Genel Energy PLC on Wednesday said it suspended dividend payments and swung to a loss in the first half of the year, following the closure of a key pipeline.

The London-based oil producer with production assets in Kurdistan, and pre-production ones in Somaliland and Morocco, swung to an operating loss of $35.7 million in the first half of 2023 from a $140.7 million profit the year before.

Earnings before interest, taxes, depreciation, amortisation and exploration expenses dropped by 91% to $19.4 million from $212.3 million. Genel also swung to a 14.6 cents basic loss per share from earnings of 45.4 cents the previous year.

Revenue, meanwhile, fell by 79% to $51.3 million from $212.3 million. Production dropped 56% to 13,440 barrels of oil per day from 30,420 barrels, while the average price of Brent oil decreased 26% to $80 per barrel from $108.

Chief Executive Paul Weir said the closure of the Iraq-Turkiye pipeline in March hurt its earnings.

‘[It] resulted in minimal sales and no payments from the [Kurdistan regional government] since that date. This has materially impacted both our current and expected cash flows, with the current period seeing a free cash out flow,’ Weir said.

Consequently, Genel said it has suspended its dividend programme. It declared a payout of 6 cents per share for the first half of 2022, and in total paid 18 cents per share that year.

Genel said it has reduced its spending due to the reduced operational activity, and currently expects capital expenditure to reach approximately $70 million for the full year. This is down from its original guidance of $100 million to $125 million.

On a slightly less pessimistic note, Weir said a ‘framework for the restart of payments and exports’ is becoming more likely following approval of the Iraqi government’s budget in June, and amid discussions between Iraq and Turkey about political and commercial arrangements affecting oil exports. However, he added that there is ‘no clear line of sight on when either pipeline exports or payments will restart.’

‘As we await a positive outcome to discussions between Iraq and Turkiye, we retain a material cash position, prioritised for investment in new assets, and remain clear and determined on our direction of travel,’ Weir continued. ‘We have accelerated the ongoing reshaping of our portfolio, organisation, and plans, and we continue to diligently review assets and businesses that can support delivery of the business that we have framed over the past 12 months.’

Genel Energy shares were down 1.4% at 102.40p on Wednesday morning in London.

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