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Message: Genel Won’t Buy Gulf Keystone, DNO as Exxon Pushes Up Prices

http://mobile.businessweek.com/news/2012-02-23/genel-won-t-buy-gulf-keystone-dno-as-exxon-pushes-up-prices.html

Genel Won’t Buy Gulf Keystone, DNO as Exxon Pushes Up Prices
By Brian Swint
Februar 23, 2012 0:32 PM EST

(Updates with closing share prices in fifth paragraph.)

Feb. 23 (Bloomberg) -- Genel Energy Plc, the oil explorer focused on northern Iraq, won’t buy fellow Kurdistan producers Gulf Keystone Petroleum Plc or DNO International ASA because the entry of Exxon Mobil Corp. into the region has forced up prices, Chief Executive Officer Tony Hayward said.

Genel, the largest oil producer in Kurdistan, will seek to expand outside the region, acquiring prospects in the Middle East or Africa, Hayward told journalists in London today.

The Kurdistan regional government said Nov. 13 that Exxon had signed contracts to drill in the semi-autonomous region. Since then shares of Gulf Keystone have doubled and DNO is up 23 percent. Genel President Mehmet Sepil said as recently as November that the company would approach DNO about a merger.

“It’s too expensive for us,” Hayward said. “What changed is Exxon coming in. We don’t need any more Kurdistan.”

Genel fell 1 percent to 821 pence in London. DNO fell 0.5 percent, and Gulf Keystone closed up 0.9 percent at 368 pence after earlier rising as much as 8.4 percent.

Genel can fund its exploration and drilling programs with cash flow from current production in Kurdistan, which it mostly sells in the domestic market, Hayward said. The company still has $1.9 billion to use for acquisitions.

Operations will produce as much as $300 million in revenue this year, Hayward said before giving a presentation to investors. Current production generates enough cash to fund exploration, appraisal and development in Kurdistan, he said.

The explorer would considering buying fields or companies involved in offshore exploration in east or west Africa, Hayward said. Acquisitions may include the purchase of companies, assets and licenses as Genel seeks geographic diversity, more exploration potential and technical capability, he said.

Genel plans to lift production from the Taq Taq field to about 200,000 barrels a day in 2014 from 66,000 barrels in 2011. The company will also build a 255-kilometer (160 mile) pipeline to the main Kirkuk-Ceyhan export line.

--Editors: Alex Devine, Tony Barrett

To contact the reporter on this story: Brian Swint in London at [email protected]

To contact the editor responsible for this story: Will Kennedy at [email protected]

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