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Genel Energy taking swift action to protect balance sheet and move forward, says broker

A net cash position of over US$100m and a dividend maintained will provide sufficient comfort to investors

Genel Energy PLC -
Genel confirmed it is paying US$27.8mln of dividends, at 10 US cents per share, to shareholders

Genel Energy PLC (LON:GENL)  has moved quickly in response to market events, according to broker SP Angel.

The Kurdistan-focused oil group has halved capital expenditure for 2020, protecting its balance sheet while still progressing the Sarta development.

Regular payments from the KRG will remain the focus, said Sam Wahab at SP Angel, however, the company’s net cash position of over US$100m and a dividend maintained will provide sufficient comfort to investors in his view.

Earlier today, Genel revealed it had received US$98mln of cash proceeds in the first four months of 2020, and, as at the end of April, it had US$404mln of cash on account – with net cash stated at US$106mln on April 30.

The group said it spent some US$45mln of capex in the four-month period, though forward expenditure was cut significantly as the coronavirus (COVID-19) pandemic took hold.

Genel confirmed it is paying US$27.8mln of dividends, at 10 US cents per share, to shareholders on its register on May 29.

The group said production in the first quarter of 2020 was marked at an average of 34,170 barrels of oil per day (bopd), in line with guidance set in January following decisions to reduce investments according to external conditions.

Genel noted that its operating costs are expected to be US$3 per barrel, and that producing asset cashflow breakeven is maintained when crude is priced below US$30 per barrel (including capex necessities and payment mechanisms).

"Despite the impact of COVID-19 creating a challenging environment for our industry, Genel's resilient business model and robust financial position, with over $100 million in net cash and an asset cashflow breakeven of $30/bbl, leaves us well placed to withstand the consequences of the pandemic as we continue to deliver our strategy,” Bill Higgs, Genel chief executive said in the statement.

Quick facts: Genel Energy PLC

Price: 132.6 GBX

LSE:GENL
Market: LSE
Market Cap: £368.19 m
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