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By John Lee.

Genel Energy plc has announced its audited results for the year ended 31 December 2023.

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

"We have continued the journey that we commenced in 2022 to, firstly, refocus the business on areas where it can be profitable and deliver shareholder value and, secondly, optimise the organisation to create a reshaped and resilient business with the potential for transformational value accretion through several catalysts.

"We are a leaner, simplified company that retains clear objectives - generating resilient and sustainable cash flows, diversifying our income through the addition of new assets, and maintaining a strong balance sheet.

"We have reduced our workforce and cut costs significantly, exited the Sarta and Qara Dagh licences, worked with our operating partner to develop a new income stream from local sales, and spent considerable time defending our contractual rights under the Bina Bawi and Miran PSCs, where we invested over $1.4 billion before their termination in December 2021.

"These actions mean that we are now well positioned in 2024, with a reshaped and resilient business and a strong balance sheet. In the absence of value accretive M&A, we expect to maintain net cash of more than $100 million even if the suspension of exports continues to the end of the year.

"Genel has established a sound platform from which to spring forward. The re-opening of the pipeline has the potential to more than double cash generation. We expect to recover the $107 million of overdue receivables, and we have the capacity and intent to acquire new assets. On the Miran and Bina Bawi oil and gas assets arbitration, having now completed the evidential hearing, our views on the merits of our case are unchanged since the arbitration was launched in December 2021."

Results summary ($ million unless stated)

1. EBITDAX is operating profit / (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 11
3. Reported cash less IFRS debt (page 11)

Highlights

• The Iraq-Türkiye pipeline ('ITP') has been suspended since March 2023, with talks ongoing but no clear timing on when exports will restart
• Reshaped business resilient and well positioned to maximise upside
  • Local sales consistent since end of January, with the Tawke PSC currently generating sufficient funding to cover organisational spend
  • Increase to Tawke PSC 2P reserves replacing production in 2023 and retaining 2P reserves of 79 MMbbls net to Genel at the licence
  • Organisational spend outside the cash generative Tawke PSC reduced by 40% to around $3 million per month
  • Reduced workforce by 70% and cut costs significantly across all areas of the business
  • Sarta and Qara Dagh exited, resulting in a write off relating to Sarta of $19 million
  • Somaliland licence extended until 2026
• Strong balance sheet provides opportunity to acquire and develop new assets
  • Net cash of $120 million at 31 December 2023 ($228 million at 31 December 2022)
  • Total debt of $248 million reduced by $26 million through repurchase of bonds at below 95 cents ($274 million at 31 December 2022)
  • Genel expects to maintain net cash well above $100 million throughout 2024
• Ongoing focus on being a socially responsible contributor to the global energy mix
  • Zero lost time incidents in 2023, with over four million hours now worked since the last incident
  • Carbon intensity of 14 kgCO2e/bbl for Scope 1 and 2 emissions in 2023 (2022: 17.6 kgCO2e/bbl), below the global oil and gas industry average of 19 kgCO2e/boe
  • Genel continues to invest in the host communities in which we operate, aiming to invest in those areas in which we can make a material difference to society
• The London-seated international arbitration two-week hearing which included Genel's claim for substantial compensation from the Kurdistan Regional Government ('KRG') following the termination of the Miran and Bina Bawi PSCs finished as scheduled. Parties will make written closing submissions in April, subsequent to which written reply submissions will be made in May. The timing of the result is uncertain, but continues to be expected by the end of 2024

Potential catalysts for significant shareholder value creation in 2024

• Reopening of the ITP has the potential to materially increase cash generation
• $107 million overdue from the KRG for oil sales from October 2022 to March 2023 inclusive
• The Company continues to seek to acquire new assets to increase and diversify our income streams

More here.

(Source: Genel Energy)

By John Lee.

UK-listed Genel Energy has said that it has cut all non-essential activity and significantly reduced spend, while developing a new source of income through domestic sales in the Kurdistan Region.

Meanwhile, an arbitration hearing into the termination of the Miran and Bina Bawi production sharing contracts (PSCs) is scheduled to start in London on 19th February.

The share price has not moved significantly in trading on Wednesday morning.

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 2023 results, which are scheduled for release on 26 March 2024. The information contained herein has not been audited and may be subject to further review.

Paul Weir [pictured], Chief Executive of Genel, said:

"Since the suspension of exports through the Iraq-Türkiye pipeline in March last year, we have reshaped the business to provide long-term resilience and maximise potential upside exposure for shareholders.

"We have cut all non-essential activity and significantly reduced spend, while developing a new source of income through domestic sales. We have well over a hundred million dollars in net cash, and expect to be in a position where domestic proceeds, if sustained at levels seen in the fourth quarter of 2023, would mean that our income covers our ongoing costs from March onwards, once Sarta and the arbitration hearing workstreams are complete. We also continue to work hard to add new assets to increase and diversify our income streams.

"The past six months have included significant work, and effective spend, on efficiently closing out our activity on Sarta and minimising our footprint and cost base in Kurdistan. Our workforce has been reduced by over two thirds in the year. We have progressed civils work in Somaliland, and we continue to defend shareholder value as we progress our arbitration claim regarding the Miran and Bina Bawi oil and gas assets.

"There is real potential in 2024 for significant improvement in cash generation and delivery of shareholder value from multiple catalysts - the resumption of exports and regular payments, clarity on the timing of the recovery of $107 million of receivables, delivery on our strategy to add new assets to diversify our production portfolio, and a successful arbitration result and subsequent collection."

2023 PERFORMANCE

• Zero lost time incidents in 2023, matching the performance of 2022, with over four million hours worked since the last lost time incident
• Net production of 12,410 bopd in 2023 (30,150 bopd in 2022), following the closure of the Iraq-Türkiye pipeline ('ITP') in March, with minimal sales between April and August inclusive and the subsequent development of domestic sales
• Total proceeds of $101 million (2022: $473 million):
  • $61 million export sales proceeds relating to sales made in August and September 2022
  • $40 million domestic sales proceeds in H2 2023, of which $26 million was received in Q4 2023 as volumes improved from Q3 2023
• $107 million remains overdue from the Kurdistan Regional Government ('KRG') for oil sales from October 2022 to March 2023 inclusive
• Capital expenditure of $71 million, of which $24 million was in H2, as Genel cut activity and costs in an appropriate manner for the external environment
• Free cash outflow of $72 million (2022: positive free cash flow of $235 million)
• Bond debt reduced by $26 million nominal at an average price below 95¢
• Dividends totalling 12¢ per share paid in 2023 (2022: 18¢ per share), a total distribution of $33.5 million. Due to the lack of visibility on the timing of pipeline exports resuming and the re-establishment of a reliable record of payments, Genel has suspended its dividend programme

• Cash of $363 million at 31 December 2023 ($495 million at 31 December 2022)
• Net cash under IFRS of $119 million at 31 December 2023 ($228 million at 31 December 2022)
  • Total debt of $248 million at 31 December 2023 ($274 million at 31 December 2022)

2024 OUTLOOK AND GUIDANCE

• Should local sales continue at similar levels to Q4 2023, the Tawke PSC would generate sufficient funding to cover organisational spend from Q2 onwards

• Organisational spend outside the cash generative Tawke PSC is set to be reduced to around $3 million per month by the end of Q1, following completion of final remediation work at Sarta and the Miran and Bina Bawi arbitration hearing
• Interest expense is fixed at $2 million per month, paid half-yearly, with interest income from our cash currently around $1.5 million per month

• This outlook is expected to maintain net cash above $100 million throughout 2024, and preserves the financial capability to add new assets

UPDATE ON IRAQ-TÜRKIYE PIPELINE

• The Iraq-Türkiye pipeline ('ITP') shut on 25 March 2023
• While there continue to be positive meetings between relevant parties regarding reopening, there remains a lack of clarity regarding the status and timing of export resumption
• The Association of the Petroleum Industry of Kurdistan ('APIKUR'), of which Genel is a member, remains committed to working with the Federal Government of Iraq and the KRG to resume full production and export through the ITP for the benefit of all stakeholders

ARBITRATION

• The London-seated international arbitration including Genel's claim for substantial compensation from the KRG following the termination of the Miran and Bina Bawi PSCs is progressing. The two-week hearing is scheduled to start in London on 19 February 2024
• The KRG's claim is that the KRG was entitled to terminate the Bina Bawi and Miran PSCs. Genel's claim is that the KRG's termination of the PSCs was repudiatory and, as a consequence, is claiming substantial damages. The KRG is not claiming any damages from Genel
• In total, Genel spent in excess of $1.4 billion acquiring and attempting to develop the Bina Bawi and Miran fields
• The hearing is confidential and as such we will not be able to update on progress until the Award is received, with the timing of the Award uncertain, but expected in 2024

OPERATIONS

• Tawke PSC (25% working interest)
  • Gross production from the Tawke licence increased to 65,780 bopd in Q4 2023, up from 25,980 bopd in Q3, with the field partners selling their entitlement share into the local market
  • In Q4, Genel received proceeds of $26 million and generated cash flow of $13 million from the Tawke PSC
• Sarta (30% working interest and operator).
  • The Sarta PSC terminated on 1 December 2023. Remediation activity is now complete, at a net cost ofof $1 million
• Taq Taq PSC (44% working interest and joint operator)
  • There has been no production since 20 May 2023, following closure of the export pipeline

Monthly costs have been reduced to below $1 million, with further cuts expected

• Somaliland
  • Required civil work on the Toosan-1 well site on the SL10B13 block (51% working interest and operator) at this stage of the project is now complete
  • The Company continues to assess the timing of further investment
• Morocco
  • The farm-out programme on the Lagzira block (75% working interest and operator) is ongoing

(Source: Genel Energy)

Genel Energy plc

Trading and operations update

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 2023.

Paul Weir, Chief Executive of Genel, said:

"Despite encouraging comments from senior politicians, the Iraq-Türkiye pipeline remains shut. Good progress has been made in achieving consistency of domestic sales volumes, although pricing continues to be weak. We remain confident that the pipeline exports will resume, and provide access again to international pricing. 

"We are on track to deliver the cost reductions that we forecast at our half-year results. Tawke is now cash generative from local sales, and monthly spend across the business is set to reduce further once we have exited the Sarta licence and completed Somaliland civil works. This year we have reduced debt by almost 10% at opportunistic prices while retaining our significant cash balance, providing us with the financial strength to deliver on our objectives and diversify through the addition of resilient income streams. 

"We will continue to reshape our portfolio and effectively balance minimising our spend and progressing our strategy, and we continue to progress towards the Miran and Bina Bawi arbitration hearing currently scheduled for February next year."

Q3 2023

• Zero lost time incidents in 2023, with it being over two years and four million hours worked since the last incident
• $11 million of cash proceeds received from local sales from the Tawke PSC in Q3
  • Costs have been materially reduced at Tawke, with the asset profitable in the quarter
• Capital expenditure of $12 million in Q3

• Cash of $391 million at 30 September 2023 ($425 million at 30 June 2023)
• Net cash under IFRS of $132 million at 30 September 2023 ($158 million at 30 June 2023)
  • Total debt of $264 million at 30 September 2023 ($273 million at 30 June 2023)
  • Following completion of the bond buy-back tender earlier this month, and earlier purchases in the market, Genel's total debt has been reduced by $25 million in H2 2023, and now stands at $248 million

• $110 million overdue from the Kurdistan Regional Government ('KRG') for past oil sales at the end of Q3

2023 OUTLOOK

• Domestic sales from Tawke expected to increase in Q4
• Genel expects capital expenditure to be c.$70 million (compared to March 2023 guidance of $100 to $125 million), with $60 million spent up to the end of Q3 2023
• Activity in Q4 includes limited work ahead of exit of the Sarta PSC, civil work completion on the Toosan-1 prospect in Somaliland, and continuing preparation for the Miran and Bina Bawi oil and gas arbitration hearing, scheduled for February 2024
• Genel will continue to review allocating capital towards the reduction of debt at opportunistic prices, while not materially impacting the availability of capital for the addition of new cash-generative assets

UPDATE ON IRAQ-TÜRKIYE PIPELINE

• The Iraq-Türkiye pipeline ('ITP') shut on 25 March 2023
• While there continues to be positive language from the Federal Government of Iraq and Türkiye regarding opening, Genel has received no guidance from the KRG regarding the status or timing of the pipeline reopening
• The Association of the Petroleum Industry of Kurdistan ('APIKUR'), of which Genel is a member, met with the Federal Government of Iraq's ('FGI') Ministry of Oil last week
  • The members of APIKUR have committed to continuing to work with the FGI and the KRG to resume full production and export through the ITP for the benefit of all stakeholders

OPERATIONS

• Tawke PSC (25% working interest)
  • Having begun in July, gross local sales from the Tawke licence in Q3 2023 totalled 13,300 bopd, with no export sales, and the balance of production delivered to the KRG as its entitlement
  • Production and sales continue to increase, with production in the fourth quarter so far averaging double the level of the third quarter, with the Peshkabir field having restarted production on 16 October
  • Local sales are currently more than covering costs at the licence
• Sarta (30% working interest and operator)
  • Genel and its partner, Chevron, informed the Ministry of Natural Resources ('MNR') in Q2 2023 of its intention to surrender the Sarta asset and thereby terminate the Sarta PSC, with the date of PSC termination 1 December 2023, and limited remediation activity expected to be low-cost and completed in Q1 2024
  • Genel's share of the limited amount of oil in storage at the field has been sold into the local market
• Taq Taq PSC (44% working interest and joint operator)
  • There has been no production since 20 May 2023, following closure of the export pipeline
• Somaliland
  • Civil work on the Toosan-1 well site continues on the SL10B13 block (51% working interest and operator) and is on track for the planned work for this year to be completed within budget and on time
  • As previously stated the Company will assess timing of further investment based on the financial outlook at the time
• Morocco
  • The farm-out programme on the Lagzira block (75% working interest and operator) is ongoing

ARBITRATION

• 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 is progressing. The two-week hearing is currently scheduled for February 2024
• The KRG's claim is that the KRG was entitled to terminate the Bina Bawi and Miran PSCs. Genel's claim is that the KRG's termination of the PSCs was repudiatory and, as a consequence, is claiming substantial damages. The KRG is not claiming any damages from Genel

(Source: Genel Energy)

By John Lee.

Iraq's Basra Gas Company (BGC) has exported a record shipment of 25,000 tons of condensates, the largest shipment ever exported by the company.

Andrew Weir, CEO of BGC, said the shipment was a "major achievement that will boost export rates and enhance Iraq's financial revenues."

"Iraq has the potential to be a global player in the LPG and condensates market, and we are ambitious to be among the leading exporting countries," Weir added.

Basra Gas Company was previously exporting 16,300 tons of condensates, but with increased production, the company has been able to safely and efficiently increase shipments to 25,000 tons using the tanker "Marilyn." This means shipping larger volumes, which enables the company to increase its current and future export capacity.

According to a statement from the Ministry of Oil, BGC has increased its production of associated gas to more than three times what it was producing when it was founded in 2013. The company has also been able to prevent more than 160 million tons of carbon dioxide from entering the atmosphere to date. With the full operation of the Basra LNG plant, an additional 10 million tons of carbon dioxide will be prevented from polluting the atmosphere, bringing the company's total carbon dioxide reduction capacity to around 30 million tons per year.

(Source: Ministry of Oil)

By John Lee.

Revenues at Genel Energy have, as expected, fallen sharply as a result of the closure of the Iraq-Turkey Pipeline (ITP) which brings oil from Northern Iraq to Turkiye's port of Ceyhan.

In its unaudited results for the period ended 30 June 2023, Paul Weir, Chief Executive of Genel, said:

"The closure of the Iraq-Türkiye pipeline on 25 March 2023 has resulted in minimal sales and no payments from the KRG since that date. This has materially impacted both our current and expected cash flows, with the current period seeing a free cash out flow.

"Approval of the Iraqi budget in June put in place a framework for the restart of payments and exports, with production from Kurdistan incorporated in the budget, and this was an important step. Discussions are now ongoing between Iraq and Türkiye regarding the commercial and political arrangements that would enable the resumption of exports.

"As we await a positive outcome to discussions between Iraq and Türkiye, we retain a material cash position, prioritised for investment in new assets, and remain clear and determined on our direction of travel. We have accelerated the ongoing reshaping of our portfolio, organisation, and plans, and we continue to diligently review assets and businesses that can support delivery of the business that we have framed over the past 12 months.

"Given the $170 million impact so far that the lack of payments and revenue is expected to have on our liquidity at year-end, and with no clear line of sight on when either pipeline exports or payments will restart, we have taken the decision to suspend the dividend. We remain committed to building a business with predictable, repeatable, and diversified cash flows, which would ultimately support the re-establishment of a dividend programme."

The main points from the results announcement:

Results summary ($ million unless stated)

1. EBITDAX is operating (loss)/profit adjusted for the add back of depreciation and amortisation, impairment of property, plant and equipment, impairment of intangible assets and impairment/reversal of impairment of receivables
2. Free cash flow is reconciled on page 7
3. Reported cash less debt reported under IFRS (page 7)

Summary

• The prolonged closure of the Iraq-Türkiye pipeline has materially impacted production, which averaged 13,440 bopd in H1 (H1 2022: 30,420)
• Two payments totalling $61 million were received from the Kurdistan Regional Government ('KRG') in the period, with $110 million now overdue
• Given the loss of cash flow in the period and the lack of visibility on both the timing of pipeline exports resuming and the re-establishment of a reliable record of payments, Genel has suspended its dividend programme
• In addition, the Company will assess the timing of further investment in Somaliland following the completion of civil engineering work, based on the financial outlook at the time
• Work on assessing the future plans for Sarta, with a goal of making operations profitable, has been made more challenging by the investment environment, and consequently Genel has informed the Ministry of Natural Resources of its intention to surrender the asset and terminate the Sarta PSC
• Significant cash balance of $425 million at 30 June 2023 ($496 million at 31 March 2023) is prioritised for addition of new assets
• Net cash of $158 million at 30 June 2023 ($229 million at 31 March 2023)
  • Total debt of $273 million at 30 June 2023 ($274 million at 31 March 2023)
• 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

• As a consequence of the reduction in operational activity, Genel has right-sized the organisation and reduced spend compared to expectations at the start of 2023
  • Genel currently expects full year capital expenditure to be c.$70 million (original guidance $100-125 million), with two thirds of this already spent
• Limited local sales are ongoing from the Tawke licence
• Genel continues to actively review and work up opportunities to invest our cash to build a business that delivers resilient, reliable, and diversified cash flows that support a repeatable dividend programme in the long-term
• 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 is progressing. The trial remains scheduled for February 2024

More here.

(Source: Genel Energy)

Shares in Genel Energy rose nearly five percent on Wednesday as it announced its audited results for the year ended 31 December 2022.

Paul Weir, Chief Executive of Genel, said:

"Our production business generated record cash flow in 2022, building our significant financial resources and resulting in a net cash balance at the end of the year of over $200 million. The Company now has an exceptional opportunity to deploy its financial resources carefully to add new assets and grow and diversify our production business in order to improve the resilience and extend the line of sight on the funding of our established dividend programme. 

"Our capital allocation decisions for 2023 and beyond will be centred around that material, sustainable and progressive dividend programme, while protecting and maintaining the strength of our balance sheet. Our core business remains robust, funding our dividend from free cash flow in the mid-term and there is significant potential still remaining in the portfolio. We have an extremely busy 18 months ahead that carries much potential, and we have a highly capable team in place that is fully focused on delivering on that potential."

Results summary ($ million unless stated)

1. EBITDAX is operating profit / (loss) adjusted for the add back of depreciation and amortisation, impairment/write-off of oil and gas assets and net reversal of impairment of receivables
2. Free cash flow is reconciled on page 10
3. Reported cash less IFRS debt (page 10)
4. EPS excluding impairment is loss and total comprehensive expense adjusted for the add back of net impairment/write-off of oil and gas assets and net reversal of impairment of receivables divided by weighted average number of ordinary shares

Highlights

• Zero lost time incidents in 2022, with over three million hours now worked since the last incident
• Another year of active drilling on the Tawke PSC and consistent reservoir performance resulted in average daily working interest production of 30,150 bopd (2021: 31,710 bopd)

• Record free cash flow in 2022
  • High oil price and recovery of receivables helped drive free cash flow of $235 million (2021: $86 million)
  • Investment in production and appraisal at Sarta resulted in capital expenditure of $143 million (2021: $164 million)

• Disappointing results at Sarta resulted in a reduction in reserves and an impairment of $126 million, with expiry of the Qara Dagh licence resulting in a write off of $78 million
• Strong balance sheet provides opportunity to acquire and develop new assets
  • Significantly increased financial resources of $495 million ($314 million at 31 December 2021)
  • Net cash under IFRS of $228 million at 31 December 2022 ($44 million at 31 December 2021)
  • Total debt of $274 million at 31 December 2022 ($280 million at 31 December 2021)
• Committed material, sustainable, and progressive dividend programme well established
  • Dividends paid in 2022 increased by 13% to 18¢ per share (2021: 16¢ per share) a total distribution of $50 million
• Carbon intensity of 17.6 kgCO2e/bbl for Scope 1 and 2 emissions in 2022 (2021: 16 kgCO2e/bbl), below the global oil and gas industry average of 19 kgCO2e/boe

Outlook

• Committed dividend funded by free cash flow for medium-term
  • The Board is recommending a final dividend of 12¢ per share (2022: 12¢ per share), a distribution of $33.5 million
• Established dividend programme frames business and capital allocation decisions:
  • Production guidance unchanged at 27-29,000 bopd
  • 2023 capital expenditure expected to be between $100 million and $125 million
  • Progress towards drilling a well in Somaliland
  • Genel continues to actively screen and work up opportunities to invest our cash to extend the line of sight on resilient cash flows that support our dividend programme into the long-term
• Genel continues to invest in the host communities in which we operate, aiming to invest in those areas in which we can make a material difference to society
• 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 is progressing. The trial is scheduled for February 2024

More here.

(Source: Genel Energy)

Genel Energy has issued the following trading and operations update in advance of the Company's full-year 2022 results, which are scheduled for release on 22 March 2023. The information contained herein has not been audited and may be subject to further review.

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

"Genel starts 2023 with a strong balance sheet, a net cash balance of over $200 million, and a cash generative production business. Our focus is now the preservation of capital for the addition of new resilient and cash-generative assets to our production portfolio, with free cash generation in 2023 funding both our dividend programme and progress towards the drilling of our exploration well in Somaliland.

"As we work to centre our business around the delivery of our material, sustainable, and progressive dividend programme, our capital allocation decisions are targeted towards delivering the profitability and cash generation required to support that programme in the long-term."

2022 PERFORMANCE

• Zero lost time incidents in 2022, with over three million hours worked since the last incident
• Net production of 30,150 bopd in 2022 (31,710 bopd in 2021), and 29,600 bopd in Q4, in line with guidance
• $473 million of cash proceeds were received from the KRG in 2022 (2021: $281 million)
  • Higher Brent oil price of $101/bbl in 2022 ($71/bbl in 2021)
  • $124 million received relating to Tawke PSC override payments
  • $94 million received for deferred receivables relating to unpaid oil sales from November 2019 to February 2020 and the suspended override from March to December 2020
• Capital expenditure of $140 million, slightly below guidance due to the deferral of a well at Taq Taq and lower than budgeted spend at Sarta
  •  $74 million at Tawke PSC, and $47 million at Sarta
• Free cash flow of $233 million ($86 million in 2021)
• Dividends totalling 18¢ per share paid in 2022 (2021: 15¢ per share), a total distribution of $50 million

• Cash of $495 million at 31 December 2022 ($314 million at 31 December 2021)
  • Excludes $64 million which was due for payment in 2022
• Net cash under IFRS of $228 million at 31 December 2022 ($44 million at 31 December 2021)
  • Total debt of $274 million at 31 December 2022 ($280 million at 31 December 2021)

2023 OUTLOOK AND GUIDANCE

• Production in 2023 is expected to be 27-29,000 bopd, with similar operating expenditure to last year of c.$50 million, equating to c.$5/bbl
• Material reduction in capital expenditure, with 2023 expenditure expected to be between $100 million and $125 million, with key asset spend including:
  • Production business cost recoverable capital expenditure roughly flat at c.$90 million
  • Up to c.$25 million expenditure in Somaliland, as we progress towards the spudding of the Toosan-1 well in this frontier basin
  • c.$10 million currently expected on maintenance of other assets including Sarta, a reduction of c.$50 million on 2022
• Genel is committed to our material and sustainable dividend programme. The dividend is currently at 18¢ per share, equating to $50 million, which we expect to be covered by free cash flow in 2023
• Genel continues to actively screen and work up opportunities to put our cash to work in order to extend the line of sight on cash flows that support our dividend programme into the long-term

• Genel continues to invest in the host communities in which we operate, aiming to invest in those areas in which we can make a material difference to society, with an increasing focus on Somaliland in 2023

PRODUCTION BUSINESS

• Production by field was as follows:

• Tawke PSC (25% working interest)
  • Gross production averaged 107,090 bopd in 2022, and 106,480 bopd in Q4
• Sarta (30% working interest and operator)
  • Gross production 4,710 bopd in 2022, and 3,960 bopd in Q4
  • Genel's focus is on making ongoing production from Sarta profitable, with any further capital investment contingent on both licence profitability and the extent to which there can be confidence that such investment can add cash generative production
• Taq Taq PSC (44% working interest and joint operator)
  • Gross production averaged 4,490 bopd in 2022, and 3,970 bopd in Q4
  • Activity in 2023 is expected to include one sidetrack well targeting the Upper Shiranish formation

PRE-PRODUCTION BUSINESS

• Somaliland
  • Preparation continues for the drilling of the Toosan-1 well on the highly prospective SL10B13 block (51% working interest and operator)
  • The Toosan prospect contains stacked Mesozoic reservoir objectives, with multiple individual prospective resource estimates each ranging from 100 to 200 MMbbls
  • The geotechnical survey has now completed as we progress towards construction of the well pad. Environmental and social impact assessments are underway, and tendering has commenced for the rig and well services
  • Genel continues to target a spud date in the next 12-18 months, acknowledging the challenges of operating in such a frontier area with limited existing infrastructure
• Morocco
  • The farm-out programme on the Lagzira block (75% working interest and operator) is continuing
• Qara Dagh
  • The results of the QD-2 well were announced in January 2022
  • Under the terms of the PSC the licence has now expired
  • The joint venture partners are engaging with the KRG on the future of the licence area

ARBITRATION

• 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 is progressing. The trial is scheduled for February 2024

(Source: Genel Energy)

Shares in Genel Energy were trading as much as 6 percent higher this morning following a trading and operations update in respect of the third quarter and first nine months of 2022.

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

"I am pleased that we remain on track to generate around $250 million of free cash flow this year, building towards a significant cash balance of over $500 million by the end of the year. We are focused on putting this cash to work to purchase new assets, grow the business, and increase shareholder returns. It is business as usual on an operational level in Kurdistan, while we continue to work with the KRG on the challenges that the sector faces. Our existing predictable production business outlook supports our established dividend of $50 million, and our committed dividend programme has paid $178 million of cash to shareholders since its inception in 2019."

FINANCIAL

• Margin of $36/bbl in the first three quarters of 2022 (2021: $24/bbl), with Brent averaging $105/bbl (2021: $71/bbl)
• Capital expenditure of $109 million, of which $55 million was spent at Tawke, and $38 million at Sarta
• Free cash flow of $175 million up to 30 September 2022
  • This does not include proceeds for June production, totalling $59 million, received in October

• In relation to the nominal $120 million for unpaid sales made from November 2019 to February 2020, and the suspended override from March 2020 to December 2020 that would have earned $38 million, since January 2021:
  • Cash of $117 million has been received
  • Offsets of $9 million have been made
• Cash of $447 million at 30 September 2022 ($412 million at 30 June 2022)
• Net cash under IFRS of $181 million at 30 September 2022 ($141 million at 30 June 2022)
  • Total debt of $274 million at 30 September 2022 ($280 million at 30 June 2022), following the opportunistic acquisition of $6 million of bonds at a price that provided an attractive level of return

PRODUCTION BUSINESS

• Net production of 30,350 bopd in the first nine months of 2022, and 30,200 bopd in Q3, in line with guidance
• Tawke PSC (25% working interest)
  • Gross production averaged 107,300 bopd in the first nine months of 2022, and 108,500 bopd in Q3
• Sarta (30% working interest and operator)
  • Gross production averaged 4,900 bopd in the first nine months of 2022, and 3,960 bopd in Q3
  • Production continues from existing well stock as we continue to work on the field to seek to optimise production from various zones, ranging from the pilot production tests of the newly discovered Butmah and Najmah resources through to the initial stacked Mus & Adaiyah reservoir intervals
  • Rigless testing at Sarta-6 is now underway, with the initial appraisal programme expected to be complete by the end of year
• Taq Taq PSC (44% working interest and joint operator)
  • Gross production averaged 4,660 bopd in the first nine months of 2022, and 4,280 bopd in Q3
  • Taq Taq continues to perform in line with expectations, with positive results from the recent well intervention programme
  • Drilling is set to resume with an infill production well expected to spud around the end of 2022

PRE-PRODUCTION BUSINESS

• Somaliland
  • Following the successful farm-out in December 2021, preparation continues for the drilling of a well on the highly prospective SL10B13 block (51% working interest and operator)
  • The Toosan prospect contains stacked Mesozoic reservoir objectives, with multiple individual prospective resource estimates each ranging from 100 to 200 MMbbls
  • The geotechnical survey will begin this month, supporting the plan for the construction of the well pad. Environmental and social impact assessments will begin before the end of 2022, and tendering has commenced for the rig and well services, ahead of a targeted spud date around the end of 2023/early 2024
  • Having undertaken a combination of water and food relief programmes earlier in the year, in reaction to the ongoing drought in Somaliland Genel is working with ANPPCAN to deliver a food relief programme to c.4,000 families
• Morocco
  • A Petroleum Agreement and Association Contract is expected to be signed with ONHYM regarding the Lagzira block (75% working interest and operator), with a farm-out programme now underway
  • The Lagzira block is a large offshore licence, in water depths of 200-1,200 metres, with a proven petroleum system following Genel's 2014 well which recovered oil from Upper and Middle Jurassic reservoirs
  • Subsequent to this drilling, high quality 3D (broadband multi-azimuth) seismic was acquired in 2018, and new plays identified, with 18 prospects and leads, and material resource potential
• Qara Dagh (40% working interest and operator)
  • We continue to evaluate the QD-2 well and its results, and a decision on licence next steps will be taken shortly. Should no further action be taken then the licence will expire in January 2023

ARBITRATION

• 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 is progressing. Written submissions have been made to the tribunal and the trial has now been scheduled for February 2024

ESG

• Zero lost time incidents in 2022, with three million hours worked since the last incident
• Following the Annual General Meeting ('AGM') on 12 May 2022 the Company announced that resolutions 4 and 16 had over 20% of votes cast against them. In accordance with Provision 4 of the UK Corporate Governance Code 2018, the Company is required to provide an update on the views received from shareholders and actions taken in respect of these resolutions
  • In light of the votes received against the resolutions, the Company has engaged with major shareholders to understand their views. Noting that proxy agencies were all in favour of the above resolutions, and following discussions with shareholders, the Board considers the votes cast against the resolutions to primarily reflect differing opinions held by the Company's major shareholders in relation to a number of matters. As a consequence, the Company does not believe it is necessary or appropriate to take any additional action

OUTLOOK AND GUIDANCE

• Production guidance of 30-31,000 bopd reiterated for 2022
• 2022 capital expenditure guidance of between $150 million to $170 million reiterated
• Genel expects to end 2022 with over $500 million of cash on the balance sheet
• Genel continues to actively screen and work up opportunities to put our cash to work in order to extend the line of sight on cash flows that support our dividend programme into the long-term
• Appraisal at Sarta is ongoing, with results of the Sarta-6 well expected around the end of the year
• Genel has an established and committed dividend programme, currently paying $50 million per annum
• We have recently taken opportunistic steps to buy back a limited number of bonds at a price that provides an attractive return on investment. We may make further opportunistic purchases so long as the capital need does not reduce our ability to successfully acquire assets that we are targeting

(Source: Genel Energy)

Genel Energy has announced the appointment of Paul Weir as Chief Executive Officer, and as a member of the Board of Directors, with immediate effect.

Paul, who was previously Chief Operating Officer before being made Interim Chief Executive Officer in June this year, joined Genel in January 2020. Paul had worked for more than 30 years in upstream E&P with experience in the North Sea, South East Asia and Africa.

Before joining Genel, Paul was Group Head of Operations and Safety at Tullow Oil. Prior to that he had spent 13 years at Talisman Energy, ultimately as VP Production and Exploration. He has also worked in a variety of roles at Total, Occidental, Elf and Nippon Oil.

David McManus, Chair, said:

"I am delighted to confirm the appointment of Paul as Chief Executive Officer. He has the experience and vision to deliver Genel's strategy, as we focus on positive performance from our current portfolio and utilising our material financial strength to grow the Company for the benefit of all stakeholders.

"Paul has already brought energy and clarity to the business, giving us confidence that value delivery will follow."

Paul Weir, CEO, said:

"I am excited to be leading Genel as we move on to the next chapter of our growth story. We have built a fantastic team that I am confident will turn our significant growth potential into value for shareholders. My highly experienced team is focused on both operational delivery - our production remains robust, and our material dividend is well supported - as well as exploring opportunities for putting our balance sheet to work to enhance our position by adding assets.

"As we look to do so, we will not lose our firm focus on the central pillars of our business model - mitigating risk and ensuring the ongoing financial strength to support our dividend in the long-term."

(Source: Genel Energy)

By John Lee.

Shares in Genel Energy were trading down around 5 percent on Tuesday morning, despite significant increases in revenue and profit announceed in its unaudited results for the six months ended 30 June 2022.

Paul Weir, Interim Chief Executive of Genel, said:

"Our cash generation in the first half of the year has been exceptionally strong - driven by our low-cost, high-margin oil production and disciplined capital allocation. We remain focused on the delivery of our long-established strategy of putting capital to work to grow our production and cash generation, while retaining our resilience and paying a material and progressive dividend.

We generated $129 million in free cash flow and are well on track to generate over a quarter of a billion dollars of free cash flow for the full year. This continues to build our balance sheet strength and optionality, providing us with the funds to add the right assets at the right price. Our cash flow this year benefits from the recovery of receivables and our override payments, and we are focused on replacing these by building a portfolio that supports the resilience, sustainability, and progression of our material dividend."

Results summary ($ million unless stated)

1. EBITDAX is operating profit / (loss) adjusted for the add back of depreciation and amortisation, impairment of property, plant and equipment, impairment of intangible assets and reversal of impairment of receivables
2. Free cash flow is reconciled on page 8
3. Reported cash less IFRS debt (page 8)

Summary

• Material cash generation from low-cost and high-margin oil production:
  • Net production averaged 30,420 bopd in H1 2022 (H1 2021: 32,760 bopd)
  • Low production cost of $4.4/bbl and strength of oil price delivered a margin per barrel of $32/bbl (H1 2021: $20/bbl)
  • Free cash flow of $129 million (H1 2021: $22 million)
• Financial strength provides options for capital allocation:
  • $75 million of capital expenditure in H1 2022, of which $41 million was spent at Taq Taq and Tawke, and $27 million on Sarta appraisal
  • Genel took on operatorship at Sarta on 1 January 2022, with Sarta-5 and Sarta-1D subsequently being completed
  • Cash of $412 million (31 December 2021: $314 million)
  • Net cash of $141 million (31 December 2021: net cash of $44 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
    • Two million work hours since the last LTI, as we seek to repeat the performance of six years without an LTI up to September 2021
  • As we mark 20 years of operations in the Kurdistan Region of Iraq ('KRI'), the Genel20 Scholars initiative has launched, with Genel funding the opportunity for 20 economically disadvantaged students to have a life-enhancing education at the American University of Kurdistan

Outlook

• Production guidance for 2022 maintained as around the same level as 2021, currently tracking between 30-31,000 bopd for the full-year
• 2022 capital expenditure guidance of between $140 million and $180 million tightened to $150 million to $170 million
• Genel expects free cash flow of over $250 million in 2022, pre dividend payments
• Appraisal at Sarta is ongoing, with results of the Sarta-6 well expected around the end of the year
• The Company continues to actively pursue new business opportunities, focused on production and cash generation
• The London seated international arbitration regarding Genel's claim for substantial compensation from the KRG following Genel's termination of the Miran and Bina Bawi PSCs is ongoing
• Interim dividend retained at 6¢ per share:
  • Ex-dividend date: 15 September 2022
  • Record date: 16 September 2022
  • Payment date: 14 October 2022

Full results here.

(Source: Genel Energy)