Gross 2P reserves
bopd gross production in 2016
The Taq Taq licence area is located 60 km northeast of the Kirkuk oil field and the adjacent city of Kirkuk, 85 km southeast of the city of Erbil and 120 km northwest of the city of Sulaimaniah. The gross area of the Taq Taq licence area is approximately 951 square km.
The Taq Taq field has been producing since 2006. As of 30 June 2017 the field had produced over 210 mmbbls, generating over $12 billion in sales.
On 29 February 2016, the Company announced that the 2P initial gross recoverable reserves (referred to in the industry as Estimated Ultimate Recovery, or EUR) for the Taq Taq field had been downgraded from 683 MMbbls to 356 MMbbls. On 28 March 2017 the Company announced a further downward revision of Taq Taq 2P EUR to 267 MMbbls, implying gross 2P reserves of 61 MMbbls at year-end 2016 (from 172 MMbbls at year-end 2015). Genel’s net share of Taq Taq 2P reserves at year-end 2016 is 27 MMbbls. The further reduction of 2P EUR for Taq Taq is a consequence of a reassessment of the gross rock volume above the oil water contact and fracture porosity in the undrained Cretaceous Shiranish reservoir, following an analysis of reservoir surveillance data and well performance from 2016.
The overriding strategy for the Taq Taq field is to generate free cash flow flow – and $32 million in free cash flow was generated in the first half of 2017 – and maximise gross ultimate recovery.
As a result the field partners have decided to wait for the results of the TT-29 well ahead of sanctioning any further investment in the main Cretaceous reservoir. Accordingly, two planned sidetracks of existing Cretaceous producers have been moved into the contingent category pending results from TT-29.
The main objective in the TT-29 well, which has been drilling since February 2017, is to reduce the uncertainty on the free water level in the north flank of the field. Results were originally expected around mid-year, although challenging hole conditions experienced while deviated drilling through Palaeocene aged rocks immediately above the Cretaceous reservoirs in the field have resulted in well operations being behind schedule. The well has recently been plugged back, with the partners aiming to re-drill the Palaeocene lithology with a less aggressive well trajectory. As a consequence, TT-29 results are now expected in H2 2017. The TT-29 well was also targeting a shallower Tertiary anomaly which was proven not to be hydrocarbon bearing.
In the shallower Pilaspi reservoir the partners have agreed to drill two additional development wells, which are planned for H2 2017.
Well intervention operations continue within the existing well stock, notably including a rolling programme of jet pump testing in selected Cretaceous producers to assess the potential for increasing field off-take at higher levels of water cut using this form of artificial lift.
While the rate of decline in Taq Taq production has slowed in recent months, management believes it is still too early to extrapolate meaningful conclusions from this trend, particularly ahead of the results of the TT-29 well.
As stated in the full year 2016 results, Genel intends to announce Taq Taq field gross production on a monthly basis going forward:
- July 2017 - 14,705 bopd
- June 2017 - 15,939 bopd
- May 2017 - 16,917 bopd
- April 2017 - 18,011 bopd