Genel Energy plc announces its audited results for the year ended 31 December 2018.
Murat Özgül, Chief Executive of Genel, said:
"Genel's strategy at the start of 2018 was clear - generate material free cash flow from producing assets, build and invest in a rich funnel of transformational development opportunities, and return capital to shareholders at the appropriate time. We are delivering on this strategy.
2018 was another year of material free cash flow generation, we continued to transform our balance sheet and the addition of assets with the potential of Sarta and Qara Dagh led to a very successful delivery on the first two parts of our strategy. We will continue to develop opportunities and invest in growth. As we do so, a robust cash flow outlook and our confidence in Genel's future prospects underpins our initiation of a material and sustainable dividend policy."
- $335 million of cash proceeds were received in 2018 (2017: $263 million)
- Strong cash flow generation, with free cash flow totalling $164 million in 2018 (2017: $99 million), an increase of 66%
- Financial strength continues to increase, with unrestricted cash balances at 28 February 2019 of $378 million, and net cash at $81 million
- Addition of Sarta and Qara Dagh to the portfolio in 2019 brings further near-term production and material growth potential
- Increase in 1P and 2P reserves as of 31 December 2018 to 99 MMbbls (31 December 2017: 97 MMbbls) and 155 MMbbls (31 December 2017: 150 MMbbls) respectively, including Sarta
- The carrying value of the Miran licence has been under review. Due to the focus on the development of Bina Bawi, while Genel continues to see significant opportunity in the licence, this has resulted in an accounting impairment to the carrying value
- Production guidance maintained - net production during 2019 is expected to be close to Q4 2018 levels of 36,900 bopd, an increase of c.10% year-on-year
- Capital expenditure guidance updated to include spend on Sarta and Qara Dagh, with net capital expenditure now forecast to be $150-170 million (from c.$115 million)
- Opex and G&A guidance unchanged at c.$30 million and c.$20 million respectively
- Genel expects to generate material free cash flow of over $100 million in 2019, inclusive of investment in Sarta and Qara Dagh
- Given the strong free cash flow forecast of the business, even after investment in growth opportunities, Genel is initiating a material and sustainable dividend policy
- The Company intends to pay a minimum dividend of $40 million per annum starting in 2020, with the intention for this to grow
- The dividend will be split between an interim and final dividend, to be paid one-third/two-thirds
- The Company is set to approach bondholders to request a temporary waiver of the dividend restriction, which limits dividends to 50% of annual net profit, in relation to accelerating the start of distribution to 2019
- The Company continues to actively pursue growth and appraise opportunities to make value-accretive additions to the portfolio