Interims from Genel this morning which continue to show what a strong position the company is in. WI production averaged 37,400 b/d in H1 2019 an increase of 17% compared to 1H 2018 and FY guidance remains at ‘close to Q4 2018 levels of 36,900 b/d’ which would be a 10% increase y/y.
Free cash generation of $57m in the half (70m) with $19m added post the period end which the company reminds investors gives annual fcf of c.20% of current market cap. The period ended with net cash of $56m (net debt $64m) and by 5th August the company had $390m of cash a net cash position of $92m.
The period also included the Sarta and Qara Dagh assets with their opportunities for near term production and ‘material ‘ future growth potential as well as the payment of a 10c maiden dividend, the confirmation of a 5c interim and of course the share buy-back continues.
Expect an active upcoming drilling programme with over ten wells set to be completed by early 2020 with a well location agreed at Qara Dagh and production from Sarta by ‘mid 2020’. The company continue to be in active discussions with the KRG regarding Bina Bawi, focussing on agreeing detailed commercial plans for the integrated Phase 1 oil and gas development and fdp’s.
Genel is therefore in a very strong position, they are generating ‘material ‘ fcf and capex remains at the top end of guidance confirming continued investment across the board. They are also continuing to monitor value-accretive additions to the portfolio. With these key metrics in such a strong position the business looks remarkably good value as it generates cash to invest in the business and to have a highly rewarding return of cash to shareholders. The oil sector has been experiencing some investor push back of late but there can be few better opportunities than Genel which ticks all the investor boxes.
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Chairman Dr. Clifford Gross believes such growth was attained through the company’s “unique approach of acquiring and commercialising university IP innovations, coupled with providing a range of IP services continues to deliver strong returns on invested capital.”