Half Yearly Report

RNS Number : 5294K

Genel Energy PLC

31 July 2013

 



 31 July 2013

Genel Energy plc (GENL)

Half Year unaudited results for the six months to 30 June 2013

Genel Energy plc, the London listed exploration and production company and largest independent oil producer in the Kurdistan Region of Iraq, announces its unaudited half year results to 30 June 2013.

Results¹ summary

	H1 2013	H1  2012
Revenue ($million)	160.6	123.1
Profit before tax2 ($million)	109.1	22.3
Cash flow from operating activities ($million)	181.3	82.4
Free cash flow3 ($million)	(88.8)	5.4
Net cash ($million)	867.1	1,829.7
EPS (cents per share)	38.93	8.03
Production (kbopd, working interest)	42	39

^{1 Results are from continuing operations and are unaudited}

² Includes a one-off benefit of $54.5 million following a change in the basis of the depreciation charge in respect of Oil and Gas assets with effect from 1 January 2013

³ Free cash flow is cash flow from operating activities less capital expenditure

Highlights

·      Net working interest production averaged 41,500 bopd (+7% from 1H 2012), generating revenue of $161 million (+31% from 1H 2012)

·      Material resource additions at Tawke and Bina Bawi confirmed by important appraisal success

·      Significant progress made in commercialising Miran and Bina Bawi oil and gas assets

·      Major exploration success in the KRI: a material new oil discovery at Chia Surkh of c.250-500mmbbls  with commercial discoveries at Tawke Deep and Ber Bahr

·      Exploration and appraisal success added c.500 mmboe (50%+ increase) to contingent resources

·      Work programmes progressed across the African exploration portfolio:  high impact offshore drilling programme to commence in 4Q 2013

·      Clear evidence of positive political momentum and independent KRI export infrastructure nearing completion

·      Strong first half results and financial position with $867 million of net cash at the end of the period

Outlook

·      2013 guidance maintained: average net working interest production expected to be 45,000 - 55,000 bopd, generating revenues of $300-400 million

·      Independent KRI export pipeline infrastructure to be completed by the end of 2013

·      Development programmes at Taq Taq and Tawke on track for net working interest production capacity of 140,000 bopd by  the end of 2014

·      Appraisal and development programmes at Miran and Bina Bawi continue: early oil development underway, export and domestic gas monetisation options being progressed; targeting export Gas Sales Agreement between the KRG and Turkey by 4Q 2013

·      Material exploration drilling programme continuing in the KRI on Chia Surkh, Taq Taq Deep and Miran Deep, targeting c.1.0 bn boe gross unrisked resources

·      High impact African exploration programme targeting 3.3 bn boe net unrisked prospective resources to commence in 4Q 2013: first well to spud in Morocco

Commenting today Tony Hayward, chief executive, said:

"Genel has had a strong first half of the year making material progress in exploration, appraisal and development.   Success with the drill bit has added c.500 mmboe to our contingent resource hopper - an increase of more than 50% - while the development programmes at both Taq Taq and Tawke continue to build production capacity, and look set to benefit from the expected completion and operational start-up of the KRI export pipeline by year end.  The appraisal success at Bina Bawi and Miran has created a transformational gas business and Genel, with our Turkish heritage, is uniquely placed to benefit from the KRG-Turkey Gas Sales Agreement which we expect to be signed by year end.   The strong combination of operational and political momentum we are enjoying in the KRI will be further reinforced by an African exploration programme that will commence in the fourth quarter of the year.   We have a lot to look forward to."

Enquiries:

Genel Energy                                                                                [phone]

Julian Metherell, Chief Financial Officer                                      

Natalie Fortescue, Investor Relations

M: Communications                                                                   [phone]

Patrick d'Ancona                                     

Andrew Benbow

A presentation will be held at 2pm today at Saddlers' Hall, 40 Gutter Lane, London, EC2V 6BR. A live webcast of this presentation will be available via Genel Energy's website at www.genelenergy.com.

Operating review

Overview

During the period under review Genel Energy made significant operational progress across all areas of its business. Development plans to increase production capacity at our key producing assets Taq Taq and Tawke are on track and material progress has been made in developing and commercialising the highly prospective assets at Miran and Bina Bawi. In exploration, the Company announced major exploration success in the Kurdistan Region of Iraq ("KRI"). The high impact African exploration programme remains on track to commence in the fourth quarter of 2013.

Revenue for the first half of 2013 of $160.6 million was in line with guidance resulting in operating cash flow of $181.3 million and a profit before tax of $109.1 million. Capital expenditure of $270.1 million in the first half included $222.1 million in the KRI which was funded broadly from operating cash flow.  As of 30 June 2013 the Company had net cash of $867 million.

Politics and Infrastructure

During the first half of 2013 there has been further positive political momentum surrounding the KRI oil and gas industry.

On the ground, production capacity continues to grow and is expected to be more than 400,000 bopd by the end of 2013. In addition, the supermajors and major independent oil companies who have entered the region over the past 18 months, including Exxon, Chevron and Total, have consolidated their positions and are increasing their activity in the KRI.

The relationship between the KRI and Turkey has continued to deepen and culminated in the signing of an Energy Framework Agreement between Turkey and the Kurdistan Regional Government ("KRG") in March 2013. Since the signing of the Agreement there has been clear evidence of its implementation:

·      Independent exports of KRI crude oil commenced by truck to the Mediterranean coast in Turkey where the crude is sold by the KRG on the international market;

·      A Turkish state-backed energy company entered the upstream market in the KRI, signing 6 PSCs with the KRG and partnering with Exxon in a number of licences

·      Significant progress has been made on the independent KRI export infrastructure to Turkey

·      Turkey and the KRG have agreed a framework for the export of KRI gas to the Turkish gas market

Pipeline Update

Significant progress has been made on the independent KRI pipeline infrastructure to Turkey which is expected to be completed in the last quarter of this year. The first phase from the Taq Taq field to Khurmala is now operational. The pipeline has an initial capacity of 150,000 bopd and has the potential to be increased to some 200,000 bopd. The second phase involves the conversion to an oil pipeline of a pipeline from Khurmala to Dohuk, which was originally intended for gas. This will have an initial capacity of 300,000 bopd and the conversion is now complete. The final phase is a pipeline from Dohuk to Fishkabur on the Turkish border. This is under construction and expected to be completed in the fourth quarter of 2013.

Production operations

Genel Energy's net working interest production for the first half of the year averaged 41,500 bopd, compared to 39,000 bopd in the corresponding period in 2012. During the first half production from Genel Energy's two producing assets, Taq Taq and Tawke, has been sold principally into the domestic market with some exports via Turkey from Taq Taq by truck. Sales volumes into the domestic market were lower in the first quarter due to both lower demand during the Navruz or New Year holiday in March, and the Company's policy to prioritise revenues from domestic sales rather than volumes. However, domestic volumes resumed at higher levels in the second quarter and working interest production since May has averaged over 50,000 bopd. Domestic market price realisation has been strong throughout the period with average prices of c.$70/bbl at Taq Taq and c.$60/bbl at Tawke.

On 7 January 2013, Genel Energy received permission from the KRG to export crude oil from Taq Taq into Turkey by truck. Initially volumes were small but they have increased through the period to current levels of c.30,000 - 40,000 bopd and the Company expects exports to remain at this level for the rest of the year. These crude oil cargos from the KRI are sold on the international market by the KRG at Mersin in Turkey. Genel is receiving payment in full for its entitlement under its Taq Taq PSC for these exports, realising c$75/bbl after transportation costs.  

For the rest of 2013, it is likely production will continue to be sold into the domestic market as well as exported by truck from Taq Taq to Turkey before the completion of the independent KRI export pipeline in the fourth quarter. As a result, average daily production guidance for the year is unchanged at 45,000 - 55,000 bopd, generating sales revenue of $300 - $400 million.

Taq Taq (44% working interest, Joint Operator)

Gross production from the Taq Taq field has averaged 78,000 bopd in the first half of 2013 compared to 66,000 bopd in the same period in 2012. During the period the Company has continued to progress the appraisal and development programme. Gross production capacity is currently 120,000 bopd and remains on track to deliver production capacity of 200,000 bopd in 2014.

Facility and infrastructure upgrades on Taq Taq are on-going. These include the construction of the second phase of the central processing facility which is being carried out by Ventech USA. It is planned to be operational by the middle of 2014, adding an additional 90,000 bopd processing capacity. In addition, the expansion of the truck loading facility will be complete in the fourth quarter of 2013, taking truck loading capacity from 120,000 bopd to 150,000 bopd.

Field development drilling has continued in the period. Taq Taq 18 reached target depth in January 2013. It initially flowed at 13,000 bopd and has been bought on production. The Company intends to drill an additional two development wells during the second half of 2013, the first of which Taq Taq 21 reached target depth in May and is being tested. Taq Taq 20 has spudded and is drilling on schedule. The first horizontal well on Taq Taq is intended to spud towards the end of the year.

Tawke (25% working interest)

Gross production from the Tawke field has averaged 29,000 bopd in the first half of 2013 compared with 39,000 bopd in the same period of 2012 when the export markets were available for some of the period. Production was lower than anticipated due to a 17 day maintenance shutdown of the Tawke refinery in January and reduced sales to the domestic market in March due to the Navruz or New Year holiday. Production volumes have increased since April leading to an increase in average production for the second quarter to 39,000 bopd from 18,000 bopd in the first quarter. Genel Energy and DNO International ("DNO") continue to progress the development and appraisal programme and have committed to increase production capacity from the current capacity of 100,000 bopd to 200,000 bopd by the end of 2014.

Field development drilling has continued in the period. Tawke 20, which was the first horizontal well in the Tawke field and the first well of a six development well drilling programme for 2013, completed in the first half and has been put on production at a record production rate of 25,000 bopd. This compares to the most productive vertical well in the Tawke field which flows at an average rate of 10,000 bopd. A second horizontal well Tawke 23 is drilling on schedule and preparations are underway to spud a third horizontal well, Tawke 21.

Appraisal and Development

Miran (100% working interest, Operator)

The appraisal programme for the Miran West oil and gas discovery continued throughout the first half.

An Extended Well Test ("EWT") on the oil-bearing Upper Cretaceous reservoirs was completed in the first quarter and produced up to 3,000 bopd. An early production facility ("EPF") is now under development and will be commissioned during the third quarter to provide a more permanent production facility for Miran oil going forward with production of 2,000 bopd for the first well. Production is expected to ramp up as additional wells come on line in 2014 and beyond.

Miran is a significant gas field with recoverable gas resources of 3.8 tcf. Multiple elements of the development have been progressed during the year. The Miran West 5 well was spudded on 4 July and will reach target depth in the fourth quarter.  An EWT will be conducted on this well to provide more detailed information on field productivity and to test the Gas Water Contact for the field.  Front End Engineering and Design ("FEED") work being carried out by Petrofac has been completed and has provided a basis of design, cost and schedule that confirm the economics of the Miran gas project.

As part of the KRG/Turkey March Energy Framework Agreement, heads of terms have been agreed between the KRG and the Turkish Government for the sale of 10 bcma to Turkey.  Negotiations are envisaged to continue through the remainder of the year with the agreement of a final GSA by the end of 2013. Final Investment Decision will follow completion of the GSA.

Bina Bawi (44% working interest)

As previously announced an EWT from the Bina Bawi 3 well commenced production in March.  A Declaration of Commerciality was submitted to the Ministry of Natural Resources of the KRG in March and a Field Development plan will be submitted in the second half of 2013.

The Bina Bawi field appraisal programme is on-going. During the second quarter, OMV the operator of the field has completed an extensive testing programme on the Bina Bawi 4 and Bina Bawi 5 appraisal wells. 

Drill Stem Tests ("DSTs"), together with Modular formation Dynamics Tester ("MDT") results, have confirmed a continuous, hydraulically connected gas column in excess of 1,100 metres in both wells. The top Kurra Chine formation in these two wells is 400 metres down dip from the crest, confirming a minimum gas column of 1,500 metres on the structure. There is potential for up to an additional 500 metres of hydrocarbon column, below the basal test in Bina Bawi 4 down to the structural spill point. DSTs have been completed over the full extent of the drilled Triassic section, including the Geli Khana and across the entire Kurra Chine section. Observed productivity has been high over perforated zones of 30 to 60 metres.  Across the Kurra Chine, rates of around 20 mmscfd were recorded in 3 separate zones with the highest achieved rate limited by tubing and surface test equipment. In the Permian Triassic Geli Khana, a non-acidized stabilised flow rate of 10 mmscfd was achieved. Based on the latest test results, gross mean recoverable gas resources (excluding H₂S and other inerts)  are now estimated at 4.4 tcf with an upside potential of 7.7 tcf (equivalent to 750 mmboe or 1.3 bn boe respectively).

Taken together, Miran and Bina Bawi represent a world class gas position with mean gross recoverable resources estimated at 8 tcf with upside to 14 tcf between the 2 fields, excluding additional exploration potential in the deeper Miran horizons.  This resource provides a strong foundation to build a highly attractive gas business for the long term, supplying the rapidly growing Turkish markets and also providing some smaller, high return investment opportunities to supply gas in the KRI. As the gas business matures and at the appropriate time, Genel will look to bring in a new partner, reducing the Company's interest in Miran to bring in additional financial flexibility and complementary skills and experience.

Dohuk Summail (40% working interest)

The Summail-1 well, completed at the end of 2011, discovered gas in the Cretaceous formations.  During the first half of 2013, a development concept has been finalised for the production of up to 120 mmscfd of gas for sale to the existing Dohuk Power Plant.  A detailed term sheet has now been agreed between the operator DNO, Genel and the KRG and we expect to enter into a fully termed Gas Sales Agreement and take the Final Investment Decision for the project in the third quarter of 2013. First gas sales are forecast to begin in early 2014.

Exploration

Kurdistan

At the start of the year, the Company commenced an exploration programme in the KRI of five high impact wells to be drilled during 2013, targeting over c.1.0 bn boe of gross unrisked resource potential. During the first half Genel Energy has announced a number of material exploration successes in the KRI; with a significant new oil discovery on the Chia Surkh field and commercial discoveries at both Ber Bahr and at Tawke Deep. Two further wells at Taq Taq Deep and Chia Surkh have spudded and preparations are underway to spud an exploration well on Miran early in 2014.

Chia Surkh (60% working interest, Operator)

On 10 April, Genel Energy announced a significant new oil discovery on the Chia Surkh field. Chia Surkh 10 ("CS 10") was drilled to a depth of 1,696 metres in the Oligo-Miocene section, and, in tests extending over several days, flowed at up to 11,950 barrels of oil a day and 15 million cubic feet of gas. The oil was 41 degrees API and well-head flow pressure 2,000 pounds per square inch. A second drill-stem test carried out over a 12 metre zone in the Miocene section flowed at sustained rates of 3,200 barrels of oil a day and 8.4 million cubic feet of gas. The oil was 38 degrees API and well-head flow pressure 2,550 pounds per square inch. CS 10 has now been suspended as a future producer.

Successful completion of the testing of CS 10 with excellent flow rates has confirmed the presence of a substantial new discovery. The first appraisal well on the Chia Surkh structure CS 11 has been drilled 5km to the north west of CS 10 and c.75 m down dip on the structure. It penetrated a gross hydrocarbon column of c.170 metres without encountering the oil-water contact. Logging operations are currently being completed prior to testing. Based on the available data the likely recoverable reserves are now estimated to be between c.250 - 500 mmbbls. .  A 310 km² 3D seismic survey is planned to be acquired in the second half of the year with further appraisal wells to be drilled.  An early production scheme is expected to commence in the course of 2014. Significant additional exploration upside potential exists in the Chia Surkh licence with the Qalami and Barda Sur prospects.

Tawke Deep (25% working interest)

The Tawke Deep well (Tawke 17) was drilled to a depth of 4,775 metres and in one test flowed 1,500 bopd of 26-28 degree API crude oil from an Upper Jurassic reservoir 200 metres below the producing Cretaceous reservoir in the field.  Based on this result and continued appraisal and development drilling success, DNO believes that recoverable reserves at Tawke are now 1 bn bbls.

Ber Bahr (40% working interest, Operator)

In May, the Company announced that a successful side track of the original Ber Bahr 1 exploration well confirmed the existence of a commercial oil discovery. In several tests, conducted over a period of days, a sustainable flow rate of 2100 STB/ day of 15 degree API oil was achieved from the Middle Jurassic age Sargelu Formation. The recoverable reserve number for the discovery is currently estimated to be between 50 and 100 mmbbls. Appraisal plans include shooting 160 km2 of 3D seismic in the third quarter of 2013 followed by an appraisal well (Ber Bahr 2) in early 2014. Early oil production is expected to begin from the middle of 2014.

Taq Taq Deep (44% working interest, Joint Operator) 

The Taq Taq Deep well (Taq Taq 22) spudded on 27 March and will test the Jurassic and Triassic reservoirs in the Taq Taq structure at a target depth of c.5,400 metres.  A well drilled in the mid-1970s on Taq Taq tested gas from the Jurassic/Triassic interval. The pre-drill gross un-risked resource estimate is c.250 mmboe. Results for the well are expected in the fourth quarter of 2013.

Miran (100% working interest, Operator)

Testing of the Miran East 1 exploration well which was drilled on the eastern limb of the existing discovery, was completed in the second quarter of 2013. The well was drilled to evaluate Cretaceous, Jurassic and Triassic reservoirs which are known to be hydrocarbon bearing in the western structure. Hydrocarbons were not recovered from the shallower Cretaceous horizon. Operational difficulties precluded a full evaluation of the deeper Jurassic horizons. The well has been suspended for a later side-track to test this horizon in a more optimal structural location.

Since becoming operator of the Miran Block, new evaluation of the broader resource potential of the block has identified additional exploration opportunities in the deeper horizons with significant resource upside potential.  Further work to evaluate these opportunities and to define an appropriate exploration programme is on-going. It is expected that a deep well to target Triassic and Permian reservoirs on Miran will spud in the first half of 2014.

Africa

Work programmes have continued across all of the blocks in Genel Energy's high impact African exploration portfolio. The Company is preparing for a minimum two year drilling campaign commencing late 2013 targeting 3.3 bn boe of net unrisked prospective resource. In May a contract was signed with Noble Corporation to secure a deep water, semi-submersible rig to deliver a 2 year offshore drilling programme. This programme is designed to deliver a high impact drilling campaign in Morocco and Malta, starting in the fourth quarter of 2013.  In addition, preparations are underway for  a four well drilling programme for onshore Somaliland, commencing mid 2014. Genel Energy intends to publish a Competent Person's Report covering Morocco and Malta in the second half of the year.

As well as progressing our work programmes across our existing portfolio, Genel Energy continues to seek to acquire further material equity positions in high quality exploration opportunities where the Company can obtain a sufficient depth of exposure to hydrocarbon basins targeting more than 250 mmbbls of gross recoverable reserves.

Morocco

On Juby Maritime, the operator Cairn Energy PLC completed the acquisition of 680km2 of 3D seismic targeting exploration prospects close to the existing discoveries of light and heavy oil in the Jurassic carbonate reservoirs. Preparations continue to drill the first well on the Cap Juby discovery in the fourth quarter of 2013, targeting 250 mmboe gross unrisked prospective resource with a POS of 33 % (Genel estimate).

The seismic vessel used at Juby Maritime moved to Mir Left and acquired 1,200km2 of 3D seismic in Q1 2013. On Sidi Moussa, the reprocessing of existing 3D seismic is on-going.

Malta

Preparations for the drilling of the first well in Area 4 (Hagar Qim) are progressing. A service order has been signed with AGR Well Management Limited for the provision of drilling engineering and rig procurement support, with drilling scheduled to commence early in the first quarter of 2014, targeting 250 mmboe gross unrisked prospective resource with a POS of 20% (Genel estimate).

Somaliland

Gravity and aeromag has been acquired and interpreted over the entire 40,000 km2 acreage. A seismic programme for a 4,000 km line of 2D seismic is underway with drilling scheduled to commence in mid-2014.

Outlook

Genel Energy is set for a further period of strong operational progress over the rest of 2013. The development programmes at Taq Taq and Tawke to build production capacity are on track. The appraisal programmes at Miran and Bina Bawi will continue with early oil development underway at both fields. In addition, following the agreement of the heads of terms for gas sales from the KRI to Turkey, signature of the first export gas sales agreement is targeted for the end of the year. In exploration, high impact drilling will continue in the KRI with results expected from Taq Taq Deep and Chia Surkh 11 and with Miran Deep expected to spud in 2014. In Africa, with the first well in Morocco, a high impact multi well exploration programme targeting 3.3 bn boe of net unrisked resource, will start in the fourth quarter of 2013, followed by Malta early in 2014.

As well as strong operational progress, the independent KRI export infrastructure is expected to complete by the end of 2013. Average net working interest production for the full year is expected to remain at c.45,000 - 55,000 bopd, with sales revenue guidance unchanged at c.$300-400million.

Finance review

Results¹ summary

	H1 2013	H1 2012
Revenue ($million)	160.6	123.1
Operating profit2 ($million)	107.0	17.8
Profit before tax2 ($million)	109.1	22.3
EPS (cents)	38.93	8.03
Cash flow from operating activities ($million)	181.3	82.4
Capex ($million)	270.1	77.0
Free cash flow3 ($million)	(88.8)	5.4
Net cash ($million)	867.1	1,829.7
Net assets ($million)	4,029.0	3,866.2

¹ Results are from continuing operations and are unaudited

² Includes a one-off benefit of $54.5 million following a change in the basis of the depreciation charge in respect of Oil and Gas assets with effect from 1 January 2013

³ Free cash flow is cash flow from operating activities less capital expenditure

Results for the period

For the six months ended 30 June 2013, the Group reported revenue of $160.6 million (2012: $123.1 million), an operating profit of $107.0 million (2012: $17.8 million) and earnings per share of 38.93 cents (2012: 8.03 cents). Free cash flow for the period was an outflow of $88.8 million compared to an inflow of $5.4 million in 2012.

Revenue

Revenue of $160.6 million (2012: $123.1 million) is comprised of petroleum sales in the Kurdistan Region of Iraq and exports to Turkey.

Operating costs

Cost of sales of $61.8 million (2012: $86.5 million) includes depletion and depreciation charges of $45.5 million (2012: $67.4 million) and production costs of $16.3 million (2012: $19.1 million). The basis of the depreciation charge was changed this year in order to depreciate the cost of assets based on physical production volumes rather than derive depletion from revenue. Had the basis remained the same as prior years, the charge for the first half would have been $54.5 million higher at $100.0 million (see notes 2 and 4 in the notes to the condensed consolidated financial statements for further details).

Exploration expenses in the half year represent the reversal of a $22.2 million provision for impairment made in 2012 following encouraging results for the sidetrack work on the Ber Bahr licence.

Other operating costs amounted to $14.0 million (2012: $18.8 million) for the period and included $2.8 million (2012: $9.7 million) of costs relating to acquisitions and pre-licence activity, with the remaining $11.2 million (2012: $9.1 million) classified as general administration costs.

Finance income

Finance income of $2.1 million (2012: $4.5 million) represents principally interest income received on cash and loan balances.

Taxation

All corporation tax due has been paid on behalf of the Company by the KRG from the KRG's own share of revenues and there is no tax payment required or expected to be made by the Company. 

Dividend

No interim dividend will be paid (2012: nil) or is expected to be paid in the near future.  

Capital expenditure

Capital expenditure in the first half amounted to $270.1 million (2012: $77.0 million). Exploration spend in KRI amounted to $162.8 million (2012: $45.5 million) with a further $59.3 million (2012: $30.6 million) incurred on the development of existing producing assets in KRI. Capital expenditure on our recently acquired licences in Morocco, Somaliland, Côte d'lvoire and Malta was $45.2 million (2012: nil).

Based on current plans, capital expenditure for 2013 is now forecast to increase to c.$500-$550 million, principally as a result of successful appraisal well testing at Bina Bawi and accelerated development of the Miran oil business and Dohuk.

Cash flow

Relatively low production costs and receipts in advance of oil sales pushed net cash inflow from operations $20.7 million above revenue at $181.3 million (2012: $82.4 million) and after capex of $270.1 million (2012: $77.0 million) produced a free cash out flow of $88.8 million (2012: in flow of $5.4 million). Acquisition and other cash flows amounted to $45.4 million (2012: $88.6 million) leaving a total net cash outflow of $134.2 million (2012: $83.2 million).The net cash balance at the end of the period was $867.1 million (2012: $1,829.7 million).

Net cash

At 30 June 2013, the group had a net cash balance of $867.1 million (2012: $1,829.7 million). Cash at the 31 December 2012 was $1,001.3 million.

Acquisitions

The Group spent a total of $43.0 million on acquisitions in the first half of 2013, $30 million of which represented the previously announced payment to the KRG in respect of the Miran transaction, which completed on 23 January 2013. In February the Company acquired a 75% stake in a block offshore Malta through the acquisition of 75% of the share capital of Phoenicia Energy Company Limited for $11.7 million. In March the Group acquired a 60% working interest in the Sidi Moussa licence in Morocco for $1.3 million.

Net assets

Net assets at 30 June 2013 amounted to $4,029.0 million.

Going Concern

The Directors have assessed that the cash balance held provides the Group with adequate headroom over forecast operational and potential acquisition expenditure for at least 12 months following the signing of the half year financial statements for the period ended 30 June 2013 for the Group to be considered a going concern.

Principal risks and uncertainties

The Group is exposed to a variety of risks and uncertainties, principal amongst them being  commercial risks, political risks, HSSE risks and legal and regulatory risks.

The half year financial report does not include details of the principal risks and uncertainties required in the annual financial statements; the half year financial report should be read in conjunction with the Group's annual financial statements for the period ended 31 December 2012. A detailed explanation of the principal risks and uncertainties can be found on pages 48 and 49 of the Annual Report for the period ended 31 December 2012. There have been no significant changes in any of the principal risks and uncertainties since year end.

Responsibility statement of the directors

The Directors confirm that these condensed half year consolidated financial statements have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union and that the half year management report includes a fair view of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

·      an indication of important events that have occurred during the six months ended 30 June 2013 and their impact on the condensed half year consolidated financial statements, and a description of the principal risks and uncertainties for the remaining period of the financial year; and

·      material related-party transactions in the six months ended 30 June 2013 and any material changes in the related-party transactions described in the last annual report.

The Directors of Genel Energy plc are listed in the Genel Energy Annual Report and Accounts for 31 December 2012. A List of the current Directors is maintained on the Genel Energy plc website: www.genelenergy.com

By Order of the Board

Tony Hayward

CEO

30 July 2013

Disclaimer

This announcement contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil & gas exploration and production business. Whilst the Company believes the expectations reflected herein to be reasonable in light of the information available to them at this time, the actual outcome may be materially different owing to factors beyond the Company's control or within the Company's control where, for example, the Company decides on a change of plan or strategy. Accordingly no reliance may be placed on the figures contained in such forward looking statements.

Condensed consolidated statement of comprehensive income

	Notes	6 months to 30 June 2013	6 months to 30 June 2012	Year to 31 December 2012
		$m	$m	$m
Revenue	3	160.6	123.1	333.4
Cost of sales	4	(61.8)	(86.5)	(208.4)
Gross profit		98.8	36.6	125.0
Exploration credit / (expense)	5	22.2	-	(29.7)
Other operating costs	6	(14.0)	(18.8)	(35.0)
Operating profit		107.0	17.8	60.3
Finance income	7	2.1	4.5	15.6
Profit before income tax		109.1	22.3	75.9
Income tax expense	8	-	-	-
Profit for the period		109.1	22.3	75.9
Other comprehensive items		-	-	-
Total comprehensive income for the period		109.1	22.3	75.9
Attributable to:
Equity holders of the Company		109.1	22.3	75.9
		109.1	22.3	75.9
Earnings per ordinary share attributable to the ordinary equity holders of the Company
Basic earnings per share - cents per share	9	38.93	8.03	27.18
Diluted earnings per share - cents per share	9	38.71	8.02	27.12

Results are from continuing operations.

Condensed consolidated balance sheet

	Notes	At 30 June 2013	At 30 June 2012	At 31 December 2012
		$m	$m	$m
Assets
Non-current assets
Intangible assets	10	1,447.7	373.0	1,172.7
Property, plant and equipment	11	1,946.7	1,812.2	1,932.8
		3,394.4	2,185.2	3,105.5
Current assets
Inventories	12	0.1	0.1	0.1
Trade and other receivables	13	14.5	6.2	49.1
Cash and cash equivalents	14	867.1	1,829.7	1,001.3
		881.7	1,836.0	1,050.5
Total Assets		4,276.1	4,021.2	4,156.0
Liabilities
Non-current liabilities
Trade and other payables	15	-	-	(5.0)
Deferred income	16	(58.0)	(67.1)	(61.6)
Provisions	17	(15.3)	(10.6)	(13.2)
		(73.3)	(77.7)	(79.8)
Current liabilities
Trade and other payables	15	(166.5)	(71.9)	(149.0)
Deferred income	16	(7.3)	(5.4)	(7.1)
		(173.8)	(77.3)	(156.1)
Total liabilities		(247.1)	(155.0)	(235.9)
Net assets		4,029.0	3,866.2	3,920.1
Equity attributable to equity holders of the parent
Share capital	18	43.8	43.8	43.8
Share premium account		4,074.2	4,074.2	4,074.2
Retained earnings		(96.8)	(259.6)	(205.7)
Total shareholders' equity		4,021.2	3,858.4	3,912.3
Non-controlling interest		7.8	7.8	7.8
Total equity		4,029.0	3,866.2	3,920.1

Condensed consolidated statement of changes in equity

	Share capital	Share premium	Retained earnings	Total attributable to equity holders	Non-controlling interest	Total equity
	$m	$m	$m	$m	$m	$m
At 1 January  2013	43.8	4,074.2	(205.7)	3,912.3	7.8	3,920.1
Comprehensive income for the period	-	-	109.1	109.1	-	109.1
Transactions with shareholders:
Share-based payment transactions	-	-	2.2	2.2	-	2.2
Purchase of own shares for ESOP1	-	-	(2.4)	(2.4)	-	(2.4)
At 30 June 2013	43.8	4,074.2	(96.8)	4,021.2	7.8	4,029.0
At 1 January  2012	40.9	3,824.2	(54.6)	3,810.5	31.3	3,841.8
Comprehensive income for the period	-	-	22.3	22.3	-	22.3
Transactions with shareholders:
Issue of Founder Shares (note 18)	2.9	250.0	(229.4)	23.5	(23.5)	-
Share-based payment transactions	-	-	2.1	2.1	-	2.1
At 30 June 2012	43.8	4,074.2	(259.6)	3,858.4	7.8	3,866.2
At 1 January 2012	40.9	3,824.2	(54.6)	3,810.5	31.3	3,841.8
Comprehensive income for the period	-	-	75.9	75.9	-	75.9
Transactions with shareholders:
Issue of founder shares	2.9	250.0	(229.4)	23.5	(23.5)	-
Share-based payment transactions	-	-	3.6	3.6	-	3.6
Purchase of own shares for ESOP1			(1.2)	(1.2)	-	(1.2)
At 31 December 2012	43.8	4.074.2	(205.7)	3,912.3	7.8	3,920.1

¹ Purchase of shares in the market to be used to satisfy the Company's commitments under various Employee Share Plans

Condensed consolidated cash flow statement

	Notes	6 months to 30 June 2013	6 months to 30 June 2012	Year to 31 December 2012
		$m	$m	$m
Cash flows from operating activities
Cash generated from operations	19	175.7	78.7	293.9
Interest received		5.6	3.7	13.1
Net cash from operating activities		181.3	82.4	307.0
Cash flows from investing activities
Purchase of property, plant and equipment		(59.9)	(31.4)	(76.6)
Purchase of intangible assets		(210.2)	(45.6)	(156.9)
Acquisition of businesses and licences	20	(43.0)	(88.6)	(984.0)
Net cash from investing activities		(313.1)	(165.6)	(1,217.5)
Cash flows from financing activities
Net proceeds from the issue of share capital		-	-	0.1
Purchase of ESOP shares		(2.4)	-	(1.2)
Net cash from financing activities		(2.4)	-	(1.1)
Net decrease in cash and cash equivalents		(134.2)	(83.2)	(911.6)
Cash and cash equivalents at the beginning of the period		1,001.3	1,912.9	1,912.9
Cash and cash equivalents at period end	14	867.1	1,829.7	1,001.3

 

 

Notes to the condensed consolidated financial statements

1. Basis of preparation

The company is a public limited company incorporated and domiciled in Jersey with a listing on the London Stock Exchange.

The address of its registered office is 12 Castle Street, St Helier, Jersey, JE2 3RT.

The half year condensed consolidated financial statements for the six months ended 30 June 2013 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union and were approved for issue on 31 July 2013. They do not comprise statutory accounts within the meaning of Article 105 of the Companies (Jersey) Law 1991.

The half year condensed consolidated financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2012, which have been prepared in accordance with IFRS as adopted by the European Union. The annual financial statements for the period ended 31 December 2012 were approved by the board of directors on 27 February 2013. The report of the auditors was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under the Companies (Jersey) Law 1991.

The Directors have, at the time of approving the half year condensed consolidated financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, the Group continues to adopt the going concern basis of accounting in preparing the half year condensed consolidated financial statements.

The interim financial information for the six months to 30 June 2013 and six months to 30 June 2012 is unaudited. The financial information for the year to 31 December 2012 has been extracted from the audited accounts.

2. Accounting Policies

The accounting policies adopted in preparation of the condensed half year consolidated financial statements are consistent with those used in preparation of the annual financial statements for the year ended 31 December 2012.

The preparation of the half year condensed consolidated financial information for the half-year ended 30 June 2013 requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities at the date of the statement. If in the future such estimates and assumptions, which are based on management's best judgement at the date of the statement, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change.

In preparing these condensed half year consolidated financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were consistent with those applied to the consolidated financial statements for the period ended 31 December 2012, except for a change made to the basis used to calculate depreciation of the Company's oil and gas assets. The Company continues to use the unit of production method but now uses the Company's share of actual production as the basis for depreciation rather than deriving an estimate of the Company's share of production from revenue entitlement. The impact of the change is shown in note 4.

Significant seasonal or cyclical variations in the group's total revenues are not experienced during the financial year.

There are no new standards and amendments to standards as adopted by the European Union at 30 June 2013 which are mandatory for the first time for the financial year beginning 1 January 2013 and which have a significant impact on the group. A number of new standards, amendments to standards and interpretations will be effective for annual periods beginning after 1 July 2013. None of these standards have been early adopted. The new standards are not expected to have a significant effect on the consolidated financial statements of the Group.

Financial risk factors

The group's activities expose it to a variety of financial risks: credit risk, currency risk, interest risk and liquidity risk. The condensed half year consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the group's annual financial statements as at 31 December 2012. There have been no significant changes in any risk management policies since year end.

Notes to the condensed consolidated financial statements

 

3. Segmental information

The Group has two reportable business segments, which are its oil and gas exploration and production business in the KRI and its oil and gas exploration business in Africa. Capital expenditure decisions for the Kurdistan segment are considered in the context of the cash flows expected from the production and sale of crude oil. Capital expenditure for the Africa segment is considered in the context of the available cash of the Group.

 
Finance income is not considered part of a business segment and forms part of the reconciliation to the reported numbers.

6 Months to 30 June 2013

	Kurdistan	Africa	Other	Total Reported
	$m	$m	$m	$m
Revenue	160.6	-	-	160.6
Cost of sales	(61.8)	-	-	(61.8)
Gross profit	98.8	-	-	98.8
Exploration credit / (expense)	22.2	-	-	22.2
Other operating costs	(1.0)	-	(13.0)	(14.0)
Operating profit	120.0	-	(13.0)	107.0
Finance income				2.1
Profit before tax				109.1
Capital expenditure	222.1	45.2	2.8	270.1
Total assets	3,385.9	117.1	773.1	4,276.1
Total liabilities	(226.2)	(14.9)	(6.0)	(247.1)

6 Months to 30 June 2012

	Kurdistan	Africa	Other	Total Reported
	$m	$m	$m	$m
Revenue	123.1	-	-	123.1
Cost of sales	(86.5)	-	-	(86.5)
Gross profit	36.6	-	-	36.6
Exploration expense	-	-	-	-
Other operating costs			(18.8)	(18.8)
Operating profit	36.6	-	(18.8)	17.8
Finance income				4.5
Profit before tax				22.3
Capital expenditure	76.1	-	0.9	77.0
Total assets	2,246.2	-	1,775.0	4,021.2
Total liabilities	(144.0)	-	(11.0)	(155.0)

3. Segmental information (continued)

Year to 31 December 2012

	Kurdistan	Africa	Other	Total Reported
	$m	$m	$m	$m
Revenue	333.4	-	-	333.4
Cost of sales	(208.4)	-	-	(208.4)
Gross profit	125.0	-	-	125.0
Exploration expense	(29.7)	-	-	(29.7)
Other operating costs	(1.6)	-	(33.4)	(35.0)
Operating profit	93.7	-	(33.4)	60.3
Finance income				15.6
Profit before tax				75.9
Capital expenditure	216.9	12.0	4.6	233.5
Total assets	3,292.0	53.1	810.9	4,156.0
Total liabilities	(217.1)	(11.0)	(7.8)	(235.9)

4. Cost of sales

	6 months to 30 June 2013	6 months to 30 June 2012	Year to 31 December 2012
	$m	$m	$m
Depreciation, depletion and amortisation of oil and gas assets	45.5	67.4	168.4
Production costs	16.3	19.1	40.0
	61.8	86.5	208.4

The basis of the depreciation charge for oil and gas assets was changed in 2013, which is explained further in the Accounting Policies (note 2). Had the basis remained the same as used in prior years, the depreciation charge for the period would have been $54.5 million higher at $100.0 million.

5. Exploration expense

The $22.2 million exploration credit in 2013 represents the reversal of a provision for impairment made in 2012 following encouraging results for the sidetrack work on the Ber Bahr licence.

6. Other operating costs

	6 months to 30 June 2013	6 months to 30 June 2012	Year to 31 December 2012
	$m	$m	$m
M & A activity and pre licence exploration costs	2.8	9.7	13.3
General and other costs	11.2	9.1	21.7
	14.0	18.8	35.0

7. Finance income 

	6 months to 30 June 2013	6 months to 30 June 2012	Year to 31 December 2012
	$m	$m	$m
Interest received on bank deposits	0.3	4.7	7.8
Interest on other loans	2.1	-	8.5
Interest unwind on provisions	(0.3)	(0.2)	(0.7)
	2.1	4.5	15.6

8. Taxation

All corporation tax due is paid on behalf of the Company by the KRG from the KRG's own share of revenues and there is no tax payment required or expected to be made by the Company. The tax paid by the KRG in accordance with the terms of the PSCs would usually be presented as a gross up of revenue and a corresponding taxation expense in the income statement with no cash out flow. In the Company's results for the periods ended 30 June 2013, 30 June 2012 and 31 December 2012, no presentation of taxation expense with an equivalent gross up for revenue has been accounted for because it has not been possible to measure reliably the amount of taxation paid on behalf of the Company because of uncertainties over how the amount of taxation should be calculated. This is an accounting presentational issue and there is no taxation to be paid. For the same reason, it has not been possible to assess whether it is necessary to gross up the acquired assets for deferred tax.

9. Earnings per share

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of shares in issue during the period.

	6 months to 30 June 2013	6 months to 30 June 2012	Year to 31 December 2012
Profit for the period attributable to equity holders of the company - $ million	109.1	22.3	75.9
Weighted average number of Ordinary Shares - number	280,248,198	277,973,731	279,117,179
Basic earnings per share - cents per share	38.93	8.03	27.18

Diluted

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to include all potential dilutive ordinary shares. The group has four types of potential dilutive ordinary shares:

-  Shares granted to Directors and employees under the Performance Share Plan, to the extent that performance conditions have been met at the period end;

-  Share options granted to employees under the Share Option Plan, where the exercise price is less than the market price of the Company's Ordinary Shares at the period end

- Shares issued to employees under the Restricted Share Plan

- Shares and securities issued to the Founders of the Company, to the extent that performance conditions have been met at the period end.

	6 months to 30 June 2013	6 months to 30 June 2012	Year to 31 December 2012
Profit for the period attributable to equity holders of the company - $ million	109.1	22.3	75.9
Weighted average number of Ordinary Shares - number	280,248,198	277,973,731	279,117,179
Adjustment for performance shares, restricted shares, share options and founder shares and securities - number	1,556,391	352,157	610,253
Weighted average number of Ordinary Shares for diluted earnings per share - number	281,804,589	278,325,888	279,727,432
Diluted earnings per share - cents per share	38.71	8.02	27.12

10. Intangible assets

	Exploration and evaluation assets	Miran Acquisition	Other assets	Total
	$m	$m	$m	$m
Cost
At 1 January 2013	720.8	472.6	1.9	1,195.3
Acquisitions	515.6	(472.6)	-	43.0
Additions	208.1	-	2.1	210.2
Balance at 30 June 2013	1,444.5	-	4.0	1,448.5
At 1 January 2012	227.6	-	0.1	227.7
Acquisitions	99.7	-	-	99.7
Additions	45.5	-	0.1	45.6
Balance at 30 June 2012	372.8	-	0.2	373.0
At 1 January 2012	227.6	-	0.1	227.7
Acquisitions	532.1	463.0	-	995.1
Additions	145.5	9.6	1.8	156.9
Transfer to property, plant and equipment (note 11)	(176.9)	-	-	(176.9)
Write-off of exploration costs	(7.5)	-	-	(7.5)
Balance at 31 December 2012	720.8	472.6	1.9	1,195.3
Depreciation and impairment
At 1 January 2013	22.2	-	0.4	22.6
Depreciation charge for the period	-	-	0.4	0.4
Provision for write-off of exploration costs (note 5)	(22.2)	-	-	(22.2)
At 30 June 2013	-	-	0.8	0.8
At 1 January 2012	-	-	-	-
Depreciation charge for the period	-	-	-	-
Provision for write-off of exploration costs	-	-	-	-
At 31 June 2012	-	-	-	-
At 1 January 2012	-	-	-	-
Depreciation charge for the period	-	-	0.4	0.4
Provision for write-off of exploration costs (note 5)	22.2	-	-	22.2
At 31 December 2012	22.2	-	0.4	22.6
Net book value
At 30 June 2013	1,444.5	-	3.2	1,447.7
At 30 June 2012	372.8	-	0.2	373.0
At 31 December 2012	698.6	472.6	1.5	1,172.7
At 31 December 2011	227.6	-	0.1	227.7

Exploration and evaluation assets are comprised of the Company's exploration assets in the Kurdistan Region of Iraq and Africa. Exploration and evaluation assets are not amortised but are assessed for impairment indicators under IFRS 6.

In 2012, the Group acquired an additional 75% interest in the Miran PSC. This was not presented as an exploration and evaluation asset at 31 December 2012 because, although all parties had approved the transfer and the sale and purchase agreement had been signed, the deed of assignment was not formally signed by the KRG until January 2013 at which point it was recognised as an exploration asset.

The net book value of $3.2 million (2012: $0.2 million) of other assets is principally comprised of capitalised software.

11. Property, plant and equipment

	Oil and gas assets	Other assets	Total
	$m	$m	$m
Cost
At 1 January 2013	2,115.4	5.1	2,120.5
Additions	59.3	0.6	59.9
At 30 June 2013	2,174.7	5.7	2,180.4
At 1 January 2012	1,859.3	7.7	1,867.0
Additions	30.6	0.8	31.4
Reclassified	5.5	(5.5)	-
At 30 June 2012	1,895.4	3.0	1.898.4
At 1 January 2012	1,859.3	7.7	1,867.0
Additions	73.7	2.9	76.6
Transfer from intangible assets (note 10)	176.9	-	176.9
Reclassified	5.5	(5.5)	-
At 31 December 2012	2,115.4	5.1	2,120.5
Depreciation and impairment
At 1 January 2013	186.7	1.0	187.7
Depreciation charge for the period	45.5	0.5	46.0
At 30 June 2013	232.2	1.5	233.7
At 1 January 2012	18.3	0.3	18.6
Depreciation charge for the period	67.4	0.2	67.6
At 30 June 2012	85.7	0.5	86.2
At 1 January 2012	18.3	0.3	18.6
Depreciation charge for the period	168.4	0.7	169.1
At 31 December 2012	186.7	1.0	187.7
Net book value
At 30 June 2013	1,942.5	4.2	1,946.7
At 30 June 2012	1,809.7	2.5	1,812.2
At 31 December 2012	1,928.7	4.1	1,932.8
At 31 December 2011	1,841.0	7.4	1,848.4

Oil and gas assets comprise principally the group's share of interests in the Taq Taq and Tawke producing oil fields in the Kurdistan Region of Iraq. Other assets include leasehold improvements, office furniture and motor vehicles.  

12. Inventories

	At 30 June 2013	At 30 June 2012	At 31 December 2012
	$m	$m	$m
Crude oil inventory	0.1	0.1	0.1
	0.1	0.1	0.1

 

13. Trade and other receivables

	At 30 June 2013	At 30 June 2012	At 31 December 2012
	$m	$m	$m
Trade receivables	0.3	0.7	28.2
Other receivables	4.9	2.0	4.7
Prepayments	9.3	3.5	16.2
	14.5	6.2	49.1

 

14. Cash and cash equivalents

	At 30 June 2013	At 30 June 2012	At 31 December 2012
	$m	$m	$m
Cash and cash equivalents	867.1	1,829.7	1,001.3
	867.1	1,829.7	1,001.3

Cash includes the Company's share of cash held in its joint operations.

15. Trade and other payables

	At 30 June 2013	At 30 June 2012	At 31 December 2012
	$m	$m	$m
Trade payables	33.6	8.2	61.3
Deferred consideration	5.0	5.0	5.0
Other payables	24.1	12.6	1.0
Accruals	103.8	46.1	86.7
	166.5	71.9	154.0
Non-current	-	-	5.0
Current	166.5	71.9	149.0
	166.5	71.9	154.0

 

The fair value of financial assets and liabilities approximate their carrying value

16. Deferred income

	At 30 June 2013	At 30 June 2012	At 31 December 2012
	$m	$m	$m
Non-current	58.0	67.1	61.6
Current	7.3	5.4	7.1
	65.3	72.5	68.7

Deferred income is royalty income received in advance from the Group's partner for the Taq Taq PSC. The deferred income is recognised in the Statement of Comprehensive Income in a manner consistent with how the royalty income becomes due. Once the deferred income has been fully recognised, the joint operating partner will recommence cash payment for the royalty as it becomes due.

17. Provisions

	At 30 June 2013	At 30 June 2012	At 31 December 2012
	$m	$m	$m
Opening balance	13.2	9.4	9.4
Interest unwind	0.3	0.2	0.7
Additions	1.8	1.0	3.1
Closing balance	15.3	10.6	13.2
Non-current	15.3	10.6	13.2
Current	-	-	-
	15.3	10.6	13.2

Non-current provisions cover expected decommissioning and abandonment costs resulting from the net ownership interests in petroleum and natural gas assets, including well sites and gathering systems. The fair value of a liability for a decommissioning and abandonment provisions is recognised in the period in which it is incurred.

The cash flows relating to the decommissioning and abandonment provisions are expected to occur between 2031 and 2039. The provision is the discounted present value of the cost, using existing technology at current prices of decommissioning of blocks in Iraq.

18. Share capital

	Suspended Voting  Ordinary shares	Voting Ordinary shares	Total  Ordinary Shares
In issue at 1 January 2013	66,511,519	213,736,679	280,248,198
Sale of 1,500,000 Ordinary Shares by an affiliated shareholder to a third party on 15 May 2013	(2,142,858)	2,142,858	-
Sale of 1,300,000 Ordinary Shares by an affiliated shareholder to a third party on 21 May 2013	(1,857,142)	1,857,142	-
In issue at 30 June 2013 - fully paid	62,511,519	217,736,679	280,248,198
In issue at 1 January 2012	74,647,156	186,617,888	261,265,044
Issue of 18,713,154 voting Ordinary Shares to Founders on exercise of option on 20 January 2012	(8,019,923)	26,733,077	18,713,154
Issue of 90,000 voting Ordinary Shares to Directors under Share Matching Award scheme on 2 April 2012	(38,572)	128,572	90,000
Issue of 180,000 voting Ordinary shares to Directors under Share Matching Award scheme on 22 June 2012	(77,142)	257,142	180,000
In issue at 30 June 2012  - fully paid	66,511,519	213,736,679	280,248,198
In issue at 1 January 2012	74,647,156	186,617,888	261,265,044
Issue of 18,713,154 Voting Ordinary Shares to Founders on exercise of option on 20 January 2012	(8,019,923)	26,733,077	18,713,154
Issue of 90,000 Voting Ordinary Shares to Directors under Share Matching Award scheme on 2 April 2012	(38,572)	128,572	90,000
Issue of 180,000 Voting Ordinary shares to Directors under Share Matching Award scheme on 22 June 2012	(77,142)	257,142	180,000
In issue at 31 December 2012  - fully paid	66,511,519	213,736,679	280,248,198

On 15 May 2013, 1,500,000 Ordinary Shares were transferred from an affiliated shareholder to a third party and on the same day converted a further 642,858 Suspended Voting Ordinary Shares to Voting Ordinary Shares in accordance with the terms of the Suspended Voting Ordinary Shares.

On 21 May 2013, 1,300,000 Ordinary Shares were transferred from an affiliated shareholder to a third party and on the same day converted a further 557,142 Suspended Voting Ordinary Shares to Voting Ordinary Shares in accordance with the terms of the Suspended Voting Ordinary Shares.

On 20 January 2012, the Company issued 18,713,154 Ordinary Shares when the Founders of the Company exercised their right to exchange their Founder Shares for Ordinary Shares in the Company. At the same time, the Company converted 8,019,923 Suspended Voting Ordinary Shares to Voting Ordinary Shares in accordance with the terms of the Suspended Voting Ordinary Shares. The transaction resulted in the removal of the non-controlling interest associated with the Founder Shares and the difference in value has been taken direct to reserves.

On 2 April 2012, the Company issued 90,000 Ordinary Shares to Non-Executive Directors under the Share Matching Award scheme and a further 180,000 on 22 June 2012. On the same dates, the Company converted 38,572 and 77,142 Suspended Voting Ordinary Shares to Voting Ordinary Shares in accordance with the terms of the Suspended Voting Ordinary Shares.

There have been no changes to the authorised share capital since it was determined to be 10,000,000,000 Ordinary Shares of £0.10 per share.

19. Cash generated from operating activities

	6 months to  June 2013	6 months to 30 June 2012	Year to 31 December 2012
	$m	$m	$m
Profit for the period	109.1	22.3	75.9
Adjustments for :
Finance income	(2.1)	(4.5)	(15.6)
Depletion, depreciation and amortisation	46.4	67.6	169.5
Write-off of exploration costs	-	-	7.5
Provision for write-off of exploration costs	(22.2)	-	22.2
Share based payments	2.2	2.1	3.6
Changes in working capital:
Trade and other receivables	34.5	8.0	(31.7)
Trade and other payables and provisions	7.8	(16.8)	62.5
Cash generated from operating activities	175.7	78.7	293.9

20. Acquisitions

	Phoenicia	Sidi Moussa	Miran	Total
	$m	$m	$m	$m
Exploration assets	11.7	1.3	30.0	43.0
	-	-
Total consideration and cash flow	11.7	1.3	30.0	43.0

On 28 February 2013, the Group completed the acquisition of a 75% stake in a block offshore Malta through the acquisition of 75% of the share capital of Phoenicia Energy Company Limited for $11.7 million. On 28 March 2013, the group acquired a 60% working interest in the Sidi Moussa licence in Morocco for $1.3 million. The Group completed the acquisition of the Miran PSC on 23 January 2013.

21. Commitments

As announced on 1 May 2013, the Group signed a drilling rig contract with Noble Corporation ("Noble") for its African offshore drilling programme. The rig will be used to deliver a high impact drilling campaign over a 2 year period committing the Group to c.$200 million, after taking into account our partners' share of costs.

Independent review report to Genel Energy plc

Introduction

We have been engaged by the Company to review the condensed consolidated financial statements in the half year financial report for the six months ended 30 June 2013, which comprises the condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows and related notes. We have read the other information contained in the half year financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated financial statements.

Directors' responsibilities

The half year financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half year Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated financial statements included in this Half Year Report have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated financial statements in the half year financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of the interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements in the half year financial report for the six months ended 30 June 2013 are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

1 Embankment Place

London

WC2N 6RH

31 July 2013

 

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