Genel Energy issued the following trading and operations update ahead of the Company's Annual General Meeting (‘AGM’), which is being held today. 

Bill Higgs, Chief Executive of Genel, said:
“Despite the impact of COVID-19 creating a challenging environment for our industry, Genel’s resilient business model and robust financial position, with over $100 million in net cash and an asset cashflow breakeven of $30/bbl, leaves us well placed to withstand the consequences of the pandemic as we continue to deliver our strategy. We have cut our cloth appropriately against this backdrop and halved capital expenditure for 2020, protecting our balance sheet while still progressing Sarta, and positioning us to take advantage of growth opportunities as the landscape improves.”

FINANCIAL PERFORMANCE

• $98 million of cash proceeds received in the first four months of 2020
• Cash of $404 million at 30 April 2020 ($391 million at 31 December 2019)
• Net cash of $106 million at 30 April 2020 ($93 million at 31 December 2019)
• Capital expenditure of $45 million in the first four months of 2020, with point forward expenditure cut significantly due to the impact of COVID-19
• Final dividend of 10¢ per share (2019: 10¢ per share), a distribution of c.$27.8 million, to be paid to shareholders on the register on 29 May 2020, pending approval at today’s AGM

OPERATING PERFORMANCE

• Production in the first quarter of 2020 averaged 34,170 bopd, in line with January’s guidance, guidance that has been removed following the decision to reduce investment to a level appropriate for the external environment
• As well as impacting the oil price and hence investment plans for 2020, COVID-19 has provided operational challenges in relation to the movement of people and equipment. This has been less of a challenge for producing fields than pre-production assets, and the reduced work plan put in place in Q2 is progressing in line with expectations

PRODUCTION ASSETS

Tawke PSC (25% working interest)

• Production at the Tawke PSC averaged 115,200 bopd in the first quarter of 2020, with the Tawke field producing 61,490 bopd, and Peshkabir 53,710 bopd
• Five development wells have been completed on the licence. Three drilling rigs were released as the 2020 activity plan was amended to reflect the external environment, while a workover rig continues to service production wells
• A drilling rig has been stacked at each field and can be quickly mobilised when conditions warrant

Taq Taq PSC (44% working interest and joint operator)

• Taq Taq gross field production averaged 12,200 bopd in the first quarter of 2020
• The latest well on the northern flank of the field, TT-35, spud on 6 January, and completed in April. The well is currently adding c.600 bopd to production. This completed the planned drilling programme with the Sakson-605 rig, which has now been released
• Activity at Taq Taq is focused on maximising cash generation. Appropriate for the external environment, it is not expected that there will be any further drilling activity in 2020

PRE-PRODUCTION ASSETS

Sarta (30% working interest)

• Civil construction work at the Sarta field is nearing completion, with the facility build ongoing
• Due to delays in the movement of people and equipment caused by the impact of COVID-19, first oil is now expected in Q4 2020, rather than Q3
• Phase 1A represents a low-cost pilot development of the Mus-Adaiyah reservoirs, designed to recover 2P gross reserves estimated by Genel at 34 MMbbls

Qara Dagh (40% working interest and operator)

• The QD-2 well was on track to spud in Q2 2020 prior to COVID-19 impacting supply chains and the movement of people in to the KRI
• Due to ongoing uncertainty caused by COVID-19, Genel notified the KRG of the occurrence of a force majeure event preventing the Company from being able to perform its contractual obligations as scheduled
• Work continues to take place to ensure that Genel is in the best possible position to start to drill the QD-2 well once external conditions improve and the force majeure event ceases

Bina Bawi (100% working interest and operator)

• Genel received documentation in mid-April from the KRG following the commercial understanding reached in September 2019
• Negotiations regarding this documentation are ongoing, as Genel continues to seek a viable and balanced commercial way forward for the development of Bina Bawi’s gas and oil resources

Somaliland - SL10B13 block (100% working interest and operator)

• A farm-out process relating to this highly prospective block began in Q4 2019, and a number of companies continue to assess the opportunity

Morocco – Sidi Moussa block (75% working interest and operator)

• The farm-out campaign is set to begin in Q3 2020, aimed at bringing a partner onto the licence prior to considering further commitments

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