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Former BP boss Tony Hayward to leave Genel Energy

Former BP boss Tony Hayward will in June leave Genel Energy, the Kurdistan-focused oil explorer he co-founded, following several troubled years for the lossmaking company.

He will be succeeded as Genel chairman by Stephen Whyte, an energy industry veteran, whose career has included a long spell at Royal Dutch Shell in various technical and commercial roles.

Since 2013, Mr Hayward has been chairman of Glencore, the mining-cum-trading behemoth. He stepped down as chief executive of BP in 2010 after strong criticism of the energy company’s response to the Deepwater Horizon oil spill in the US.

Genel was formed in 2011 when Mr Hayward teamed up with financier Nat Rothschild to acquire a Turkish company with energy assets in the semi-autonomous Kurdistan region of Iraq, in a deal valued at $2.1bn.

Genel took a stock market listing in London, and Mr Hayward served as chief executive before becoming chairman in 2015.

He said at the time of the 2011 deal that Kurdistan was “undoubtedly one of the last great oil and gas frontiers”, but it is a bet that has turned sour for Genel.

Once valued at more than £3.1bn, the company is now worth just £215m following a litany of problems, including asset writedowns, the oil price crash and failed drilling campaigns in several countries outside Iraq. Its pre-tax loss last year widened to $1.3bn from $1.2bn in 2015.

Oil explorers active in Kurdistan have faced a number of difficulties in recent years, including securing regular payments for their crude exports from the cash-strapped regional government, which had to divert funds towards the fight against Isis in Iraq while oil prices fell.

But Genel’s key operating asset, the Taq Taq field, has also disappointed and the company has twice been forced to reduce its estimate of how much oil can be extracted from it.

Genel’s shares hit an all-time low last month when it announced its most recent downgrade on Taq Taq, warning that the field may only hold a remaining 59.1m barrels of crude. It also has a stake in the Tawke oilfield in Kurdistan operated by DNO of Norway.

Genel, meanwhile, has also consumed cash exploring for oil in other countries such as Angola and the Ivory Coast, to no avail.

Mr Hayward, who is a significant shareholder in Genel with a 0.5 per cent stake worth £1.1m, will depart as company chairman on June 6, following its annual meeting.

Murat Özgül, chief executive of Genel, said the oil industry in Kurdistan had taken great strides since Mr Hayward’s involvement. 

“When we first started working together, the oil industry in the Kurdistan Region of Iraq was still in its infancy, without an export pipeline and there was a high degree of uncertainty over export sales,” he added.

“Kurdistan now has a fully operational pipeline infrastructure . . . and Taq Taq and Tawke have a proven track record of international sales and significant cash generation.”

Mr Hayward, who was chief executive of BP between 2007 and 2010, made no comment in a Genel statement announcing his departure on Monday.

Analysts said it was wrong to blame Mr Hayward for the political difficulties Genel has encountered in Kurdistan, but some did accuse the company of wasting hundreds of millions of dollars on drilling for oil in Africa.

Stephane Foucaud, analyst at GMP FirstEnergy, said investors knew what they were getting in to when they backed Mr Hayward’s move into Kurdistan.

“These were bets on a politically difficult region that could have turned better,” he added.

But Mr Foucaud suggested Genel overpaid for gas assets in Kurdistan, the future of which is uncertain.

Genel has spent more than $1.4bn buying and developing two gasfields, but production for export has yet to get under way.

The company started on the London stock market with $2bn of cash, but it recorded gross cash of $407m at the end of 2016 and had net debt of $241m.

Via FT