Genel Energy's share price has plunged as its flagship Taq Taq field reserves are revised down

Courtney Goldsmith
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Reserves for Genel's top oil field have been revised down (Source: Getty)

Shares in oil firm Genel Energy dropped more than 20 per cent after the firm said its flagship oil field will produce much less crude than expected.

The company, which is chaired by former BP boss Tony Hayward, said there is "significant uncertainty" in reserves at its Taq Taq field, which is located in the Kurdistan region of Iraq.

As a result, it expects to book an impairment charge of $181m (£143.9m), subject to audit.

The firm's share price fell 21.47 per cent at 57.32p in morning trading.

McDaniel and Associates' competent person's report (CPR) estimates the field's gross reserves at 59m barrels as of 28 February, compared with 172m barrels at 31 December 2015.

Read more: Tony Hayward's Genel appoints new chief operating officer

The field is currently producing around 19,000 barrels per day (bpd) compared with 36,000 bpd at the end of 2016. It has produced 207.9m barrels cumulative to 28 February, of which 1.8m barrels were produced in 2017.

"Recently, key producing wells have exhibited high rates of decline as a result of water breakthrough, exacerbating the decline rate across the field," Genel said in its statement.

The firm has removed its previous guidance of 24,000-31,000 bpd for Taq Taq's 2017 gross average production, and it said it will announce field production on a monthly basis going forward.

Genel said further detail on the Taq Taq field and the near-term development plan will be given in the company's annual results, which will be announced Thursday.

Analysts previously cast doubts over Taq Taq production levels, which depend on receiving regular and predictable export payments from the Kurdistan Regional Government that are out of the company's hands.

"Taq Taq and the outlook for production here are for us the factor most likely to move the shares, though there is little evidence at present of a sustained improvement in the export payments, leading us to expect further declines in the near term," Daniel Slater, analyst at Arden Partners, previously said.

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