Genel Energy PLC (GENL)
Genel Energy PLC: Half-Year Results
06-Aug-2019 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
6 August 2019
Genel Energy plc
Unaudited results for the period ended 30 June 2019
Genel Energy plc ('Genel' or 'the Company') announces its unaudited results
for the six months ended 30 June 2019.
Bill Higgs, Chief Executive of Genel, said:
"These results demonstrate the continued success of our strategy - highly
cash generative production underpins capital investment in growth
opportunities that deliver rapid returns and enables a compelling cash
return to shareholders through our dividend.
Our production grew 17% in H1 2019, and pro forma free cash flow rose to $76
million. This cash generation, and our strong balance sheet, allows us to
both increase investment in growing the business as well as returning cash
to shareholders via dividends. Accordingly, we have today announced an
interim dividend of $14 million.
Disciplined capital allocation remains at the core of our business. The
speed with which our investments pay back means that cash is quickly
recycled to create most value for shareholders. The cash that our production
generates funds work now underway at Sarta and Qara Dagh, with plenty left
over to both pay a dividend and seek new opportunities, as we progress
Genel's growth strategy."
Results summary ($ million unless stated)
H1 H1 FY
2019 2018 2018
Production (bopd, working interest) 37,400 32,100 33,700
Revenue 194.3 161.1 355.1
EBITDAX 1 167.3 137.4 304.1
Depreciation and amortisation (74.8) (63.6) (136.2)
Exploration (expense) / credit (0.6) (0.5) 1.5
Impairment of intangible assets - - (424.0)
Operating profit / (loss) 91.9 73.3 (254.6)
Cash flow from operating activities 142.3 125.1 299.2
Capital expenditure 72.2 34.1 95.5
Free cash flow2 56.7 70.1 164.2
Pro forma free cash flow2 75.6 70.1 164.2
Dividend payments 27.4 - -
Cash3 353.3 233.2 334.3
Total debt 300.0 300.0 300.0
Net cash (debt)4 55.8 (63.8) 37.0
Basic EPS (¢ per share) 27.2 21.3 (101.6)
Underlying EPS (¢ per share)1 59.9 49.2 109.0
1) EBITDAX is operating profit / (loss) adjusted for the add back of
depreciation and amortisation ($74.8 million) and exploration expense
($0.6 million). Underlying EPS is EBITDAX divided by the weighted average
number of ordinary shares
2) Free cash flow is set out on page 7 and does not include $18.9 million,
invoiced for Tawke production and due in June 2019 and received late on 9
July 2019, with the delay due to a change in the Operator's banking
arrangements. Pro forma free cash flow of $75.6 million includes this
payment.
3) Cash reported at 30 June 2019 excludes $10 million of restricted cash
and the $18.9 million noted above
4) Reported IFRS debt less cash
Highlights
· Working interest production averaged 37,400 bopd in H1 2019 (H1 2018:
32,100 bopd), an increase of 17% compared to H1 2018
· 8 wells completed in H1 2019, resulting in year-on-year production
increases at both the Tawke and Taq Taq PSCs
· Free cash generation of $57 million in H1 2019 (H1 2018: $70 million),
which increases to $76 million when including the post period receipt of
$19 million, with annual free cash flow yield of c.20% of current market
capitalisation
· Net cash of $56 million at 30 June 2019 (net debt of $64 million at 30
June 2018)
· Following the receipt of all payments relating to April 2019, Genel
had $390 million of cash as of 5 August 2019, a net cash position of $92
million
· Addition of Sarta and Qara Dagh to the portfolio in January 2019
provides near-term production and material future growth potential
· Maiden dividend distribution of 10¢ per share paid on 24 June 2019
· Interim dividend of 5¢ per share confirmed
· Genel retains an open mandate for a share buy-back programme of up to
$10 million, and will continue to review purchasing opportunities
Outlook
· Net production guidance in 2019 maintained at close to Q4 2018 levels of
36,900 bopd, an increase of c.10% year-on-year
· Drilling programme ongoing, with over 10 wells set to be completed by
early 2020
· Active discussions with the Kurdistan Regional Government ('KRG')
regarding Bina Bawi are ongoing, focused on agreeing the detailed
commercial terms for the integrated Phase 1 oil and gas development and
approval of the associated field development plans
· Work continuing at Sarta to prepare for production by the middle of 2020
· QD-2 well location agreed at Qara Dagh, well pad civil engineering work
set to begin
· Farm-out process relating to Somaliland acreage to begin in late Q3 2019
· Genel expects to generate material free cash flow in H2 2019, even while
investment in growth increases
· 2019 capital expenditure is expected to be towards the top end of the
$150-170 million guidance range
· Searches for a new Chairman and Chief Operating Officer are progressing
· The Company continues to actively pursue growth and is assessing
opportunities to make value-accretive additions to the portfolio
For further information, please contact:
Genel Energy +44 20 7659 5100
Andrew Benbow, Head of Communications
Vigo Communications +44 20 7390 0230
Patrick d'Ancona
There will be a presentation for analysts and investors today at 0930 BST,
with an associated webcast available on the Company's website,
www.genelenergy.com [1].
This announcement includes inside information.
Disclaimer
This announcement contains certain forward-looking statements that are
subject to the usual risk factors and uncertainties associated with the oil
& gas exploration and production business. Whilst the Company believes the
expectations reflected herein to be reasonable in light of the information
available to them at this time, the actual outcome may be materially
different owing to factors beyond the Company's control or within the
Company's control where, for example, the Company decides on a change of
plan or strategy. Accordingly no reliance may be placed on the figures
contained in such forward looking statements. The information contained
herein has not been audited and may be subject to further review.
CEO STATEMENT
Genel aims to be a world-class creator of shareholder value by growing
high-margin production through rapid development and an efficient use of
capital, recycling cash flows into an expanding asset portfolio with the
potential to deliver significant growth, while generating sufficient cash
throughout the investment cycle to fund a material and progressive dividend.
GENERATING CASH WHILE INVESTING IN GROWTH
The oil we produce is good quality, low-cost, and highly cash generative,
with a development model focused on optimising cost and minimising
development risk. This makes our business highly cash generative. Setting us
apart from the majority of our peers both within the region and outside, we
have been able to materially increase production without significant cash
out - in fact our asset portfolio generates material free cash flow even
while increasing production.
This is best illustrated by the Tawke PSC, where production at Peshkabir has
increased from 12,000 bopd at the end of 2017 to over 55,000 bopd. While
doing so Peshkabir continues to generate material free cash flow, adding $32
million in the first half of 2019. Overall, capital expenditure in the first
half of $72 million has nearly doubled from last year, but still free cash
flow increased year-on-year.
Our low-cost production also makes us resilient to oil price fluctuations,
and we generate cash at a low oil price. As an illustration, even if the
Brent oil price averaged $36/bbl in 2019 we would still generate sufficient
cash to pay our dividend of $40 million from free cash flow.
The level and speed of our cash generation allows us the optionality to
recycle capital into those areas that promise to create the maximum
shareholder value. The priority remains investing in our current producing
assets to underpin this cash generation, and subsequently spending is now
set to ramp up at Sarta and Qara Dagh.
Commercial discussions continue on Bina Bawi, and we are increasingly
confident of making sufficient progress to enable work on the ground to
begin next year, with the potential for Bina Bawi oil to also add to our
production in 2020. And we will continue to generate free cash flow even
after making these investments in growth.
A MATERIAL AND PROGRESSIVE DIVIDEND
With our strong cash generation, even while investing in growth and adding
assets to the portfolio, paying a dividend was the ultimate intended outcome
of our strategy. With our portfolio having the potential to double
production in coming years, and an M&A strategy focused on boosting
near-term cash generation, we see the baseline annual distribution of $40
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