Genel Energy PLC (LSE:GENL, FRA:4VL, OTC:GEGYF) released half-year results that highlight strong cash generation, as its low-cost operation in Northern Iraq was supported by oil prices, and increased its interim dividend to 6 US cents per share, up from 5 cents.
It produced 32,760 barrels of oil per day net in the first half of 2021, slightly higher than the same period last year and in line with expectations. Production cost was marked at only US$3.7 per barrel and the Brent Crude Oil (LSE:BRENT) price averaged around US$65 per barrel during the period.
Free cash flow was marked at US$22mln for the period, after the Kurdistan Regional Government switched payment terms to two months' arrears from one (moving US$30mln of due payments into the second half). Genel noted that some US$123mln of oil payments were received from the KRG in the first half.
Chief executive Bill Higgs said that Genel continues to deliver on its strategy.
“Capital investment made last year, despite the low oil price and over US$150mln of deferred payments, has meant this period has benefitted from the addition of oil from Sarta and increased production from Peshkabir, with production having increased in line with guidance,” Higgs said.
“This high-margin production will generate sufficient cash flow in 2021 to more than cover investment in growth and the increased dividend, and we are set to end the year in a net cash position.
“Given the cash generation of the business, our strong balance sheet, and the resilience of our business model, we are fulfilling our aim of paying a progressive dividend by increasing the interim payment," Higgs said.
The Genel chief meanwhile highlighted that an appraisal campaign, targeting growth projects at Sarta and Qara Dagh, is now well underway, and results from three high-potential wells are due later in the year.