Genel Energy upbeat on year ahead

(Sharecast News) - Genel Energy said in an update on Tuesday that it remained well positioned to deliver long-term value for shareholders, as it issued a trading and operations update ahead of its full-year results, pointing to a resilient core business, a strong balance sheet and multiple growth opportunities across its portfolio.

Chief executive Paul Weir said the London-listed company's core operations were able to cover their costs even when oil sales were restricted to discounted domestic market pricing at just over $30 a barrel, while its balance sheet provided the funding required to execute its strategy.

"Geographical diversification of our cash generation remains the priority for the business," he said, adding that Genel continued to review and bid for new opportunities while maintaining a disciplined and value-focused approach.

In Kurdistan, where Genel holds a 25% working interest in the Tawke production sharing contract, fourth-quarter gross production averaged 77,270 barrels of oil per day, compared with 74,140 daily barrels a year earlier, while full-year average production came in at 70,090 barrels per day, down from 78,615 daily barrels in 2024.

Working interest production averaged 17,520 barrels of oil per day for the year, with realised prices of $32 a barrel, compared with $35 a year earlier, reflecting continued sales into the domestic market.

The company said operational performance benefited from an effective programme of workovers and well interventions, with production in months unaffected by a drone attack exceeding last year's levels despite no new wells being drilled.

Mobilisation of rigs for a sustained drilling campaign is under way, targeting additions to both production and reserves.

Weir said a new drilling campaign at Tawke was underway to maximise production and add to the existing reserves base, while early stages of a new Kurdistan export arrangement had been reported by participants to be working.

"We see sustained and consistent execution as a key consideration as we keep export arrangements under review," he said.

In Oman, where Genel holds a 40% interest in Block 54, preliminary re-entry and workover operations at the Batha West-1 discovery well were completed safely, ahead of schedule and under budget.

The company said work was continuing to analyse the data gathered, which would inform activity over the next two years, including the acquisition of 3D seismic data and the drilling of two exploration wells.

In Somaliland, where Genel has a 51% working interest in the SL10B13 licence, the company said it continued to work with stakeholders towards drilling the potentially transformational Toosan-1 exploration well, while maintaining social investment programmes focused on health, education and environmental initiatives.

Financially, Genel reported core business netback of $11m in 2025, up from $5m a year earlier, while free cash flow fell to $4m from $20m.

At the end of December, cash stood at $224m, compared with $196m a year earlier, with total debt of $92m, leaving net cash of $134m.

Receivables of $88m remain overdue from the Kurdistan Regional Government, excluding interest, although those were partly offset by around $40m of payables.

The company said it continued to work towards a settlement plan, while an appeal against a $27m arbitration costs award relating to Genel Energy Miran Bina Bawi was due to be heard in the second quarter of 2026.

Looking ahead, Genel said it expected core business free cash flow in 2026 to more than cover its costs, supported by stable domestic sales from Tawke and production uplift from new drilling.

The company said it planned to invest up to $20m in its pre-production assets, including Block 54 in Oman and progress towards drilling Toosan-1 in Somaliland.

Weir said each of the company's strategic objectives had the potential to deliver significant value.

"In combination they can transform the business, transform our cash generation capacity, and further energise the business and the value proposition for our shareholders," he added.

At 1235 GMT, shares in Genel Energy were up 2.51% at 61.5p.

Reporting by Josh White for Sharecast.com.