Genel cuts revenue outlook on weaker production

LONDON, July 28 (Reuters) - Genel Energy (Other OTC: GEGYF - news) , one of the main oil producers in Iraqi Kurdistan, cut its revenue outlook for the year on Thursday after it reduced its production target earlier this month.

London-listed Genel reported a first-half pretax loss of $4.2 million on Thursday, down from a $31.4 million profit in the same period last year as weak oil prices and lower production took their toll.

Shares (Berlin: DI6.BE - news) in Genel were down 5 percent at 98 pence a share shortly after market opening.

Genel said 2016 revenue would be $200-230 million, down from $200-275 million previously expected.

The oil producer, which is still owed $412 million by the Kurdistan Regional Government (KRG) for oil exports in 2014 and 2015, halved its proven and probable reserves at its Taq Taq oil field in Kurdistan earlier this year.

The Taq Taq and Tawke oil fields saw much lower production levels year on year, partly due to the closure of a key export pipeline to Turkey and partly due to natural decline in the reservoirs.

This led Genel to cut its full-year production target by around 14 percent earlier this month to 53,000-60,000 barrels per day (bpd).

With reliance on revenue from its main two oil fields, Genel is banking on a recovery in oil prices to beef up its balance sheet in the short term.

"With its production and balance sheet, Genel is a decent levered play on oil price recovery, but the shares may otherwise struggle to make progress," said Daniel Slater, analyst ay Arden Partners (LSE: 0QOQ.L - news) .

In the long term, Genel's Miran and Bina Bawi gas fields are expected to contribute significant cashflow through gas exports to energy-hungry Turkey. (Reporting by Karolin Schaps; Editing by Adrian Croft)