20th Jan 2016 08:33
LONDON (Alliance News) - Genel Energy PLC on Wednesday said revenue and production in 2015 narrowly missed the company's full-year guidance, and warned revenue and production is expected to fall significantly in 2016 due to lower oil prices.
Genel shares were down 7.5% to 114.75 pence per share on Wednesday morning.
The company, which produces oil from the Kurdistan region of Iraq, said revenue in 2015 is expected to total USD342.0 million, which is lower than the company's guidance range of USD350.0 to USD375.0 million.
That guidance was based on an oil price of USD50 a barrel, but the average price in 2015 only reached USD44 a barrel, Genel said. Production also missed its guidance range, averaging 84,900 barrels a day compared to the guidance of 85,000 to 90,000 barrels a day.
In 2014, Genel generated USD519.7 million in revenue from production of 69,400 barrels of oil per day.
Genel also provided a gloomy outlook for 2016, stating revenue is expected to fall to the region of USD200.0 million to USD275.0 million as production is expected to fall to 60,000 to 70,000 barrels per day.
That guidance for 2016 is based on an oil price of USD45 a barrel - a smidgen above the average price in 2015 - but also far above current prices which were trading at just over USD28 a barrel on Wednesday, recovering from hitting their lowest level since November 2003 on Monday.
On a brighter note, Genel said its operations remain very profitable, with production costs set to amount to only USD2 per barrel in 2016, and said its producing assets can remain breakeven at even USD20 a barrel.
Genel also expects monthly cash expenditure to fall to USD20.0 million a month in 2016 compared to USD25.0 million a month in 2015. That expenditure includes operating and capital expenditure, general and administrative expense and debt servicing.
"In 2015, a number of efficiency measures and cost reduction programmes were implemented across the business in response to falling oil prices. Production costs and general and administrative costs have fallen year-on-year by around 40% compared to 2014 levels," the company said.
Cash at the end of 2015 stood at USD455.0 million, and Genel said most of its expenditure planned in 2016 is discretionary, giving it great flexibility moving forward in the tough environment.
Capital expenditure in 2016 is set to total USD80.0 million to USD120.0 million, compared to USD160.0 million in 2015. However the expenditure in 2016 will be reliant on the Kurdistan regional government continuing to make monthly payments to the company for the oil it exports out of Iraq. No formal payment system has been established, but payments for current production have been flowing through in the past four months.
Genel is owed around USD421.0 million from the regional government in backpayments, rising from USD409.0 million at the end of September. Genel said this has edged down to around USD405.0 million in the middle of January, with fellow regional producer Gulf Keystone Petroleum PLC previously suggesting the Kurdistan government plans to clear its debts to foreign producers during 2016.
An exploration expense of USD173.0 million will be recorded in the 2015 accounts relating to the relinquishment of interests in the Ber Bahr, Dohuk and CI-508 licenses in the Ivory Coast, the Adigala licence in Ethiopia and the Mir Left licence in Morocco.
Net debt at the end of 2015 stood at USD239.0 million, rising from USD211.0 million at the end of September.
The fully termed upstream production sharing contract amendments and gas supply agreements relating to Genel's key gas development assets at Miran and Bina Bawi in Iraq are expected to be signed in the first quarter of 2016, Genel said.
"Work continues on the financing and development plans for the KRI gas business. The timing of progress is dependent on the evolution of export payments and regional political developments," said the company.
By Joshua Warner; [email protected]; @JoshAlliance
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