REG-Genel Energy PLC Genel Energy PLC: Trading and operations update

Genel EnergyAnnouncement

03/11/2022 07:00

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  Genel Energy PLC (GENL)
  Genel Energy PLC: Trading and operations update

  03-Nov-2022 / 07:00 GMT/BST
  Dissemination of a Regulatory Announcement that contains inside information in
  accordance with the Market Abuse Regulation (MAR), transmitted by EQS Group.
  The issuer is solely responsible for the content of this announcement.

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  3 November 2022

   

                                 Genel Energy plc

                                         

                          Trading and operations update

                                         

  Genel Energy plc ('Genel' or 'the  Company') issues the following trading  and
  operations update in  respect of the  third quarter and  first nine months  of
  2022.

   

  Paul Weir, Chief Executive of Genel, said:

  “I am pleased that we remain on track to generate around $250 million of  free
  cash flow this year, building towards a significant cash balance of over  $500
  million by the end of the year. We are focused on putting this cash to work to
  purchase new assets, grow the  business, and increase shareholder returns.  It
  is business as usual on an  operational level in Kurdistan, while we  continue
  to work with the  KRG on the  challenges that the  sector faces. Our  existing
  predictable production business outlook  supports our established dividend  of
  $50 million, and  our committed dividend  programme has paid  $178 million  of
  cash to shareholders since its inception in 2019.”

   

  FINANCIAL

    • Margin of $36/bbl  in the first  three quarters of  2022 (2021:  $24/bbl),
      with Brent averaging $105/bbl (2021: $71/bbl)
    • Capital expenditure of  $109 million, of  which $55 million  was spent  at
      Tawke, and $38 million at Sarta
    • Free cash flow of $175 million up to 30 September 2022

         ◦ This does not include proceeds for June production, totalling $59
           million, received in October

    • In relation  to  the nominal  $120  million  for unpaid  sales  made  from
      November 2019 to February 2020, and the suspended override from March 2020
      to December 2020 that would have earned $38 million, since January 2021:

         ◦ Cash of $117 million has been received
         ◦ Offsets of $9 million have been made 

    • Cash of $447 million at 30 September 2022 ($412 million at 30 June 2022)
    • Net cash under IFRS of $181 million at 30 September 2022 ($141 million  at
      30 June 2022)

         ◦ Total debt of $274 million at 30 September 2022 ($280 million at 30
           June 2022), following the opportunistic acquisition of $6 million of
           bonds at a price that provided an attractive level of return

   

  PRODUCTION BUSINESS

    • Net production of 30,350 bopd in the first nine months of 2022, and 30,200
      bopd in Q3, in line with guidance
    • Tawke PSC (25% working interest)

         ◦ Gross production averaged 107,300 bopd in the first nine months of
           2022, and 108,500 bopd in Q3

    • Sarta (30% working interest and operator)

         ◦ Gross production averaged 4,900 bopd in the first nine months of
           2022, and 3,960 bopd in Q3
         ◦ Production continues from existing well stock as we continue to work
           on the field to seek to optimise production from various zones,
           ranging from the pilot production tests of the newly discovered
           Butmah and Najmah resources through to the initial stacked Mus &
           Adaiyah reservoir intervals 
         ◦ Rigless testing at Sarta-6 is now underway, with the initial
           appraisal programme expected to be complete by the end of year

    • Taq Taq PSC (44% working interest and joint operator)

         ◦ Gross production averaged 4,660 bopd in the first nine months of
           2022, and 4,280 bopd in Q3
         ◦ Taq Taq continues to perform in line with expectations, with positive
           results from the recent well intervention programme
         ◦ Drilling is set to resume with an infill production well expected to
           spud around the end of 2022

   

  PRE-PRODUCTION BUSINESS

    • Somaliland

         ◦ Following the successful farm-out in December 2021, preparation
           continues for the drilling of a well on the highly prospective
           SL10B13 block (51% working interest and operator)
         ◦ The Toosan prospect contains stacked Mesozoic reservoir objectives,
           with multiple individual prospective resource estimates each ranging
           from 100 to 200 MMbbls
         ◦ The geotechnical survey will begin this month, supporting the plan
           for the construction of the well pad. Environmental and social impact
           assessments will begin before the end of 2022, and tendering has
           commenced for the rig and well services, ahead of a targeted spud
           date around the end of 2023/early 2024
         ◦ Having undertaken a combination of water and food relief programmes
           earlier in the year, in reaction to the ongoing drought in Somaliland
           Genel is working with ANPPCAN to deliver a food relief programme to
           c.4,000 families

    • Morocco

         ◦ A Petroleum Agreement and Association Contract is expected to be
           signed with ONHYM regarding the Lagzira block (75% working interest
           and operator), with a farm-out programme now underway
         ◦ The Lagzira block is a large offshore licence, in water depths of
           200-1,200 metres, with a proven petroleum system following Genel’s
           2014 well which recovered oil from Upper and Middle Jurassic
           reservoirs
         ◦ Subsequent to this drilling, high quality 3D (broadband
           multi-azimuth) seismic was acquired in 2018, and new plays
           identified, with 18 prospects and leads, and material resource
           potential

    • Qara Dagh (40% working interest and operator)

         ◦ We continue to evaluate the QD-2 well and its results, and a decision
           on licence next steps will be taken shortly. Should no further action
           be taken then the licence will expire in January 2023

   

  ARBITRATION

    • The London-seated international  arbitration regarding  Genel’s claim  for
      substantial compensation from  the KRG  following the  termination of  the
      Miran and Bina  Bawi PSCs  is progressing. Written  submissions have  been
      made to the  tribunal and the  trial has now  been scheduled for  February
      2024

   

  ESG

    • Zero lost time incidents  in 2022, with three  million hours worked  since
      the last incident
    • Following the Annual General  Meeting (‘AGM’) on 12  May 2022 the  Company
      announced that resolutions  4 and 16  had over 20%  of votes cast  against
      them. In accordance with Provision 4  of the UK Corporate Governance  Code
      2018, the Company is required to  provide an update on the views  received
      from shareholders and actions taken in respect of these resolutions

         ◦ In light of the votes received against the resolutions, the Company
           has engaged with major shareholders to understand their views. Noting
           that proxy agencies were all in favour of the above resolutions, and
           following discussions with shareholders, the Board considers the
           votes cast against the resolutions to primarily reflect differing
           opinions held by the Company’s major shareholders in relation to a
           number of matters. As a consequence, the Company does not believe it
           is necessary or appropriate to take any additional action

   

  OUTLOOK AND GUIDANCE

    • Production guidance of 30-31,000 bopd reiterated for 2022
    • 2022 capital expenditure guidance of between $150 million to $170  million
      reiterated
    • Genel expects to end 2022  with over $500 million  of cash on the  balance
      sheet
    • Genel continues to actively  screen and work up  opportunities to put  our
      cash to work  in order  to extend  the line of  sight on  cash flows  that
      support our dividend programme into the long-term
    • Appraisal at Sarta is ongoing, with  results of the Sarta-6 well  expected
      around the end of the year
    • Genel has  an  established  and committed  dividend  programme,  currently
      paying $50 million per annum
    • We have recently taken opportunistic steps to buy back a limited number of
      bonds at a price that provides an attractive return on investment. We  may
      make further opportunistic purchases so long as the capital need does  not
      reduce our ability to successfully acquire assets that we are targeting

   

  Genel will also host a live presentation on the Investor Meet Company platform
  today at 1000  GMT. The  presentation is open  to all  existing and  potential
  shareholders.  Questions  can  be  submitted  at  any  time  during  the  live
  presentation. Investors can sign up to Investor Meet Company for free and  add
  to              meet               Genel              Energy               PLC
  via:  1 https://www.investormeetcompany.com/genel-energy-plc/register-investor

   

                                      -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 progressive dividend.  Genel also continues  to
  pursue further growth opportunities. For further information, please refer  to
   2 www.genelenergy.com

   

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   ISIN:          JE00B55Q3P39, NO0010894330
   Category Code: TST
   TIDM:          GENL
   LEI Code:      549300IVCJDWC3LR8F94
   Sequence No.:  198511
   EQS News ID:   1478067


    
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