Shares in Genel Energy (GENL) are 34 per cent up for the year, and almost 70 per cent higher since the Kurdistan group published sink-or-swim results in March. That backdrop masks a period of tumult, in which chief financial officer Ben Monaghan, boardroom grandees Nathaniel Rothschild, Simon Lockett and chairman Tony Hayward have all exited, and the once key Taq Taq field saw a 68 per cent year-on-year decline in output.
The latter remains a real concern. Taq Taq, in which Genel owns a 44 per cent working interest, averaged 28,000 barrels of oil a day (bopd) in the first quarter of 2017, 22,100bopd in the first half of the year, and now pumps just 14,700bopd. At issue is rising oil water contact in the Shiranish reservoir, which means that every other barrel Taq Taq now produces is water. And while the rate of decline is apparently slowing, a remedial drilling programme at the TT-29 well has proved problematic, with results delayed.
How then, do we explain the stock market’s brighter sentiment? One source of optimism comes from strong performance at Tawke, now home to 74 per cent of Genel’s output. This should expand pending the installation of an early production facility at the Peshkabir discovery.
The second hope is the balance sheet, which looks in better nick following the repurchase of $253m (£191m) nominal value bonds for $217m in cash. Numis is now guiding for a pre-tax profit of $19m and EPS of 7¢ this year, compared with losses of $1.25bn and 449¢ in 2016.
GENEL ENERGY (GENL) | ||||
ORD PRICE: | 107p | MARKET VALUE: | £299m | |
TOUCH: | 106.8-107.3p | 12-MONTH HIGH: | 108p | LOW: 55p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 488¢* | NET DEBT: | 12% | |
Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
30 Jun | ($m) | profit ($m) | share (¢) | per share (¢) |
2016 | 91.1 | -4.2 | -1.50 | nil |
2017 | 87.1 | 23.5 | 8.40 | nil |
% change | -4 | - | - | - |
Ex-div: | n/a | |||
Payment: | n/a | |||
£1=$1.32. *Includes intangible assets of $930m, or 334¢ a share |