Genel Energy PLC (LSE:GENL, OTC:GEGYY)'s chief executive Paul Weir, in today's half-year results, highlighted that cash-generative production continues at the Tawke project, and the company is still seeking new assets to materially diversify its business.
This comes amidst a political impasse which currently restricts Kurdistan crude from being sold in international markets.
The company reported revenue of US$37.6 million for the first six months of 2024, with 19,510 barrels of oil produced per day from Tawke, sold domestically only, as exports from Kurdistan to international buyers remain suspended.
Genel Energy delivered significant cost reductions across its business and ended the half-year with a net cash position of US$125.5 million.
“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,” Weir said in the results statement.
“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.”
Weir noted that the business in Kurdistan still “has the potential to deliver significant shareholder value, well above the current market value.”
He added: “The Tawke PSC is a world-class asset with a long life ahead of it, and when exports restart, it can deliver over $100 million of entitlement-free cash flow per annum to Genel, more than double the current level.”
Weir told shareholders that, alongside the industry, Genel continued 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 demonstrates that negotiations continue and support the view that a negotiated solution can be found,” Weir added.
Looking ahead, the Genel boss said: “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.”
Today, Genel also announced its intention to buy back around $25 million of bonds in a process that is expected to close on 20 August.