Genel Energy plc (‘Genel’ or ‘the Company’) announces its audited results for the year ended 31 December 2023.

Paul Weir, Chief Executive of Genel, said:
“We have continued the journey that we commenced in 2022 to, firstly, refocus the business on areas where it can be profitable and deliver shareholder value and, secondly, optimise the organisation to create a reshaped and resilient business with the potential for transformational value accretion through several catalysts.

We are a leaner, simplified company that retains clear objectives – generating resilient and sustainable cash flows, diversifying our income through the addition of new assets, and maintaining a strong balance sheet.

We have reduced our workforce and cut costs significantly, exited the Sarta and Qara Dagh licences, worked with our operating partner to develop a new income stream from local sales, and spent considerable time defending our contractual rights under the Bina Bawi and Miran PSCs, where we invested over $1.4 billion before their termination in December 2021.

These actions mean that we are now well positioned in 2024, with a reshaped and resilient business and a strong balance sheet. In the absence of value accretive M&A, we expect to maintain net cash of more than $100 million even if the suspension of exports continues to the end of the year.

Genel has established a sound platform from which to spring forward. The re-opening of the pipeline has the potential to more than double cash generation. We expect to recover the $107 million of overdue receivables, and we have the capacity and intent to acquire new assets. On the Miran and Bina Bawi oil and gas assets arbitration, having now completed the evidential hearing, our views on the merits of our case are unchanged since the arbitration was launched in December 2021.”

Highlights

• The Iraq-Türkiye pipeline (‘ITP’) has been suspended since March 2023, with talks ongoing but no clear timing on when exports will restart
• Reshaped business resilient and well positioned to maximise upside
  • Local sales consistent since end of January, with the Tawke PSC currently generating sufficient funding to cover organisational spend
  • Increase to Tawke PSC 2P reserves replacing production in 2023 and retaining 2P reserves of 79 MMbbls net to Genel at the licence
  • Organisational spend outside the cash generative Tawke PSC reduced by 40% to around $3 million per month
  • Reduced workforce by 70% and cut costs significantly across all areas of the business
  • Sarta and Qara Dagh exited, resulting in a write off relating to Sarta of $19 million
  • Somaliland licence extended until 2026
• Strong balance sheet provides opportunity to acquire and develop new assets
  • Net cash of $120 million at 31 December 2023 ($228 million at 31 December 2022)
  • Total debt of $248 million reduced by $26 million through repurchase of bonds at below 95 cents ($274 million at 31 December 2022)
  • Genel expects to maintain net cash well above $100 million throughout 2024
• Ongoing focus on being a socially responsible contributor to the global energy mix
  • Zero lost time incidents in 2023, with over four million hours now worked since the last incident
  • Carbon intensity of 14 kgCO2e/bbl for Scope 1 and 2 emissions in 2023 (2022: 17.6 kgCO2e/bbl), below the global oil and gas industry average of 19 kgCO2e/boe
  • Genel continues to invest in the host communities in which we operate, aiming to invest in those areas in which we can make a material difference to society
• The London-seated international arbitration two-week hearing which included Genel’s claim for substantial compensation from the Kurdistan Regional Government (‘KRG’) following the termination of the Miran and Bina Bawi PSCs finished as scheduled. Parties will make written closing submissions in April, subsequent to which written reply submissions will be made in May. The timing of the result is uncertain, but continues to be expected by the end of 2024

Potential catalysts for significant shareholder value creation in 2024

• Reopening of the ITP has the potential to materially increase cash generation
• $107 million overdue from the KRG for oil sales from October 2022 to March 2023 inclusive
• The Company continues to seek to acquire new assets to increase and diversify our income streams

KeyFacts Energy: Genel Energy Iraq country profile