RE: Trading update12 Jan 2026 10:09
And from the same article 😀
Risks
What could happen that would invalidate this narrative?
The company remains heavily reliant on a single producing asset, the Tawke PSC. Short term shocks such as the recent drone attacks highlight how concentrated operational risk in one geopolitical region can interrupt output, which would constrain revenue and free cash flow if disruptions become more frequent or prolonged.
Long running political and fiscal uncertainty between the Kurdistan Regional Government and Federal Government of Iraq, including the lack of a binding export and payment framework and unresolved receivables of around 50 million dollars, could lead to structurally weaker realized pricing or non payment for production, which would pressure revenue and net margins over time.
The strategy to diversify cash generation depends on acquiring value accretive, cash generative production assets in a competitive MENA deal market. If suitable assets remain scarce or are only available at high prices, the company may deploy its enlarged cash and bond-funded balance sheet into low return projects, which would dilute returns on capital and weigh on earnings.
Frontier and early stage projects such as Block 54 in Oman and the Toosan prospect in Somaliland require multi year investment before potential commercialisation. If appraisal results disappoint or security, regulatory or partner issues delay drilling, these projects could consume capital without adding meaningful barrels, limiting medium term production growth, revenue diversification and margin improvement.
The unresolved arbitration cost award and large current trade and other payables, much of which relate to KRG disputes, create ongoing legal and counterparty risks. These may crystallize into cash outflows or write downs, which would reduce net cash, constrain dividend capacity and negatively impact earnings.
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