Member Info for Jim800

enel Energy plc ('Genel' or 'the Company'), in line with other operators, has received a letter from the Kurdistan Regional Government ('KRG') proposing an amendment to the repayment schedule for monies owed for oil sales from November 2019 to February 2020 and the suspended override from March to December 2020. Under the communicated revised payment terms, for each cent above a monthly dated Brent average of $50/bbl, 0.2 cents per paying interest barrel produced will be received towards monies owed (previously 0.5 cents per paying interest barrel). The revised payment terms are stated by the KRG to be a result of the Dated Brent price having consistently stayed well above $50/bbl, and the ongoing challenges presented by the COVID-19 pandemic in Iraq.

The UK Govt may have reduced overseas aid - but it seems Genel continues it's role as a loan company who pump a bit of oil on the side. Very disappointing news.

Must be because Brent has only gone up to 69.4, not 69.5.

Red is so last year!
Green is the new blue :-)

I didn't realise the May 2021 dividend was for FY 2018! When do we get 2019 and 2020s?

High interest rate on Bond prices due to risk of unreliable / delayed payments from KRG.
Those of us who have been here for a while have seen quite a few returns to late or non-payment over the years - hopefully Brent price will enable continued payments for both production and recoveries - but anyone lending recently would have wanted a risk premium. Given evidence of regular payments, any re-financing (if required) should be cheaper in the future.

Think it's going to be a slow climb, with dips between the rises.
I think for an independent investor (perhaps we are a bit emotionally involved in Genel) G just doesn't have the history of regular, reliable payments for the stuff they pump. Suggest we need to build a pattern of consistent receipts (and recovering missed payments), stable or increasing output and stable reserves.
Missed payments, reduced reserves and declining production all raise warning flags when compared with the level of risk with RDS.
I think G will recover to £2.50 levels (or 3 x Brent if that's higher) but we need 6 months of consistency to look like a stable company rather than a punt on a risky sector in a risky country - albeit with a decent divi.
Patience everyone

Scratch - that's what I thought but thanks for confirmation.

With Hargreaves Lansdown i have had to fill in separate W-8BEN forms for my SIPP and my ISA so assume (but will now check) that both DGOC holdings get the 15% saving.

Is Genel an Oil Company relying on the price of Brent to make a profit or is it a loan company who's shares have picked up now that the KRG are paying both money due and receivables?

The latter might explain the SP holding up.

Edwina - you need to fill in a W-8BEN form (which your ISA provider should give you and hold).

Darren - who knows? Obvious answer is that more people want to sell than want to buy. Might be any of: profit taking (share doesn't like to get over 130), dislike of oil / gas sectors, fear that DGOC business model is not sustainable, concerns about US economy or a move away from natural gas to greener energy sources.
Depends whether you want a stable, high dividend or a rising share price - if you can find both then let me know.

Yellow - Thanks for link, very informative. Rusty explaining the hedging strategy makes much more sense than the text in the Final Results. Given uncertainty over natural resource pricing over last few years and next few years, it seems a sensible strategy to minimise downside risk - even if it might reduce profit in good years. 90 % hedging for this year and 60% for next year already should ensure dividend security. Lack of Capex and strategy of recycling / improving efficiency of old wells looks like a simple success as long as reserves hold up.
I've been a holder for several years, topping up whenever price below £1 - often tempted to sell at over £1.20 but liking the increasing dividend so still here. Think massive share price rise unlikely as it looks like an Oil company to the uninitiated but happy at 9% return.

Strange how the forum regulars used to be most concerned about the price of Brent, the regularity of payments and the recovery of receivables.
All these seem to be improving, there's nowhere else out there to invest money and upwards progress is still slow. Can only assume it's the old chestnut of green money just not investing in oil or tobacco, however good the dividends or prospects.

Roofer - some (most?) of us long term holders are still sitting on a paper loss having not missed the boat at various prices ranging, in my case, from over £5 down to 60p! It's been a rollercoaster with a long wait for the downhill bit to give way to the gentle upslope.
One day Rodney...........

Just topped up my LTH at 2705 - as per previous posting, 2700 looks like a bottom for the time being. Happy to hold for the dividend, guess longer term share price will depend on how prospective share buyers feel about investing in a company profiting from tobacco products. Hopefully, individuals seeking a 7-8% return can replace all those institutional shareholders who aren't allowed such products under their ESG strategies.

Boyo - I'm with you in RDSB and Genel for several years now (though my RDBS paper loss is bigger than my Genel one - who'd have thought that 3 years ago).
I see a similar picture in tobacco firms, BAT for example is still making a profit despite COVID, has maintained dividends yet is down since earlier this year - Institutional funds and their ethics appear the culprit. Some commentators think the way out for such "unethical" companies is share buy backs to replace the lost institutional investors and get back to a higher proportion of private income investors and hence rally share price. It's a long game though so patience required - but I'm happy to sit tight whilst dividends are > 4% and price ticks up very slowly.

Boyo,
Thanks very much - as i thought, payments on schedule but a few months missing.
No need to apologise, information far more important than formatting.
Thanks again for all your thought provoking contributions.

Back in Feb when payment delays were being discussed / admitted, someone had put together a little table of which month's production had / hadn't been paid for and where there were still payment gaps. Any chance of an updated one please?
I can't believe the situation is as simple as the RNS implies - July payment of June production - or if it is that simple then there are a load of months that have been added to the "pay you later" pile.

RCGL,
Nothing many of us haven't done in the past. Timing of entry always difficult to get correct, my strategy is buy in blocks over a few days: costs you a bit more in fees, and you may have a rising price but at least you don't buy in just before the fall.
I also never buy live. Pick a price just below current and what seems OK and set a buy order - the price will get usually there eventually and it will be cheaper than when you were first tempted - if not, at least you can console yourself with your stock selection even if not your buying. .
To make you fell better, I bought in at about £10, sold out at £14 and then re bought in as it fell through £10 (thought it had to be a bargain at that price with a full order book and a good dividend). Have topped up more at 76p but not worth selling out now. Guess moral of the story is stop losses save this happening and limit your losses to 10% rather than 80%. Still see lots of reasons why it could recover to £3 or £4 over nest few years.

Interesting bar chart in Boyo's link. This appears to show that shale drilling in successive years becomes less long lasting, has a quicker decline in volume and output expires more quickly. Guess this makes sense (companies getting the biggest / easiest volumes first). Implies that pay back on drilling Ops / Capex becomes less profitable as years march on.
Wonder if they know where the break even point is?

Think the divi effect is more than just the 8 ish pence, it is a sign that the BoD are confident (so confident they're betting their cashflow forecasts) in regular KRG payments (even if the 28th is the 15th day of the month).
I'm taking the message that the decision to make the divi payment implicitly says things they can't put into print explicitly.
ie things are set to slowly improve but we can't say this in RNSs.
Hope I'm right :-)