Genel Energy to acquire interests in Iraq oil blocks from Chevron

Genel Energy has agreed to acquire stakes in the Sarta and Qara Dagh blocks in the Kurdistan region of Iraq from US oil company Chevron.

Under the terms of the agreement, Genel will gain a 30% equity in the Sarta licence and a 40% equity in the Qara Dagh appraisal licence.

In exchange for the interest in the Sarta licence, the company will pay a 50% share of ongoing field development costs until a specific production target is reached.

The consideration also includes a fee related to the achievement of a production milestone.

Once the transaction is completed, Chevron’s ownership stake in the Sarta licence will decrease to 50%. The remaining 20% interest will be held by the Kurdistan Regional Government (KRG).

Genel expects its total expenditure on the field development up to the end of next year to be $60m.

Genel Energy chief executive Murat Özgül said: “The agreement provides access to a phased development opportunity with significant growth potential at Sarta, and an exciting appraisal opportunity at Qara Dagh.

“The additions to our portfolio are an important step in our diversification strategy, offering a further opportunity for near-term production and cash-generation.”

The company noted that two Sarta appraisal wells recorded test production rates of 7,500bpd.

These wells would be placed on production in the first phase of development, noted Genel.

The firm will become the operator of the Qara Dagh licence through a carry arrangement.

Chevron will retain 40% of the equity in the licence while the KRG will own the remaining 20%.

The first well on the licence was completed in 2011 and a second well is planned to be drilled next year.

Genel’s producing fields in the Kurdistan region include Taq Taq and Tawke where the company’s working interest production averaged 33,700bopd last year.