Flash Report /
Iraq

Kurdistan makes delayed oil payments as Middle East security risks increase

    Tellimer Research
    8 January 2020
    Published byTellimer Research

    Genel and Gulf Keystone have confirmed receipt of the delayed payments for the August oil shipments from Kurdistan. If all other operators were also paid (some of are likely to disclose today), it will ease liquidity pressure on the companies operating in the region, particularly smaller and more leveraged players like HKN Energy and ShaMaran Petroleum. 

    The news is positive for the Kurdistan oil & gas complex, but we do not think it will be reflected positively in bond prices. When security issues come to the fore, fundamentals are likely to take a back seat.

    Overnight, Iran retaliated against the US assassination of Qassim Soleimani striking two military bases in Iraq. The US has not responded yet. We are concerned that Iraq could become an arena for military action between the US and Iran, although our base case remains that all-out war is unlikely.

    In a report published yesterday ('Kurdistan Oil & Gas: US-Iran escalation adds to the risks'), we downgraded the DNONO 23s and DNONO 24s to Sell, reiterated Sell on the HKNENG 24s and SNMCN 23s and reiterated Hold on the DNONO 20s, GENLLN 22s and GULFKY 23s.