Genel Energy has announced its unaudited results for the six months ended 30 June 2019.
Bill Higgs (pictured), Chief Executive of Genel, said:
“These results demonstrate the continued success of our strategy -highly cash generative productionunderpins capital investment in growth opportunities that deliver rapid returns and enables a compelling cash return to shareholders through our dividend.
“Our production grew 17% in H1 2019, and pro forma free cash flow rose to $76 million. This cash generation, and our strong balance sheet, allows us to both increase investment in growing the business as well as returning cash to shareholders via dividends. Accordingly, we have today announced an interim dividend of $14 million.
“Disciplined capital allocation remains at the core of our business. The speed with which our investments pay back means that cash is quickly recycled to create most value for shareholders. The cash that our production generates funds worknow underway at Sarta and Qara Dagh, with plenty left over to both pay a dividend and seek new opportunities, as we progress Genel’s growth strategy.“
Results summary ($ million unless stated)
| H1
2019 |
H1
2018 |
FY
2018 |
|
| Production (bopd, working interest) | 37,400 | 32,100 | 33,700 |
| Revenue | 194.3 | 161.1 | 355.1 |
| EBITDAX 1 | 167.3 | 137.4 | 304.1 |
| Depreciation and amortisation | (74.8) | (63.6) | (136.2) |
| Exploration (expense) / credit | (0.6) | (0.5) | 1.5 |
| Impairment of intangible assets | – | – | (424.0) |
| Operating profit / (loss) | 91.9 | 73.3 | (254.6) |
| Cash flow from operating activities | 142.3 | 125.1 | 299.2 |
| Capital expenditure | 72.2 | 34.1 | 95.5 |
| Free cash flow2 | 56.7 | 70.1 | 164.2 |
| Pro forma free cash flow2 | 75.6 | 70.1 | 164.2 |
| Dividend payments | 27.4 | – | – |
| Cash3 | 353.3 | 233.2 | 334.3 |
| Total debt | 300.0 | 300.0 | 300.0 |
| Net cash (debt)4 | 55.8 | (63.8) | 37.0 |
| Basic EPS (¢ per share) | 27.2 | 21.3 | (101.6) |
| Underlying EPS (¢ per share)1 | 59.9 | 49.2 | 109.0 |
- EBITDAX is operating profit / (loss) adjusted for the add back of depreciation and amortisation ($74.8 million) and exploration expense ($0.6 million). Underlying EPS is EBITDAX divided by the weighted average number of ordinary shares
- Free cash flow is set out on page 7 and does not include $18.9 million, invoiced for Tawke production and due in June 2019 and received late on 9 July 2019, with the delay due to a change in the Operator’s banking arrangements. Pro forma free cash flow of $75.6 million includes this payment.
- Cash reported at 30 June 2019 excludes $10 million of restricted cash and the $18.9 million noted above
- Reported IFRS debt less cash
Highlights
- Working interest production averaged 37,400 bopd in H1 2019 (H1 2018: 32,100 bopd), an increase of 17% compared to H1 2018
- 8 wells completed in H1 2019, resulting in year-on-year production increases at both the Tawke and Taq Taq PSCs
- Free cash generation of $57 million in H1 2019 (H1 2018: $70 million), which increases to $76 million when including the post period receipt of $19 million, with annual free cash flow yield of c.20% of current market capitalisation
- Net cash of $56 million at 30 June 2019 (net debt of $64 million at 30 June 2018)
- Following the receipt of all payments relating to April 2019, Genel had $390 million of cash as of 5 August 2019, a net cash position of $92 million
- Addition of Sarta and Qara Dagh to the portfolio in January 2019 provides near-term production and material future growth potential
- Maiden dividend distribution of 10¢ per share paid on 24 June 2019
- Interim dividend of 5¢ per share confirmed
- Genel retains an open mandate for a share buy-back programme of up to $10 million, and will continue to review purchasing opportunities
Outlook
- Net production guidance in 2019 maintained at close to Q4 2018 levels of 36,900 bopd, an increase of c.10% year-on-year
- Drilling programme ongoing, with over 10 wells set to be completed by early 2020
- Active discussions with the Kurdistan Regional Government (‘KRG’) regarding Bina Bawi are ongoing, focused on agreeing the detailed commercial terms for the integrated Phase 1 oil and gas development and approval of the associated field development plans
- Work continuing at Sarta to prepare for production by the middle of 2020
- QD-2 well location agreed at Qara Dagh, well pad civil engineering work set to begin
- Farm-out process relating to Somaliland acreage to begin in late Q3 2019
- Genel expects to generate material free cash flow in H2 2019, even while investment in growth increases
- 2019 capital expenditure is expected to be towards the top end of the $150-170 million guidance range
- Searches for a new Chairman and Chief Operating Officer are progressing
- The Company continues to actively pursue growth and is assessing opportunities to make value-accretive additions to the portfolio
(Source: Genel Energy)