Shares in London-listed oil firms Genel and Gulf Keystone Petroleum jumped today on the news that they could recoup hundreds of millions of dollars in overdue payments from the Kurdistan Regional Government (KRG).
Shares in Gulf Keystone rose as much as 43.43 per cent to 17.57p per share this afternoon, while Genel gained as much as 6.75 per cent to 111.55p this morning.
The KRG clarified its payments to international oil companies, saying it would pay them according to their contractual entitlements this year. It had began allocating funds in September to exporters that had previously gone unpaid, but the sum wasn't based on their contractual entitlements.
Payments will adjust for the quality of crude produced compared to Brent prices, and the cost of transporting it to the market, it said. Oil companies will also receive five per cent of the monthly "netback revenue" from each oil field, helping recover money they're already owed.
"The KRG's newly outlined commitment to paying its international upstream contractors is positive," analysts at Barclays said in a note.
"A move to payments under the PSC terms could reduce monthly payment levels at current oil prices, but this impact may be offset by the start of payments to reduce the receivable balance."
In a trading update released last week, Genel said that the KRG continues to reiterate its commitment to make regular export payments to international oil companies operating there.
The KRG aims to process each of the monthly payments to the international oil companies within 10 working days of the following month, it added.