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

Genel EnergyAnnouncement

12/11/2024 07:15

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

  12-Nov-2024 / 07:00 GMT/BST

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  12 November 2024

   

                                 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
  2024.

   

  Paul Weir, Chief Executive of Genel, said:

  “Since our half  year results  in August,  we have  continued optimising  cash
  flows,  evolving   our  capital   structure  and   originating  and   maturing
  opportunities to acquire new assets that  add reserves and diversify our  cash
  generation geographically. We maintain  our discipline on  spend and focus  on
  profitability and  both delivering,  and building  on, the  significant  value
  upside that is already in the business.

   

  We have repurchased and cancelled $182 million of our own bonds, reducing  our
  debt from $248 million to $66 million at the end of October. Our balance sheet
  position remains strong, with net cash at the end of October of $125  million,
  and cash of $191 million.

   

  The Tawke  PSC  continues to  deliver  consistent production  into  consistent
  domestic market demand to generate significant cash flow. That cash generation
  more than covers our cash out-flows in the period, which have further  reduced
  as a result of non-repeating activity in the first half of the year coming  to
  an end, decreasing activity on non-core  licences as we move towards exit  and
  reduction in net interest cost following the purchases of our bonds.

   

  Finally, the timing of  the award from the  London-seated Miran and Bina  Bawi
  oil and gas assets arbitration is not certain, but is expected before the  end
  of 2024.”

   

  FINANCIAL

    • Tawke cash generation has again more than covered all spend in the period,
      resulting in year-to-date free cash flow of $20 million (2023: $60 million
      out flow)
    • Cash of $273 million at 30 September 2024 (30 June 2024: $370 million)

         ◦ $109 million invested in August to purchase $107 million nominal
           value of bonds through the bond tender announced at half year results
         ◦ Bond debt of $141 million at 30 September 2024 (30 June 2024: $248
           million)
         ◦ Net cash of $132 million at 30 September 2024

    • Balance sheet further evolved  at 31 October 2024  by call of $75  million
      nominal value of bonds

         ◦ Cancellation of $234 million nominal value of all bonds already held
           by the Company
         ◦ Cash of $191 million and debt of $66 million, net cash of $125
           million

    • We retain an overdue receivables balance of nominal $107 million owed by
      the KRG. Although there has been discussion on the mechanism for recovery
      of this balance, there is not yet a formal payment plan in place. We
      expect any resolution to include offsetting balances owed to the KRG,
      which at the end of October amounted to around $50 million. This balance
      relates to unpaid amounts owed on the Tawke, Taq Taq, Sarta and Qara Dagh
      PSCs and arises from past year and current year items such as Oil field
      Police Force, financial obligations under our PSCs and positive working
      capital movements.

  TAWKE PSC ACTIVITY AND PRODUCTION

    • Q3  Gross  production  of  84,210   bopd  (Q2  2024:  79,780  bopd)   sold
      domestically at average $37/bbl (Q2 2024: $36/bbl), with a small  increase
      in YTD production  since the  half year to  80,120 bopd  (H1 2024:  78,050
      bopd)
    • Q3 Working interest production of 21,050  bopd in Q3 2024 (19,950 bopd  in
      Q2 2024)
    • Three wells that  were drilled  last year, but  not completed  due to  the
      closure of the  Iraq-Türkiye Pipeline,  were brought  onstream midyear  to
      meet  demand  from  local  traders,  contributing  7,800  bopd  to   gross
      production in the quarter
    • Further production was added from well interventions work.
    • In association with our industry  peers, we continue dialogue towards  the
      resumption of exports  on a  basis that  properly rewards  IOCs that  have
      chosen to invest in Kurdistan in accordance with their contractual terms

   

  ESG

    • Emissions reduction: in partnership with  DNO, Genel continues to be  part
      of the  first Associated  Gas  Injection (AGI)  project  in the  KRI.  The
      project has successfully captured over 1.2 million tonnes of CO2e from the
      Peshkabir field
    • CDP Climate score of B for two consecutive years
    • Genel's Mobile Medical Clinic project in Somaliland launched phase two  of
      the project in July, with a further 15,000 cases treated to take the total
      cases treated to nearly 30,000
    • Following the Annual General Meeting on  9 May 2024 the Company  announced
      that resolutions 2,  3, 4, 6  and 12 had  over 20% of  votes cast  against
      them. The Company reached  out to major  shareholders to understand  their
      views. The Company does not believe it is necessary or appropriate to take
      any additional action

   

  OUTLOOK

    • With domestic sales expected  to continue at  similar levels, the  Company
      expects net cash at the end of the year to be around $125 million
    • The Company continues to seek progression towards building a business with
      a strong balance sheet that  delivers resilient, reliable, repeatable  and
      diversified cash flows that supports a dividend programme
    • We continue to work towards the restart of exports to access international
      pricing, and the acquisition of new production assets to add reserves  and
      diversify our cash generation
    • The timing  of  the  award relating  to  the  London-seated  international
      arbitration regarding  Genel’s counterclaim  for substantial  compensation
      from the KRG following the termination of the Miran and Bina Bawi PSCs  is
      not certain, but it is expected by the end of the year.

   

  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: Luke Clements, CFO   +44 20 7659 5100
  Vigo Consulting: Patrick d’Ancona  +44 20 7390 0230

   

  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:  UPD
   TIDM:           GENL
   LEI Code:       549300IVCJDWC3LR8F94
   OAM Categories: 2.2. Inside information
   Sequence No.:   358396
   EQS News ID:    2027421


    
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