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

Genel EnergyAnnouncement

24/01/2024 07:15

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

  24-Jan-2024 / 07:00 GMT/BST

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  24 January 2024

   

                                 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 2023 results,  which
  are scheduled for release on 26  March 2024. The information contained  herein
  has not been audited and may be subject to further review.

   

  Paul Weir, Chief Executive of Genel, said:

  “Since the suspension of  exports through the  Iraq-Türkiye pipeline in  March
  last year, we have reshaped the  business to provide long-term resilience  and
  maximise potential upside exposure for shareholders.

   

  We have cut all non-essential activity and significantly reduced spend,  while
  developing a new source of income through domestic sales. We have well over  a
  hundred million dollars  in net cash,  and expect  to be in  a position  where
  domestic proceeds, if sustained at levels seen in the fourth quarter of  2023,
  would mean that our income covers  our ongoing costs from March onwards,  once
  Sarta and the arbitration hearing  workstreams are complete. We also  continue
  to work hard to add new assets to increase and diversify our income streams.

   

  The past six months  have included significant work,  and effective spend,  on
  efficiently closing out our activity on Sarta and minimising our footprint and
  cost base in Kurdistan. Our workforce has  been reduced by over two thirds  in
  the year. We  have progressed civils  work in Somaliland,  and we continue  to
  defend shareholder value as  we progress our  arbitration claim regarding  the
  Miran and Bina Bawi oil and gas assets.

   

  There is real potential in 2024 for significant improvement in cash generation
  and delivery of shareholder value from multiple catalysts – the resumption  of
  exports and regular payments,  clarity on the timing  of the recovery of  $107
  million of  receivables,  delivery  on  our strategy  to  add  new  assets  to
  diversify our production  portfolio, and a  successful arbitration result  and
  subsequent collection.”

   

  2023 PERFORMANCE

    • Zero lost time incidents in 2023,  matching the performance of 2022,  with
      over four million hours worked since the last lost time incident
    • Net production of 12,410 bopd in 2023 (30,150 bopd in 2022), following the
      closure of the Iraq-Türkiye pipeline (‘ITP’) in March, with minimal  sales
      between April  and  August inclusive  and  the subsequent  development  of
      domestic sales
    • Total proceeds of $101 million (2022: $473 million):

         ◦ $61 million export sales  proceeds relating to  sales made in  August
           and September 2022
         ◦ $40 million domestic sales proceeds in H2 2023, of which $26  million
           was received in Q4 2023 as volumes improved from Q3 2023

    • $107 million  remains  overdue  from  the  Kurdistan  Regional  Government
      (‘KRG’) for oil sales from October 2022 to March 2023 inclusive
    • Capital expenditure of  $71 million, of  which $24 million  was in H2,  as
      Genel cut activity  and costs in  an appropriate manner  for the  external
      environment
    • Free cash outflow of  $72 million (2022: positive  free cash flow of  $235
      million)
    • Bond debt reduced by $26 million nominal at an average price below 95¢
    • Dividends totalling 12¢ per  share paid in 2023  (2022: 18¢ per share),  a
      total distribution of $33.5 million. Due to the lack of visibility on  the
      timing of pipeline exports resuming and the re-establishment of a reliable
      record of payments, Genel has suspended its dividend programme

    • Cash of $363  million at  31 December 2023  ($495 million  at 31  December
      2022)
    • Net cash under IFRS of $119 million  at 31 December 2023 ($228 million  at
      31 December 2022)

         ◦ Total debt of $248 million at 31 December 2023 ($274 million at 31
           December 2022)

   

  2024 OUTLOOK AND GUIDANCE

    • Should local sales continue  at similar levels to  Q4 2023, the Tawke  PSC
      would generate sufficient  funding to cover  organisational spend from  Q2
      onwards

    • Organisational spend outside the  cash generative Tawke PSC  is set to  be
      reduced to  around  $3 million  per  month by  the  end of  Q1,  following
      completion of final remediation work at Sarta and the Miran and Bina  Bawi
      arbitration hearing
    • Interest expense is fixed at $2 million per month, paid half-yearly,  with
      interest income from our cash currently around $1.5 million per month

    • This  outlook  is  expected  to  maintain  net  cash  above  $100  million
      throughout 2024, and preserves the financial capability to add new assets

   

  UPDATE ON IRAQ-TÜRKIYE PIPELINE

    • The Iraq-Türkiye pipeline (‘ITP’) shut on 25 March 2023
    • While there  continue to  be positive  meetings between  relevant  parties
      regarding reopening, there remains a lack of clarity regarding the  status
      and timing of export resumption
    • The Association  of the  Petroleum Industry  of Kurdistan  (‘APIKUR’),  of
      which Genel is  a member, remains  committed to working  with the  Federal
      Government of  Iraq and  the  KRG to  resume  full production  and  export
      through the ITP for the benefit of all stakeholders

   

  ARBITRATION

    • The London-seated international  arbitration including  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 scheduled
      to start in London on 19 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
    • In total, Genel spent in excess  of $1.4 billion acquiring and  attempting
      to develop the Bina Bawi and Miran fields
    • The hearing is confidential and as such  we will not be able to update  on
      progress until  the  Award is  received,  with  the timing  of  the  Award
      uncertain, but expected in 2024

   

  OPERATIONS

          Gross production Net production Net production
  (bopd)
                2023            2023           2022
  Tawke        46,280          11,570         26,770
  Taq Taq      1,360            600           1,980
  Sarta         790             240           1,400
  Total        48,430          12,410         30,150

   

    • Tawke PSC (25% working interest)

         ◦ Gross production from the Tawke licence increased to 65,780 bopd in
           Q4 2023, up from 25,980 bopd in Q3, with the field partners selling
           their entitlement share into the local market
         ◦ In Q4, Genel received proceeds of $26 million and generated cash flow
           of $13 million from the Tawke PSC

   

    • Sarta (30% working interest and operator).

         ◦ The Sarta PSC terminated on 1 December 2023. Remediation activity is
           now complete, at a net cost ofof $1 million

   

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

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

  Monthly costs  have  been reduced  to  below  $1 million,  with  further  cuts
  expected

   

    • Somaliland

         ◦ Required civil work on the Toosan-1 well site on the SL10B13 block
           (51% working interest and operator) at this stage of the project is
           now complete
         ◦ The Company continues to assess the timing of further investment

   

    • Morocco

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

   

  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). 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.:  299221
   EQS News ID:   1821409


    
   End of Announcement EQS News Service

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