Genel's 2015 loss widens to $1.16 bln after slashing oil field reserves

* 2015 pretax loss of $1.16 billion

* 2016 capital expenditure at $80-120 million

* Genel owed $423 million by KRG for oil exports (Updates throughout)

By Karolin Schaps

LONDON, March 3 (Reuters) - Genel Energy (Other OTC: GEGYF - news) , the oil explorer chaired by former BP boss Tony Hayward, reported its biggest-ever annual loss after writing off $1 billion because its largest operational oilfield holds less oil than it previously thought.

Genel, one of the main oil producers in Iraqi Kurdistan, lost more than a third of its market value to an all-time low on Monday after announcing it had halved the reserves estimate for Taq Taq in Northern Iraq.

Oil prices that have fallen around 70 percent in the last 18 months had also eroded the value of the remaining reserves at the field.

The write-off meant Genel made a full-year pretax loss of $1.16 billion from a loss of $312.8 million in 2014.

Genel nevertheless expects to spend $80-120 million this year on projects including Taq Taq.

"We recognise and share the disappointment of the recent Taq Taq reserves update," Genel Chief Executive Murat Ozgul said in a statement. "Both Taq Taq and Tawke remain low-cost oil fields by any global benchmark."

Production costs are forecast at less than $2 a barrel this year, the company said.

It (Other OTC: ITGL - news) maintained its 2016 production guidance of 60,000-70,000 barrels per day (bpd) and a revenue forecast of $200-275 million assuming oil prices average $45 a barrel.

"With (Other OTC: WWTH - news) its cash generative assets and strong balance sheet Genel could be an attractive merger/takeover target for a partner," said Daniel Slater, analyst at Arden Partners (LSE: ARDN.L - news) .

Hayward, who set up Genel with financier Nat Rothschild and former Goldman Sachs (NYSE: GS-PB - news) banker Julian Metherell, last year signalled his readiness to sell the company should a buyer hunting "high-quality assets" make an approach, the Financial Times reported.

Genel shares clawed back some of Monday's losses, and were up 6.1 percent at 0839 GMT.

The company is also planning to make progress this year on developing its gas fields in Iraqi Kurdistan. It is banking on a 3 percent annual gas demand growth in neighbouring Turkey to boost the fields' prospects.

Genel, which is owed $423 million by the cash-strapped Kurdistan Regional Government (KRG) mainly for oil exports, said it had received payments under a new scheme but these would likely fall due to an outage at one of the main oil pipelines into Turkey.

"The outage is clearly disappointing. We do have a local market we can fall back on in the event of pipeline outage," Genel Chief Financial Officer Ben Monaghan told Reuters.

KRG promised in February to start paying oil producers according to the terms of their contracts, on top of a percentage of monthly netback revenue derived from each field to help them recover costs. (Editing by Susan Fenton and Susan Thomas)