Genel Energy PLC: Trading and operations update (766023)

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 Genel Energy PLC (GENL) 
Genel Energy PLC: Trading and operations update 
 
15-Jan-2019 / 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. 
 
15 January 2019 
 
      Genel Energy plc 
 
      Trading and operations update 
 
Genel Energy plc ('Genel' or 'the Company') issues the following trading and 
 operations update in advance of the Company's full-year 2018 results, which 
are scheduled for release on 20 March 2019. The information contained herein 
            has not been audited and may be subject to further review. 
 
             Murat Özgül, Chief Executive of Genel, said: 
 
    "2018 was a very positive year for Genel, which saw us generate material 
         free cash flow and further transform the balance sheet. An expected 
       year-on-year increase in production means we are set to continue this 
    performance in 2019, with low-cost assets forecast to generate over $100 
           million in free cash flow even if the oil price averages $45/bbl. 
 
  As we generate cash we will continue to invest in the business to maximise 
   the value of our existing portfolio. We are also working hard to bring in 
      new assets that are complementary to our cash generation story. We are 
   focused on building a stronger company with sustainable and material cash 
     flow and multiple growth opportunities from which to create significant 
            shareholder value." 
 
            FINANCIAL PERFORMANCE 
 
  · $335 million of cash proceeds were received in 2018 ($263 million in 
  2017), an increase of 27%, of which $98 million was received in Q4 
 
  · Free cash flow totalled $164 million in 2018 ($99 million in 2017), an 
  increase of 66%, representing a free cash flow yield of 27% on the 
  year-end share price 
 
  · Unrestricted cash balances at 31 December 2018 were $334 million ($162 
  million at 31 December 2017 ), with net cash at $37 million ($135 million 
  net debt at 31 December 2017) 
 
  · Capital expenditure for 2018 totalled $95 million, of which $70 million 
  was cost recoverable spend on producing assets 
 
2018 OPERATING PERFORMANCE AND 2019 ACTIVITY OUTLOOK 
 
  · 2018 net production averaged 33,690 bopd, with Q4 averaging 36,920 bopd. 
  Production and sales by asset during 2018 was as follows: 
 
 (bopd)   Export via   Refinery     Total     Total   Genel net 
           pipeline     sales       sales   productio production 
                                                n 
  Taq Taq   11,770       590       12,360    12,350     5,430 
Tawke PSC  111,760        -        111,760   113,020    28,260 
    Total  123,530       590       124,120   125,370    33,690 
 
Note: Difference between production and sales relates to inventory movements 
 
· Tawke PSC (Genel 25% working interest) 
 
· Tawke PSC production averaged 113,020 bopd in 2018, with production 
from Peshkabir contributing 27,660 bopd to this figure 
 
· Production in Q4 2018 averaged 127,220 bopd, of which Peshkabir 
contributed 50,130 bopd 
 
· The Peshkabir-8 well completed in December 2018, and is currently 
producing just under 10,000 bopd. Results of the Peshkabir-9 well are 
expected shortly 
 
· While further production wells are set to be drilled in 2019, 
Peshkabir activity in 2019 will focus on field management facilities and 
the utilisation of associated gas to enhance oil recovery at the Tawke 
field 
 
· Taq Taq PSC (Genel 44% working interest and joint operator) 
 
· Taq Taq field production averaged 12,350 bopd in 2018 
 
· Production in Q4 2018 averaged 11,640 bopd 
 
· Drilling operations on the TT-32 well have now been completed, and 
test production is underway. The well is currently flowing at a rate of 
over 3,000 bopd, and still cleaning up, with further zones to be tested 
ahead of an expected stabilised production rate of c.2,000 bopd 
 
· The rig has now moved to drill the horizontal sidetrack TT-20z well, 
which will drill the Shiranish in the western flank of the field with an 
aim to increasing productivity 
 
· Three further wells are scheduled to be drilled in 2019, as Genel 
continues to target the flanks of the field with the aim of delivering a 
year-on-year production increase 
 
· Bina Bawi and Miran (Genel 100% and operator) 
 
· Field development plans for both Bina Bawi and Miran oil and gas are 
under discussion with the KRG, and may entail a phased development 
approach in order to reduce initial capital expenditure and achieve the 
earliest date for first gas. An extension to the conditions precedent is 
expected to be granted shortly 
 
· Genel is reviewing the value of the Miran PSC carried in the Company 
accounts, and will update this as part of the year-end results process 
 
· African exploration update 
 
· Onshore Somaliland, seismic processing has now completed on the 
SL-10-B/13 block (Genel 75% working interest, operator) and analysis and 
interpretation is underway. Initial indications confirm the Company view 
that the block has hydrocarbon potential. Genel continues to develop a 
prospect inventory and assess next steps ahead of a farm-out process and 
potentially spudding a well in 2020. On the Odewayne block further 
seismic processing is being considered in order to complete the 
Company's understanding of the prospectivity of the block 
 
· On the Sidi Moussa block offshore Morocco (Genel 75% working interest, 
operator), the acquisition of a c.3,500 km2 multi-azimuth broadband 3D 
seismic survey completed in November. PSTM and PSDM processing will 
continue through 2019. Genel has no additional work commitments relating 
to the licence. A decision will be made on whether to drill a well, and 
the appropriate equity level, once processing has progressed 
sufficiently 
 
            2019 GUIDANCE 
 
· Genel expects to generate material free cash flow in 2019 
 
· Genel generates positive free cash flow at and above an oil price of 
$20/bbl 
 
· In light of the Company's balance sheet strength and ongoing material 
cash generation, management is appraising the most effective model for 
balanced capital allocation in order to take advantage of growth 
opportunities, make value accretive additions to the portfolio, and pave 
the way to returning capital to shareholders at the appropriate time 
 
· Combined net production from the Tawke and Taq Taq PSCs during 2019 is 
expected to be close to Q4 2018 levels 
 
· Capital expenditure net to Genel is forecast to be c.$115 million, with 
the majority being cost-recoverable spend on current producing assets. 
Capex includes: 
 
· Tawke and Taq Taq net to Genel of c.$100 million 
 
· Bina Bawi and Miran maintenance capex of c.$10 million, with the 
potential for this figure to be updated should there be positive 
developments on Bina Bawi commercial discussions 
 
· African exploration cost of under $5 million, largely comprising 
processing costs relating to Moroccan seismic 
 
· Opex: c.$30 million 
 
· G&A: c.$20 million 
 
· The Company continues to actively pursue growth and appraise 
opportunities to make value-accretive additions to the portfolio 
 
      -ends- 
 
            For further information, please contact: 
 
Genel Energy                          [phone] 
 
Andrew Benbow, Head of Communications 
 
Vigo Communications                   [phone] 
 
Patrick d'Ancona 
 
This announcement includes inside information. 
 
            Notes to editors: 
 
       Genel Energy is an independent oil and gas exploration and production 
  company listed on the main market of the London Stock Exchange (LSE: GENL, 
    LEI: 549300IVCJDWC3LR8F94). The Company, with headquarters in London and 
offices in Ankara and Erbil, is one of the largest London-listed independent 
   oil producers, and is the largest holder of reserves and resources in the 
       Kurdistan Region of Iraq. Through its Bina Bawi and Miran fields, the 
     Company is positioned to be a cornerstone provider of KRI gas to Turkey 
    under the KRI-Turkey Gas Sales Agreement. Genel also continues to pursue 
      further growth opportunities. For further information, please refer to 
            www.genelenergy.com [1]. 
 
            Disclaimer 
 
      This announcement contains certain forward-looking statements that are 
 subject to the usual risk factors and uncertainties associated with the oil 
  & gas exploration and production business. Whilst the Company believes the 
  expectations reflected herein to be reasonable in light of the information 
        available to them at this time, the actual outcome may be materially 
       different owing to factors beyond the Company's control or within the 
    Company's control where, for example, the Company decides on a change of 
     plan or strategy. Accordingly, no reliance may be placed on the figures 
            contained in such forward looking statements. 
 
ISIN:          JE00B55Q3P39 
Category Code: TST 
TIDM:          GENL 
LEI Code:      549300IVCJDWC3LR8F94 
Sequence No.:  7164 
EQS News ID:   766023 
 
End of Announcement EQS News Service 
 
 
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January 15, 2019 02:01 ET (07:01 GMT)