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

Genel EnergyAnnouncement

14/11/2023 07:15

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

  14-Nov-2023 / 07:00 GMT/BST

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  14 November 2023

   

                                 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
  2023.

   

  Paul Weir, Chief Executive of Genel, said:

  “Despite  encouraging  comments  from  senior  politicians,  the  Iraq-Türkiye
  pipeline remains shut. Good progress has been made in achieving consistency of
  domestic sales  volumes, although  pricing  continues to  be weak.  We  remain
  confident that the pipeline exports will  resume, and provide access again  to
  international pricing. 

   

  We are  on track  to  deliver the  cost reductions  that  we forecast  at  our
  half-year results. Tawke is now cash generative from local sales, and  monthly
  spend across the business  is set to  reduce further once  we have exited  the
  Sarta licence and completed Somaliland civil works. This year we have  reduced
  debt by almost  10% at  opportunistic prices while  retaining our  significant
  cash balance,  providing us  with the  financial strength  to deliver  on  our
  objectives and diversify through the addition of resilient income streams. 

   

  We will continue to reshape  our portfolio and effectively balance  minimising
  our spend and progressing  our strategy, and we  continue to progress  towards
  the Miran and Bina Bawi  arbitration hearing currently scheduled for  February
  next year.”

   

  Q3 2023

    • Zero lost time incidents in  2023, with it being  over two years and  four
      million hours worked since the last incident
    • $11 million of cash proceeds received from local sales from the Tawke  PSC
      in Q3

         ◦ Costs have been materially reduced at Tawke, with the asset
           profitable in the quarter

    • Capital expenditure of $12 million in Q3

    • Cash of $391 million at 30 September 2023 ($425 million at 30 June 2023)
    • Net cash under IFRS of $132 million at 30 September 2023 ($158 million  at
      30 June 2023)

         ◦ Total debt of $264 million at 30 September 2023 ($273 million at 30
           June 2023)
         ◦ Following completion of the bond buy-back tender earlier this month,
           and earlier purchases in the market, Genel’s total debt has been
           reduced by $25 million in H2 2023, and now stands at $248 million

    • $110 million overdue  from the Kurdistan  Regional Government (‘KRG’)  for
      past oil sales at the end of Q3

   

  2023 OUTLOOK

    • Domestic sales from Tawke expected to increase in Q4
    • Genel expects capital expenditure to  be c.$70 million (compared to  March
      2023 guidance of $100 to $125 million),  with $60 million spent up to  the
      end of Q3 2023
    • Activity in Q4 includes limited work ahead of exit of the Sarta PSC, civil
      work completion on  the Toosan-1  prospect in  Somaliland, and  continuing
      preparation for the Miran and Bina  Bawi oil and gas arbitration  hearing,
      scheduled for February 2024
    • Genel will continue to review allocating capital towards the reduction  of
      debt  at  opportunistic  prices,   while  not  materially  impacting   the
      availability of capital for the addition of new cash-generative assets

   

  UPDATE ON IRAQ-TÜRKIYE PIPELINE

    • The Iraq-Türkiye pipeline (‘ITP’) shut on 25 March 2023
    • While there continues to be positive language from the Federal  Government
      of Iraq and Türkiye regarding opening, Genel has received no guidance from
      the KRG regarding the status or timing of the pipeline reopening
    • The Association  of the  Petroleum Industry  of Kurdistan  (‘APIKUR’),  of
      which Genel is a member, met with the Federal Government of Iraq’s (‘FGI’)
      Ministry of Oil last week

         ◦ The members of APIKUR have committed to continuing to work with the
           FGI and the KRG to resume full production and export through the ITP
           for the benefit of all stakeholders

   

  OPERATIONS

   

          Gross production Net production Gross production Net production
  (bopd)
              Q3 2023         Q3 2023         YTD 2023        YTD 2023
  Tawke        25,980          6,500           39,710          9,930
  Taq Taq        0               0             1,820            800
  Sarta          0               0             1,060            320
  Total        25,980          6,500           42,590          11,050

   

    • Tawke PSC (25% working interest)

         ◦ Having begun in July, gross local sales from the Tawke licence in Q3
           2023 totalled 13,300 bopd, with no export sales, and the balance of
           production delivered to the KRG as its entitlement
         ◦ Production and sales continue to increase, with production in the
           fourth quarter so far averaging double the level of the third
           quarter, with the Peshkabir field having restarted production on 16
           October
         ◦ Local sales are currently more than covering costs at the licence

    • Sarta (30% working interest and operator)

         ◦ Genel and its partner, Chevron, informed the Ministry of Natural
           Resources (‘MNR’) in Q2 2023 of its intention to surrender the Sarta
           asset and thereby terminate the Sarta PSC, with the date of PSC
           termination 1 December 2023, and limited remediation activity
           expected to be low-cost and completed in Q1 2024
         ◦ Genel’s share of the limited amount of oil in storage at the field
           has been sold into the local market

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

         ◦ There has been no production since 20 May 2023, following closure of
           the export pipeline

    • Somaliland

         ◦ Civil work on the Toosan-1 well site continues on the SL10B13 block
           (51% working interest and operator) and is on track for the planned
           work for this year to be completed within budget and on time
         ◦ As previously stated the Company will assess timing of further
           investment based on the financial outlook at the time

    • Morocco

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

   

  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 two-week hearing is currently
      scheduled for February 2024
    • The KRG’s claim is that  the KRG was entitled  to terminate the Bina  Bawi
      and Miran PSCs. Genel’s  claim is that the  KRG’s termination of the  PSCs
      was repudiatory and,  as a consequence,  is claiming substantial  damages.
      The KRG is not claiming any damages from Genel

   

  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), 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  continues to seek opportunities to add  new
  resilient  and   cash-generative  assets   to  its   portfolio.  For   further
  information, please refer to  2 www.genelenergy.com

   

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  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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   ISIN:          JE00B55Q3P39, NO0010894330
   Category Code: TST
   TIDM:          GENL
   LEI Code:      549300IVCJDWC3LR8F94
   Sequence No.:  284577
   EQS News ID:   1772249


    
   End of Announcement EQS News Service

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