REG-Genel Energy PLC Genel Energy PLC: Trading and operations update
19/01/2021 07:00
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Genel Energy PLC (GENL)
Genel Energy PLC: Trading and operations update
19-Jan-2021 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
EQS Group.
The issuer is solely responsible for the content of this announcement.
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19 January 2021
Genel Energy plc
Trading and operations update
Genel Energy plc ('Genel' or 'the Company') issues the following trading
and operations update in advance of the Company's full-year 2020 results,
which are scheduled for release on 18 March 2021. The information
contained herein has not been audited and may be subject to further
review.
Bill Higgs, Chief Executive of Genel, said:
"Executing our strategy in 2020 through delivering low-cost production,
paying a material dividend, and retaining our financial strength in order
to invest in growth has helped lay the foundations for year on year
production increases in this year and the years ahead. Bringing Sarta to
production in 2020 despite the challenges of COVID-19 now means that we
are generating revenues from our fourth field as we rapidly move to
further appraise its huge reserve potential.
The successful early refinancing provides us with the liquidity and
financial certainty to continue prudently investing in growth while
retaining a robust balance sheet and delivering returns to shareholders.
We expect to drill 12 wells across the portfolio this year. These wells
have the potential to add incremental low-cost and cash generative
production at the Tawke PSC, add and convert contingent resources to
reserves and add production at Sarta, and open up a new field at Qara
Dagh. With numerous catalysts in the year and a more promising external
environment than 2020, Genel is looking confidently ahead to 2021."
FINANCIAL PERFORMANCE
• $173 million of cash proceeds were received in 2020 (2019: $317
million)
• Capital expenditure of $109 million (2019: $161 million), with
spending reduced appropriately to reflect the external environment,
yet ensuring continuing growth
• Free cash outflow of $5 million in 2020, pre dividend payment (2019:
$99 million free cash inflow), comparison impacted by:
◦ Lower oil price ($42/bbl in 2020, compared to $64/bbl in 2019)
◦ Non-payment of $121 million relating to oil sales from November
2019 to February 2020
◦ Suspension of override payments with a cashflow impact totalling
$38 million in 2020
• The low-production cost per barrel of $2.8/bbl in 2020 helped deliver
asset level cash generation of $74 million in the year
• Dividends of $55 million paid in 2020, of which $14 million relates to
the 2019 interim dividend paid in January 2020
• Cash of $354 million at 31 December 2020 ($377 million at 31 December
2019), net cash of $10 million
◦ Following the call of the outstanding bond with a maturity date
in December 2022, settled on 8 January 2021, Genel had cash of
$273 million and debt of $267 million, a net cash position of $6
million
◦ Genel currently retains $20 million of the 2025 bond, to reduce
interest cost and increase future optionality
OPERATING PERFORMANCE
• Net production averaged 31,980 bopd in 2020, with net production in Q4
averaging 31,510 bopd (Q3 2020: 32,210 bopd)
• Production by field was as follows:
Gross production Net production Net production
(bopd)
2020 2020 2019
Tawke 57,570 14,390 17,190
Peshkabir 52,710 13,180 13,800
Taq Taq 9,670 4,250 5,260
Sarta 520 160 -
Total 120,470 31,980 36,250
PRODUCTION ASSETS
• Tawke PSC (25% working interest)
◦ Gross production at the Tawke PSC averaged 110,280 bopd in 2020,
of which Peshkabir contributed 52,710 bopd
◦ Production in Q4 2020 averaged 110,170 bopd, of which Peshkabir
contributed 56,320 bopd
◦ There will be an active drilling campaign in 2021 on the Tawke
licence, with up to eight new development wells set to be drilled
and multiple workovers on existing producing wells to be
undertaken in the drive to maintain production above 100,000 bopd
• Sarta (30% working interest)
◦ First oil production from Sarta began in November 2020, and the
Sarta-3 well has produced at an average of c.5,500 bopd so far in
2021
◦ Due to ongoing COVID-19 protocols, production from Sarta-2 is now
expected in February. A stable production level from both wells
will be reached in Q1 2021
◦ The 2021 appraisal drilling campaign is targeting a material
portion of the 250 MMbbls of existing contingent resources, and
prospective resources, in Jurassic formations
◦ The campaign will begin at the start of Q2. Sarta-5 and Sarta-6
will be drilled back to back, with results from the first well
expected in Q3, and operations on both wells complete in Q4 2021
◦ Re-entry and deepening of the Sarta-1 (S-1D) well is expected
around the middle of the year. Should S-1D be successful, a
flowline will be constructed in order to enable the well to enter
production around the end of 2021
• Taq Taq PSC (44% working interest and joint operator)
◦ Gross production at Taq Taq averaged 9,670 bopd in 2020,
following the suspension of drilling activity in H1 2020
◦ Q4 production at the field averaged 7,610 bopd, with an exit rate
of over 8,000 bopd following the early implementation of part of
the 2021 well intervention programme, which increased production
from the TT-20z and TT-34y wells
◦ With activity at Taq Taq focused on optimising cash flow, no
drilling is scheduled in 2021, with activity limited to workovers
that will help manage field decline
PRE-PRODUCTION ASSETS
• Qara Dagh (40% working interest and operator)
◦ Preparatory activities are ongoing for the QD-2 well, as Genel
continues to target a spud date late in Q1 2021. The water well
project successfully completed in December, providing us with
water for the drilling operations
◦ The well is expected to drill, complete, and test before the end
of the year, with the field holding resources estimated by Genel
at gross mean c.400 MMbbls
• Bina Bawi (100% working interest and operator)
◦ Discussions with the KRG are ongoing at the highest levels
relating to our proposals submitted in August and December 2020,
which would enable the Company to progress the next stage of
activity
◦ Genel continues to maintain capex discipline, and will only
commence investment upon certainty of alignment with the KRG and
a clear path to monetisation
• African exploration assets
◦ The uncertainty created by COVID-19 delayed the search for
partners to fund and minimise Genel's spend on our potentially
high-impact exploration wells, but the farm-out process relating
to the highly prospective SL10B13 block in Somaliland (100%
working interest and operator) is progressing, with potential
partners involved in assessing the opportunity
◦ A farm-out campaign is also planned relating to the Lagzira block
offshore Morocco (75% working interest and operator), with the
aim of bringing a partner onto the licence prior to considering
further commitments
ESG
• Zero lost time injuries ('LTI') and zero tier one loss of primary
containment events in 2020 at Genel and TTOPCO operations
◦ There has not been an LTI since 2015, with over 13 million work
hours since the last incident
◦ 400,000 hours of work completed at Sarta without an LTI
• Genel expects our 2020 carbon intensity to be c.15 kgCO2e/bbl for
scope 1 and 2 emissions, significantly below the global oil and gas
industry average of 20 kgCO2e/boe
◦ The carbon intensity of our portfolio reduced to 7kg CO2e/bbl of
scope 1 and 2 emissions in H2 2020 following the material
reduction in flaring at the Tawke PSC through completion and
commissioning of the enhanced oil recovery project
◦ While portfolio emissions will increase in 2021 following early
production at Sarta, Genel is committed to significantly reducing
those emissions as production at the field matures
• Genel is analysing the most effective way to manage emissions, both
annually across the portfolio and over the life of each asset, in
order to deliver the Paris Agreement goals of limiting global warming
to 1.5 degrees and leading to net zero by 2050
OUTLOOK AND GUIDANCE
• Production in 2021 is expected to be slightly above the 2020 average
of 31,980 bopd, with the potential for a higher exit rate and further
growth in 2022 depending on success of the Sarta appraisal programme
◦ Average margin per working interest barrel of over $10/bbl
expected in 2021 at average Brent oil price $50/bbl
• Payments from the KRG continue to be made, with monthly payments
received under the KRG's updated payment schedule for the past nine
months
◦ Override payments to resume from the January 2021 invoice
◦ The KRG has submitted a reconciliation model for repayment of the
receivable relating to the $159 million in unpaid invoices,
whereby for each cent above a monthly dated Brent average of
$50/bbl, 0.5 cent per working interest barrel shall be paid
towards monies owed. We continue to discuss this model with the
KRG, and will update the market in due course
• Genel retains significant flexibility over its capital expenditure,
and will ensure that expenditure is appropriate to the external
environment. 2021 capital expenditure is expected to be $150 million
to $200 million, with the current outlook supporting investment at the
top end of this range
◦ Production: c.$80 million expenditure forecast, with all spend
recovered through cash receipts in the year
◦ Growth: c.$100 million expenditure forecast, including wells and
facilities costs, focused on material reserves additions and
near-term production
• Operating costs expected to be c.$50 million (2020: $33 million), with
the increase due to the addition of Sarta early production costs,
equating to $4/bbl in 2021 ($3/bbl in 2020), retaining our
advantageous low operating cost position
• G&A: expected to be c.$13 million (2020: $12 million)
• Genel expects to pay a material dividend, as we look to offer a
compelling mix of growth and returns
There will be a presentation for analysts and investors today at 0900 GMT,
with an associated webcast available on the Company's
website, 1 www.genelenergy.com.
-ends-
For further information, please contact:
Genel Energy
+44 20 7659 5100
Andrew Benbow, Head of Communications
Vigo Communications
+44 20 7390 0230
Patrick d'Ancona
This announcement includes inside information.
Notes to editors:
Genel Energy is a socially responsible oil producer listed on the main
market of the London Stock Exchange (LSE: GENL, LEI:
549300IVCJDWC3LR8F94). The Company is one of the largest London-listed
independent hydrocarbon producers, with an asset portfolio that positions
us well for a future of fewer and better natural resources projects. Genel
has low-cost and low-carbon production from the Sarta, Taq Taq, and Tawke
licences in the Kurdistan Region of Iraq, providing financial resilience
that allows investment in growth and the payment of a material and
sustainable dividend, even at a low oil price. Genel also continues to
pursue further growth opportunities. For further information, please refer
to 2 www.genelenergy.com.
Disclaimer
This announcement contains certain forward-looking statements that are
subject to the usual risk factors and uncertainties associated with the
oil & gas exploration and production business. Whilst the Company believes
the expectations reflected herein to be reasonable in light of the
information available to them at this time, the actual outcome may be
materially different owing to factors beyond the Company's control or
within the Company's control where, for example, the Company decides on a
change of plan or strategy. Accordingly, no reliance may be placed on the
figures contained in such forward-looking statements.
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ISIN: JE00B55Q3P39
Category Code: TST
TIDM: GENL
LEI Code: 549300IVCJDWC3LR8F94
Sequence No.: 91747
EQS News ID: 1161469
End of Announcement EQS News Service
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