Genel Energy Announces Unaudited Results for the Period Ended 30 June 2021

Source: www.gulfoilandgas.com 8/3/2021, Location: Middle East

Genel Energy plc has announced its unaudited results for the six months ended 30 June 2021.

Bill Higgs, Chief Executive of Genel, said:

"Genel continues to deliver on its strategy and demonstrate the merits of its business model. Capital investment made last year, despite the low oil price and over $150 million 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. 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.

Our appraisal campaign at our exciting growth assets Sarta and Qara Dagh is now well underway, and we look forward to the results of three of these high-potential wells later this year. 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."

Highlights

- Strong cash generation from low-cost oil production:

- Net production averaged 32,760 bopd in H1 2021, slightly above the average in the prior year and in line with guidance (H1 2020: 32,100 bopd)

- Low production cost of $3.7/bbl, oil price increase, and restart of the override helped deliver an overall margin from our production assets of $111 million

- Free cash flow for the period was $22 million, despite the Kurdistan Regional Government ('KRG') changing its payment schedule from one to two months in arrears, moving c.$30 million that was due in H1 into July

- $123 million of cash proceeds were received in H1 2021 (H1 2020: $110 million)

- Investing in growth:

- Our high-potential drilling campaign is well underway, with the QD-2 well at Qara Dagh having spud in April, and the Sarta-5 well in June

- $58 million of capital expenditure in H1 2021, with activity accelerating in H2

- Financial strength to underpin a material and progressive dividend:

- Cash of $266 million, with net debt of $2.2 million

- Due to the rise in the oil price boosting expected cash generation, and Management's confidence in Genel's future prospects, interim dividend increased to 6 per share (H1 2020: 5 per share)

- A socially responsible contributor to the global energy mix:

- Zero lost time injuries ('LTI') and zero tier one loss of primary containment ('LOPC') events at Genel and TTOPCO operations. Now no LTIs since 2015, with over 14 million work hours since the last incident, and no LOPCs since 2017

- Second GRI compliant Sustainability Report issued today

Outlook

- Production guidance for 2021 of slightly above the 2020 average of 31,980 bopd maintained

- 2021 capital expenditure guidance maintained at $150 million to $200 million, with the expectation that expenditure will now be around the middle of this range, following delays in approvals from the KRG and ongoing challenges relating to COVID-19 causing some planned activity to move to Q1 2022

- High-impact appraisal results to come in 2021:

- Results from the QD-2 and Sarta-5 wells are expected around the end of Q3 2021

- The Sarta-1D well is set to spud in coming days

- Sarta-6 well is scheduled to get underway immediately following the completion of drilling at Sarta-5

- Genel expects to generate free cash flow in 2021 and end the year in a net cash position, despite material investment in growth


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