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

Genel EnergyAnnouncement

27/01/2025 07:15

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

  27-Jan-2025 / 07:00 GMT/BST

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  27 January 2025

   

                                 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 2024 results,  which
  are scheduled for release on 18  March 2025. The information contained  herein
  has not been audited and may be subject to further review.

   

  Paul Weir, Chief Executive of Genel, said:

  “We start 2025 with a business that  has all the building blocks necessary  to
  grow and become more  successful.  Genel has a  strong balance sheet, our  two
  producing fields within the Tawke PSC  form a world class asset that  delivers
  significant cash  generation, even  when only  selling at  heavily  discounted
  domestic prices.  Genel has a compact,  but highly skilled and motivated  work
  force, dedicated to delivery performance,  execution of a growth strategy  and
  pursuit of value accretive acquisitions that will geographically diversify  us
  into reliable and predictable jurisdictions.

   

  We continue  to work  with  peers and  our host  government  to push  for  the
  conditions necessary to enable  testing of any new  mechanism for exports.  We
  note the recent discussions of a revised budget law in Iraq that would provide
  the framework  for a  mechanism to  fund the  payment of  IOCs by  the KRG  on
  resumption of exports. 

   

  Consistent strong delivery performance at  Tawke saw us complete another  year
  of robust production and deliver full year  free cash flow of $19 million  and
  an improvement in our net cash position to $131 million.

   

  We are very clear on what needs to be done to deliver on our strategy, add new
  assets  and  build  a   business  that  delivers   consistent  value  to   its
  shareholders.  The period of our work focused on consolidation and  efficiency
  improvement in 2024 has laid the foundations for profitable future growth.”

   

  2024 FINANCIAL PERFORMANCE

    • Working interest average production of 19,650 bopd for the year, increased
      from 12,410 bopd in 2023
    • All production sold  into the  domestic market at  average $35/bbl  (2023:
      $35/bbl)
    • Closing out and finalising terms of exit from Taq Taq at minimal cost.
    • Free cash flow  of $19  million, compared  to free  cash out  flow of  $71
      million last year
    • Balance sheet at 31 December 2024

         ◦ Total debt has been reduced from $248 million at the start of the
           year to current $66 million
         ◦ Cash of $195 million (2023: $363 million)
         ◦ Net cash of $131 million, an increase from $120 million at the start
           of the year

    • Receivables

         ◦ $107 million (under KBT pricing and excluding interest) remains
           overdue from the Kurdistan Regional Government (‘KRG’), although this
           is reduced by amounts owed to the KRG, which are currently around $50
           million
         ◦ We continue to work towards a plan for payment or settlement of
           amounts owed, and appropriate adjustment for price and interest

    • Arbitration

         ◦ In December 2024 our subsidiary, Genel Energy Miran Bina Bawi
           Limited, lost the arbitration case brought against it by the KRG
           regarding the KRG’s right to terminate the Miran and Bina Bawi
           Production Sharing Contracts
         ◦ Due to the extremely limited grounds of appeal against an LCIA
           Arbitration Award, no appeal has been made by Genel Energy Miran Bina
           Bawi Limited and the deadline for appeal has passed
         ◦ The process under which the Tribunal determines the costs award to be
           made against Genel Energy Miran Bina Bawi Limited is now underway.
           The first stage of that process was  for the KRG to submit its claim
           for costs incurred to the Tribunal. The KRG is claiming circa $36
           million for costs incurred to the end of November 2024. This is
           materially higher than all the costs incurred by Genel Energy Miran
           Bina Bawi Limited throughout all stages of the arbitration process
           which was commenced by the KRG in  2021
         ◦ The next stage of the process gives Genel Energy Miran Bina Bawi
           Limited the opportunity to make submissions to the Tribunal to
           challenge robustly the quantum of the KRG’s cost claim, with a view
           to the final costs award being made for costs that are reasonably
           incurred, proportionate and also necessary

   

  KURDISTAN: TAWKE PSC ACTIVITY AND PRODUCTION

    • Q4  Gross  production  of  74,140   bopd  (Q3  2024:  84,210  bopd)   sold
      domestically  at  average  $34/bbl   (Q3  2024:  $37/bbl),  with   average
      production for the year 78,615 bopd (H1 2024: 78,050 bopd)
    • Working interest production of 18,540 bopd  in Q4 2024 (21,050 bopd in  Q3
      2024)
    • Three wells that were drilled in 2023 but not completed due to the closure
      of the Iraq-Türkiye Pipeline,  were brought onstream midyear  contributing
      7,800 bopd to gross  production, with further  production added from  well
      interventions work.
    • Discussions with  the Regulator  around the  work programme  for 2025  are
      ongoing

   

  AFRICA EXPLORATION

    • On SL10B13 in Somaliland, we continue to work towards achieving conditions
      that support drilling of the highly prospective Toosan-1 exploration well
    • On Lagzira in Morocco, we are  running a farmout process seeking  partners
      to test the newly high graded Banasa Prospect, which has been de-risked by
      2024 seismic reprocessing

   

  LEGACY KURDISTAN LICENCES

    • Over the last two years  we have taken steps to  stop spend that does  not
      represent  good  investment   and  we   have  begun   the  divestment   or
      relinquishment of unprofitable assets
    • We are pleased to confirm that we have agreed terms for divestment of  the
      Taq Taq PSC, which  will remove the risk  of any residual  decommissioning
      liabilities. This divestment is now subject to KRG approval

   

  ESG

    • Emissions reduction: in partnership with  DNO, Genel continues to be  part
      of the first Associated Gas Injection (AGI) project in the KRI.
    • CDP Climate risk score of B for three consecutive years
    • Genel's Mobile Medical Clinic project in Somaliland, which provides  vital
      medical care for some of the poorest people in Africa, launched phase  two
      of the project in July,  with a further 15,000  cases treated to take  the
      total cases treated to more than 30,000

   

  OUTLOOK

    • With Tawke domestic sales demand in  2025 expected to continue at  similar
      levels to  2024, the  Company expects  its cash  generation to  cover  its
      organisational costs -  we will provide  an update on  Tawke activity  and
      investment plans at our full year results in March
    • We continue  to  work towards  a  payment  plan for  recovery  of  overdue
      receivables
    • The Company  continues to  progress  towards building  a business  with  a
      strong balance  sheet that  delivers resilient,  reliable, repeatable  and
      diversified cash flows  that supports  a dividend  programme. The  Company
      objectives for the year on the path to building that business include:

         ◦ acquisition of new assets to add reserves and diversify our cash
           generation
         ◦ restart of exports to access international pricing
         ◦ recovery of net amounts owed by the KRG
         ◦ further progress towards drilling Toosan-1
         ◦ farm-out of Lagzira

  Genel will host a live presentation  on the Investor Meet Company platform  on
  Tuesday 4  February at 1000 GMT. The presentation is open to all existing  and
  potential shareholders.  Questions can  be  submitted at  any time  before  or
  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).  For
  further information, please refer to  2 www.genelenergy.com

   

   

   

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  Dissemination of a Regulatory Announcement that contains inside information in
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  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.:  372767
   EQS News ID:   2074737


    
   End of Announcement EQS News Service

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