Genel share price soars despite biggest loss ever: Former BP boss Tony Hayward oil firm Genel falls to £1bn loss

Jessica Morris
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Genel announced a $1.1bn impairment on Monday (Source: Getty)

Genel shares closed up 13.5 per cent today at 88.25p per share, despite reporting its biggest annual loss since a stock market flotation four years ago. This followed a previously announced writedown to its oil field reserves in Iraqi Kurdistan.

The figures

Genel's losses before tax ballooned by 271 per cent to $1.2bn, up from $312.8bn in 2014. Its revenue fell 33.8 per cent to $343.9m, down from $519.7m a year earlier.

This came despite production increasing 22 per cent to 84,900 barrels of oil per day on an annual basis.

The company also squeezed its spending by 77 per cent $157.2m year-on-year, down from $676.9m.

Genel expects to produce between 60,000 to 70,000 barrels of oil per day this year, generating revenue between $200m to $275m, providing Brent crude oil prices average around $45 per barrel.

But this will fall to between $160m to $220m if oil prices fail to recover from the $35 per barrel which they're currently languishing at.

Genel confirmed plans to spend between $80-120m on oil fields in Kurdistan this year.

Why it's interesting

Genel shares tumbled earlier this week, after it warned of a $1.1bn impairment charge due to lower production expectations from its Taq Taq oil field in Iraqi Kurdistan, as well as diminished value from the oil price rout.

The writedown has helped push the company to its biggest loss since a stock market floatation four years ago. Co-founder and former BP boss Tony Hayward last year suggested he was open to selling the company, the FT reported.

Genel has had to contend with oil prices falling from a high of over $100 per barrel in the middle of 2014, to around $35 today.

It's also owed hundreds of millions of dollars in overdue payments from the Kurdistan Regional Govern­ment (KRG). However, the KRG has since started to make repayments to foreign energy companies.

Tony Hayward has chaired Genel since stepping down as chief exec last year. He left BP in the wake of the Gulf of Mexico oil spill, and had led Kurdistan-focused Genel since 2011.

What Genel said:

"We recognise and share the disappointment of the recent Taq Taq reserves update. Both Taq Taq and Tawke remain low-cost oil fields by any global benchmark. The fields are set to be significantly cash generative going forward, with a discretionary investment programme aiming to maximise the value of the remaining reserves.

"Our 264m barrels of net 2P reserves comprise a robust oil business well positioned in the current oil price environment."

"The instigation of the new payment mechanism by the KRG Ministry of Natural Resources in February 2016 provided clarity over the timing and quantum of our monthly receipts for export payments, recognising our receivable and putting in place the process through which it will be recovered."

"We are now starting to make real progress in the development planning for our KRI gas business. It remains a unique opportunity underpinned by a government signed gas sales agreement."

In short

Genel's losses ballooned on a write down to its Taq Taq oil field in Iraqi Kurdistan.

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