TIDMGENL
RNS Number : 5837G
Genel Energy PLC
05 March 2015
5 March 2015
Genel Energy plc
Audited results for the year ended 31(st) December 2014
Genel Energy plc, the London listed exploration and production
company and largest independent oil producer in the Kurdistan
Region of Iraq, announces its audited results for the year ended
31(st) December 2014.
Results summary
2014 2013
--------- --------
Revenue ($million) 519.7 347.9
EBITDAX(1) ($million) 410.6 274.8
(Loss) / profit before tax ($million) (312.8) 186.5
Cash flow from operating activities ($million) 116.0 311.3
Free cash flow(2) ($million) (560.9) (252.6)
Cash ($million) 489.1 699.7
EPS (cents per share) (112.97) 66.24
Production (kbopd, working interest) 69.4 44.0
1. EBITDAX is profit before interest, tax, depreciation, amortisation and exploration expense
2. Free cash flow is cash flow from operating activities less capital expenditure
Highlights
-- 2014 revenue of $520 million, an increase of 49% on 2013
-- 2014 EBITDAX of $411 million, an increase of 49% on 2013
-- 2014 production of 69,000 boepd, an increase of 58%
year-on-year with significant further growth expected in 2015
-- Iraq budget passed into law in February 2015, enabling
financial implementation of interim oil deal between the Kurdistan
Regional Government ("KRG") and Government of Iraq
-- Cash balances at 31 December 2014 stood at c.$490 million,
with Genel highly focused on balance sheet strength to enable
future investment and growth in the KRI
Outlook
-- To provide cash directly to contractors during the transition
to regular payments for exports, the KRG has implemented a
temporary domestic market sales channel under which contractors
receive 50% of domestic sales proceeds:
- This has run successfully for Taq Taq through February 2015
- Taq Taq domestic price of $40-45/bbl equates to a Brent price
of $50/bbl less transportation tariffs, reflecting strong demand
for lighter barrels within the Kurdistan Region of Iraq ("KRI")
domestic market
-- Domestic market prices will be revised monthly in line with
movements in international benchmarks
-- Revenue and production guidance for 2015 maintained at
90-100,000 boepd and $350-400 million at a Brent price of
$50/bbl
-- On completion of gas deal, total working interest reserves
and unrisked resources set to increase significantly
Tony Hayward, Chief Executive of Genel, said:
"2014 was a year of significant growth for Genel. Operational
progress and the completion of the KRI-Turkey pipeline helped to
drive production up 58%, which in turn led to an increase in both
revenue and EBITDAX of almost 50%. Growth is set to continue in
2015, with production forecast to rise by a further 40%.
At a time of a depressed oil price we remain focused on the
importance of a robust balance sheet. Genel's financial flexibility
is a significant strength, and allows us to target spending on
growth at our producing assets in the KRI, as we wait for the
economic situation in Iraq to improve sufficiently to facilitate
regular export payments.
In the first quarter of 2015 we have stepped up the domestic
monetisation of our KRI production. Given that this production is
amongst the lowest-cost in the world, and domestic realisations
strong, this provides a significant interim source of revenue until
predictable export payments are in place. We expect to receive
regular payments for exports as we move through 2015."
Enquiries:
Genel Energy
Julian Metherell, Chief Financial
Officer
Phil Corbett, Head of Investor
Relations
Andrew Benbow, Head of Public
Relations +44 20 7659 5100
Vigo Communications
Patrick d'Ancona +44 20 7016 9573
There will be a conference call for analysts and investors today
at 0900 GMT, with an associated presentation available on the
Company's website, www.genelenergy.com. The call will be recorded
and made available on the website shortly after it finishes.
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.
Chairman's statement
I am pleased to welcome you to Genel Energy's fourth preliminary
statement, detailing what has been a significant year in the
Kurdistan Region of Iraq and for Genel. We have continued to
deliver material growth in the business, and have successfully
positioned the Company to grow over the coming years - even in a
lower oil price environment.
2014 was transformational for the KRI's oil and gas prospects.
Three things fundamentally changed the operating environment.
First, the region's independent oil export infrastructure was
completed, and pipeline exports rose throughout the year, reaching
over 400,000 bopd by the end of 2014. This is also set to increase
significantly in 2015. Increased exports were matched by successful
tanker liftings and sales, and the second half of 2014 saw KRI
crude being sold by the KRG on the international market on a
regular and predictable basis, generating international export
prices.
The second change in 2014 was the emergence of ISIS, which
dominated world headlines throughout the year and has reshaped the
political landscape in Syria and Iraq. While the initial military
advances of ISIS created market uncertainty, throughout the period
the Kurdistan Regional Government has been able to protect its
borders. We continued to operate at our producing assets throughout
the summer, and our operations remained safe and secure. Of course,
we did take additional steps to ensure that our workforce were
safe, and I would like to express my sincere thanks for their
perseverance and commitment.
The support that the KRG has received from the international
community underpins confidence that security will not be an
impediment to our ongoing operations.
The third change this year was the overall political situation
in Iraq. With the Iraq-Turkey export pipeline in Iraq inoperable,
the major Baghdad-controlled Kirkuk oil reserves were left stranded
to the detriment of the Iraqi people. This, allied with the
increasing production in the KRI, contributed to the re-engagement
of the Federal Government of Iraq with the KRG. Dialogue was helped
by the election of a more inclusive, pragmatic leadership in
Baghdad, led by Prime Minister Haider al-Abadi, which is keen to
work together with the KRG for the benefit of all Iraqis.
The interim oil export agreement, finalised in December,
provides a pragmatic solution, ensuring that oil exports from the
KRI are able to reach their full potential and boost Iraq as a
whole, with the KRG receiving its full budget allocation. Further
payments to contractors, including Genel, are expected to
follow.
POWERING THE KURDISTAN REGION OF IRAQ
With export infrastructure in place, in 2014 Genel has focused
on its producing operations in the KRI. Production at Taq Taq and
Tawke increased by over 50%, and the low-cost of this production is
a clear advantage at a time when the oil price has fallen
significantly. A similar rise in production is expected in 2015.
This increase means that Genel is now one of the largest
independent oil producers listed on the London Stock Exchange - a
significant achievement for a business that only listed a little
over three years ago.
Oil exports are crucial to the economy of the KRI, and we will
continue to underpin the success of the KRG through helping
facilitate the sale of gas by the KRG to Turkey. Under the
KRG-Turkey Gas Sales Agreement, signed in November 2013, the KRG is
set to provide energy-hungry Turkey with an initial 4 bcma of gas
exports from 2018, rising to 10 bcma by 2020.
Agreement for the development of our Miran and Bina Bawi fields,
reached with the KRG in November, will unlock a world-class gas
resource and will assist the KRG to satisfy both domestic gas
demand and its obligations to Turkey. This agreement was also a
milestone for Genel, materially de-risking the value of our gas
business, giving attractive project returns while significantly
lowering our capital exposure.
ROBUST BALANCE SHEET
The Company has a clear strategy in place for an environment
that has seen a significant fall in the oil price. Fiscal
responsibility and a robust balance sheet are crucial in the oil
and gas industry, and your Board will ensure that the business is
managed prudently and will continue to monitor opportunities to
preserve the competitive advantage of our financial strength and
ensure ongoing growth.
After the period end we announced Julian Metherell's retirement
from the Company, and the appointment of Ben Monaghan as Chief
Financial Officer. Julian leaves Genel in a strong position to
prosper, and on behalf of the Board I would like to thank him for
all of his hard work. We look forward to working with Ben, who has
precisely the attributes we were looking for as we continue
building on our position as a leading exploration and production
company.
GOVERNANCE AND RISK MANAGEMENT
The changing environment reinforces the need for strong
independent governance and we will continue to monitor carefully
risk across all operations. In this, we work closely with regional
authorities and local communities to ensure the safety of our staff
and contractors and equally to maintain a strong reputation for
responsible operations.
Since Genel's inception, a key pillar of our strategy has been
to observe the highest standards of corporate governance. In line
with this, we continue to have strong, independent audit and
remuneration committees.
OPERATING RESPONSIBLY
Your company has a history of partnership with the Kurdistan
Regional Government stretching back over a decade, and we are proud
of the important role that we have played in the development of the
KRI and its oil industry. It has been distressing to see the
humanitarian crisis in the region, as over one million people were
displaced by the actions of ISIS and sought refuge in the KRI. With
an indigenous population of only five million people, this influx
is unprecedented.
The successful management of this influx is a testament to the
leadership of KRG. We continue to help in any way that we can. Our
core strength, producing hydrocarbons, is vital to the economic
prosperity of the region, and we have further embedded ourselves
into the communities in which we operate. These works, and our
contribution to easing the humanitarian crisis, are detailed in
this report.
GROWTH IN A LOW-PRICE WORLD
We move into 2015 with rising oil production in the KRI fuelling
increased exports. Payments for these exports are set to
continue.
Our production costs are amongst the lowest in the world, and a
robust balance sheet, allied with the significant capital
flexibility in our portfolio, leaves Genel well positioned to
continue its growth even in a period of sustained low oil
prices.
A joint statement from the chief executive officer and
president
Momentum in the Kurdistan Region of Iraq oil industry provided
the backdrop for a strong operational performance. 2014's two
overriding geopolitical factors - the emergence of ISIS, and later
in the year the fall in the oil price - did not distract us from
our focus on core operations. This year we achieved a 58% growth in
production, at the top end of our guidance range, resulting in a
significant increase in revenue. This is a testament to the
strength of the professional team we have in place and the quality
of our KRI resources.
A YEAR OF DELIVERY IN THE KRI
In 2014, a focus on operations boosted working interest
production to an average of 69,000 boepd, with gross production
from Taq Taq and Tawke averaging 194,000 bopd. In a year in which
the Kurdistan Regional Government faced significant economic
challenges this strong operational performance provided the oil
that fed growing exports, which were sold with increasing
regularity through the Turkish port of Ceyhan.
The opening of the KRI-Turkey oil export pipeline was a
transformational moment. The ability to reach the export market,
and in turn international pricing, provided a route to large-scale,
cost effective monetisation of KRI oil. The first lifting of this
oil took place in Ceyhan in May, increasing in regularity over the
remainder of the year. Over 40 cargoes were lifted in 2014,
establishing a track record of predictable sales.
In total, 40% of Genel's production was exported by the KRG
through the KRI-Turkey pipeline system, with 9% exported via Turkey
by truck and the remainder sold into the domestic market.
In 2014 focus in the KRI was on increasing production, and work
will be undertaken in 2015 to further grow this significantly.
The successful installation and commissioning of well site
temporary production facilities in December 2014 at Taq Taq helped
set a new daily production record of 135,000 bopd and a new record
for gross daily liftings of 147,000 bopd. Completion and
commissioning of the second central processing facility is due by
year-end 2015, and works to increase the processing capacity at the
Tawke field are expected to complete in the early part of 2015.
This increasing production is not constrained by pipeline
capacity issues. By the end of 2014 the Fishkhabour to Ceyhan 40"
pipeline had capacity of 700,000 bopd. Total exports by the KRG
grew to over 400,000 bopd by the end of the year.
DEVELOPING THE KRI OIL INDUSTRY
We are proud of the integral role that Genel has played in the
growth of the KRI oil industry. For over a decade we have worked
with the KRG to develop this industry, working hand-in-hand for the
region's economic strength and stability. Our success is entwined
with the strength of the KRI, and the KRG has repeatedly stated its
clear intention to pay contractors their full PSC entitlements. The
first payment for oil exports via the pipeline was received in
December 2014.
We expect our KRI operations to be significantly cash generative
in coming years, despite the significant drop in the oil price. Our
barrels can be developed and produced at some of the lowest costs
in the industry today due to their onshore location and prolific
reservoirs. This contributes to a low breakeven oil price, and
Genel is well positioned to continue to grow even in a period of
sustained low oil prices.
A TRANSFORMATIONAL GAS AGREEMENT
One of the most exciting developments was crystallising the
potential of our KRI gas business through an agreement reached in
November with the Ministry of Natural Resources of the KRG for the
development of the Miran and Bina Bawi gas fields.
With 11 tcf of mean raw gas resources, these are world-class
fields, and the agreement sets out a roadmap to develop them at low
cost to provide domestic gas production to power continued
industrial and economic growth in the KRI. It also assists the KRG
in fulfilling the gas sales agreement signed between Turkey and the
KRG in November 2013, which calls for 4 bcma of gas exports from
2018, rising to 10 bcma by 2020, and the potential for further
increases in the next decade.
Gas supplied from our Miran and Bina Bawi fields will
significantly reduce Turkey's gas import bill and help cement the
already close ties between it and the KRI. With these fields, the
KRI is poised to become a major producer, consumer and exporter of
gas, which will create significant value for both the region and
Genel.
The agreement provided a solution with clear benefits for both
the KRG and Genel, and is in line with our key objectives:
-- to maintain a meaningful exposure to the gas development
while reducing our capital investment; and
-- to generate attractive returns, including prior acquisition
costs, for both fields and to unlock significant value for
Genel.
Our negotiations with the KRG over the detailed PSC amendments
regarding Miran and Bina Bawi have been going well in recent
months. As a result, we expect the PSC amendments to be completed
in the first half of 2015.
The new structure will deliver a material reduction in our
capital exposure: for both fields we anticipate that combined gross
contractor capex to first gas will be $1 billion, generate
attractive returns, and create significant value for Genel.
A FOCUSED EXPLORATION STRATEGY
Over the last few years, we have enjoyed considerable
exploration success in the KRI with discoveries at Chia Surkh, Bina
Bawi, Ber Bahr, Peshkabir and Tawke Deep. Unfortunately, in common
with many of our peers, we have not enjoyed the same success in our
frontier exploration programme offshore Africa. A well was drilled
offshore Malta, and two offshore Angola, without success.
In Morocco, the Juby Maritime well encountered a 110 metre gross
oil column of heavy oil in the Upper Jurassic, and the SM-1
exploration well on our operated Sidi Moussa licence encountered
oil in fractured and brecciated Upper Jurassic carbonates. We
continue to evaluate the two wells and the implications for further
activity in Morocco.
Following these drilling results, expenditure relating to
exploration wells drilled in Angola, Malta and the Sidi Moussa and
Juby Maritime licences in Morocco has been written off.
With a robust balance sheet being of key importance in a low oil
price environment, we have reset our exploration strategy to
reflect the current market conditions. We will now focus on less
capital-intensive onshore exploration within our existing KRI and
Africa portfolio.
In 2016, we are planning to drill appraisal wells on both
Peshkabir and Chia Surkh in the KRI. These wells will help refine
the volumes for both discoveries and their potential developments.
In Africa, we will concentrate on our Horn of Africa operations.
Notwithstanding security difficulties over the past year, we
continue to see significant potential in our Somaliland acreage. In
addition, the 2D seismic acquired on the Adigala block in Ethiopia
in 2014 supports the presence of a working hydrocarbon system and
large structures which could hold material potential.
We are hopeful that work can resume on our highly prospective
Somaliland acreage, and we will progress our Ethiopian prospects
towards drilling, although capital discipline in the face of lower
oil prices and the timing of existing work programmes means
drilling activity is unlikely before 2016. Adding resource through
exploration remains a key objective for Genel and we will continue
to add new opportunities where appropriate.
A ROBUST BALANCE SHEET
Our portfolio has the benefit of significant flexibility,
allowing us to target capital expenditure in key areas, driving
growth in our core KRI operations. Cash balances at the end of 2014
stood at c.$490 million. We remain focused on maintaining a robust
balance sheet and, with cash generative production, even at a low
oil price, Genel has a very resilient business underpinning our
future growth.
We are advantaged by having no capital-intensive fixed long-term
development projects in our portfolio. We will continue to focus
spend in the Kurdistan Region, prioritising investment in our
production assets which offer short paybacks and high returns on
incremental expenditure.
Split broadly equally between the KRI and Africa, our capital
expenditure in 2014 was c.$670 million. This will fall to $200-250
million in 2015, a reduction of 70%. Importantly, this is without
impacting near-term production plans in the KRI. General and
administrative cost reductions of 40% have been initiated to ensure
staff levels are appropriate for our future level of planned
activity.
A PARTNER FOR THE KRI
Supporting and sustaining the regions in which we operate is
fundamental to Genel's success and our commitment to being a
sustainable business. Having operated in the KRI since 2002, our
operations have helped pave the way for the KRG to create an
economically strong, potentially self-sufficient Kurdistan Region
of Iraq. This starts with the significant contribution we have made
to the development of an indigenous oil and gas industry and
extends to the extensive community investment programmes we have
undertaken, which are making a real difference at a local
level.
The humanitarian crisis caused by the emergence of ISIS to the
west of the KRI was a key focus of both the KRG and our community
work in 2014, and we have been a leading supporter of the KRG's
Kurdistan Oil and Gas Humanitarian Initiative. Working with the KRG
and leading NGOs, Genel has contributed to the provision of
emergency aid to tens of thousands of vulnerable people displaced
by conflict. We will continue to work with the KRG in 2015, helping
to ensure the wider benefit of our operations.
OUTLOOK
Today, oil sales from the Kurdistan Region of Iraq are regular
and predictable, the relationship between Baghdad and Erbil is
closer than it has been for many years, and payments for increasing
oil exports are expected to continue throughout 2015. This,
combined with low-cost onshore oil production, and the significant
financial flexibility in the portfolio, leaves us well positioned
to continue our growth even in a period of sustained low oil
prices.
We are proud that we will continue to play a key role in the
next phase of the development of the KRI oil and gas sector - to
the benefit of the people of the region and to Genel.
Operating review
PRODUCTION
Net working interest production in 2014 averaged 69,000 boepd,
at the top end of the Company's guidance range, which remain
unchanged all year. This represented growth of 58% on 2013. The
main driver of higher production was the onset of KRI exports via
the new export pipeline through Turkey. This allowed both Taq Taq
and Tawke to deliver high levels of capacity utilisation during the
second half of 2014. In addition, Taq Taq production capacity
increased in H2 2014 through the installation of temporary
well-site production facilities.
During the year, the Company's net production from Taq Taq and
Tawke totalled 68,000 bopd, which was sold into both export and
domestic markets. Export volumes increased through the year as
pipeline capacity increased. During the fourth quarter of 2014,
around two thirds of Genel's net working interest production was
exported via pipeline. Over the course of 2014, there was a broadly
equal split between domestic and export sales.
The Dohuk gas field on the Summail licence commenced production
in May 2014 and contributed 1,300 boepd to 2014 net production.
This was below expectations due to earlier than anticipated
declines in reservoir pressure and water production in the first
two production wells. In light of this initial performance, no
further investment is planned at Summail and the field is expected
to deliver minimal levels of production going forward.
Production guidance for 2015 is reiterated at 90-100,000 boepd,
representing further significant growth as a result of a full year
of pipeline availability and further surface capacity increases at
Taq Taq and Tawke. This translates into revenue guidance of
$350-400 million at a Brent price of $50/bbl.
RESERVES AND RESOURCES
At 31(st) December 2014, Genel Energy's proven and probable (2P)
working interest reserves were 429 mmboe (2013: 453 mmboe), a 5%
decrease year-on-year. The booking of Miran oil reserves only
partially offset production from Taq Taq, Tawke and Summail and the
removal of Summail 2P reserves following field underperformance. As
a result, the reserves replacement ratio in 2014 was 8% (2013:
147%).
Contingent resources declined by 5% to 1,033 mmboe (2013: 1,088
mmboe) on a downward revision to Miran oil resources and subsequent
transfer into 2P reserves. The contingent resources associated with
the Dohuk licence (12 mmboe) have also been removed.
Proven and Probable Contingent resources 2P reserves
(2P) reserves (mmboe)(2) and contingent
(mmboe)(1) resources (mmboe)
----------------------------- -------------------- --------------------- -------------------
Start of 2014 453 1,088 1,541
Production (26) - (26)
Net additions and revisions 2 (55) (53)
----------------------------- -------------------- --------------------- -------------------
End of 2014 429 1,033 1,462
----------------------------- -------------------- --------------------- -------------------
1. Proven and probable 2P reserves at Taq Taq and Tawke are based on independent reserve reports
2. Contingent resources are based on both Genel Energy's
estimates and independent reserve reports
Year-end 2014 reserves and contingent resources do not include
the potential impact of the arrangements with the KRG and OMV in
respect of the Miran and Bina Bawi gas fields. Pro-forma for
successful execution of these arrangements, year-end 2014 2P
reserves would have been 437 mmboe, incorporating a further 25%
share of the Miran oil reserves. Pro-forma, year-end 2014
contingent resources would have significantly increased after
factoring in the conversion of sales gas to raw gas and an increase
in working interest at both assets.
KRI OIL ASSETS
KRI pipeline infrastructure
During 2014, the KRG commenced oil exports through the new
KRI-Turkey export pipeline. The pipeline consists of a number of
sections. The first, from the Taq Taq field to the Khurmala Dome,
has capacity of 150,000 bopd, with the potential to increase to
200,000 bopd. The second section, from Khurmala to the KRI border,
currently has capacity of 375,000 bopd, which will shortly increase
to 700,000 bopd once a section of the pipeline crossing the Zab
river is upgraded. At the border, both the KRI pipeline and the
dedicated export pipelines from the Tawke field, which have
capacity in excess of 250,000 bopd, are tied into the into the
40-inch section of the Iraq-Turkey pipeline. The 40-inch section
currently has 700,000 bopd of capacity. Pipelines on both the KRI
and Turkey sides of the border have sufficient capacity to
facilitate all current or future oil exports from Genel's
fields.
Initial volumes were exported through the pipeline system in
March 2014, and by May, sufficient volumes had accumulated in
storage at the Mediterranean port of Ceyhan to commence oil sales
to international buyers. First sales commenced in May 2014 and by
the end of 2014, over 40 cargoes of KRI crude had been sold,
representing a strong track record of unimpeded exports.
Taq Taq (44% working interest, joint operator)
The Taq Taq field produced a gross average of 103,000 bopd in
2014, compared to 77,000 bopd in 2013. Pipeline exports to
international markets via Turkey commenced in May 2014 and steadily
increased over the year. Exports (via pipeline and truck) and
domestic sales were split broadly equally over the year. Deliveries
to the Bazian refinery averaged 32,000 bopd, or c.30% of total
production, during 2014.
After the installation of temporary well-site production
facilities during the year, end2014 surface processing capacity
stood at 135,000 bopd, a c.10% increase on end-2013. The
installation of a temporary production facility will further
increase processing capacity to 150,000 bopd in Q1 2015. The
completion and commissioning of the second permanent central
processing facility, which has planned capacity of 90,000 bopd, is
expected by year-end 2015.
At end2014, Taq Taq wellhead production capacity was in excess
of 150,000 bopd. The TT-23 deviated well and TT-24 horizontal well
have been drilled and will be tested over coming months.
Tawke (25% working interest)
The Tawke field produced an average of 91,000 bopd in 2014,
compared to 39,000 bopd in 2013. Production more than doubled
year-on-year given the onset of export availability through the
KRI-Turkey pipeline. Production was broadly equally split between
the domestic and export markets during 2014.
The Tawke surface processing facilities are currently capable of
producing up to 125,000 bopd. This capacity is scheduled to
increase to 200,000 bopd in the early part of 2015 through the
utilisation of early production facilities. To facilitate the
higher volumes, a new 24-inch pipeline has been constructed from
the field to the Tawke partners' Fishkhabour export facility. This
increases export capacity to in excess of 250,000 bopd and delivers
transportation system redundancy.
Wellhead production capacity at end-2014 was in excess of
150,000 bopd. The Tawke-27 and 28 wells have been brought on-stream
recently producing at a combined rate of 11,500 bopd. The Tawke-30
well has reached final depth and is being completed for
production.
KRI GAS ASSETS
In 2014, Genel materially de-risked the Miran and Bina Bawi
fields through a new commercial structure with the KRG and reached
key terms to buy OMV's interest in the Bina Bawi field. This
unlocks significant value for Genel and the KRG, and will enable
the development of the Miran and Bina Bawi gas resource to satisfy
both KRI domestic gas demand and exports to Turkey.
In November 2014, we announced that agreement had been reached
with the Ministry of Natural Resources ("MNR") of the KRG for the
development of the Miran and Bina Bawi gas fields.
In addition, we announced that key terms had been agreed with
OMV to acquire its 36% operated stake in the Bina Bawi gas field.
The total consideration will be $150 million in cash. An initial
payment of $20 million will be paid on completion of the deal, with
the remaining $130 million paid in two instalments after first gas.
This is subject to finalisation of documentation and OMV's
corporate approvals.
The agreement reached with the MNR for the development of Miran
and Bina Bawi states that:
-- The Miran and Bina Bawi field developments are to be
combined. This is expected to be approved by end H1 2015. Following
approval, Genel will become the sole contractor
-- The responsibilities of Genel will be drilling of the gas
wells, reservoir management, installation of flowlines and first
stage condensate separation at Miran and Bina Bawi. The Company
will also be responsible for the development of the oil resources
at Miran and Bina Bawi
-- The KRG will assume responsibility for the gas treatment
facilities and gas offtake arrangements from the fields
-- The tender process for the gas treatment plant will commence
in 2015 and first gas production for export will commence in 2018.
The KRG also has an option to request gas for domestic consumption
commencing in 2016
-- For 10 bcma of gas processing capacity, gross contractor life
of field upstream capital investment is estimated at $3-3.5
billion, which represents a unit development cost of less than
$0.3/mcf. Unit opex is estimated at less than $0.2/mcf
The benefits to the KRG from these arrangements are as
follows:
-- Commercialisation of a major onshore, low-cost, gas resource
which will generate significant revenue and value for the people of
the KRI
-- The option for early gas production into the domestic market,
which stands to be an important contributor to industrial and
economic growth
-- The ability to assist the KRG in fulfilling its export
commitments to Turkey under the Gas Sales Agreement signed in
November 2013
The benefits to Genel are as follows:
-- The new structure will deliver attractive life of field
returns and unlock significant value in Genel's gas business
-- The arrangement covering Miran and Bina Bawi simplifies the structure of the gas business
-- Acquiring OMV's Bina Bawi interest will consolidate the
ownership structure across both fields, streamline project
management and provide flexibility in meeting development goals
-- Gross contractor upstream capital investment to first gas is
reduced to c.$1 billion for the combined Miran and Bina Bawi
developments
-- Drilling activity and investment phased from 2016 onwards
Miran (75% working interest, operator)
The Miran field is a simple, large structure well defined on 3D
seismic. The gas resources in the field are situated in Jurassic
aged Butmah and Adaiyah reservoirs, which have delivered 20-25
mmscfd on test. Raw gas volumes in the Jurassic have been
independently estimated at 2-7 tcf. In addition, we estimate up to
50 mmbbls of condensate from first stage separation.
The shallower Cretaceous Shiranish oil bearing reservoir is
estimated to contain up to 60 mmbbls of 15 degree API oil, which
has already been produced through an early production facility and
which we plan to bring on-stream ahead of the gas resources in the
field.
Reprocessing of 3D seismic over the field suggests upside to
existing oil, gas and condensate resource estimates.
In light of the prevailing oil price environment, the Miran
West-5 well was suspended at year-end 2014. The well was made safe
above the main Miran reservoir horizons.
Bina Bawi (44% working interest)
The Bina Bawi field is a very large, simple, anticlinal
structure which has five well penetrations and is fully appraised.
Gas and condensate resources are reservoired in the Triassic Kurra
Chine and Geli Khana reservoirs, with a small oil accumulation in
the shallower Jurassic. Raw gas resources in the Triassic have been
independently estimated at 4-12 tcf. In addition, we estimate up to
21 mmbbls of condensate.
There is significant upside potential to existing estimates of
raw gas volumes as a definitive gas water contact has yet to be
established by any of the wells drilled.
Dohuk (40% working interest)
The Summail gas field on the Dohuk licence commenced production
into the Dohuk power plant during May 2014. However, during the
second half of 2014, production from the field declined sharply due
to decreasing reservoir pressure and water production in the first
two wells. The field continues to produce, albeit at rates
significantly below those envisaged in the original field
development plan. As a result, minimal levels of production are
expected going forward, leading to Summail 2P reserves being
de-booked and the carrying value of the asset being impaired in the
2014 accounts.
EXPLORATION AND APPRAISAL
2014 EXPLORATION REVIEW
KRI
Drilling operations on the Taq Taq Deep exploration well (Genel
44% working interest and joint operator) were completed in March
2014 after encountering oil and gas shows in Jurassic and Triassic
reservoirs. A testing programme was carried out over three separate
zones, which flowed minor non-commercial rates of oil and gas due
to the tight nature of the reservoirs.
Morocco
In March 2014, the JM-1 exploration well on the Juby Maritime
licence (Genel 37.5% working interest) was plugged and abandoned
without testing after reaching a total depth of 3,711 metres. The
well confirmed the presence of heavy oil over a gross interval of
110 metres as originally tested in the 1968 MO-2 well, some two
kilometres from the JM-1 well. Work continues to evaluate the
potential for moveable hydrocarbons in the Upper Jurassic Cap Juby
discovery.
In November, the SM-1 well on the Sidi Moussa permit (Genel 60%
working interest and operator) was plugged and abandoned after
being drilled to a total depth of 2,825 metres. The well
encountered oil in fractured and brecciated cavernous Upper
Jurassic carbonates. In the course of well control operations, 26
degree API oil was produced to surface. A subsequent testing
programme over the same interval failed to produce oil at
sustainable rates. Further evaluation of the well results and other
sub-surface information is required before any definitive
conclusions can be drawn.
Malta
In July, the Hagar Qim-1 well on the Area 4 licence (Genel 75%
working interest and operator) offshore Malta was drilled to the
Eocene target and plugged and abandoned with no indication of
hydrocarbons. Genel has subsequently relinquished its interest in
the Area 4 licence.
Angola
In April 2014, the Company announced that, together with White
Rose Energy Ventures, it had acquired 15% working interests in the
Blocks 38 and 39 offshore Angola. The 15% working interest in Block
38 was acquired from China Sonangol for an upfront payment of $59
million ($30 million net to Genel). The 15% working interest in
Block 39 was acquired from the operator Statoil for a consideration
comprising a pro rata share of past costs and a partial carry of
Statoil's share of the first exploration well, for a total
consideration value of $222 million ($111 million net to
Genel).
In September, the Dilolo-1 well on Block 39 was plugged and
abandoned after failing to encounter hydrocarbons. In November, the
Jacaré -1 exploration well on Block 38 was plugged and abandoned.
These two wells concluded Genel's committed Angola drilling
programme.
FUTURE EXPLORATION ACTIVITY
KRI
On the Chia Surkh licence (Genel 60% working interest and
operator) recently acquired 3D suggests that the main closure in
the field sits adjacent to and beneath the Oligo-Miocene reservoirs
tested in the successful 2013 drilling campaign. The provisional
location of the ChiaSurkh-12 well has been chosen to test the
possibility of several stacked reservoir zones in the Tertiary and
Cretaceous. This well is due to spud in 2016.
At Ber Bahr (Genel 40% working interest and operator), a
160km(2) 3D seismic survey was completed in September 2014. The
initial interpretation of this data confirms a potentially large
accumulation in Jurassic aged reservoirs. An appraisal well, Ber
Bahr-2, is planned in 2016 to delineate the reservoir and define
the oil water contact of the existing discovery.
The Jurassic aged Peshkabir discovery is located on the Tawke
licence. Recently acquired 3D seismic has confirmed that the
original Peshkabir-1 well was drilled at structural closure. The
Peshkabir-2 well has been located to appraise the Jurassic
discovery up-dip from the original well location as well as test
additional prospectivity in the Cretaceous. This well is planned
for 2016.
Africa
Outside the KRI, the Company's near-term focus is on
high-grading its exploration acreage in East Africa.
Onshore Ethiopia, the 2D seismic acquired during 2014 on the
Adigala block (Genel 40% working interest) continues to de-risk the
prospectivity of the licence, with field work proving the presence
of a working petroleum system. This 2D data also supports the
presence of large structures in the Jurassic which could hold
material potential. A well is planned in 2016.
Onshore Somaliland, the Company continues to support the
government's efforts to establish an Oilfield Protection Unit,
which will provide an appropriate level of security in order to
conduct future seismic and drilling operations. Seismic acquisition
on the Odewayne licence (Genel 50% working interest and operator)
and SL-10B/13 licence (Genel 75% working interest and operator) is
currently scheduled for early 2016.
Offshore Côte d'Ivoire, a number of prospects have been
identified on the CI-508 licence (Genel 24% working interest). The
Company is considering its options with regard to future
activity.
Finance director's review
Results summary
2014 2013
--------- --------
Revenue ($million) 519.7 347.9
EBITDAX(1) 410.6 274.8
(Loss) / profit before tax ($million) (312.8) 186.5
EPS (cents) (112.97) 66.24
Cash flow from operating activities ($million) 116.0 311.3
Capex ($million) 676.9 563.9
Free cash flow(2) ($million) (560.9) (252.6)
Cash ($million) 489.1 699.7
Net assets ($million) 3,733.5 4,104.2
1. EBITDAX is profit before interest, tax, depreciation, amortisation and exploration expense
2. Free cash flow is cash flow from operating activities less
capital expenditure
Results for the period
For the year ended 31(st) December 2104, the Group reported
revenue of $519.7 million (2013: $347.9 million), a loss before tax
of $312.8 million (2013: $186.5 million profit) and a loss per
share of 112.97 cents (2013: 66.24 cents earnings). Free cash flow
for the period was an outflow of $560.9 million (2013: outflow of
$252.6 million).
Revenue
Revenue, which is on an accruals basis, of $519.7 million (2013:
$347.9 million) and EBITDAX of $410.6 million (2013: $274.8
million) increased from the comparable period as a result of
pipeline export availability. Pipeline exports brought about higher
production volumes and improved crude oil price realisations, which
averaged $73/bbl (2013: $66/bbl).
Operating costs
Cost of sales of $203.1 million (2013: $140.7 million) includes
depreciation charges of $141.0 million (2013: $94.4 million) and
production costs of $62.1 million (2013: $46.3 million).
Depreciation increased broadly in line with production levels
whilst production costs were impacted favourably by lower transport
costs, consumables and workover costs.
Exploration costs of $476.8 million (2013: credit of $3.1
million) represent the write-off of expenditure relating to
exploration wells drilled in Angola, Malta and the Sidi Moussa and
Juby Maritime fields in Morocco. In addition, the Company wrote off
the entire value of the Dohuk gas asset ($80.9 million).
Other operating costs amounted to $47.0 million (2013: $26.8
million) for the period and included $9.0 million (2013: $6.2
million) of costs relating to acquisitions and pre-licence
activity. The remaining $38.0 million (2013: $20.6 million)
represented general and administration costs with 2013 benefitting
from a one-off credit of $6 million.
Finance expense
Finance expense of $24.7 million (2013: $3.0 million income)
represents primarily interest and issue costs on the $500 million
bond issued in late May 2014.
Taxation
All corporation tax due has been paid on behalf of the Group by
the KRG from the KRG's own share of revenues and there is no tax
payment required or expected to be made by the Group other than
some small amounts incurred and paid in respect of the Group's
service companies in Turkey and the UK.
Dividend
No dividend (2013: nil) will be paid for the year ended 31(st)
December 2014.
Capital expenditure
Capital expenditure in the year amounted to $676.9 million
(2013: $563.6 million). Exploration spend in KRI amounted to $137.8
million (2013: $348.4 million) with a further $193.4 million (2013:
$128.1 million) incurred on the development of existing producing
assets in KRI. Capital expenditure in Africa amounted to $343.0
million (2013: $82.1 million).
Cash flow
Net cash flow from operations was $195.3 million below last year
at $116.0 million (2013: $311.3 million) primarily due to an
increase in net amounts due from the KRG. This together with capex
spend of $676.9 million (2013: $563.9 million) resulted in a free
cash outflow of $560.9 million (2013: $252.6 million). Acquisition
spend was $76.8 million (2013: $43.0 million) and the purchase of
own shares and shares for employee share plans amounted to $63.2
million (2013: $6.0 million). Financing raised from the issue of
bonds raised a net $490.3 million, leaving a net cash outflow of
$210.6 million (2013: $301.6 million).
Cash
At 31(st) December 2014, the Group had a gross cash balance of
$489.1 million (2013: $699.7million). After the deduction of
borrowings, net debt was $2.3 million (2013: net cash $699.7
million).
Acquisitions
The group spent a total of $76.8 million (2013: $43.0 million)
on acquisitions in the year. On 6(th) March 2014, the Group
acquired a 40% interest in the Adigala block in Ethiopia for $4.0
million. On 3(rd) April 2014, the Group acquired a 7.5% interest in
Blocks 38 and 39 offshore Angola for $72.8 million
Net assets
Net assets at 31(st) December 2014 amounted to $3,733.5 million
(2013: $4,104.2 million) and consist primarily of oil and gas
assets of $2,010.7 million (2013: $1,998.4 million), exploration
and evaluation assets of $1,676.6 million (2013: $1,630.9 million)
and net debt of $2.3 million (2013: $699.7 million net cash).
Liquidity / counterparty risk management
The Group monitors its cash position, cash forecasts and
liquidity on a regular basis. The Group takes a conservative
approach to cash management, with surplus cash held in government
gilts or treasury bills or on time deposits with a number of major
financial institutions. Suitability of banks is assessed using a
combination of sovereign risk, credit default swap pricing and
credit rating.
Going concern
The directors have assessed that the cash balance held provides
the Group with adequate headroom over forecast operational and
potential acquisition expenditure for the 12 months following the
signing of the annual report for the period ended 31(st) December
2014 for the Group to be considered a going concern.
Accounting policies
UK listed companies are required to comply with the European
regulation to report consolidated statements that conform to
International Financial Reporting Standards (IFRS) as adopted by
the European Union. Principal accounting policies adopted by the
Group and applicable for the period ended 31(st) December 2014 can
be found in the 2013 annual report The following standards have
been adopted by the group for the first time for the financial year
beginning on or after 1(st) January 2014 and do not have a material
impact on the group: IFRS 10, 'Consolidated financial statements',
IFRS 11, 'Joint arrangements' and IFRS 12, 'Disclosures of
interests in other entities'
Condensed consolidated statement of comprehensive income
For the period ended 31(st) December
Notes 2014 2013
$m $m
-------------- -------------
Revenue 1 519.7 347.9
Cost of sales 2 (203.1) (140.7)
Gross profit 316.6 207.2
Exploration (expense) / credit 3 (476.8) 3.1
Asset write-off 4 (80.9) -
Other operating costs 5 (47.0) (26.8)
Operating (loss) / profit (288.1) 183.5
EBITDAX 410.6 274.8
Depreciation of oil and gas assets 2 (141.0) (94.4)
Exploration (expense) / credit 3 (476.8) 3.1
Asset write-off 4 (80.9) -
Finance (expense) / income 6 (24.7) 3.0
(Loss) / profit before income tax (312.8) 186.5
Income tax expense 7 (1.5) (0.9)
(Loss) /profit for the period (314.3) 185.6
Other comprehensive items - -
Total comprehensive (loss) / income
for the period (314.3) 185.6
-------------- -------------
Attributable to:
Equity holders of the Company (314.3) 185.6
-------------- -------------
(314.3) 185.6
-------------- -------------
Earnings per ordinary share attributable
to the ordinary equity holders of the
Company
Basic earnings per share - cents per
share 8 (112.97) 66.24
Diluted earnings per share - cents per
share 8 (112.97) 65.70
Condensed consolidated balance sheet
At 31(st) December
Notes 2014 2013
$m $m
------- -------
Assets
Non-current assets
Intangible assets 9 1,679.3 1,633.9
Property, plant and equipment 10 2,015.2 2,003.2
3,694.5 3,637.1
Current assets
Trade and other receivables 11 303.7 15.8
Cash and cash equivalents 12 489.1 699.7
------- -------
792.8 715.5
Total Assets 4,487.3 4,352.6
-------
Liabilities
Non-current liabilities
Trade and other payables 13 (5.0) (5.0)
Deferred income 14 (47.8) (53.5)
Provisions 15 (19.4) (16.9)
Bank and other long-term borrowings 16 (491.4) -
------- -------
(563.6) (75.4)
Current liabilities
Trade and other payables 13 (184.0) (164.3)
Deferred income 14 (6.2) (8.7)
-------
(190.2) (173.0)
Total liabilities (753.8) (248.4)
------- -------
Net assets 3,733.5 4,104.2
======= =======
Owners of the parent
Share capital 17 43.8 43.8
Share premium account 4,074.2 4,074.2
Retained earnings (392.3) (21.6)
------- -------
Total shareholders' equity 3,725.7 4,096.4
Non-controlling interest 7.8 7.8
Total equity 3,733.5 4,104.2
======= =======
Condensed consolidated statement of changes in equity
For the period ended 31(st) December
Total
attributable
Share Share Retained to equity Non-controlling Total
capital premium earnings holders interest equity
$m $m $m $m $m $m
-------- -------- --------- ------------- --------------- ---------
At 1(st) January 2014 43.8 4,074.2 (21.6) 4,096.4 7.8 4,104.2
Comprehensive loss for the period - - (314.3) (314.3) - (314.3)
Transactions with shareholders:
Share-based payment transactions - - 6.8 6.8 - 6.8
Purchase of own shares for ESOP(1) - - (39.2) (39.2) - (39.2)
Purchase of own shares(2) - - (24.0) (24.0) - (24.0)
At 31st December 2014 43.8 4,074.2 (392.3) 3,725.7 7.8 3,733.5
-------- -------- --------- ------------- --------------- -------
At 1(st) January 2013 43.8 4,074.2 (205.7) 3,912.3 7.8 3,920.1
Comprehensive income for the period - - 185.6 185.6 - 185.6
Transactions with shareholders:
Share-based payment transactions - - 4.5 4.5 - 4.5
Purchase of own shares for ESOP(1) - - (6.0) (6.0) - (6.0)
At 31(st) December 2013 43.8 4,074.2 (21.6) 4,096.4 7.8 4,104.2
-------- -------- --------- ------------- --------------- -------
1. Purchase of shares in the open market to satisfy the
Company's commitments under various employee share plans.
2. Purchase of own shares in the open market and held as treasury shares
Condensed consolidated cash flow statement
For the period ended 31(st) December
Notes 2014 2013
$m $m
------- -------
Cash flows from operating activities
Cash generated from operations 18 135.3 305.4
Interest (paid) / received (17.8) 6.6
Taxation paid (1.5) (0.7)
Net cash from operating activities 116.0 311.3
Cash flows from investing activities
Purchase of intangible assets 9 (482.1) (433.1)
Purchase of property, plant and equipment 10 (194.8) (130.8)
Acquisition of intangibles 19 (76.8) (43.0)
Net cash from investing activities (753.7) (606.9)
Cash flows from financing activities
Purchase of ESOP shares (39.2) (6.0)
Purchase of own shares (24.0) -
Net proceeds from issue of $500 million
bond 490.3 -
Net cash from financing activities 427.1 (6.0)
Net decrease in cash and cash equivalents (210.6) (301.6)
Cash and cash equivalents at the 1(st)
January 699.7 1,001.3
Cash and cash equivalents at 31(st) December 12 489.1 699.7
------- -------
Notes to the condensed financial statements
1. Segmental information
The Group has two reportable business segments, which are its
oil and gas exploration and production business in the KRI and its
oil and gas exploration business in Africa. Capital expenditure
decisions for the Kurdistan segment are considered in the context
of the cash flows expected from the production and sale of crude
oil. Capital expenditure for the Africa segment is considered in
the context of the available cash of the Group.
Finance income is not considered part of a business segment and
forms part of the reconciliation to the reported numbers.
For the period ended 31(st) December 2014
Total
Kurdistan Africa Other Reported
$m $m $m $m
------------ --------- -------- ----------
Revenue 519.7 - - 519.7
Cost of sales (203.1) - - (203.1)
------------ --------- -------- ----------
Gross profit 316.6 - - 316.6
Exploration expense - (476.8) - (476.8)
Asset write-off (80.9) - - (80.9)
Other operating costs (1.9) - (45.1) (47.0)
------------ --------- -------- ----------
Operating profit / (loss) 233.8 (476.8) (45.1) (288.1)
------------ --------- --------
Finance expense (24.7)
Loss before tax (312.8)
----------
Capital expenditure 331.2 343.0 2.7 676.9
Total assets 3,946.1 115.1 426.1 4,487.3
Total liabilities (168.1) (78.8) (506.9) (753.8)
Other represents non-segmental items related to head office
activities. Total assets and liabilities in the other segment are
predominantly cash and debt balances.
For the period ended 31(st) December 2013
Total
Kurdistan Africa Other Reported
$m $m $m $m
------------ --------- -------- ----------
Revenue 347.9 - - 347.9
Cost of sales (140.7) - - (140.7)
------------ --------- -------- ----------
Gross profit 207.2 - - 207.2
Exploration credit / (expense) 22.2 (19.1) - 3.1
Other operating costs 0.2 - (27.0) (26.8)
------------ --------- -------- ----------
Operating profit / (loss) 229.6 (19.1) (27.0) 183.5
------------ --------- --------
Finance income 3.0
Profit before tax 186.5
----------
Capital expenditure 476.5 82.1 5.3 563.9
Total assets 3,586.6 149.4 616.6 4,352.6
Total liabilities (209.2) (27.5) (11.7) (248.4)
Other represents non-segmental items related to head office
activities. Total assets and liabilities in the other segment are
predominantly cash and debt balances.
2. Cost of sales
2014 2013
$m $m
----- -----
Depreciation and amortisation of oil and gas
assets 141.0 94.4
Production costs 62.1 46.3
203.1 140.7
----- -----
3. Exploration expense / credit
2014 2013
$m $m
Exploration write-off / (credit) (see note
9) 471.1 (22.2)
Exploration costs 5.7 19.1
476.8 (3.1)
----- ------
The exploration write-off represents exploration expenditure in
respect of Angola, Malta and Morocco (Sidi Moussa and Juby Maritime
fields) previously capitalised and now expensed.
4. Asset write-off
The asset write-off of $80.9 million (2013: nil) reflects the
impairment of Dohuk where recent tests have shown the
recoverability of the assets to be highly unlikely (see note
10).
5. Other operating costs
2014 2013
$m $m
------ ------
Activity:
Acquisition activity and pre-licence exploration
costs 9.0 6.2
General and other costs 38.0 20.6
47.0 26.8
------ ------
Nature:
Employee cost 80.3 61.5
Directors' fees 6.8 6.5
Audit fees 0.4 0.4
Operating lease rentals 5.1 5.8
Depreciation and amortisation of other assets 3.3 3.1
Other expenses 36.2 18.0
Recharges and amounts capitalised to exploration
and oil & gas assets (85.1) (68.5)
47.0 26.8
------ ------
6. Finance expense / income
2014 2013
$m $m
------ -----
Interest received on bank deposits 0.6 3.5
Interest payable on bond (24.5) -
Interest unwind on provisions (0.8) (0.5)
(24.7) 3.0
------ -----
7. Taxation
A taxation charge of $1.5 million (2013: $0.9 million) was made
in the Turkish and UK services companies. All other corporation tax
due has been paid on behalf of the Group by the government from the
government's share of revenues and there is no tax payment required
or expected to be made by the Group.
8. Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of shares in issue during the period.
2014 2013
----------- -----------
Profit for the period attributable to equity
holders of the
Company - $ million (314.3) 185.6
Weighted average number of ordinary shares
- number (1) 278,177,070 280,248,198
Basic earnings per share - cents per share (112.97) 66.24
1. Excluding the purchase of own shares now held as treasury shares
Diluted
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to include all potential
dilutive ordinary shares. The Group has four types of potential
dilutive ordinary shares:
- Shares granted to directors and employees under the
performance share plan, to the extent that performance conditions
have been met at the period end;
- Share options granted to employees under the share option
plan, where the exercise price is less than the average market
price of the Company's ordinary shares during the period
- Shares issued to employees under the restricted share plan
- Shares and securities issued to the founders of the Company,
to the extent that performance conditions have been met at the
period end.
2014 2013
------------- -------------
Profit for the period attributable to equity
holders of the
Company - $ million (314.3) 185.6
Weighted average number of ordinary shares
- number(1) 278,177,070 280,248,198
Adjustment for performance shares, restricted
shares, share options and founder shares
and securities - number(2) - 2,328,856
------------- -------------
Weighted average number of ordinary shares
for diluted earnings per share - number 278,177,070 282,577,054
Diluted earnings per share - cents per share (112.97) 65.70
1. Excluding the purchase of own shares now held as treasury shares
2. As the Group reported a loss in 2014, there are no dilutive adjustments to be made
9. Intangible assets
Exploration
and evaluation Miran Other
assets Acquisition assets Total
$m $m $m $m
--------------- ------------- ------- -------
Cost
At 1(st) January 2014 1,630.9 - 4.5 1,635.4
Acquisitions (note19) 76.8 - - 76.8
Transfer to property, plant and
equipment (note 10) (40.8) - - (40.8)
Write-off (471.1) - - (471.1)
Additions 480.8 - 1.3 482.1
Balance at 31(st) December 2014 1,676.6 - 5.8 1,682.4
--------------- ------------- ------- -------
Depreciation and impairment
At 1(st) January 2014 - - 1.5 1.5
Depreciation charge for the period - - 1.6 1.6
At 31(st) December 2014 - - 3.1 3.1
--------------- ------------- ------- -------
Net book value
At 1(st) January 2014 1,630.9 - 3.0 1,633.9
--------------- ------------- ------- -------
At 31(st) December 2014 1,676.6 - 2.7 1,679.3
--------------- ------------- ------- -------
Cost
At 1(st) January 2013 720.8 472.6 1.9 1,195.3
Acquisitions 43.0 - - 43.0
Transfer 472.6 (472.6) - -
Transfer to property, plant and
equipment (note 10) (36.0) (36.0)
Additions 430.5 - 2.6 433.1
Balance at 31(st) December 2013 1,630.9 - 4.5 1,635.4
Depreciation and impairment
At 1(st) January 2013 22.2 - 0.4 22.6
Depreciation charge for the period - - 1.1 1.1
Provision for write-off of exploration
costs (see note 3) (22.2) - - (22.2)
At 31(st) December 2013 - - 1.5 1.5
--------------- ------------- ------- -------
Net book value
At 1(st) January 2013 698.6 472.6 1.5 1,172.7
--------------- ------------- ------- -------
At 31(st) December 2013 1,630.9 - 3.0 1,633.9
--------------- ------------- ------- -------
The exploration write-off represents exploration expenditure in
respect of Angola, Malta and Morocco (Sidi Moussa and Juby Maritime
fields), now expensed to the income statement.
Exploration and evaluation assets are comprised of the Group's
PSC interests in exploration assets in the Kurdistan Region of Iraq
and Africa. Exploration and evaluation assets are not amortised but
are assessed for impairment indicators under IFRS 6.
The net book value of $2.7 million (2013: $3.0 million) of other
assets is principally software.
10. Property, plant and equipment
Oil and Other
gas assets assets Total
$m $m $m
------------- --------- --------
Cost
At 1(st) January 2014 2,279.5 7.8 2,287.3
Additions 193.4 1.4 194.8
Write-off (80.9) (80.9)
Transfer from intangible assets (see
note 9) 40.8 - 40.8
At 31(st) December 2014 2,432.8 9.2 2,442.0
------------- --------- --------
Depreciation and impairment
At 1(st) January 2014 281.1 3.0 284.1
Depreciation charge for the period 141.0 1.7 142.7
At 31(st) December 2014 422.1 4.7 426.8
------------- --------- --------
Net book value
At 1(st) January 2014 1,998.4 4.8 2,003.2
------------- --------- --------
At 31(st) December 2014 2,010.7 4.5 2,015.2
------------- --------- --------
Cost
At 1(st) January 2013 2,115.4 5.1 2,120.5
Additions 128.1 2.7 130.8
Transfer from intangible assets (see
note 9) 36.0 - 36.0
At 31(st) December 2013 2,279.5 7.8 2,287.3
------------- --------- --------
Depreciation and impairment
At 1(st) January 2013 186.7 1.0 187.7
Depreciation charge for the period 94.4 2.0 96.4
At 31(st) December 2013 281.1 3.0 284.1
------------- --------- --------
Net book value
At 1(st) January 2013 1,928.7 4.1 1,932.8
------------- --------- --------
At 31(st) December 2013 1,998.4 4.8 2,003.2
------------- --------- --------
Oil and gas assets comprise principally the Group's share of
interests in the Taq Taq and Tawke producing fields in the
Kurdistan Region of Iraq. Other assets include leasehold
improvements, office furniture and motor vehicles.
The write-off relates to the Dohuk asset which has been fully
written off to the income statement.
11. Trade and other receivables
2014 2013
$m $m
------ -----
Trade receivables 232.9 0.4
Other receivables 49.4 4.0
Prepayments 21.4 11.4
303.7 15.8
------ -----
The fair values of financial assets approximate their carrying
value.
12. Cash and cash equivalents
2014 2013
$m $m
------ ------
Cash and cash equivalents 489.1 699.7
489.1 699.7
------ ------
The above amounts are primarily held in government gilts or
treasury bills or on time deposits with a number of major financial
institutions. Cash includes the Group's share of cash held in its
joint operations and $166.1 million (2013: $nil) of cash collateral
on letters of credit and performance guarantees, which can be
reconverted at relatively low cost.
13. Trade and other payables
2014 2013
$m $m
------ ------
Trade payables 69.0 45.0
Deferred consideration 5.0 5.0
Other payables 16.5 17.5
Accruals 98.5 101.8
189.0 169.3
------ ------
Non-current 5.0 5.0
Current 184.0 164.3
------ ------
189.0 169.3
------ ------
The fair values of financial liabilities approximate their
carrying value.
14. Deferred income
2014 2013
$m $m
----- -----
Non-current 47.8 53.5
Current 6.2 8.7
54.0 62.2
----- -----
Deferred income is royalty income received in advance from the
Group's partner for the Taq Taq PSC. The deferred income is
recognised in the statement of comprehensive income in a manner
consistent with how the royalty income becomes due. Once the
deferred income has been fully recognised, the joint operating
partner will recommence cash payment for the royalty as it becomes
due.
15. Provisions
2014 2013
$m $m
----- -----
Balance at 1(st) January 16.9 13.2
Interest unwind 0.8 0.5
Additions 1.7 3.2
Balance at 31(st) December 19.4 16.9
----- -----
Non-current 19.4 16.9
Current - -
Balance at 31(st) December 19.4 16.9
----- -----
Non-current provisions cover expected decommissioning and
abandonment costs resulting from the net ownership interests in
petroleum and natural gas assets, including well sites and
gathering systems. The decommissioning and abandonment provision is
based on management's best estimate of the expenditure required to
settle the present obligation at the end of the period.
The cash flows relating to the decommissioning and abandonment
provisions are expected to occur between 2031 and 2039. The
provision is the discounted present value of the cost, using
existing technology at current prices.
16. Bank and other long-term borrowings
2014 2013
$m $m
------ -----
$500 million 7.5% bond due May 2019 491.4 -
491.4 -
------ -----
The $500 million bond is unsecured with a coupon rate of 7.5%
payable on a biannual basis and is shown net after unamortised
issue costs. The fair value of the bond at 31(st) December 2014 was
$452.1 million.
17. Share capital
Suspended
Voting Voting Total
Ordinary Ordinary Ordinary
shares shares Shares
------------- ----------- -----------
At 1(st) January 2014 47,166,873 233,081,325 280,248,198
Sale of 3,250,000 ordinary shares by
affiliated shareholders to third parties
on 27(th) January 2014 and 21(th) February
2014 (4,642,857) 4,642,857 -
Sale of 2,170,000 ordinary shares by
affiliated shareholders to third parties
on 10(th) March 2014 (3,100,000) 3,100,000 -
Sale of 1,120,000 and 3,000,000 ordinary
shares by affiliated shareholders to
third parties on 2(nd) July 2014 and
7(th) July 2014 respectively (5,885,715) 5,885,715 -
At 31(st) December 2014 - fully paid(1) 33,538,301 246,709,897 280,248,198
------------- ----------- -----------
At 1(st) January 2013 66,511,519 213,736,679 280,248,198
Sale of 1,500,000 ordinary shares by
an affiliated shareholder
to a third party on 15(th) May 2013 (2,142,858) 2,142,858 -
Sale of 1,300,000 ordinary shares by
an affiliated shareholder
to a third party on 21(st) May 2013 (1,857,142) 1,857,142 -
Sale of 5,425,001 ordinary shares by
affiliated shareholders to third parties
on 5(th) July 2013 (7,750,002) 7,750,002 -
Sale of 3,076,251 and 1,430,000 ordinary
shares by affiliated shareholders to
third parties on 26(nd) September 2013
and 18(th) October 2013 respectively (6,437,501) 6,437,501 -
Sale of 810,000 ordinary shares by
an affiliated shareholder
to a third party on 22(nd) November
2013 (1,157,143) 1,157,143 -
At 31(st) December 2013 - fully paid(1) 47,166,873 233,081,325 280,248,198
------------- ----------- -----------
1. Voting ordinary shares includes 2,006,362 (2013: nil) treasury shares
On the sale of voting ordinary shares from an affiliated
shareholder to a third party, the affiliated shareholders have a
right of conversion of suspended voting ordinary shares to voting
ordinary shares in order to maintain their voting ordinary share
percentage at just below 30% of the Company. Details of those sales
and resulting conversions are set out below.
On 27(th) January 2014, 2,250,000 voting ordinary shares were
transferred from affiliated shareholders to third parties. On
21(st) February 2014 a further 1,000,000 voting ordinary shares
were transferred from affiliated shareholders to third parties. On
7(th) March 2014 4,642,857 suspended voting ordinary shares were
converted to voting ordinary shares in accordance with the terms of
the suspended voting ordinary shares.
On 10(th) March 2014, 2,170,000 voting ordinary shares were
transferred from affiliated shareholders to third parties and on
the 11(st) March 2014 3,100,000 suspended voting ordinary shares
were converted to voting ordinary shares in accordance with the
terms of the suspended voting ordinary shares.
On 2(nd) July 2014, 1,120,000 voting ordinary shares were
transferred from affiliated shareholders to third parties. On 7(th)
July 2014 a further 3,000,000 voting ordinary shares were
transferred from affiliated shareholders to third parties. On
24(th) July 2014, 5,885,715 suspended voting ordinary shares were
converted to voting ordinary shares in accordance with the terms of
the suspended voting ordinary shares.
On 15(th) May 2013, 1,500,000 suspended voting ordinary shares
were transferred from an affiliated shareholder to a third party
and converted to voting ordinary shares. On the same day a further
642,858 suspended voting ordinary shares were converted to voting
ordinary shares in accordance with the terms of the suspended
voting ordinary shares.
On 21(st) May 2013, 1,300,000 suspended voting ordinary shares
were transferred from an affiliated shareholder to a third party
and converted to voting ordinary shares. On the same day a further
557,142 suspended voting ordinary shares were converted to voting
ordinary shares in accordance with the terms of the suspended
voting ordinary shares.
On 5(th) July 2013, 5,425,001 suspended voting ordinary shares
were transferred from affiliated shareholders to third parties and
converted to voting ordinary shares. On the same day a further
2,325,001 suspended voting ordinary shares were converted to voting
ordinary shares in accordance with the terms of the suspended
voting ordinary shares.
On 26(th) September 2013 and 18(th) October 2013 3,076,251 and
1,430,000 voting ordinary shares were transferred from affiliated
shareholders to third parties. On 31(st) October 2013 6,437,501
suspended voting ordinary shares were converted to voting ordinary
shares in accordance with the terms of the suspended voting
ordinary shares.
On 22(nd) November 2013, 810,000 suspended voting ordinary
shares were transferred from an affiliated shareholder to third
parties and converted to voting ordinary shares. On the same day a
further 347,143 suspended voting ordinary shares were converted to
ordinary shares in accordance with the terms of the suspended
voting ordinary shares
There have been no changes to the authorised share capital since
it was determined to be 10,000,000,000 ordinary shares of GBP0.10
per share.
18. Cash generated from operating activities
2014 2013
$m $m
------- ------
(Loss) / profit for the period (314.3) 185.6
Adjustments for :
Finance expense / (income) 24.7 (3.0)
Taxation 1.5 0.9
Depreciation and amortisation 144.3 97.5
Write-off of exploration costs 471.1 -
Asset write-off 80.9 -
Provision for write-off of exploration costs - (22.2)
Share based payments 6.8 4.5
Changes in working capital:
Trade and other receivables (287.8) 33.5
Trade and other payables and provisions 8.1 8.6
Cash generated from operating activities 135.3 305.4
------- ------
19. Acquisitions
On 6(th) March 2014, the Group acquired a 40% interest in the
Adigala block in Ethiopia for $4.0 million. On 3(rd) April 2014,
the Group acquired a 7.5% interest in Blocks 38 and 39 offshore
Angola for $72.8 million.
Angola Ethiopia Total
$m $m $m
------ -------- -----
Intangible assets 72.8 4.0 76.8
Cash flow 72.8 4.0 76.8
------ -------- -----
20. Commitments
Under the terms of its PSCs and JOAs, the Group has certain
commitments that are defined by activity rather than spend. The
Group's capital programme for the next few years is explained in
the 2014 annual report to be distributed to shareholders in March
2015 and is in excess of the activity required by its PSCs and
JOAs.
21. Statutory accounts
The financial information for the year ended 31(st) December
2014 contained in this preliminary announcement has been audited
and was approved by the board on 5(th) March 2015.
The financial information in this statement does not constitute
the Company's statutory accounts for the years ended 31(st)
December 2014 or 2013. The financial information for 2014 and 2013
is derived from the statutory accounts for 2013, which have been
delivered to the Registrar of Companies, and 2014, which will be
delivered to the Registrar of Companies and issued to shareholders
in March 2015. The auditors have reported on the 2014 and 2013
accounts; their report was unqualified and did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report.
The statutory accounts for 2014 are prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted for
use in the European Union. The accounting policies (that comply
with IFRS) used by Genel Energy plc (the Group) are consistent with
those set out in the 2013 annual report with the exception of IFRS
10, IFRS 11 and IFRS 12 which were implemented during the year. The
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were consistent with those applied to the consolidated financial
statements for the period ended 31(st) December 2013.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
22. Annual report
Copies of the 2014 annual report will be despatched to
shareholders in March 2015 and will also be available from the
Company's registered office at 12 Castle Street, St Helier, Jersey
JE2 3RT and at the Company's website, www.genelenergy.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSFFALFISEDD
Genel Energy (LSE:GENL)
Historical Stock Chart
From Jun 2024 to Jul 2024
Genel Energy (LSE:GENL)
Historical Stock Chart
From Jul 2023 to Jul 2024
