Genel Energy today announced its unaudited results for the six months ended 30 June 2020.

Bill Higgs, Chief Executive of Genel, said:
“Genel’s robust business model, which is designed to provide resilience in a challenging environment, has demonstrated its value as the Company negotiates the headwinds facing the sector in 2020. Our low-cost production and the capital flexibility within our development programme have enabled us to preserve the strength of our balance sheet even while investing in growth. Given the lower oil price and overdue payments, the fact that we still expect to end 2020 in a net cash position – even after dividend distributions and making the investment to bring Sarta to production this year – is a testament to our resilience, and we have today confirmed an interim dividend of 5¢ per share.”

Highlights

• Cash of $355 million at 30 June 2020 ($353 million at 30 June 2019)
• Net cash of $57 million at 30 June 2020 (net cash of $56 million at 30 June 2019)
• $110 million received from the Kurdistan Regional Government (‘KRG’) in H1 2020
• Updated payment mechanism introduced in April, under which the KRG committed to settling monthly sales invoices by the middle of the following month
• $121 million remains outstanding in relation to oil sales from November 2019 to February 2020 – discussions continue with the KRG over settlement arrangements
• Despite the monies outstanding, the fall in oil price and non-payment of the override, $6.5 million of free cash flow was generated in H1 2020 due to Genel’s low-costs and resilient business model allowing flexible expenditure
• Production cost of $2.9/bbl in H1 2020
• Capital expenditure of $58.5 million in H1 as spending cut due to the external environment
• G&A costs of $6.6 million, a reduction of c.30% year-on-year, as activity is rephased
• Production of 32,100 bopd in H1 2020, due in part to the impact of COVID-19, coupled with payment uncertainty, resulting in reduced drilling activity at the Tawke PSC
• Production averaged 33,000 bopd in July 2020, following fast tracking of activity at the Tawke PSC against an improved backdrop
• Continued focus on safety: zero lost time incidents and zero losses of primary containment in the period
• Impairments of $286 million largely due to reduction in Brent oil price forecast
• Interim dividend of 5¢ per share confirmed (2019: 5¢ per share)

Outlook

• Genel’s low-cost production, flexible capital investment programme, and robust balance sheet makes it resilient to lower oil prices, and the Company expects to retain a net cash position at the end of 2020 at the prevailing oil price, while still investing in key growth assets
• Capex of c.$45 million expected in H2, with c.50% to be spent on moving Sarta to production in Q4, where work has continued despite the challenges resulting from COVID-19
• Genel continues discussions with the KRG regarding the recovery of the $121 million receivable 

KeyFacts Energy: Genel Energy Iraq country profile