DJ Genel Energy PLC: Half-Year Results
Genel Energy PLC (GENL)
Genel Energy PLC: Half-Year Results
03-Aug-2021 / 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.
=----------------------------------------------------------------------------------------------------------------------
3 August 2021
Genel Energy plc
Unaudited results for the period ended 30 June 2021
Genel Energy plc ('Genel' or 'the Company') announces its unaudited results for the six months ended 30 June 2021.
Bill Higgs, Chief Executive of Genel, said:
"Genel continues to deliver on its strategy and demonstrate the merits of its business model. Capital investment made
last year, despite the low oil price and over USD150 million of deferred payments, has meant this period has benefitted
from the addition of oil from Sarta and increased production from Peshkabir, with production having increased in line
with guidance. This high-margin production will generate sufficient cash flow in 2021 to more than cover investment in
growth and the increased dividend, and we are set to end the year in a net cash position.
Our appraisal campaign at our exciting growth assets Sarta and Qara Dagh is now well underway, and we look forward to
the results of three of these high-potential wells later this year. Given the cash generation of the business, our
strong balance sheet, and the resilience of our business model, we are fulfilling our aim of paying a progressive
dividend by increasing the interim payment."
Results summary (USD million unless stated)
H1 2021 H1 2020 FY 2020
Average Brent oil price (USD/bbl) 65 40 42
Production (bopd, working interest) 32,760 32,100 31,980
Revenue 151.5 88.4 159.7
EBITDAX1 123.1 65.1 114.6
Depreciation and amortisation (81.8) (82.6) (153.7)
Exploration expense - (1.3) (2.2)
Impairment of oil and gas assets - (286.3) (286.3)
Impairment of receivables - (34.9) (36.9)
Operating profit / (loss) 41.3 (340.0) (364.5)
Cash flow from operating activities 91.1 85.5 129.4
Capital expenditure 58.2 58.5 109.7
Free cash flow2 22.2 6.5 (4.4)
Cash 266.4 355.3 354.5
Total debt 280.0 300.0 280.0
Net (debt) / cash3 (2.2) 57.2 6.2
Basic EPS (¢ per share) 9.3 (128.9) (152.0)
Dividends declared for the period (¢ per share) 6 5 15
1. EBITDAX is operating profit / (loss) adjusted for the add back of depreciation and amortisation, exploration
expense, impairment of property, plant and equipment, impairment of intangible assets and impairment of receivables 2. Free cash flow is reconciled on page 10 3. Reported cash less IFRS debt (page 11)
Highlights - Strong cash generation from low-cost oil production:
- Net production averaged 32,760 bopd in H1 2021, slightly above the average in the prior year and in line with
guidance (H1 2020: 32,100 bopd)
- Low production cost of USD3.7/bbl, oil price increase, and restart of the override helped deliver an overall
margin from our production assets of USD111 million
- Free cash flow for the period was USD22 million, despite the Kurdistan Regional Government ('KRG') changing its
payment schedule from one to two months in arrears, moving c.USD30 million that was due in H1 into July
- USD123 million of cash proceeds were received in H1 2021 (H1 2020: USD110 million) - Investing in growth:
- Our high-potential drilling campaign is well underway, with the QD-2 well at Qara Dagh having spud in April,
and the Sarta-5 well in June
- USD58 million of capital expenditure in H1 2021, with activity accelerating in H2 - Financial strength to underpin a material and progressive dividend:
- Cash of USD266 million, with net debt of USD2.2 million
- Due to the rise in the oil price boosting expected cash generation, and Management's confidence in Genel's
future prospects, interim dividend increased to 6¢ per share (H1 2020: 5¢ per share) - A socially responsible contributor to the global energy mix:
- Zero lost time injuries ('LTI') and zero tier one loss of primary containment ('LOPC') events at Genel and
TTOPCO operations. Now no LTIs since 2015, with over 14 million work hours since the last incident, and no
LOPCs since 2017
- Second GRI compliant Sustainability Report issued today
Outlook - Production guidance for 2021 of slightly above the 2020 average of 31,980 bopd maintained - 2021 capital expenditure guidance maintained at USD150 million to USD200 million, with the expectation that expenditure
will now be around the middle of this range, following delays in approvals from the KRG and ongoing challenges
relating to COVID-19 causing some planned activity to move to Q1 2022 - High-impact appraisal results to come in 2021:
- Results from the QD-2 and Sarta-5 wells are expected around the end of Q3 2021
- The Sarta-1D well is set to spud in coming days
- Sarta-6 well is scheduled to get underway immediately following the completion of drilling at Sarta-5 - Genel expects to generate free cash flow in 2021 and end the year in a net cash position, despite material
investment in growth
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.
Genel is pleased to announce the appointment of Jefferies as Joint Corporate Broker to the Company, effective immediately. Jefferies will work alongside J.P. Morgan Cazenove, Genel's current Joint Corporate Broker.
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
We have a business model that is designed to be resilient in tough times, and to thrive when times are good. 2020 was a challenging year, but our resilience allowed us to continue strategic execution that paved the way for an exciting year in 2021. While the increase in the oil price has therefore been very welcome, boosting our revenues and cash generation, it does not change our strategy. This remains simple - increase low-cost production, invest in growth, and pay a material and progressive dividend. We continue to deliver on this strategy.
Executing our strategy
In line with guidance, our production has increased slightly year-on-year. This has been driven by the addition of a fourth producing field at Sarta, as we further strengthen our position as the most diversified producer in the Kurdistan Region of Iraq ('KRI'). Production at the Tawke PSC also remains robust, with Peshkabir in particular continuing to perform very well.
Our commitment to rigorously controlling our costs, coupled with the material recovery in the oil price, helped us to generate free cash flow of over USD20 million in the first half of 2021. Our low-cost production is highly cash-generative, providing the financial strength to then invest in exciting growth areas, as we seek to fulfil our goal of creating material shareholder value.
Our strong financial performance would have been stronger still without the KRG changing its payment schedule in May, which resulted in only five monthly payments being received. While this amendment, and the change to the receivable recovery payment method, is frustrating, it marks a deferral of payment rather than a removal, and we are in discussions with the KRG regarding the pace of Genel's receivable recovery payments. At present, the KRG sees the IOC debts as interest free, and we are working to determine if there is a more equitable solution. In May, the KRG committed to reviewing the payment mechanism, and we look forward to hearing from them in this regard.
We are also attempting to work with the KRG to drive forward the development of Bina Bawi. This remains a potentially valuable project to Genel, and of national significance to the KRI, where we want to develop our existing licence to the benefit of local and national stakeholders. The resources in place are such that its development is of strategic importance, and we continue to attempt to drive forward this project, and explore all avenues to create shareholder value.
Investing in growth
Sarta and Qara Dagh have the potential to create significant value and are priority projects for Genel. The strength of our balance sheet and confidence in consistent payments mean that we are able to invest significantly in these projects this year.
(MORE TO FOLLOW) Dow Jones Newswires
August 03, 2021 02:00 ET (06:00 GMT)
