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

Genel EnergyAnnouncement

17/01/2023 07:15

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

  17-Jan-2023 / 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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  17 January 2023

   

                                 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 2022 results,  which
  are scheduled for release on 22  March 2023. The information contained  herein
  has not been audited and may be subject to further review.

   

  Paul Weir, Chief Executive of Genel, said:

  “Genel starts 2023 with  a strong balance  sheet, a net  cash balance of  over
  $200 million, and a cash generative production business. Our focus is now  the
  preservation of capital for the addition of new resilient and  cash-generative
  assets to our production portfolio, with free cash generation in 2023  funding
  both  our  dividend  programme  and  progress  towards  the  drilling  of  our
  exploration well in Somaliland.

   

  As we  work  to centre  our  business around  the  delivery of  our  material,
  sustainable,  and  progressive  dividend  programme,  our  capital  allocation
  decisions  are  targeted  towards   delivering  the  profitability  and   cash
  generation required to support that programme in the long-term.”

   

  2022 PERFORMANCE

    • Zero lost time  incidents in 2022,  with over three  million hours  worked
      since the last incident
    • Net production of 30,150  bopd in 2022 (31,710  bopd in 2021), and  29,600
      bopd in Q4, in line with guidance
    • $473 million of cash proceeds were received from the KRG in 2022 (2021:
      $281 million)

         ◦ Higher Brent oil price of $101/bbl in 2022 ($71/bbl in 2021)
         ◦ $124 million received relating to Tawke PSC override payments
         ◦ $94 million received for deferred receivables relating to unpaid  oil
           sales from November 2019 to February 2020 and the suspended  override
           from March to December 2020

    • Capital expenditure of $140  million, slightly below  guidance due to  the
      deferral of a well at Taq Taq and lower than budgeted spend at Sarta

         ◦  $74 million at Tawke PSC, and $47 million at Sarta

    • Free cash flow of $233 million ($86 million in 2021)
    • Dividends totalling 18¢ per  share paid in 2022  (2021: 15¢ per share),  a
      total distribution of $50 million

    • Cash of $495  million at  31 December 2022  ($314 million  at 31  December
      2021)

         ◦ Excludes $64 million which was due for payment in 2022 

    • Net cash under IFRS of $228 million at 31 December 2022 ($44 million at 31
      December 2021)

         ◦ Total debt of $274 million at 31 December 2022 ($280 million at 31
           December 2021)

   

  2023 OUTLOOK AND GUIDANCE

    • Production in  2023  is  expected  to  be  27-29,000  bopd,  with  similar
      operating expenditure to last year of c.$50 million, equating to c.$5/bbl
    • Material reduction in capital expenditure, with 2023 expenditure  expected
      to be  between  $100  million  and $125  million,  with  key  asset  spend
      including:

         ◦ Production business cost recoverable capital expenditure roughly flat
           at c.$90 million
         ◦ Up to c.$25 million expenditure in Somaliland, as we progress towards
           the spudding of the Toosan-1 well in this frontier basin
         ◦ c.$10 million currently expected on maintenance of other assets
           including Sarta, a reduction of c.$50 million on 2022

    • Genel is committed to our material and sustainable dividend programme. The
      dividend is currently at 18¢ per share, equating to $50 million, which  we
      expect to be covered by free cash flow in 2023
    • 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

    • Genel continues to  invest in the  host communities in  which we  operate,
      aiming to invest in those areas in which we can make a material difference
      to society, with an increasing focus on Somaliland in 2023

   

  PRODUCTION BUSINESS

    • Production by field was as follows:

   

          Gross production Net production Net production
  (bopd)
                2022            2022           2021
  Tawke       107,090          26,770         27,180
  Taq Taq      4,490           1,980          2,610
  Sarta        4,710           1,400          1,920
  Total       121,060          30,150         31,710

   

    • Tawke PSC (25% working interest)

         ◦ Gross production averaged 107,090 bopd in 2022, and 106,480 bopd in
           Q4

    • Sarta (30% working interest and operator)

         ◦ Gross production 4,710 bopd in 2022, and 3,960 bopd in Q4
         ◦ Genel’s focus is on making ongoing production from Sarta profitable,
           with any further capital investment contingent on both licence
           profitability and the extent to which there can be confidence that
           such investment can add cash generative production

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

         ◦ Gross production averaged 4,490 bopd in 2022, and 3,970 bopd in Q4
         ◦ Activity in 2023 is expected to include one sidetrack well targeting
           the Upper Shiranish formation

   

  PRE-PRODUCTION BUSINESS

    • Somaliland

         ◦ Preparation continues for the drilling of the Toosan-1 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 has now completed as we progress towards
           construction of the well pad. Environmental and social impact
           assessments are underway, and tendering has commenced for the rig and
           well services
         ◦ Genel continues to target a spud date in the next 12-18 months,
           acknowledging the challenges of operating in such a frontier area
           with limited existing infrastructure

    • Morocco

         ◦ The farm-out programme on the Lagzira block (75% working interest and
           operator) is continuing

    • Qara Dagh

         ◦ The results of the QD-2 well were announced in January 2022
         ◦ Under the terms of the PSC the licence has now expired
         ◦ The joint venture partners are engaging with the KRG on the future of
           the licence area

   

  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.  The  trial is  scheduled  for
      February 2024

   

  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  Kurdistan  Region  of Iraq,  and  a  committed  dividend
  programme  that  is  material  and   sustainable.  Genel  continues  to   seek
  opportunities  to  add  new  resilient  and  cash-generative  assets  to   its
  portfolio, with the  goal of progressing  its dividend in  the long-term.  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.:  216119
   EQS News ID:   1536357


    
   End of Announcement EQS News Service

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