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Genel Energy, the oil minnow chaired by former BP boss Tony Hayward, has admitted for a second time that its flagship field in the Kurdistan region of Iraq contains far less crude than originally thought.
The group, which once had a market cap of more than £3bn in 2014 but is now worth just over £200m, said its key Taq Taq field is now estimated to hold a remaining 59.1m barrels, down from a previous assessment of 171.8m.
The field, in which Genel has a 44 per cent stake and is joint operator, has already produced 207.9m barrels.
The company’s shares plunged more than 40 per cent last year when it first cut its reserves estimate for Taq Taq, from 683m barrels of oil over the total life of the field, to 356m barrels.
As flagged by the Financial Times, today’s reserves downgrade had been anticipated by analysts. Kurdistan-focused explorers have had a rough time over the last few years.
In light of today’s downgrade, Genel has scrapped its guidance for Taq Taq gross average production this year of 24,000-31,000 barrels of oil per day and will in future announce figures on a monthly basis.
It will also book a $181m writedown against the field in its 2016 accounts, which will be published on Thursday.
Mr Hayward, who is shortly expected to depart the company he helped set up, had once described the semi-autonomous region of Iraq as “one of the last great frontiers in the oil and gas industry”.
But operators have struggled to secure vital, regular payments from the Kurdistan regional government in return for oil exports.
Several companies such as Genel have also discovered their fields contained less oil than believed at the outset.
Genel has also had other setbacks. It spent cash drilling in other countries such as Angola and Ivory Coast only to come up short.