Shareholder Q&A

Please see below for responses to key questions currently being asked by investors. If your question isn’t answered, please email us at investor.relations@genelenergy.com.

 

What is happening with Bina Bawi – why the ongoing delay?

“Discussions with the KRG are ongoing at the highest levels relating to our proposals submitted in August and December 2020, which would enable the Company to progress the next stage of activity. Genel continues to maintain capex discipline, and will only commence investment upon certainty of alignment with the KRG and a clear path to monetisation.”

What are your expectations for a Somaliland farm-in and what is the significance of the recent acquisition?

“Somaliland is highly prospective and underexplored. As we stated, interpretation of the 2018 2D seismic data together with basin analysis has identified multiple stacked prospects, with each of them estimated to have resources of c.200 MMbbls. It has the potential to be a low-cost high-value component of our long-term growth story. We are keen to drill in Somaliland, but we are also keen to share the cost in order ensure that the risk/reward balance is appropriate for our shareholders.”

What is your current cost of production per barrel?

“Our cost of production is c.$3/bbl. Our low-cost position helps us achieve a high-margin on our production, with average margin per working interest barrel of c.$11/bbl expected in 2021 at average Brent oil price $50/bbl.”

What does the Company plan to do to provide stability and strength to the share price?

“We plan to keep on delivering on our strategy. Genel is focused on delivery – drilling wells, generating cash, adding new opportunities and progressing existing ones, and paying a material dividend. We also continue to appraise opportunities to make value accretive additions to the portfolio, although given the current strength of the existing portfolio and the opportunities available in it we will continue to be highly selective.”

Can you please provide some sensitivities of your free cash flow at different levels of oil price?

“To start with, due to our low-cost production it is worth noting that our producing assets breakeven at a Brent oil price of $30/bbl. In 2020, for every increase in the Brent oil price of $15/bbl, we would have added c.$5 million in free cash flow on a monthly basis.”

Is Genel looking to diversify away from the Kurdistan Region of Iraq?

“Our M&A strategy as stated at the beginning of 2018 prioritises areas with low to moderate political risk. Given the improved political environment in the Kurdistan Region of Iraq we now view the KRI as one such region. As seen by the acquisition of stakes in Sarta and Qara Dagh, we are committed to the region and believe that it can drive value for investors. That said, we continue to explore a wide range of opportunities, and it is fair to say that had Sarta been situated outside the KRI, then we would still have been very keen to acquire the stake.”

Is there any possibility of acquiring some near-term production utilising some of the cash available?

“We continue to look at a wide range of opportunities, focused on assets that offer near-term value for shareholders. If the opportunity to acquire production came along at the right price, then it is something that we would look to take advantage of. That said, we are not after production for the sake of adding production, but we look to boost profit and cash flow.”

Is there any kind of early indication or guidance on what can be expected in terms of bopd and the growth potential over the years for Sarta?

“The 20,000 bopd central processing facility should be sufficient to handle production from phase 1A. If this is successful, and two of the wells forming phase 1A have already flowed 7,500 bopd on test, we will then look to progress through the multiple phase project. The asset has very significant potential. There are hydrocarbons throughout the structure, from the Tertiary down to the Triassic, which are the typical Kurdistan Region of Iraq reservoirs.”