By Christian Moess Laursen
London-listed oil company Genel Energy has decided to suspend its dividend program due to the significant negative impact on cash flow caused by the closure of the Iraq-Turkey export pipeline. In the first half of 2022, the company’s daily oil production decreased to 13,440 barrels, compared to 30,420 barrels in the same period last year, primarily because of the prolonged closure of the pipeline.
This suspension comes as a direct result of the loss of cash flow and uncertainty regarding the resumption of pipeline exports and the re-establishment of a reliable payment system. Genel Energy’s Chief Executive, Paul Weir, explained that since the closure of the Iraq-Turkey pipeline on March 25, sales have been minimal, and payments from the Kurdistan Regional Government have completely ceased. Consequently, both current and expected cash flows have been significantly impacted, leading to a free cash outflow in the current period.
As a consequence of the lack of payments, Genel Energy’s revenue has dropped to $51.3 million from $245.6 million in the previous year. Furthermore, the company is now facing over $110 million in overdue payments from the government of Kurdistan. In response to these challenges, Genel Energy has revised its full-year capital-expenditure guidance to approximately $70 million, down from the previously estimated range of $100 million to $125 million.