GENEL ENERGY PLC
Genel Energy PLC (GENL)
Genel Energy PLC: Trading and operations update
19-Jan-2021 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014
(MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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19 January 2021
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 2020 results, which are scheduled for release on 18 March 2021. The information contained herein
has not been audited and may be subject to further review.
Bill Higgs, Chief Executive of Genel, said:
"Executing our strategy in 2020 through delivering low-cost production, paying a material dividend, and retaining our
financial strength in order to invest in growth has helped lay the foundations for year on year production increases in
this year and the years ahead. Bringing Sarta to production in 2020 despite the challenges of COVID-19 now means that
we are generating revenues from our fourth field as we rapidly move to further appraise its huge reserve potential.
The successful early refinancing provides us with the liquidity and financial certainty to continue prudently investing
in growth while retaining a robust balance sheet and delivering returns to shareholders. We expect to drill 12 wells
across the portfolio this year. These wells have the potential to add incremental low-cost and cash generative
production at the Tawke PSC, add and convert contingent resources to reserves and add production at Sarta, and open up
a new field at Qara Dagh. With numerous catalysts in the year and a more promising external environment than 2020,
Genel is looking confidently ahead to 2021."
FINANCIAL PERFORMANCE
? USD173 million of cash proceeds were received in 2020 (2019: USD317 million)
? Capital expenditure of USD109 million (2019: USD161 million), with spending reduced appropriately to reflect the
external environment, yet ensuring continuing growth
? Free cash outflow of USD5 million in 2020, pre dividend payment (2019: USD99 million free cash inflow), comparison
impacted by:
? Lower oil price (USD42/bbl in 2020, compared to USD64/bbl in 2019)
? Non-payment of USD121 million relating to oil sales from November 2019 to February 2020
? Suspension of override payments with a cashflow impact totalling USD38 million in 2020
? The low-production cost per barrel of USD2.8/bbl in 2020 helped deliver asset level cash generation of USD74 million in
the year
? Dividends of USD55 million paid in 2020, of which USD14 million relates to the 2019 interim dividend paid in January
2020
? Cash of USD354 million at 31 December 2020 (USD377 million at 31 December 2019), net cash of USD10 million
? Following the call of the outstanding bond with a maturity date in December 2022, settled on 8 January 2021,
Genel had cash of USD273 million and debt of USD267 million, a net cash position of USD6 million
? Genel currently retains USD20 million of the 2025 bond, to reduce interest cost and increase future optionality
OPERATING PERFORMANCE
? Net production averaged 31,980 bopd in 2020, with net production in Q4 averaging 31,510 bopd (Q3 2020: 32,210 bopd)
? Production by field was as follows:
Gross production Net production Net production
(bopd)
2020 2020 2019
Tawke 57,570 14,390 17,190
Peshkabir 52,710 13,180 13,800
Taq Taq 9,670 4,250 5,260
Sarta 520 160 -
Total 120,470 31,980 36,250 PRODUCTION ASSETS ? Tawke PSC (25% working interest)
? Gross production at the Tawke PSC averaged 110,280 bopd in 2020, of which Peshkabir contributed 52,710 bopd
? Production in Q4 2020 averaged 110,170 bopd, of which Peshkabir contributed 56,320 bopd
? There will be an active drilling campaign in 2021 on the Tawke licence, with up to eight new development wells
set to be drilled and multiple workovers on existing producing wells to be undertaken in the drive to maintain
production above 100,000 bopd ? Sarta (30% working interest)
? First oil production from Sarta began in November 2020, and the Sarta-3 well has produced at an average of
c.5,500 bopd so far in 2021
? Due to ongoing COVID-19 protocols, production from Sarta-2 is now expected in February. A stable production
level from both wells will be reached in Q1 2021
? The 2021 appraisal drilling campaign is targeting a material portion of the 250 MMbbls of existing contingent
resources, and prospective resources, in Jurassic formations
? The campaign will begin at the start of Q2. Sarta-5 and Sarta-6 will be drilled back to back, with results from
the first well expected in Q3, and operations on both wells complete in Q4 2021
? Re-entry and deepening of the Sarta-1 (S-1D) well is expected around the middle of the year. Should S-1D be
successful, a flowline will be constructed in order to enable the well to enter production around the end of
2021 ? Taq Taq PSC (44% working interest and joint operator)
? Gross production at Taq Taq averaged 9,670 bopd in 2020, following the suspension of drilling activity in H1
2020
? Q4 production at the field averaged 7,610 bopd, with an exit rate of over 8,000 bopd following the early
implementation of part of the 2021 well intervention programme, which increased production from the TT-20z and
TT-34y wells
? With activity at Taq Taq focused on optimising cash flow, no drilling is scheduled in 2021, with activity
limited to workovers that will help manage field decline
PRE-PRODUCTION ASSETS ? Qara Dagh (40% working interest and operator)
? Preparatory activities are ongoing for the QD-2 well, as Genel continues to target a spud date late in Q1 2021.
The water well project successfully completed in December, providing us with water for the drilling operations
? The well is expected to drill, complete, and test before the end of the year, with the field holding resources
estimated by Genel at gross mean c.400 MMbbls ? Bina Bawi (100% working interest and operator)
? Discussions with the KRG are ongoing at the highest levels relating to our proposals submitted in August and
December 2020, which would enable the Company to progress the next stage of activity
? Genel continues to maintain capex discipline, and will only commence investment upon certainty of alignment
with the KRG and a clear path to monetisation ? African exploration assets
? The uncertainty created by COVID-19 delayed the search for partners to fund and minimise Genel's spend on our
potentially high-impact exploration wells, but the farm-out process relating to the highly prospective SL10B13
block in Somaliland (100% working interest and operator) is progressing, with potential partners involved in
assessing the opportunity
? A farm-out campaign is also 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 considering further commitments
ESG ? Zero lost time injuries ('LTI') and zero tier one loss of primary containment events in 2020 at Genel and TTOPCO
operations
? There has not been an LTI since 2015, with over 13 million work hours since the last incident
? 400,000 hours of work completed at Sarta without an LTI ? Genel expects our 2020 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
? The carbon intensity of our portfolio reduced to 7kg CO2e/bbl of scope 1 and 2 emissions in H2 2020 following
the material reduction in flaring at the Tawke PSC through completion and commissioning of the enhanced oil
recovery project
? While portfolio emissions will increase in 2021 following early production at Sarta, Genel is committed to
significantly reducing those emissions as production at the field matures ? Genel is analysing the most effective way to manage emissions, both annually across the portfolio and over the life
of each asset, in order to deliver the Paris Agreement goals of limiting global warming to 1.5 degrees and leading
to net zero by 2050
OUTLOOK AND GUIDANCE ? Production in 2021 is expected to be slightly above the 2020 average of 31,980 bopd, with the potential for a
higher exit rate and further growth in 2022 depending on success of the Sarta appraisal programme
? Average margin per working interest barrel of over USD10/bbl expected in 2021 at average Brent oil price USD50/bbl ? Payments from the KRG continue to be made, with monthly payments received under the KRG's updated payment schedule
for the past nine months
? Override payments to resume from the January 2021 invoice
? The KRG has submitted a reconciliation model for repayment of the receivable relating to the USD159 million in
unpaid invoices, whereby for each cent above a monthly dated Brent average of USD50/bbl, 0.5 cent per working
interest barrel shall be paid towards monies owed. We continue to discuss this model with the KRG, and will
update the market in due course ? Genel retains significant flexibility over its capital expenditure, and will ensure that expenditure is appropriate
to the external environment. 2021 capital expenditure is expected to be USD150 million to USD200 million, with the
current outlook supporting investment at the top end of this range
(MORE TO FOLLOW) Dow Jones Newswires
January 19, 2021 02:00 ET (07:00 GMT)
