Revenue rises as Genel Energy swings to operating profit

Oil and gas explorer and producer Genel Energy reported 2022 production of 30,150 barrels of oil per day in its full-year results on Wednesday, which was a decrease from 31,710 barrels in 2021.

The London-listed company did, however, see an increase in revenue to $432.7m from $334.9m year-on-year, while earnings before interest, taxes, depreciation, amortisation and exploration expenses (EBITDAX) increased to $361.6m from $275.1m.

Its operating profit for the year totalled $18.3 million, compared to an operating loss of $276.8m in 2021.

Genel’s cash flow from operating activities was $412.4m for the year, up from $228.1m, while free cash flow increased to $234.8m from $85.9m in 2021.

The firm’s cash balance also increased, to $494.6m at the end of the year, from $313.7m a year earlier, with total debt remaining almost stable at $274m, down from $280m.

Genel's net cash position rose to $228m from $43.9m, while its basic losses per share narrowed to 2.6 cents from 111.4 cents.

Earnings per share excluding impairments increased to 66.7 cents, up from 25.8 cents in 2021.

Genel Energy reported zero lost time incidents in 2022, with more than three million hours worked since the last incident.

The company's drilling activity on the Tawke PSC remained active, while it also invested $143m in production and appraisal at Sarta, resulting in a reduction of reserves and an impairment of $126m.

Its carbon intensity stood at 17.6 kilograms of carbon dioxide per barrel for scope one and two emissions in 2022, which was below the global oil and gas industry average of 19 kilograms of carbon dioxide per barrel of oil equivalent.

Genel said it expected to maintain its committed dividend funded by free cash flow for the medium-term, with the board recommending a final dividend of 12 cents per share, for a total a distribution of $33.5m.

Its production guidance for 2023 was for between 27,000 and 29,000 barrels of oil per day, with capital expenditure for the year pencilled in between $100m and $125m.

The company said it also aimed to invest in host communities in which it operates, with plans to extend the line-of-sight on resilient cash flows to support its dividend programme into the long-term.

Finally, Genel said the London-seated international arbitration over its claim for substantial compensation from the Kurdistan Regional Government, following the termination of the Miran and Bina Bawi PSCs, was progressing.

The trial was currently scheduled for February 2024.

“Our production business generated record cash flow in 2022, building our significant financial resources and resulting in a net cash balance at the end of the year of over $200m,” said chief executive officer Paul Weir.

“The company now has an exceptional opportunity to deploy its financial resources carefully to add new assets and grow and diversify our production business in order to improve the resilience and extend the line of sight on the funding of our established dividend programme.”

Weir said the firm’s capital allocation decisions for 2023 and beyond would be centred around that material, sustainable and progressive dividend programme, while protecting and maintaining the strength of its balance sheet.

“Our core business remains robust, funding our dividend from free cash flow in the mid-term and there is significant potential still remaining in the portfolio.

“We have an extremely busy 18 months ahead that carries much potential, and we have a highly capable team in place that is fully focused on delivering on that potential.”

At 0808 GMT, shares in Genel Energy were up 0.39% at 113.84p.

Reporting by Josh White for Sharecast.com.