Genel Energy LON:GENL fell -2.40% today after its trading update failed to persuade the market that the company’s problems were behind it.
Genel Energy the oil exploration and production business that is active in Iraqi kurdistan, Moroco and Somalia, published a trading and operational update today that contained several positve developments including:
- A significant Production increase to 19,650 bopd in 2024 -up from 12,410 bopd in 2023.
- Generating a positive free cash flow of $19.0 million in 2024, compared to negative cash flow -$71.0 million in 2023.
- A chiveing a subststantial reduction in debt which fell from $248.0 million to just $66 million.
However, there were several areas of concern including, an outstanding payment of $107.0 million due to company from the Kurdistan Regional Government or KRG.
The oustanding balance has been partialy offset by payments due to the KRG from Genel Energy, the net balance now stands at $50.0 million.
That news is tempered by the loss of court case, against the KRG in December, that has opened the firm’s subsidiary, Genel Energy Miran Bina Bawi Limited, up to claims for legal costs, from the KRG, of some $36.00 million. Genel must now make submission to a tribunural who will decide on the size pf the final award.
Chief Executive of Genel, Paul Weir preffered to focus on the future saying that:
“We start 2025 with a business that has all the building blocks necessary to grow and become more successful. Genel has a strong balance sheet, our two producing fields within the Tawke PSC form a world class asset that delivers significant cash generation, even when only selling at heavily discounted domestic prices. Genel has a compact, but highly skilled and motivated work force, dedicated to delivery performance, execution of a growth strategy and pursuit of value accretive acquisitions that will geographically diversify us into reliable and predictable jurisdictions.”
Given that Genel Energy’s stock price has fallen by more than -30.0% over the last 6-months you might be tempted to think that the bad news is priced in.
However, we can’t ignore the fact the firm continues to sell the oil it produces locally, at well below international market prices, at an average of around $35.00 per barrel and until that changes the stock seems likley to underperform.lon-gnel
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