Genel warns of $1bn Taq Taq impairment
Upstream Genel expects to record an impairment, subject to audit, of some $1bn to the 2015 carrying value of the Taq Taq field in the Kurdish region of Iraq. The reservoir has lower than expected porosity and on top of that, the oil price is lower, it said in a London stock exchange statement February 29.
The work done by McDaniel & Associates, in order to produce a necessary competent person's report (CPR), is now largely complete, and the gross recoverable proven and probable ('2P') reserves or estimated ultimate recovery is almost half what it was.
Genel's internal Taq Taq review and the CPR process have focused on the fracture porosity within the Shiranish reservoir. Both processes have used newly acquired data to establish that the fracture porosity within the Shiranish is lower than estimated in the original McDaniel CPR dated 30 June 2011.
In June 2015, its estimated ultimate recovery stood at 683mn boe but as of December this figure was 356mn boe. Of the 356mn boe, about half, 184mn boe, have been produced.
Genel anticipates that gross Taq Taq production will average around 80,000 b/d in 2016. There are no pipeline capacity constraints but the company is limiting investments proportionately to the economic climate. Gross Taq Taq production is estimated at 65-75,000 b/d and 50-70,000 b/d in 2017 and 2018 respectively.