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Genel Energy PLC: Half-Year Results -11-

DJ Genel Energy PLC: Half-Year Results

Genel Energy PLC (GENL) 
Genel Energy PLC: Half-Year Results 
 
06-Aug-2020 / 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 2020 
 
         Genel Energy plc 
 
Unaudited results for the period ended 30 June 2020 
 
 Genel Energy plc ('Genel' or 'the Company') announces its unaudited results 
         for the six months ended 30 June 2020. 
 
         Bill Higgs, Chief Executive of Genel, said: 
 
"Genel's robust business model, which is designed to provide resilience in a 
         challenging environment, has demonstrated its value as the Company 
 negotiates the headwinds facing the sector in 2020. Our low-cost production 
and the capital flexibility within our development programme have enabled us 
       to preserve the strength of our balance sheet even while investing in 
    growth. Given the lower oil price and overdue payments, the fact that we 
       still expect to end 2020 in a net cash position - even after dividend 
   distributions and making the investment to bring Sarta to production this 
     year - is a testament to our resilience, and we have today confirmed an 
          interim dividend of 5¢ per share." 
 
Results summary ($ million unless stated) 
 
                                     H1 2020 H1 2019 FY 2019 
Production (bopd, working interest)   32,100  37,400  36,250 
Revenue                                 88.4   194.3   377.2 
EBITDAX1                                65.1   167.3   321.8 
Depreciation and amortisation         (82.6)  (74.8) (158.5) 
Exploration expense                    (1.3)   (0.6)   (1.2) 
Impairment of oil and gas assets     (286.3)       -  (29.8) 
Impairment of trade receivables       (34.9)       -       - 
Operating (loss) / profit            (340.0)    91.9   132.3 
Underlying (loss) / profit2           (32.2)    76.6   134.9 
Cash flow from operating activities     85.5   142.3   272.9 
Capital expenditure                     58.5    72.2   158.1 
Free cash flow3                          6.5    56.7    99.0 
Dividends paid                          41.3    27.4    27.4 
Cash4                                  355.3   353.3   390.7 
Total debt                             300.0   300.0   300.0 
Net cash5                               57.2    55.8    92.8 
Basic EPS (¢ per share)              (128.9)    27.2    37.8 
Underlying EPS (¢ per share)2         (11.7)    27.4    49.0 
Average Brent oil price ($/bbl)           40      65      64 
 
1) EBITDAX is operating (loss) /profit adjusted for the add back of 
depreciation and amortisation ($82.6 million), exploration expense ($1.3 
million), impairment of property, plant and equipment ($242.0 million), 
impairment of intangible assets ($44.3 million) and impairment of trade 
receivables ($34.9 million). 
 
2) Underlying EPS is underlying profit (page 9) divided by weighted 
average number of shares 
 
3) Free cash flow is reconciled on page 10 
 
4) Cash reported at 30 June 2020 excludes $3.1 million of restricted cash, 
and takes into account the dividend paid in June 
 
5) Reported cash less IFRS debt (page 10) 
 
Highlights 
 
· Cash of $355 million at 30 June 2020 ($353 million at 30 June 2019) 
 
· Net cash of $57 million at 30 June 2020 (net cash of $56 million at 30 
June 2019) 
 
· $110 million received from the Kurdistan Regional Government ('KRG') 
in H1 2020 
 
· Updated payment mechanism introduced in April, under which the KRG 
committed to settling monthly sales invoices by the middle of the 
following month 
 
· $121 million remains outstanding in relation to oil sales from 
November 2019 to February 2020 - discussions continue with the KRG over 
settlement arrangements 
 
· Despite the monies outstanding, the fall in oil price and non-payment of 
the override, $6.5 million of free cash flow was generated in H1 2020 due 
to Genel's low-costs and resilient business model allowing flexible 
expenditure 
 
· Production cost of $2.9/bbl in H1 2020 
 
· Capital expenditure of $58.5 million in H1 as spending cut due to the 
external environment 
 
· G&A costs of $6.6 million, a reduction of c.30% year-on-year, as 
activity is rephased 
 
· Production of 32,100 bopd in H1 2020, due in part to the impact of 
COVID-19, coupled with payment uncertainty, resulting in reduced drilling 
activity at the Tawke PSC 
 
· Production averaged 33,000 bopd in July 2020, following fast tracking 
of activity at the Tawke PSC against an improved backdrop 
 
· Continued focus on safety: zero lost time incidents and zero losses of 
primary containment in the period 
 
· Impairments of $286 million largely due to reduction in Brent oil price 
forecast 
 
· Interim dividend of 5¢ per share confirmed (2019: 5¢ per share) 
 
         Outlook 
 
· Genel's low-cost production, flexible capital investment programme, and 
robust balance sheet makes it resilient to lower oil prices, and the 
Company expects to retain a net cash position at the end of 2020 at the 
prevailing oil price, while still investing in key growth assets 
 
· Capex of c.$45 million expected in H2, with c.50% to be spent on moving 
Sarta to production in Q4, where work has continued despite the challenges 
resulting from COVID-19 
 
· Genel continues discussions with the KRG regarding the recovery of the 
$121 million receivable 
 
         Enquiries: 
 
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 0900 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 
 
   No natural resources company has been immune from the impacts of COVID-19 
 and the resulting collapse in demand and fall in the oil price. In the face 
 of this material change in circumstances, we focused on controlling what is 
 within our power to control in the near-term, while continuing to build the 
 business fit for a future of fewer and better natural resources projects in 
the long-term. In this regard our business model positions us well both now, 
as we have a strong balance sheet and limited fixed capital expenditure, and 
         for the future. 
 
  We have a business model designed for tough times, and we moved quickly to 
rebase our spending appropriately for the external environment, reducing our 
   full-year capital expenditure forecast by c.$75 million to just over $100 
         million, and continuing to focus on managing costs elsewhere in the 
         business. 
 
   Given the external environment, we continued to allocate capital to those 
  areas that can provide the greatest returns and deliver shareholder value. 
 Due to the oil price and lack of certainty over the deferred receivable and 
    override payments, investing at Taq Taq is not currently a priority, and 
         work at Tawke has the ability to rapidly scale up as the external 
  environment improves. Despite the reduction in investment, production from 
      Tawke has been in line with internal expectations, and the significant 
increase in production in July is an encouraging illustration of what can be 
         achieved once investment resumes. 
 
   The key focus of capital allocation in 2020 has been Sarta, where work is 
  continuing along a critical path to production in Q4. Genel is already the 
 only multi-licence producer in the KRI, and further diversifying production 
 by bringing Sarta into production with its tremendous growth potential is a 
         milestone that we are all looking forward to reaching. 
 
     It is a testament to our balance sheet and careful financial management 
     that, even with $121 million outstanding from the KRG for production in 
 November 2019 to February 2020 and override payments unpaid, we are able to 
      continue allocating capital to direct returns to shareholders, and our 
          interim dividend of 5¢ per share has been retained. 
 
       While the mechanism through which the receivable from the KRG will be 
    recovered has yet to be finalised, we are confident that a solution that 
 works for both parties will be found, as has been done in the past, and our 
         discussions with the KRG continue. 
 
         ESG 
 
    As the external environment has deteriorated due to COVID-19, it has not 
      lessened our focus on ESG. The safety of our workforce and contractors 
    remains a key priority, and we are pleased to continue our record of not 
 having a lost-time injury since 2015. We are also working hard on improving 
  our ESG activities, and better communicating the things that we already do 
         well. 
 
      We recognise that we have a long way to go, but are proud of our track 
 record in the KRI, where we have aimed to have a positive impact ever since 
our operations started almost 15 years ago. In this time, we have funded and 

(MORE TO FOLLOW) Dow Jones Newswires

August 06, 2020 02:00 ET (06:00 GMT)

DJ Genel Energy PLC: Half-Year Results -2-

successfully delivered 245 social investment and community projects, 
         spending almost $60 million. 
 
  In the first half of the year we have become a member of both Transparency 
    International UK and TRACE, and become a signatory of the United Nations 
         Global Compact, supporting our aim of being a socially responsible 
     contributor to the global energy mix. Our sustainability report, due in 
   September, will provide further detail and enhanced disclosure on all ESG 
         aspects. 
 
OPERATING REVIEW 
 
  The impact of COVID-19 led to a significant reduction in activity in 2020. 
    By this point of the year, we were expecting to have continued an active 
 drilling programme at Tawke and Peshkabir, to be drilling at Qara Dagh, and 
 for Sarta to be advancing towards production. The fall in the oil price and 
   the delay in receipt of payments from the KRG, resulted in an appropriate 
       reduction in expenditure at the Tawke PSC, while the direct impact of 
 COVID-19 on supply chains and the movement of people into the KRI forced us 
 to notify the KRG of the occurrence of a force majeure event preventing the 
 Company from being able to perform its contractual obligations as scheduled 
         at Qara Dagh. 
 
   Work has continued at Sarta, our key capital allocation priority in 2020, 
 and despite the challenges faced initial production is still expected later 
         this year. 
 
         Production 
 
         In line with internal expectations given the updated work plan. 
 
 (bopd)       Gross          Net         Gross          Net 
            production   production    production   production 
 
             H1 2020       H1 2020      H1 2019       H1 2019 
    Tawke     59,790       14,950        71,700       17,920 
Peshkabir     48,790       12,200        54,950       13,740 
  Taq Taq     11,260        4,950        13,150        5,780 
    Total    119,840       32,100       139,800       37,440 
 
PRODUCING ASSETS 
 
Tawke PSC (25% working interest) 
 
    Gross production from the Tawke licence averaged 108,580 bopd during the 
 first half of 2020, and 102,000 bopd during the second quarter of the year, 
   as the operator halted development activity to preserve cash at a time of 
         historically low and uncertain oil prices. 
 
In June 2020, following the stabilisation of oil prices and export payments, 
       activity was fast tracked at the Tawke licence and production quickly 
         increased by 15,000 bopd month-on-month to raise average July 2020 
         production to 115,000 bopd. 
 
      The Peshkabir-to-Tawke gas reinjection project (the first enhanced oil 
   recovery project in the KRI) was commissioned in June, and aims to unlock 
   additional oil reserves at Tawke while significantly reducing gas flaring 
         and CO2 emissions at Peshkabir. 
 
Taq Taq (44% working interest, joint operator) 
 
 Production at Taq Taq averaged 11,260 bopd in H1, in line with expectations 
given the activity plan. As has been the case for some time, activity at Taq 
  Taq is focused on maximising cash generation and, given the oil price, the 
TT-35 well, which completed in April, was the only well in the 2020 drilling 
    programme. This well initially added c.600 bopd to production, but is no 
         longer producing, following a mechanical issue. 
 
  Activity at the field will remain appropriate for the external environment 
  and aligned with our capital allocation priorities, and it is not expected 
         that there will be any further drilling activity in 2020. 
 
         PRE-PRODUCTION ASSETS 
 
Sarta (30% working interest) 
 
Despite the significant operational challenges caused by COVID-19, including 
   the closure of borders impacting supply chains and the movement of people 
  into the KRI, work has continued at Sarta, and first oil remains on target 
        for Q4 this year. Civil construction work at the field is materially 
         complete, with remaining work now focussing on the completion and 
        commissioning of the 20,000 bopd capacity early-production facility. 
 
       Production will begin following the recompletion of the Sarta-2 well, 
     re-entry of the Sarta-3 well, and commissioning of the facility through 
        which oil will be produced and processed ahead of tanker loading and 
         transport to the export pipeline at Khurmala. 
 
  With first oil now in sight, plans are well underway for the next stage of 
  the phase 1A pilot development, an appraisal programme which aims to fully 
   utilise the facility capacity and convert more of the 253 MMbbls of gross 
        resources assigned by ERCE to the Mus-Adaiyah-Butmah reservoirs into 
   reserves. A three well campaign is scheduled for 2021, with environmental 
baselining underway ahead of construction of the well pads, in line with the 
previously announced schedule. The first of these wells, S-6, is expected to 
         spud in Q1 and will be followed immediately by the S-1D well. While 
 focussing on the primary Mus-Adaiyah-Butmah reservoirs these wells are also 
       set to target additional reservoir intervals, a cost-efficient way to 
  maximise the gathering of information which will help inform the Company's 
         view of the wider potential of Sarta. 
 
In order to minimise the time between appraisal success and monetisation the 
 field partners are investigating a range of options for oil production from 
         these 2021 wells. 
 
         Qara Dagh (40% working interest, operator) 
 
Due to ongoing uncertainty caused by COVID-19, Genel notified the KRG of the 
  occurrence of a force majeure event preventing the Company from being able 
 to perform its contractual obligations as scheduled. Work continues to take 
     place to ensure that Genel is in the best possible position to start to 
  drill the QD-2 well once external conditions improve and the force majeure 
     event ceases. This has included the securing of an amendment to the rig 
     contract with Parker, in expectation of the future lifting of the force 
 majeure event, while from a community engagement perspective emergency food 
  aid has been provided to vulnerable groups within the Qara Dagh community, 
    and the construction of firebreaks in nearby agricultural land have been 
         funded. 
 
Bina Bawi and Miran (100% working interest, operator) 
 
         As previously stated, Genel received documentation from the KRG in 
         mid-April, and then further documents were received in June. This 
   documentation did not adequately reflect the commercial concepts and risk 
   sharing that were expected for the development of Bina Bawi's gas and oil 
         resources. 
 
 Discussions are now taking place with the KRG at the highest level as Genel 
         seeks to progress the development of Bina Bawi. 
 
         African exploration 
 
   A farm-out process relating to the highly prospective SL10B13 block (100% 
     working interest and operator) in Somaliland began in Q4 2019 and while 
  conditions for farm-out have been challenging in the first half of 2020, a 
 number of companies continue to engage with the Company with respect to the 
         opportunity. 
 
         Regarding Morocco, and the Lagzira block (75% working interest and 
operator), despite the logistical challenges posed by COVID-19 having caused 
     some delay to the completion of the 3D seismic processing project being 
       carried out by Western Geco, Genel continues to work towards a future 
     farm-out campaign aimed at bringing a partner onto the licence prior to 
         considering further commitments. 
 
         FINANCIAL REVIEW 
 
         Overview 
 
      The impact of COVID-19 has been significant. The resulting drop in oil 
 demand exacerbated the fall in oil price this year, which deteriorated from 
     around $60/bbl at the start of 2020 to a low of under $20/bbl in April. 
        Although the oil price has since improved, there remains significant 
 uncertainty as to how COVID-19 and its aftermath will impact economies, oil 
  demand and therefore oil price over the near and mid-term. This has caused 
      significant economic pressure on the KRG's finances, pressure that has 
manifested itself in two ways: firstly, the deferral of payments owed by the 
   KRG for sales made in the four months from November 2019 to February 2020 
inclusive, amounting to $121 million; secondly, the non-payment of the Tawke 
         override royalty from 1 March 2020. 
 
It is clear that macro-economic uncertainty will extend into 2021 and likely 
       beyond, creating a challenging backdrop against which to progress our 
    business and seek to deliver on our commitment to run a business that is 
    resilient to downside scenarios, is cash generative, and delivers growth 
         when other oil and gas companies cannot. 
 
All of the above means that the Company's business model, developed over the 
     past few years to be profitable at low prices and resilient at very low 
         prices, has been tested on its ability to: 
 
· Progress value creative growth projects in a challenging environment; 
 
· Demonstrate material flexibility in capital allocation, supporting the 
generation of free cash flow even at low oil prices; 
 
· Pay a dividend. 
 
         Our assessment is that our business model has stood up well to the 
   challenge. Much of the hard work done in previous years has positioned us 
 well: costs have had previous scrutiny so required optimisation rather than 
    a radical overhaul; and asset development plans had been set up within a 
high capital flexibility model that mitigates financial risk, optimises cash 
     generation and expedites capital return and payback, so we were able to 
         adapt plans to the external environment. 
 
   The table below summarises our financial performance in the first half of 
         2020 (all figures $ million unless stated): 
 
                                         H1 2020 H1 2019 FY 2019 

(MORE TO FOLLOW) Dow Jones Newswires

August 06, 2020 02:00 ET (06:00 GMT)

DJ Genel Energy PLC: Half-Year Results -3-

Brent average oil price                  $40/bbl $65/bbl $64/bbl 
Revenue                                   88.4    194.3   377.2 
Opex                                     (16.8)  (18.1)  (37.7) 
G&A (excl. depreciation and               (6.5)   (8.9)  (17.7) 
amortisation) 
EBITDAX                                   65.1    167.3   321.8 
Producing asset capex                    (35.7)  (53.3)  (115.1) 
Net cash interest1                       (13.4)  (12.6)  (23.4) 
Surplus before growth capex and dividend  16.0    101.4   183.3 
Development capex                        (11.5)  (11.3)  (22.1) 
Exploration and appraisal capex          (11.3)   (7.6)  (20.9) 
(Deficit) / Surplus                       (6.8)   82.5    140.3 
Working capital and other                 13.3   (25.8)  (41.3) 
Free cash flow                             6.5    56.7    99.0 
 
1 Net cash interest is bond interest payable less bank interest income (note 
         5) 
 
· Our producing assets have delivered predictable production, and 
liquidity has been preserved by taking quick steps to materially reduce 
capex to a level appropriate to the oil price 
 
· General and administration costs have been optimised 
 
· The capital needs for Sarta first oil had already been optimised in line 
with our business plan (low capital need, early cash generation), meaning 
that even in this financial environment, we have been able to continue to 
allocate capital to the project 
 
· Force majeure declared at Qara Dagh, but we have continued to invest 
where possible to position the project for a rapid and efficient restart 
once force majeure is lifted and operating conditions permit 
 
  The overall result is that revenue generated in the period more than cover 
     our costs, resulting in a surplus of $16.0 million before investment in 
 growth. Our investment in growth projects, principally Sarta and Qara Dagh, 
      reduced that surplus to a deficit for the period of $6.8 million, with 
    working capital movements turning that deficit into a positive free cash 
  flow of $6.5 million. This has enabled the Company to preserve its balance 
   sheet strength, reporting net cash of $355 million. Despite not receiving 
   $120.8 million due in the period, this is a reduction of only $22 million 
  from the post-interim dividend cash number reported at 31 December 2019 of 
         $377 million. 
 
         Accounting impairments 
 
 Despite the business model proving to be resilient in the first half, there 
  has been a significant reduction in both near-term and long-term oil price 
       forecasts, with the change from the assumptions used for the previous 
         reporting period summarised in the table below: 
 
            $/bbl 2020 2021 2022 2023 2024 
         Forecast  40   43   50   55   60 
Year-end forecast  65   67   68   72   73 
 
The decrease in oil price, and to a significantly lesser extent the increase 
      in discount rate and deferral of some barrels into future periods as a 
   result of reduced activity, has resulted in a significant decrease in the 
 net present value of the Company's oil and gas assets. This has resulted in 
         a total impairment of $286.3 million. 
 
    In addition, there has been an impairment of $34.9 million to the $120.8 
  million nominal value of receivables owed by the KRG for sales made in the 
  four months from November 2019 to February 2020. The net present value has 
   been estimated for accounting purposes based on the initial communication 
    from the KRG, which indicates repayment would commence once oil price is 
   above $50/bbl. However, the mechanism for, and pace of, repayment has not 
   yet been agreed, and Genel expects to receive the nominal balance owed of 
         $120.8 million in full. 
 
      Resilient financial strength - well positioned to take advantage of an 
         unpredictable environment 
 
  With cash of $355 million, producing asset cash flows that cover corporate 
       and bond interest costs and fund pre-production investment, and Sarta 
    expected to be on production by the end of the year, the Company is well 
         positioned for 2021. 
 
        Genel will be ready to capitalise if the macro-environment starts to 
  improve, with a business that is already cash generative when investing in 
       pre-production growth projects and with a material receivable balance 
    expected to be recovered in line with the improvement in oil price. In a 
downside scenario our business model and financial strength provides us with 
   an opportunity to take advantage both organically and inorganically: with 
 potential to drill Qara Dagh at a lower cost than might have been expected, 
and the potential to acquire new assets that may become available due to the 
         financial stress on less resilient businesses. 
 
         Capital allocation and growth 
 
       As set out above, our business model supports the preservation of our 
  financial strength and has led us to generate cash even in a period with a 
   low oil price and irregular receipts of payments. Looking forward, due to 
     COVID-19 and the related oil price uncertainty, there remains a lack of 
clarity on the mechanism for the recovery of the $121 million of monies owed 
       and the timing of the resumption of Tawke override payments. There is 
       therefore uncertainty over the timing and value of very material cash 
     inflows that were previously included in our base case near to mid-term 
         liquidity planning scenarios. 
 
This emphasises the considerable extent to which our business model has been 
     tested and how durable it has proved to be. However, the quantum of the 
  uncertainty over timing of receipt of monies that we are contractually due 
       is significant and means that there is a very wide range of liquidity 
      outcomes ahead of us. The level of capital that is appropriate for the 
       Company to commit to its capital allocation priorities depends on its 
        confidence in the quantum and timing of future cash flows, and Genel 
      constantly reviews its capital allocation plans, aiming to deliver the 
         greatest returns and to preserve balance sheet strength. 
 
        The Company has a portfolio that contains assets with material value 
  creation possibilities, with discovered resource with the potential to add 
        incremental value to the share price greater than the current market 
   capitalisation of the Company. The higher our confidence in receipts, and 
      dependent on operating conditions, the more pace can be brought to the 
   development of these projects in the event that commercial, technical and 
         operational conditions support investment. 
 
         Dividend 
 
  In 2019, our confidence in our business plan to replace and grow producing 
       asset cash generation at value accretive cost was demonstrated by the 
    commencement of a sustainable and material dividend, and $41 million was 
        distributed to shareholders. The dividend remains a core part of our 
  business model, which is focused on growth and the protection of financial 
 strength. The financial strength of our business and the flexibility in our 
   cost base enabled us to reaffirm the final dividend at our full-year 2019 
         results, and we have retained our interim dividend of 5¢ per share. 
 
         Financial priorities and outlook 
 
         The table below summarises our progress against the 2020 financial 
         priorities of the Company as set out at our 2019 results. 
 
 FY2020 financial priorities               Progress 
 
· Maintaining our financial    · Net cash expected to be 
strength through existing      maintained at year-end at 
market conditions              current oil price 
 
· Continued focus on capital   · Despite COVID-19 bringing 
allocation, with               material challenges: 
prioritisation of highest      progression towards Sarta 
value investment in assets     first oil in 2020 and 
with ongoing or near-term      investment in Qara Dagh 
cash and value generation      appraisal, once force majeure 
                               removed, remain our key 
                               capital allocation priorities 
 
· Delivery of a 2020 work      · A recut 2020 work programme 
programme on time and on       and budget preserving 
budget, that is appropriate    liquidity and reducing costs 
to the external environment 
                               · We are reducing spend on 
                               controllable inputs 
 
· Continued focus on           · Management continues to seek 
identifying and developing     growth opportunities that fit 
additional assets that offer   the Company's capital 
potential for significant      structure and business model 
value to the Company with 
near to mid-term cash 
generation, primarily to 
further build the Company's 
cash generation options when 
the override royalty 
agreement ends in Q3 2022 
and provide the basis for 
increasing the dividend in 
the future 
 
 Our capital allocation philosophy remains the same, despite the recent fall 
   in oil price - invest in those projects with the potential to create most 
     shareholder value, targeting those assets that fit the criteria set out 
         previously. 
 
 In light of the likely macro volatility and uncertainty that lies ahead, in 
    order to maximise our ability to move quickly and deploy capital to take 
    advantage of prevailing conditions, the Board has decided to reverse its 
previous decision to comply with premium listing rules. The principal impact 
  of this is that the Company will no longer apply chapter 10 of the Listing 
    Rules with respect to classifying transactions (such as acquisitions and 
         disposals) and so will have the benefit of being able to execute 
       transactions more efficiently, a significant advantage in the current 
         environment. See note 13 for more information. 
 

(MORE TO FOLLOW) Dow Jones Newswires

August 06, 2020 02:00 ET (06:00 GMT)

DJ Genel Energy PLC: Half-Year Results -4-

We will continue to be disciplined in our capital allocation and invest in 
areas that can deliver most shareholder value. Rigorous cost management will 
   be maintained across all operations, ensuring spend is sufficient to take 
advantage of the growth opportunities in the portfolio, and to maximise (net 
         present) value of the portfolio. 
 
         A summary of the financial results for the year is provided below. 
 
         Financial results for the period 
 
         Income statement 
 
(all figures $ million)                  H1 2020 H1 2019 FY 2019 
Production (bopd, working interest)      32,100  37,400  36,250 
Profit oil                                24.0    64.6    117.2 
Cost oil                                  47.6    69.4    147.2 
Override royalty                          16.8    60.3    112.8 
Revenue                                   88.4    194.3   377.2 
Operating costs                          (16.8)  (18.1)  (37.7) 
G&A (excl. depreciation and               (6.5)   (8.9)  (17.7) 
amortisation) 
EBITDAX                                   65.1    167.3   321.8 
Depreciation and amortisation            (82.6)  (74.8)  (158.5) 
Net interest                             (14.7)  (15.5)  (27.7) 
Income tax expense                          -     (0.4)   (0.7) 
Underlying (loss) / profit               (32.2)   76.6    134.9 
Impairment                               (321.2)    -    (29.8) 
Exploration expense                       (1.3)   (0.6)   (1.2) 
(Loss) / Profit                          (354.7)  76.0    103.9 
 
 Working interest production of 32,100 bopd decreased year-on-year (H1 2019: 
      37,400 bopd), principally as a result of lower average production from 
        Peshkabir, with the decrease in revenue from $194.3 million to $88.4 
         million, principally caused by: 
 
· Lower Brent $62 million 
 
· Lower capex resulting in lower cost oil $21 million 
 
· Lower production $10 million 
 
· Override unpaid from March onwards $10 million 
 
Production costs of $16.8 million decreased from last period (H1 2019: $18.1 
million) as a result of scaled back activity in producing assets. Production 
        cost per barrel increased from $2.7/bbl to $2.9/bbl due to decreased 
    production. General and administration costs were $6.6 million (H1 2019: 
    $9.5 million), of which corporate cash costs were $4.9 million (H1 2019: 
         $6.6 million). The reduction from the prior period is a result of 
    optimisation of costs and increased operational activity, principally at 
   Sarta and Qara Dagh. The decrease in revenue resulted in EBITDAX of $65.1 
         million (H1 2019: $167.3 million): 
 
  EBITDAX is presented in order for the users of the financial statements to 
 understand the cash profitability of the Company, which excludes the impact 
  of costs attributable to exploration activity, which tend to be one-off in 
   nature, and the non-cash costs relating to depreciation, amortisation and 
      impairments. Underlying profit is presented in order to understand the 
 profitability of the recurring business, excluding the impact of items that 
         tend to be one off in nature, such as impairment and exploration 
         expenditure. 
 
Depreciation of $51.6 million (H1 2019: $39.7 million) and Tawke intangibles 
amortisation of $30.9 million (H1 2019: $34.5 million) increased as a result 
     of a combination of decrease in production profile and higher estimated 
         future costs on the Tawke PSC (depreciation/bbl: $8.6/bbl (H1 2019: 
         $5.8/bbl), noting that these costs are fully recoverable. 
 
An impairment expense of $254.7 million for Tawke CGU, $31.6 million for Taq 
   Taq and $34.9 million for trade receivables was booked which is explained 
         further in note 2 (H1 2019: nil). 
 
   Bond interest expense of $15.0 million was in line with the prior period. 
    Finance income of $1.6 million (H1 2019: $2.4 million) was bank interest 
       income. Other finance expense of $1.3 million (H1 2019: $2.9 million) 
         included a non-cash discount unwind expense on liabilities. 
 
      In relation to taxation, under the terms of the KRI production sharing 
 contracts, corporate income tax due is paid on behalf of the Company by the 
  KRG from the KRG's own share of revenues, resulting in no corporate income 
tax payment required or expected to be made by the Company. Tax presented in 
   the income statement was related to taxation of the service companies (H1 
         2020: nil, H1 2019: $0.4 million). 
 
         Capital expenditure 
 
 Capital expenditure is the aggregation of spend on production assets ($35.7 
       million) and pre-production assets ($22.8 million) and is reported to 
        provide investors with an understanding of the quantum and nature of 
  investment that is being made in the business. Capital expenditure for the 
period was $58.5 million, predominantly focused on production assets and the 
         Sarta PSC ($11.5 million) and Qara Dagh ($4.4 million): 
 
(all figures $ million)               H1 2020 H1 2019 FY 2019 
Cost recovered production capex        35.7    53.3    115.1 
Pre-production capex - oil             11.5    11.3    22.1 
Pre-production capex - gas              5.9     5.6    11.9 
Other exploration and appraisal capex   5.4     2.0     9.0 
Capital expenditure                    58.5    72.2    158.1 
 
         Cash flow, cash, net cash and debt 
 
    Gross proceeds received was $110.0 million (H1 2019: $167.5 million), of 
  which $22.9 million (H1 2019: $54.2 million) was received for the override 
         royalty. 
 
(all figures $ million)              H1 2020 H1 2019 FY 2019 
Brent average oil price              $40/bbl $65/bbl $64/bbl 
Operating cash flow                   85.5    142.3   272.9 
Producing asset cost recovered capex (38.1)  (48.7)  (105.1) 
Development capex                    (11.6)   (9.4)  (18.7) 
Exploration and appraisal capex      (13.7)  (12.2)  (26.5) 
Restricted cash                       (0.1)     -      7.0 
Interest and other                   (15.5)  (15.3)  (30.6) 
Free cash flow                         6.5    56.7    99.0 
 
Free cash flow is presented in order to show the free cash generated that is 
 available for the Board to invest in the business. The measure provides the 
   reader a better understanding of the underlying business cash flows. Free 
cash flow before dividend was $6.5 million, with an overall decrease in cash 
         of $35.4 million in the period (H1 2019: $19.0 million increase). 
 
(all figures $ million)        H1 2020 H1 2019 FY 2019 
Free cash flow                   6.5    56.7    99.0 
Dividend paid (incl. expenses) (41.3)  (29.0)  (29.0) 
Purchase of shares              (0.7)   (8.7)  (13.5) 
Other                            0.1      -     (0.1) 
Net change in cash             (35.4)   19.0    56.4 
Opening cash                    390.7   334.3   334.3 
Closing cash                    355.3   353.3   390.7 
Debt reported under IFRS       (298.1) (297.5) (297.9) 
Net cash / (debt)               57.2    55.8    92.8 
 
Closing cash of $355.3 million and net cash of $57.2 million (H1 2019: $55.8 
  million) exclude restricted cash of $3.1 million (H1 2019: $10.0 million). 
      Net cash is reported in order for users of the financial statements to 
   understand how much cash remains if the Company paid its debt obligations 
         from its available cash on the period end date. 
 
   Reported IFRS debt was $298.1 million (31 December 2019: $297.9 million), 
comprised of $300 million of bond debt less amortised costs. The bond pays a 
10.0% coupon and matures in December 2022. A reconciliation of debt and cash 
         is provided in note 11 to the financial statements. 
 
         The bond has three financial covenant maintenance tests: 
 
                      Financial covenant   Test H1 2020 
                      Net debt / EBITDAX< 3.0   (0.3) 
Equity ratio (Total equity/Total assets)  > 40%     64% 
                       Minimum liquidity > $30m   $355m 
 
         Net assets 
 
Net assets at 30 June 2020 were $1,005.7 million (31 December 2019: $1,386.1 
million) and consist primarily of oil and gas assets of $1,107.5 million (31 
    December 2019: $1,412.5 million), trade receivables of $90.2 million (31 
   December 2019: $150.2 million) and net cash of $57.2 million (31 December 
         2019: $92.8 million). 
 
         Liquidity / cash counterparty risk management 
 
   The Company monitors its cash position, cash forecasts and liquidity on a 
  regular basis. The Company holds surplus cash in treasury bills or on time 
deposits with a number of major financial institutions. Suitability of banks 
      is assessed using a combination of sovereign risk, credit default swap 
         pricing and credit rating. 
 
         Dividend 
 
Interim dividend distribution of $13.6 million was paid in January 2020, and 
     a final dividend distribution of $27.7 million in June 2020 (June 2019: 
         $27.4 million). 
 
 The Board is recommending no change in the interim dividend of 5¢ per share 
        (2019: 5¢ per share), a total distribution of c.$13.6 million. Total 
   dividends declared in 2020 amount to $41.3 million (2019: $40.8 million), 
 representing 15¢ per share (2019: 15¢ per share). The payment timetable for 
         the interim dividend is below: 
 
· Ex-dividend date: 12 November 2020 
 
· Record Date: 13 November 2020 
 
· Payment Date: 11 December2020 
 
         Going concern 
 
  The Directors have assessed that the Company's forecast liquidity provides 
 adequate headroom over forecast expenditure for the 12 months following the 
signing of the half-year condensed consolidated financial statements for the 
 period ended 30 June 2020 and consequently that the Company is considered a 
 going concern. In assessing going concern, the Directors have assessed that 
  prolonged prevalence of COVID-19 may have a further negative impact on the 

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DJ Genel Energy PLC: Half-Year Results -5-

oil price and in turn revenues, operational activity and receipt of amounts 
     owed. The Company's low run rate costs, flexible capital programme, and 
strong cash position provide appropriate mitigation of the reduction of cash 
       inflows that COVID-19 may cause for the going concern basis to remain 
         appropriate. 
 
Principal risks and uncertainties 
 
      The Company is exposed to a number of risks and uncertainties that may 
    seriously affect its performance, future prospects or reputation and may 
 threaten its business model, future performance, solvency or liquidity. The 
   following risks are the principal risks and uncertainties of the Company, 
  which are not all of the risks and uncertainties faced by the Company: the 
         development and recovery of oil reserves; reserve replacement; 
    commercialisation of the KRI gas business; M&A activity; the KRI natural 
       resources industry and regional risk; a deterioration in the external 
       environment caused by COVID-19; corporate governance failure; capital 
  structure and financing; local community support; the environmental impact 
   of oil and gas extraction; and health and safety risks. Further detail on 
 many of these risks was provided in the 2019 Annual Report. Since year-end, 
    the environmental impact of oil and gas extraction has been added to the 
 risk register, reflecting the increased focus on ESG issues, along with the 
         impact of COVID-19. 
 
Statement of directors' responsibilities 
 
The directors confirm that these condensed interim financial statements have 
      been prepared in accordance with International Accounting Standard 34, 
'Interim Financial Reporting', as adopted by the European Union and that the 
interim management report includes a true and fair review of the information 
         required by DTR 4.2.7 and DTR 4.2.8, namely: 
 
· an indication of important events that have occurred during the first 
six months and their impact on the condensed set of financial statements, 
and a description of the principal risks and uncertainties for the 
remaining six months of the financial year; and 
 
· material related-party transactions in the first six months and any 
material changes in the related-party transactions described in the last 
annual report. 
 
 The directors of Genel Energy plc are listed in the Genel Energy plc Annual 
   Report for 31 December 2019. A list of current directors is maintained on 
         the Genel Energy plc website: www.genelenergy.com [2] 
 
         By order of the Board 
 
         Bill Higgs 
 
         CEO 
 
         5 August 2020 
 
         Esa Ikaheimonen 
 
CFO 
 
5 August 2020 
 
         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. 
 
Condensed consolidated statement of comprehensive income 
 
For the period ended 30 June 2020 
 
                                6 months      6 months      Year 
 
                              to 30 June    to 30 June to 31 Dec 
                                    2020          2019 
 
                                                            2019 
                     Note             $m            $m        $m 
 
Revenue               3             88.4         194.3     377.2 
 
Production costs      4           (16.8)        (18.1)    (37.7) 
Depreciation and      4           (82.5)        (74.2)   (157.1) 
amortisation of oil 
assets 
Gross (loss) /                    (10.9)         102.0     182.4 
profit 
 
Exploration expense   4            (1.3)         (0.6)     (1.2) 
Impairment of        4,8          (44.3)             -         - 
intangible assets 
Impairment of        4,9         (242.0)             -    (29.8) 
property, plant and 
equipment 
Impairment of trade  4,10         (34.9)             -         - 
receivables 
General and           4            (6.6)         (9.5)    (19.1) 
administrative costs 
Operating (loss) /               (340.0)          91.9     132.3 
profit 
 
Operating (loss) / 
profit is comprised 
of: 
EBITDAX                             65.1         167.3     321.8 
Depreciation and      4           (82.6)        (74.8)   (158.5) 
amortisation 
Exploration expense   4            (1.3)         (0.6)     (1.2) 
Impairment of        4,8          (44.3)             -         - 
intangible assets 
Impairment of        4,9         (242.0)             -    (29.8) 
property, plant and 
equipment 
Impairment of trade  4,10         (34.9)             -         - 
receivables 
 
Finance income        5              1.6           2.4       6.6 
Bond interest         5           (15.0)        (15.0)    (30.0) 
expense 
Other finance         5            (1.3)         (2.9)     (4.3) 
expense 
(Loss) / Profit                  (354.7)          76.4     104.6 
before income tax 
Income tax expense    6                -         (0.4)     (0.7) 
(Loss) / Profit and              (354.7)          76.0     103.9 
total comprehensive 
(expense) / income 
 
Attributable to: 
Shareholders' equity             (354.7)          76.0     103.9 
                                 (354.7)          76.0     103.9 
 
(Loss) / Profit per                    ¢             ¢         ¢ 
ordinary share 
Basic                 7          (128.9)          27.2      37.8 
Diluted               7          (128.9)          27.1      37.4 
Underlying1                       (11.7)          27.4      49.0 
 
         1. Underlying profit is reconciled on page 9 
 
         Condensed consolidated balance sheet 
 
At 30 June 2020 
 
                           30 June 2020 30 June 2019 31 Dec 2019 
                      Note           $m           $m          $m 
               Assets 
   Non-current assets 
    Intangible assets  8          716.0        796.1       775.6 
  Property, plant and  9          391.5        641.2       636.9 
            equipment 
                                1,107.5      1,437.3     1,412.5 
       Current assets 
      Trade and other  10          98.3        125.6       157.4 
          receivables 
      Restricted cash               3.1         10.0         3.0 
        Cash and cash             355.3        353.3       390.7 
          equivalents 
                                  456.7        488.9       551.1 
 
         Total assets           1,564.2      1,926.2     1,963.6 
 
          Liabilities 
          Non-current 
          liabilities 
      Trade and other           (124.7)      (120.8)     (118.8) 
             payables 
      Deferred income            (26.8)       (28.1)      (26.7) 
           Provisions            (39.0)       (34.7)      (37.4) 
           Borrowings  11       (298.1)      (297.5)     (297.9) 
                                (488.6)      (481.1)     (480.8) 
  Current liabilities 
      Trade and other            (66.9)       (65.3)      (91.7) 
             payables 
      Deferred income             (3.0)        (6.2)       (5.0) 
                                 (69.9)       (71.5)      (96.7) 
 
    Total liabilities           (558.5)      (552.6)     (577.5) 
 
           Net assets           1,005.7      1,373.6     1,386.1 
 
 Owners of the parent 
        Share capital              43.8         43.8        43.8 
Share premium account           4,005.4      4,046.6     4,033.4 
   Accumulated losses         (3,043.5)    (2,716.8)   (2,691.1) 
         Total equity           1,005.7      1,373.6     1,386.1 
 
         Condensed consolidated statement of changes in equity 
 
For the period ended 30 June 2020 
 
                    Share      Share    Accumulated Total equity 
                  capital    premium         losses 
 
                                                              $m 
                       $m         $m             $m 
 
At 1 January         43.8    4,074.2      (2,786.6)      1,331.4 
2019 
 
Profit and              -          -           76.0         76.0 
total 
comprehensive 
income 
Share-based             -          -            2.5          2.5 
payments 
Purchase of             -          -          (8.2)        (8.2) 
shares to 
satisfy share 
awards 
Purchase of             -          -          (0.5)        (0.5) 
treasury 
shares 
Dividend                -    (27.6)1              -       (27.6) 
payment 
 
At 30 June           43.8    4,046.6      (2,716.8)      1,373.6 
2019 
 
At 1 January         43.8    4,074.2      (2,786.6)      1,331.4 
2019 
 
Profit and              -          -          103.9        103.9 
total 
comprehensive 
income 
Share-based             -          -            5.1          5.1 
payments 
Purchase of             -          -          (8.2)        (8.2) 
shares to 
satisfy share 
awards 
Purchase of             -          -          (5.3)        (5.3) 
treasury 
shares 
Dividends               -     (40.8)              -       (40.8) 
provided for 
or paid1 
 
At 31 December       43.8    4,033.4      (2,691.1)      1,386.1 
2019 and 1 
January 2020 
 
Loss and total          -          -        (354.7)      (354.7) 
comprehensive 
expense 
Share-based             -          -            3.0          3.0 
payments 
Purchase of             -          -          (0.7)        (0.7) 
shares for 
employee share 
awards 
Dividends               -     (28.0)              -       (28.0) 
provided for 
or paid1 
 
At 30 June           43.8    4,005.4      (3,043.5)      1,005.7 
2020 
 
1 The Companies (Jersey) Law 1991 does not define the expression "dividend" 

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DJ Genel Energy PLC: Half-Year Results -6-

but refers instead to "distributions". Distributions may be debited to any 
account or reserve of the Company (including share premium account). 
 
         Condensed consolidated cash flow statement 
 
For the period ended 30 June 2020 
 
                           30 June 2020 30 June 2019 31 Dec 2019 
                      Note           $m           $m          $m 
Cash flows from 
operating activities 
(Loss) / Profit and             (354.7)         76.0       103.9 
total comprehensive 
(expense) / income 
Adjustments for: 
Net finance expense    5           14.7         15.5        27.7 
Taxation               6              -          0.4         0.7 
Depreciation and       4           82.6         74.8       158.5 
amortisation 
Exploration expense    4            1.3          0.6         1.2 
Impairment of          4           44.3            -           - 
intangible assets 
Impairment of          4          242.0            -        29.8 
property, plant and 
equipment 
Impairment of          4           34.9            -           - 
receivables 
Other non-cash items              (0.3)        (1.4)       (2.4) 
Changes in working 
capital: 
Decrease / (Increase)              22.0       (21.8)      (55.4) 
in trade receivables 
Decrease / (Increase)               0.1            -       (0.2) 
in other receivables 
(Decrease) / Increase             (2.7)        (3.7)         3.3 
in trade and other 
payables 
Cash generated from                84.2        140.4       267.1 
operations 
Interest received      5            1.6          2.4         6.6 
Taxation paid                     (0.3)        (0.5)       (0.8) 
Net cash generated                 85.5        142.3       272.9 
from operating 
activities 
 
Cash flows from 
investing activities 
Purchase of                      (13.7)       (12.2)      (26.5) 
intangible assets 
Purchase of property,            (49.7)       (58.1)     (123.8) 
plant and equipment 
Movement in                       (0.1)            -         7.0 
restricted cash 
Net cash used in                 (63.5)       (70.3)     (143.3) 
investing activities 
 
Cash flows from 
financing activities 
Dividends paid to                (41.3)       (29.0)      (29.0) 
company's 
shareholders, 
including expenses 
Purchase of shares                (0.7)        (8.2)       (8.2) 
for employee share 
trust 
Purchase of treasury                  -        (0.5)       (5.3) 
shares 
Lease payments                    (0.5)        (0.3)       (0.6) 
Interest paid                    (15.0)       (15.0)      (30.0) 
Net cash used in                 (57.5)       (53.0)      (73.1) 
financing activities 
 
Net (decrease) /                 (35.5)         19.0        56.5 
increase in cash and 
cash equivalents 
Foreign exchange gain               0.1            -       (0.1) 
/ (loss) on cash and 
cash equivalents 
Cash and cash                     390.7        334.3       334.3 
equivalents at 1 
January 
Cash and cash                     355.3        353.3       390.7 
equivalents at 31 
December 
 
         Notes to the condensed consolidated financial statements 
 
         1. Basis of preparation 
 
    Genel Energy Plc - registration number: 107897 (the Company) is a public 
  limited company incorporated and domiciled in Jersey with a listing on the 
    London Stock Exchange. The address of its registered office is 12 Castle 
         Street, St Helier, Jersey, JE2 3RT. 
 
The half-year condensed consolidated financial statements for the six months 
 ended 30 June 2020 and six months ended 30 June 2019 are unaudited and have 
   been prepared in accordance with the Disclosure and Transparency Rules of 
         the Financial Conduct Authority and with IAS 34 'Interim Financial 
Reporting' as adopted by the European Union and were approved for issue on 6 
  August 2020. They do not comprise statutory accounts within the meaning of 
     Article 105 of the Companies (Jersey) Law 1991. The half-year condensed 
    consolidated financial statements should be read in conjunction with the 
 annual financial statements for the year ended 31 December 2019, which have 
 been prepared in accordance with IFRS as adopted by the European Union. The 
      annual financial statements for the period ended 31 December 2019 were 
      approved by the board of directors on 18 March 2020. The report of the 
   auditors was unqualified, did not contain an emphasis of matter paragraph 
and did not contain any statement under the Companies (Jersey) Law 1991. The 
   financial information for the year to 31 December 2019 has been extracted 
         from the audited accounts. 
 
 There have been no changes in related parties since year-end and no related 
      party transactions that had a material effect on financial position or 
   performance in the period. There are not significant seasonal or cyclical 
         variations in the Company's total revenues. 
 
Going concern 
 
 The Company regularly evaluates its financial position, cash flow forecasts 
         and its compliance with financial covenants by considering multiple 
     combination of oil price, discount rates, production volumes, payments, 
    capital and operational spend scenarios. As a result, the Directors have 
   assessed that the Company's forecast liquidity provides adequate headroom 
over its forecast expenditure for the 12 months from the date of signing the 
  half-year condensed consolidated financial statements for the period ended 
        30 June 2020 and consequently that the Company is considered a going 
         concern. 
 
         2. Summary of significant accounting policies 
 
 The accounting policies adopted in preparation of these half-year condensed 
         consolidated financial statements are consistent with those used in 
        preparation of the annual financial statements for the year ended 31 
         December 2019. 
 
         The preparation of these half-year condensed consolidated financial 
  statements in accordance with IFRS requires the Company to make judgements 
   and assumptions that affect the reported results, assets and liabilities. 
    Where judgements and estimates are made, there is a risk that the actual 
   outcome could differ from the judgement or estimate made. The Company has 
        assessed the following as being areas where changes in judgements or 
      estimates could have a significant impact on the financial statements. 
 
         Significant judgements 
 
     Apart from those involving estimations (which are dealt with separately 
 below), there are no significant judgements that the directors have made in 
  the process of applying the Company's accounting policies and that has the 
         most significant effect on the amounts recognised in the financial 
         statements. 
 
         Significant estimates 
 
 The following are the significant estimates that the directors have made in 
  the process of applying the Company's accounting policies and that has the 
         most significant effect on the amounts recognised in the financial 
         statements. 
 
  Estimation of hydrocarbon reserves and resources and associated production 
         profiles and costs 
 
Estimates of hydrocarbon reserves and resources are inherently imprecise and 
  are subject to future revision. The Company's estimation of the quantum of 
   oil and gas reserves and resources and the timing of its production, cost 
   and monetisation impact the Company's financial statements in a number of 
 ways, including: testing recoverable values for impairment; the calculation 
   of depreciation, amortisation and assessing the cost and likely timing of 
 decommissioning activity and associated costs. This estimation also impacts 
         the assessment of going concern and the viability statement. 
 
    Proven and probable reserves are estimates of the amount of hydrocarbons 
   that can be economically extracted from the Company's assets. The Company 
     estimates its reserves using standard recognised evaluation techniques. 
 Assets assessed as proven and probable reserves are generally classified as 
        property, plant and equipment as development or producing assets and 
depreciated using the units of production methodology. The Company considers 
 its best estimate for future production and quantity of oil within an asset 
based on a combination of internal and external evaluations and uses this as 
the basis of calculating depreciation and amortisation of oil and gas assets 
         and testing for impairment. 
 
         Hydrocarbons that are not assessed as reserves are considered to be 
    resources and are classified as exploration and evaluation assets. These 
assets are expenditures incurred before technical feasibility and commercial 
        viability is demonstrable. Estimates of resources for undeveloped or 
    partially developed fields are subject to greater uncertainty over their 
    future life than estimates of reserves for fields that are substantially 
        developed and being depleted and are likely to contain estimates and 
  judgements with a wide range of possibilities. These assets are considered 
         for impairment under IFRS 6. 
 
    Once a field commences production, the amount of proved reserves will be 
    subject to future revision once additional information becomes available 
through, for example, the drilling of additional wells or the observation of 
 long-term reservoir performance under producing conditions. As those fields 
         are further developed, new information may lead to revisions. 
 
  Assessment of reserves and resources are determined using estimates of oil 
  and gas in place, recovery factors and future commodity prices, the latter 
         having an impact on the total amount of recoverable reserves. 
 
         Change in accounting estimate 
 
         The Company has updated its estimated production profiles with the 
    accounting impact summarised below under estimation of oil and gas asset 
         values. 
 
Estimation of oil and gas asset values 
 

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Estimation of the asset value of oil and gas assets is calculated from a 
number of inputs that require varying degrees of estimation. Principally oil 
    and gas assets are valued by estimating the future cash flows based on a 
  combination of reserves and resources, costs of appraisal, development and 
 production, production profile and future sales price and discounting those 
         cash flows at an appropriate discount rate. 
 
  Future costs of appraisal, development and production are estimated taking 
into account the level of development required to produce those reserves and 
     are based on past costs, experience and data from similar assets in the 
   region, future petroleum prices and the planned development of the asset. 
         However, actual costs may be different from those estimated. 
 
   Discount rate is assessed by the Company using various inputs from market 
       data, external advisers and internal calculations. A post tax nominal 
    discount rate of 13% derived from the Company's weighted average cost of 
         capital (WACC) is used when assessing the impairment testing of the 
   Company's oil assets at year-end. Risking factors are also used alongside 
   the discount rate when the Company is assessing exploration and appraisal 
         assets. 
 
     In addition, estimation of the recoverable amounts of the Bina Bawi and 
   Miran CGUs, which are classified under IFRS as exploration and evaluation 
 intangible assets and consequently carry the inherent uncertainty explained 
 above, include the key assessment that the projects will progress, which is 
    outside of the control of management and is dependent on the progress of 
         government discussions regarding supply of gas and sanctioning of 
  development of both of the midstream for gas and the upstream for oil. The 
   KRG and the Company have been focusing on progressing the Bina Bawi asset 
        first, with success on Bina Bawi likely to inform both of the likely 
 structure, midstream and downstream solution for Miran. Lack of progress on 
       Bina Bawi could result in significant delays in value realisation and 
      consequently a materially lower asset value for both assets. Under the 
     existing PSCs for both Bina Bawi and Miran, the KRG has a right (not an 
    obligation) effective from 30 April 2020 and 31 May 2020 respectively to 
  terminate the PSCs in the absence of new Gas Lifting Agreement(s) being in 
    place. Extensive documentation including a new draft PSC was received in 
         mid-April from the KRG and the Company has been informed that while 
        negotiations are ongoing with respect to these documents it will not 
         exercise the notice of an intention to terminate the Bina Bawi PSC. 
         Discussions are ongoing. 
 
     Change in accounting estimate - Discount rate for assessing recoverable 
         amount of producing assets 
 
   Following the significant change in the macro geo-political, economic and 
    industry environment, the Company has updated the discount rate used for 
      assessing the recoverable amount of its producing assets from 12.5% to 
13.0%. This has a negative impact on the recoverable amount of the Tawke CGU 
    and the Taq Taq CGU. The results of the assessments combining with other 
 factors are explained below. The Company disclosed the sensitivities on net 
         present values in note 9. 
 
   Change in accounting estimate - Tawke asset and Tawke RSA carrying value; 
         Taq Taq carrying value 
 
         As a result of lower oil prices and levels of investment than were 
forecasted when the financial statements for the year-ended 31 December 2019 
     were finalised, together with the higher discount rate explained above, 
 management has assessed that there are impairment indicators for both Tawke 
 and Taq Taq. Management has performed its impairment assessments, resulting 
     in an impairment of $210.4 million for the Tawke; $44.3 million for the 
         Tawke RSA; and $31.6 million for the Taq Taq asset respectively. 
 
         Estimation of future oil price and netback price 
 
  The estimation of future oil price has a significant impact throughout the 
        financial statements, primarily in relation to the estimation of the 
recoverable value of property, plant and equipment and intangible assets. It 
       is also relevant to the assessment of going concern and the viability 
         statement. 
 
 The Company's forecast of average Brent oil price for future years is based 
  on a range of publicly available market estimates and is summarised in the 
         table below, with the 2024 price then inflated at 2% per annum. 
 
            $/bbl 2020 2021 2022 2023 2024 
         Forecast  40   43   50   55   60 
Year-end forecast  65   67   68   72   73 
 
 The netback price is used to value the Company's revenue, trade receivables 
and its forecast cash flows used for impairment testing and viability. It is 
      the aggregation of realised oil price less transportation and handling 
 costs. The Company does not have direct visibility on the components of the 
netback price realised for its oil because sales are managed by the KRG, but 
 invoices are currently raised for payments on account using a netback price 
         agreed with the KRG. 
 
The trade receivable is recognised when the control of oil is transferred to 
   the customer at the metering point, as this is the time the consideration 
         becomes unconditional. The trade receivable reflects the Company's 
         entitlement based on the netback price and oil transferred. 
 
         Estimation of the recoverable value of trade receivables 
 
  At the end of March, in line with other International Oil Companies (IOCs) 
in Kurdistan, the KRG informed the Company that payments owed for sales made 
   in the four months from November 2019 to February 2020 would be deferred. 
        For Genel this amounted to $120.8 million. The initial communication 
received from the KRG indicated that once the oil price is around $50/bbl, a 
   mechanism will be put in place for repayment of amounts owed. The Company 
         has responded, with no agreement yet reached on timing or terms of 
         repayment. 
 
As a consequence of the deferred payments, the Company compared the carrying 
   value of trade receivables with the present value of the estimated future 
   cash flows mostly based on the KRG's initial communication, but it may be 
 the timing and terms of recovery may be different. Under IFRS9, the Company 
      has used a forward-looking impairment model based on lifetime expected 
     credit loss (ECL) assessment. The model calculates net present value of 
 outstanding receivables using the effective interest rate for the period in 
which the revenue was recognised, which was 13%. The expected credit loss is 
     the weighted average of these scenarios and is recognised in the income 
       statement. The result of the Company's assessment under IFRS is $34.9 
  million adjustment to the trade receivables. The Company provided detailed 
         disclosures required by IFRS 9 ECL assessment in note 10. 
 
         Recognition of revenue generated by the override, arising from the 
         Receivables Settlement Agreement (RSA) 
 
       Since 2017 when the RSA was signed, the Company has received override 
 revenue from Tawke sales. At the end of March, the KRG informed the Company 
       that this override income was suspended for a minimum of nine months. 
Because management does not have sufficient confidence in timing or value of 
    revenue to be received relating to the override, or to which barrels the 
         override now relates, it has assessed that the criteria for revenue 
 recognition under IFRS15, specifically on payment terms and collectability, 
 have not been met, and consequently no override revenue has been recognised 
      from 1 March 2020. The total amount of override revenue for the period 
   between 1 March 2020 to 30 June 2020 that has not been recognised is $9.6 
         million. 
 
New standards 
 
The following new accounting standards, amendments to existing standards and 
interpretations are effective on 1 January 2020. Amendments to References to 
  the Conceptual Framework in IFRS Standards, Amendments to IAS 1 and IAS 8: 
   Definition of Material, Amendments to IFRS 9, IAS 39 and IFRS17: Interest 
      Rate Benchmark Reform, Amendments to IFRS 3 Business Combinations. The 
         adoption of these standards and amendments has had no impact on the 
         Company's results or financial statement disclosures. 
 
The following new accounting standards, amendments to existing standards and 
 interpretations have been issued but are not yet effective and have not yet 
been endorsed by the EU: IFRS 17 Insurance contracts (effective 1 Jan 2023), 
 Amendments to IAS 1 Presentation of Financial Statements: Classification of 
    Liabilities as Current or Non-current (1 Jan 2022), Amendments to IFRS 3 
         Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 
         Provisions, Contingent Liabilities and Contingent Assets; Annual 
      Improvements 2018-2020 (1 Jan 2022), Amendment to IFRS 16 Leases Covid 
    19-Related Rent Concessions (1 Jun 2020), Amendments to IFRS 4 Insurance 
         Contracts - deferral of IFRS19 (1 Jan 2021). 
 
3. Segmental information 
************************ 
 
         The Company has two reportable business segments: Production and 
 Pre-production. Capital allocation decisions for the production segment are 
considered in the context of the cash flows expected from the production and 
     sale of crude oil. The production segment is comprised of the producing 
fields on the Tawke PSC (Tawke and Peshkabir) and the Taq Taq PSC (Taq Taq), 
   which are located in the KRI and make sales predominantly to the KRG. The 
   pre-production segment is comprised of discovered resource held under the 
   Sarta PSC, the Qara Dagh PSC, the Bina Bawi PSC and the Miran PSC (all in 

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DJ Genel Energy PLC: Half-Year Results -8-

the KRI) and exploration activity, principally located in Somaliland and 
         Morocco. 'Other' includes corporate assets, liabilities and costs, 
elimination of intercompany receivables and intercompany payables, which are 
         non-segment items. 
 
For the 6-month period ended 30 June 2020 
 
                                  Pre-production           Total 
 
                       Production                  Other 
                               $m             $m      $m      $m 
Revenue from contracts       86.3              -       -    86.3 
with customers 
Revenue from other            2.1              -       -     2.1 
sources 
Cost of sales              (99.3)              -       -  (99.3) 
Gross loss                 (10.9)              -       -  (10.9) 
 
Exploration expense             -          (1.3)       -   (1.3) 
Impairment of              (44.3)              -       -  (44.3) 
intangible assets 
Impairment of             (242.0)              -       - (242.0) 
property, plant and 
equipment 
Impairment of trade        (34.9)              -       -  (34.9) 
receivables 
General and                     -              -   (6.6)   (6.6) 
administrative costs 
Operating loss            (332.1)          (1.3)   (6.6) (340.0) 
 
Operating loss is 
comprised of 
EBITDAX                      71.6              -   (6.5)    65.1 
Depreciation and           (82.5)              -   (0.1)  (82.6) 
amortisation 
Exploration expense             -          (1.3)       -   (1.3) 
Impairment of              (44.3)              -       -  (44.3) 
intangible assets 
Impairment of             (242.0)              -       - (242.0) 
property, plant and 
equipment 
Impairment of trade        (34.9)              -       -  (34.9) 
receivables 
 
Finance income                  -              -     1.6     1.6 
Bond interest expense           -              -  (15.0)  (15.0) 
Other finance expense       (0.9)          (0.1)   (0.3)   (1.3) 
Loss before income tax    (333.0)          (1.4)  (20.3) (354.7) 
 
Capital expenditure          35.7           22.8       -    58.5 
Total assets                617.9          618.6   327.7 1,564.2 
Total liabilities          (95.2)        (150.8) (312.5) (558.5) 
 
 Revenue from contracts with customers includes $14.7 million (30 June 2019: 
      $54.7 million, 31 December 2019: $104.3 million) arising from the 4.5% 
  royalty interest on gross Tawke PSC revenue ending at the end of July 2022 
        ("the ORRI"). As explained in note 2, no revenue has been recognised 
         regarding to the ORRI from March 2020. 
 
Total assets and liabilities in the other segment are predominantly cash and 
         debt balances. 
 
For the 6-month period ended 30 June 2019 
 
    The Company has updated its segmental reporting on the basis of internal 
reports that are regularly reviewed by the CEO, the chief operating decision 
         maker, in order to allocate resources to the segment and assess its 
         performance. 
 
                                  Pre-production           Total 
 
                       Production                  Other 
                               $m             $m      $m      $m 
Revenue from contracts      188.7              -       -   188.7 
with customers 
Revenue from other            5.6              -       -     5.6 
sources 
Cost of sales              (92.3)              -       -  (92.3) 
Gross profit                102.0              -       -   102.0 
 
Exploration expense             -          (0.6)       -   (0.6) 
General and                     -              -   (9.5)   (9.5) 
administrative costs 
Operating profit /          102.0          (0.6)   (9.5)    91.9 
(loss) 
 
Operating profit / 
(loss) is comprised of 
EBITDAX                     176.2              -   (8.9)   167.3 
Depreciation and           (74.2)              -   (0.6)  (74.8) 
amortisation 
Exploration expense             -          (0.6)       -   (0.6) 
 
Finance income                  -              -     2.4     2.4 
Bond interest expense           -              -  (15.0)  (15.0) 
Other finance expense       (1.0)          (0.1)   (1.8)   (2.9) 
Profit / (Loss) before      101.0          (0.7)  (23.9)    76.4 
income tax 
 
Capital expenditure          53.3           18.9       -    72.2 
Total assets              1,021.6          563.8   340.8 1,926.2 
Total liabilities          (97.0)        (150.1) (305.5) (552.6) 
 
Total assets and liabilities in the other segment are predominantly cash and 
debt balances. 
 
For the 12-month period ended 31 December 2019 
 
                                  Pre-production           Total 
 
                       Production                  Other 
                               $m             $m      $m      $m 
Revenue from contracts      368.7              -       -   368.7 
with customers 
Revenue from other            8.5              -       -     8.5 
sources 
Cost of sales             (194.8)              -       - (194.8) 
Gross profit                182.4              -       -   182.4 
 
Exploration expense             -          (1.2)       -   (1.2) 
Impairment of              (29.8)              -       -  (29.8) 
property, plant and 
equipment 
General and                     -              -  (19.1)  (19.1) 
administrative costs 
Operating profit /          152.6          (1.2)  (19.1)   132.3 
(loss) 
 
Operating profit / 
(loss) is comprised of 
EBITDAX                     339.5              -  (17.7)   321.8 
Depreciation and          (157.1)              -   (1.4) (158.5) 
amortisation 
Exploration expense             -          (1.2)       -   (1.2) 
Impairment of              (29.8)              -       -  (29.8) 
property, plant and 
equipment 
 
Finance income                  -              -     6.6     6.6 
Bond interest expense           -              -  (30.0)  (30.0) 
Other finance expense       (1.8)          (0.3)   (2.2)   (4.3) 
Profit / (Loss) before      150.8          (1.5)  (44.7)   104.6 
income tax 
 
Capital expenditure         115.1           43.0       -   158.1 
Total assets                998.1          595.2   370.3 1,963.6 
Total liabilities          (99.4)        (149.9) (328.2) (577.5) 
 
Total assets and liabilities in the other segment are predominantly cash and 
         debt balances. 
 
4. Operating costs 
 
                    6 months to 30   6 months to      Year to 31 
                              June  30 June 2019   December 2019 
 
                              2020 
                                $m            $m              $m 
   Production costs         (16.8)        (18.1)          (37.7) 
Depreciation of oil         (51.6)        (39.7)          (88.8) 
  and gas property, 
plant and equipment 
Amortisation of oil         (30.9)        (34.5)          (68.3) 
 and gas intangible 
             assets 
      Cost of sales         (99.3)        (92.3)         (194.8) 
 
Exploration expense          (1.3)         (0.6)           (1.2) 
      Impairment of         (44.3)             -               - 
  intangible assets 
           (note 8) 
      Impairment of        (242.0)             -          (29.8) 
property, plant and 
 equipment (note 9) 
Impairment of trade         (34.9)             -               - 
  receivables (note 
                10) 
 
     Corporate cash          (4.9)         (6.6)          (13.3) 
              costs 
    Other operating          (1.1)         (0.6)           (0.8) 
           expenses 
          Corporate          (0.5)         (1.7)           (3.6) 
share-based payment 
            expense 
   Depreciation and          (0.1)         (0.6)           (1.4) 
    amortisation of 
   corporate assets 
        General and          (6.6)         (9.5)          (19.1) 
     administrative 
           expenses 
 
  Exploration expense relates to spend and accruals for costs or obligations 
  relating to licences where there is ongoing activity or that have been, or 
         are in the process of being, relinquished. 
 
5. Finance expense and Finance income 
 
                  6 months to 30  6 months to 30      Year to 31 
                            June       June 2019   December 2019 
 
                            2020 
                              $m              $m              $m 
   Bond interest          (15.0)          (15.0)          (30.0) 
         payable 
   Other finance           (1.3)           (2.9)           (4.3) 
         expense 
 Finance expense          (16.3)          (17.9)          (34.3) 
 
   Bank interest             1.6             2.4             6.6 
          income 
  Finance income             1.6             2.4             6.6 
 
     Net finance          (14.7)          (15.5)          (27.7) 
         expense 
 
 Bond interest payable is the cash interest cost of Company bond debt. Other 
finance expense primarily relates to the discount unwind on the bond and the 
         asset retirement obligation provision. 
 
6. Income tax expense 
********************* 
 
        Current tax expense is incurred on the profits of the Turkish and UK 
  services companies. Under the terms of KRI PSC's, corporate income tax due 
     is paid on behalf of the Company by the KRG from the KRG's own share of 
 revenues, resulting in no corporate income tax payment required or expected 
 to be made by the Company. It is not known at what rate tax is paid, but it 
is estimated that the current tax rate would be between 15% and 40%. If this 
 was known it may result in a gross up of revenue with a corresponding debit 
  entry to taxation expense with no net impact on the income statement or on 
 cash. In addition, it would be necessary to assess whether any deferred tax 
         asset or liability was required to be recognised. 
 
7. Earnings per share 
********************* 
 
         Basic 
 
  Basic earnings per share is calculated by dividing the profit attributable 
to equity holders of the Company by the weighted average number of shares in 
         issue during the period. 
 
                    6 months to 30   6 months to      Year to 31 

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DJ Genel Energy PLC: Half-Year Results -9-

June  30 June 2019   December 2019 
 
                              2020 
 
(Loss) / Profit            (354.7)          76.0           103.9 
attributable to 
equity holders of 
the Company ($m) 
 
Weighted average       275,197,007   279,435,346     275,197,007 
number of 
ordinary shares - 
number 1 
Basic (loss) /             (128.9)          27.2            37.8 
earnings per 
share - cents per 
share 
 
1 Excluding shares held as treasury shares 
 
         Diluted 
 
         The Company purchases shares in the market to satisfy share plan 
      requirements so diluted earnings per share is adjusted for performance 
 shares, restricted shares and share options not included in the calculation 
    of basic earnings per share. Because the Company reported a loss for the 
         6-month period ended 30 June 2020, diluted EPS is anti-dilutive and 
         therefore diluted EPS is the same as basic EPS: 
 
                     6 months to 30   6 months to    Year to 31 
                               June  30 June 2019 December 2019 
 
                               2020 
 
(Loss) / Profit             (354.7)          76.0         103.9 
attributable to 
equity holders of 
the Company ($m) 
 
Weighted average        275,197,007   279,435,346   275,197,007 
number of ordinary 
shares - number1 
Adjustment for                    -       812,852     2,577,720 
treasury shares 
Weighted average        275,197,007   280,248,198   277,774,727 
number of ordinary 
shares and 
potential ordinary 
shares 
Diluted (loss) /            (128.9)          27.1          37.4 
earnings per share 
- cents per share 
 
1 Excluding shares held as treasury shares 
 
8. Intangible assets 
******************** 
 
                        Exploration and   Tawke  Other    Total 
                      evaluation assets 
 
                                            RSA assets 
                Cost                 $m      $m     $m       $m 
   At 1 January 2019            1,493.2   425.1    6.8  1,925.1 
           Additions                7.6       -    0.4      8.0 
  Discount unwind of                4.3       -      -      4.3 
          contingent 
       consideration 
     At 30 June 2019            1,505.1   425.1    7.2  1,937.4 
 
   At 1 January 2019            1,493.2   425.1    6.8  1,925.1 
           Additions               20.9       -    0.5     21.4 
  Discount unwind of                5.2       -      -      5.2 
          contingent 
       consideration 
               Other              (0.8)       -      -    (0.8) 
 At 31 December 2019            1,518.5   425.1    7.3  1,950.9 
  and 1 January 2020 
 
           Additions               11.3       -    0.1     11.4 
  Discount unwind of                4.7       -      -      4.7 
          contingent 
       consideration 
               Other              (0.3)       -      -    (0.3) 
     At 30 June 2020            1,534.2   425.1    7.4  1,966.7 
 
         Accumulated 
    amortisation and 
          impairment 
   At 1 January 2019          (1,005.3)  (94.9)  (6.5) (1,106.7 
                                                              ) 
 Amortisation charge                  -  (34.5)  (0.1)   (34.6) 
      for the period 
     At 30 June 2019          (1,005.3) (129.4)  (6.6) (1,141.3 
                                                              ) 
 
   At 1 January 2019          (1,005.3)  (94.9)  (6.5) (1,106.7 
                                                              ) 
 Amortisation charge                  -  (68.3)  (0.3)   (68.6) 
      for the period 
 At 31 December 2019          (1,005.3) (163.2)  (6.8) (1,175.3 
  and 1 January 2020                                          ) 
 
 Amortisation charge                  -  (30.9)  (0.2)   (31.1) 
      for the period 
          Impairment                  -  (44.3)      -   (44.3) 
     At 30 June 2020          (1,005.3) (238.4)  (7.0) (1,250.7 
                                                              ) 
 
      Net book value 
     At 30 June 2019              499.8   295.7    0.6    796.1 
 At 31 December 2019              513.2   261.9    0.5    775.6 
     At 30 June 2020              528.9   186.7    0.4    716.0 
 
       Tawke RSA asset was impaired by $44.3 million, further explanation is 
         provided in note 2. 
 
                                                30     30 31 Dec 
                                              June   June   2019 
                                              2020   2019 
Book value                                      $m     $m     $m 
Bina Bawi PSC         Discovered gas and     362.5  347.4  352.9 
                      oil, appraisal 
Miran PSC             Discovered gas and     121.6  117.9  120.3 
                      oil, appraisal 
Somaliland PSC        Exploration             34.1   33.4   33.8 
Qara Dagh PSC         Exploration /           10.7    1.1    6.2 
                      Appraisal 
Exploration and                              528.9  499.8  513.2 
evaluation assets 
 
Tawke overriding                              90.9  188.5  160.2 
royalty 
Tawke capacity building payment waiver        95.8  107.2  101.7 
Tawke RSA assets                             186.7  295.7  261.9 
 
   The table below shows the indicative sensitivity of the Bina Bawi CGU net 
present value to changes to long term Brent, discount rate or production and 
         reserves, assuming no change to other inputs. 
 
                                         $m 
 
Long term Brent +/- $5/bbl           +/- 13 
Discount rate +/-2.5%               +/- 101 
Production and reserves +/- 10%      +/- 32 
 
9. Property, plant and equipment 
 
                      Producing     Development  Other 
                         assets          assets 
 
                                                assets     Total 
             Cost            $m              $m     $m        $m 
At 1 January 2019       2,757.2               -    9.6   2,766.8 
            Asset             -            49.4      -      49.4 
     acquisitions 
        Additions          53.3            11.3      -      64.6 
     Right-of-use             -               -    1.9       1.9 
           assets 
    Net change in             -           (1.9)      -     (1.9) 
          payable 
         Non-cash           1.6               -      -       1.6 
    additions for 
  ARO/share-based 
         payments 
  At 30 June 2019       2,812.1            58.8   11.5   2,882.4 
 
At 1 January 2019       2,757.2               -    9.6   2,766.8 
            Asset             -            49.4      -      49.4 
     acquisitions 
        Additions         115.1            22.1    0.3     137.5 
     Right-of-use             -               -    3.6       3.6 
           assets 
    Net change in             -           (3.6)      -     (3.6) 
          payable 
         Non-cash           3.8             0.1      -       3.9 
    additions for 
  ARO/share-based 
         payments 
   At 31 December       2,876.1            68.0   13.5   2,957.6 
       2019 and 1 
     January 2020 
 
        Additions          35.7            11.5    1.0      48.2 
     Right-of-use             -               -    1.0       1.0 
           assets 
    Net change in             -           (1.8)      -     (1.8) 
          payable 
         Non-cash           1.2             0.3      -       1.5 
    additions for 
  ARO/share-based 
         payments 
  At 30 June 2020       2,913.0            78.0   15.5   3,006.5 
 
      Accumulated 
 depreciation and 
       impairment 
At 1 January 2019     (2,192.1)               -  (8.9) (2,201.0) 
     Depreciation        (39.7)               -  (0.5)    (40.2) 
   charge for the 
           period 
  At 30 June 2019     (2,231.8)               -  (9.4) (2,241.2) 
 
At 1 January 2019     (2,192.1)               -  (8.9) (2,201.0) 
     Depreciation        (88.8)               -  (1.1)    (89.9) 
   charge for the 
           period 
       Impairment        (29.8)               -      -    (29.8) 
   At 31 December     (2,310.7)               - (10.0) (2,320.7) 
       2019 and 1 
     January 2020 
 
     Depreciation        (51.6)               -  (0.7)    (52.3) 
   charge for the 
           period 
       Impairment       (242.0)               -      -   (242.0) 
  At 30 June 2020     (2,604.3)               - (10.7) (2,615.0) 
 
   Net book value 
  At 30 June 2019         580.3            58.8    2.1     641.2 
   At 31 December         565.4            68.0    3.5     636.9 
             2019 
  At 30 June 2020         308.7            78.0    4.8     391.5 
 
                                  30 June 2020  30 June   31 Dec 
                                                   2019     2019 
Book value                                  $m       $m       $m 
Tawke PSC    Oil                         247.0    488.5    474.9 
             production 
Taq Taq PSC  Oil                          61.7     91.8     90.5 
             production 
Producing                                308.7    580.3    565.4 
assets 
 
Sarta PSC    Oil                          78.0     58.8     68.0 
             development 
 
The sensitivities below provide an indicative impact on net asset value of a 
        change in long term Brent, discount rate or production and reserves, 
         assuming no change to any other inputs. 
 
                                Taq Taq CGU Tawke CGU $m 
 
                                         $m 
     Long term Brent +/- $5/bbl       +/- 2       +/- 16 
         Discount rate +/- 2.5%       +/- 3       +/- 37 
Production and reserves +/- 10%       +/- 4       +/- 39 
 
10. Trade and other receivables 
 
                                  30 June 30 June 2019 31 Dec 
                                                    $m 
 
                                     2020                2019 
                                       $m                  $m 
                Trade receivables    90.2        116.6  150.2 
Other receivables and prepayments     8.1          9.0    7.2 

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DJ Genel Energy PLC: Half-Year Results -10-

98.3        125.6  157.4 
 
  At 30 June 2020, $120.8 million relating to invoices from November 2019 to 
   February 2020 was overdue and has required impairment of $34.9 million as 
         explained in note 2. Under the Tawke and Taq Taq PSCs, payment for 
         entitlement is due within 30 days. 
 
        Since February 2016, there has been a track record of payments being 
    received three months after invoicing., but since April 2020 the KRG has 
   been settling invoices within one month of invoicing, with $8.3m owed but 
         not due at period end. 
 
                                    Year of sale of 
                                    amounts overdue 
                      Not due          2020          2019  Total 
                           $m            $m            $m     $m 
 Trade receivables at     8.3          37.6          44.3   90.2 
         30 June 2020 
 Trade receivables at    97.7           n/a          18.9  116.6 
         30 June 2019 
 Trade receivables at    96.1           n/a          54.1  150.2 
     31 December 2019 
 
Movement on trade receivables in    30 June 30 June 2019  31 Dec 
the period                                            $m 
 
                                       2020                 2019 
                                         $m                   $m 
Carrying value at 1 January           150.2         94.8    94.8 
Revenue from contracts with            86.3        188.7   368.7 
customers 
Cash proceeds                       (110.0)      (167.5) (317.4) 
Offset of payables due to the KRG     (3.2)            -       - 
Loss allowance                       (34.9)            -   (0.5) 
Capacity building payments              1.8          0.6     4.6 
Carrying value at 31 December          90.2        116.6   150.2 
 
Recovery of the carrying value of the receivable 
 
     The Company expects to recover the full nominal value of $120.8 million 
     receivables owed from the KRG, but the terms of recovery are not known. 
   Explanation of the assumptions and estimates in assessing the net present 
         value of the deferred receivables are provided in note 2. 
 
                                                Total 
 
                                                   $m 
Nominal balance to be recovered                 120.8 
Estimated net present value of total cash flows  85.9 
 
         Sensitivities 
 
       The table below shows the sensitivity of the net present value of the 
 overdue trade receivables to changes to the date on which the KRG commences 
         repayment and the period of time over which repayment is made. 
 
     NPV13.0 of overdue           Timing of repayment start 
      receivables ($m) 
                Immediate     1 Jan    1 Jan    1 Jan 
                               2021     2022     2023 
 Period for   Bullet payment  120.8    113.6    100.5     89.0 
  repayment 
 
              12-months       114.3    107.5     95.1     84.2 
              24-months       107.7    101.3     89.7     79.3 
              36-months       101.6     95.6     84.6     74.9 
 
11. Borrowings and net cash 
 
        1 Jan 2020    Discount Dividend paid    Net 30 June 2020 
                        unwind               change 
                                                 in 
                                               cash 
                $m          $m            $m     $m           $m 
2022       (297.9)       (0.2)             -      -      (298.1) 
Bond 
10.0% 
Cash         390.7           -        (41.3)    5.9        355.3 
Net           92.8       (0.2)        (41.3)    5.9         57.2 
Cash 
 
The fair value of the bonds is $298.5 million (30 June 2019: $315.8 million, 
         31 December 2019: $316.5 million). 
 
        1 Jan 2019    Discount     Dividend     Net     30 June 
                        unwind         paid  change        2019 
                                            in cash 
                $m          $m           $m      $m          $m 
2022       (297.3)       (0.2)            -       -     (297.5) 
Bond 
10.0% 
Cash         334.3           -       (27.4)    46.4       353.3 
Net           37.0       (0.2)       (27.4)    46.4        55.8 
Cash 
 
        1 Jan 2019    Discount Dividend paid     Net 31 Dec 2019 
                        unwind                change 
                                             in cash 
                $m          $m            $m      $m          $m 
2022       (297.3)       (0.6)             -       -     (297.9) 
Bond 
10.0% 
Cash         334.3           -        (27.4)    83.8       390.7 
Net           37.0       (0.6)        (27.4)    83.8        92.8 
Cash 
 
         12. Capital commitments 
 
   Under the terms of its PSCs and JOAs, the Company has certain commitments 
     that are generally defined by activity rather than spend. The Company's 
      capital programme for the next few years is explained in the operating 
      review and is in excess of the activity required by its PSCs and JOAs. 
 
         13. Premium listing 
 
In view of the fact that a premium listing is unlikely in the near-term, and 
in order to facilitate the creation of shareholder value through the ability 
   to make rapid capital allocation decisions, the Company believes it is an 
appropriate time to step back from its previous decision to act as a premium 
 listed company. This change will take effect after a transitional period of 
    three months from the date of this announcement, after which the Company 
        will no longer act as if it were premium listed and UK incorporated. 
 
    From that date, the Company will act in accordance with the requirements 
  applicable to a standard listed company. The principal impact will be that 
       the Company will no longer apply Chapter 10 of the Listing Rules with 
respect to classifying transactions (such as acquisitions and disposals) and 
         so will have the benefit of being able to execute transactions more 
       efficiently and competitively, a significant advantage in the current 
   environment. Restrictions in Chapter 9 of the Listing Rules, including in 
 relation to the terms of new equity issuances and Chapter 11 of the Listing 
Rules relating to related party transactions will also not be applied by the 
  Company. Notwithstanding the change, the Company continues to be committed 
  to a high standard of corporate governance, and will continue to comply in 
        full with the UK Corporate Governance Code and with the Remuneration 
        Regulations, so shareholders will still have a vote on remuneration. 
 
Independent review report to Genel Energy plc 
 
Report on the half-year condensed consolidated financial statements 
 
Our conclusion 
 
        We have reviewed Genel Energy plc's half-year condensed consolidated 
  financial statements (the "interim financial statements") in the half-year 
results of Genel Energy plc for the 6 month period ended 30 June 2020. Based 
  on our review, nothing has come to our attention that causes us to believe 
     that the interim financial statements are not prepared, in all material 
 respects, in accordance with International Accounting Standard 34, 'Interim 
   Financial Reporting', as adopted by the European Union and the Disclosure 
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial 
         Conduct Authority. 
 
What we have reviewed 
 
         The interim financial statements comprise: 
 
· the condensed consolidated balance sheet as at 30 June 2020; 
 
· the condensed consolidated statement of comprehensive income for the 
period then ended; 
 
· the condensed consolidated cash flow statement for the period then 
ended; 
 
· the condensed consolidated statement of changes in equity for the period 
then ended; and 
 
· the notes to the interim financial statements. 
 
The interim financial statements included in the half-year results have been 
  prepared in accordance with International Accounting Standard 34, 'Interim 
   Financial Reporting', as adopted by the European Union and the Disclosure 
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial 
         Conduct Authority. 
 
   As disclosed in note 1 to the interim financial statements, the financial 
    reporting framework that has been applied in the preparation of the full 
annual financial statements of the Group is applicable law and International 
     Financial Reporting Standards (IFRSs) as adopted by the European Union. 
 
Responsibilities for the interim financial statements and the review 
******************************************************************** 
 
Our responsibilities and those of the directors 
 
   The half-year results, including the interim financial statements, is the 
   responsibility of, and has been approved by, the directors. The directors 
  are responsible for preparing the half-year results in accordance with the 
         Disclosure Guidance and Transparency Rules sourcebook of the United 
         Kingdom's Financial Conduct Authority. 
 
      Our responsibility is to express a conclusion on the interim financial 
       statements in the half-year results based on our review. This report, 
including the conclusion, has been prepared for and only for the company for 
the purpose of complying with the Disclosure Guidance and Transparency Rules 
   sourcebook of the United Kingdom's Financial Conduct Authority and for no 
       other purpose. We do not, in giving this conclusion, accept or assume 
    responsibility for any other purpose or to any other person to whom this 
 report is shown or into whose hands it may come save where expressly agreed 
         by our prior consent in writing. 
 
What a review of interim financial statements involves 
 
 We conducted our review in accordance with International Standard on Review 
 Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information 
  Performed by the Independent Auditor of the Entity' issued by the Auditing 

(MORE TO FOLLOW) Dow Jones Newswires

August 06, 2020 02:00 ET (06:00 GMT)

Practices Board for use in the United Kingdom. A review of interim financial 
  information consists of making enquiries, primarily of persons responsible 
     for financial and accounting matters, and applying analytical and other 
         review procedures. 
 
         A review is substantially less in scope than an audit conducted in 
 accordance with International Standards on Auditing (UK) and, consequently, 
    does not enable us to obtain assurance that we would become aware of all 
significant matters that might be identified in an audit. Accordingly, we do 
         not express an audit opinion. 
 
   We have read the other information contained in the half-year results and 
       considered whether it contains any apparent misstatements or material 
   inconsistencies with the information in the interim financial statements. 
 
         PricewaterhouseCoopers LLP 
 
         Chartered Accountants 
 
         London 
 
         5 August 2020 
 
ISIN:          JE00B55Q3P39 
Category Code: IR 
TIDM:          GENL 
LEI Code:      549300IVCJDWC3LR8F94 
Sequence No.:  80269 
EQS News ID:   1111243 
 
End of Announcement EQS News Service 
 
 
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(END) Dow Jones Newswires

August 06, 2020 02:00 ET (06:00 GMT)

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