Genel Energy PLC (LON:GENL) has sent a message of “resilience” and “strong performance” against industry and broader headwinds In its financial results statement.
The group said its results for the twelve months ended 31 December 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. Operating profit and underlying profit were reported at US$132.3mln and US$134.9mln respectively, versus a loss of US$254.6mln and a profit of US$138.9mln in 2018.
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.
READ: Genel Energy says Tawke production is profitable at US$30 oil
“The industry is currently facing headwinds that challenge companies to demonstrate their resilience and flexibility,” Bill Higgs, Genel's chief executive said in the statement.
“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," he added.
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.
A future ramp-up in investment could see the capex budget expand to around US$160mln to US$200mln as and when the external environment improves.
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.
Yesterday, Genel announced that drilling activity at the Tawke field was being scaled back, and today it noted that the planned Qara Dagh-2 well which had been slated for Q2 will now likely be delayed.
Production guidance for 2020 - set “close to Q4 2019 levels” which amounted to 35,410 bopd – is likely to be impacted by reduced spending.
The company said that recent payments due from the Kurdish authorities have yet to be received. It's most recent came in January, covering crude sales for September 2019, though the “KRG continues to state the importance of ongoing payments to oil companies.”
Genel told investors it expects that the KRG with deliver on its promises.
Genel also noted that as well as paying a final dividend of 10 cents per share, distributing around US$28mln, it would seek to increase the 2020 interim dividend if market conditions allow it, and, it plans to take advantage of opportunities to repurchase its bonds at a value-accretive price.