5th Mar 2015 11:04
LONDON (Alliance News) - Genel Energy PLC Thursday reported a significant rise in revenue and production in 2014, but the company swung to a pretax loss in 2014 on the back of significant depreciation charges and write offs and it slashed its budget for 2015 by 70%.
The exploration and production company focused on Iraq said that although production is set to significantly rise in 2015, it is facing lower oil prices. Its average realised crude oil price rose to USD73 a barrel in 2014, up from USD66 a barrel in 2013, but it is basing its 2015 guidance on a Brent oil price of USD50 a barrel.
Genel swung to a USD312.8 million pretax loss for the year ended December 31, from a USD186.5 million profit in 2013 after it was hit by USD141 million in depreciation charges which was "broadly in line with production levels", alongside exploration costs of USD476.8 million which represent the write-off of expenditure relating to exploration wells drilled in Angola, Malta and the Sidi Moussa and Juby Maritime fields in Morocco. In addition, Genel wrote off the entire USD80.9 million value of the Dohuk gas asset in Iraq.
Earnings before interest, tax, depreciation, amortization and exploration expenses totalled USD410.6 million, a rise from USD274.8 million a year earlier as the company reported a substantial rise in revenue of USD519.7 million from USD347.9 million, driven by an increase in production. Still, revenue was towards the lower end of the company's guidance of between USD500 million to USD600 million.
At the end of the year, Genel reported a cash balance of USD489.1 million, and net debt of USD2.3 million.
"At a time of a depressed oil price we remain focused on the importance of a robust balance sheet. Genel's financial flexibility is a significant strength," said Chief Executive Tony Hayward.
Capital expenditure in 2014 totalled USD676.9 million after a significant rise in capital expenditure in Africa, partially offset by reduced spending on exploration. This excludes USD75 million for the acquisition of the Angola farm in during the year. In 2013, it spent a total of USD563.6 million in capital expenditure.
The company slashed its capital expenditure budget for 2015 in February, to USD250 million, a 70% reduction from 2014. 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.
Net production in 2014 reached the top end of the company's guidance at 69,000 barrels of oil equivalent per day, up 58% year-on-year, and the company said it is expecting "significant further growth in 2015".
In 2015, Genel is expecting to produce between 90,000 and 100,000 barrels of oil equivalent per day, although revenue is expected to fall to between USD350 million and USD400 million based on a Brent oil price of USD50 a barrel.
"Given that this production is amongst the lowest-cost in the world, and domestic realisations strong, this provides a significant interim source of revenue until predictable export payments are in place. We expect to receive regular payments for exports as we move through 2015," said Hayward.
Genel shares were up 2.9% to 578.49 pence per share at the open Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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