Tony Hayward - Chairman Murat Özgül - Chief Executive Officer Ben Monaghan - Chief Financial Officer

Rafal Gutaj - BofA Merrill Lynch Michael Alsford - Citi Brendan Warn - BMO Capital Dan Ekstein - UBS Jamie Maddock - Morgan Stanley Sanjeev Bahl - Numis Robin Haworth - Stifel James Thompson - J.P. Morgan

Ladies and gentlemen, good morning. I think it's time, we can get going. judging by the number of sun tan faces in the room either people have taken their holidays earlier than ever or you all return specially from the beach to here Genel's 2015 Interim Results Presentation. Great to have so many of you here this morning. It's a great please for me to be here my new capacity as Chairman. With Genel's new young dynamic executive team. I'm sure, you'll agree with me, that this is undoubtedly a significant upgrade on the prior inhabitants of these particular roles. On the Slide 2, we've got the usual disclaimer and then let me start presentation. What I want to do is review the first half of 2015 and touch on the current political situation in Northern Iraq and then I'm going to hand over to Murat to take you through the Kurdistan regional assets and operations in detail. And then Ben will take you through the first half financial performance and cover financial strategy as he does that. And then I'm going to return to summarize, where we stand, what we see future as. And then we'll be very happy to take all of your questions. So moving onto Slide 4. The key highlights during the first half was of course a significant production growth, at Taq Taq and Tawke and alongside tangible progress on the commercial framework for our Kurdistan Region Gas project. First half production increased 41% year-on-year as the facilities upgrades at Taq Taq and Tawke allowed for higher volumes to be supplied to the Kurdistan Regional Government for export via the Kurdistan region Turkey pipeline. On our KRI gas project. We've signed revised term sheets with the KRG finalizing the Upstream PSC terms, which will apply to Miran and Bina Bawi as well as a gas supply agreement between Genel and the Kurdistan Regional Government. Genel is also leading the efforts on structuring and financing the mid-stream gas processing. Murat will take you through the detail of these agreements, later in the presentation. During the period, we've also seen changes to our Board of Directors and senior management team. Ben joined as a CFO in May and Murat as you know recently moved into the CEO position, having been a key member of the management team, since 2008. And for the last three years, having managed our Kurdistan region operations. His in depth operational knowledge for the Kurdistan region and strong relationships with the Kurdistan Regional Government will be an important aspect of unlocking the considerable value in our Kurdistan region asset base. I spent a lot of time with Murat over the last three years or four years. I feel really confident, the combination of Murat, Ben and the other members of the senior management team. We have the right blend of skills and expertise to lead the company going forward. My role in the future as Chairman will be the focus on strategy and leadership of the board as well as providing guidance to the senior management team. Let me now move onto to discuss policies and payments in further detail and put some of the recent events into context. The charts on this page are clear illustration of the progress the Kurdistan Regional Government's oil industry has made over the past 12 months. This is a point I really want to stress. We all get so focused on the day-to-day, the week-to-week looking at the screen, what's happening every moment? But if you stand back and look at the context, of what has happened in this particular part of the oil industry over the last 12 months. It is a stunning success story. Production has increased significantly on the backup facility upgrades at Taq Taq and Tawke. As well as the introduction of volumes from the Avana Dome and Bai Hassan. Combined with the uplifting the capacity is Khurmala - Fishkhabour pipeline to 700,000 barrels a day. This is led to significant growth in oil exports from Northern Iraq. I don't think anywhere else in the world has achieved 700,000 barrel a day increment in the course of the last year. According to the KRG data, Northern Iraq exports to [indiscernible] in June and July average 540,000 barrels a day. If pipeline downtime was taken into account, this figure would arise to over 600,000 barrels a day. In the second quarter of this year, Northern Iraq exports represented nearly 20% of total Iraqi exports. A gain underlining the importance of this strategic oil export route for Iraq. In recent months, the KRG has marketed an increasing share of Northern Iraqi exports outside of [indiscernible]. Thereby receiving the proceeds of these sales directly rather than relying on budget transfers from Baghdad. The move to sell the majority if not all, of Northern Iraq exports directly was significantly enhanced the liquidity in position of the Kurdistan Regional Government. Even with a recent weakness in oil prices, the KRG can now generate a level of monthly revenues, which allows for payments to Genel and other IOCs operating in the Kurdistan region. Monday of this week, the KRG committed to paying IOCs for exports on a sustainable basis from September onwards. Sustainable payments will have caused foster a positive investment climate, within the region to sustain and grow current oil production levels as well as laying the foundation for the development of the region's significant natural gas resources. The past couple of weeks have seen a renewed focus on the Turkish Government's relationship with the Kurds both inside and outside its borders. From our perspective one thing is clear and that is, the Kurdistan Regional Government's relationship with Turkey remains strong and has not been impacted by recent events. The relationship is founded on a common political framework. A robust and consistent approach to security, and military intelligence, and strong economic ties underpin by $10 billion of bilateral trade, and a major energy cooperation agreement, which will see large volumes of gas exported from the Kurdistan region to Turkey over the coming decades. Over the past week in the half, the export pipeline has been largely shut in, due to a number of incidents of thefts and sabotage. As part of the repair process, security has been enhanced to mitigate against further instances of thefts and flows recommends yesterday afternoon. And the pipeline is today operating pretty well normally. We remain confident in the ability of the Turkish Government to maintain high levels of pipeline uptime. At it's worth reminding you, that when the pipeline has been offline, we've been able to switch Taq Taq and Tawke production into the domestic Kurdistan Regional market at short notice. Excluding the government-owned refineries, the domestic Kurdistan market is been 120,000 barrels and 150,000 barrels a day of capacity. And during the period of the recent pipeline downtime, Taq Taq and Tawke averaged combined gross local sales of more than 110,000 barrels a day. Let me now handover to Murat, to take you through an update on Taq Taq and Tawke. And also go into details on the recent developments in the gas business. Murat?

Thank you, Tony. Good morning, everyone. It's a great pleasure and privilege to be presenting to you as CEO for the first time. I just thought, I would give a brief reminder of my background for those who I haven't met before. My 20-year career has spanned the oil and gas high tech and different sectors. I joined Genel in 2008 as Chief Commercial Officer and led the mergers with Vallares in 2011. Following the mergers I became President of our Kurdistan region operations. I'm proud of the significant progress we have made in Kurdistan region over the past four years. Particularly, the development and production growth from our oil assets and creating a world scale gas development project. I'm looking forward to getting to know all of you better, as I broaden my interactions with the investment community in coming months. Firstly, let me update you on our key oil producing assets on Slide 6. Both fields deliver significant production growth in the first half of the year, driven by the facilities upgrades and new production wise. Taq Taq production increased by 39% to 128,000 barrels per day. With approximately two-thirds of production exported through KRI Turkey pipeline around the quarter was delivered to Bazian refinery and the remainder sold into domestic markets. Taq Taq processing and well head capacity now stands at 150,000 barrels per day, after a successful commissioning of a temporary production facility in the first quarter of 2015. The second central processing facility, which has plant capacity of 90,000 barrels per day is due for completion around year end. With the central processing facility and it's detailed engineering design for handling Taq Taq crude will not only increase the processing capacity, but also reduce unit operating cost at the field, once commissioned. At Tawke, production increased 54% year-on-year as a result of successful delivery of the well head and processing capacity upgrade to 200,000 barrels per day. The strategy for Taq Taq and Tawke excludes [ph], we will produce the fields with a view to optimizing value rather than seeking near-term peaks in the production. On Slide 7, I would like to remind of the attractive characteristics of our Kurdistan region gas business. We have a world class resource base of 11.4 trillion cubic feet of raw gas and 79 million barrels of high value oil and first-stage condensate. This scale, an onshore location delivers a life of field Upstream cost of less than $3 per barrel of oil equivalent. This puts Miran and Bina Bawi at the lower end of the industrial cost curve. CapEx and OpEx for the Midstream gas processing is estimated at less than $2.5 per barrel of oil equivalent. Miran and Bina Bawi are located closed to Turkish borders with already established oil and gas pipeline routes. The attractiveness of Miran and Bina Bawi for the Turkish gas market is clear. KRI Gas will diversify Turkish gas imports at a much lower price than is currently being paid, which is around $10 per thousand cubic feet. That also remains the opportunity to sell Miran and Bina Bawi gas into the domestic market. The term sheet we have signed with KRG makes us indifferent to where the gases supplied into domestic markets. Slide 8 illustrates the commercial flows in the gas project between the upstream, Midstream and KRG and Turkey. During the first half of this year, we continued to negotiate with the KRG on the commercial framework for the development of Miran and Bina Bawi. The revised structures which we have disclosed today rules from and materially develops the prior agreements. The Upstream fiscal terms in order to, PSC structures which we expect could become a basis for further gas developments in the Kurdistan region. By leading an ultimately retaining at stake in the Midstream, we can make sure that this critical element of the overall gas project is moved forward in an optimal manner. Perhaps, most importantly. There is now complete alignment along the value chain from the Turkey, from KRI to Turkey gas sales agreement through Midstream to Upstream, which helps to KRG manage its obligation and de-risks the wider project. In the Upstream, Genel will have 100% ownership, once we complete the acquisition of Bina Bawi stake from OMV and the KRG's interest in both field is transferred. The gas supply from two fields will be governed by gas supply agreement between Genel and the KRG. A raw gas fee of $1.20 per thousand cubic feet is payable to Genel and this is guaranteed by the KRG under Turkey gas sales agreement and or KRG crude sales. In the Midstream gas processing, Genel is currently leading the Engineering Procurement Construction tender process and efforts to secure both equity and debt financing. The Midstream will receive a tolling fee, which will also be guaranteed by Turkey GSA and also KRG crude sales. Genel will aim to retain a 10% interest in the Midstream Consortium. We believe, this integration will allow Genel to make sure that, the entire gas project moves forward in an optimal and focused manner. The KRG will be counterparty for both the Upstream and the Midstream. It will sell the gas to Turkey under the gas sales agreement signed in 2013. The price formula in the GSA has an oil price link. At current oil prices, the export gas price will still leave a healthy margin for the KRG after paying the Upstream raw gas fee and the Midstream tolling fee. Let me now touch on these areas in detail. Slide 9 covers the Upstream structure and cost. We expect to sign, an SPA and complete the acquisition of OMV stake in the Bina Bawi field soon. The development responsibilities for the Upstream contractors are unchanged from the original agreement in November, 2014 although there has been a change in the fiscal structure. The revised term sheet is now based on a PSC structure, which is more closely aligned with the contracts in used elsewhere [ph] in the Kurdistan region. The PSC will govern the contractor share of proceeds from sales of raw gas, first stage condensate and oil production from Miran and Bina Bawi. The main points are zero royalty and 100% cost recovery on gas production. The PSC structure retains Genel's project economics in line with the original agreement. Slide 10 outlines the key elements of the term sheet signed for the gas supply agreement, which will establish the principles on under which raw gas is sold from Miran and Bina Bawi to KRG. Importantly, this is guaranteed by the Turkey KRG Gas's agreement and KRG crude oil sales. Genel will commit to supply in the KRG at a rate between 600 million to 1,200 million standard cubic feet per day over a 12-year period, which consist of an initial two year build-up phase and the 10-year plateau period at 1,200 million standard cubic feet per day. On the other side, the KRG will commit by Genel's gas through a take-or-pay arrangement. Where it's obliged to purchase 80% of annual contract quantity. The gas price is fixed at $1.20 per thousand cubic feet, which 20% of the gas price adjusted for inflation. Slide 11, shows the details of the Midstream. A Midstream company will be contracted by the KRG on a build, own, operate and transfer basis for the gas treatment facilities. MidstreamCo will receive a tolling fee on a toll-or-pay basis for the gas processed through the facilities. Genel is currently leading the EPC tender process and efforts to secure equity and debt financing. We currently intent to retain, a 10% equity stake in the project after financial close and sanction. There is no obligation on Genel to develop the Midstream project without new equity and debt funding. We have recently engaged with contractors to assess their suitability and capacity for this project and expect to launch a formal EPC tender process, during the second half of 2015. On financing, we recently appointed a financial advisor to assist with Midstream debt financing. We expect both the debts and equity financing for the Midstream to be secured during the second half of 2016. Slide 12 is a conceptual view of the KRI Gas project. Starting at the border with Turkey, [indiscernible] to prepare for Kurdistan region gas export to tie into Turkish gas transmission system. At this stage, we anticipate that a high pressure gas export pipeline will follow the export pipeline from the border to the Khurmala Dome and will have a connection to Miran and Bina Bawi. The exact location of the condensate separation and treatment facilities and the gas processing are indicated. The final locations will be based on detailed engineering design. Life of field Upstream development CapEx is unchanged from $3.3 billion estimate, we announced last November. This is split $2.9 million for gas and $400 million for oil. With a CapEx for the first gas estimated $1 billion. Combined OpEx for both the gas and oil development is also unchanged at less than $1 per barrel of oil equivalent. Our Upstream CapEx estimates particularly drilling cost have yet to be revoked to reflect the impact of lower oil prices on the services unwind. We will expect Upstream CapEx estimates to fall as we progress through the development planning. We now expect the CapEx for the gas processing to cost around $2.5 billion, which is a meaningful reduction on the previous estimate. The fall in the cost estimate is based on most recent developments in the market and in part reflects the deflation in the supply chain given weaker oil prices. Slide 13, sets out a timetable for the gas business going forward. We are already making progress on converting the revised term sheets on the PSC Amendments and Gas Supply Agreement into full form documents. And expect these to be finalized and signed before the end of 2015. Following the tender for the EPC contract in the second half of 2015. We would look to make the award in the first half of 2016. We are aiming to complete the structuring and financing of the Midstream in the second half of 2016 and a final investment decision would follow financial close of the Midstream. We will expect first gas toward the six months following the final investment decision. Let me now hand over to Ben to take your through the financial review.

Thank you, Murat and good morning, everybody. I've appreciated the opportunity to meet many of you, since I joined Genel in May. But for those I haven't yet met. I came to the company after 20 years in the oil gas team at J.P. Morgan and I can already say it's an interesting difference to be on this side of the table. Now let me take you through the financials for the first half. Slide 14, summarizes the key figures. Revenues of $199 million was slightly up year-on-year-year, as the fall in realization for our oil production, was more than compensated by the production growth in the period. Our 2015 revenue guidance, expressed on accruals basis and at $50 Brent price remain $350 million to $400 million. EBITDAX or earnings before interest tax depreciation and exploration expenses increased 15% year-on-year. This was down to production cost falling largely as a result of the first half of 2014 including cost associated with trucked exports from Taq Taq, which were not repeated in the first half of 2015. Depreciation increased in line with production volumes. Exploration activity expense through the P&L amounted to $12 million in the first half. Combined with a full period of interest on the original $500 million bond issued last March. Pre-tax profit came in at $31 million compared to $71 million in the prior period. CapEx in the first half totalled $93 million, with a majority of spending on our development programs at Taq Taq and Tawke. Activity levels were sharply reduced year-on-year given the discontinuation of the African exploration program and an optimization of our KRI spend. At end June, 2015 Genel has cash of $474 million resulting in $216 million net debt position. Our key focus remains on preserving a strong financial position to enable us to invest in an improving environment. Slide 15, provides further detail on our half one income statement. As you heard earlier from Murat, production increased significantly in the first half of the year. Around 70% of our production in the period was exported. With a remainder either being supplied from the Taq Taq field to the Bazian refinery or sold into the local market and the Tawke refinery. The mix between domestic sales and export is been a key area of focus for the market in recent months. The KRG's primary objective is to maximize piped exports and that's maximize revenues. This provides them with a cash flow from which to make payments to us. And so this should be seen as the primary outlet for our production. The weighted average realization for our production in half one 2015 was $42 a barrel, which represented a 42% fall from a year earlier. The main factor was the fall in global oil prices, which in turn had an impact on export realizations. We estimate our export realization through prevailing Brent prices adjusted for sales discounts freight and pipeline tariffs. We'll then to reconcile these realizations with the KRG, once exports and payments normalize. Domestic pricing for local sales is also linked to benchmark oil prices through a new pricing mechanism that was introduced by the KRG in early 2015. As a result, we would continue to guide to local sales prices of $42 a barrel and $36 a barrel for Taq Taq and Tawke respectively over the remainder of 2015. Production cost as I previously mentioned came down year-on-year as trucked exports from Taq Taq have seized. Guidance remains at $1.25 to $1.75 a barrel, set in the midpoint of the production guidance range of 90,000 to 100,000 barrels a day. Similarly, guidance for unit depreciation is also unchanged at $5.5 to $6 a barrel. Moving onto other operating cost, which include G&A. These totalled $18 million in the first half and full year 2015 guidance is unchanged at $1 a barrel. A major focus for the oil industry in response to lower our prices, has been headcount reduction. We've implemented our own efficiency program, which will lead to reductions in CapEx, OpEx and other operating cost. By way of example, our overall payroll costs are expected to fall by a third from 2016 relative to 2014 levels. Concluding the income statement is $24 million of interest payments, reflecting the $500 million bond issued in May, 2014 and the $230 million bond issued in March of this year. The annual interest payments associated with now merged bonds is expected to be approximately $50 million. Slide 16 illustrates our usual cash flow waterfall chart, but in a slightly different format. Cash at the beginning of the year was $489 million. Cash proceeds from local sales from Taq Taq and Tawke in the first half were $50 million. This more than covered corporate overheads and KRI OpEx, which totalled $36 million in the period. There was an outflow of around $100 million relating to working capital in the KRI and Africa, where an accrual had been made in 2014 and subsequently cash flow down during this period. I would not expect this figure to change significantly in the second half. The majority of our capital activity in the first half was in the KRI, we're spending total $90 million. Of this, the development programs at Taq Taq and Tawke accounted for around $70 million. Africa spending accounted for $15 million which includes both CapEx and also exploration activity in the period, that was expensed through the P&L. In March, we added to the company's liquidity by issuing $230 million of bonds at a discount to par, which brought in just short of $200 million net of expenses. Finally, we incurred close to $20 million in cash bond interest resulting in a small reduction in cash balances during the period to $474 million. Slide 17, goes into more detail on our CapEx plans for 2015. As you can see from the chart, activity during the year were remained biased toward Taq Taq and Tawke development programs. We've been tracking towards the lower end of the previous guidance range and optimization of activity levels within the KRI business, such as cost savings and activity deferrals within the production operations. Together with efficient exist of exploration licenses, particularly the Angola position enabled us to bring down the guidance into the $150 million to $200 million. It's important to note, that none of the activity deferrals at Taq Taq impact on the schedule for the completion and commissioning of CPF II. Finally, I will move to the balance sheet on Slide 18. Although, there was increase in net debt during the period, partly as a result of investment in the capacity increases at Taq Taq and Tawke. Our balance sheet remains strong and flexible. The receivable with the KRG unpaid production continued to growth in the period from $230 million at the start of the year to $378 million at the end of half one. I would reiterate Tony's comment, that in a normal environment some oil sales revenue will always be reflected in working capital. And our focus will be on reducing these receivables to a level commensurate with three to four months of revenues. Preserving our balance sheet strength and liquidity remains a key focus. And with $474 million of cash at the half year and nearly four years to maturity on our bond, we're well placed to execute on our growth projects. And with that, I will hand over to Tony to conclude.

Thank you, very much. Ben. So Slide 19, summarize is our progress in the first half of the year. Clearly, the production growth at Taq Taq and Tawke is a standout achievement and we're on track to deliver 40% growth in production during 2015. On top of the 58% we achieved in 2014. I think, when you put that in context, it's an even more impressive performance. We are now one of the largest listed E&P companies in Europe, when measured by production. In terms of what is within our control, we are doing what we said we would and I'd like to take this opportunity to congratulate Murat, our operational team and our partners in the Kurdistan region for delivering this success. Our performance is been the foundation of the Kurdistan regions ability to increase production in exports in the way, that it has. As you've heard, we've also made tangible progress in de-risking our major growth project. The development of Miran and Bina Bawi gas fields. The rise term sheets, represent a solid foundation and we expect full form agreements to be signed before the end of 2015. And as Murat outlined, in parallel, we're working hard on the structuring and financing of the Midstream. As I discussed earlier, the KRG has now made a firm public commitment to begin payments to IOCs on a regular and sustainable basis beginning next month. Despite the challenges, Genel remains committed to the Kurdistan region on the back of regular payments, we will continue to invest into existing oil fields and move our major gas fields forward into development. With respect to Kurdistan and to Genel, I think it really is true to say, that the best is yet to come. Ladies and gentlemen, that concludes our presentation for this morning. We'd now be delighted to take your questions. There is a couple of microphones in the room. If you can please state your name and where you're from, before your question that will be very good. If you can keep your questions brief and one at a time, that will be even better. So if we can start, somewhere down the front here please.

Good morning, it's Rafal Gutaj from Bank of America Merrill Lynch. Just two on gas and one on oil. I promise, they're quick. So firstly, what is the rationale for reversing back to PSC structure on Miran and Bina Bawi? What is the implication of the pushback on first gas to Turkey, if any versus the November, 13 agreement? And then finally on the oil, you previously indicated that CapEx spending into 2016 would be eased back unless you got payments for exports, with the announcement of the KRG on Monday saying they'd pay cost, is that enough? Or do you need a share of revenue before you continue with your development program there?

Okay. Well, let me ask Murat to cover the gas and I'm going to take the oil one. If that's okay?

Let me start for the first part of your question, with the PSC structure. This is, first of all it's not changing as I present in the result economics from November agreement to here. If you recall, it was $0.78 at that time, that we're getting paid now we'll be getting $1.20 and we will be paying some of the revenue back to our factors through regular PSC system. So this is helping, the same organization for KRG on oil and gas in the region. So this is the basic reason that we move from here to there. But it's a bigger picture, there is another reason that we book at whole value chain together from, now starting from Turkish GSA coming to Midstream and Upstream link to all each other and it's back-to-back linked with the Turkish GSA guarantee on the payment term. So this will be increasing the project realization, at the same time and linked to each other with Turkish GSA guarantee. On the timing of the gas, I think if you look at the financing of the Midstream and FID decision. I think, we're still on the first gas around 2019 for Turkey first gas.

On the oil question, I think it's important to clarify what the KRG has actually said. They said, they would play their ongoing obligation with effect from September and then also volumes rise in the first part of next year, would begin to catch up on the receivables. So that's not saying, they're just going to pay cost. It's quite different from that actually. So that's what they said, now we need to wait and see, how it unfolds and we will make decisions on the pace of investment and the scale of investment depending on how, the payment cycle evolves. But clearly, if we're into a regular and sustainable predictable payment cycle, we will continue to invest on a sort of normal course, but we'll be talking to you about that at the end of the year, as we go into next year either in an update at the end of the year or perhaps around the full year results, when we'll have greater clarity. But I do want to stress, they say they'll pay the obligation on an ongoing basis and then as volumes rise, maybe even prices will rise. But at least volumes we know will rise, they'll be out to make start contributing to catching up on the outstanding receivables, they owe us.

Good morning, Michael from Citi. A couple of question from me, if I could? Just back to the point around the KRG payments. I know that's clear a big focus to the market. I just wanted to understand, when I look sort of the mass, the KRG kind of need about 500,000 barrels per day of direct exports to pay salaried employees and the [indiscernible] efforts. I just wondered, if you both agreed with that and then I guess over and about that, will be available money to be paid to oil companies in past oil sales or what you think, that's actually a lower number and therefore will be more room to pay, oil companies more than that from there. And then secondly just on the Midstream point, you're committing now obviously to invest in the Midstream part of the gas. And I just wanted you talked about the 10% stake, you've not told us what the tolling fee is, so I just maybe if you can give us a view on what that tolling fee would be and if not, maybe what I guess returned maybe unlevered or levered return, that you're expecting on your investment in the midstream. Thanks.

On the Midstream first, let me clarify we're not committing the investment at this stage. First of all, we'll be looking on financing that, plus we will looking for the equity partnership, the strategic equity partnership that will be the equity partners from Turkey definitely for this project. We'll have some early discussions, when we complete financing securing the financing and equity partnership. This will be their final investment decision and committing point. When we come to the tolling fee? When we structured all of this including the EPC cost, now we're giving rough order of magnitude of the EPC cost? When we reach the FID, we'll have all the cost elements in our hand including the financing. So we will be in early discussion with KRG about proper IRR for the project and when we're pushing the button on the FID, we'll have the definite tolling fee arrangement with KRG under the guarantee of Turkish gas sales agreement. But we're expecting mid-teens to high-teens IRR for this project.

I think on the oil. I mean, if you look at where we are today, there are total 600,000 barrel a day, give or take. There is a strong confidence in being at 750,000 barrels a day before the end of the year, at with volumes rising beyond that as we go into the first half of next year. so even on a sort $50 Brent world, you can see there's enough cash being generated now to pay their ongoing obligations with respect to domestic budget and have an increment available to pay the contractors. And I think it is the first time, we've had the volumes necessary even a relatively low price to have enough cash in the system to do both and that's why, it's clear why they made the statement and it's why we have confidence they will follow through on their statement and I think, if I look at the history of all of this over the last two or three years. The KRG have been very good, following through and doing what they said, they were going do. They said, they're going to build a pipeline, they built a pipeline. They said, they're going to increase oil volumes, they've increased oil volumes and they're now saying, we're going to pay people because we now the cash in the system, even at lower prices to be ought to do so.

Thank you, it's Brendan Warn, BMO Capital and thanks to the opportunity to ask couple of questions. Just on the gas, the revised gas terms. Can you flesh out for the take-or-pay element and more on the call it the pay side, just sort of under what parameters, what price and what is back stop pay component both to the Midstream and to the Upstream? And then just second point on that is there, an obligation or is there a penalty if you don't supply. If you're the 100% gas supplier, are you signaling to us that obviously your intent to go to 10% in the Midstream. Are you still happy with the 100% of the Upstream and just give us an update of OMV's exist, what remaining hurdles are required for that exit and is there an increased cost or penalty to yourselves for taking over that equity?

Let me start from the beginning of your question about take-or-pay. First of all, as I explained, now it's full value chain stick to Turkish gas sales agreement. So the terms of the Midstream and Upstream is exactly linked to Turkish gas sales agreement, which I presented during my speech it's 80%, based on 80% of the ACQ take-or-pay. It will be valid for upstream, but we'll looking the details of the toll-or-pay fee for the Midstream during the fully termed agreements. Most probably, it will be also based on between 80% of this take-or-pay and full ACQ levels in between. The second part of your question, OMV deal. We're at the final stage and we'll be finalizing very soon with the approval of KRG government, so there is no problem over there. On midstream, taking the 10% of the equity we will be sure about the full value chain that we can also, sure about the Midstream business is going in line with the timeline and also with the technical details. So this is reason, we would like to lead the Midstream and make off value chain at the same time inline and stick to each other back-to-back and end up with minority stake that we can run the process through the gas supply to Turkey, with this 10% at stake to be sure about the Midstream up and running properly.

I think in terms of our position in the upstream, we're very happy with it for now. I think as the project matures and we get closer to the point at FID, it will become an interesting option for the company. Whether we retain a 100% stake or decide to dilute that. I think that's a very interesting piece of optionality, the company has in its portfolio.

Any penalties, if you're unable to supply gas?

There is no penalty over that, but we'll be all talking all this penalties linked to Turkish contract in the fully termed agreements. But we have the resource, if you look at the ACQ, what we're supplying it's fully stick to our two key resources and it's fully proven resources over there, that we can supply to Turkey.

Thank you, it's Dan Ekstein from UBS. I've got a couple of questions on the Midstream component. Obviously, cost have come down but you're still looking for $2.5 billion of I guess predominantly Turkish capital to come in sponsor this. How far advanced are you in discussions with potential counterparts there. I mean, what you've been doing in the background have you had indications of interest or is that something that you're now going to commence in earnest? And could you also elaborate on the sort of debt, that you'd be looking to inject into the MidstreamCo without the traditional project financing and is there appetite from Turkish banks to deploy capital into Kurdistan at the moment? Thanks/

On Midstream let me start from your first question, the EPC and equity partners. We have early discussions with the EPC potential partners over there. That all credible companies that they handle the same size and complex of the projects in the world. And we will be getting all the feedbacks about their cost, but definitely we need to run the detailed engineering design and complete the EPC tender to understand the accurate cost of the project. And equity on financing, I think we'll be around 25%, 75% roughly and the appetite in Turkey especially is really huge. Gas in Turkey is really important, if you look at the gas mix in Turkey now, we will be paying around $10 and this gas will diversify the source and reduce the cost of Turkey and it's strategically important to be the gas player of Turkey. And also the private companies is interested for this project, we have early discussions for the equity partners. Coming back to the financing, Turkish government and the private and government banks in Turkey is interested and based on our discussions, with EPC partners there maybe also ECA options for this project.

Maybe, if I just add. I do think, this is a an unusual gas project for a small E&P company to have. Why do I say that? Partly because you start with the gas sales agreement. Most people start with lots of resources and trying to figure out, where they're going to sell it. What we've got here is, a government-to-government gas sales agreement, which was inked two years ago and what we have done over the last six months, what Murat has done over the last six months, is reconfigure this project. So we now fit, Miran and Bina Bawi against that gas sales agreement. Which is not, really where we were last November? Last November, we were going to develop the upstream, we were going to throw the Midstream over the fence and the KRG was going to be an aggregator and they somehow satisfy the Turkish gas sales agreement by some sort of aggregation of Miran and Bina Bawi and whatever else, they happen to have on their hands at the time. What we've done in the last six months, what Murat has done in the last six months is, reconfigured this. So you start with the gas sales agreement, you match our Upstream resource to gas sales agreement and then we've created this Midstream vehicle, which we decided we need to participate into to be onto direct it, to line it up. It's unusual and the market is taking care of. And that means because it's a fully termed gas sales agreement, there is no ambiguity. It means that the project is eminently more financeable because of that. then you might normally otherwise expect.

Thank you. it's Jamie from Morgan Stanley.

You're looking faint. As if I said it, it's evidently more [indiscernible] on the back of what we can see in Turkey that is undoubtedly the case. Jamie?

Thank you. the question relates to Page 6 and a quote, that you put up there and it kind of ties back to what some of the other Kurdistan producers are seeing with water breakthrough, I was just wondering if you could, give us any sense and whether you've seen that yet and either of your fields and how you're thinking about maintaining plateau production rate at Taq Taq and Tawke in light of, what you for the, I guess well head capacity? Thanks.

Both Taq Taq and Tawke are technically great fields, world class fields. As I presented during my presentation, we are not aiming the peaks in short-term. We'll be looking optimizing the value of the fields. We'll be evaluating all the technical data and optimizing our field production for future and we will be continuing this one. as we announced earlier, we are at the level that we promised before and will be continuing to develop the fields with the aim of optimization of the value and recovery of the fields.

To put in other way, we haven't seen water breakthrough and we're managing it to ensure that we don't.

And just I guess to conservatively assume, plateau production rates for both of those fields resuming you won't near to capacity, give us a sense of where we think a little bit more than we are today, over the next few years or substantially ahead of I guess first half rates?

I think we're probably looking about where we are today maybe a bit more, but not materially more. It is as Murat says, it's about - we've seen because most of the reservoirs very fractured. If you don't manage them carefully, you can very easily pull water through them and start losing reserves, we've done great job not doing that and we intend to continue to manage it in a way, that maximizes recoverable reserves not rate any moment in time. So that probably means about where we are today, maybe a little bit higher but probably around where we are today.

Thank you and then, to the extent you can't answer this of course. So apologies if not, the additional production the KRG I guess you're implicitly saying or assuming in some respects and for the 150,000 where can we assume that might come from?

That fields that will be online in Kurdistan region. And also Kurdistan Regional Government has a plan for Bai Hassan, Avana and Khurmala altogether will be increasing their production very soon. So there is a potential in Kurdistan region to increase their production levels, as Tony mentioned earlier a year ago when Kurdistan Regional Government was saying they will be around 500,000 barrel per day today, reverse around 200,000. Now Kurdistan Regional Government is presenting, it will be 700,000 by a year end and a 1 million in 2016, by the end of 2016. Whole region has a potential for this production increase.

Thanks. This is Sanjeev Bahl, Numis. A couple of questions, firstly just following on Jamie's question on plateau production rates. What level of pipeline uptime are you assuming in your assumptions going forward and kind of follow-on from that. We've seen three, I guess unexpected events over the last week, in terms of pipeline disruptions. How comfortable can we be, that we [indiscernible] further disruptions over the course of the next six months or 12 months? Thanks.

I'm going to answer the question about Plateau production pipeline because they clearly have nothing to do with each other, as demonstrated in the last week. When we're not exporting we're putting into domestic market. so there is no linkage between what we're doing in the fields of pipeline capacity. And then I'll let Murat talk about the pipelines and what Turkey is doing to reinforce security around the pipelines.

The last stoppage as you know, related to some incidents plus maintenance over that and also it was including the enhanced security measures through the pipelines. It's not valid to only this pipeline, it's valid also other pipelines in Turkey. So coming back to your question, we will be basing and expecting the same level of the outage on the pipeline maybe better in the future.

Sorry, just to clarify on that. so your entire production can be sold into the domestic market, as we stand?

Yes, correct.

Down in the last week.

So it's not affected.

There is no linkage between what we are doing at the fields and export capacity.

Thanks.

And also, we should highlight on this local sales. We'll be getting paid to 50% of this local sales in advance.

It's, Robin Haworth from Stifel here. I'm just wondering, what level of push back or objection you expect from Baghdad, given the independent oil sales from the Kurdistan region?

Well, I think it's not for us to expect. Okay, well let's see, so far nothing. I think, it's - you should ask that question to someone else.

It's James Thompson from J.P. Morgan just a couple of quick question. If the payments do commence in September and they do start to carry on a monthly basis, how long do you think the temporary adjustment you've got taken 50% of cash flow will continue and just secondly on the midstream. You indicated, your lights go down to a 10% equity, but would you be willing to commit to the project at a higher equity?

Gary [ph] you need to restate your first question. I didn't understand it, I'm sorry.

So, you've got the temporary arrangement in the domestic market, where the contractors are receiving 50% of cash, how long do you think that will continue affects payments do start in September.

I think the reasons for not continuing, definitely. It's just the release valve, in the event pipeline is down, all the production. I don't think there is any reason to see that changing. Clearly, it's not what the KRG want to do, it's not what we want to do. but it's available in the event, with pipeline downtime.

On the second part of the question, the Midstream project is flexible for us, we may end up with 10%, if you would like to join this one, high-ish [ph] equity stake. This is in our hand, we will be leading whole project.

Okay, thank you.

Any other questions, ladies and gentlemen. I think, that's it. Well thank you very much for joining us in middle of August. Enjoy rest of the summer and we will probably see before the end of the year, but if not in the first part of next year. Thank you very much.

Thank you.