Genel Energy PLC on Tuesday insisted it remains ‘well positioned’ for this year, despite the Iraq-Turkey pipeline’s closure causing production and revenue to plunge.
The oil and gas exploration and production company, formerly focused on exports to the Kurdistan region, has had to switch its focus to generating income through domestic sales since the Iraq-Turkey pipeline was shut in March last year.
Genel said it swung to a pretax loss of $28.28.3 million in 2023, following its $122.1 million profit in 2022.
Revenue dropped by 79% to $84.8 million from $401.9 million. Production fell 59% to 12,410 from 30,150 barrels of oil per day, as Genel predicted in late January. Meanwhile, the average brent oil price was down 19% to $82 from $101 per barrel.
Genel said dividends declared during 2023 totalled 12 US cents per share, down 33% from 18 cents in 2022.
‘It is difficult to look at 2023 without it being dominated by the closure of the Iraq-Turkey pipeline,’ commented Chief Executive Officer Paul Weir. ‘The suspension of our route to export resulted in a material reduction in production and cash flow.’
Nonetheless, he added: ‘We are [now] a leaner, simplified company that retains clear objectives – generating resilient and sustainable cash flows, diversifying our income through the addition of new assets, and maintaining a strong balance sheet.’
Genel had a cash balance of $363.4 million at December 31, down from $494.6 million one year prior.
Turkey had closed the pipeline after the International Chamber of Commerce ordered Ankara to pay about $1.5 billion in damages to Baghdad, for transporting oil from the Kurdistan region without Iraq’s approval.
Going forward, Weir said Genel is ‘now well positioned in 2024, with a reshaped and resilient business’.
‘Genel has established a sound platform from which to spring forward,’ he continued. ‘The re-opening of the pipeline has the potential to more than double cash generation.’
However, Genel acknowledged that while talks continue to potentially re-open the pipeline, there is still ‘no clear timing on when exports will restart’.
Genel shares were down 2.0% at 82.34 pence late on Tuesday morning in London.
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