Genel Energy boss confident in ‘leaner’ company as Iraq pipeline closure sinks revenue

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Chief executive Paul Weir said his company's cash could double once the pipeline is turned back on
Chief executive Paul Weir said his company's cash could double once the pipeline is turned back on

The closure of the Iran-Turkey oil pipeline has hit another London-listed firm hard, as 2023 revenue at Genel Energy came in nearly 80 per cent lower year-on-year.

For the 12 month period ending 31 December 2023, the group posted revenue of $84.8 (£67m) against $401m (£316m) the year prior.

In March 2023, the Iraqi government declared ownership over the oil exports flowing from the Kurdistan region through Turkey, which at one point totalled around 450,000 crude barrels per day.

This meant producers using the pipeline to export their oil, such as fellow London-listed firm Gulf Keystone Petroleum, were left in the lurch, having to scramble for alternate sources of business.

Genel’s earnings before interest, tax, depreciation and amortisation (EBITDA) fell from $349m (£275m) to $32.8m (£25.9m), while cash flow dropped 86 per cent to $55m (£43.4m).

The group’s total debt improved to $248m (£196m) from $274m (£216.8m) the year prior, but net cash fell from $228m (£180.2m) to $119.7m (£94.6).

Genel Energy chief executive Paul Weir said the group could now “spring forward” after a year that provided a sound platform to start looking ahead to the future as a “leaner, simplified company”.

“We have continued the journey that we commenced in 2022 to, firstly, refocus the business on areas where it can be profitable and deliver shareholder value and, secondly, optimise the organisation to create a reshaped and resilient business with the potential for transformational value accretion through several catalysts,” he said.

Weir added that the re-opening of the pipeline has the potential to double cash generation, and over $107m (£84.5m) of “overdue receivables” would be used to acquire new assets.

Unfortunately for Genel and other Gulf oil producers, there is no sign the pipeline will resume operations in the coming months.

According to a Reuters report this week, protracted legal battles between Iraq and Turkey are likely to hamper the process for the foreseeable future.