21st Jan 2015 08:21
LONDON (Alliance News) - Genel Energy PLC Wednesday said 2014 revenue will be towards the lower end of its guidance and will fall significantly in 2015 due to the slumping oil price, and it will make a USD480 million write-down of its exploration assets, and slash spending and administrative costs as a result.
Genel is expecting 2014 revenue to be at the lower end of its guidance of USD500 million to USD600 million. It had previously predicted flat revenue in 2015 was to remain flat, but now thinks it will be between USD350 million and USD400 million.
It said it will be making a non-cash exploration write-off of USD480 million in its 2014 accounts, associated with offshore drilling in Malta, Angola and Morocco.
The company has also slashed its capital expenditure budget for 2015 by a further 30% to USD200 million to USD250 million. This is a 70% reduction from the USD670 million spent in 2014, excluding an additional USD75 million acquisition related to the Angola farm in during the year, said the company.
Capital expenditure in 2015 will be mostly attributable to the Taq Taq field and Tawke field, both in Iraq, to expand production with the remainder being spent on exploration across its portfolio.
Genel is also planning on reducing administrative costs by 40% during 2015, by reducing staff and implementing other efficiency measures, it said in a statement.
Genel said its cash balance at the end of 2014 was USD490 million and its net debt totalled USD10 million.
Production net to the company during the year averaged 69,000 barrels of oil equivalent per day, a 58% increase from 2013, with significant further growth expected in 2015. The production for the year hit the top end of Genel's guidance of 60,000 to 70,000 barrels of oil equivalent per day.
Pipeline exports from the Taq Taq field and Tawke are estimated to average around USD77 per barrel for 2014, with domestic market sales from Taq Taq to average around USD75 per barrel, which is a 6% increase from 2013. Domestic sales from Tawke during 2014 averaged USD56 per barrel, a 7% decrease from 2013.
The company has reiterated its production guidance for 2015 of between 90,000 and 100,000 barrels of oil equivalent per day.
"Our robust balance sheet, coupled with rising onshore oil production amongst the lowest cost in the world, and the significant financial flexibility in the portfolio, leaves us well positioned to continue to grow even in a period of sustained low oil prices," said Chief executive Tony Hayward.
Genel shares were down 2.5% to 648.50 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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