Genel Energy Half-Year Report

Shares in Genel Energy rose slightly on Tuesday after the company announced its unaudited results for the six months ended 30 June 2017:


  • Tawke and Taq Taq generated cash proceeds of $139 million in H1 2017, leading to free cash flow of $78 million in the period
  • Successful bond repurchase in April 2017, with $253 million of nominal bonds acquired at a 14% discount to par. Annual interest charge reduced from $51 million to $32 million
  • Unrestricted cash balances at 30 June 2017 of $246 million (31 December 2016: $407 million). IFRS net debt at the end of the period was $158 million, a 34% reduction on the end 2016 figure of $241 million 
  • Net working interest production averaged 37,100 bopd in H1 2017. Tawke field gross production is currently averaging c.109,000 bopd, with a further c.4,500 bopd gross added from the Peshkabir-2 production testing
  • Successful production test of Cretaceous horizons in the Peshkabir-2 well on the Tawke PSC. The well's Cretaceous Shiranish interval was placed on long-term test in late May, with the well producing consistently around 4,500 bopd to date and production trucked to Fishkhabur prior to export by the KRG through the KRI-Turkey pipeline
  • Onshore Somaliland, the acquisition of 2D seismic data commenced in March 2017, with over 1,000 km obtained to date 


  • Negotiations with potential partners for the Kurdistan Region of Iraq ('KRI') gas project are ongoing, with the Company expecting to be in a position to update the market on these discussions by the end of 2017
  • The Company continues to work collaboratively with the KRG on a definitive mechanism to recover the receivable for unpaid oil sales
  • Peshkabir-3 well spudded on 8 July 2017 and is expected to take three months to drill. Peshkabir early production facility to be installed by year-end 2017
  • 2017 guidance:
    • Capex:
      • Tawke and Taq Taq net to Genel $60-75 million (from $50-75 million)
      • KRI gas business capex of $10-15 million
      • Somaliland 2D seismic capex budget expected at c.$15 million (from $10-15 million)
    • Opex: $30-35 million (unchanged)
    • G&A: income statement $20-25 million (from $30 million) and cash cost $15-20 million (from $20 million)

Murat Özgül (pictured), Chief Executive of Genel, said:

"I am pleased to report a strong financial performance in the first half of 2017. Regular payments from the KRG, the conversion of part of the booked receivable into cash, and our ongoing focus on costs, has allowed us to generate significant free cash flow. This in turn gave us the confidence to increase investment at Tawke and undertake a large scale bond repurchase, with net debt reducing by around a third since the end of 2016.

Negotiations with potential upstream partners for the gas business continue, and we expect to give an update on these in the second half of 2017 in line with our previously stated timetable. We are also encouraged by the preliminary results of the Peshkabir-2 testing programme, and look forward to drilling the Peshkabir-3 well."

(Source: Genel Energy)

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