Genel Energy was formed last year after Turkey's Genel Energy International reversed into Rothschild-backed investment vehicle, Vallares, to create a company for exploiting energy opportunities in the Kurdistan region of Northern Iraq and other frontier markets. And, after announcing three big deals to augment Genel's six existing production sharing contracts with the Kurdistan Regional Government (KRG), the group's long-term prospects are hard to ignore – despite the risks associated with such frontier regions.
That deal-doing certainly overshadowed these maiden half-year results. Indeed, alongside the figures, Genel announced that it had entered into a $450m (£285m) deal to secure Heritage Oil's Miran gas discovery in Kurdistan and agreed to a $40m farm-in deal for a 75 per cent share of licence interests in offshore Malta, run by Mediterranean Oil and Gas. Management also negotiated a farm-in agreement with Serica and San Leon whereby Genel will eventually fork out up to $51m for 60 per cent of the Sidi Moussa block, offshore Morocco.
That follows the acquisition earlier this month of a 44 per cent stake in the Bina Bawi block in Kurdistan for a combined $414.5m. While, in May, Genel boosted its stake in the Chia Surkh block in Kurdistan to 60 per cent and spent $27.7m buying Barrus Petroleum – an exploration play with assets in Morocco and the Ivory Coast.
Operationally, Genel's first-half production averaged 39,000 barrels of oil per day (bopd) from its two producing assets, Taq Taq and Tawke. Although, in April the KRG forced contractors in the region to halt exports of crude oil – exports did resume earlier this month, however. Meanwhile, Genel, headed by former BP boss Tony Hayward, boasts a busy exploration and appraisal programme over the next 12-18 months, and is targeting daily production of 140,000 barrels from Taq Taq and Tawke by 2014.
Investec Securities expects full-year EPS of 39.3¢ (loss per share of 72.3¢ in 2011).
| GENEL ENERGY (GENL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 700p | MARKET VALUE: | £1.5bn | |
| TOUCH: | 695-700p | 12-MONTH HIGH: | 1,020p | LOW: 586p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 1,805¢ | NET CASH: | $1.83bn† | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | nil | -5.70 | -48.3 | nil |
| 2012 | 123 | 22.3 | 8.19 | nil |
| % change | - | - | - | - |
†Does not reflect post period end acquisitions £1=$1.58 | ||||
