Genel Energy

Interims to the end of June this morning from Genel who have put in what they call an ‘impressive performance’ with which I concur. Key metric is cash generation with the company turning in over $10m per month and moving the company ‘rapidly’ to a net cash position. This has been significantly helped by an impressive performance from Peshkabir where recent success with the drill bit has provided ‘the potential for both production to exceed guidance and for  both proven and probable reserves to increase’.

11 wells are targeted for the second half in Kurdistan of which 8 are expected to be on production by the end of this year. At Peshkabir the 4 and 5 wells have boosted gross field production to 35/- b/d with the 5 well successfully proving the westward extension of the field which should add further to reserves.

The company brought in $151m of cash in the first half boosted by the impact of the RSA and the oil price with ‘strong free cash flow’ generation of $70m. Production guidance of c32,800 b/d is reiterated but must now be conservative  with so much operational success including the resumption of drilling at Tawke and Taq Taq. Capital allocation is unchanged as operations are going  extremely efficiently and when further reservoir knowledge is accumulated further gains might come in Q4.

So a good set of figures from Genel where cash flow is strong and improving and reserves are heading up again. It should not be forgotten that Peshkabir barrels are enormously profitable with every 10/- b/d contributing $25m annually which should be taken into account.

This performance should not take away from other upside at Genel where Miran and Bina Bawi caped is reduced slightly as de-risking continues and the company focuses on progression of the high value oil opportunity at the latter without compromising the longer term gas potential.

Overall this is a highly creditable set of numbers from Genel with major opportunities for the future. I remain happy with the stock in the bucket list and will change anything I need to after this morning’s analyst meeting.

Finally. Apologies if you received a stray blog yesterday afternoon, sent in error as we are tweaking the system with an upgrade I hope you will like.

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