Genel Energy has announced that it has reached an agreement with the Ministry of Natural Resources ("MNR") of the Kurdistan Regional Government ("KRG") for the development of the Miran and Bina Bawi gas fields.
In addition, Genel has agreed key terms with OMV to acquire its 36% operated stake in the Bina Bawi gas field. The total consideration will be $150 million in cash. An initial payment of $20 million will be paid on completion of the deal, with the remaining $130 million paid in two instalments after first gas. This is subject to finalisation of documentation and OMV's corporate approvals.
The agreement with the MNR for the development of Miran and Bina Bawi states that:
- The Miran and Bina Bawi fields are to be combined under one Production Sharing Contract ("PSC"). This is expected to be approved by year-end 2014. Following approval, Genel will become the sole contractor and have a 100% equity interest in both fields
- The responsibilities of Genel will be drilling of the gas wells and installation of flowlines and first stage condensate separation at Miran and Bina Bawi. The Company will also be responsible for the development of the oil resources at Miran and Bina Bawi
- The KRG will assume responsibility for the gas treatment facilities and gas offtake arrangements from the fields
- The tender process for the gas treatment plant will commence in the first half of 2015 and first gas production for export will commence in H1 2018. The KRG also has an option to request gas for domestic consumption commencing in 2016
- Genel's entitlement will be 100% of oil revenues until all licence back costs are fully recovered. The Company's share of oil revenues will then revert to 50%. First oil production is expected in 2016
- Genel will also receive 100% of the revenues for condensate extracted at first stage separation and a fee of $0.78 per thousand cubic feet for the raw gas delivered into the gas treatment facilities