REG-Genel Energy PLC Genel Energy PLC: Trading and operations update
18/01/2022 07:05
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Genel Energy PLC (GENL)
Genel Energy PLC: Trading and operations update
18-Jan-2022 / 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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18 January 2022
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 2021 results,
which are scheduled for release on 15 March 2022. The information
contained herein has not been audited and may be subject to further
review.
Bill Higgs, Chief Executive of Genel, said:
"In 2021 we generated significant free cash flow of $86 million, and in
2022 we are set to build on this as the strength of the oil price and our
positive outlook means that free cash flow is expected to more than
double. Our focus in 2022 is on growing the business and supporting our
progressive dividend long-term. We aim to increase cash flow through the
progression of our asset development plans and the addition of income
streams. Our priority is the derisking and commercialisation of Sarta,
while the successful farm-out on our Somaliland licence opens the way to
drill an exploration well on this exciting opportunity."
2022 OUTLOOK AND GUIDANCE
• Production in 2022 is expected to be around the same level as 2021
• Genel expects to generate free cash flow of up to $200 million in
2022, pre dividend payments, at a Brent oil price of $75/bbl
◦ An increase or decrease in Brent of $10/bbl impacts annual cash
by $50 million
◦ Under the terms of the Receivable Settlement Agreement signed in
August 2017, the last override payment will be made relating to
Tawke PSC production in July 2022. Given payments are received
three months in arrears from the Kurdistan Regional Government
('KRG'), 10 override payments are expected in 2022
◦ 2022 capital expenditure is expected to be between $140 million
and $180 million, with key asset spending including:
▪ c.$75 million expenditure forecast at the Tawke PSC, an
increase of c.$25 million compared to 2021 as drilling
increases at the Tawke field
▪ c.$45-80 million expenditure forecast at Sarta, with higher
spend the result of appraisal success
▪ c.$10-20 million expenditure forecast at Taq Taq
▪ Work is underway on planning a well in Somaliland, with
expenditure in 2022 expected to be under $5 million
◦ Operating costs expected to be c.$50 million (2021: $44 million),
equating to under $5/bbl, retaining our advantageous low
operating cost position
• Following the termination of the Bina Bawi and Miran PSCs by Genel on
10 December 2021, Genel will be claiming substantial compensation from
the KRG. Genel's claims will be brought in a private London seated
international arbitration
• Genel remains committed to paying a material and progressive dividend,
as we look to offer a compelling mix of value-accretive growth and
shareholder returns
• Genel continues to invest in the host communities in which we operate.
2022 represents twenty years of operations in the Kurdistan Region of
Iraq, which we will commemorate through the Genel20 programme,
launching significant new social activities throughout the year,
aligned with UN Sustainable Development Goals
2021 FINANCIAL PERFORMANCE
• $281 million of cash proceeds were received from the KRG in 2021
(2020: $173 million)
• Capital expenditure of $165 million (2020: $109 million), with c.$45
million spent at the Tawke PSC and c.$110 million at Sarta and Qara
Dagh
• Free cash flow of $86 million in 2021, pre dividend payments (2020: $5
million free cash outflow), comparison impacted by:
◦ Higher oil price of $71/bbl in 2021, compared to $42/bbl in 2020
◦ 10 entitlement payments received in 2021, compared to 12 in 2020,
following industry-wide reversion to payments three months in
arrears by the KRG
◦ Receivable recovery payments of $35 million received in 2021,
with the resumption of Tawke override payments contributing a
further $72 million ($23 million in override payments received in
2020)
• Dividends paid in 2021 of 16¢ per share (2020: 15¢ per share), a total
distribution of c.$45 million
• Cash of $314 million at 31 December 2021, net cash of $44 million ($10
million at 31 December 2020)
2021 OPERATING PERFORMANCE
• Genel strives for safe operations with zero lost time injuries ('LTI')
and zero tier one loss of primary containment events at Genel and
TTOPCO operations. One LTI was reported in 2021 at Sarta-5 drilling
operations and all corrective actions have been implemented
◦ 1.2 million work hours subsequently completed across our
operations without an LTI
• Net production averaged 31,710 bopd in 2021, with net production in Q4
averaging 30,843 bopd
◦ Production cost of c.$4/bbl, with margin per barrel of $24/bbl
• Production by field was as follows:
Gross production Net production Net production
(bopd)
2021 2021 2020
Tawke 108,710 27,180 27,570
Taq Taq 5,940 2,610 4,250
Sarta 6,400 1,920 160
Total 121,060 31,710 31,980
• Genel expects our confirmed 2021 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
◦ Expected carbon intensity in 2021 has increased from 13kg
CO2e/bbl in 2020 due to full year production at Sarta where
associated gas is currently being flared. The gas management
project to cease routine flaring is underway
PRODUCTION ASSETS
• Tawke PSC (25% working interest)
◦ Gross production at the Tawke PSC averaged 108,710 bopd in 2021
(110,280 bopd in 2020)
◦ Drilling activity is set to ramp up in 2022
• Sarta (30% working interest and operator)
◦ The results of early production from the Sarta pilot continue to
help shape the view of full field development
◦ Gross production averaged 6,400 bopd in 2021, with just over 2.5
million barrels having been produced from start up in late
November 2020 to year end 2021
◦ Drilling and completion operations at Sarta-1D concluded in
November 2021, the Viking I-21 Rig was subsequently mobilised to
Sarta-4 to workover the legacy exploration well for use as a
produced water disposal well
◦ Rigless well testing at Sarta-1D is now underway, with results
expected early this quarter. This will allow for the performance
of the thicker and more volumetrically significant Adaiyah
reservoir to be fully evaluated. Oil produced from Sarta-1D will
be delivered to the early production facility via a short c.2 km
flowline that was installed in Q4 2021 removing any lag time
between well testing results and monetisation of the resource
◦ The Sarta-5 and Sarta-6 step out wells are designed to appraise
the field away from the pilot production facility and will be key
in resolving the current uncertainty over the size and shape of
the Sarta field
◦ Drilling and completion operations concluded at Sarta-5 at the
end of 2021, and the Parker 265 Rig is currently mobilising to
the Sarta 6 location with spud expected in the coming weeks
◦ Rigless well-testing operations will be conducted at Sarta-5 in
Q1 2022
◦ As of 1 January 2022, Genel became PSC operator of Sarta in line
with the agreement with Chevron
◦ Genel has embarked on a renewable energy appraisal programme at
Sarta, with the initial phase of this study assessing wind, solar
and hydro options to power the early production facility. The
study began in Q3 2021 and will be completed in 2022, as Genel
aims to reduce GHG emissions from our facilities
• Taq Taq PSC (44% working interest and joint operator)
◦ Gross production at Taq Taq averaged 5,940 bopd in 2021,
following the ongoing suspension of drilling activity
◦ Activity at Taq Taq continues to be focused on optimising cash
flow, and drilling may resume in H2 2022
PRE-PRODUCTION ASSETS
• Qara Dagh (40% working interest and operator)
◦ As announced on 4 January, drilling operations on the QD-2 well
have been suspended and the well temporarily abandoned
◦ The evaluation by licence partners Genel and Chevron of the QD-2
well and its results is now underway, and this will inform next
steps on the licence
• Somaliland (51% working interest and operator)
◦ Following the signing of a farm-out agreement with OPIC
Somaliland Corporation relating to the SL10B13 block, field
partners are now working together to plan exploration drilling,
with an aim of drilling a well in 2023
• Morocco (75% working interest and operator)
◦ A farm-out campaign continues to be 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
-ends-
For further information, please contact:
Genel Energy
+44 20 7659 5100
Andrew Benbow, Head of Communications
Vigo Consulting
+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 1 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, NO0010894330
Category Code: TST
TIDM: GENL
LEI Code: 549300IVCJDWC3LR8F94
Sequence No.: 137142
EQS News ID: 1269669
End of Announcement EQS News Service
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