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By John Lee.

Genel Energy has issued its audited results for the year ended 31 December 2025.

Full statement from Genel Energy:

Audited results for the year ended 31 December 2025

Genel Energy plc ('Genel' or 'the Company') announces its audited results for the year ended 31 December 2025.

Paul Weir, Chief Executive of Genel, said:

"We have established an ever more resilient business with significant upside potential, and we are now well-placed to deliver value to our shareholders and build a business that generates resilient, diversified and predictable cash flows that will support the resumption of distributions to shareholders.

"In 2025 we made good progress on a range of fronts: our business continued to generate double digit USD millions of production business free cash flow, and we reported bottom line positive free cash flow to improve our net cash position, with excellent progress being made on reorganising the business. We successfully exited three unprofitable licences in Kurdistan and two in Africa, without incurring any new exit payments or retaining potential liability exposures. We also refinanced our bond, de-risking funding for delivery on future strategic priorities. We continue to maintain a strong focus on rigorous capital allocation.

"Since regional hostilities began two weeks ago, production has been temporarily halted from Tawke. A state of readiness has been maintained to allow a production restart as soon as it is safe to do so. At this moment, our guidance for 2026 remains unchanged from our January trading statement. Our key focus remains acquiring new assets to diversify our cash generation, and participating in exports from Kurdistan, whilst ensuring that we maintain the right balance between risk and reward. Operationally, our organic portfolio, where there remains significant unvalued potential, is well-positioned to deliver progress this year, with planned drilling at Tawke targeting additions to both production and reserves, a clear plan for de-risking Block 54 in Oman and tangible progress towards drilling the Toosan-1 well in Somaliland."

Results summary ($ million unless stated)

	2025	2024
Average Brent oil price ($/bbl)	69	81
Average realised price ($/bbl)	32	35
Production (bopd, working interest 'WI')	17,520	19,650
Revenue	68.7	74.7
Production costs	(21.0)	(17.6)
EBITDAX1	43.3	1.1
Operating loss	(10.3)	(52.4)
Cash flow from operations	36.3	66.9
Capital expenditure	29.2	25.7
Production business netback after interest	9.8	4.9
Free cash flow2	4.1	19.6
Cash	224.4	195.6
Total debt	92.0	65.8
Net cash3	133.7	130.7
Basic LPS from continuing operations (¢ per share)	(4.6)	(22.5)
Dividend (¢ per share)	-	-

1. EBITDAX is operating loss adjusted for the add back of depreciation and amortisation, exploration expense, net write-off/impairment of oil and gas assets, net ECL/reversal of ECL receivables and other non-cash items
2. Free cash flow is reconciled on page 8
3. Reported cash less IFRS debt is reconciled on page 8

Highlights

• Following the U.S.-Israeli air war on Iran that started on 28 February 2026, production and drilling operations on the Tawke licence were temporarily shut down. The Company continues to monitor developments closely to assess when it can safely and securely resume operations
• Tawke generated predictable production with consistent domestic sales demand, resulting in working interest production of 17,520 bopd (2024: 19,650 bopd), with all production sold domestically
• Domestic sales price averaged $32/bbl for the year (2024: $35/bbl), with all cash due for domestic sales received before the end of the year
• Production was temporarily stopped in July following the drone attacks on a number of Kurdistan oil operations, including Tawke, with gross production back to around 80,000 bopd by November
• Production business netback of $10 million (2024: $5 million) and free cash flow of $4 million (2024: $20 million). Closing net cash of $134 million (2024: $131 million)
  • Cash of $224 million (2024: $196 million)
  • Bond debt of $92 million due in 2030 (2024: $66 million)
• In late September, agreements were signed between the Federal Government of Iraq ('FGI'), the Kurdistan Regional Government (the 'KRG') and a group of international oil companies to resume exports of crude oil produced in Kurdistan through the Iraq-Türkiye Pipeline. Genel chose not to participate at that point and continues to keep exports under review, with participating parties reporting that the process is working in line with expectation
• Balances with the KRG
  • $88 million (under KBT pricing and excluding interest) remains overdue from the KRG, although this has been reduced by about $40 million credit balances. We continue to work towards a plan for payment or settlement of amounts owed, and appropriate adjustment for price and interest
  • Not included in the $40 million, Genel Energy Miran Bina Bawi Limited, a subsidiary of the group, owes the KRG around $26 million relating to an arbitration legal fees charge, an appeal against which will be held in April in London
• Exits from the Sarta, Qara Dagh and Taq Taq licences finalised with no residual liability exposure. We have also exited the Lagzira licence in Morocco and the Odewayne licence in Somaliland, again with no residual liability exposure
• A socially responsible contributor to the global energy mix:
  • Portfolio carbon intensity under 14.4 kgCO2e/bbl, remaining below the industry average target
  • Climate disclosure: maintained a CDP Climate rating of B for a fourth consecutive year
  • The Genel20 Scholarship programme has entered its fourth year, where Genel is providing university tuition funding for undergraduates from the Kurdistan Region of Iraq
  • In Somaliland, Genel continued to engage with local communities through its social investments focused on healthcare in rural areas and supporting local education

OUTLOOK

• With Tawke domestic market sales expected to be consistent, and with production expected to benefit from new drilling in FY 2026, we expect production business netback to more than cover Genel's costs, which include net interest payable
• Incremental to the production business, the Company expects to invest up to $20 million on its pre-production assets:
  • On Block 54 in Oman, in line with the 3-year initial exploration phase work plan, which includes 3D seismic acquisition and drilling two wells, as we announced at the time of entering the licence in the first half of 2025
  • SL10B13 in Somaliland, as we make progress towards drilling the Toosan-1 prospect in 2027
• The Company continues to progress towards building a business with a strong balance sheet that delivers resilient, reliable, repeatable and diversified cash flows that support a dividend programme. The Company's objectives for the year on the path to building that business include:
  • acquisition of new assets to diversify our reserves and resources and cash generation
  • restart of exports of Tawke oil to access international pricing
  • pursuit of net amounts owed by the KRG
  • safe execution of activity on Block 54
  • further progress towards drilling Toosan-1

More here.

(Source: Genel Energy)

By John Lee.

Genel Energy has issued a trading and operations update in advance of the company's full-year 2025 results, which are scheduled for release on 18 March 2026.

Regarding the company's operations in Iraqi Kurdistan, it said:

Production performance improved in the fourth quarter, supported by workovers and well interventions. Average production in unaffected months exceeded last year despite no new wells being drilled.

• • Q4 2025 gross production: 77,270 bopd (Q4 2024: 74,140 bopd)
  • FY2025 gross production: 70,090 bopd (FY2024: 78,615 bopd)
  • FY2025 working interest production: 17,520 bopd (FY2024: 19,650 bopd)
  • Average realised price: USD 32/bbl (2024: USD 35/bbl)

Preparations are underway to mobilise rigs for a sustained drilling programme targeting production and reserve additions. The company said the first phase of new Kurdistan oil export arrangements is reported to be operating.

Full statement from Genel Energy:

Genel Energy plc ('Genel' or 'the Company') issues the following trading and operations update in advance of the Company's full-year 2025 results, which are scheduled for release on 18 March 2026. The information contained herein has not been audited and may be subject to further review.

Paul Weir, Chief Executive of Genel, said:

"We are well positioned to progress on our strategy and deliver significant value to our shareholders. Notably, we have a resilient core business, which covers its costs even when sales are restricted to discounted domestic market pricing at just over $30/bbl and a balance sheet that provides the funding required to deliver on our strategic objectives.

"Geographical diversification of our cash generation remains the priority for the business. Our process remains active with live opportunities under review, and we continue to pursue and bid on these opportunities. We will retain our discipline and rigorous evaluation process to ensure every opportunity we choose to pursue is value accretive over the long term for our shareholders and meets our priority criteria.

"There is significant, currently unvalued, potential in our portfolio. On the Tawke PSC, the new drilling campaign is underway targeting the maximisation of production from, and additions to, the existing material reserves base there. In terms of accessing export pricing, the first stage of the new Kurdistan export arrangement has been reported by all participants to be working. We congratulate those stakeholders involved in the significant effort and trust that has resulted in export arrangements reaching this promising stage. We see sustained and consistent execution as a key consideration as we keep export arrangements under review. On Block 54 in Oman, preliminary operational work has been completed safely, ahead of time and under budget. Work is ongoing to assess the accumulated data to inform the focus of our activity over the next two years, which will include drilling two wells. In Somaliland, we continue to work with stakeholders to progress to a position where we can drill the potentially transformational Toosan-1 well there.

"Each of these strategic objectives has the potential to deliver significant value.  In combination they can transform the business, transform our cash generation capacity, and further energise the business and the value proposition for our shareholders."

KURDISTAN: TAWKE PSC (25% working interest)

• Exceptional performance from the Operator has resulted in Q4 average production being close to the levels delivered in the first half of the year

	QUARTER		FULL YEAR
	Q4 2025	Q4 2024	FY2025	FY2024
Gross production	77,270	74,140	70,090	78,615
Working interest production	19,320	18,540	17,520	19,650
Realised price $/bbl	32	34	32	35

• The efficient and effective programme of workovers and well intervention continues to yield excellent results. Average production for months not impacted by the drone attack was higher than last year despite no new wells being drilled. Actual average production for the full year was 70,090 bopd compared to 78,615 bopd last year
• The process for mobilisation of rigs for a sustained drilling programme is well underway, with that programme targeting additions to both production and reserves
• Our Genel20 scholarship programme continues to provide funding and support to talented, yet financially disadvantaged high school graduates from the Kurdistan Region of Iraq. Since its launch, the programme has been implemented in line with our long-term sustainability commitment, focusing on lasting educational and social impact

OMAN: BLOCK 54 (40% working interest)

• Our preliminary activity, re-entry and workover of the legacy Batha West-1 (BW-1) discovery well was completed ahead of time and under budget
• The BW-1 well operation was a low-cost preliminary activity to commence our work on the block representing the first of a number of steps towards understanding the full potential of the license
• Work is now ongoing on analysing data collected and assessing its implications for the location of further activity on the block, which includes the acquisition of 3D seismic data and drilling two exploration wells over the next 2 years. In line with our guidance, we will update on these plans in March

SOMALILAND: SL10B13 (51% working interest)

• We continue to work towards drilling of the highly prospective Toosan-1 exploration well
• Genel continues to work closely with local communities and beneficiaries, with its social investments including a broad range of initiatives in the space of mother/child health, education and the environment

FINANCIAL PERFORMANCE

• Working interest average production of 17,520 bopd was lower than last year (2024: 19,650 bopd), with exit rate production back to around 20,000 bopd. All production was sold into the domestic market at average $32/bbl (2024: $35/bbl)
• Core business netback of $11 million (2024: $5 million)
• Free cash flow of $4 million (2024: $20 million)
• Balance sheet at 31 December 2025
  • Cash of $224 million (2024: $196 million)
  • Total debt of $92 million (2024: $66 million)
  • Net cash of $134 million (2024: $131 million)
• Receivables
  • $88 million (under KBT pricing and excluding interest) remains overdue from the Kurdistan Regional Government ('KRG'), although this is offset by about $40 million of payables
  • We continue to work towards a plan for payment or settlement of amounts owed, and appropriate adjustment for price and interest
• Genel Energy Miran Bina Bawi Limited appeal against the arbitration costs award of $27 million will be heard in Q2 2026

ESG

• Climate disclosure: maintained a CDP Climate rating of B for a fourth consecutive year

OUTLOOK

• With Tawke domestic market sales expected to be consistent and production expected to benefit from new drilling in FY2026, we expect core business free cash flow generation to more than cover its costs, which includes net interest payable
• In addition to the core business, the Company expects to invest up to $20 million on its pre-production assets:
  • On Block 54 in Oman, in line with the 3-year work plan that we announced at the time of entering the licence
  • SL10B13 in Somaliland, as we seek progress towards drilling the Toosan-1 prospect towards the end of 2027
• The Company continues to progress towards building a business with a strong balance sheet that delivers resilient, reliable, repeatable and diversified cash flows that supports a dividend programme. The Company objectives for the year on the path to building that business include:
  • acquisition of new assets to add reserves and diversify our cash generation
  • restart of exports of Tawke oil to access international pricing
  • recovery of net amounts owed by the KRG
  • determination and execution of activity on Block 54
  • further progress towards drilling Toosan-1

(Source: Genel Energy)

By John Lee.

Genel Energy has issued a trading and operations update in respect of the third quarter and first nine months of 2025.

Regarding the company's operations in Iraqi Kurdistan, it said:

PRODUCTION: KURDISTAN TAWKE PSC (25% interest)

• Gross production levels are now back to around 80,000 bopd, consistent with the levels achieved in the first half of the year before the interruption from drone strikes, whilst domestic sales prices averaged $31/bbl for the quarter, with year to date average price $33/bbl (FY2024: $35/bbl)
• Working interest production up to 30 September of 16,920 bopd (FY2024: 19,650 bopd)
• Efficient and effective work on well intervention and workovers continues to yield good results, with plans to recommence drilling of production wells well underway
• We expect to receive an insurance payment by the end of the year of around $3 million for lost production arising from the drone strike

Full statement from Genel Energy:

Paul Weir, Chief Executive of Genel, said:

"Since our half year results in August, we have been delighted with the progress made on resuming maximum production from the Tawke and Peshkabir fields, with the two fields currently back to producing around 80,000 bopd. We now look forward to working with the operator to deliver an increased activity programme that can build on these production levels.

"Our core business continues to generate free cash flow despite discounted domestic sales prices of just over $30/bbl. We are encouraged by the progress made on the operational resumption of Kurdistan exports, with reports of all Kurdistan oil production now flowing through the export pipeline and being sold at Ceyhan. We hope that the implementation of the export payment process is effective and sees international oil companies paid their full entitlement revenue at international prices, which could enable the Company to participate and significantly increase its core business cash generation. We continue to monitor progress closely and remain in regular contact with relevant stakeholders.

"In Oman, on Block 54, we have started work towards testing the discovered resource. We are excited about the potential of the acreage and look forward to progressing activities there in the coming months.

"We retain a strong balance sheet. At 30 September 2025, our net cash was $135 million with cash of $226 million, prioritised for the purchase of new production assets."

PRODUCTION: KURDISTAN TAWKE PSC (25% interest)

• Gross production levels are now back to around 80,000 bopd, consistent with the levels achieved in the first half of the year before the interruption from drone strikes, whilst domestic sales prices averaged $31/bbl for the quarter, with year to date average price $33/bbl (FY2024: $35/bbl)
• Working interest production up to 30 September of 16,920 bopd (FY2024: 19,650 bopd)
• Efficient and effective work on well intervention and workovers continues to yield good results, with plans to recommence drilling of production wells well underway
• We expect to receive an insurance payment by the end of the year of around $3 million for lost production arising from the drone strike

PRE-PRODUCTION

• OMAN BLOCK 54 (40% interest)
  • Phase 1 of the 3-year work plan includes testing of the Batha West-1 (BW-1) discovery well, conducting 300km2 of 3D seismic and drilling two vertical exploration wells
  • Initial operations will involve the workover of the existing borehole to confirm suitability for testing followed by testing of multiple pay zones to confirm reservoir deliverability
  • Preparations are underway, with the workover anticipated to be completed around the end of the year and testing results to follow around the end of Q1 2026
  • BW-1 well test will inform the location for 3D seismic and subsequent wells
• SOMALILAND SL10B13 (51% interest)
  • We continue to work towards achieving conditions that support drilling of the highly prospective Toosan-1 exploration well

OUTLOOK

• We reiterate our guidance of net cash around the same level at the end of the year as the start
• The Company continues to work towards building a business with a strong balance sheet that delivers resilient, reliable, repeatable and diversified cash flows that support a dividend programme
• Our near-term objectives are:
  • the restart of exports from the Tawke and Peshkabir fields
  • maximisation of production and reserves from the Tawke and Peshkabir fields
  • appraisal on Oman Block 54
  • an agreed plan with KRG for recovery of overdue receivables
  • the acquisition of new production assets

AGM UPDATE

• Following the Annual General Meeting on 8 May 2025 the Company announced that resolutions 2, 3, 4, 5, 6, 7, 8, 10,11 and 12 had over 20% of votes cast against them and is required to provide an update on actions taken. The Company has reached out to major shareholders to understand their views and as a result of this process no specific actions have been identified.

(Source: Genel Energy)

By John Lee.

Genel Energy has issued a trading and operations update relating to Q1 2025.  Regarding the company's operations in Iraqi Kurdistan, it said:

Kurdistan Region of Iraq Operations

• Gross production of 82,081 bopd in Q1 2025 (increased from 74,140 bopd in Q4 2024) from the Tawke license
• Working interest production of 20,520 bopd (up from 18,540 bopd in Q4 2024)
• Q1 2025 sales price remained consistent at around $35/bbl
• Exit from Sarta and Qara Dagh licenses has been approved by the Kurdistan Regional Government (KRG)
• Tawke PSC (Production Sharing Contract) continues to deliver consistent production and generate significant cash flow despite discounted domestic sales prices
• Tawke and Peshkabir fields demonstrate strong operational performance and cost efficiency compared to other fields in the region

Financial Matters Related to Kurdistan

• Balances with KRG have changed:
  • Gross reported nominal receivables decreased to $99 million (from $107 million at YE2024)
  • Payables reduced to around $40 million (from around $50 million at YE2024)
• Arbitration costs award made by the Tribunal for amounts owed to the KRG by Genel Energy Miran Bina Bawi Limited is approximately $27 million (reduced from $36 million claimed by KRG)
• GEMBBL has appealed this costs award to the High Court

Iraq-Turkey Pipeline Situation

• Talks between the Kurdistan Regional Government and Federal Government of Iraq and Ministry of Oil regarding the Iraq-Türkiye Pipeline are ongoing
• No material progress has been made since March 2025
• The timing of the resumption of exports remains uncertain

Full statement from Genel Energy:

Genel Energy plc ('Genel' or 'the Company') issues the following trading and operations update relating to Q1 2025, ahead of the Company's Annual General Meeting, which is being held today.

Paul Weir, Chief Executive of Genel, said:

"In line with expectations, the Tawke PSC continues to deliver consistent, reliable production and generate significant cash flow even at the discounted domestic sales prices. The operational performance delivered from the Tawke and Peshkabir fields, together with the significant cost efficiency, continues to set these fields apart from others in the region.

"Our entry into Block 54 in Oman is expected to complete in the coming weeks, with first substantial work programme activity commencing around the end of the year.

"We continue to work towards diversifying our production, both through expansion of our footprint in Oman as well as the purchase of new assets in other preferred jurisdictions. We addressed the maturity of our bond debt by calling the old bond and issuing a new $100 million bond, thereby increasing available cash and putting in place a capital structure that can provide funding towards delivery on our strategic objectives, regardless of whatever uncertainties may face the business at the macro-economic level."

KURDISTAN

• Gross production of 82,081 bopd in Q1 2025 (Q4 2024: 74,140 bopd) from the Tawke licence where performance continues to be robust and domestic sales demand reliable
  • Working interest production of 20,520 bopd (Q4 2024: 18,540 bopd)
• Q1 2025 sales price has been consistent with the previous quarter around $35/bbl
• Exit from the Sarta and Qara Dagh licences has now been approved by the KRG, in the form of relinquishment and termination agreements with minimal residual potential liabilities

OMAN

• As previously announced, we are delighted to have entered Oman through the award of an interest in Block 54
• Royal Decree is expected in the coming weeks and we are working with OQEP, the operator, on planned activity for the second half of the year

SOMALILAND

• On SL10B13 in Somaliland, we continue to work towards achieving conditions that support drilling of the highly prospective Toosan-1 exploration well

MOROCCO

• We have informed ONHYM that we will not be extending beyond the Initial Period of the Lagzira licence to the First Extension Period, and consequently will be abandoning the licence in June 2025

FINANCIAL

• Net cash of $135 million at 31 March 2025 (YE2024: $131 million)
• Q1 2025 free cash flow of $5 million (Q4 2024: $1 million free cash outflow)
  • Ahead of guidance due to higher production and some timing differences on spend
  • Tawke free cash flow expected to cover organisational costs this year
  • No spend to date on Oman
• Cash of $201 million at 31 March 2025 (YE2024: $196 million)
  • In April the Company called $66 million of bonds maturing October 2025 and issued a new $100 million bond maturing April 2030

• Balances with KRG
  • Both receivable and payables have reduced as a result of the exit from Sarta and Qara Dagh
    • Gross reported nominal receivables of $99 million, reduced from $107 million at YE2024
    • Payables of around $40 million, reduced from around $50m million at YE2024
    • The arbitration costs award  made by the Tribunal for amounts owed to the KRG by Genel Energy Miran Bina Bawi Limited ("GEMBBL") is circa $27 million, reduced from the circa $36 million claimed by the KRG
    • GEMBBL has appealed this costs award to the High Court on the grounds that, because the KRG did not provide any breakdown of the amounts claimed by reference to any items of work, the Arbitration Tribunal was unable to assess the reasonableness and proportionality of the recoverable costs and consequently did not have jurisdiction to make an award

OUTLOOK

• Tawke free cash flow at current production and prices is expected to continue to cover organisational costs, with net cash at year-end expected to be about the same as the start of the year
• Following our entry into Oman, there will be some direct capital investment this year as we work towards testing previously discovered resource
• Talks between the Kurdistan Regional Government and Federal Government of Iraq and Ministry of Oil regarding the Iraq-Türkiye Pipeline are ongoing, but no material progress has been made since March and the timing of the resumption of exports remains uncertain

(Source: Genel Energy)

By Ahmed Tabaqchali, Chief Strategist of AFC Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Market at an All-time High, Oil Prices Crashing, What Gives?

The market, as measured by the Rabee Securities U. S. Dollar Equity Index (RSISX USD Index), closed at an all-time high for the month, with a 3.0% increase, and is up 3.3% for the year. The market was closed in the first week of the month in observance of the Eid holidays, and so it missed out on the global market mayhem in response to the unveiling of the U.S.'s "reciprocal" tariffs on its trading partners.

Once trading resumed, it, to some extent, joined its global peers in being down 1.0% for two days until the announcement of the 90-day suspension of tariffs, after which it ticked upwards to close at an all-time monthly high -although the all-time daily high was mid-month (chart below).

The market's technical picture continues to be positive, and the consolidation of the last few weeks is likely to continue for some time, given the uncertainty over the direction of the world's economy from the evolving U.S. sanctions -a great deal of uncertainty remains, in which the positives of the 90-day tariff suspension, might be replaced by a U.S.-China trade war, or the 90 days will lapse before enough "beautiful" deals are agreed on.

Rabee Securities U.S. Dollar Equity Index and Daily Turnover

(Source: Iraq Stock Exchange, Rabee Securities, AFC Research, daily data as of April 30^th.
Note: daily turnover adjusted for block trades¹)

The market's action in closing at an all-time-high, stands in sharp contrast to those of other global markets, which have recouped their "liberation day" losses, yet remain down year to date. Moreover, it is remarkable considering the potential negative effects from Iraq's leverage to global oil demand. As argued in "Tariffs, Oil Prices, and the Budget", irrespective of the evolving U.S. tariff policy, their direct impact on Iraq is almost zero, as oil constitutes almost all of its exports to the U.S., which are exempt from reciprocal tariffs, but, the impact will be indirect and felt through a lower Iraqi oil price as a consequence of expected lower global demand for oil.

On the one hand, this negative is aggravated by increased supply in the form of OPEC+'s aggressive unwinding of its prior production cuts for May and June, that probably will be repeated for the next few months as well. On the other hand, the positives are the U.S.'s increasing tough line against Iranian oil (crude, and products) exports to China, which would more than offset OPEC+'s increased production, should they be fully implemented, so is the potential decline of high-cost U.S. shale production, as well as the low levels of global oil stocks.

However, there is a great deal of uncertainty over how these factors will play out as well as on the direction of the global economy, with the result that oil markets are in unchartered territory, and so oil prices continue to head lower, with Brent crude trading at four-year lows. Mirroring these concerns, the IMF, as part of lowering its global growth forecasts for 2025-26 in response to the U.S.'s tariffs, lowered those for oil exporters even more reflecting the added effects of lower oil prices, with its forecasts for Iraq lowered more than those of its peers among oil exporters (table below).

IMF's Iraq's growth forecasts for 2025-26 versus growth figures for 2023-24(Source: IMF May 2025 Regional Economic Outlook for the Middle East and Central Asia; old forecast refers to IMF's October 2024 forecast, while new forecast is that of May 2025)

The obvious question is: what gives? Especially considering that investors on the Iraq Stock Exchange (ISX), whether locals or the handful of foreigners, are fully aware of the effects of lower prices on Iraq, and should have reacted negatively without waiting for the oil market's weird dynamics or for the IMF's forecast downgrade. The logical answer, as asserted here in the past, most recently in "What Next After Two Gangbuster Years?", is that Iraq's economy is undergoing a significant structural transformation, following the country's decades of conflict, driven by two key dynamics -the cumulative positive effects of the country's relative stability and the acceleration of banking adoption instead of cash and informality that dominated the economy, that are in the early stages of their transformation of the economy.

One such manifestation of the increased adoption of banking,  last discussed under a year ago in "An Unfolding Structural Economic Transformation", is the significant growth, year-over-year and month-over-month, in the monthly values of Iraqi Dinar (IQD) transactions through cards (prepaid, debit, and credit) and e-wallets (chart below).  These are at the early stages of the transition to the use of the banking system in the payments for transactions, and while from a small base, the trends are clear and mirror, with a time lag, those that took place elsewhere in emerging and frontier economies. It is this increased adoption of banking, that stands out as a positive in the IMF's updated forecasts, as seen through the figures for broad money growth (table above). While they were lowered from 6.4% to 4.3%, they still show solid growth as a reflection of the increased adoption of banking and the role that banks play in the expansion of the money supply.

Card and E-wallet Monthly IQD Transactions

(Source: CBI, AFC Research, data as of the end of December 2024)

Finally, the market's positive performance, despite such negatives, should be seen in the context of a market that last peaked in January 2014, followed by a brutal seven-year bear market in which the RSISX USD Index was down 25.4% in 2014, 22.7% in 2015, 17.4% in 2016%, 11.8% in 2017, 15.0% in 2018, 1.3% in 2019, and 5.4% in 2020 -for a cumulative decline of 66.6%; and only surpassed the 2014 peak over a decade later in October 2024.

Nevertheless, the negative effects of lower oil prices on the economy will become a negative headwind, reversing the positive tailwind of the past two years. Yet, the secular positives of the economic transformation should overcome the drag from the cyclical negatives and thus continue to drive the market's direction.

The equity market, as measured by the Rabee Securities U. S. Dollar Equity Index (RSISX USD Index), having surpassed its 2014 peak by 10.3% by the end of April, has the potential to rally further reflecting the powerful dynamics discussed here over the last few months. However, risks remain given Iraq's recent history of conflict, extreme leverage to volatile oil prices, especially in the current uncertain global environment, as well as the risk that a widening of the current Middle East conflict will not be contained and evolve to destabilise the region.

Notes:

• Daily market turnover is first adjusted by removing block, pre-arranged trades conducted during the special session following the regular trading session; subsequently, it is adjusted further by removing high-volume trades during regular market hours that show a pattern consistent with those of pre-arranged trades. High-volume trades are defined as those that are significantly higher than a given stock's average daily turnover; and as such are subjective. Moreover, trading volumes, and trading turnovers are used interchangeably here, and defined as the values of trading turnovers in Iraqi dinars (IQD)

Please click here to download Ahmed Tabaqchali's full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the Chief Strategist of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years' experience in US and MENA markets. He is a Visiting Fellow at the LSE Middle East Centre, Senior Fellow at the Institute of Regional and International Studies (IRIS), and a Senior Non-resident Fellow at the Atlantic Council.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.

Genel Energy has announced its audited results for the year ended 31 December 2024.

Paul Weir, Chief Executive of Genel, said:

"In 2024, we demonstrated further progress on our journey of building towards delivering resilient, diversified cash flows. Our shift from cash outflow in 2023 to cash generation in 2024 has been important, and in 2025 we expect the cash generated by the Tawke PSC to continue to cover our costs. We are delighted to have established a footprint in the Sultanate of Oman, through our award of an interest in Block 54. This is the first step on our roadmap to diversification.

"For 2025, we remain focussed on three principal objectives: maintenance of a strong balance sheet; resilient cash generation from the core business; and the addition of new assets.

"For new assets, we will seek both to increase that footprint in Oman, and also acquire assets in other preferred jurisdictions that we have identified as attractive to Genel, with a focus on adding production assets that increase the cash generation and resilience of the business, and provide potential for further growth.

"In the Kurdistan Region of Iraq ('KRI') we continue to work with our peers and the Regulator towards the restart of exports on the right terms to ensure our contracts are honoured and we are paid what we are due."

Results summary ($ million unless stated)

	2024	2023
Average Brent oil price ($/bbl)	81	82
Average realised price per barrel	35	47
Production (bopd, working interest)	19,650	12,410
Revenue	74.7	78.4
Production costs	(17.6)	(18.0)
EBITDAX1	1.1	33.3
Operating loss	(52.4)	(10.3)
Cash flow from operations	66.9	55.1
Capital expenditure	25.7	68.0
Free cash flow2	19.6	(71.0)
Cash	195.6	363.4
Total debt	65.8	247.8
Net cash3	130.7	119.7
Basic LPS from continuing operations (¢ per share)	(22.5)	(6.1)

1. EBITDAX is operating loss adjusted for the add back of depreciation and amortisation, exploration expense, net write-off/impairment of oil and gas assets and net ECL/reversal of ECL receivables
2. Free cash flow is reconciled on page 8
3. Reported cash less IFRS debt is reconciled on page 8

Highlights

• Working interest average production increased by 58% to 19,650 bopd (2023: 12,410 bopd)
• All production sold into the domestic market at average $35/bbl consistent with prior year (2023: $47/bbl, which included export sales prices in Q1)
• Free cash flow of $20 million, compared to free cash outflow of $71 million last year
  • Tawke free cash flow generation from domestic sales was over $70 million (2023: $28 million), benefiting from some offsetting and also positive working capital movements of around $30 million
  • Organisation cost reductions were offset by non-repeating costs on arbitration, closing out unprofitable licences at Taq Taq and Sarta, and finalising exit from Qara Dagh
• Closing net cash of $131 million, an increase from $120 million at the start of the year
  • Cash of $196 million (2023: $363 million), with bond debt reduced from $248 million at the start of the year to $66 million at year-end from buybacks and partial exercise of call option
  • $107 million (under KBT pricing and excluding interest) remains overdue from the Kurdistan Regional Government ('KRG') to the Genel subsidiary Genel Energy International Limited ('GEIL') for sales made in previous years. The Company owes the KRG around $50 million. We continue to work towards a plan for payment or settlement of amounts owed, and appropriate adjustment for price and interest
  • We were disappointed that in December 2024 the subsidiary, Genel Energy Miran Bina Bawi Limited ('GEMBBL'), lost the arbitration case brought against it by the KRG regarding the Miran and Bina Bawi gas assets. As previously announced, the KRG is seeking a costs award of over $36 million against GEMBBL
• Last week, the Company announced its award of an interest in Block 54 in the Sultanate of Oman. This new country entry is an important first step towards strategic diversification of our business
• Average portfolio carbon intensity again expected to be under 14 kgCO2e/bbl, remaining below the current target for industry average
• Climate rating: maintained a CDP Climate score of B for a third consecutive year

OUTLOOK

• With domestic sales demand at similar levels to last year and year to date this year, the Company expects cash generation from the Tawke PSC to cover its organisational costs
• The Company continues to progress towards building a business with a strong balance sheet that delivers resilient, reliable, repeatable and diversified cash flows that supports a dividend programme. The Company objectives for the year on the path to building that business include:
  • acquisition of new assets in Oman and other targeted jurisdiction to add reserves and diversify our cash generation
  • restart of exports to access international pricing
  • recovery of net amounts owed by the KRG
  • further progress towards drilling Toosan-1
• The Company has engaged Pareto Securities AS as Manager and Bookrunner to arrange fixed income investor meetings. Subject to market conditions and acceptable terms, a new senior unsecured bond issue with a tenor of five years may follow

:

CEO STATEMENT

We start 2025 leaner and more efficient, and with all the building blocks necessary to establish a bigger and more successful business. Genel has a strong balance sheet and our producing fields within the Tawke PSC form a world-class asset that delivers significant cash generation even when selling at heavily discounted domestic prices because of the suspension of exports. This is a situation that we continue to work on closely with our peers and host government to resolve. Genel has a compact but highly skilled and motivated workforce, dedicated to executing our growth strategy and pursuing value accretive acquisitions that will diversify our geographical footprint within reliable and predictable jurisdictions.

In 2024, we continued with the cost reduction exercise and business efficiency improvements that began in 2022. That process extended to continuing the divestment process for non-profitable assets. Taq Taq awaits only government approval before divestment is complete, and relinquishment of our other non-producing legacy assets in the Kurdistan Region of Iraq ('KRI') will also be completed soon.

Having delivered these improvements and trimmed our debt levels to improve the capital efficiency of the business, it's time to move on to the next phase.

We are very clear on what needs to be done to deliver the appropriate Company growth and deliver the shareholder returns that are necessary for an emerging market exploration and production business. The period of consolidation and efficiency improvement in 2024 must now give way to profitable growth.

Genel is delighted to have taken the first step in its growth journey by signing an EPSA in the Sultanate of Oman with OQ Exploration & Production SAOG ('OQEP') as Operator, which will see us participate in the appraisal and development of Block 54. This will see Genel spend modestly over the next three years. The potential on the block is significant and while the eventual returns are not certain at this stage, we believe this move will lead to further exciting opportunities in the region. Oman is a jurisdiction that Genel has long considered as a very attractive place to do business and where we have been made very welcome by both our new partner and the regulator.

Back in the KRI, together with our operating partner DNO, we have helped establish a reliable and consistent domestic sales market, which generates very important cash for producers there, albeit at a heavily discounted price. Tawke production currently realises only around $35/bbl, which is well below relevant reference benchmark oil prices. With our peers in the KRI, we continue to work with our host Government and Federal Iraqi authorities to negotiate an arrangement that allows the resumption of international oil sales at international oil prices and that provides appropriate returns for those producing the oil. This has proved to be a sporadic process, but most recent indicators suggest a solution should soon be found; a solution that could double Genel revenue immediately upon implementation.

We have worked hard with DNO to ensure spend and delivery performance are optimised. The world-class field operating cost of only $4/bbl and consistent production delivery throughout 2024 are testament to the successful delivery performance of this asset.

We have put behind us the disappointment of the outcome of the arbitration on the KRG's termination of the legacy Miran and Bina Bawi licences, where the London Court of International Arbitration ruled in favour of the KRG.

We have a clear direction of travel and specific targets that we are pursuing to re-energise the business.

Outlook

The Company is focussed on delivering on three principal objectives:

Strong balance sheet

• We will retain an appropriate balance that provides protection against outlook downside scenarios and maintain debt at a level that is appropriate for the cash generation of the business

Resilient cash generation

• Realising the full potential of our existing portfolio which includes delivering performance from the Tawke licence, an asset with a long and profitable life ahead of it, and where many opportunities for further investment exist, if conditions permit.
• Continuing to work with our peers, the Kurdistan Regional Government ('KRG') and the Federal Government of Iraq ('FGI') to support the resumption of international oil sales from the KRI

Investment in new cash flows

• Acquiring the right new assets to re-energise our portfolio and deliver diversified, increased, and more resilient cash generation that will enable us to re-establish a regular long-term dividend for our shareholders
• We are also focused on establishing the right conditions to support drilling the Toosan-1 exploration well in Somaliland

OPERATING REVIEW

Reserves and resources development

Genel's proven plus probable (2P) net working interest reserves totalled 82 MMbbls (31 December 2023: 89 MMbbls) at the end of 2024.

 

	Remaining reserves (MMbbls)				Resources (MMboe)
					Contingent				Prospective
	1P		2P		1C		2C		Best
	Gross	Net	Gross	Net	Gross	Net	Gross	Net	Gross	Net
31 December 2023	245	63	338	89	13	3	39	10	4,580	2,964
Production	(29)	(7)	(29)	(7)	-	-	-	-	-	-
Acquisitions and disposals	-	-	-	-	-	-	-	-	-	-
Extensions and discoveries	-	-	-	-	-	-	-	-	-	-
New developments	-	-	-	-	-	-	-	-	-	-
Revision of previous estimates	-	-	-	-	-	-	-	-	43	32
31 December 2024*	216	56	309	82	13	3	39	10	4,623	2,996

* Subject to final confirmation of Tawke PSC Reserves and Resources by the Operator

Production

Working interest average production of 19,650 bopd for the year, increased from 12,410 bopd in 2023.

All Genel production in 2024 came from the Tawke PSC and was sold into the domestic market at average $35/bbl (2023: $47/bbl).

PRODUCING ASSETS

Tawke PSC (25% working interest)

Gross production from the Tawke licence averaged 78,615 bopd in 2024 (2023: 46,280 bopd), a significant improvement that demonstrates the success in establishing consistent domestic market demand and the success of the asset to meet that demand. In 2024, the Tawke PSC generated over $70 million net cash flow for Genel, benefitting both from strong domestic sales, positive working capital movements and offsetting.

Despite drilling no new wells this year, gross production from the Tawke PSC has been maintained at consistent levels. This has been achieved by careful and diligent subsurface and operations management. Three wells that were drilled last year, but not completed due to the closure of the pipeline, were brought onstream mid-year to meet demand from domestic traders. Production performance was further supported by an active well intervention programme.

In partnership with DNO, Genel continues to be part of the first Associated Gas Injection (AGI) project in the Kurdistan Region of Iraq ('KRI'). Since its inception the project has saved approximately 2.3 million tonnes of CO2e from entering the atmosphere, with Tawke PSC carbon emissions below the industry average.

Taq Taq (44% working interest, joint operator)

We divested our 44% working interest in the Taq Taq production sharing contract to our joint venture partner. We have previously reported that Taq Taq had been on care and maintenance since May 2023 because the asset does not generate sufficient revenue at domestic sales prices to cover its operating costs. Furthermore, accessing the 10.3mmbbls of remaining net 2P reserves would require risking of further capital to drill new wells with uncertain outcomes - investment that ranks low on the Company's capital allocation priorities. The terms of the exit leave the Company with minimal residual financial obligations and potential liability exposures. The transaction is subject to Kurdistan Regional Government approval.

PRE-PRODUCTION ASSETS

Somaliland - SL10B13 (51% working interest, Operator)

We continued to work with stakeholders towards the complete framework required to support drilling the Toosan-1 exploration well. This included optimisation of the well plan to reduce cost and maximise efficiency of the well delivery process and consideration of the appropriate equity level at which to be undertaking this activity. In the meantime, our in-country team continued to work closely with our local communities. Genel's Mobile Medical Clinic project in Somaliland, which provided vital medical care for some of the poorest people in Africa, launched phase two of the project in July, with a further 17,000 cases treated to take the total cases treated to more than 35,000.

Somaliland - Odewayne (50% working interest, Operator)

We continued to work with our partners to characterise the prospectivity of the block, with subsurface studies ongoing. We also continued to invest in the local communities, and in February 2024 delivered educational supplies to 1,000 primary and secondary school students across the block.

Morocco (Lagzira block - 75% working interest, Operator)

On the Lagzira block (75% working interest and operator), we are continuing the farmout process, seeking partners to test the Banasa Prospect, high graded, having been de-risked by 2024 seismic reprocessing.

FINANCIAL REVIEW

2024 financial priorities

The table below summarises our progress against the 2024 financial priorities of the Company as set out in our 2023 results.

2024 financial priorities	Progress
Maintain business resilience and balance sheet strength	Developed a consistent dependable income stream through the domestic sales market Reduced cost and divested Taq Taq PSC (subject to KRG approval) Minimised cost of remediation on Sarta and Qara Dagh PSCs Reduced debt by $182 million, with associated decrease in interest cost Net cash of $131 million and cash of $196 million at end of 2024
Ensure capital availability for funding of key strategic objectives	Maintained competitive bond market pricing, indicating availability of debt capital when needed Reduced cash levels through debt reduction to improve capital efficiency
Ensure appropriate capital allocation	Continued reduction in organisation to match needs of the business Deferred expenditure on non-cash generative projects Optimised processes and systems to improve operational efficiency

Outlook and financial priorities for 2025

The key principles of our financial focus remain largely unchanged.  We have a resilient business model that is designed to mitigate the impact of uncontrollable adverse events and maximise exposure to the upside. Ultimately, we seek to build a business that generates resilient, diverse and predictable cash flows that support resumption of distributions to shareholders.

Full report here.

(Source: Genel Energy)

Genel Energy issued the following trading and operations update in advance of the Company's full-year 2024 results, which are scheduled for release on 18 March 2025. The information contained herein has not been audited and may be subject to further review.

Paul Weir, Chief Executive of Genel, said:

"We start 2025 with a business that has all the building blocks necessary to grow and become more successful.  Genel has a strong balance sheet, our two producing fields within the Tawke PSC form a world class asset that delivers significant cash generation, even when only selling at heavily discounted domestic prices.  Genel has a compact, but highly skilled and motivated work force, dedicated to delivery performance, execution of a growth strategy and pursuit of value accretive acquisitions that will geographically diversify us into reliable and predictable jurisdictions.

"We continue to work with peers and our host government to push for the conditions necessary to enable testing of any new mechanism for exports. We note the recent discussions of a revised budget law in Iraq that would provide the framework for a mechanism to fund the payment of IOCs by the KRG on resumption of exports. 

"Consistent strong delivery performance at Tawke saw us complete another year of robust production and deliver full year free cash flow of $19 million and an improvement in our net cash position to $131 million.

"We are very clear on what needs to be done to deliver on our strategy, add new assets and build a business that delivers consistent value to its shareholders.  The period of our work focused on consolidation and efficiency improvement in 2024 has laid the foundations for profitable future growth."

2024 FINANCIAL PERFORMANCE

• Working interest average production of 19,650 bopd for the year, increased from 12,410 bopd in 2023
• All production sold into the domestic market at average $35/bbl (2023: $35/bbl)
• Closing out and finalising terms of exit from Taq Taq at minimal cost.
• Free cash flow of $19 million, compared to free cash out flow of $71 million last year
• Balance sheet at 31 December 2024
  • Total debt has been reduced from $248 million at the start of the year to current $66 million
  • Cash of $195 million (2023: $363 million)
  • Net cash of $131 million, an increase from $120 million at the start of the year
• Receivables
  • $107 million (under KBT pricing and excluding interest) remains overdue from the Kurdistan Regional Government ('KRG'), although this is reduced by amounts owed to the KRG, which are currently around $50 million
  • We continue to work towards a plan for payment or settlement of amounts owed, and appropriate adjustment for price and interest
• Arbitration
  • In December 2024 our subsidiary, Genel Energy Miran Bina Bawi Limited, lost the arbitration case brought against it by the KRG regarding the KRG's right to terminate the Miran and Bina Bawi Production Sharing Contracts
  • Due to the extremely limited grounds of appeal against an LCIA Arbitration Award, no appeal has been made by Genel Energy Miran Bina Bawi Limited and the deadline for appeal has passed
  • The process under which the Tribunal determines the costs award to be made against Genel Energy Miran Bina Bawi Limited is now underway. The first stage of that process was  for the KRG to submit its claim for costs incurred to the Tribunal. The KRG is claiming circa $36 million for costs incurred to the end of November 2024. This is materially higher than all the costs incurred by Genel Energy Miran Bina Bawi Limited throughout all stages of the arbitration process which was commenced by the KRG in  2021
  • The next stage of the process gives Genel Energy Miran Bina Bawi Limited the opportunity to make submissions to the Tribunal to challenge robustly the quantum of the KRG's cost claim, with a view to the final costs award being made for costs that are reasonably incurred, proportionate and also necessary

KURDISTAN: TAWKE PSC ACTIVITY AND PRODUCTION

• Q4 Gross production of 74,140 bopd (Q3 2024: 84,210 bopd) sold domestically at average $34/bbl (Q3 2024: $37/bbl), with average production for the year 78,615 bopd (H1 2024: 78,050 bopd)
• Working interest production of 18,540 bopd in Q4 2024 (21,050 bopd in Q3 2024)
• Three wells that were drilled in 2023 but not completed due to the closure of the Iraq-Türkiye Pipeline, were brought onstream midyear contributing 7,800 bopd to gross production, with further production added from well interventions work.
• Discussions with the Regulator around the work programme for 2025 are ongoing

AFRICA EXPLORATION

• On SL10B13 in Somaliland, we continue to work towards achieving conditions that support drilling of the highly prospective Toosan-1 exploration well
• On Lagzira in Morocco, we are running a farmout process seeking partners to test the newly high graded Banasa Prospect, which has been de-risked by 2024 seismic reprocessing

LEGACY KURDISTAN LICENCES

• Over the last two years we have taken steps to stop spend that does not represent good investment and we have begun the divestment or relinquishment of unprofitable assets
• We are pleased to confirm that we have agreed terms for divestment of the Taq Taq PSC, which will remove the risk of any residual decommissioning liabilities. This divestment is now subject to KRG approval

ESG

• Emissions reduction: in partnership with DNO, Genel continues to be part of the first Associated Gas Injection (AGI) project in the KRI.
• CDP Climate risk score of B for three consecutive years
• Genel's Mobile Medical Clinic project in Somaliland, which provides vital medical care for some of the poorest people in Africa, launched phase two of the project in July, with a further 15,000 cases treated to take the total cases treated to more than 30,000

OUTLOOK

• With Tawke domestic sales demand in 2025 expected to continue at similar levels to 2024, the Company expects its cash generation to cover its organisational costs - we will provide an update on Tawke activity and investment plans at our full year results in March
• We continue to work towards a payment plan for recovery of overdue receivables
• The Company continues to progress towards building a business with a strong balance sheet that delivers resilient, reliable, repeatable and diversified cash flows that supports a dividend programme. The Company objectives for the year on the path to building that business include:
  • acquisition of new assets to add reserves and diversify our cash generation
  • restart of exports to access international pricing
  • recovery of net amounts owed by the KRG
  • further progress towards drilling Toosan-1
  • farm-out of Lagzira

(Source: Genel Energy)

By John Lee.

Shares in Genel Energy closed up over 6 percent on Tuesday, after the company said it, "continued optimising cash flows, evolving our capital structure and originating and maturing opportunities to acquire new assets that add reserves and diversify our cash generation geographically."

In its trading and operations update for the third quarter and first nine months of 2024, the company said its Tawke interest in Iraqi Kurdistan, "continues to deliver consistent production into consistent domestic market demand to generate significant cash flow."

Meanwhile, it says an award from the Miran and Bina Bawi oil and gas assets arbitration is not certain, but is expected before the end of 2024.

Full statement from Genel Energy:

Genel Energy plc ('Genel' or 'the Company') issues the following trading and operations update in respect of the third quarter and first nine months of 2024.

Paul Weir, Chief Executive of Genel, said:

"Since our half year results in August, we have continued optimising cash flows, evolving our capital structure and originating and maturing opportunities to acquire new assets that add reserves and diversify our cash generation geographically. We maintain our discipline on spend and focus on profitability and both delivering, and building on, the significant value upside that is already in the business.

"We have repurchased and cancelled $182 million of our own bonds, reducing our debt from $248 million to $66 million at the end of October. Our balance sheet position remains strong, with net cash at the end of October of $125 million, and cash of $191 million.

"The Tawke PSC continues to deliver consistent production into consistent domestic market demand to generate significant cash flow. That cash generation more than covers our cash out-flows in the period, which have further reduced as a result of non-repeating activity in the first half of the year coming to an end, decreasing activity on non-core licences as we move towards exit and reduction in net interest cost following the purchases of our bonds.

"Finally, the timing of the award from the London-seated Miran and Bina Bawi oil and gas assets arbitration is not certain, but is expected before the end of 2024."

FINANCIAL

• Tawke cash generation has again more than covered all spend in the period, resulting in year-to-date free cash flow of $20 million (2023: $60 million out flow)
• Cash of $273 million at 30 September 2024 (30 June 2024: $370 million)
  • $109 million invested in August to purchase $107 million nominal value of bonds through the bond tender announced at half year results
  • Bond debt of $141 million at 30 September 2024 (30 June 2024: $248 million)
  • Net cash of $132 million at 30 September 2024
• Balance sheet further evolved at 31 October 2024 by call of $75 million nominal value of bonds
  • Cancellation of $234 million nominal value of all bonds already held by the Company
  • Cash of $191 million and debt of $66 million, net cash of $125 million
• We retain an overdue receivables balance of nominal $107 million owed by the KRG. Although there has been discussion on the mechanism for recovery of this balance, there is not yet a formal payment plan in place. We expect any resolution to include offsetting balances owed to the KRG, which at the end of October amounted to around $50 million. This balance relates to unpaid amounts owed on the Tawke, Taq Taq, Sarta and Qara Dagh PSCs and arises from past year and current year items such as Oil field Police Force, financial obligations under our PSCs and positive working capital movements.

TAWKE PSC ACTIVITY AND PRODUCTION

• Q3 Gross production of 84,210 bopd (Q2 2024: 79,780 bopd) sold domestically at average $37/bbl (Q2 2024: $36/bbl), with a small increase in YTD production since the half year to 80,120 bopd (H1 2024: 78,050 bopd)
• Q3 Working interest production of 21,050 bopd in Q3 2024 (19,950 bopd in Q2 2024)
• Three wells that were drilled last year, but not completed due to the closure of the Iraq-Türkiye Pipeline, were brought onstream midyear to meet demand from local traders, contributing 7,800 bopd to gross production in the quarter
• Further production was added from well interventions work.
• In association with our industry peers, we continue dialogue towards the resumption of exports on a basis that properly rewards IOCs that have chosen to invest in Kurdistan in accordance with their contractual terms

ESG

• Emissions reduction: in partnership with DNO, Genel continues to be part of the first Associated Gas Injection (AGI) project in the KRI. The project has successfully captured over 1.2 million tonnes of CO2e from the Peshkabir field
• CDP Climate score of B for two consecutive years
• Genel's Mobile Medical Clinic project in Somaliland launched phase two of the project in July, with a further 15,000 cases treated to take the total cases treated to nearly 30,000
• Following the Annual General Meeting on 9 May 2024 the Company announced that resolutions 2, 3, 4, 6 and 12 had over 20% of votes cast against them. The Company reached out to major shareholders to understand their views. The Company does not believe it is necessary or appropriate to take any additional action

OUTLOOK

• With domestic sales expected to continue at similar levels, the Company expects net cash at the end of the year to be around $125 million
• The Company continues to seek progression towards building a business with a strong balance sheet that delivers resilient, reliable, repeatable and diversified cash flows that supports a dividend programme
• We continue to work towards the restart of exports to access international pricing, and the acquisition of new production assets to add reserves and diversify our cash generation
• The timing of the award relating to the London-seated international arbitration regarding Genel's counterclaim for substantial compensation from the KRG following the termination of the Miran and Bina Bawi PSCs is not certain, but it is expected by the end of the year.

(Source: Genel Energy)

By John Lee.

Genel Energy has announced that domestic sales demand from the Tawke field has "shown resilient consistency in the past 6 months."

The company also announced a bond buyback.

In its unaudited results for the six-month period ended 30 June 2024, Paul Weir, Chief Executive of Genel, said:

"We have continued to progress our priority workstreams, each of which can be transformational for the business, whilst maintaining our balance sheet strength by strict discipline on spend and capital allocation. 

"Cash generative production continues from our flagship Tawke licence, where domestic sales demand has shown resilient consistency in the past 6 months and some recent price improvement.  We have efficiently closed down our unprofitable operated licences in the Kurdistan Region of Iraq ('KRI') and minimised our in-country footprint, while keeping people safe and continuing to act as a trusted partner to all our stakeholders. Significant cost reductions have been made across all aspects of the business wherever appropriate, and our organisational spend in the second half of the year will reduce further. The business has the potential to deliver significant shareholder value, well above the current market value of the business. The Tawke PSC is a world class asset with a long life ahead of it, and when exports restart can deliver over $100 million of entitlement free cash flow per annum to Genel, more than double the current level.

"In association with our industry peers and other stakeholders, we continue to lobby regional and federal governments to break the current political impasse so that international exports of Kurdistan oil can resume in a manner that properly rewards IOCs that have chosen to invest in Kurdistan.  While progress is sporadic, recent participation by stakeholders in tripartite talks demonstrate that negotiations continue and support the view that a negotiated solution can be found.  

"We continue to prioritise the acquisition of new assets to materially diversify our cash generation and reinvigorate our organic portfolio. Adding new assets to achieve geographical diversification is a strategic objective, but we will only buy an asset on terms that are clearly beneficial for our shareholders.

"Regarding the London-seated Miran and Bina Bawi oil and gas assets arbitration, the written and evidentiary stages have now concluded. The timing of the award is not certain, but is expected before the end of 2024. Our view on the merits of our case remains unchanged since the arbitration process was initiated by the KRG in 2021."

The main points from the results announcement:

Results summary ($ million unless stated)

	H1 2024	H1 2023	FY 2023
Average Brent oil price ($/bbl)	84	80	82
Production (bopd, working interest)	19,510	13,440	12,410
Revenue	37.6	48.0	84.8
Opex	(8.2)	(14.7)	(21.3)
EBITDAX1	11.1	22.9	32.8
Operating loss	(15.8)	(11.2)	(19.2)
Cash flow from operations	36.4	39.2	55.1
Capital expenditure	15.9	47.5	68.0
Free cash flow2	8.5	(35.1)	(71.0)
Cash	370.4	425.0	363.4
Total debt	248.0	273.0	248.0
Net cash3	125.5	158.2	119.7
Basic LPS (¢ per share)	(7.9)	(14.6)	(22.0)

1. EBITDAX is operating loss adjusted for the add back of depreciation and amortisation, net write-off/impairment of oil and gas assets and net ECL/reversal of ECL receivables
2. Free cash flow is reconciled on page 6
3. Reported cash less debt reported under IFRS (page 6)

Summary

• We continue to sell domestically with the route to exports suspended
• Consistent production from the Tawke PSC, with minimal investment, has delivered average working interest production of 19,510 bopd in H1 2024 (H1 2023: 11,740 bopd)
• Domestic sales price has averaged $34/bbl for the period (2023: $35/bbl), with the last two months priced at $37/bbl, with all cash due for domestic sales received before the end of the period
• Net cash of $126 million (31 December 2023: $120 million)
  • Significant cash balance of $370 million (31 December 2023: $363 million)
  • Bond debt of $248 million (31 December 2023: $248 million)
• A socially responsible contributor to the global energy mix:
  • Zero lost time injuries ('LTI') and zero tier one loss of primary containment events at Genel and TTOPCO operations
  • Three million work hours since the last LTI

Outlook

• Continued consistent production from the Tawke PSC at similar levels to the first half
• Organisational spend around $3 million per month
• Interest income $1-2 million per month, with one bond interest payment of $11.5 million due in October
• Our cash generation has been above expectations in the first half of the year, and we reiterate our previous guidance that we expect closing net cash balance at the end of the year to be well above $100 million
• We continue to seek progression towards building a business that delivers resilient, reliable, repeatable and diversified cash flows that support a dividend programme by:
  • maintaining a strong balance sheet
  • working, together with our peers, towards the restart of exports and access to international pricing
  • seeking diversification of our income through the purchase of new assets
• The process for the London-seated international arbitration regarding Genel's claim for substantial compensation from the KRG following the termination of the Miran and Bina Bawi PSCs has now been concluded, with closing submissions exchanged in May and reply reports exchanged in June. It is now for the panel to deliberate and then make an award. The timing of the award is not certain but is expected before the end of the year.
• Reverse tender offer to buy back bond announced today

More here.

(Source: Genel Energy)

By John Lee.

Genel Energy issued the following trading and operations update relating to Q1 2024 on Thursday, ahead of the Company's Annual General Meeting:

Paul Weir (pictured), Chief Executive of Genel, said:

"We have achieved balanced income and expenditure in the first quarter of the year, which is ahead of schedule. Local sales from the Tawke licence have been robust to date, with the sales price increasing marginally and demand staying strong, and we continue to expect income to cover our spend over the course of the full year. Local sales volumes going forward will continue to be dependent on demand, the view of the field partners on reservoir management, and whether investment would be cost effective and deliver value to shareholders.

"The business is in a robust financial position, with multiple potential catalysts for the delivery of significant shareholder value ahead."

FINANCIAL

• Cash of $372 million at 31 March 2023 ($363 million at 31 December 2023)
  • The positive improvement in cash is principally caused by temporary deferral of payables and other positive working capital movements
  • Following the first of the $11 million bi-annual bond interest payments in April, cash at the end of April is $361 million
  • We expect our costs to be covered by income for the remainder of the year
• Net cash under IFRS of $128 million at 31 March 2024 ($120 million at 31 December 2023)
  • Total debt of $248 million at 31 March 2024 ($248 million at 31 December 2023)

PRODUCTION AND OPERATIONS

• Zero lost time incidents in 2024 to date, with four and a half million hours worked since the last incident
• Gross production of 76,310 bopd in Q1 2024 (65,770 bopd in Q4 2023), all from the Tawke licence, where local sales demand remains robust
  • Net production of 19,080 bopd in Q1 2024 (16,440 bopd in Q4 2023)
• Following negotiation with local buyers, the sales price from the Tawke licence has been raised to the upper-USD 30s per barrel level

ARBITRATION

• The London-seated international arbitration process, which includes Genel's claim for substantial compensation from the KRG following the termination of the Miran and Bina Bawi PSCs, is ongoing. Written closing submissions will now be made next week, subsequent to which written reply submissions will be made in the first half of June. The timing of the result is uncertain, but is expected by the end of 2024

OUTLOOK

• Genel continues to expect net cash to remain well above $100 million throughout 2024
• Talks between stakeholders regarding the Iraq-Türkiye Pipeline are ongoing, although the timing of the resumption of exports remains uncertain

(Source: Genel Energy)