Genel Energy losses widen amid growing worries over production in Iraq

Genel Energy saw losses widen last year, on the back of a series of expensive write-downs, while revenue almost halved.

In the 12 months to 31 December, the group posted a $1.25bn (£1.01 €1.16) pre-tax loss, compared with $1.16bn in the previous year, while revenue slumped 44.5% year-on-year to $190.7m.

The wider loss came as a result of $780m worth of impairment costs against the company's exploration assets. Meanwhile, production declined sharply, falling to 53,300 barrels of oil per day (bpd), which was at the lower end of guidance, from 84,900 bpd in 2015.

To complicate matters further, the company's net debt increased over the last financial year, climbing to $241.2m from $238.8m in the previous 12 months, while available cash resources amounted to $407m. The figure was lower than the $455.3m on record at the end of 2015 and sharply inferior to the $2bn the company had when it started out in 2011.

Genel, chaired by former BP chief Tony Hayward who is expected to vacate his role later this year, admitted the performance throughout 2016 had been disappointing, largely because of a challenging trading environment.

However, Hayward said the management was determined to turn fortunes around and there were reasons to be mildly optimistic ahead of this year.

"There is now greater stability in the oil industry, and there are opportunities in the Genel portfolio that provide clear reasons for optimism going forward," he said.

Earlier this week, shares in the company plummeted to a record low after it admitted for a second time in a year that its main asset in Iraq's semi-autonomous Kurdistan region, where the company operates, contained less crude than expected.

The Taq Taq field, which is located approximately 50 miles away from the Kurdish capital of Ebril, is believed to contain approximately 59.1 million barrels of oil, much less than the original estimate of 171.8 million barrels the company provided just over a year ago.

Genel, which had already downgraded its forecast in February last year, also warned the current estimate was surrounded by "significant uncertainty", adding the field was currently producing 19,000bpd, compared with 36,000 bpd last year.