Genel Energy PLC (GENL) Genel Energy PLC: Trading and operations
update 18-Jan-2022 / 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.
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18 January 2022
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
2021 results, which are scheduled for release on 15 March 2022. The
information contained herein has not been audited and may be
subject to further review.
Bill Higgs, Chief Executive of Genel, said:
"In 2021 we generated significant free cash flow of USD86
million, and in 2022 we are set to build on this as the strength of
the oil price and our positive outlook means that free cash flow is
expected to more than double. Our focus in 2022 is on growing the
business and supporting our progressive dividend long-term. We aim
to increase cash flow through the progression of our asset
development plans and the addition of income streams. Our priority
is the derisking and commercialisation of Sarta, while the
successful farm-out on our Somaliland licence opens the way to
drill an exploration well on this exciting opportunity."
2022 OUTLOOK AND GUIDANCE
-- Production in 2022 is expected to be around the same level as
2021
-- Genel expects to generate free cash flow of up to USD200
million in 2022, pre dividend payments, at a Brentoil price of
USD75/bbl? An increase or decrease in Brent of USD10/bbl impacts
annual cash by USD50 million ? Under the terms of the Receivable
Settlement Agreement signed in August 2017, the last
overridepayment will be made relating to Tawke PSC production in
July 2022. Given payments are received three months inarrears from
the Kurdistan Regional Government ('KRG'), 10 override payments are
expected in 2022 ? 2022 capital expenditure is expected to be
between USD140 million and USD180 million, with key assetspending
including:? c.USD75 million expenditure forecast at the Tawke PSC,
an increase of c.USD25 million compared to2021 as drilling
increases at the Tawke field ? c.USD45-80 million expenditure
forecast at Sarta, with higher spend the result of appraisal
success ? c.USD10-20 million expenditure forecast at Taq Taq ? Work
is underway on planning a well in Somaliland, with expenditure in
2022 expected to be underUSD5 million ? Operating costs expected to
be c.USD50 million (2021: USD44 million), equating to under
USD5/bbl, retainingour advantageous low operating cost position
-- Following the termination of the Bina Bawi and Miran PSCs by
Genel on 10 December 2021, Genel will beclaiming substantial
compensation from the KRG. Genel's claims will be brought in a
private London seatedinternational arbitration
-- Genel remains committed to paying a material and progressive
dividend, as we look to offer a compellingmix of value-accretive
growth and shareholder returns
-- Genel continues to invest in the host communities in which we
operate. 2022 represents twenty years ofoperations in the Kurdistan
Region of Iraq, which we will commemorate through the Genel20
programme, launchingsignificant new social activities throughout
the year, aligned with UN Sustainable Development Goals
2021 FINANCIAL PERFORMANCE
-- USD281 million of cash proceeds were received from the KRG in
2021 (2020: USD173 million)
-- Capital expenditure of USD165 million (2020: USD109 million),
with c.USD45 million spent at the Tawke PSC andc.USD110 million at
Sarta and Qara Dagh
-- Free cash flow of USD86 million in 2021, pre dividend
payments (2020: USD5 million free cash outflow),comparison impacted
by:? Higher oil price of USD71/bbl in 2021, compared to USD42/bbl
in 2020 ? 10 entitlement payments received in 2021, compared to 12
in 2020, following industry-wide reversionto payments three months
in arrears by the KRG ? Receivable recovery payments of USD35
million received in 2021, with the resumption of Tawke
overridepayments contributing a further USD72 million (USD23
million in override payments received in 2020)
-- Dividends paid in 2021 of 16¢ per share (2020: 15¢ per
share), a total distribution of c.USD45 million
-- Cash of USD314 million at 31 December 2021, net cash of USD44
million (USD10 million at 31 December 2020)
2021 OPERATING PERFORMANCE
-- Genel strives for safe operations with zero lost time
injuries ('LTI') and zero tier one loss of primarycontainment
events at Genel and TTOPCO operations. One LTI was reported in 2021
at Sarta-5 drilling operations andall corrective actions have been
implemented? 1.2 million work hours subsequently completed across
our operations without an LTI
-- Net production averaged 31,710 bopd in 2021, with net
production in Q4 averaging 30,843 bopd? Production cost of
c.USD4/bbl, with margin per barrel of USD24/bbl
-- Production by field was as follows:
Gross production Net production Net production
(bopd)
2021 2021 2020
Tawke 108,710 27,180 27,570
Taq Taq 5,940 2,610 4,250
Sarta 6,400 1,920 160
Total 121,060 31,710 31,980
-- Genel expects our confirmed 2021 carbon intensity to be c.15
kgCO2e/bbl for scope 1 and 2 emissions,significantly below the
global oil and gas industry average of 20 kgCO2e/boe? Expected
carbon intensity in 2021 has increased from 13kg CO2e/bbl in 2020
due to full yearproduction at Sarta where associated gas is
currently being flared. The gas management project to cease
routineflaring is underway
PRODUCTION ASSETS
-- Tawke PSC (25% working interest)? Gross production at the
Tawke PSC averaged 108,710 bopd in 2021 (110,280 bopd in 2020) ?
Drilling activity is set to ramp up in 2022
-- Sarta (30% working interest and operator)? The results of
early production from the Sarta pilot continue to help shape the
view of full fielddevelopment ? Gross production averaged 6,400
bopd in 2021, with just over 2.5 million barrels having been
producedfrom start up in late November 2020 to year end 2021 ?
Drilling and completion operations at Sarta-1D concluded in
November 2021, the Viking I-21 Rig wassubsequently mobilised to
Sarta-4 to workover the legacy exploration well for use as a
produced water disposalwell ? Rigless well testing at Sarta-1D is
now underway, with results expected early this quarter. This
willallow for the performance of the thicker and more
volumetrically significant Adaiyah reservoir to be fullyevaluated.
Oil produced from Sarta-1D will be delivered to the early
production facility via a short c.2 kmflowline that was installed
in Q4 2021 removing any lag time between well testing results and
monetisation ofthe resource ? The Sarta-5 and Sarta-6 step out
wells are designed to appraise the field away from the
pilotproduction facility and will be key in resolving the current
uncertainty over the size and shape of the Sartafield ? Drilling
and completion operations concluded at Sarta-5 at the end of 2021,
and the Parker 265 Rig iscurrently mobilising to the Sarta 6
location with spud expected in the coming weeks ? Rigless
well-testing operations will be conducted at Sarta-5 in Q1 2022 ?
As of 1 January 2022, Genel became PSC operator of Sarta in line
with the agreement with Chevron ? Genel has embarked on a renewable
energy appraisal programme at Sarta, with the initial phase of
thisstudy assessing wind, solar and hydro options to power the
early production facility. The study began in Q32021 and will be
completed in 2022, as Genel aims to reduce GHG emissions from our
facilities
-- Taq Taq PSC (44% working interest and joint operator)? Gross
production at Taq Taq averaged 5,940 bopd in 2021, following the
ongoing suspension of drillingactivity ? Activity at Taq Taq
continues to be focused on optimising cash flow, and drilling may
resume in H22022
PRE-PRODUCTION ASSETS
-- Qara Dagh (40% working interest and operator)? As announced
on 4 January, drilling operations on the QD-2 well have been
suspended and the welltemporarily abandoned ? The evaluation by
licence partners Genel and Chevron of the QD-2 well and its results
is nowunderway, and this will inform next steps on the licence
-- Somaliland (51% working interest and operator)? Following the
signing of a farm-out agreement with OPIC Somaliland Corporation
relating to theSL10B13 block, field partners are now working
together to plan exploration drilling, with an aim of drilling
awell in 2023
-- Morocco (75% working interest and operator)? A farm-out
campaign continues to be planned relating to the Lagzira block
offshore Morocco (75%working interest and operator), with the aim
of bringing a partner onto the licence prior to consideringfurther
commitments
-ends-
For further information, please contact:
Genel Energy
+44 20 7659 5100
Andrew Benbow, Head of Communications
Vigo Consulting
+44 20 7390 0230
Patrick d'Ancona
This announcement includes inside information.
Notes to editors:
Genel Energy is a socially responsible oil producer listed on
the main market of the London Stock Exchange (LSE: GENL, LEI:
549300IVCJDWC3LR8F94). The Company is one of the largest
London-listed independent hydrocarbon producers, with an asset
portfolio that positions us well for a future of fewer and better
natural resources projects. Genel has low-cost and low-carbon
production from the Sarta, Taq Taq, and Tawke licences in the
Kurdistan Region of Iraq, providing financial resilience that
allows investment in growth and the payment of a material and
sustainable dividend, even at a low oil price. Genel also continues
to pursue further growth opportunities. For further information,
please refer to www.genelenergy.com
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