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LONDON (Alliance News) - Genel Energy PLC still intends to pay a dividend for 2019, it said on Wednesday, though will have to ask bondholders after a large impairment.
Genel posted a USD283.4 million pretax loss for 2018, after a USD272.0 million profit in 2017, mainly due to a USD424.0 million impairment of its Miran gas asset in Iraq.
Genel does not currently pay a dividend, but plans to for 2019, in the form of both an interim and final return worth a total of at least USD40 million a year.
However, the company said: "Although we have been strengthening our credit continuously, and will continue to do the same, the non-cash impairment of the Miran gas asset means we need to seek a waiver from our bondholders for a dividend in 2019."
The swing to loss came as Genel reported a rise in revenue for 2018 of 55% to USD355.1 million. Poduction slipped to 33,700 barrels of oil per day on average from 35,200 barrels, but Genel benefited from higher oil prices.
Genel has maintained net production guidance of around 36,900 barrels of oil per day in 2019.
Free cash flow for 2018 rose by 66% to USD164.2 million, and Genel moved into a net cash position at the end of the year of USD37.0 million from net debt of USD134.8 million a year prior.
Capital expenditure in 2018 was USD95.5 million, broadly flat year-on-year. Genel has upped capex guidance for 2019 to between USD150 million and USD170 million, from USD115 million before, after the purchase of the Sarta and Qara Dagh blocks in Kurdistan.
Chief Executive Murat Ozgul commented: "Genel's strategy at the start of 2018 was clear - generate material free cash flow from producing assets, build and invest in a rich funnel of transformational development opportunities, and return capital to shareholders at the appropriate time. We are delivering on this strategy.
"2018 was another year of material free cash flow generation, we continued to transform our balance sheet and the addition of assets with the potential of Sarta and Qara Dagh led to a very successful delivery on the first two parts of our strategy."
"We will continue to develop opportunities and invest in growth. As we do so, a robust cash flow outlook and our confidence in Genel's future prospects underpins our initiation of a material and sustainable dividend policy," Ozgul continued.
Genel shares were 2.0% lower on Wednesday at a price of 220.61 pence each.
