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Main issue here is that, whereas the KRG used to have a good relationship with Turkey and leverage over Baghdad, the tables have turned. Turkey is now at odds with the KRG (they have issues with the PPK who have a presence there) and have now teamed up with Baghdad against the KRG.
The ITP and PSCs can be easily resolved, but there is no political will to do so... KRG Oil is far form indispensable especially given the global supply demand fundamentals and OPEC's reduced quotas; Baghdad is not in a rush to reduce its own production in order to accommodate that of the KRG's.
Also, theres something brewing military on the borders with the borders with Turkey. A military attack by Turkey on PKK outposts wherever they might be in Kurdistan is a very probable (when? I dunno). But he tension between Erdogan and KRG are high.... they are no longer allied as before.
On the Somaliland asset, tensions are higher than ever with now Puntland another Semi-autonomous region in Somalia has withdrawn its recognition of the Somali Federal government paving way to another cessation from the country... this is not good for business sin the region.
Perhaps someone will do what the KRG intended to do before Ukraine kicked off - go into partnership with Russia to develop the gas fields.
Doubt there’s any trust left for further Genel investment in KRG - they seemed to be set on not renewing current Tawke license at Investor Meet briefing.
It doesn't cost any party anything to re-instate GENL's right to develop the gas fields, except for some legal costs and time, so to me that is the only viable outcome should GENL win the arbitration - the KRG can't pay and the FGI won't.
What GENL does then is what I can't figure out.
Must admit im wondering how any arbitration win for genel would be paid if they cant even pay an employee
FCFY - and who do you think will pay Genel the 1.2Bn?
The KRG who haven’t any money because the ITP is closed and Baghdad don’t even give them enough to pay public sector workers or Iraq who weren’t a signatory to the BB and Miran PSCs?
Telling all parties that opening the ITP is mutually beneficial is merely stating the bleedin’ obvious.
Since when did mutual benefit outweigh political interest? Especially in the Middle East where looking after your region, tribe, religion or family is deemed far more important.
If we’re relying on common sense it might be a long wait - some backhanders or Baghdad political gain over KRG will be much more important.
US now turning up the pressure for export resumption. I presume with Russia cutting oil before the US elections, it will provide more impetios to have the KRG oil online.
https://www.rudaw.net/english/business/260320241
Noticible shift now with US backing and leverage.
The Arbitration hearing is now priced at call option money, with a growing cash reserve. It will make everything else pale in comparison.
£1.2B return and a current EV of £109M. 11X return. Not often the market presents an opportunity like this.
The company can't market it due to its nature. Historic examples have all been favourable to the companies.
I agree 100% with you. This is quite poor.
The Somaliland licence only has 2 more years to run ... now that everything seems ready to go ... but somehow we have 0 timescales.
No exports for the foreseeable future.
Local sales at a huge discount.
Morrocco has been without any meaningful news for years.
No news payments ... who will pay us in the future.
I am actually surprised the SP did not go down more.
GLA.
They’ve been saying the same on M&A for years - move slowly towards the right deal at the right price.
So:
- no update on M&A
- no update on arbitration other than should be complete by end of 24.
- Somalialand paused - no update on a restart.
- 107 million owed might be repaid in lump sums or might be an over ride arrangement.
- they only have the same news as everyone else on ITP reopening.
- continue to extract limited reserves and sell locally at $32-34.
Not much to move the share price there!
“As we reshaped our business in 2023, we have continued our search for the right opportunity to integrate within Genel. There remain opportunities out there that fit our criteria, and we are confident that we will find the correct deal.”
I wonder if they already have something in their sights. If they can’t spend it, we may get dividends like in the past. Meanwhile outgoings are covered, cash in the bank and looking forward to the reopening of the pipeline and the results of our arbitration claim.
I would have loved to have seen a farm out in Morocco and the start of drilling in Somaliland.
Fairly good update, the Company is in a good position with plenty of cash on the books, I think Somalia is on hold due to the Political unrest between Somalia and Somaliland, if they start flowing oil there, it could create a big problem, think they are holding back until the political scenery changes .
TBH I was disappointed that there was nothing new. Yes, they've done a good job dealing with the effects of the pipeline closure, but they're still to find a new asset to buy (despite looking for several years now) and for some reason have paused the Somaliland drill which will not take place this year.
A link to the presentation for those who missed it -
https://www.investormeetcompany.com/meetings/full-year-results-112
I thought they looked very respectable. As expected though, we've gone down on the back of them.
Happy to wait this year for arbitration results. Then we'll see
Thought that was a fantastic set of results.
Genel are now banking some serious cash per month even under the current conditions.
FCF/EV around 34%
We’ll done to management.
Confident statements on the arbitration.
It’s 1000 today - access via investor meet.
Register and you’ll get an invitation email with a link.
I’m off for some Pilates to get in the mood!
Looking forward to tomorrows investormeet talks,
Thank you jc-123. Good read.
Correction. It’s 4 layers!
https://genelenergy.com/wp-content/uploads/2020/08/Genel-Energy-Pareto-conference-FINAL.pdf
Also from memory, the drill is supposed to target 3 stacked layers of the reservoir I think. So although the first layer is close to the surface, it will end up being much deeper due to lower sections of the reservoir. It all has to be tested also. In other words it will probably take longer than we think.
Thank you. That was a fist postponement as it was first end of 23 drill time ( from memory). So we are already coming to the tail end of the 18 months period. If drilling is started in the last quarter of the year, I will be happy.
The most recent timing inidication I can find from Genel is last years year end report saying 12-16 months from a year ago. Hopefully we’ll get an update on 26th
I don't forget. It is a big plus given Genel record of progressing things on their own in general. However, this is just a press article with very vague (middle if 2024) indications if timings.
What Genel told the investor has been pushed back first to beginning of 2024 and now we don't know. As far as we have been told drilling has not started and there is no indication when it will. Only told civil work has been completed and they are "evaluating" the next stage. For me, in Genel speak it means not much is happening.
Hopefully, I am wrong ... I will be one day. Lol.
Don't forget the JV partner is CPC. You'd have thought the Taiwanese national oil company won't let timescales slip the way Genel normally does. We haven't had any indication of delays and as far back as August last year, the timescale for a drill was mid 2024.
http://somalilandstandard.com/taiwanese-oil-firm-to-drill-somalilands-first-oil-well-in-mid-2024/
As far as I know they have not started drilling. The problem with their communication is that they always postpone what they said they would do.
Finding oil should be fairly straight forward if we are to believe what was said before. It should be large and close to the surface. Let's see if they can do differently than before I.e. funding oil rather than dust.
I still think it will be tough to make it commercially viable (because or operational/political/safety problems) but I would you be proven wrong.