Continued drillbit success enabled Genel Energy (GENL) to boost its contingent resource base by 50 per cent by the half-year stage, while tighter ties between the Turkish government and the Kurdistan regional government (KRG) presents huge export opportunities for the frontier oil & gas explorer.
January's export agreement with the KRG enabled Genel to monetise more of its production outside of Kurdistan. That helped net profits soar to $109m (£71.2m) from last year's $22.3m, while operating cash flow grew by 120 per cent to $181m. Genel expects a significant step-up in output over the next 18 months, too. The Taq Taq and Tawke production wells averaged 41,500 barrels of oil per day (bopd) on a working interest basis during the first half (39,000 bopd in 2012), with full-year output reiterated at 45,000-55,000 bopd - generating revenues of $300m-$400m. Completion of an export pipeline into Turkey this year should also enable Genel to boost output to 140,000 bopd by end-2014.
Material upgrades at Tawke and Bina Bawi allowed Genel to book an additional 500m barrels in contingent resources. Development of the huge Miran gasfield (3.8 trillion cubic feet) should gain momentum during the fourth quarter, when the KRG is expected to sign an outline supply agreement with the Turks for the sale of 10bn cubic metres of gas a year.
Credit Suisse expects full-year EPS of 65¢ (from 27¢ in 2012).
| GENEL ENERGY (GENL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 942p | MARKET VALUE: | £2.1bn | |
| TOUCH: | 940-942p | 12-MONTH HIGH: | 970p | LOW: 626p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 25 | |
| NET ASSET VALUE: | 1,783¢* | NET CASH: | $867m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 123 | 22.3 | 8.03 | nil |
| 2013 | 161 | 109 | 38.9 | nil |
| % change | +31 | +389 | +384 | - |
*Includes intangible assets of $1.45bn, or 642¢ a share £1=$1.53 | ||||
