Genel Energy Down 3% on Trading Update

REVENUE

  • Revenue for 2014 is expected to be towards the lower end of the $500-600 million guidance range, in line with consensus
  • In 2014, crude oil realisations averaged $73/bbl, an 11% increase on 2013
    • Pipeline export realisations from Taq Taq and Tawke are estimated at $77/bbl
    • Taq Taq domestic market sales (including Bazian refinery) realised $75/bbl, a 6% increase on 2013
    • Tawke domestic market sales realised $56/bbl, a 7%  decrease on 2013
  • 2015 revenue guidance is revised from $500-600 million at a Brent price of $80/bbl to $350-400 million at a Brent price of $50/bbl

EXPLORATION WRITE-OFF

  • Genel expects to record a non-cash exploration write-off of c.$480 million in its 2014 accounts in respect of drilling offshore Malta, Angola and Morocco during the year

CAPEX AND BALANCE SHEET

  • Capital expenditure in 2014 is estimated at c.$670 million, split broadly equally between the KRI and Africa. This excludes the c.$75 million acquisition component of the Angola farm-in
  • Cash balances at 31 December 2014 stood at c.$490 million, with net debt of c.$10 million
  • At 31 December, the net trade receivable with the Kurdistan Regional Government stood at c.$230 million. The KRG continues to reiterate its commitment to the terms of the Production Sharing Contracts signed with contractors. Genel remains confident that payments in respect of contractual entitlements will continue through 2015
  • In light of continued weakness in oil prices, capital expenditure guidance for 2015 is reduced from $300-350 million to $200-250 million, a year-on-year reduction of c.70%. Some 90% of the revised 2015 budget will be focused on work programmes to expand production at Taq Taq and Tawke, with the remainder on exploration and appraisal across the portfolio
  • The onshore nature of Genel's KRI asset base affords significant capex flexibility, with the ability to increase or decrease activity and investment at short notice
  • Headcount reductions and other efficiency measures are expected to reduce administrative expenses by 40% year on year in 2015

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