Genel Energy PLC (GENL) Genel Energy PLC: Trading and operations
update 04-Nov-2021 / 07:00 GMT/BST Dissemination of a Regulatory
Announcement that contains inside information according to
REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The
issuer is solely responsible for the content of this
announcement.
-----------------------------------------------------------------------------------------------------------------------
4 November 2021
Genel Energy plc
Trading and operations update
Genel Energy plc ('Genel' or 'the Company') issues the following
trading and operations update in respect of the third quarter and
first nine months of 2021.
Bill Higgs, Chief Executive of Genel, said:
"Genel's low-cost and high-margin production continues to
generate material positive cash flow which, coupled with our
confidence in predictable payments going forward, allows us to
further invest in our growth assets with sufficient surplus to
support our competitive and progressive dividend, with the interim
dividend increased by 20%.
I am pleased that drilling is back underway at Tawke, and
drilling operations at Peshkabir, Sarta, and Qara Dagh are ongoing.
We continue to work hard to deliver results from the appraisal
programmes at Sarta and Qara Dagh, and remain excited about their
potential, although disappointed that the testing programme will be
later than we had forecast due to a combination of geological and
operational challenges, supply chain issues, and well approval
delays."
FINANCIAL PERFORMANCE
-- USD187 million of cash proceeds received in the first nine
months of 2021 (USD142 million in the first ninemonths of 2020)
-- Free cash flow before investment in growth was USD99 million
in the first nine months of 2021 (USD36 millionin first nine months
of 2020), despite the expected industry-wide reversion to payments
three months in arrears bythe Kurdistan Regional Government ('KRG')
meaning seven payments have been received in the nine-month
period
-- Total capital expenditure of USD106 million, with USD71
million spent in the first nine months of 2021 onprogressing Sarta
and Qara Dagh
-- Free cash flow of USD33 million in the first nine months of
2021 (outflow of USD5 million in the first ninemonths of 2020)
-- Cash of USD277 million at 30 September 2021 (USD266 million
at 30 June 2021)? Net cash of USD8 million at 30 September 2021
(net debt of USD2 million at 30 June 2021)
-- Interim dividend of 6¢ per share (2020: 5¢ per share), a
distribution of c.USD18 million, to be paid toshareholders on the
register as of 12 November 2021
OPERATING UPDATE
-- Net production averaged 32,005 bopd in the first nine months
of 2021, with net production in Q3 averaging30,520 bopd (Q2 2021:
32,475 bopd)
-- Production by field was as follows:
Gross production Net production
(bopd)
Q3 2021 Q3 2021
Tawke 45,260 11,310
Peshkabir 59,920 14,980
Sarta 5,960 1,790
Taq Taq 5,530 2,430
Total 116,670 30,520
PRODUCTION ASSETS
-- Tawke PSC (25% working interest)? Gross production at the
Tawke PSC averaged 109,150 bopd in the first nine months of 2021,
of whichPeshkabir contributed 61,430 bopd, and 105,180 bopd in Q3,
of which Peshkabir contributed 59,920 bopd whilebeing impacted for
shut-ins and maintenance ? The Peshkabir-Tawke gas project, which
was commissioned in mid-2020, has injected eight billion cubicfeet
of otherwise flared gas as of the end of the third quarter,
capturing 480,000 tonnes of CO2 equivalent. InSeptember, a second
phase of the gas capture project to reinject and retain gas in the
Tawke reservoir andavoid flaring was initiated ? Drilling at the
Tawke field resumed in Q3 2021 after an 18-month pause during which
naturalproduction decline was slowed through pressure support from
gas injection and workovers
Sarta (30% working interest) ? Gross production averaged 6,680
bopd in the first nine months of 2021, and 5,960 bopd in Q3 ?
Production in Q3 has come predominantly from the Sarta-2 well,
after the Sarta-3 well was taken offlineat the end of Q2 in order
to monitor and manage reservoir pressure in the thinner,
volumetrically smaller Musreservoir and water ingress from part of
the deeper Adaiyah reservoir, both of which are informing the
long-termproduction strategy for the field ? This strategy includes
plans to convert the legacy Sarta-4 well into a water disposal well
in Q1 2022 tooptimise Sarta oil production ? Q3 production has been
in line with expectations for the Mus only reservoir accessible
with the Sarta-2well ? The Sarta-1D well is drilling ahead in the
reservoir section with testing expected early in the new year,now
via the production flowline, in order to accommodate the recent
industry-wide directive from the Ministry ofNatural Resources
('MNR') prohibiting the burning of oil during well test operations.
Sarta-1D addition to theproduction stream is expected in Q1 2022 ?
The Sarta-5 well is set to enter the primary reservoir objectives
imminently and testing will take placein Q1 2022 once the
appropriate equipment is in place to comply with the MNR's well
testing directive ? The Sarta-6 well will spud once the Sarta-5
well has been drilled and completed ? In line with the farm-in
agreement Chevron is set to transfer operatorship of the field to
Genel on 1January 2022
-- Taq Taq PSC (44% working interest and joint operator)? Gross
production averaged 6,170 bopd in the first nine months of 2021,
and 5,530 bopd in Q3 ? Additional activity at the field is set to
resume in 2022, with a view to increasing cash generationfrom the
licence, with returns boosted by the improved oil price
PRE-PRODUCTION ASSETS
-- Qara Dagh (40% working interest and operator)? The QD-2 well,
appraising the crest of a 50 km long structure at Qara Dagh, spud
in April 2021 ? Drilling is ongoing, with the well having been
side-tracked in response to encountering more complexgeology above
the target reservoir than expected by the joint venture ? Given the
current challenging drilling conditions, Genel is evaluating
options to optimally deliverthe primary well objectives ? Genel is
now targeting the completion of drilling and testing at QD-2 in Q1
2022
-- Bina Bawi and Miran (100% working interest and operator)? In
August, Genel received notice from the Ministry of Natural
Resources of the KRG of its intentionto terminate the Bina Bawi and
Miran PSCs ? Genel subsequently issued notices of dispute to the
KRG under each PSC contesting the right of theKRG to issue any such
termination notice. Genel will take steps to protect its rights
under the PSCs and, ifnecessary, seek compensation ? Genel will
update the market on future developments
-- African exploration assets? A farm-out process relating to
the highly prospective SL10B13 block (100% working interest
andoperator) in Somaliland is continuing, and active engagement
with respect to the opportunity is ongoing ? Genel continues to
work towards a farm-out campaign aimed at bringing a partner onto
the Lagziralicence offshore Morocco (75% working interest and
operator).
ESG
-- Our sustainability report in accordance with Global Reporting
Initiative standards was issued in August2021, giving a
comprehensive overview of our ESG activities and positions
-- Following 14 million work hours since a lost time injury
('LTI') at Genel and TTOPCO operations, a memberof the contractor
drilling team regrettably sustained a foot injury during drilling
operations at Sarta-5. Actionhas been taken to prevent a recurrence
of such an incident, as we strive to repeat the performance of the
previoussix years of LTI free operations
-- Following the Annual General Meeting ('AGM') on 6 May 2021
the Company announced that all the resolutionsput forward to the
meeting had passed with the requisite majority of votes and
acknowledged that resolutions 3, 4,6, 18 and 19, had a c.40% of
votes cast against them. In accordance with Provision 4 of the UK
Corporate GovernanceCode 2018, the Company wishes to provide an
update on the views received from shareholders and actions taken
inrespect of these resolutions? In light of the votes received
against the resolutions, the Company has engaged with
majorshareholders to understand their views. Noting that proxy
agencies were all in favour of the above resolutions,and following
discussions with shareholders, the Board considers the votes cast
against the resolutions toprimarily reflect differing opinions held
by the Company's major shareholders in relation to a number
ofmatters. As a consequence, the Company does not believe it is
necessary or appropriate to take any additionalaction
OUTLOOK
-- Following the strength of the oil price, Genel expects to
generate free cash flow in 2021 despitematerial investment in
growth? At a Brent oil price of USD85/bbl, our barrels generate
USD28/bbl of cash flow, sufficient to deliver amaterial surplus
after funding growth expenditure, corporate costs, and interest ?
USD132 million still outstanding from the KRG for oil sales from
November 2019 to February 2020 and thesuspended override from March
to December 2020 ? The inclusion of Sarta production in our
receivable recovery payments is a positive step andincreases the
pace of recovery of monies owed
-- Following the production performance of Sarta in 2021 being
below expectations, and delays in drilling atTawke, Genel now
expects production in the year to be slightly below the 2020
average of 31,980 bopd
-- 2021 capital expenditure expected to be c.USD165 million
(guidance USD150 million to USD200 million), followingdelays in
approvals from the KRG and ongoing supply chain challenges caused
by COVID-19 leading to some plannedactivity moving to Q1 2022
(MORE TO FOLLOW) Dow Jones Newswires
November 04, 2021 03:00 ET (07:00 GMT)
Genel Energy (LSE:GENL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Genel Energy (LSE:GENL)
Historical Stock Chart
From Apr 2023 to Apr 2024
