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UPDATE 1-Genel slashes 2015 revenue forecast on weak oil prices

Genel Energy, one of the main oil producers in Iraqi Kurdistan, slashed its 2015 revenue forecast on Wednesday citing weak crude prices and said it would cut jobs to lower costs.

The oil producer reduced its revenue target for this year by $150-200 million to $350-400 million, expecting Brent crude prices to average $50 per barrel instead of $80 previously forecast.

Oil companies across the globe are grappling with a near 60 percent fall in crude prices since last June due to a supply glut, forcing them to trim costs and rein in investments.

Genel also announced a 30 percent cut to its 2015 capital expenditure guidance to $200-250 million and said it would cut administrative expenses by 40 percent through job cuts and other measures.

For 2014, Genel expects to write off around $480 million in relation to drilling work offshore Malta, Angola and Morocco, where it made some unsuccessful oil exploration attempts.

It warned that its 2014 revenue, which it is due to report on March 5, would likely come in at the lower end of its $500-600 million guidance despite reaching the top end of its production target at 69,000 barrels of oil equivalent per day.

The company's shares were down 1.28 percent in early trading.

Genel's operations in Kurdistan are key to its business. It was still owed around $230 million by the Kurdish Regional Government (KRG) at the end of 2014 for crude exported from the region but Genel said it was confident the KRG would continue making contractual payments through 2015.

The KRG struck an agreement on oil exports with the federal Iraqi government at the end of last year that saw Baghdad resume payments to Kurdish officials.

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Copyright:
Reuters
Published on:
January 21, 2015
Source url:
http://uk.reuters.com/article/2015/01/21/genel-energy-trading-idUKL6N0V00X220150121?rpc=401
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