Genel Energy plc announces that it has agreed to acquire an additional 21 per cent interest in the Bina Bawi exploration block in the Kurdistan Region of Iraq from Hawler Energy Ltd (the Transaction) for $240 million, to be paid from the Company's existing cash resources.
The Transaction is in addition to the Company's acquisition of an initial 23 per cent interest in the Bina Bawi block, which completed on 3 August 2012 (together the Acquisitions).
The Bina Bawi exploration block is in the center of the Kurdistan Region of Iraq and covers an area of 240 square km. It is 50 km to the east of Erbil and is the adjacent block to Genel Energy's producing oil field Taq Taq. To date, 2 of the 3 exploration wells drilled on the block have encountered significant hydrocarbons.
The most recent well, Bina Bawi-3, encountered a gross hydrocarbon column of more than 800 metres in the Jurassic zone and two Jurassic reservoir intervals tested separately achieved an aggregate flow rate of more than 4,000 barrels a day of light, 44 to 47-degree API oil. A further gross hydrocarbon column, estimated at over 1,000 metres, in the Triassic zone of Bina Bawi-3, remains untested but confirmed the gas find made in the first well in 2007.
The overall results of Bina Bawi-3 continue to be reviewed, including the evaluation of deeper potential targets in the Triassic reservoirs. An extended well test will commence towards the end of the year. There are two further appraisal wells planned on the block this year. The Bina Bawi discovery is estimated to contain contingent resources of between 500 million to 1 billion boe.
Upon completion of the Acquisitions, Genel Energy will hold a 44 per cent working interest in the PSC, OMV (Operator) will hold a 36 per cent working interest and the KRG will retain a 20 per cent working interest which is carried by the contractors pro rata to their PSC entitlements.
The Transaction is conditional on the receipt of approval from the Kurdistan Regional Government.
Commenting on the transaction, Tony Hayward, Chief Executive Officer of Genel, said: "This acquisition gives us a material interest in a third major oil and gas development (alongside Taq Taq and Tawke) and reinforces Genel's leading position in the Kurdistan oil and gas province. It is consistent with our strategy of continuing to build our Kurdistan business through selective acquisitions and our ongoing exploration drilling programme."