viewGenel Energy PLC

Genel Energy showing resilience with low-cost production in Kurdistan


  • Low-cost oil production
  • Stakes in Taq Taq and Tawke oilfields
  • Dividend payer
Genel Energy PLC -

Quick facts: Genel Energy PLC

Price: 115 GBX

Market: LSE
Market Cap: £319.32 m

What it does

Genel Energy PLC (LON:GENL) is the largest holder of reserves and resources in the Kurdistan Region of Iraq, where it operates the Taq Taq and Tawke oil fields, in which it owns 44% and 25% stake respectively.

In the same region, it is also planning a drilling campaign at the Qara Dagh field where it envisages some 200mln barrels of crude, while the Sarta field, where it has partnered with US giant Chevron, is set to see a mid-2020 startup date.

It also has exploration acreage in Morocco, at the offshore Sidi Moussa licence, and Somaliland, where it recently bought out its partner East Africa Resource Group in the SL10B13 onshore block, estimated to hold around 200mln barrels of oil.

How it is doing

Financial results released in March sent a message of resilience and strong performance against industry and broader headwinds.

It confirmed production growth, with output of 36,250 barrels of oil per day up from 33,700 bopd in 2018.

Revenue rose to US$377.2mln, from US$355.1mln, while earnings excluding exploration (EBITDAX) amounted to US$321.8mln, up from US$304.1mln.

Genel generated some US$272.9mln of cash from operations, had capex of US$158mln and ended 2019 with US$390mln of cash and US$300mln of debt. Dividends for the year amount to 15 US cents per share.

A pair of statements in April updated on the payment arrangements in Kurdistan.

It received outstanding payments for oil sales in October 2019 and then another for March 2020.

The payments come as the Kurdistan authorities made new proposals regarding international oil companies operating in the Iraqi region – committing to settle monthly invoices sooner, by the fifteenth day of the following month, whilst deferring outstanding payments from November 2019 to February 2020.

At that time, the company said that an additional payment programme will be put in place to recover deferred invoices should the oil price recover to US$50 per barrel.

In terms of outlook, Genel said its business is resilient to an oil price of US$30 per barrel and noted that with significant capital allocation flexibility it can cut back capital expenditure (capex) for 2020 down to around US$60mln.

Noting the impact of the coronavirus (covid-19) pandemic, it added that the operations in the Kurdistan Region of Iraq have been affected though operations continue with a reduced staff. Further activity is under review.

Production guidance for 2020 - set “close to Q4 2019 levels” which amounted to 35,410 bopd - is likely to be impacted by reduced spending.


What the boss says

“The industry is currently facing headwinds that challenge companies to demonstrate their resilience and flexibility,” said chief executive Bill Higgs.

“Genel has a business model and strategy designed to shelter us from such extreme circumstances, with low-cost oil production, robust finances, and flexibility in our expenditure allowing us to pay a material dividend while retaining sufficient liquidity to capitalise on opportunities and take advantage of future upside. 

“Our strong balance sheet with limited capital commitments allows us to invest in the most value accretive areas and pay this dividend at the prevailing oil price, even in a scenario with a temporary delay in payments from the KRG.”

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