6 August 2024 Genel Energy plc - Unaudited results for the period ended 30 June 2024 Paul Weir, Chief Executive of Genel, said: “We have continued to progress our priority workstreams, each of which can be transformational for the business, whilst maintaining our balance sheet strength by strict discipline on spend and capital allocation. Cash generative production continues from our flagship Tawke licence, where domestic sales demand has shown resilient consistency in the past 6 months and some recent price improvement. We have efficiently closed down our unprofitable operated licences in the Kurdistan Region of Iraq (‘KRI’) and minimised our in-country footprint, while keeping people safe and continuing to act as a trusted partner to all our stakeholders. Significant cost reductions have been made across all aspects of the business wherever appropriate, and our organisational spend in the second half of the year will reduce further. The business has the potential to deliver significant shareholder value, well above the current market value of the business. The Tawke PSC is a world class asset with a long life ahead of it, and when exports restart can deliver over $100 million of entitlement free cash flow per annum to Genel, more than double the current level. In association with our industry peers and other stakeholders, we continue to lobby regional and federal governments to break the current political impasse so that international exports of Kurdistan oil can resume in a manner that properly rewards IOCs that have chosen to invest in Kurdistan. While progress is sporadic, recent participation by stakeholders in tripartite talks demonstrate that negotiations continue and support the view that a negotiated solution can be found. We continue to prioritise the acquisition of new assets to materially diversify our cash generation and reinvigorate our organic portfolio. Adding new assets to achieve geographical diversification is a strategic objective, but we will only buy an asset on terms that are clearly beneficial for our shareholders. Regarding the London-seated Miran and Bina Bawi oil and gas assets arbitration, the written and evidentiary stages have now concluded. The timing of the award is not certain, but is expected before the end of 2024. Our view on the merits of our case remains unchanged since the arbitration process was initiated by the KRG in 2021.” Results summary ($ million unless stated)
| | H1 2024 | H1 2023 | FY 2023 |
| Average Brent oil price ($/bbl) | 84 | 80 | 82 |
| Production (bopd, working interest) | 19,510 | 13,440 | 12,410 |
| Revenue | 37.6 | 48.0 | 84.8 |
| Opex | (8.2) | (14.7) | (21.3) |
| EBITDAX1 | 11.1 | 22.9 | 32.8 |
| Operating loss | (15.8) | (11.2) | (19.2) |
| Cash flow from operations | 36.4 | 39.2 | 55.1 |
| Capital expenditure | 15.9 | 47.5 | 68.0 |
| Free cash flow2 | 8.5 | (35.1) | (71.0) |
| Cash | 370.4 | 425.0 | 363.4 |
| Total debt | 248.0 | 273.0 | 248.0 |
| Net cash3 | 125.5 | 158.2 | 119.7 |
| Basic LPS (¢ per share) | (7.9) | (14.6) | (22.0) |
EBITDAX is operating loss adjusted for the add back of depreciation and amortisation, net write-off/impairment of oil and gas assets and net ECL/reversal of ECL receivables Free cash flow is reconciled on page 6 Reported cash less debt reported under IFRS (page 6) Summary We continue to sell domestically with the route to exports suspended Consistent production from the Tawke PSC, with minimal investment, has delivered average working interest production of 19,510 bopd in H1 2024 (H1 2023: 11,740 bopd) Domestic sales price has averaged $34/bbl for the period (2023: $35/bbl), with the last two months priced at $37/bbl, with all cash due for domestic sales received before the end of the period Net cash of $126 million (31 December 2023: $120 million) Significant cash balance of $370 million (31 December 2023: $363 million) Bond debt of $248 million (31 December 2023: $248 million) A socially responsible contributor to the global energy mix: Zero lost time injuries ('LTI') and zero tier one loss of primary containment events at Genel and TTOPCO operations Three million work hours since the last LTI Outlook Continued consistent production from the Tawke PSC at similar levels to the first half Organisational spend around $3 million per month Interest income $1-2 million per month, with one bond interest payment of $11.5 million due in October Our cash generation has been above expectations in the first half of the year, and we reiterate our previous guidance that we expect closing net cash balance at the end of the year to be well above $100 million We continue to seek progression towards building a business that delivers resilient, reliable, repeatable and diversified cash flows that support a dividend programme by: maintaining a strong balance sheet working, together with our peers, towards the restart of exports and access to international pricing seeking diversification of our income through the purchase of new assets The process for the London-seated international arbitration regarding Genel’s claim for substantial compensation from the KRG following the termination of the Miran and Bina Bawi PSCs has now been concluded, with closing submissions exchanged in May and reply reports exchanged in June. It is now for the panel to deliberate and then make an award. The timing of the award is not certain but is expected before the end of the year. Reverse tender offer to buy back bond announced today Enquiries:
| Genel Energy Luke Clements, CFO | +44 20 7659 5100 |
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| Vigo Consulting Patrick d’Ancona | +44 20 7390 0230 |
Genel will host a live presentation on the Investor Meet Company platform on Tuesday 6 August at 1000 BST. The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation. Investors can sign up to Investor Meet Company for free and add to meet Genel Energy PLC via:
https://www.investormeetcompany.com/genel-energy-plc/register-investor This announcement includes inside information. 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. While 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. The information contained herein has not been audited and may be subject to further review. CEO STATEMENT Despite a strong operational performance in the period, with production performance consistent, realised price per barrel improving a little and activity milestones and cost reduction targets reached ahead of time, the business continues to feel the effects of the prolonged suspension of exports and the lack of access to international oil prices. We continue to sell domestically at a price heavily discounted to the fundamental value of our product meaning our cash generation and organic delivery of shareholder value is materially impaired, with the Tawke PSC currently generating less than half of the entitlement free cash flow that current production levels would produce at export prices. Against that backdrop, the Company has limited appetite to risk capital in order to increase the volumes of oil sold at below market value, and consequently no new wells have been drilled in the period. Despite this lack of investment, the Tawke PSC has again demonstrated that it is a world class asset with many years to run, consistently averaging around 80,000 bopd gross production in the period with a globally competitive operating cost of c.$2/bbl. Against this combination of low realised price per barrel in the domestic market and the continued uncertainty on timing of export restart, we have continued to optimise spend across the business. As activity has ended or reduced, we have scaled back the organisation, absorbing work elsewhere or realising efficiency benefits from system and process improvements, while maintaining the capability necessary to support achievement our business objectives. Regarding the resumption of exports, we saw signs of progress in January with reports of positive conversations taking place between the KRG and the Federal Government of Iraq (‘FGI’), but this then fell away. Around the end of May, we again saw signs of some new impetus to meet and find the terms that would support restart. More recently still there have been important meetings between regional and federal government leaders and we remain hopeful of an acceptable negotiated solution. We remain of the view therefore that the export pipeline will reopen and we again note past communications to IOCs by both the Federal Government of Iraq and the Prime Minister of the Kurdistan Region of Iraq that the prevailing commercial terms will be respected and that all amounts owed will be paid. We have a clear business model and plan, a strong balance sheet and a high quality and lean team working on the delivery of that plan. We have a dedicated and experienced team in place analysing opportunities that will take the business in the right direction by adding near-term income, diversifying our portfolio to deliver reliable and repeatable cash flows. We remain disciplined and careful – although diversification is a priority, it is not a necessity for this Company to deliver material shareholder value. We will not transact a deal that is not good for shareholders. On the London-seated arbitration regarding the Miran and Bina Bawi oil and gas asset, the written and evidentiary stage of the London-seated arbitration following the termination of the Miran and Bina Bawi PSCs has now concluded. The evidential hearing was held in February and the exchange of closing submissions in May and reply report submissions in June. We now await an award on liability and quantum, whose timing is uncertain but continues to be expected before the end of 2024. Our view of the merits of the case remains unchanged from when the dispute commenced under the PSCs in Q4 2021. OPERATING REVIEW KURDISTAN With the ongoing suspension of the export pipeline meaning that the only market available is domestic sales, which are at heavily discounted prices, the Company has worked with its partners to minimise both operational spend and risking of capital, with no new wells drilled so far this year. Gross production for the first half of 2024 was 78,050 bopd, well below what we would expect to produce if exports were available, but significantly higher than the first half last year, which produced minimal volumes after the pipeline was shut at the end of March.
| (bopd) | Gross production Domestic sales Q1 2024 | Gross production Domestic sales Q2 2024 | Gross production Domestic sales H1 2024 | WI production Domestic sales H1 2024 | WI production Exports H1 2023 |
| Tawke | 76,310 | 79,780 | 78,050 | 19,510 | 11,740 |
| Taq Taq | - | - | - | - | 1,220 |
| Sarta* | - | - | - | - | 480 |
| Total | 76,310 | 79,780 | 78,050 | 19,510 | 13,440 |
*Having served notice of surrender of the Company’s interest in the Sarta PSC, that surrender took effect on 30 November 2023. Tawke PSC (Tawke and Peshkabir fields) The Tawke PSC has delivered a significant increase in production compared to the first half of last year, which suffered from there being no production between the export pipeline being suspended on 27 March 2023 and the end of the period. Despite drilling no new wells this year, gross production from the Tawke PSC has been maintained at consistent levels, opening the year at 87,870 bopd, closing the half year at 81,800 bopd and averaging 78,050 bopd. This has been achieved by careful and diligent subsurface and operations management, with June also benefitting from wells that were drilled during the period of shutdown in the second quarter of last year being put on production. Sales price has averaged $34/bbl over the course of the period compared to average Brent of $84/bbl, improving slightly in recent months to around $37/bbl. The Company has generated revenue of $38 million from Tawke entitlement in the period. The asset has delivered the robust production throughout the period and is expected to continue to do so. We will work with the operator to evaluate appropriate and capital efficient investment in order to ensure the production levels meet our needs. The Operator continues to work diligently and expertly, continuously evolving the long-term field development plan for the two fields on the Tawke PSC. Upon reopening of the export pipeline, which reflects our contractual right to access international prices, reinstatement of an active drilling programme could see Tawke PSC production generating over $100 million of free cash flow annually for the Company. Taq Taq Taq Taq has been on care and maintenance since May last year, because the revenue it would generate at the established domestic sales prices would not adequately cover the operating costs. We have continued to drive cost reductions with the appointment of a new general manager, our monthly spend is now down to below $500,000. Somaliland -SL10B13 As we continue to work towards the complete framework required to support drilling the Toosan-1 exploration well, we were pleased to have agreed an extension of the licence until the middle of 2026. We continue to work on optimisation of the well plan to reduce cost and maximise efficiency of the well delivery process. In the meantime, our in-country team continues to work closely with our local communities, a highlight of which has been the provision of mobile medical services to over 800 patients a week during H1 2024. Given the success of the project a 2nd phase, through to the end of the year, has been initiated. Somaliland - Odewayne We continue to work with our partners to characterise the prospectivity of the block, with subsurface studies ongoing. We are also continuing to invest in the communities, and in February 2024 delivered educational supplies to 1,000 primary and secondary school children across the block. Morocco The farm-out campaign on the Lagzira block (75% working interest and operator) is ongoing. We continue to progress the block Minimum Work Program, focussed on seismic reprocessing and subsurface studies to further define the prospectivity and potential of the block. FINANCIAL RESULTS The ongoing closure of the Iraq-Türkiye pipeline resulted in no export sales being made in the period, with all production sold domestically in Kurdistan.
| (all figures $ million) | H1 2024 | H1 2023 | FY 2023 |
| Brent average oil price ($/bbl) | 84 | 80 | 82 |
| Field level realised price per barrel ($/bbl) | 34 | 60 | 47 |
| Average price per working interest barrel ($/bbl) | 11 | 19 | 19 |
| Working interest production (bopd) | 19,510 | 13,440 | 12,410 |
| Cost oil | 18.4 | 28.8 | 58.6 |
| Profit oil | 19.2 | 17.4 | 25.4 |
| Override royalty | - | 1.8 | 0.8 |
| Revenue | 37.6 | 48.0 | 84.8 |
| Production costs | (8.2) | (14.7) | (21.3) |
| Production capex | (13.4) | (39.7) | (55.2) |
| Production business netback | 16.0 | (6.4) | 8.3 |
| Other operating costs and capex | (4.7) | (8.3) | (16.4) |
| G&A (excl. non-cash) | (14.2) | (9.0) | (25.5) |
| Net cash interest1 | (2.3) | (2.2) | (4.2) |
| Net expense from discontinued operations | (0.9) | (3.5) | (11.6) |
| Working capital and other | 14.6 | (5.7) | (21.6) |
| Free cash flow | 8.5 | (35.1) | (71.0) |
| Dividend paid | - | (33.5) | (33.5) |
| Purchases of own shares | (1.5) | - | (1.8) |
| Purchases of own bonds | - | (1.0) | (24.9) |
| Net change in cash | 7.0 | (69.6) | (131.2) |
| Opening cash | 363.4 | 494.6 | 494.6 |
| Cash | 370.4 | 425.0 | 363.4 |
| Debt reported under IFRS | (244.9) | (266.8) | (243.7) |
| Net cash | 125.5 | 158.2 | 119.7 |
1 Net cash interest is bond interest payable less bank interest income (see note 5) Average production of 19,510 bopd is higher than the comparative period (H1 2023: 13,440 bopd) because of no production in Q2 2023. All production this year has been sold domestically at an average price of $34/bbl, compared to the comparative period when production was exported at an average price of $60/bbl. As a result of the lower realised price per barrel, revenue of $37.6 million is lower than revenue of $48.0 million reported last year. Production costs of $8 million decreased from the prior period (H1 2023: $15 million), primarily as a result of there being no production from Taq Taq and optimisation of costs at Tawke. Cost per barrel of $2.3/bbl is an improvement from last year (H1 2023: $6.2/bbl). Production capex has significantly reduced to $13 million (H1 2023: $40 million) as a result of significantly reduced activity as a result of the pipeline closure. Cash general and administration costs were $14 million, an increase from last year (H1 2023: $9 million) primarily as a result of arbitration costs. Interest income of $9 million (H1 2023: $11 million) and bond interest expense of $12 million (H1 2023: $13 million) decreased in line with cash and bond balances. Other finance expense of $3 million (H1 2023: $3 million) related to non-cash discount unwinding on provisions. Following the termination of Sarta PSC in 2023, income statement figures of Sarta PSC have been disclosed as discontinued operation. Further details are provided in note 7 to the financial statements. EBITDAX and cash flow
| (all figures $ million) | H1 2024 | H1 2023 | FY 2023 |
| EBITDAX | 11.1 | 22.9 | 32.8 |
| Working capital | 25.3 | 16.3 | 22.3 |
| Operating cash flow | 36.4 | 39.2 | 55.1 |
| Producing asset cost recovered capex | (12.1) | (37.9) | (66.6) |
| Development capex | (1.7) | (16.0) | (22.2) |
| Exploration and appraisal capex | (2.2) | (6.1) | (9.7) |
| Interest and other | (11.9) | (14.3) | (27.6) |
| Free cash flow | 8.5 | (35.1) | (71.0) |
The decrease in revenue of $10 million resulted in a similar decrease to EBITDAX, which was $11 million (H1 2023: $23 million). EBITDAX is presented in order to illustrate the cash operating profitability of the Company and excludes the impact of costs attributable to exploration activity, which tend to be one-off in nature, and the non-cash costs relating to depreciation, amortisation, impairments and write-offs. Free cash flow is presented in order to illustrate the free cash generated for equity. Free cash flow was $9 million (H1 2023: $35 million outflow) with an overall increase due to the cash and carry basis of local sales and optimised spend. Cash and debt Cash of $370 million increased from the start of the year (31 December 2023: $363 million). The Company monitors its cash position, cash forecasts and liquidity on a regular basis. The Company holds surplus cash in treasury bills, time deposits or liquidity funds 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. The nominal value of bond debt remained unchanged at $248 million, with reported net cash of $126 million (31 December 2023: $120 million). The bond debt matures in October 2025 and has two financial covenant maintenance tests:
| Financial covenant | Test | H1 2024 |
| Equity ratio (Total equity/Total assets) | > 40% | 52% |
| Minimum liquidity | > $30 million | $370 million |
| | | |
Net assets Net assets at 30 June 2024 were $414 million (31 December 2023: $434 million) and consist primarily of oil and gas assets of $321 million (31 December 2023: $331 million), net trade receivables of $93 million (31 December 2023: $93 million) and net cash of $126 million (31 December 2023: $120 million). Going concern The Directors have assessed that the Company’s forecast liquidity provides adequate headroom over debt maturity and forecast expenditure for the 17 months following the signing of the half-year condensed consolidated financial statements for the period ended 30 June 2024 and consequently that the Company is considered a going concern. The Company is in a net cash position with sufficient funds to repay the bond that matures in October 2025 if required. Principal risks and uncertainties The Company is exposed to a number of risks and uncertainties that may seriously affect its performance, future prospects or reputation and may threaten its business model, future performance, solvency or liquidity. The following risks are the principal risks and uncertainties of the Company, which are not all of the risks and uncertainties faced by the Company: KRI Regional Oil & Gas Sector Risk, notably the current closure of the Iraq-Türkiye pipeline; Commercial Terms & Payment for Kurdish Sales, lack of oil export payments, as well as the recovery of the $107 million outstanding gross receivable; Development & Recovery of Oil Reserves; Arbitration; Reserves Replacement & Additions; New Business Activity; Capital Structure & Financing; Attract & Maintain Organisational Capability; Environmental, Social & Governance Expectations; Regulatory & Compliance Failure; and Health & Safety risks. Further detail on many of these risks was provided in th
