As you'd expect of a company based in Iraqi Kurdistan, life is always turbulent for Genel Energy (GENL). But while the Kurdistan Regional Government's liquidity issues appear to have dissipated, last year's increase in production failed to offset the precipitous decline in the oil price, which in turn fed into a 57 per cent decline in gross profit. The shares leapt on these results, but failed to recover the ground lost by Monday's announcement of a steep reduction in proven and probable (2P) reserves at the Taq Taq field, which brought with it a $1.04bn (£0.74bn) impairment expense and sent full-year results into the red.
Several analysts have suggested Genel should diversify its production away from Kurdistan, given the company's cash pile and the large number of assets currently available at knock-down prices. For its part, Genel says it will "selectively pursue accretive M&A opportunities", although at least $25m of its capital will this year be directed towards the Miran and Bina Bawi gas projects, which are likely to command an increasing amount of attention.
Prior to these results, JPMorgan Cazenove was forecasting adjusted pre-tax profit of $30m and EPS of 11¢ for 2016, against losses of $915m and 329¢ in 2015.
GENEL ENERGY (GENL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 82p | MARKET VALUE: | £228m | |
| TOUCH: | 81.25-82p | 12-MONTH HIGH: | 649p | LOW: 72p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 925¢* | NET DEBT: | 9% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 24.0 | -58.0 | -72.3 | nil |
| 2012 | 333 | 76.0 | 27.2 | nil |
| 2013 | 348 | 187 | 66.2 | nil |
| 2014 | 520 | -313 | -113 | nil |
| 2015 | 344 | -1,161 | -417 | nil |
| % change | -34 | - | - | - |
£1=$1.42 *Includes intangible assets of $1.67bn, or 601¢ a share | ||||
