to maintain a tight focus on cost control and further savings will be reflected in the full year results.

"With our current measures in place, we are pleased to provide 2020 gross production guidance of 35,000 to 36,000 bopd. With continued improvement in macro and operating conditions, we are well positioned to deliver the long-term potential of the Shaikan Field and look forward to resuming shareholder distributions over time."

Highlights to 30 June 2020 and post reporting period

Operational

  • Operations at Shaikan continue safely and reliably, with no Lost Time Incidents ("LTIs") reported during 2020.
  • The Shaikan reservoir continues to perform in line with expectations, with current gross production of c.36,000 bopd and average 2020 gross production to 1 September 2020 of 36,272 bopd.
  • At the time of suspension of investment plans in March 2020, key drilling and facilities activities were on track to achieve the 55,000 bopd target in Q3 2020.
  • GKP is preparing to return to production growth, and has identified a number of quick payback projects, which are expected to increase gross production by c.5,000 bopd for an aggregate gross cost of c.$3 million. Planning is ongoing and, subject to a satisfactory operating environment, could be implemented in the near-term.
  • The Company remains committed to operating sustainably. Throughout the pandemic, the Company has continued to actively support the communities around Shaikan and has donated essential equipment to nearby hospitals.

Financial

  • H1 2020 revenue of $49.9 million (H1 2019 - $95.6 million) and Adjusted EBITDA of $27.5 million (H1 2019 - $59.0 million) resulted from the decline in oil prices, partially offset by increased production. Such factors combined with increased depreciation, depletion and amortisation ("DD&A") due to production growth drove a loss after tax of $33.1 million (H1 2019 - $24.2 million profit).
  • Opex per barrel in H1 2020 was $2.6/bbl, below guidance of $2.7 - $3.1/bbl. Operating costs and general and administrative ("G&A") expenses savings of 12% contributed to expense reductions compared to H1 2019, and further savings are expected in H2 2020 with the significant reduction in activity and continuing focus on cost control.
  • Net capex in H1 2020 was $38.5 million. H2 2020 net capex is expected to be minimal, comprised principally of long-lead time deliveries that will expedite the eventual restart of growth activities. Full year net capex is expected to be within the original $40-48 million guidance range.
  • To protect cash flows, Gulf Keystone hedged c.70% of its H2 2020 net production at a floor price of $35/bbl while retaining full upside exposure.
  • In Q1 2020, the Company completed the second tranche of its share buyback programme bringing total 2019 and 2020 capital distributions to $99 million.
  • Since March 2020, the Kurdistan Regional Government ("KRG") has paid for the last five months of oil sales in the following month as per its commitment to international oil companies ("IOCs").
  • The Company has a strong balance sheet with $140 million of cash at 2 September 2020 and no debt repayment until mid-2023.

  Corporate

  • As previously announced, Jón Ferrier, CEO, has informed the Board of his intention to retire from the Company upon appointment of a successor and after a period of handover. The search process for a new CEO is underway.
  • The Company announced the re-appointment of Garrett Soden to the Board of GKP as a Non-Independent Non-Executive Director representing funds managed by Lansdowne Partners Austria GmbH.

Outlook

  • After successfully managing the impacts of COVID-19 over the last several months, the Company is pleased to provide 2020 gross production guidance of 35,000 bopd to 36,000 bopd.
  • GKP is well positioned to restart its drilling programme to achieve 55,000 bopd when circumstances permit.
  • In line with its stated growth strategy, GKP continues to progress growth opportunities at Shaikan and will also consider potential value accretive inorganic options on an opportunistic basis.
  • The Company remains in a constructive dialogue with the KRG and will continue to seek the timely settlement of the overdue November 2019 to February 2020 invoices totaling $73.3 million (net). The KRG has committed that with the continuing improvement in the price of dated Brent above $50/bbl outstanding arrears will be reviewed.
  • GKP remains committed to maintaining its strong financial position and, as conditions continue to improve, returning to a balance of production growth and shareholder distributions.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

More here and here.

(Sources: GKP, Yahoo!)

The post GKP Reports Loss for 1H 2020 first appeared on Iraq Business News.

Oryx Petroleum Announces Change in Control

Oryx Petroleum Corporation has announced that the Corporation's two largest shareholders have informed the Corporation that Zeg Oil and Gas Ltd. acquired control of the Corporation from AOG Upstream BV on July 23, 2020 in the context of the previously announced transaction.

The acquisition was conditional upon and subsequent to the closing of the Loan Settlement announced by the Corporation on July 23, 2020.

In connection with the change in control, Jean Claude Gandur has resigned from the Board of Directors of the Corporation.

As part of securing consent for the change in control of the Corporation's interest in the Hawler license area from the Ministry of Natural Resources of the Kurdistan Region of Iraq ("MNR"), the Corporation has agreed to amend certain terms of the Production Sharing Contract governing the Hawler license area (pictured).

Specifically, the Corporation has agreed to a 22% reduction in the cost pool related to its interest, and to finance all costs attributed to the 35% interest it does not own for the duration of the development period and without a cap on such financing facility.

Previously, the Corporation was financing only the costs attributable to a 20% interest in the license, to a maximum of US $300 million. The MNR has agreed to waive any rights it has to audit costs incurred up to December 31, 2020.

Depending on actual future revenue and cost profiles, the changes may or may not result in a lower share of future cash flows attributable to the Corporation's interest compared to the applicable terms prior to amendment.

(Source: Oryx Petroleum)

UAE Sends Medical Aid to Iraq to Fight COVID-19

The UAE has sent an aid plane carrying 10.5 metric tons of medical supplies to Iraq to bolster the country's efforts to curb the spread of COVID-19.

This aid will assist approximately 10,500 medical professionals as they work to contain the virus.

Commenting on the aid delivery, Mohamad Saleh Altenaiji, Charge d'affaires of the UAE Embassy in Baghdad, said:

"The UAE has contributed to supporting our Iraqi brothers for years and continues to provide all possible support in all areas, particularly the economic and developmental realms. The UAE is also keen to protect and preserve Iraq's cultural heritage in the face of terrorist threats that have tried to destroy and maim it.

"In continuation of these efforts, the UAE's wise leadership sent a medical aid plane today to support the efforts of health workers to deal with COVID-19, which comes in addition to the recent medical assistance sent to the Kurdistan Region of Iraq."

To date, the UAE has responded to the COVID-19 crisis by providing over 974 metric tons of aid to 68 countries, supporting more than 974,000 medical professionals in the process.

(Source: Govt of UAE)

Shamaran Bondholders appoint Advisers

By John Lee.

According to Bloomberg Law, a group of bondholders of Shamaran Petroleum has reportedly appointed restructuring specialists Akin Gump Strauss Hauer & Feld LLP to advise on ongoing debt talks.

ShaMaran Petroleum said last week that that it continues to examine alternatives to address a breach of financial covenant and liquidity shortfall, and that difficult discussions with its largest independent bondholders are continuing.

The Canadian company has a 27.6 percent direct interest in the Atrush Block production sharing contract in Iraqi Kurdistan.

More here (subscription required).

(Sources: Bloomberg Law, Shamaran)

Covid-19: KRG makes Masks Mandatory in Public

Prime Minister Masrour Barzani chairs meeting on combating new wave of Covid_19

KRG Prime Minister Masrour Barzani on Wednesday chaired a meeting with the government's high-level committee on the coronavirus outbreak via video conference.

In the meeting attended by Deputy Prime Minister Qubad Talabani, the Minister of Health presented a detailed report on the increasing number of infections and fatalities in the Kurdistan Region due to a recent surge in Covid_19 cases. The Minister of Interior then presented a report on government measures to enforce compliance with the government's health advice.

Following an exchange of views on how to curb the spread of the disease, the government's committee on coronavirus made the following decisions:

  1. First: The government's public health guidance will continue, including quarantine and delivering services to the infected, contacts and tourists. The campaign to spread awareness on the disease and health advice will intensify too.
  2. Second: The committee also decided to make wearing a mask mandatory in public places and institutions. There will be a supply of masks at government institutions for people visiting these places. Violators will be held accountable to the law.
  3. Third: The government will allocate an additional 5 billion Iraqi dinars to fight the pandemic. Health institutions in all provinces and counties can benefit from these funds.
  4. Fourth: The government will facilitate the production of masks and other equipment to ensure high quality and affordable pricing.
  5. Fifth: The Ministry of Health is permitted to expand laboratory services and set necessary mechanisms to diagnose and identify virus patients Ministry teams will continue contact tracing and tracking suspect cases.
  6. Sixth: The Ministries of Health and Interior along with the Department of Foreign Relations were assigned to contact and visit relevant departments in the Iraqi government and the World Health Organization (WHO) in Iraq and the Kurdistan Region as well as consulates and international organisations to seek assistance for the fight against the virus.
  7. Seventh: The travel ban between provinces in the Kurdistan Region and between the Kurdistan Region and Iraqi cities will continue, and measures to protect from the virus will toughen amid a recent surge in infections. The Ministries of Peshmerga Affairs and Interior were also assigned to schedule reporting to duty hours in a way to minimise travel and contact, especially for those who commute from other cities to work. The same will apply to employees of other departments, who have to commute to work.

(Source: KRG)

DNO Guides 2020 Production and Spend

By John Lee.

DNO ASA, the Norwegian oil and gas operator, today provided production and spend guidance for the balance of the year ahead of its Annual General Meeting on Wednesday.

The Company reported that it has implemented the target 35 percent reductions across all spend categories to shrink its 2020 budget by USD 350 million to USD 640 million in response to turbulence and uncertainty in global oil and financial markets triggered by the coronavirus pandemic.

While strengthening its balance sheet, cutbacks in spend will throttle back 2020 Company Working Interest (CWI) production to a projected 88,000 barrels of oil equivalent per day (boepd), of which the Kurdistan region of Iraq will contribute 71,000 barrels of oil per day (bopd) and the North Sea 17,000 boepd. DNO's CWI production averaged 104,800 boepd last year.

In Kurdistan, DNO has reduced the number of rigs deployed in drilling, testing and workovers from five in 2019 and early 2020 to two; these two rigs are believed to be the only ones currently active in Kurdistan, down from an overall count approaching 20 last summer.

Of the two active rigs, one is drilling the Zartik-1 exploration well on the DNO-operated Baeshiqa license and the other is a Tawke license workover rig that will shortly be moved for scheduled maintenance. However, two third-party rigs have been warm stacked at the Tawke and Peshkabir fields and can quickly be mobilized if oil prices climb and export payments are regularized.

"Our cost cutbacks have been thoughtful and deliberate as we moved at warp speed to preserve cash and our balance sheet," said Bijan Mossavar-Rahmani, DNO's Executive Chairman. "The resulting reductions in oil production especially in Kurdistan are reversible with a restart of drilling," he added. "We have not lost reserves but simply parked a portion until the market recovers. And it will."

Gross production at the DNO-operated Tawke license in the Kurdistan region of Iraq containing the Tawke and Peshkabir fields, absent drilling of new infill wells to arrest natural field decline, is expected to average 100,000 bopd in 2020. This reflects a drop from 115,210 bopd in Q1 2020 to 100,000 bopd in Q2 2020 and 90,000 bopd over the balance of the year. The Tawke license exit rate at yearend 2020 is projected at 85,000 bopd absent new wells. Production continues to be split 55-45 between the Tawke and Peshkabir fields.

On a CWI basis, DNO's production in Kurdistan in the second half of the year is projected to average 65,000 bopd (81,220 bopd in Q1 2020 and an estimated 70,000 bopd in Q2 2020). CWI in North Sea operations will contribute another 17,000 boepd in the second half of 2020 (18,640 boepd in Q1 2020 and an estimated 17,000 boepd in Q2 2020).

Budget cuts and the newly announced Norwegian production caps are not expected to make a material change to DNO's 2020 North Sea projections; the majority of the Company's fields subject to the restrictions are not fully utilizing their previous higher production permits.

DNO ASA 2020 Projected Spend
Q1 2020 Q2 2020 Q3+Q4 2020 2020 2019
Actual Projected Projected Projected Actual
USD million USD million USD million USD million USD million
Exploration expenditures 34 36 65 135 187
Capital expenditures 78 37 40 155 339
Operating expenditures 59 49 92 200 237
Abandonment expenditures 17 7 7 31 23
Operational spend 187 129 204 520 786
Other 40 34 46 120 203
TOTAL 227 163 250 640 989

Note: Figures above are pre-tax (i.e., before exploration tax refund in Norway). The category
"Other" includes general and administrative expenditures (G&A), net interest payments and

(Source: DNO)

KRG PM Barzani calls for Constitutional Solution

Prime Minister Barzani chairs cabinet meeting, calls for constitutional solution to problems with Baghdad

Prime Minister Masrour Barzani chaired a cabinet meeting in Erbil on Wednesday to discuss economic conditions in the Kurdistan Region and outstanding problems with the federal government.

In the meeting, which was also attended by Deputy Prime Minister Qubad Talabani, the Prime Minister wished success to the new Iraqi cabinet, and stressed the need for a constitutional solution to ongoing issues between Erbil and Baghdad.

The cabinet discussed proposed draft bills covering the selling and renting of public properties, investment, and patients' rights. Relevant departments in the Kurdistan Regional Government (KRG) were assigned to prepare final drafts for parliament.

Prime Minister Barzani said the Kurdistan Region is going through difficult economic times due to falling oil prices and the impact of the coronavirus pandemic, and must make adjustments due to limited financial resources.

He called for a review of the economy in light of the regional financial downturn, and underlined the importance of continuing to implement the Reform Law (2020).

The Prime Minister said the KRG will do its best to pay public sector salaries, and reiterated his commitment to continue providing public services and strengthening the region's infrastructure.

During the meeting, Deputy Prime Minister Talabani provided an update on recent discussions with federal authorities on budgetary issues and oil exports. He said dialogue with Baghdad will continue to reach a deal on outstanding problems.

(Source: KRG)

Genel Energy “Robust Financial Position”

Genel Energy has issued the following trading and operations update ahead of the Company's Annual General Meeting ('AGM'), which is being held today.

The information contained herein has not been audited and may be subject to further review.

Bill Higgs (pictured), Chief Executive of Genel, said:

"Despite the impact of COVID-19 creating a challenging environment for our industry, Genel's resilient business model and robust financial position, with over $100 million in net cash and an asset cashflow breakeven of $30/bbl, leaves us well placed to withstand the consequences of the pandemic as we continue to deliver our strategy.

"We have cut our cloth appropriately against this backdrop and halved our capital expenditure for 2020, protecting our balance sheet while still progressing Sarta, and positioning us to take advantage of growth opportunities as the landscape improves."

FINANCIAL PERFORMANCE

  • $98 million of cash proceeds received in the first four months of 2020
  • Cash of $404 million at 30 April 2020 ($391 million at 31 December 2019)
  • Net cash of $106 million at 30 April 2020 ($93 million at 31 December 2019)
  • Capital expenditure of $45 million in the first four months of 2020, with point forward expenditure cut significantly due to the impact of COVID-19
  • Final dividend of 10¢ per share (2019: 10¢ per share), a distribution of c.$27.8 million, to be paid to shareholders on the register on 29 May 2020, pending approval at today's AGM

OPERATING PERFORMANCE

  • Production in the first quarter of 2020 averaged 34,170 bopd, in line with January's guidance, guidance that has been removed following the decision to reduce investment to a level appropriate for the external environment
  • As well as impacting the oil price and hence investment plans for 2020, COVID-19 has provided operational challenges in relation to the movement of people and equipment. This has been less of a challenge for producing fields than pre-production assets, and the reduced work plan put in place in Q2 is progressing in line with expectations
  • Production by asset was as follows:
(bopd) Gross production

Q1 2020

Net production

Q1 2020

Tawke 61,490 15,370
Peshkabir 53,710 13,430
Taq Taq 12,200 5,370
Total 127,400 34,170

PRODUCTION ASSETS

  • Tawke PSC (25% working interest)
    • Production at the Tawke PSC averaged 115,200 bopd in the first quarter of 2020, with the Tawke field producing 61,490 bopd, and Peshkabir 53,710 bopd
    • Five development wells have been completed on the licence. Three drilling rigs were released as the 2020 activity plan was amended to reflect the external environment, while a workover rig continues to service production wells
    • A drilling rig has been stacked at each field and can be quickly mobilised when conditions warrant
  • Taq Taq PSC (44% working interest and joint operator)
    • Taq Taq gross field production averaged 12,200 bopd in the first quarter of 2020
    • The latest well on the northern flank of the field, TT-35, spud on 6 January, and completed in April. The well is currently adding c.600 bopd to production. This completed the planned drilling programme with the Sakson-605 rig, which has now been released
    • Activity at TaqTaq is focused onmaximisingcash generation. Appropriate for the external environment, it is not expected that there will be any further drilling activity in 2020

PRE-PRODUCTION ASSETS

  • Sarta (30% working interest)
    • Civil construction work at the Sarta field is nearing completion, with the facility build ongoing
    • Due to delays in the movement of people and equipment caused by the impact of COVID-19, first oil is now expected in Q4 2020, rather than Q3
    • Phase 1A represents a low-cost pilot development of the Mus-Adaiyah reservoirs, designed to recover 2P gross reserves estimated by Genel at 34 MMbbls
  • Qara Dagh (40% working interest and operator)
    • The QD-2 well was on track to spud in Q2 2020 prior to COVID-19 impacting supply chains and the movement of people in to the KRI
    • Due to ongoing uncertainty caused by COVID-19, Genel notified the KRG of the occurrence of a force majeure event preventing the Company from being able to perform its contractual obligations as scheduled
    • Work continues to take place to ensure that Genel is in the best possible position to start to drill the QD-2 well once external conditions improve and the force majeure event ceases
  • Bina Bawi (100% working interest and operator)
    • Genel received documentation in mid-April from the KRG following the commercial understanding reached in September 2019
    • Negotiations regarding this documentation are ongoing, as Genel continues to seek a viable and balanced commercial way forward for the development of Bina Bawi's gas and oil resources
  • Somaliland - SL10B13 block (100% working interest and operator)
    • A farm-out process relating to this highly prospective block began in Q4 2019, and a number of companies continue to assess the opportunity
  • Morocco - Sidi Moussa block (75% working interest and operator)
    • The farm-out campaign is set to begin in Q3 2020, aimed at bringing a partner onto the licence prior to considering further commitments

ESG

  • Zero lost time incidents and zero losses of primary containment in 2020 to date at Genel and TTOPCO operations
    • There has not been an LTI since 2015, with almost 12 million hours worked since the last incident
  • The Peshkabir-to-Tawke gas capture, transport and reinjection project to effectively end CO2 emissions at Peshkabir and boost oil recovery at Tawke is completed and undergoing commissioning
  • Multiple projects are ongoing to support local communities in the Kurdistan Region of Iraq, with activities in the Qara Dagh region continuing despite the force majeure event
  • Genel will issue a sustainability report in September 2020

OUTLOOK

  • Payments from the KRG are ongoing, with an updated payment mechanism put in place under which the KRG has committed to settling monthly sales invoices by the fifteenth day of the following month, as announced on 17 April 2020
    • $11.1 million received in April for oil sales during March 2020
  • 2020 capital expenditure reduced by c.50% from the top end of the original guidance range of $160-200 million and now expected to be just over $100 million, of which around half will be spent on the Tawke and Taq Taq PSCs, c.$30 million on Sarta, and c.$10 million on Qara Dagh
    • Point forward expenditure expected to be c.$60 million in 2020
  • Operating costs per barrel expected to be $3/bbl in 2020
  • Producing asset cashflow breakeven in 2020 at an oil price of less than $30/bbl, taking into account the 2020 capital expenditure programme and the updated payment mechanism
  • Opex: reduction of 10% compared to original guidance of c.$40 million
  • G&A: unchanged at c.$15 million (a reduction of c.20% from 2019)
  • Genel continues to analyse opportunities to repurchase bonds at a value-accretive price
  • The Company continues to actively pursue growth and is analysing opportunities to make value-accretive additions to the portfolio that are consistent with Genel's strategy

(Source: Genel Energy)