Genel Energy plc

Good morning. Good morning, everybody.

My name is Paul Weir, as you've just heard, I'm the CEO of Genel Energy, and I'm joined as usual by our CFO, Luke Clements. Welcome to our 2025 results presentation.

We published our annual report and our full year results last week. And in my statements, then we broadly reiterated the key messages and guidance provided in our January trading statement.

Obviously, the big change since January is the security situation in the Middle East, which has resulted in our production effort being temporarily suspended on a precautionary basis since hostilities began almost 4 weeks ago. Understandably, the operator's priority since then has been the safety of its personnel.

Steps have been taken, however, to maintain a state of readiness for a prompt restart, but the security situation in the region remains very dynamic and very uncertain. The focus of this presentation then is not to provide you with the Middle East security update, which wouldn't likely add to the understanding you've already had from mainstream media.

Instead, we will take you through the key elements of the performance of the company in the last year, the current position of the business and the catalysts and priorities for '26. Luke and I will work through these slides.

I think there's 10 or 11 basically. We'll work through those fairly briskly, and then we will be very happy to take any questions that you submit during the course of the presentation.

We start with an overview of the business, and this slide pulls together some key metrics to outline the building blocks we now have in place. We ended the year with a daily average working interest production rate of around 17,500 barrels per day.

Net 2P reserves of 64 million barrels and a net cash position of $134 million. EBITDAX was $43 million.

Our barrels are low cost with a low emissions rate, well -- industry average target rate for 2025, which was 17 kilos per barrel and with world-class operating costs at around $4 a barrel. Even in a year that included significant production disruption at Tawke and continued domestic market pricing, the business has remained resilient, cash generative and well funded and with the potential for very significant value uplift.

The key building blocks for that significant value uplift are listed at the foot of this slide. The Tawke PSC, our world-class production asset generating material free cash flow even at domestic sales prices, a significant cash holding of more than $220 million at year-end and about the same right now, ready for deployment and a portfolio with significant organic upside potential from exports resuming, Tawke drilling resuming, Oman appraisal and Somaliland drilling, all of which supports our ultimate objective of getting back to a regular dividend in time.

Once we've established some geographical diversity and the further resilience that follows that diversification and repeatable cash. On to the next slide, please.

This slide sets out our strategy and strategic objectives in the way that we think about them every day. The 3 familiar boxes on this slide represent our objectives in simple terms, and I've spoken about many times before, so I won't dwell on them too much.

Firstly, maintaining a strong balance sheet; secondly, maximizing cash generation from the assets we have, which means investment in Tawke and resuming exports from Kurdistan. And finally, adding some new sources of cash flow in a disciplined and value-accretive manner.

That order matters, but we need to do a good job in all 3 of those areas if our eventual aim to return value directly to shareholders in a regular way. Let's move into the detail on the platform now.

The world-class characteristics of Tawke are well known, but 2025 again demonstrated the resilience of the combination of the assets and its operator, DNO. If you look at the production graph on the right-hand side of the slide, you can see quite clearly the effect of the drone attacks in Q3 of last year.

And thereafter, you can see just how quickly production was restored to a production rate at the [indiscernible] of the year of around 80,000 barrels a day. It's also worth noting that production in the months not impacted by the drone event was actually higher than the 2024 average despite no new wells contributing to that production rate.

Drilling restarted then in Q4 of '25. First Tawke well was spudded in December and immediately started delivering results.

A second good production well followed in the same month, but the 2026 drilling campaign for which 2 more rigs have been mobilized to site has now been suspended given the security situation. So today, we're in a position where both production operations and the drilling campaign are temporarily suspended, and we remain on standby until such times as the operator determines that it's safe to reestablish a full presence at site and resume activity.

We remain close to and very supportive of the operator on that. All that aside, when we talk about Tawke as a world-class asset, we mean 254 million barrels of gross 2P reserves, very low operating costs, low emissions, long reserve life and clear upside from drilling.

Right, I'm going to pass you on to Luke now for the next couple of slides.

Thank you, Paul. Good morning.

This slide provides the buildup of what we call production business netback. Production business netback is revenue less production asset spend.

That's both OpEx and CapEx, less G&A. It tells us what funding our business is generating and making available for capital allocation outside of the Tawke PSC.

And you can see that it has been double-digit millions for 2 years in a row now, having been negative in 2023 despite similar levels of revenue. So you can see that we've been working hard on our spend.

So what was the income side of that double-digit production business netback made up of last year? Firstly, while Brent averaged $69 a barrel in 2025, our realized price sold was $32 a barrel with all production sold domestically.

If we were exporting, we'd expect that realized price to be close to Brent. Secondly, working interest production averaged 17,500 barrels a day, lower year-on-year only because of the drone-related interruption in Q3 that Paul just mentioned.

And finally, EBITDAX of $43 million. You can see our underlying EBITDAX is back to more normal levels for domestic sales at around $35 million for the past 3 years now.

This underlying number excludes movement on arbitration cost accruals, which negatively impacted '24 and positively impacted '25. So the key point here is that the production business is now delivering consistent double-digit netback even at domestic sales pricing, while still funding all production activity and investment on the Tawke license and so building our balance sheet cash position and available funding.

That is the product of Tawke resilience and the discipline we've applied to the business since 2022 in simplifying the portfolio, stopping non-value accretive spend, exiting licenses and reducing cash G&A. Next slide, please.

This slide illustrates our balance sheet strength. We finished the year with $224 million of cash, the net cash of $134 million and gross debt of $92 million.

Our cash is about the same today as it was at the end of the year, so it's around $225 million. In April last year, we issued a new 5-year bond maturing in 2030, replacing the bond that had been due to mature in October 2025.

That issuance was oversubscribed, and we continue to see good support and appetite for our bonds. That issuance has reduced funding risk around delivery on our strategic objectives.

This remains a very underleveraged balance sheet with significant headroom to fund investment. That matters because the cash and capacity for further debt provide us with significant optionality.

We can fund the appropriate Tawke program, progress our organic growth assets and pursue value-accretive acquisitions without being forced into decisions by capital structure pressure. Next slide, please.

This slide shows our primary capital allocation options when we consider the best way to deliver shareholder value. Our first consideration is to maintain the strength of our balance sheet.

Then the best place to invest our capital, providing the instant significant returns is the Tawke PSC. Then we think about how best to diversify our cash generation.

All 3 building blocks have to be properly managed to establish a sustainable dividend. That means not every potential project will automatically be funded and not every acquisition opportunity will be pursued.

Every value creation opportunity has to compete with others within our strategic framework. The Board reviews capital allocation on an ongoing basis, and we take care to remain disciplined.

I'll hand back to Paul now to talk about our acquisition strategy.

Thank you, Luke. So look, we want to add resilient cash-generative production or near production assets that reduce our reliance on one asset in one geography.

We want something that complements what we already have and supports long-term shareholder value. During 2025, we were very active.

We originated, developed and actually bid on a number of opportunities. We were involved in bilateral discussions and in broader processes, too.

We've looked at opportunities within our current region and further afield. And to be entirely frank, although it's early days still, 2026 is already shaping up to be as active as 2025 was.

Having said all of that, there isn't an abundance of suitable opportunities, and there's a great deal of competition for the good ones that are available. So we continue to diligently scan the deal horizon.

We're trying to avoid being distracted by the current unsettling events. Patience and discipline are key.

Finally, on this, and again, as we've made clear in previous presentations, we will resist overpaying to get short-term positive market reaction only to find over time that the assets that we buy are unable to deliver the value that we need. We remain very confident that we will secure the right opportunity in time.

On to Oman then. On Block 54, the initial activity set did exactly what it needed to do.

The reentry and testing of the legacy Batha West-1 discovery well was completed safely ahead of time and under budget. That was a low cost and very useful first step in understanding the block better.

Our block is adjacent to the prolific Mukhaizna field, and we are targeting reservoirs that are proven in that neighboring field on another adjacent block, Block 4 and on legacy well logs from Block 54 itself. The immediate focus now is not to rush to a drilling location decision.

Instead, we will use the data from Batha West properly to reprocess existing seismic and to acquire new 3D seismic in the most efficient and cost-effective way that we can, so that the joint venture can identify the best locations for the 2 commitment wells that we will now drill on the block. That's the right technical sequence, and it's also the right capital allocation sequence.

And based on current planning, we expect those commitment wells to be drilled early in 2027. So Block 54 is exactly the kind of exactly the kind of organic opportunity that we like, modest initial capital outlay, a clear work program, data-led decision-making and meaningful upside if the subsurface case continues to strengthen.

And on Somaliland on the next slide. In Somaliland, the opportunity remains for a material discovered resource addition from our existing portfolio, and we've seen steady progress towards drilling the highly prospective Toosan-1 well.

Toosan-1 targets best estimate prospective resources of about 650 million barrels across multiple stacked reservoir objectives. As the first mover, the commercial terms are also very attractive, meaning that even a modest discovery would likely be commercial.

Of course, wherever we find logistically will benefit from proximity to the Berbera Deep Water Port on the Gulf of Aden. In terms of drilling preparedness, the majority of the civil engineering work is complete and most long lead items are already held in inventory, but we will remain quite measured in how we talk about this.

There's still work to do. That work is ongoing, and there is still a need for operational, commercial and geopolitical elements to all come together.

The key takeaway for today is one of continued progress towards drilling, while we continue to invest in the well-being of our host communities there to further strengthen our social license to operate. On the next slide, we'll -- we can see -- we can sort of give you a flavor of the work that we carried out last year and through into the first quarter of '26.

We've been proactive in the areas of mother child health care, educational facilities and conservation projects. And we've been reactive.

Very importantly, we've been reactive in response to the very severe drought conditions that the region is now suffering. Genel has recently distributed around 9 million liters of fresh clean water in the area of our SL10B13 license.

Okay. So I think we can wrap up now.

This closing slide returns to our 3 strategic pillars. Firstly, maintaining a strong platform.

That means protecting the balance sheet, keeping the business efficient and being careful about how we spend our money. Secondly, maximizing cash generation.

That means cost consciousness, executing the Tawke drilling program well, pursuing the net amounts that are owed to us and positioning ourselves to participate in exports when the conditions are in place -- when the right conditions are in place. And finally, diversifying production and free cash flow.

That means finalizing and executing the right plan for Block 54 and continuing to progress Toosan-1 and Somaliland. Most importantly, it means continuing the disciplined pursuit of value-accretive acquisitions.

Those are the building blocks. They're fairly straightforward.

They are mutually reinforcing and they remain the right framework for Genel's value delivery. If we execute well, we continue the journey towards a business with resilient cash flows that can support a regular dividend for our shareholders.

That's our clear objective, and we are determined to get there. So thank you.

That was a relatively brief run through the slides, but I want to thank you for your time this morning. Luke and I will now be happy to take any questions that you might have.

Thank you. So there's a few questions on security in Kurdistan, Paul, and how quickly we can restart production.

I think as you said at the start, we're not really going to comment on security in the Middle East and Kurdistan because it kind of changes all the time. There is a question about once you do restart production, how quickly can you get back to pre-conflict production levels?

I think it is worth you answering, Paul.

Well, I think we can get back to preproduction -- pre-conflict production levels very quickly indeed. I mean it's worth pointing out, and there is a little bit of an overlay here into the security question.

We've shut down as a precautionary measure. We haven't been targeted, and we haven't suffered any damage during the course of the current conflict, although obviously, there's been quite a lot of ordinance heading into Kurdistan.

It's not been headed at us. The point being that when we do sense that the time is right to restart all the equipment there and functional.

The operator has been working cleverly to make sure that we maintain a state of readiness. And as soon as we can get boots back on the ground, we can get production away quite quickly.

So I'm confident that we can resume production levels pretty quickly within a week or 2 of giving ourselves a green line.

Okay. So staying Kurdistan on exports.

We understand that the Tripartite deal has been extended to the end of June. Has Genel approached MNR to join the deal?

The answer to that is no, we have not approached MNR to join the deal. I think we've made our position on the current export arrangements quite clear, but I'll repeat them just now.

A number of our peers elected to participate in that arrangement. We chose not to do so.

We wanted to make sure that all of the conditions within the deal were on fully before we felt able to commit to that. Primarily amongst those conditions, of course, is the top-up payments that would actually render the participants hold with respect to the PSC.

So we would want to see that before we elected to try and join the current arrangements. In the meantime, we would continue to sell our product locally.

And there's a kind of related question, which you've kind of answered, how are other operators being paid through the pipeline. I mean, for me, Paul, that's really for others to comment on.

It looks like the first part of that is working okay. But as you alluded to, we -- the top-up payment hasn't been expected yet and hasn't been paid yet, I think, is the right way to think about it.

Agreed.

Are you still a member of APIKUR?

Yes, we are still a member of APIKUR. Obviously, when some of the APIKUR members elected to participate in the export or the arrangements that were in place up until the facility stopped.

When some of the APIKUR members elected to participate in that arrangement and others chose not to, APIKUR essentially divided into 2 counts, but APIKUR remains the trade association. It remains the forum where all of the IOCs within Kurdistan can talk together.

And we have a directorship there, and we remain a part of APIKUR.

Okay. Moving outside of -- sorry, one more on Kurdistan.

Any update on court case costs?

No, there isn't. And next month, our appeal against the award of the other side's costs goes to court, and we're waiting to see the outcome of that appeal before we engage with the authorities on that matter.

Okay. So now as on Kurdistan.

How quickly can new assets? And I don't know if that means the organic portfolio or newly acquired assets, but how quickly can new assets meaningfully reduce reliance on Kurdistan?

Well, those new assets, if we're able to secure the kind of asset that we're looking for, those new assets can immediately reduce our reliance in Kurdistan because it's a production asset, then we benefit from a new income stream immediately. So certainly, first prize for us is securing an arrangement that gives us an alternative cash flow as soon as the transaction is completed.

As far as the other -- as far as near production assets are concerned, if we were to go down that route, then it would be entirely dependent on the nature of the deal we were considering. I couldn't give a time line on that.

Yes. I'd just add, we've always said we want to do a bigger deal rather than a smaller deal.

And you can see the cash pile we have on the balance sheet. And you can assume that an asset we acquire would have debt capacity on it as well.

So you can see if you're spending that kind of money, you should be able to achieve some meaningful diversification of your cash generation. I think you probably already answered it, but can you provide an update on Toosan-1 in Somaliland?

Any specific milestones before spud? Any specific time line that we want to set out?

No. I think I appreciate there'll be a great deal of curiosity around our progress in Toosan-1 because we talk about it and from an outside-in point of view, it may at times be difficult to see progress, but work does continue, and we are quite active on that front.

Engineering work continues and procurement work continues. We've been looking at the market to -- we have most of the long lead items in place, but we've been putting together a project execution plan.

We've been putting together a project plan. We've been trying to determine who are the best people to come in and help us manage that drilling campaign.

And all of that continues as we speak, and we have people in-house dedicated to that task. And as with all projects of that nature, we have a stage gate process in place.

So we will convene with the executive every time we reach a stage gate, and we will convene with the Board every time we reach a stage gate. And we will take a conscious decision to embark on the next stage of the process and be prepared to spend the money that's associated with that particular stage.

We can't commit to a particular time line at the moment. As I said in the presentation, a number of commercial, operational and geopolitical pieces of the jigsaw need to fall into place together before we can actually define with certainty when things are going to happen.

But work does continue, and we are committed to the cost.

Okay. Back to Oman.

What is your estimate of drilling costs concerning the 2 wells in Oman?

Well, the wells are relatively shallow wells, and we're in an area that's well serviced by the oil industry. So services are readily available.

We're competitive and they're relatively low cost. I wouldn't want to put a figure right at this moment for the well cost because, of course, that's determined to some extent by precisely where we want to drill, and we haven't determined precisely where we want to drill yet.

But what I can repeat is what the cost of this entire project is going to be, and that's around $15 million over a 3-year period to Genel. That obviously started last year.

So all the work that's taken place so far has been extremely well planned and very clearly executed and it's below budget. But we're expecting to spend a total of around $15 million over a 3-year period starting last year.

Okay. It looks like we are through the questions.

Yes. I mean I'll close, first of all, by thanking everybody for taking -- continuing to take an interest in Genel and for taking the time to listen to us talk about our business today.

I just want to close basically by reiterating the 3 main points that we wanted to land during the course of this presentation and in fact, in all our recent presentations. The first is that we have a very resilient business, and our strategic priority is to maintain that degree of resilience, protect the balance sheet.

The second is to emphasize the extent to which we have potential within the organic portfolio. Oman and Somaliland, both represent very exciting potential value builders for the business, and we continue to push forward with those.

But of course, the biggest story and the biggest strategic thrust at the moment is making use of our cash pile. We've been sitting on that quite patient and are waiting for the right deal.

But we continue to be very, very active in the M&A space, and we continue to be extremely confident that in time, we are going to find the right deal that's going to allow us to deploy that cash. So thanks, everyone, for your time.

Thanks very much for the questions, and we look forward to talking to you with more good news.