Corrected: UPDATE 2-Iraqi Kurdistan-focused oil shares hit by IS advance

Forza Petroleum

07/08/2014 19:04

(Corrects units to barrels per day in paragraph 8) 
    * Islamic State advance raises fears for Kurdistan oilfields 
    * DNO Petroleum shares down as much as 24 percent 
    * Gulf Keystone Petroleum down as much as 13 percent 
 
    By David Sheppard 
    LONDON, Aug 7 (Reuters) - Shares in energy companies 
operating in Iraqi Kurdistan plummeted on Thursday after Islamic 
State militants advanced closer to oilfields in the 
semi-autonomous region. 
    Oil producers, including Oslo-listed DNO Petroleum  DNO.OL  
and London-listed Gulf Keystone Petroleum  GKP.L  saw 
double-digit declines in their share prices as the radical Sunni 
militants seized at least three more towns near 
Kurdish-controlled territory.  ID:nL6N0QD2GL  
    While the firms said their Kurdish fields continued to 
operate, there are growing concerns about the security risks 
faced by firms active in Iraqi Kurdistan, seen as a beacon of 
relative stability in the region. 
    Shares in Oslo-listed oil producer DNO fell up to 24 percent 
and London-listed Gulf Keystone Petroleum was down 13 percent at 
their lowest point on Thursday, before paring losses. 
    Kurdistan oil producer Genel Energy  GENL.L  also saw a 6 
percent fall in its shares traded in London. 
    "Investors are now taking into account the risk," ABG Sundal 
Collier analyst Oeyvind Hagen said, adding it remained difficult 
to judge how far into the Kurdish region the islamists could 
penetrate. 
    Gulf Keystone said it had increased security at its flagship 
Shaikan field, Iraqi Kurdistan's largest, but added that 
production and trucking operations were continuing safely. 
    DNO operates the Tawke field, in which Genel is also a 
partner, which produces around 120,000 barrels of oil per day. 
    Other Kurdistan oil producers including London-listed Afren 
 AFRE.L  and Toronto-listed Oryx Petroleum  OXC.TO  - which 
operates the fields closest to the militants advance - declined 
to comment.  
    Two car bombs killed nine people in the Kurdish-held Iraqi 
oil city of Kirkuk on Thursday, police and medical sources said. 
     
    PESHMERGA PULL BACK 
    Energy companies have flocked to Iraqi Kurdistan in recent 
years, hoping to access what is believed to be one of the 
world's last huge conventional onshore oil deposits. 
    The regional capital Arbil houses many western oil workers 
and executives, and has seen an investment boom despite tensions 
with Baghdad over the control of oil sales and revenues. 
    Most worrying for investors this week has been the pullback 
of the Kurdistan Regional Government's peshmerga soldiers. 
    Facing militants freshly armed with U.S.-made heavy weapons 
seized from the Iraqi army, the peshmergas have given up several 
towns since Sunday. 
    Witnesses on Thursday said the militants had seized the town 
of Makhmur, around 40 km from the regional capital Arbil, but 
Kurdish officials told local media their forces remained in 
control there and television channels broadcast footage of 
peshmerga fighters driving around the town. 
    The militant group said in a statement on its Twitter 
account that its fighters had seized 15 towns, the strategic 
Mosul dam on the Tigris River and a military base.  
    DNO, which describes its prospects in Iraqi Kurdistan as 
'the jewel in the crown' on its website, was the first 
international energy company to enter the Iraqi Kurdistan region 
in 2004. 
    Production from the region accounted for 55 percent of its 
revenue last year. 
 
 (Additional reporting by Karolin Schaps and Sarah Young in 
London, Ole Petter Skonnord, Terje Solsvik and Balazs Koranyi in 
Oslo; editing by David Sheppard and William Hardy) 
 ((Balazs.Koranyi@thomsonreuters.com)(+47 2331 6596)(Reuters 
Messaging: balazs.koranyi.thomsonreuters.com@reuters.net)) 
 
Keywords: IRAQ SECURITY/SHARES