Annual Report
2023
A socially responsible contributor
to the global energy mix
Who we are
Genel is a socially responsible oil producer with low-cost and
low-carbon production from the Kurdistan Region of Iraq.
Our strategy is focused on generating long-term resilient cash
flows that ultimately support a material and sustainable dividend
programme, as we strive to deliver on our ambition of being a
world-class creator of shareholder value and fulfil our goal of
being a socially responsible contributor to the global energy mix.
Contents
Strategic report
1 Welcome
2 Genel at a glance
4 Chief Executive Officer’s statement
6 Key performance indicators
8 Our business model and strategy
10 Financial review
14 Operating review
16 Risk management
19 Principal risks
24 Viability statement
25 Stakeholder engagement
Sustainability
26 CEO message
27 Overview
31 Environmental responsibility
36 TCFD disclosures
46 Social responsibility
62 Responsible governance
68 Sustainability metrics
Governance
71
Chair’s statement on corporate governance
72 Governance statements
78 HSSE Committee
80 International Relations Committee
82 Reserves Committee
84 Division of responsibilities
85 Composition, succession, and evaluation
89 Board of Directors
92 Executive Committee
94 Nomination Committee
96 Audit Committee
100 Remuneration Committee
118 Other statutory and regulatory information
121 Statement of Directors’ responsibilities
Financial statements
123 Independent auditor’s report
130 Financial statements and notes
Other information
160 Report on payments to governments
162 Glossary of technical terms
163 Shareholder information
I am pleased to welcome you to Genel
Energy’s twelfth annual report.
2023 was dominated by the suspension of
the Iraq-Türkiye pipeline in March, which at
present has cut off our route to the export
market. Production was temporarily shut
in across our assets, prior to us working
with partners to generate cash from
local sales in the second half of the year.
This unsurprisingly resulted in a material
negative impact on our performance in
the year. However, our ongoing focus on
resilience, something that is a core part of
our business model, and reshaping of the
business has positioned us well to move
forward from this significant setback.
We enter 2024 with a material net cash
balance of over $100 million and local
sales revenues that are set to keep this
robust balance sheet intact. We have a solid
financial platform from which we are able to
continue executing our strategy, and there
are numerous potential catalysts which mean
that we are looking forward with confidence
to the year ahead.
One area in which the pipeline closure did not
impact our business was our ongoing focus
on sustainability. To better illustrate how it is
a core part of our business, we have this year
incorporated our Sustainability Report into
our Annual Report. We are proud of our work
in this area, and our disclosure remains in line
with Global Reporting Initiative standards.
David McManus
Chair
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Genel at a glance
What we do
Genel is a socially responsible energy company, with low-cost and
low-carbon production from the Kurdistan Region of Iraq and
exploration assets in Africa.
Why we do it
Genel aims to achieve our goals in accordance with values that are
inherently linked to our business model and strategic success. If we
uphold our values, we will deliver our ambition: to become a world-
class independent E&P creator of shareholder value.
As we do this, we aim to have a positive economic impact both by
producing the hydrocarbons that will fuel economies during the
energy transition, and directly supporting the communities in which
we operate by improving infrastructure and providing employment
and development opportunities.
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Genel Energy Annual Report 2023
Our values are fundamental to our behaviour, decision making, and the delivery both of our purpose and strategic objectives. S
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Where we do it
Key
Corporate offices
Licences
United
Kingdom
LAGZIRA |
Working interest 75%
Morocco
Turkey
TAWKE |
Working interest 25%
TAQ TAQ |
Working interest 44%
Kurdistan
Region of Iraq
ODEWAYNE |
Working interest 50%
SL10B13 |
Working interest 51%
Somaliland
Genel Energy Annual Report 2023
3
Chief Executive Officer’s statement
Reshaped and resilient business, with
potential catalysts to deliver significant
shareholder value
It is difficult to look at 2023 without it being
dominated by the closure of the Iraq-Türkiye
pipeline (‘ITP’). The suspension of our route
to export resulted in a material reduction in
production and cash flow. In a year in which
we were buffeted by factors beyond our
control, it was a reminder of the inherent
resilience of our business model, a resilience
that means we retain a strong position from
which we view the future with confidence.
Going in to 2023, one of our key aims was to continue the
simplification of the business, focusing on optimisation and cost
control and investment in business improvement. With the ITP
suspended, we accelerated this journey, significantly changing
the size and shape of the organisation, materially reducing our
cost base. We are now in a position where our income from
strong local sales in January and February 2024 has covered our
outflows, we have over $100 million in net cash, and significant
opportunities lie ahead.
A reshaped business
The closure of the pipeline prompted us to move quickly to reduce
our capital expenditure, with $50 million cut from our original
budget. We have more than halved our workforce, and we have
shed non-profitable assets. We allowed the Qara Dagh licence to
lapse, and Sarta has been terminated. We are a significantly leaner
vehicle than we were even six months ago, having efficiently
closed out our activity at Sarta and having minimised our
footprint and cost base in Kurdistan. And we are getting leaner
still, encouraging a constant state of awareness in the business
about how we can drive further cost efficiencies.
As we have cut costs we have ensured that we have kept the right
personnel to grow the business in the better times that certainly
lie ahead. It is important that a reshaped business does not mean
a business that lacks skills, and we must ensure that we have
the correct balance between being right sized in the current
environment, and having the right people to drive Genel forward
and take advantage of upcoming opportunities.
All of the changes that we have made to the business have been
done with our shareholders in mind, protecting shareholder funds
and ensuring that we remain resilient with a robust balance sheet,
with a business that is set up to maximise shareholder value
going forward.
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Genel Energy Annual Report 2023
“We have the correct balance between being right sized in
the current environment, and having the right people to drive
Genel forward and take advantage of upcoming opportunities.”
Miran and Bina Bawi arbitration progressing
The Company has committed significant senior management time
to the arbitration relating to the Miran and Bina Bawi PSCs. As a
reminder, our position is that the KRG’s termination of the Bina
Bawi and Miran licences in December 2021 was repudiatory and
caused us significant losses. By way of reference, we have spent
over $1.4 billion acquiring and attempting development of these
assets, both as operator and non-operator up to the termination
of both PSCs in December 2021.
The two-week hearing (including factual and expert evidence)
was held in London as scheduled and ended on 1 March 2024.
The timing of the result is uncertain, but is expected by the end
of 2024 following the Parties making closing written submissions
in April 2024 and reply written submissions in May 2024.
Our views on the merits of the case are unchanged since the
dispute process under the PSCs was commenced in Q3 2021.
Outlook
Genel retains a robust cash position, a resilient business model,
and a focus on taking advantage of the material catalysts ahead.
Paul Weir
Chief Executive Officer
Robustly positioned
Our focus on resilience is bolstered by income from the Tawke
licence, which remains the engine room of the business.
Working with the operator, DNO, a great job has been done to build
a new income stream from local sales , while cutting operational
costs by 65%. Production ramped up through the second half
of the year, and local sales have been material and robust so far
this year.
Going forward we expect cash generation from these local
sales to match our total business expenditure, should income
remain at levels seen in Q1 2024. Should the ITP reopen, our
cash generation has the potential to more than double overnight.
Along with our industry peers, we continue to work hard to
facilitate the resumption of exports with appropriate commercial
terms. Positive comments are regularly being made by politicians
from both the Federal Government of Iraq and the KRG, although
these are not being supported by movement on key issues so far.
The timing of export resumption is therefore not something that
we can suggest with any certainty.
Opportunities ahead
The reopening of the export route, with a stable and predictable
payment environment, is one of the numerous catalysts that we
can see ahead in 2024. We are reviewing all options relating to
the $107 million that is still owed for past exports, the repayment
of which would help to further strengthen our balance sheet and
boost cash generation.
As we work to unlock the significant value from Kurdistan, we
continue our search to add new income streams elsewhere.
Our criteria for new assets have not changed – we are focused
on cash generation, seeking a value accretive deal in a stable
jurisdiction. We remain laser focused and disciplined as we seek
the right deal for shareholders, and are comfortable looking
beyond the MENA region to get a deal that ticks all of our boxes.
As we reshaped our business in 2023, we have continued our
search for the right opportunity to integrate within Genel.
There remain opportunities out there that fit our criteria, and we
are confident that we will find the correct deal.
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Key performance indicators
Measuring our progress
Net production
Free cash flow
Net 2P reserves
Dividends announced
Lost time incidents
Spills – loss of primary containment
12,410 bopd
-$71 million
89 MMbbls
$34 million
0 frequency
0
2023
12,410
-71
2023
2023
2022
2021
2020
2019
30,150
31,710
31,980
2022
2021
86
-4
2020
36,250
2019
99
235
2022
2021
2020
2019
89
92
104
117
124
Definition
Production is measured in barrels of oil
produced per day.
Definition
Cash flow generated from operating
activities, minus capital expenditure.
Definition
2P reserves are proved plus
probable reserves.
Performance
Genel’s production was robust in Q1 2023
and in line with our guidance of 27-29,000
bopd. Following the closure of the Iraq-
Türkiye pipeline on 25 March 2023,
production was shut in at all producing
fields once the limited storage capacity
was used. Production for the local market
resumed from the Tawke field in Q3, and
gross production reached 65,780 bopd in
the final quarter of 2023.
Relevance to strategy
Production from our fields provides Genel’s
revenue generation, and is a key measure
of our operational performance. Our oil
production in the KRI is managed to ensure
long-term value creation and maximise cash
generation, with production maximised
over the life of the field.
Performance
Cash generation in 2023 suffered from
the closure of the ITP, and the lack of a
route to export sales and international
pricing. Total proceeds in the year were
$102 million, with only two payments
relating to export sales received in
Q1 prior to the closure of the pipeline.
Expenditure was reduced materially, while
local sales from the Tawke licence helped
to more than cover operational costs from
the licence in Q4. Given the cost reductions
achieved, and with the expectation of
ongoing local sales, Genel expects to be
free cash flow neutral from the end of
Q1 2024.
Relevance to strategy
Production from operating activities forms
Genel’s revenue generation. Net cash
illustrates the success of monetisation
of these activities, reflecting both
money received and the minimisation of
operating costs.
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Genel Energy Annual Report 2023
Performance
Genel’s 2P working interest reserves
totalled 89 MMbbls at the end of 2023.
A positive 4 MMbbls revision of 2P reserves
at the Tawke PSC offset the removal
of 2.7 MMbbls of 2P reserves from the
terminated Sarta PSC, with 4.5 MMbbls of
production in 2023.
Relevance to strategy
Our strategy is to enhance the value of
our existing 2P reserves through active
reservoir management and cost-effective
development. The Company also looks to
replace 2P reserves through a combination
of maturing contingent resource to
commerciality, exploration for new sources
of hydrocarbons, and M&A activity.
Relevance to strategy
Relevance to strategy
Relevance to strategy
Genel’s strategy aims to increase low-cost
The safety of our workforce remains of
Part of our commitment to being a
production, invest in growth, and retain
paramount importance. Genel is committed
sustainable business is for the impact on
sufficient liquidity to pay a material and
to running safe and reliable operations
the environment around our operations
sustainable dividend. Dividend distributions
across our portfolio, aiming at zero
are therefore a signifier of the success of
fatalities and no lost time incidents.
Genel’s overall strategy.
to be minimised. Asset integrity is a major
priority for Genel and we plan and execute
the operations of our business and our
engagement of subcontractors so as to
minimise risk and mitigate potential impact.
Definition
Definition
Definition
The combined total distribution of the final
Lost time incident frequency measures the
Loss of primary containment records
and interim dividends announced in the
number of lost time incidents per million
any unplanned or uncontrolled release of
calendar year.
work hours.
material from a piece of equipment (such as
a pipe, vessel, or tank) used for containment
of potentially harmful or hazardous
substances and products.
Performance
Performance
Performance
Genel’s dividend programme paid over
Genel strives for safe operations with
There were zero incidents of losses of
$200 million of dividends (72p per share)
zero lost time injuries (‘LTI’), and this
primary containment in 2023, and it is now
since inception in 2019, with a final dividend
goal was achieved in 2023, matching the
six years since our last incident.
totalling 12¢ per share paid in 2023
performance of 2022. There have now been
(2022: 18¢ per share), a total distribution of
well over four million hours worked since
$33.5 million. Due to the lack of visibility on
the last incident.
the timing of pipeline exports resuming and
the re-establishment of a reliable record
of payments, Genel suspended its dividend
programme at the half-year results.
Net production
Free cash flow
Net 2P reserves
Dividends announced
Lost time incidents
Spills – loss of primary containment
12,410 bopd
-$71 million
89 MMbbls
$34 million
0 frequency
2023
2022
2021
2020
2019
34
2023
0
50
2022
0
44
2021
0.29
41
41
2020
0
2019
0
Definition
Definition
Definition
Production is measured in barrels of oil
Cash flow generated from operating
2P reserves are proved plus
produced per day.
activities, minus capital expenditure.
probable reserves.
Definition
The combined total distribution of the final
and interim dividends announced in the
calendar year.
Definition
Lost time incident frequency measures the
number of lost time incidents per million
work hours.
Performance
Performance
Performance
Genel’s production was robust in Q1 2023
Cash generation in 2023 suffered from
Genel’s 2P working interest reserves
and in line with our guidance of 27-29,000
the closure of the ITP, and the lack of a
totalled 89 MMbbls at the end of 2023.
bopd. Following the closure of the Iraq-
route to export sales and international
A positive 4 MMbbls revision of 2P reserves
Türkiye pipeline on 25 March 2023,
pricing. Total proceeds in the year were
at the Tawke PSC offset the removal
production was shut in at all producing
$102 million, with only two payments
of 2.7 MMbbls of 2P reserves from the
fields once the limited storage capacity
relating to export sales received in
terminated Sarta PSC, with 4.5 MMbbls of
was used. Production for the local market
Q1 prior to the closure of the pipeline.
production in 2023.
resumed from the Tawke field in Q3, and
Expenditure was reduced materially, while
gross production reached 65,780 bopd in
local sales from the Tawke licence helped
the final quarter of 2023.
Performance
Genel’s dividend programme paid over
$200 million of dividends (72p per share)
since inception in 2019, with a final dividend
totalling 12¢ per share paid in 2023
(2022: 18¢ per share), a total distribution of
$33.5 million. Due to the lack of visibility on
the timing of pipeline exports resuming and
the re-establishment of a reliable record
of payments, Genel suspended its dividend
programme at the half-year results.
Performance
Genel strives for safe operations with
zero lost time injuries (‘LTI’), and this
goal was achieved in 2023, matching the
performance of 2022. There have now been
well over four million hours worked since
the last incident.
to more than cover operational costs from
the licence in Q4. Given the cost reductions
achieved, and with the expectation of
ongoing local sales, Genel expects to be
free cash flow neutral from the end of
Q1 2024.
0
2023
0
2022
0
2021 0
2020
0
2019
0
Definition
Loss of primary containment records
any unplanned or uncontrolled release of
material from a piece of equipment (such as
a pipe, vessel, or tank) used for containment
of potentially harmful or hazardous
substances and products.
Performance
There were zero incidents of losses of
primary containment in 2023, and it is now
six years since our last incident.
Relevance to strategy
Relevance to strategy
Relevance to strategy
Production from our fields provides Genel’s
Production from operating activities forms
Our strategy is to enhance the value of
revenue generation, and is a key measure
Genel’s revenue generation. Net cash
our existing 2P reserves through active
of our operational performance. Our oil
illustrates the success of monetisation
reservoir management and cost-effective
production in the KRI is managed to ensure
of these activities, reflecting both
development. The Company also looks to
long-term value creation and maximise cash
money received and the minimisation of
replace 2P reserves through a combination
generation, with production maximised
operating costs.
over the life of the field.
of maturing contingent resource to
commerciality, exploration for new sources
of hydrocarbons, and M&A activity.
Relevance to strategy
Genel’s strategy aims to increase low-cost
production, invest in growth, and retain
sufficient liquidity to pay a material and
sustainable dividend. Dividend distributions
are therefore a signifier of the success of
Genel’s overall strategy.
Relevance to strategy
The safety of our workforce remains of
paramount importance. Genel is committed
to running safe and reliable operations
across our portfolio, aiming at zero
fatalities and no lost time incidents.
Relevance to strategy
Part of our commitment to being a
sustainable business is for the impact on
the environment around our operations
to be minimised. Asset integrity is a major
priority for Genel and we plan and execute
the operations of our business and our
engagement of subcontractors so as to
minimise risk and mitigate potential impact.
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Our business model and strategy
Our business model
and strategy
Our strategy
Financial discipline
STRONG
BALANCE
SHEET
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Supporting the
establishment of
a sustainable
dividend
programme
RESILIENT
CASH
GENERATION
INVESTMENT
IN NEW
CASH FLOWS
Focus on ESG and sustainability
LED BY A RESILIENT BUSINESS MODEL
Values that define us
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Genel Energy Annual Report 2023
Genel aims to be a socially responsible contributor to the global
energy mix, generating cash from low-cost and low-carbon
production in order to be a world-class creator of shareholder
value, and a company that has a positive impact by fuelling
economic growth and directly supporting the communities in
which we operate.
Benefitting all stakeholders
Shareholders
We aim to provide a compelling mix of growth and returns through increasing low-cost production
through disciplined investment, generating material and sustainable cash flows and building
towards a business that supports the establishment of a material and sustainable dividend.
Host governments
We aim to have a positive economic impact by growing production of the hydrocarbons that fuel
economic growth. Since starting production, over $21 billion has been directly generated for the
KRG from operations at Taq Taq and Tawke, with a further considerable boost to the economy from
employment and supply chain development.
Local communities
We directly support the communities in which we operate through maximising local employment
and economic development opportunities, as well as direct investment in community projects and
the infrastructure surrounding our operations.
Employees
We aim to benefit our employees and contractors through responsible business practices,
the promotion of a work culture centred on safety and inclusion, fair remuneration, and job
development opportunities.
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Financial review
Strong balance sheet providing long-term
resilience and opportunity
With the export pipeline suspended from
March, 2023 did not generate the financial
performance that we had planned for, but
we have taken decisions that mean we have
ended the year in a resilient position, with
an outlook where we can see a clear route
to delivery of material shareholder value.
While the closure of the ITP accelerated
and deepened some of our planned cost
cutting, we were already well on the way
to reshaping the business and ensuring
that it has the financial strength to endure
challenges and maintain our exposure to the
significantly value accretive potential events
that we hope to see materialise in 2024.
(all figures $ million)
Brent average oil price
Revenue
Production costs
Cost recovered production
asset capex
Production business net income
after cost recovered capex
Other operating costs
G&A (excl. non-cash)
Net cash interest1
Working capital
Free cash flow before
investment in growth
FY 2023
$82/bbl
FY 2022
$101/bbl
84.8
(21.3)
401.9
(34.3)
(55.2)
(85.9)
8.3
281.7
(3.6)
(25.5)
(4.2)
4.7
-
(17.7)
(19.2)
47.2
(20.3)
292.0
Non-cost recovered capex
(12.8)
(57.2)
Net (expense) / income from
discontinued operations
Working capital and other
Free cash flow
Dividend paid
Purchases of own shares
Purchases of own bonds
Net change in cash
Cash
(11.6)
12.5
(26.3)
(71.0)
(33.5)
(1.8)
(24.9)
(131.2)
363.4
(12.5)
234.8
(47.9)
-
(6.0)
180.9
494.6
1 Net cash interest is bond interest payable less bank interest income (see note 5)
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Genel Energy Annual Report 2023
2023 financial priorities
The table below summarises our progress against the 2023 financial priorities of the Company as set out in our 2022 results.
2023 financial priorities
Progress
— Maintain business resilience and balance sheet strength
— On suspension of exports, completed work efficiently, significantly cut
capital and operating expenditure, suspended the dividend programme
— Developed a new income stream through domestic sales
— Cash at $363 million at end of 2023
— Put our significant cash balance to work, earning
— Final dividend of 12¢ per share paid
appropriate returns to deliver value to shareholders
primarily through our dividend programme and diversify
— On the Tawke licence, new wells were completed in the first half, and 2P
reserves increased to offset production in the year
our cash generation
— Bond debt reduced by $26 million at an average price below 95¢ in
the dollar
— Continued to actively screen and work up opportunities to acquire new
production assets, with the ultimate aim of resuming dividend returns
to shareholders
— Deliver the 2023 work programme on time and on
— Work programme reduced due to external conditions
budget, and continue simplification of the business with a
focus on optimisation and cost control and investment in
business improvement
— Remaining activities completed on time and below budget
— Simplification of the business was accelerated and deepened, with a
two thirds reduction to our total workforce
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Financial review
Outlook and financial priorities for 2024
The key principles of our financial focus remain largely
unchanged. We have a resilient business model that will continue
to mitigate negative events and maximise potential upside, all
with a firm focus on maximising cash generation. Ultimately,
successful strategic delivery will lead to a resumption of
shareholder returns, through delivering robust, resilient, diverse,
and predictable cash flows.
- Maintain business resilience and balance sheet strength
Running a resilient business with a strong balance sheet is a key
component of our business model. It is particularly relevant at
the current time, with the lack of access to export prices and
volumes and the delayed receipt of amounts owed. While the ITP
remains closed, we protect the balance sheet and resilience of
the business by balancing the sources and uses of our cash flows.
Actions taken to reduce costs and restructure the organisation
in 2023 have prepared us well for this, with monthly organisation
spend excluding the cash-generative Tawke PSC reduced to
under $3 million per month at the time of writing.
Local market sales since November 2023 have seen relatively
consistent volumes, which has required constant attention
from the operator. We believe the Tawke PSC is well positioned
to continue to deliver stable and meaningful cash flows that
will be sufficient to cover our costs, and as a consequence we
expect to retain a net cash position of over $100 million in 2024.
Should the pipeline open, which we expect, then the subsequent
establishment of regular payments would materially boost our
cash generation, with the receipt of our outstanding receivable
of $107 million offering further significant upside.
strategic objectives
Our capital allocation priorities remain maintenance of a strong
balance sheet and funding of the Company’s strategic objectives
in order to generate long-term value for shareholders.
We are currently retaining a significant cash balance in excess
of the cash required to fund the organic business in order to
fund the acquisition of new assets, as we seek to diversify our
income streams. This balance is partly funded by our bond debt
of $248 million, which matures in October 2025. We retain
strict discipline as we seek new opportunities, with appropriate
economic analysis and downside planning key considerations.
With a coupon that is low relative to prevailing market rates, the
net cost of retaining this optionality is low.
- Ensure appropriate capital allocation
In pursuit of our strategic objectives, robust assessment of the
expected benefit to be obtained from invested capital underpins
our processes to ensure appropriate allocation of capital, making
sure that each dollar spent is done so in the knowledge that we
are custodians of shareholder funds.
In 2023, as well as cutting our capital allocation appropriately
in the face of the ongoing ITP closure, with Tawke drilling
suspended, we ensured that any investment was necessary and
effective towards improving the profitability of our business and
achieving our objectives.
exploration period on the Toosan-1 well in Somaliland. There is
the opportunity for significant value creation in Somaliland,
where we remain excited about the potential of the subsurface.
In addition, we invested in the Miran and Bina Bawi arbitration
process, where we are seeking to protect our contractual
position under the PSCs which are governed by English law.
We have invested over $1.4 billion in the acquisition and
attempted development of these assets, and we will continue to
ensure that funds are available to pursue collection in the event
of an Award in Genel’s favour.
Finally we reduced our debt by nominal $26 million of our debt
at a cost of below 95 cents in the dollar, which provided an
attractive level of return without significantly impacting our
capital availability for other strategic objectives.
Financial results for the year
Income statement
(all figures $ million)
Brent average oil price
FY 2023
$82/bbl
FY 2022
$101/bbl
Production (bopd, working interest)
12,410
30,150
Profit oil
Cost oil
Override royalty
Revenue
Production costs
Other operating costs
G&A (excl. depreciation and amortisation)
Depreciation and amortisation
Exploration expense
Net write-off / impairment of oil and
gas assets
Net (ECL) / reversal of ECL of receivables
Net finance expense
Income tax expense
Loss from discontinued operations
Loss
25.4
58.6
0.8
84.8
(21.3)
(3.6)
(27.1)
32.8
143.4
116.1
142.4
401.9
(34.3)
-
(18.5)
349.1
(44.0)
(134.3)
(0.1)
(1.0)
1.2
(75.8)
(9.1)
(9.1)
(0.2)
(32.8)
(61.3)
8.6
(24.5)
(0.2)
(129.2)
(7.3)
Production of 12,410 bopd was significantly lower than last year
(2022: 30,150 bopd) as a result of the suspension of exports
through the ITP. This resulted in very limited production between
April and July, with production from Tawke only restarting
from July at lower levels, selling into the domestic market.
This decrease in production, together with the significantly lower
realised price per barrel for local sales, resulted in a reduction
in revenue from $402 million to $85 million, with $38 million
generated from local sales in H2 2023 and the remainder of
$47 million generated from export sales between January and
March inclusive.
Production costs of $21 million decreased from the prior year
(2022: $34 million), with cost per barrel $4.8/bbl in 2023 (2022:
$3.3/bbl), with the higher cost per barrel being the result of a
combination of lower production and some fixed costs.
- Ensure capital availability for funding of key
EBITDAX
At the start of the year, we took the decision to exit the Qara
Dagh licence, due to the extent of certainty that redrilling on the
licence would have a positive outcome. For similar reasons, it was
decided not to pursue other drilling opportunities at Sarta, and
to reduce costs appropriately at Taq Taq. This focus has meant
that our future activity at that licence is under review. Finally,
we agreed with the government and our partner to extend the
Other operating costs of $4 million were related to Taq Taq which
were incurred after production cease. Corporate cash costs were
$12 million (2022: $14 million).
The decrease in revenue resulted in a similar decrease to
EBITDAX, which was $33 million (2022: $349 million). EBITDAX is
presented in order to illustrate the cash operating profitability
12
Genel Energy Annual Report 2023
of the Company and excludes the impact of costs attributable
to exploration activity, which tend to be one-off in nature,
and the non-cash costs relating to depreciation, amortisation,
impairments and write-offs.
Free cash flow is presented in order to illustrate the free cash
generated for equity. Free cash outflow was $71 million (2022:
$235 million inflow) with an overall decrease due to pipeline
closure and delay in proceeds.
Depreciation of $40 million (2022: $95 million) and Tawke
intangibles amortisation of $4 million (2022: $39 million)
decreased due to lower production and pipeline closure.
While Genel expects to recover its overdue receivables of
$107 million in full, given there is currently no repayment plan,
a net expense of $10 million has been recognised relating to the
expected credit loss on overdue receivables. Further explanation
is provided in note 1 to the financial statements.
Interest income of $21 million (2022: $7 million) has significantly
increased as a result of the increase in interest rates, in
turn reducing our net cost of debt. Bond interest expense of
$25 million (2022: $26 million) was in line with the previous year.
Other finance expense of $5 million (2022: $5 million) related
to non-cash discount unwinding on provisions and bond which is
partly offset by gain on buyback of bonds in the year.
In relation to taxation, under the terms of KRI production sharing
contracts, corporate income tax due is paid on behalf of the
Company by the KRG from the KRG’s own share of revenues,
resulting in no corporate income tax payment required or
expected to be made by the Company. Tax presented in the
income statement was related to taxation of the service
companies (2023: $0.2 million, 2022: $0.2 million).
Following the termination of Sarta PSC in the year, income
statement figures of Sarta PSC have been disclosed as
discontinued operation. Further details are provided in note 7 to
the financial statements.
Capital expenditure
Capital expenditure was reduced to $68 million (2023:
$143 million), a reduction of around $50 million from our initial
guidance. Spend on production assets was $59 million, and
pre-production assets $9 million, with $20 million spent in H2 as
expenditure cuts were made following the ITP closure.
(all figures $ million)
FY 2023
FY 2022
Cost recovered production capex
Non cost recovered production capex
Other exploration and appraisal capex
Capital expenditure
55.1
3.8
9.1
68.0
85.9
47.5
9.7
143.1
Cash flow, cash, net cash and debt
Gross proceeds received totalled $102 million (2022: $473 million).
(all figures $ million)
Brent average oil price
EBITDAX
Working capital
Operating cash flow
Producing asset cost
recovered capex
Development capex
Exploration and appraisal capex
Interest and other
Free cash flow
FY 2023
$82/bbl
FY 2022
$101/bbl
32.8
22.3
55.1
349.1
63.3
412.4
(66.6)
(77.8)
(22.2)
(9.7)
(27.6)
(71.0)
(50.4)
(20.0)
(29.4)
234.8
(all figures $ million)
FY 2023
FY 2022
Free cash flow
Dividend paid
Other
Bond repayment
Net change in cash
Opening cash
Closing cash
(71.0)
(33.5)
(1.8)
(24.9)
(131.2)
494.6
363.4
234.8
(47.9)
-
(6.0)
180.9
313.7
494.6
Debt reported under IFRS
Net cash
(243.7)
(266.6)
119.7
228.0
The bonds maturing in 2025 have two financial covenant
maintenance tests:
Financial covenant
Test
YE 2023
Equity ratio
(Total equity/Total assets)
> 40%
55%
Minimum liquidity
> $30m
$363m
Net assets
Net assets at 31 December 2023 were $434 million (31 December
2022: $528 million) and consist primarily of oil and gas assets
of $331 million (31 December 2022: $327 million), net trade
receivables of $93 million (31 December 2022: $117 million) and
net cash of $120 million (31 December 2022: $228 million).
Liquidity / cash counterparty risk management
The Company monitors its cash position, cash forecasts and
liquidity on a regular basis. The Company holds surplus cash in
treasury bills, time deposits or liquidity funds with a number of
major financial institutions. Suitability of banks is assessed using
a combination of sovereign risk, credit default swap pricing and
credit rating.
Going concern
The Directors have assessed that the Company’s forecast
liquidity provides adequate headroom over forecast expenditure
for the 12 months following the signing of the annual report for
the year ended 31 December 2023 and consequently that the
Company is considered a going concern. Further explanation is
provided in note 1 to the financial statements.
The Company is in a net cash position with no near-term maturity
of liabilities.
Luke Clements
Chief Financial Officer
Genel Energy Annual Report 2023
13
Strategic reportGovernanceFinancial statementsOther information
Operating review
A focused portfolio,
with robust production from Tawke
Mike Adams
Technical Director
Reserves and resources development
Genel’s proven plus probable (2P) net working interest reserves
totalled 89 MMbbls (31 December 2022: 92 MMbbls) at the end of
2023. A positive 4 MMbbls revision of 2P reserves at the Tawke
PSC offset the removal of 2.7 MMbbls of 2P reserves from the
terminated Sarta PSC, with 4.5 MMbbls of production in 2023.
Production
Net production in 2023 averaged 12,410 bopd, significantly down
on the prior year (2022: 30,150 bopd) due to the suspension of the
ITP. This caused there to be minimal sales in the second quarter of
the year, before the local sales market was established in Q3 and
production was then ramped up in Q4. Production was dominated
by the Tawke PSC, which produced 11,570 bopd.
Producing assets
Tawke PSC (25% working interest)
Gross production from the Tawke licence averaged 46,280 bopd in
2023, impacted by the closure of the ITP. Following the start of local
sales in H2, production increased to 65,780 bopd in Q4 2023.
At the end of 2023, gross production from the Tawke licence was
averaging 80,000 bopd, with entitlement barrels sold at prices in
the low-to-mid $30s per barrel. The operator, DNO, expects gross
production at the licence to continue to average 80,000 bopd.
That figure could change depending on the outcome of ongoing
discussions related to recovery of arrears for past deliveries to the
KRG and payment terms and conditions for any future oil exports,
which in turn will drive investments in wells.
All Genel production in H2 2023 came from the Tawke PSC.
Gross production from the Tawke licence increased to 65,780 bopd
in Q4 2023, up from 25,980 bopd in Q3, with the field partners
selling their entitlement share into the local market.
With operational spend having been reduced by 65%, the Tawke
PSC is currently generating over $3 million a month in net cash flow
for Genel from strong local sales, which if retained at current levels
is able to cover total organisational spend away from the licence.
Remaining reserves (MMbbls)
Resources (MMboe)
Contingent
Prospective
1P
2P
1C
2C
Best
Gross
Net
Gross
Net
Gross
Net
Gross
Net
31 December 2022
Production
Acquisitions and disposals
Extensions and discoveries
New developments
Revision of previous estimates
31 December 2023
267
(18)
-
-
-
(4)
245
69
(5)
-
-
-
(1)
63
349
(18)
(9)
-
-
16
92
(4)
(3)
-
-
4
338
89
37
-
(28)
-
-
4
13
11
-
(8)
-
-
1
3
129
-
(85)
-
-
(5)
39
14
Genel Energy Annual Report 2023
(25)
(142)
Gross
4,722
-
-
-
-
Net
3,006
-
(43)
-
-
-
4,580
2,964
36
-
-
-
(1)
10
Taq Taq (44% working interest, joint operator)
Prior to the closure of the ITP, field partners were planning a
resumption of drilling at Taq Taq. In line with Genel’s focus on
reducing costs, and lack of clarity regarding the resumption
of exports and payments, this plan was dropped. Costs were
reduced to below $1 million per month at the start of 2024, and
further cuts are expected to reduce this to around half a million
dollars per month. Given the lack of meaningful cash flows
expected to come from Taq Taq going forward, its place in the
Genel portfolio is under review.
Sarta (30% working interest, operator)
Genel’s focus at the start of 2023 was on making ongoing
production from Sarta profitable, and capital investment was
contingent on both licence profitability and the extent to which
there could be confidence that such investment would add cash
generative production. Given the investment required, and the
lack of certainty over a resumption of payments, Genel and its
joint venture partner, Chevron, informed the Ministry of Natural
Resources of its intention to surrender the asset and thereby
terminate the Sarta PSC on 1 December 2023.
Remediation work was completed in Q1 2024, at a net cost of
$1 million, and there will be no further material expenditure at
Sarta going forward.
Pre-production assets
Somaliland
Work continued in 2023 on readiness towards the potential
drilling of a well at the Toosan-1 well site on the SL10B13 block
(51% working interest and operator). The Environmental, Social
and Health Impact Assessment was finished, and required civil
work at the well site at this stage of the project is now complete.
Genel continues to believe that there is a tremendous
opportunity in Somaliland, and is assessing the timing of further
investment. There is no significant expenditure expected in
2024, and a licence extension has been granted which allows for
drilling to be undertaken in due course.
Morocco (Lagzira block - 75% working interest, operator)
The farm-out programme on the Lagzira block is ongoing.
Genel Energy Annual Report 2023
15
Strategic reportGovernanceFinancial statementsOther information
Risk management
Risk management
The successful delivery of our strategy and business model requires strong corporate
governance and effective risk management.
We deliver effective risk management through a simple framework and an active
assurance plan.
The Company categorises risks into three categories:
— Strategy: risks that will impact delivery of company objectives
and shareholder value
— External: risks that are largely outside of the Company’s
control and arise from the external environment
— Routine: risks that are principally managed by standard
business processes and procedures
For each identified and assessed risk, the Board sets clear
executive-level accountability, the appropriate risk management
action, the appropriate level of assurance to be obtained, and
the monitoring and reporting to be delivered.
Risk
Assessment &
Treatment
Objective
Risk
Management
& Assurance
Risk
Identification
Risk
Monitoring
& Reporting
16
Genel Energy Annual Report 2023
Risk identification
Risk identification is comprised principally of two approaches.
- Firstly, from the top down, the Board and Executive
Committee identify potential risks that may impact delivery of
the Company strategy and business objectives
- Secondly, each business area identifies potential risks
that may affect delivery of the objectives relevant to that
business area. Business areas are comprised of functions
and projects, with each business area led by an Executive
Committee member
Both processes include considering future risks that may impact
the business, which are identified as emerging risks. We identify
emerging risks to track their evolution and assess whether
mitigating controls in place for the Company are appropriate
relative to the expected evolution of the risk.
Risk assessment and treatment objective
Once risks have been identified, they are assessed for post-
mitigation impact and likelihood using a simple matrix, with post-
risk mitigation assessment determined by evaluating existing
controls and mitigation activities. This assessment is then used
to define the risk treatment objective for each risk.
The Company uses four specific categorisations of risk
treatment objectives:
Mitigate
Put in place processes or take actions that minimise the
likelihood or impact of negative consequences of a risk
or maximise positive consequences
Eliminate
Remove the risk or reduce the importance of the risk
to the business
Transfer
Transfer the risk to a third-party
Accept
Accept the post-mitigation assessment of the
likelihood and impact
The appropriate management action is assessed in the context
of the agreed treatment objective.
Risk management and assurance
Appropriate management of risks includes, but is not limited to:
- Ensuring appropriate and adequate controls are in place
- Ensuring that appropriate systems are in place to ensure that
those controls are designed and operating effectively
- Ensuring appropriate monitoring and re-evaluation systems
are in place
- Ensuring that appropriate reporting systems are in place so
that the Board can identify if intervention is required
Key risk developments and mitigation progress are monitored
and reported to provide adequate oversight by the Board at
least yearly. The Executive Committee conducts regular in-depth
reviews of the status of the key risks and their mitigation.
The assurance process provides a clear and transparent link
between risks, the existing controls and mitigating actions,
and assurance that these controls and mitigating actions
are adequate, and risks are managed to acceptable levels.
We implement a three-tier assurance model to provide different
levels of the organisation with assurance that risks are being
adequately and appropriately managed and that mandatory
requirements and standards are being adhered to.
Risk monitoring and reporting
For each identified risk, the depth and frequency of monitoring
and reporting is determined depending on the likelihood of the
risk and its potential impact, with risks with more significant
potential impact being reported more frequently and in
greater depth.
Risks can develop and evolve, and their potential impact or
likelihood may vary in response to internal and external events.
Sometimes, there may be insufficient information to fully
understand the risk’s likelihood, impact, or velocity. Additionally,
it may not be possible to fully define a mitigation plan until the
risk is better understood.
Reporting on risks takes various forms, with external specialist
expertise employed where appropriate to ensure the Board
is provided with the appropriate understanding of the
relevant issues.
In addition, the Company continuously monitors the
external and strategic environment to assess and reassess
risks, uncertainties, and opportunities, both current and
emerging, that may impact delivery on strategy and key
business objectives.
Process
Sponsor
Group Assurance Framework
External Assurance
TIER 3
Internal Assurance
Self Review
TIER 2
TIER 1
Board
Audit Committee
Executive Committee
Audit Committee
Executive Committee
Accountable Executive
Committee Member
Genel Energy Annual Report 2023
17
Strategic reportGovernanceFinancial statementsOther information
Risk management
Roles and Responsibilities
Board
— Provide oversight for risk management
— Oversees and monitors sensitivity of the principal risks of the business and
makes effective, appropriate and timely decisions on how these are managed
or accepted
— Ensures that decisions taken are appropriately executed throughout the
business through appropriate delegation of authorities and policies
— Challenges where controls are not appropriate or not operating effectively
Strategy
Risk assessment
and review
Board sets controls to
mitigate or manage risks
Audit Committee
— Oversees risk management and internal control systems and makes
recommendations to the Board
— Reviews the risk register and the effectiveness of controls in place
Audit Committee oversees risk management
and internal controls
Executive Committee
— Leads the identification, understanding and assessment of risks to the
business for review and discussion by the Board
— Assigns risks to relevant Executive Committee members as risk owners
— Identifies where controls are not appropriate or not operating effectively and
implements improvements
— Identifies new risks or changes in the nature, probability or impact of
existing risks
— Collectively keeps the risk register under regular review
Risk register identifies, assesses
and documents risks and controls
The system for managing risks is embedded in the organisational
structure, operations, and management systems.
Board
The Board is responsible for maintaining and reviewing the
effectiveness of the Company’s internal control system. The Board
has established processes to meet the obligations placed on listed
companies and the expectations of the UK Corporate Governance
Code to publish a long-term viability statement and continually
monitor risk management systems and internal control systems.
These processes include having clear lines of responsibility,
documented delegated authority levels, and appropriate
operating procedures.
We recognise that the system is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives and
can only provide reasonable, and not absolute, assurance against
misstatement or loss.
The Board has reviewed the effectiveness of the internal control
system for the year ended 31 December 2023 and up to the date
of signing the financial statements. It is satisfied that it remains
appropriate to the business.
Audit Committee
The Audit Committee provides oversight and reviews the
effectiveness of the Company’s risk management systems and
reports its assessment to the Board. The risk management
systems are designed to identify, evaluate, and manage the
principal risks to which the Company is exposed. It reports to
the Board on those systems’ effective design and operations.
The Audit Committee sets the annual assurance programme,
within the framework of an assurance cycle, and reviews findings
and recommendations. Further information on the actions taken
by the Audit Committee during the year can be found on pages
96 to 99.
Executive Committee
The Executive Committee is responsible for the day-to-day
management of risks, with each risk assigned to an executive
owner accountable for managing the risk.
18
Genel Energy Annual Report 2023
Principal risks
Key
Strategic pillars
Resilient cash generation
Investment in new
cash flows
Strong balance sheet
Change assessment
Risk level increased
Risk level stable
Risk level decreased
2023-2024 Group principal risks
The following provides an overview of the principal risks at the end of 2023, the potential impacts and mitigation measures. The risks are
grouped thematically, not in order of importance.
KRI Regional Oil & Gas Sector Risk
Strategic link:
Risk owner:
Year-on-year risk movement:
CEO
Context
The region in which the Company produces oil and generates revenues has seen long-standing regional tensions.
There has been long-standing disagreement between the FGI and the KRG regarding the quantum and payment of the KRG’s
budget allocation and its right to run its oil and gas sector and to export oil independently.
In March 2023, an international arbitration ruling regarding Türkiye accepting the export of Kurdish oil through the ITP to
Ceyhan without explicit FGI approval found in favour of the FGI. Following the ruling, Türkiye immediately suspended access to
the export pipeline. In October 2023, Türkiye declared the pipeline available, although it remains closed.
While both FGI and KRG have consistently stated that they would like exports to resume, the extended closure period
demonstrates that these key stakeholders cannot agree on the terms for exports to take place.
What is
this risk?
- Suspension of access to the export pipeline continues, denying the Company and its peers access to higher pricing
and sales volumes available through exporting oil
- The FGI and/or the KRG seeks to use political tension to try to void the extant PSCs, impose terms on the IOCs that
are averse to their extant contractual position and/or requires IOCs to export oil without being provided clarity on
the offtake terms of the sale
- Escalation of the reported Iraqi Supreme Court decision and/or the FGI more generally seek to void Kurdistan PSCs
How we
manage it
Genel is actively working with its Kurdistan partners, peers, the KRG, and the FGI to seek a negotiated solution to
restart exports.
The Company is a founding member and holds a Directorship in the Kurdistan trade association APIKUR, that seeks to
influence governmental bodies.
The Company’s ultimate remedy for protecting the value of its extant contracts will be through the provisions within these
PSCs, namely under English law, with remediation for a dispute in the London Court of International Arbitration.
Context
What is
this risk?
Commercial Terms & Payment for Kurdish Sales
Strategic link:
Risk owner:
Year-on-year risk movement:
CFO
Cash generation from oil production is maximised via exports, where production is sold to the KRG at the wellhead, with
the sales then priced on a netback price derived from the onward sale realised price per barrel adjusted for various costs
or charges. When exports are not available, prices for domestic sales are negotiated with local buyers, with payment
received in advance of sale.
- Future offtake arrangements for exports may be different, either positively or negatively, to the terms imposed from
September 2022. Until September 2022, exports were priced using a formula that had previously been established
with the KRG. From September 2022 to March 2023, the KRG unilaterally imposed a change to this formula
- The KRG, the Company’s sole counterparty, delays payments of amounts due once exports begin, as has happened
sporadically in the past, adversely impacting the cash generation of the Company’s production
- The Company is currently owed a significant sum for sales made between September 2022 and March 2023.
Although the KRG has consistently committed to pay all the monies that it owes to the Company, there is currently no
agreed plan for collection of amounts owed, and consequently there is uncertainty around the timing of collection
How we
manage it
Under the terms of its PSCs, the Company is entitled to benefit from a prescribed proportion of barrels sold and the netback
price based on the actual realised price per barrel achieved from its sale in the international markets, with an adjustment for
the cost of the oil being delivered to the customer. The Company will defend its contractual position on both issues.
In terms of payment risk, the Company has consistently maintained a strong balance sheet and run appropriate downside
scenarios to mitigate the risk of insufficient funding for its objectives, or insolvency, arising from an unexpected material
reduction in its cash generation from Kurdistan. This has generally resulted in carrying a significant cash balance and
underlevered balance sheet.
Genel Energy Annual Report 2023
19
Strategic reportGovernanceFinancial statementsOther information
Risk management Principal risks
Development & Recovery of Oil Reserves
Strategic link:
Risk owner:
Year-on-year risk movement:
CEO
The Company aims to realise the value of the reserves in its portfolio by deploying capital in line with the value creation
expected from our asset development plans.
- Underestimation of reservoir uncertainty, low side reservoir performance, and poor drilling execution impact the
ability to extract maximum reserves value
Genel implements life-of-field asset development plans to manage risks, ensuring a structured approach to mitigate
uncertainties. The Company also prioritises the correct categorisation of uncertainties to facilitate informed decision-making.
Context
What is
this risk?
How we
manage it
Arbitration
Strategic link:
Risk owner:
Year-on-year risk movement:
GC
New Risk
Context
The main evidentiary hearing for the London-seated international arbitration, including Genel’s claim for substantial
compensation from the KRG following the termination of the Miran and Bina Bawi PSCs, took place in London between
19 February 2024 and 1 March 2024. The timing of a final resolution in respect of the arbitration is currently unclear
although a final ruling is expected in the second half of 2024.
The KRG’s claim is that the KRG was entitled to terminate the Bina Bawi and Miran PSCs. Genel’s claim is that the KRG’s
termination of the PSCs was repudiatory and, as a consequence, is claiming substantial damages.
The KRG is not claiming any damages from Genel. In total, Genel spent in excess of $1.4 billion acquiring and attempting
to develop the Bina Bawi and Miran fields.
Our views on the merits of the case are unchanged since the arbitration was launched in December 2021.
- As with any arbitration, there can be no certainty as to the outcome of the proceedings
-
In the event of a successful award of damages there is a risk associated with the successful enforcement of
such award
- There can also be no certainty as to how the legal costs incurred will ultimately be borne between the Company and
the KRG, with the Arbitration Tribunal having a discretion to allocate such costs as part of its Award
Genel has sought to mitigate the risks outlined above by instructing a leading international law firm and barristers specialising
in such matters to advise in relation to the arbitration, with the Company’s management ensuring that they dedicate sufficient
time and attention to the arbitration. The Company will continue to ensure sufficient internal and external resources are
committed to the arbitration until a final resolution has been reached.
What is
this risk?
How we
manage it
20
Genel Energy Annual Report 2023
Reserves Replacement & Additions
Strategic link:
Risk owner:
Year-on-year risk movement:
TD
Genel has a clear objective of increasing its reserves and its long-term cash-generative production, both organically
and inorganically.
- Genel is unable to replace and add reserves produced from the existing asset base due to the mature nature of
producing fields with limited contingent resources conversion potential, or from addition of inorganic opportunities
to broaden the portfolio
- Organic reserves replacement from exploration is inherently higher risk from both a subsurface and above ground
geopolitical perspective
Genel manages this risk through a combination of life-of-field existing asset development planning while correctly
categorising uncertainty.
Retaining the optionality for future exploration drilling in Somaliland with the potential for future contribution to contingent
resources and reserves.
The pursuit and addition of assets through new business remains a key mitigant to depletion of the Company’s reserves base.
New Business Activity
Strategic link:
Risk owner:
Year-on-year risk movement:
TD
The Company has set out its clear objective of adding new assets to its portfolio to progress its strategy to create
shareholder value through the diversification of production and revenue streams.
- Cash generation and investor returns decline as the Company is unable to add new assets
- The Company executes a transaction that adversely impacts the Company’s long-term liquidity, balance sheet, asset
portfolio quality and equity story, negatively impacting shareholder returns
Genel mitigates this risk through a clear set of strategic objectives, against which an experienced management team
can deliver.
The Board oversees and approves all significant new business decisions, ensuring thorough scrutiny and alignment with
our strategy.
Context
What is
this risk?
How we
manage it
Context
What is
this risk?
How we
manage it
Capital Structure & Financing
Strategic link:
Risk owner:
Year-on-year risk movement:
CFO
Context
The Company’s balance sheet and capital structure provide funding for achieving its objectives.
The range of possible outcomes for its cash position over five years is extensive due to several uncertainties, including but not
exclusive to commodity price volatility, geopolitics, uncertainty regarding production and reserves, the timing of payments
and spending, the quantum of spend, availability of debt and equity capital markets.
What is
this risk?
How we
manage it
- One of, or a combination of, the various uncertainties result in a significant impact on capital available to the Board
to fund the achievement of its objectives. Should this happen, prospects for delivery of shareholder value decrease
and the risk of reduction in shareholder value increases
The Company has consistently maintained a strong balance sheet and run appropriate downside scenarios to mitigate
the risk of insufficient funding for its objectives or insolvency arising from an unexpected material reduction in its cash
generation from the Kurdistan Region of Iraq.
This has generally resulted in a significant cash balance and underleveraged balance sheet.
Genel Energy Annual Report 2023
21
Strategic reportGovernanceFinancial statementsOther information
Risk management Principal risks
Context
What is
this risk?
How we
manage it
Context
What is
this risk?
How we
manage it
Attract & Maintain Organisational Capability
Strategic link:
Risk owner:
Year-on-year risk movement:
CHRO
The Company aims to attract, retain, and develop the appropriate level of talent and organisational capability required
for delivery of its strategy.
- Risk mitigation and the successful delivery of strategy is negatively impacted through not having the right capability
in the business to meet obligations
- A gap in our capabilities jeopardises our ability to meet our obligations in the regions the Company serves
- A failure to prioritise recruitment practices that involve discussions and adherence to local government and
community guidelines impacts Genel’s reputation and hinders the Company’s ability to carry out activities efficiently
- The recent reduction in headcount, as a result of the downsizing of operations, affects our ability to retain core
personnel in a buoyant oil and gas market and strategic measures are required to both retain existing and attract
new skilled professionals
Genel regularly determines its capability needs and reports to the Board periodically through various Committees.
The annual performance management process is instrumental in supporting high performance while identifying areas for
necessary development, ensuring a proactive approach to skill enhancement and growth. Our Annual TalentMAP process is
designed to identify key individuals and facilitate broad succession planning, minimising the impact of talent gaps.
Furthermore, our balanced approach to internal and external talent acquisition allows for immediate insights and swift
reactions to staff changes, ensuring seamless transition and operational efficiency. These strategic talent management
practices collectively contribute to our risk mitigation efforts, fostering a resilient and adaptable workforce.
Environmental, Social & Governance Expectations
Strategic link:
Risk owner:
Year-on-year risk movement:
CEO
Position the Company during the energy transition, supporting communities where we operate. Identifying and addressing
relevant ESG risks is integral to our strategy.
-
Ineffective management of risks associated with ESG elements results in reduced access to capital and
reputational harm
- Carbon taxation or future climate-related regulation results in a negative impact on operations and/or
cash generation
- A failure in ongoing engagement with our host communities and an inability to maintain strong local community
support results in disruption to field operations
Genel prioritises mitigating ESG risks, which is evident in the Board’s and senior management’s strong commitment to the
approved strategy. This strategy outlines responsible practices across all ESG aspects, allowing adaptation to emerging trends
and operational changes. This strategy also extends to Genel’s social investment projects and furthermore, emphasises the
importance of robust community engagement practices in contributing positively to host communities. Monitoring progress
involves an integrated ESG scorecard and sustainability metrics, enhancing transparency and accountability. By prioritising
ESG, Genel aims to mitigate risks and uphold responsibility through the energy transition.
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Genel Energy Annual Report 2023
Regulatory & Compliance Failure
Strategic link:
Risk owner:
Year-on-year risk movement:
GC
Context
The Company and its staff are subject to various laws and regulations governing corporate and personal conduct.
What is
this risk?
How we
manage it
- Failure to adhere to our legal and regulatory obligations could result in financial penalties, a negative impact on
performance, regulatory oversight, and reputational damage
Genel is committed to conducting business in compliance with all applicable laws and regulations and in accordance with
the highest ethical standards. We have defined a clear set of values, adopted our Code of Conduct and implemented a
robust set of policies and procedures across the business which establishes a framework that sets clear expectations.
We have in place a legal compliance programme that includes due diligence processes, an annual training and
certification process, a whistleblowing and grievance procedure and an investigations procedure.
New legislation and regulations are closely monitored and our Board of Directors examine the application of our
compliance programme and governance framework.
Health & Safety
Strategic link:
Risk owner:
Year-on-year risk movement:
CEO
Context
Health and safety management are primary considerations across all Genel operations.
What is
this risk?
How we
manage it
- HSE procedure failures result in harm, including injuries, environmental impact, and reputational damage
Genel highlights the link between HSE performance and our operating licence, emphasising the need for strong controls.
Managing these risks protects our workforce, environment, and operational licence. High HSE standards are crucial for
employee motivation and a safe work environment.
The Company prioritises hiring competent personnel and strives for incident-free operations through continual
improvement in our HSE management system. A robust HSE plan defined KPIs, and proactive risk mitigation are integral.
Genel conducts thorough HSE and process safety assessments, and ongoing assurance activities reinforce safety protocols.
Incident response capabilities are enhanced through workforce training, and HSE supervision ensures a vigilant environment.
This comprehensive approach aims to minimise health and safety risks, fostering a culture of continuous improvement.
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Principal risks and uncertainties
Viability statement
In accordance with provision 31 of the 2018 revision of the UK
Corporate Governance Code (‘the Code’), the Directors have
assessed the prospects and viability of the Company over
a longer period than the 12 months required by the ‘Going
Concern’ provision.
Consideration of principal risks
The principal assumptions underlying the forecasts above were
reviewed in the context of the risks and mitigating actions set out
in the Principal Risks in the Annual Report including in particular
those that specifically relate to the company’s viability, including:
— Commercial terms & payment for Kurdish sales
— Arbitration
— Development & recovery of oil reserves
— KRI oil and gas sector and regional risk
— Capital structure & financing
Viability assessment
Based on their review of these assumptions and sensitivities in
the context of the funding options and risks referred to above,
the Directors found that there was a reasonable expectation that
the Company will be able to continue in operation and manage
its liabilities as they fall due over the three-year period to
December 2026.
Our 2023 Strategic Report from pages 1 to 69 has been reviewed
and approved by the Board of Directors on 25 March 2024.
Paul Weir
Chief Executive Officer
Choice of assessment period
Given the extant uncertainty around the timing and terms of
any export restart, the Directors have reduced their assessment
of the appropriate period for their viability statement from five
years to three years. Although a shorter period, it importantly
still captures the maturity of the Company’s bonds in October
2025 and there remains inevitable cash flow uncertainty given
the inherent volatility in long-term oil price and uncertainty
regarding netbacks, route to market, payment terms, receivable
recovery, cost and production forecasting.
Business assumptions when assessing viability are derived from
the Company’s forecast of its cash generation and value delivery.
Review of financial forecasts
In reviewing the expected evolution of the company’s business,
cash flows and capital structure over the review period the
Directors took into account:
— The Company’s five-year plan, which incorporates the Company’s
latest life of field cash flow projections for producing assets
— The various capital allocation scenarios that may evolve and the
Company’s potential asset portfolio investment decisions
— The Company’s bond and compliance with its covenants
— The availability of debt capital markets and other sources of
finance, together with the debt capacity of the business
— The oil price forecast set out in the notes of our
financial statements
A range of sensitivities were run on the assumptions set out
above to reflect different scenarios including, but not limited
to, changes to production profiles, oil price and netback
assumptions, route to markets, receivable recovery, capital
allocation, and payments.
24
Genel Energy Annual Report 2023
Stakeholder engagement
As a Jersey registered company, Genel Energy plc is not required
to prepare a s172(1) statement in accordance with UK legislation,
however, in line with the UK Corporate Governance Code we have
voluntarily chosen to report how we take our stakeholders into
consideration in running the business.
We recognise that the Company has a range of stakeholders
including but not limited to our investors, the local government
and communities in the regions in which we operate, our joint
venture partners, employees, and suppliers. When making
business decisions the Board of Directors considers, both
individually and collectively, that they have acted in good faith
and in a way that would be most likely to promote the success of
the Company for the benefit of its members as a whole (having
regard to the stakeholders and matters set out in s172(1) ((a-f) of
the Act) in the decisions taken during the year ended 31 December
2023 (see Corporate Governance report). In particular, the Board
considers this to be the case, by reference to the approval of our
strategy and business model supported by our viability statement
on page 24:
(a) The likely consequences of any decision in the long-term
Genel aims to have a portfolio of assets that positions us well for
a future of fewer and better natural resource projects, with an
organic portfolio funded by cash generated from our producing
assets, while we seek to deploy capital on adding new assets.
The Company continues to maintain its strong balance sheet,
and its liquidity runway and debt maturity profile is proactively
managed, for example through the market purchases of bonds and
the bond buy-back tender executed during the year.
(b) The interests of the Company’s employees
Although an organisational review during 2023 resulted in a
significant reduction of the workforce Genel continues to be
committed to employing a diverse and balanced team, enabling
us to build an effective and talented workforce at all levels of the
organisation. To this end, we continue to use our annual Talent
MAP process to identify high-potential employees including
areas where additional professional development support can
be provided. In 2023 a coaching and leadership programme was
initiated with eight participants. Further information on employee
management can be found on pages 52 to 54.
The Board has appointed Canan Edibog˘lu as the Designated
Independent Non-Executive Director, responsible for workforce
engagement and providing insight into our employees’
perspectives on the business to the Board. Further information on
workforce engagement can be found on page 77.
(c) The need to foster the Company’s business relationships
with suppliers, customers, and others
Long-term strategic thinking, aligning our goals with those of host
governments and business partners to build deep and valuable
relationships, helping to unlock value in complex commercial
situations helps Genel to fulfil its strategy. In 2023, the Company
continued to engage with host governments at all levels in
order to drive forward our business strategy. In the wake of the
shut-in of the ITP we collaborated with our partners and host
government to switch to domestic sales, and with our suppliers to
reduce expenditure.
(d) The impact of the Company’s operations on the community
and the environment
Supporting and engaging with the communities in which we
operate continues to be fundamental to Genel’s success, and
in 2023 we continued to support meaningful social investment
initiatives that demonstrate our commitment to improve the
wellbeing of our host communities. In addition, Genel also
prioritises the promotion of local employment and contracting,
where possible, so that the economic benefits generated from
our operations are shared directly within the regions where our
activities are taking place.
The Company was pleased to see the progress being made by each
of the Genel20 Scholars following the launch of this programme
in the KRI in 2022, which provides a university scholarship for 20
talented school graduates from disadvantaged backgrounds.
In response to the devastating earthquakes in Türkiye and
Morocco during 2023, the Company made donations to support
emergency response efforts in both regions, and also made
contributions to education programmes in the earthquake-
affected zones of Türkiye.
As our civil engineering work continued in Somaliland, Genel’s
social investments included funding a mobile health clinic
programme to provide medical support to communities with
limited or no existing facilities. In continuation of our focus on
education, Genel also funded a programme of educational supplies
across 20 schools, and also made a donation to Burao Academy of
Science and Technology. The Company was also pleased to fund
improvements to an existing orphanage in Burao.
We remain acutely aware of the challenges associated with
climate change, and the requirement for a reduction in GHG
emissions. We also recognise a breadth of environmental
considerations associated with our activities beyond climate-
related risks. This was reflected in 2023 in the manner in which
we exited the Sarta asset; which included a cuttings and fluids
treatment and disposal project, in order to address the potential
residual environmental impact resulting from Genel’s tenure as
operator at the asset and remediate the site. More information can
be found in the sustainability section on pages 26 to 69.
(e) The desirability of the Company maintaining a reputation
for high standards of business conduct
Genel Energy plc is a Jersey incorporated, UK tax domiciled,
Company with a standard listing on the London Stock Exchange.
Our Code of Conduct defines the values that capture the heart of
the Company’s spirit and ensure the Company maintains a strong
reputation for high standards of business conduct. Our 2023
Corporate Governance report illustrates how the Board and its
Committees have supported these business activities.
(f) The need to act fairly towards members of the Company
The Board of Directors’ aims to ensure that Genel behaves
responsibly toward our shareholders and treats them fairly
and equally, so they too may benefit from the successful
delivery of our plan. The Chair and Independent Non-Executive
Directors meet regularly in order to deliver on this responsibility.
More information on our relationship with shareholders can be
found in the Corporate Governance report.
Genel Energy Annual Report 2023
25
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Sustainability Introduction
Sustainability report -
a message from the CEO
future operated ventures, and through its application we remain
focussed on the role Genel can play as a responsible operator
during the energy transition. On this front, we were also pleased
to maintain our CDP Climate score of B in 2023.
We remain conscious of the broader sustainability challenges
beyond climate-related risks and in 2023 I was particularly
pleased by the environmental stewardship we demonstrated as
part of our exit from Sarta which, at the end of the year, saw our
field teams complete a treatment and disposal project for the
waste drill cuttings and fluids that had been generated during
Genel’s presence at the asset. This work presented significant
logistical and HSE challenges, and our KRI in-country team was
able to complete the project ahead of schedule.
I was delighted to see the progress being made by the students
enrolled in the Genel20 Scholars programme, which we launched
in 2022 and which will provide a full four years university
education for 20 students from disadvantaged backgrounds
across the KRI. This programme has now entered its second
year and Genel’s staff were pleased to engage directly with the
Scholars during the year. I was encouraged to hear of their stories
from their first year of studies, and some of these accounts have
been shared in this report. This programme continues to be a
source of great pride for Genel and I am eagerly anticipating how
the ambition of these 20 scholars will materialise over the next
few years.
The ramp-up in our civil infrastructure work in Somaliland was
coupled with important and productive engagement with our host
communities, and also saw a broad range of social investments in
the region. Our flagship social initiative in Somaliland is a mobile
medical clinic programme which targets communities with few or
no existing medical support services. In continuation of our focus
on education, Genel also funded a programme of educational
supplies which will benefit approximately 1000 students across
20 schools. We made a donation to Burao Academy of Science
and Technology and earlier in the year Genel also funded
improvements to an orphanage in Burao.
In reading this report you will notice that we have taken the
decision to extend the sustainability content in this year’s Annual
Report, to reflect what would normally be issued as our separate
Sustainability Report. This is an important step for Genel and
reflects the significance we allocate to reporting and progressing
our sustainability journey. I am particularly happy to share the
work that we have completed in relation to commitments towards
the TCFD recommendations over the past year, and the action
items we have developed going forward.
As we look to Genel’s future operations and activities, we do
so as a responsible business with established sustainability
practices at our core, and with ongoing commitment to supporting
local communities.
Paul Weir
Chief Executive Officer
Sustainability practices have been an
important priority in Genel’s business and
this focus remained unchanged throughout
2023. While it has been a year of change for
Genel’s operated licences, we have maintained
our steadfast commitment to environmental
management, engaging with and investing
in our host communities, and operating as a
socially responsible and transparent business.
Our focus on sustainability is a natural progression of our
corporate values, which drive not only the way we conduct our
business, but also the way we treat our stakeholders. Genel’s
robust governance structure provides a foundation for the high
ethical standards to which we aim to adhere, and which in turn has
helped build our company culture. Furthermore, in 2023 Genel
continued our commitment to the communication of progress to
the UN Global Compact’s 10 Principles on human rights, labour
standards, environment and anti-corruption.
The dedication and professionalism of our Health and Safety
teams was apparent once again during 2023, and it was because
of their continued hard work and diligence that I can once again
report that there were no Lost Time Incidents or Tier One Losses
of Primary Containment throughout the year. The changes to
our operational activities in 2023 tested Genel’s agility and I was
pleased to see how the business responded to these challenges,
as evidenced in the restructuring of the HSE and Security and
Emergency Response teams during the changes to activities in
Somaliland and the KRI.
While our exit from Sarta meant that we were unable to bring
our planned operated emissions reduction projects at this asset
to fruition, Genel will continue to focus our attention on climate-
related risks during this critical period for the oil and gas industry.
The implementation of our GHG Emissions Management Standard
remains as the central tool for assessing climate-related risks in all
26
Genel Energy Annual Report 2023
2023 Sustainability highlights
$626,000
invested in social projects in 2023
Maintained CDP
climate score of B
Zero LTIs
across all Genel operations
with over 4 million hours
worked incident free
Zero
Tier 1 or Tier 2
Process Safety Events
Carbon Intensity of
13.6
kg CO2e/bbl
200
employment opportunities
for local contractor workforce
in Somaliland
Genel20
Scholars programme
reaches first year milestone
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Sustainability Overview
Overview
The following chapter provides details of Genel’s sustainability strategy, and of the activities
that delivered on this strategy during 2023. Despite changes to our operated licences over
the past twelve months sustainable practices remained at the core of our business. We were
pleased to continue our commitment to the Communication on Progress under the United
Nations Global Compact, and the following chapter expands further on our progress towards
addressing a broad range of sustainability challenges as a responsible business.
Guided by Sustainable
Development Goals
The UN Sustainable Development Goals (‘SDGs’) are a collection of 17 global goals established by the United Nations
General Assembly which are intended to provide a ‘blueprint to achieve a better and more sustainable future for all’.
The SDGs provide valuable guidance to Genel and our continued commitment to these helps anchor our responsible
business practices and moreover, helps Genel make a tangible difference to the lives of people in communities in which
we operate.
Furthermore, by focussing on the goals that we consider to be of most relevance to Genel’s business and operating
landscape, we have been able to concentrate our sustainability efforts on delivering in a targeted and impactful way.
The relevance of these goals is reviewed periodically depending on our operating environment, and regions of operation.
Education and health initiatives have long been a central pillar of our social investment programmes and both these
themes remain as a key need for local communities in our regions of operation. Indeed, two of our key social investments
in 2023 followed these themes – namely, the ongoing Genel20 scholarship programme in KRI, and a mobile medical clinic
programme in Somaliland.
Additionally, we have also identified the critical need to support economic growth through maximising community
employment opportunities, building local supply chains, and through capacity building and knowledge sharing. As a
natural resources company, we are also acutely aware of our environmental footprint, and managing our potential impact
on the natural environment is core to our activities and our social investments.
Accordingly, the following five UN SDG’s are the goals which we have selected to be most appropriate as the focus of
our attention:
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Genel Energy Annual Report 2023
Materiality: what matters most to Genel?
Understanding the materiality of our business
has been key to shaping our sustainability
strategy, and the key to accurately reflecting
our materiality is meaningful engagement
with our stakeholders.
Genel undertook a comprehensive materiality assessment which
began in 2022 and was completed in early 2023, and which
provided an opportunity for engagement with a broad range of
our stakeholders. Proactive engagement with our stakeholders
has always been a critical element of Genel’s business and this
exercise allowed us to understand the sustainability priorities
for each respective stakeholder. This assessment included
engagements with host communities, employees, business
partners, regulatory authorities, non-government organisations
(‘NGOs’) and the investment community.
Using the SASB (Sustainability Accounting Standards Board)
industry-specific material topics for Oil & Gas Exploration and
Production as its foundation and tailoring these to Genel’s
specific operations, this assessment considered the relevant
boundaries of material topics. The scope of the assessment
comprised the following:
— Individual stakeholder interviews
24 individual stakeholder interviews were completed with the
intention of understanding the views of Genel’s geographically
and functionally diverse stakeholders.
— Executive Committee workshop
Genel’s senior leadership team provided input into the likely
business impact of each ESG topic and commentary around
views of each topic.
— Consideration of applicable sustainability trends in Genel’s
operating environment
The priority of sustainability topics has evolved in the years
since Genel’s initial materiality assessment of 2019 and it was
important that these emerging trends were considered in the
assessment of materiality.
The objective of the materiality assessment was to characterise
the sustainability topics considered to be of most importance
to Genel’s stakeholders, and to determine which of these topics
could have most impact on Genel’s business performance.
The outcome of the assessment resulted in a revision to Genel’s
ESG strategy in line with the assessment findings. Genel’s
revised materiality matrix was first presented last year and is
repeated below.
R
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Social investments
GHG emissions
Human rights and modern slavery
People and diversity
Business ethics
Health and safety
Regulatory compliance
Supply chain management
Air quality
Water and wastewater
management
Community engagement
Crisis and emergency management
Ecological impact
IMPACT ON G ENEL’ S BUSIN ESS
HIGHER
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Sustainability Overview
Genel’s sustainability strategy
Genel has long acknowledged the importance
of an integrated sustainability strategy within
our broader business strategy, as the two
do not occur in isolation. Our sustainability
strategy provides a foundation for managing
core sustainability topics within Genel’s
business-as-usual operations, while also
providing a mechanism to respond to
external trends and Genel’s evolving
business operations.
The strategy is structured around
Environmental, Social and Governance (‘ESG’)
elements that have been identified in Genel’s
materiality assessment and that have been
assessed to be most relevant to our business
activities and our regions of operation.
Vision
Genel’s sustainability vision is to be a responsible business.
In doing so, to be the creator of shareholder value as a
responsible organisation throughout the energy transition.
Foundation
The foundation of Genel’s strategy comprises the existing
operational measures in place that manage sustainability risks.
These are the business-as-usual processes at Genel that form
the bedrock of being a responsible operator. Each of the material
topics identified have an established mechanism to mitigate any
potential risk and enhance our capabilities, where applicable.
Adaptability
Genel remains aware of the breadth of sustainability topics that
could potentially impact our business and moreover, how the
importance or severity of impact of these topics may evolve
over time. As such, Genel remains adaptable to emerging
sustainability trends, and the need to bolster existing measures
when required, in response to external factors or a change in
Genel’s activities.
Structuring Genel’s ESG strategy in this manner is intended
to provide a model that will evolve in line with changes
to Genel’s activities and in response to changes in the
sustainability landscape.
Application
Based on the material topics identified by Genel and its
stakeholders, and in the context of existing measures at
Genel, the application of our sustainability strategy in 2024 is
provided below, specifically, with our areas of focus for the year.
As Genel’s business evolves in the future, the application of
this strategy will evolve with the needs and requirements of the
surrounding environment.
E S G S T R AT E G Y
Being a responsible business: to be a creator of
shareholder value as a responsible organisation
throughout the energy transition.
VISION
A P PL Y I N G T HE
E S G S T R AT E G Y
I N 2 02 4
Given the dynamic nature of sustainability
challenges and as Genel’s operational activities
evolve, our strategy allows for adaptability
in order to respond to current and emerging
sustainability priorities.
At the foundation of Genel’s sustainability
strategy are the business-as-usual
operational controls required to address
core sustainability challenges. This
approach ensures that sustainability
is integrated into Genel’s broader
business strategy.
30
Genel Energy Annual Report 2023
E – Water management
ADAPTABILITY
S – People and diversity
FOUNDATION
G – Supply chain management
E – GHG Emissions
– Ecological impact
– Air quality
S – Health and safety
– Community engagement
– Human rights & modern slavery
– Social investments
G – Crisis and emergency
management
– Business ethics
– Regulatory compliance
Sustainability Environmental responsibility
Environmental responsibility
The nature of Genel’s activities and the
regions in which we operate require
that we maintain focus on a broad
range of environmental considerations.
Genel takes pride in the business-as-usual
operational controls we have developed
to identify, manage, and mitigate potential
environmental risk, and these controls remain
at the core of all our business activities.
We acknowledge the challenges associated with climate-related
risks and remain acutely aware of the requirement for reducing
GHG emissions from our operations. Reflecting the importance
that Genel assigns to climate-related risks, we have established
robust policies and procedures for assessing and managing
these risks throughout the business. We also recognise the wider
range of environmental topics associated with our activities
and relevant to our industry beyond climate-related risks,
and because of this we have established robust processes to
minimise our impact on the natural environment. This chapter
aims to explain Genel’s approach to managing this broad range
of environmental aspects, as we consider our environmental
responsibility. Additionally, a summary of the existing controls
in place for each material topic is provided on page 66-67 of
this report.
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Sustainability Environmental responsibility
Climate-related risks
— Carbon intensity of 13.6 kgCO2e/bbl
— CDP climate change score of B
Genel acknowledges the risks represented by climate change
and the significant challenges that will need to be overcome as
the world navigates the necessary energy transition. We remain
aware of the critical role that our industry will contribute
throughout this transition, given that the energy needs of future
generations are expected to be met by a mix of renewables,
conventional oil and gas, and other non-renewable energy
sources. Within this context we recognise the responsibility of
Genel, and others in this industry, to take the actions required
to mitigate climate-related risks. The following section of this
report details the established tools and processes we have in
place to manage these risks. This is led by our GHG Management
Standard which is embedded within our business-as-usual
operational activities and decisions. In reflection of Genel’s
commitment to transparency in reporting climate-related risks
and opportunities, we have also included our responses to
recommendations of the Task Force on Climate-related Financial
Disclosures (‘TCFD’) within the next section.
Climate change and the energy transition
The most recent forecasts made by the International Energy
Agency (‘IEA’) in the 2023 World Energy Outlook indicate an
expected increase in global oil consumption to 2030, under the
Stated Policies Scenario. After this initial increase, a gradual
decline in relative consumption is forecasted to 2040, with a
plateauing of consumption in the years towards 2050. As such,
this suggests a continued supply of oil will contribute towards
the overall energy demand to 2050, which will be supplemented
by an increased capacity from developing non-fossil fuel energy
sources. Accordingly, oil, and indeed hydrocarbons more broadly,
are projected to remain as part of the overall energy supply mix
required as part of the energy transition. It is in this context
that Genel considers that we can contribute to this supply as a
socially responsible operator.
During this period of change, Genel acknowledges the need to
develop existing and future assets in a manner which focuses on
a reduction in emissions while also delivering a meaningful and
positive impact to our host country communities. On this basis,
and by operating as a responsible business, it is our belief that
Genel has the right strategy to continue to navigate the energy
transition successfully.
Greenhouse Gas Emissions Management Standard
Genel’s GHG Emissions Management Standard is our primary
tool for assessing the carbon intensity of our portfolio.
The application of this Standard provides a robust understanding
of our GHG footprint, which is essential to enable Genel
to understand the scale of emission reductions required
at each respective asset, to ensure that we contribute to
the energy supply as a responsible, low carbon producer.
The Standard calculates a life-of-field carbon budget which
considers carbon limits under several climate scenarios and
represents the foundation of our ambitions for managing and
reducing emissions.
The Standard is applied in Genel’s Asset Development Plans
(‘ADPs’) as we continue to seek opportunities to reduce carbon
emissions, maintain low carbon intensity, and embed a culture
of assessing and mitigating climate change risks into our
operational practices. The management of GHG emissions
will continue to be an important consideration for our current
business, and also within our new business pursuits.
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2010
2020
2030
2040
2050
Fossil fuel consumption by fuel in the stated policies scenario 2000-2050
Taken from the IEA World Energy Outlook 2023
Natural gas
Oil
Coal
32
Genel Energy Annual Report 2023
2023 GHG emissions profile
Genel reports Global GHG emissions and intensity ratio in
accordance with the requirements of the UK’s Companies Act
2006, and The Companies (Directors’ Report) and Limited
Liability Partnerships (Energy and Carbon Report) Regulations
2018. In addition, Genel is reporting last year’s GHG emissions
data, its underlying energy consumption for 2023 and 2022, the
contribution of UK operations to global energy consumption and
GHG emissions, in alignment with the additional requirements
implemented as part of the 2018 Regulations for Streamlined
Energy and Carbon Reporting. The methodology used for
reporting follows guidance provided in the 2015 GHG Protocol
Corporate Accounting and Reporting Standard.
GHG emissions (equity based)
Scope 1 (direct) emissions (tCO2e)
Scope 2 (indirect) emissions (location based) (tCO2e)
Associated energy use (kWh)
Carbon intensity (kgCO2e/bbl)
Scope 1 and 2 emissions
Since 2020, Genel has reported Scope 1 and 2 emissions on
an equity share basis, and we have chosen to continue to
do so because we consider this to be the most transparent
representation of our emissions footprint. GHG emissions
data from non-operated assets are provided by our joint
venture partners.
In 2023 Genel’s emissions data has been subject to independent
limited assurance by ERM Certification and Verification Services
Limited (‘ERM CVS’) for selected metrics, as presented in the
GHG emissions table below. The 2023 assurance statement
and Genel’s methodology for emissions reporting, which
follows guidance provided in the 2015 GHG Protocol Corporate
Accounting and Reporting Standard, is provided on Genel’s
website (genelenergy.com/sustainability/climate-risks).
Our carbon intensity was 13.6 kgCO2e/bbl in 2023 and while this
represents a decrease from 2022, given the inconsistencies in
production experienced throughout 2023, this year-on-year
trend has only limited value. Moreover, it is likely that Genel will
establish a new baseline year, on account of the changes to our
operated licences in the past year. For Genel’s operated asset in
2023 (Sarta), we can also report that flaring accounted for 76%
of the total operated Scope 1 emissions, liquid combustion 19%,
process vents less than 1% and fugitive emissions 5%.
2023
2022
Global
UK
Global
UK
61,274*
259*
-
9.4
192,637
176
84,881,821*
45,670
179,004,401
13.6*
-
17.56
-
6.4
30,171
-
* For 2023, this metric has been subject to external independent limited assurance by ERM CVS. For the results of the assurance see ERM CVS’s assurance report and Genel’s reporting
criteria (available from genelenergy.com/sustainability/climate-risks)
GHG emissions reduction
Genel’s emissions reduction efforts requires effective design,
efficient operations, and responsible energy use, in order that
Genel’s asset development plans are sustainable from both
an economic and a climate perspective. The key contributor
influencing our GHG emissions profile is flaring, and because
of this gas management remains a primary element of Genel’s
emissions reduction strategy, supported by Genel’s GHG
Emissions Management Standard.
Throughout our tenure at Sarta, Genel had evaluated several
initiatives with the overarching aim of minimising our operated
emissions from this asset. While our exit from Sarta prevented
Genel bringing these initiatives to fruition, our experience
has provided a template for the necessary considerations and
actions required to meet our ambitions as a low carbon producer.
During field development Genel had explored potential gas
management solutions, and we had also taken steps to address
our own operational emissions through the installation of a solar
panel and battery storage unit at the Sarta-1D wellsite, which
continued to be operational in early 2023.
Furthermore, with our joint venture partner and operator of
the Tawke PSC, DNO, Genel continues to be part of the first
Associated Gas Injection (AGI) project in the KRI. Since 2020,
Phase 1 of the project has successfully captured over 1.2 million
tonnes of CO2e from the Peshkabir field and subsequent
transport of the captured gas, via pipeline, for reinjection at the
Tawke field to enhance oil recovery, thereby reducing flaring
rates across the Tawke PSC.
In 2023, an important milestone was reached on this project,
with completion of Phase 2 of the AGI. This has allowed for
capture and reinjection of the produced gas at the Tawke field,
thereby reducing flaring further. The shutdown of the Kurdistan
export pipeline in March 2023 resulted in variable production
rates across both fields, which impacted the performance of the
gas injection project in the last 12 months.
Genel Energy Annual Report 2023
33
Strategic reportGovernanceFinancial statementsOther information
Sustainability Environmental responsibility
Scope 3 emissions
In 2023 Genel continued reporting our Scope 3 emissions on
an operational control basis (accounting for Genel’s activities
at Sarta and in Somaliland), for the categories assessed to
be within our boundary of reporting. Additionally, we have
continued the precedent we set for ourselves in 2022 by equity
share reporting for category 11 (sold products). The rationale
for dual reporting category 11 being that this category is the
overwhelming contributor to Genel’s Scope 3 emissions footprint
- in 2023 representing over 89% of scope 3 operated emissions
- and so by extending the reporting boundary for this single
category allows for increased transparency in our Scope 3
emissions footprint.
2023 saw a reduction in Scope 3 emissions reflected across
most applicable categories which, as was the case with Scope 1
emissions, was largely a function of Genel’s reduced activities
and production profile in 2023. A summary of Genel’s 2023
Scope 3 emissions is presented below, both as an operational
control basis and as an equity share for Category 11.
Scope 3 Operational
Control (tCO2e)
Scope 3 Category 11
Equity share (tCO2e)
2023
2022
2021
41,926
264,686
356,847
1,950,970
4,757,588
reported
in 2021
Not
Portfolio resilience
Genel is consistently reviewing its portfolio to assess its
resilience through the energy transition. We evaluate our
producing assets each year against common scenarios outlined
by the IEA in their annual World Energy Outlook, with the
intention of assessing our business to ensure that our assets
remain competitive when stress-tested against variable carbon
taxes and oil prices. The scenarios selected are those that are
applicable to the regions in which Genel produces oil, and the
anticipated operational time horizon of these producing assets.
For the purpose of the analysis, we have applied a base case
scenario that assumes a Brent oil price of $70/bbl and no
carbon tax, on account of our assets being located in areas
where carbon tax is currently not applicable. To this base
case, and under our existing cost structure, we applied the
oil price and carbon tax values under the IEA’s Announced
Pledges Scenario, with the time horizon for our analysis of
2030 corresponding with Genel’s time horizon for our existing
assets. This scenario is based on climate-related targets already
announced by governments, and therefore is considered to
represent the scenario with the lowest degree of uncertainty for
future predictions.
Under the Announced Pledges scenario, Genel’s margin was
calculated to increase against the established base case, which
indicates the conservative nature of Genel’s base case.
It should be noted that the IEA’s Stated Polices Scenario is not
applicable for this exercise, on account of the regions in which
Genel currently operates. As such, Genel has also evaluated our
business under a hybrid scenario, by applying the oil price and
carbon tax variables at a point between the IEAs Announced
Pledges and Net Zero scenarios. Within this hybrid scenario,
Genel applied a 2030 crude price of $58/bbl and a carbon
tax of $15 per tonne, and under this scenario Genel’s margin
was calculated to erode by 67%. This has helped indicate that
fluctuating crude prices and punitive carbon taxation will have
a manageable impact on our margin, which helps demonstrate
the resilient performance of our business in a climate
changing world.
Impact on margin on 2030
100%
111%
67%
Base at $70/bbl
No carbon tax
Announced pledges
($74/bbl Brent
No carbon tax)
Hybrid scenario
($58/bbl Brent
$15/tonne of CO2)
Summary of Genel’s 2023 Scope 3 emissions shown as an operational control basis.
Scope 3 emissions category
Category 1: Purchased Goods & Services
Category 2: Capital Goods
Category 3: Fuel & Energy Related Activities
Category 4: Upstream Transportation & Distribution
Category 5: Waste Generated in Operations
Category 6: Business Travel
Category 7: Employee Commuting
Category 9: Downstream Transportation & Distribution
Category 11: Use of Sold Products
Total scope 3 emissions (operational control)
Total GHG
(tCO2e)
747
266
391
226
1,773
1,026
22
49
37,426
41,926
34
Genel Energy Annual Report 2023
Transparency and climate disclosures
Sustainability disclosures remain an important channel of
communication as we continue to provide our stakeholders
with information on the progress we are making in our
sustainability journey.
Following the lead of the Board and the CEO, every function
plays an active role in achieving Genel’s sustainability objectives.
The ESG Manager is responsible for the implementation of our
annual ESG workplan and reports progress of climate-related
Company performance to the Executive Committee, and to
the Board.
Genel welcomes the opportunity to communicate its climate
strategy to a wider audience and in doing so aims to demonstrate
commitment to our role in the energy transition, as a low carbon
producer. In 2023 following our annual CDP Climate Change
submission Genel was pleased to maintain a B score, which
represents the second consecutive year we have held this score.
Earlier in the year we also continued our annual voluntary
environmental disclosure through IOGP (the International
Association of Oil and Gas Producers).
Climate-related risks and opportunities
Governance of climate-related risks and opportunities
The management of climate-related risks is incorporated
into Genel’s wider business strategy. Responsibility for the
management of sustainability risks and monitoring of other
climate-related topics are integrated into Board oversight
through the roles of the Chairman, CEO and - in 2023 - the
Health, Safety, Security and Environment (‘HSSE’) Committee.
Our CEO is an advocate for the prioritisation of sustainability and
oversees the integration of awareness and management of this
throughout the organisation, with appropriate oversight from
Genel’s senior management. Climate and energy transition topics
are also included in Board meetings at least once a year, during
the main strategy session, yet in practice the Board is informed
more frequently through the HSSE Committee, and ongoing
engagement opportunities.
Climate-related risk
Time horizon
Detail
Identifying climate-related risks and opportunities
Genel maintains continuous review of major risks - both current
and emerging - to which its operations in all regions are exposed.
This is achieved through leveraging its local expertise, industry
knowledge and strategic relationships. Genel also aims to hold
ourselves accountable to robust regulatory environmental
standards in our operations. The Board conducts a robust
assessment of the principal risks facing the Company with a
focus on those risks that could impact our business model,
strategy, solvency, liquidity, future performance and reputation,
and climate related risks are included in this process.
Process for managing climate related risks
Sustainability risks, including the physical, socio-economic,
political, and economic elements associated with climate
change have been identified as a Board reserved matter and are
reviewed at least biannually by the Board and, in 2023, by the
HSSE Committee.
While Genel’s risk management approach identifies climate
risks across the life of field of an asset, for the purposes of
classification we have defined short-term as one to three
years, medium-term as three to five years, and long-term as
five years and beyond. This timeline corresponds with our
financial planning, and by taking a life of field approach we can
proactively mitigate and manage climate-related risks while also
providing us with the foresight to take advantage of new future-
fit opportunities. Genel’s identified climate-related risks and
opportunities are summarised in the table below.
Reputation
Climate disclosures
Current regulation
Acute physical
Market
Legal
Technology
Supply chain
Emerging regulation
Stakeholder and investor perceptions and expectations throughout
the energy transition, resulting in potential divestment. This could also
represent an opportunity for Genel, by differentiating from our peers.
SHORT-TERM
Regulatory responses to climate and carbon abatement. Compliance with
current climate regulations, and sustainability regulations more broadly.
Water-related risks (availability of resources while operating in water scarce
regions). Event-driven, e.g., extreme weather events impacting Genel’s
assets, or Genel’s ability to mobilise to assets.
SHORT-MEDIUM
Fluctuating oil demand and price. Limited financing for fossil fuels having
implications on ability to raise capital.
International changes to climate-related legislation impacting assumptions
in Genel’s current business model.
Availability and cost of technology to minimise carbon emissions (e.g.,
relating to gas management or alternative energy).
MEDIUM-LONG
Availability of suppliers in regions of operation, and potential climate-
related impacts in supply chain (i.e. scope 3 emissions).
Potential future climate-related regulation requiring carbon reductions or
abatement measures. Compliance with emerging climate-related and other
sustainability regulations.
Longer term climate changes beyond five years, potentially impacting
Genel’s regions of operation and reducing the potential regions for
future operations.
Genel Energy Annual Report 2023
35
Chronic physical
LONG-TERM
Strategic reportGovernanceFinancial statementsOther information
Sustainability Environmental responsibility
TCFD disclosures
Genel supports the recommendations of
the Task Force on Climate-related Financial
Disclosures (‘TCFD’), which aims to increase
transparency of climate-related risks, and
Genel welcomes the opportunity to provide
responses to these recommendations as part
of this report.
Genel has considered our ‘comply or explain’ obligation under
the UK’s Financial Conduct Authority’s Listing Rules as well
as the TCFD’s guidance for All Sectors and Guidance for
Non-Financial Groups. Of the TCFD’s four Recommendations
and eleven Recommended Disclosures, we consider that
the following disclosures are consistent with the TCFD
Recommended Disclosures:
— Governance recommended disclosures (a) and (b);
— Strategy recommended disclosures (a) and (c);
— Risk Management recommended disclosures (a), (b) and (c); and
— Metrics and Targets recommended disclosures (a) and (b).
During 2023, Genel has identified actions to be taken over the
next three years to address, and ultimately make disclosures
consistent with, the recommended disclosures relating to:
— Strategy recommended disclosure (b); and
— Metrics and Targets recommended disclosure (c).
Furthermore, Genel has identified where we consider action
can be taken to further improve our disclosures against
Strategy recommended disclosures (a), and Metrics and Targets
recommended disclosures (a).
To address where Genel considers that our disclosure is either
not currently compliant with the TCFD recommended disclosures,
or where we consider further improvements can be made against
compliant disclosures, we have provided a relevant action in
the disclosures below, which are intended to be progressed
during 2024.
36
Genel Energy Annual Report 2023
Disclosure level key
Disclosures consistent with
TCFD recommendations
Actions identified for
consistency with or further
improvement against
TCFD recommendations
TCFD
Recommendation
Governance
a) Describe the
Board’s oversight of
climate-related risks
and opportunities
TCFD
Recommended
Disclosures
Processes and
frequency by which
the board are informed
about climate-
related issues
Board consideration of
climate-related issues
when making decisions
Board monitoring
of progress against
goals and targets for
addressing climate-
related issues
b) Describe
management’s
role in assessing
and managing
climate-related risks
and opportunities
Organisational
structure, with internal
climate-related
responsibilities and
reporting duties
Processes of informing
management about
climate-related issues
How management
monitors climate-
related issues
Disclosure
level
Genel Response
Climate topics are included in Genel’s Board meeting agendas at
least once a year, during our main strategy session. The Board
is also informed more frequently through ongoing engagement
opportunities, in 2023 for example, through engagement with the
HSSE Committee. These engagements provide updates of the ESG
workplan, which include an evaluation of Genel’s GHG performance,
and any other emission reduction initiatives or pertinent climate-
related issues, for the attention of the Board.
The management of climate-related risks and opportunities is
incorporated into Genel’s corporate risk management process,
and as such, into our wider business strategy. Responsibility for
the management of sustainability risks, and monitoring of other
climate-related topics is integrated into Board oversight through the
roles of the Chair, CEO and in 2023, the HSSE Committee. The Board
considers climate-related issues when reviewing and guiding
strategy, considering major plans of action, business plans and
budgets, and overseeing major capital expenditure or acquisitions.
Climate-related issues, including GHG emissions performance,
are included in Genel’s Asset Development Plans (‘ADPs’)
which are developed and used as a mechanism for forecasting
and monitoring performance as assets mature. Our Board’s
commitment to robust sustainability governance is illustrated by
the inclusion of an ESG component within the Company’s annual
performance scorecard, which allows oversight and monitoring of
progress, with details of this process provided on pages 112-113 of
this report.
Genel’s Executive Committee, which is chaired by the CEO
and ultimately reports to the Board, oversees implementation
of the approved sustainability strategy, which includes the
identification, assessment and management of climate-related
risks and opportunities. The Executive Committee is informed
regularly through quarterly updates with the ESG Manager,
who reports to the Chief Human Resource Officer; a member
of the Executive Committee. The ESG Manager’s responsibility
within the business is to collaborate with the applicable business
functions (e.g. Head of HSE or Asset Managers), on climate-
related issues, where necessary, and report to the Executive
Committee and Board on these matters.
The ESG Manager is responsible for implementing the ESG
workplan, applicable to all Genel assets, and reports directly to
Genel’s Executive Committee at least once each quarter. The ESG
Manager is also advised by external specialists to ensure Genel
remains informed of emerging climate-related issues relevant to
Genel’s business. For example, in 2023 a third-party consultant
was engaged to provide guidance on emerging climate-related
regulations applicable to Genel.
Information and updates on progress on climate-related matters
are provided by the ESG Manager to the Executive Committee,
and these issues are, in turn, raised with the Board. The ESG
Manager also provides a report directly to the Board on all
climate-related matters, at least once a year, and in 2023
presented to the HSSE Committee on three occasions.
Genel Energy Annual Report 2023
37
Strategic reportGovernanceFinancial statementsOther information
Sustainability Environmental responsibility
TCFD
Recommendation
Strategy
a) Describe the
climate-related risks
and opportunities
the organisation has
identified over the
short, medium, and
long term
TCFD
Recommended
Disclosures
Description of time
horizons of climate-
related risks
Description of specific
climate-related issues
potentially arising in
each time horizon and
process to determine
material risks
and opportunities
b) Describe the
impact of climate-
related risks and
opportunities on
the organisation’s
businesses, strategy,
and financial planning.
How climate-related
issues serve as an
input to the financial
planning process
Impact on strategy,
business, and
financial planning
Disclosure
level
Genel Response
For the purpose of Genel’s assessment of climate-related risks and
opportunities, presented on page 35, short term is defined as one
to three years, medium term as three to five years, and long term as
five years and beyond. These timelines correspond with our financial
planning, and by taking a life of field approach we can proactively
mitigate and manage climate-related risks while also providing us
with the foresight to take advantage of new future fit opportunities.
Genel has conducted a high-level initial assessment of climate-
related risks across the three time horizons described above, the
results of which are set out on page 35.
Genel continuously reviews major risks and opportunities to
which its operations are exposed in our respective regions of
operation. This is achieved through internal workshops and by
leveraging local in-country expertise, and industry knowledge.
Moreover, in 2023, Genel conducted a regulation applicability
review to inform the emergence of new climate-related risks or
opportunities which could be applicable to our business.
TCFD Roadmap improvement action: revise the relevant
and material physical & transition related climate risks and
opportunities applicable to Genel’s current and emerging
business. This exercise will update the details provided on
page 35 of this report and will include an evaluation of how the
activities specific to Genel’s geographic regions of operations
will result in a bespoke series of risk and opportunities, and
furthermore, will determine how these identified risks and
opportunities may materialise over the short, medium- and
long-term, their potential financial impact (in terms of cost) on
Genel’s business, and the magnitude of this potential impact.
As part of this action, Genel will refine which climate-related
risks and opportunities have a material financial impact on
Genel. We intend to provide the results of this work with further
disclosures in next year’s Annual Report.
Genel has considered the impact of climate-related issues on our
businesses, strategy, and financial planning (described in more
detail below) and we acknowledge that access to capital may be
impacted by reputational concerns as a result of climate-related
issues. However, we acknowledge that we do not currently fully
disclose the potential impact of climate-related issues on our
financial performance or financial position.
TCFD Roadmap compliance action: integration into financial
planning. In continuation of the preceding TCFD roadmap task
under this TCFD recommendation, Genel intends to establish a
process that ensures climate-related risks and opportunities will
serve as an input into Genel future financial planning process
and how these can be prioritised in such process.
Genel’s GHG Emissions Management Standard, as described on
page 32 of this report, underpins Genel’s approach to incorporating
climate-related risks and opportunities, and ensuring they
remain integrated in our broader strategy and financial planning.
The Standard calculates a life-of-field carbon budget which
considers carbon limits under several climate scenarios and
then is applied in our Asset Development Plans (‘ADPs’) to seek
opportunities to reduce carbon emissions, maintain low carbon
intensity and embed a culture of assessing and mitigating climate
change risks into our operational practices. The implementation of
the standard informs our ‘ADPs’ which form the basis of strategic
and financial decisions.
TCFD Roadmap improvement action: as part of the action
described above, Genel will refine which climate-related risks
and opportunities have a material financial impact on Genel.
Impact on supply chain Genel’s 2023 Scope 3 emissions are presented on page 34 of this
report and Genel’s intention of assessing our supply chain in this
manner is to monitor its emissions profile in order to understand
any trends or necessary changes required from our supply chain
engagements. Moreover, Genel has developed an ESG supply
chain roadmap which provides the steps required over the next
two years to encourage engagement with contractors to increase
awareness of ESG risk, including climate-related risks, with their
own operations.
38
Genel Energy Annual Report 2023
TCFD
Recommendation
Strategy
b) Describe the
impact of climate-
related risks and
opportunities on
the organisation’s
businesses, strategy,
and financial planning.
(Continued)
TCFD
Recommended
Disclosures
Impact on acquisitions
or divestments
Impact on
adaptation and
mitigation activities
c) Describe the
resilience of the
organisation’s
strategy, taking
into consideration
different climate-
related scenarios,
including a 2°C or
lower scenario.
Description of the
resilience of Genel’s
strategy to climate-
related risks and
opportunities, taking
into consideration
different climate-
related scenarios
Adapting
our strategies
Genel Response
Disclosure
level
Genel’s climate scenario analysis, shown on page 34, allows
Genel to assess the resilience of our business under a range
of climate scenarios, and furthermore, Genel’s GHG emissions
Management Standard is also applied to any of Genel’s potential
new acquisitions, to understand potential climate-related risks
associated with these acquisitions.
Genel’s emissions reduction efforts focus on effective design,
efficient operations, and responsible energy use, so that Genel’s
asset development plans are sustainable from both an economic
and a climate perspective. The key contributor influencing
our GHG emissions profile is flaring and because of this, gas
management remains a primary element of Genel’s emissions
reduction strategy, supported by Genel’s GHG Emissions
Management Standard.
Throughout our tenure at Sarta, Genel evaluated several
initiatives with the aim of minimising our operated emissions
from this asset. For example, during field development Genel
explored potential gas management solutions, and we also took
actions to address our own operational emissions through the
installation of a solar panel and battery storage unit at the Sarta-
1D wellsite, which continued to be operational in early 2023.
Genel is consistently reviewing the resilience of our portfolio to
ensure it remains fit for purpose through the energy transition.
We evaluate our producing assets each year against common
scenarios outlined by the International Energy Agency (‘IEA’),
with the intention of assessing our business to ensure that our
assets remain competitive when stress-tested against variable
oil prices and carbon taxation. In 2023 we applied a base case
scenario that assumes a Brent oil price of $70/bbl and no carbon
tax, on account of our assets being located in areas where carbon
tax is currently not applicable. To this base case, and under our
existing cost structure, we have applied the oil price and carbon
tax values under the IEA’s Announced Pledges Scenario, with the
time horizon for our analysis of 2030 corresponding with Genel’s
time horizon for production at our existing assets. In order to
stress test our business further, we have also evaluated our
business under a hybrid scenario, by taking a point between
the IEAs Announced Pledges and Net Zero scenario. Within this
hybrid scenario, Genel applied a 2030 crude price of $58/bbl and
a carbon tax of $15 per tonne.
These scenario variables were selected to provide a broad
range of potential future scenarios. The most recent analysis
is provided on page 34 of this report, which also includes
an assessment of Genel’s portfolio resilience identified by
this analysis.
The scenario analysis is repeated on an annual basis by Genel,
and the results of our climate scenario analysis are intended to
aid decision making, with respect to Genel’s broader strategy,
but also to understand any additional capabilities that require
development in response to these results.
Genel will continue to enhance our climate scenario analysis
and use the results to inform decision making of our broader
strategy, whether that will include considerations in new business
acquisitions, or to inform operational changes at the asset or
project level.
Genel Energy Annual Report 2023
39
Strategic reportGovernanceFinancial statementsOther information
Sustainability Environmental responsibility
TCFD
Recommended
Disclosures
Genel Response
Disclosure
level
Description of process
for identifying and
assessing climate-
related risks
Identification of climate-related risks follows the processes
described in Genel’s risk management framework, which is
presented on page 16 of this report. Genel’s approach involves
the following:
TCFD
Recommendation
Risk management
a) Describe the
organisation’s
processes for
identifying and
assessing climate-
related risks.
— From the top down, the Board and Executive Committee identify
potential risks that may impact delivery of the Company strategy
and business objectives.
— Each business area identifies potential risks that may affect
delivery of the objectives relevant to that specific business area.
Business areas are comprised of functions and projects, with each
business area led by an Executive Committee member.
Once climate-related risks have been identified, the impact of
these risks are assessed by evaluating existing controls and
mitigation activities. Based on this assessment, Genel designs
and implements controls to mitigate any residual potential
negative impact. The size and potential scope of the impact of
climate-related risks, and potential mitigation and controls, are
managed at Genel through assessment by the ESG Manger and
escalated to the Executive Committee, which in turn raises these
matters, when applicable, with the Board.
Following identification of climate-related risks, Genel also
monitors the evolution of these risks to assess whether
the existing management controls remain appropriate in
consideration of the evolution of the risk. Furthermore, as part
of the ESG workplan in 2023 Genel’s ESG Manager engaged an
independent third party to undertake a regulation applicability
review. The purpose of the engagement was to understand the
emerging sustainability regulations that will be applicable to
Genel’s business. In doing so, Genel has positioned itself to be
able to integrate future regulations into our broader strategy.
Climate-related risks are considered under ESG risks and the risk
owner for climate-related risks is the CEO, who is a member of
the Board. In 2023, the HSSE Committee supported the Board on
overall management of identified risks. The CEO is supported by
the ESG Manager who develops the annual ESG workplan which
includes means of assessing the identified climate-related risks.
The materiality of climate-related risks, to Genel’s business, is
assessed periodically through a materiality assessment, which
involves obtaining the views of Genel’s stakeholders on the
relevance of climate-related issues in the context of broader
sustainability topics. The most recent materiality assessment was
completed in 2023.
The progress of the ESG workplan is communicated through
periodic updates to the Executive Committee, and in turn, with
the Board. For each identified and assessed risk, the Board
sets clear executive-level accountability, the appropriate risk
management action, the appropriate level of assurance to be
obtained, and the monitoring and reporting to be delivered.
The process of identifying and assessing climate-related risks
is integrated within Genel’s established risk management
framework, which has ultimately resulted in climate-related risks
being captured under the principal risk of Environmental, Social,
Governance expectations. The risk owner for climate-related
risks is the CEO, who is supported at Genel by the ESG Manager.
This allocation of responsibilities allows for the assessment of
climate-related risks to be integrated into Genel’s broader risk
assessment and risk management discussions with the Executive
Committee or Board. Physical climate risks are identified
through a combination of external advisory support and internal
workshops with Genel’s Executive Committee. The identified
climate-related risks are managed through implementation
of the ESG strategy, which encompasses climate-related risk
management and has been designed to allow Genel to adapt
to emerging climate-related trends while also responding to
changes in Genel’s operational activities.
Current and
emerging
regulatory
requirements
b) Describe the
organisation’s
processes for
managing climate-
related risks.
Process of managing
climate-related risks
Our integration of
climate-related risks
c) Describe how
processes for
identifying, assessing,
and managing
climate-related risks
are integrated into the
organisation’s overall
risk management.
40
Genel Energy Annual Report 2023
TCFD
Recommendation
Metrics and targets
a) Disclose the
metrics used by the
organisation to assess
climate-related risks
and opportunities
in line with its
strategy and risk
management process.
TCFD
Recommended
Disclosures
Metrics used to
assess the impact
of climate-related
risks, and metrics
used to monitor and
progress against risks
and opportunities
Board or
senior
management
incentives
Disclosure
level
Genel Response
Scope 1, Scope 2, and Scope 3 GHG emissions (tonnes CO2e) are
presented on page 33 and 34 of this report. Genel also tracks the
following climate-related metrics which are disclosed on page 68
of this report: methane emissions (tonnes CO2e), carbon intensity
(kgCO2/bbl), and flaring intensity (kgCO2/bbl). Genel’s emissions
are calculated in line with the GHG Protocol and our Scope 1,
Scope 2 and carbon intensity figures are subjected to assurance
from an accredited third-party assurance provider.
In relation to water-related climate risks, we report freshwater
withdrawals and produced water reinjected (cubic meters) and
in 2023 we received a score of C for our CDP water disclosure.
Genel remains open to consideration of additional metrics as the
business evolves.
TCFD Roadmap improvement action: following the revision
of Genel’s relevant and material physical & transition related
climate risks and opportunities, Genel will establish additional
metrics, beyond those described above, to enable the
monitoring of climate-related risks and opportunities.
Sustainability has been integrated into the agenda of our Board
meetings, and our ESG performance, which includes climate-
related elements, continues to be embedded in the remuneration
schemes for all employees by representing a percentage of the
total annual bonus. This is achieved by meeting KPIs within the
annual ESG workplan, including climate-related elements.
Integration of internal
carbon price to assess
climate-related risks
Genel’s latest climate scenario analysis is presented on page 34
of this report and applies the carbon tax for common scenarios
provided by the IEA in their annual World Energy Outlook.
In 2023 Genel has applied a maximum carbon price of $15/bbl in
our scenario analysis.
b) Disclose Scope
1, Scope 2, and, if
appropriate, Scope 3
greenhouse gas (GHG)
emissions, and the
related risks.
Scope 1 and Scope
2 emissions
Scope 3 emissions
Historical
emissions reporting
Details of climate-
related targets
absolute or
intensity targets.
c) Describe the
targets used by
the organisation to
manage climate-
related risks and
opportunities
and performance
against targets.
Scope 1 and 2 are reported by Genel on an equity share basis
and the Company’s 2023 emissions are presented on page 33 of
this report.
The applicable categories for our Scope 3 emissions are
presented on page 34 of this report. Genel reports Scope 3
emissions on an operated control basis, with the exception of
category 11 (use of sold products), which is reported both as
equity share and operated control.
To enable a year-on-year comparison Genel has provided the
2022 and 2021 emissions on page 68 of this report for our
equity share Scope 1, Scope 2, and total operated control Scope
3 emissions. Genel has reported Scope 1 and 2 emissions on an
equity share basis since 2020 and furthermore since this time, we
are pleased to have subjected our Scope 1 and Scope 2 emissions
to limited assurance from an accredited third-party assurance
provider. Each of Genel’s previous Annual and Sustainability
Reports, containing this information can be found on Genel’s
website (https://genelenergy.com/investor-relations/results-
presentations/).
Genel does not currently have any specific climate-related
targets, though Genel does report absolute emissions and the
carbon intensity of our portfolio assets on an equity share basis,
with our portfolio being assessed against the life-of-field carbon
budgets outlined in the GHG Emission Management Standard.
TCFD Roadmap compliance action: Genel will identify suitable
targets aligned with the revised climate-related risks and
opportunities. These targets are to be linked with associated
metrics which can be used to track performance over time
following establishment of a base year, for future reporting.
This process will consider potential targets relating to
emissions reductions, internal energy use, and application of
alternative energy sources in operations.
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Sustainability Environmental responsibility
Managing the natural environment
Environmental Social Impact Assessments
(‘ESIAs’)
The ESIA process has long provided the cornerstone to Genel’s
environmental due diligence and helps to protect both the
natural and the built environment. Specifically, an ESIA will
precede any new development activities in order to identify
potential impact from said activities and crucially, will detail the
necessary actions required to mitigate this impact.
The ESIA process forms an essential part of our business-as-
usual operational practices and broadly includes the following:
— Stakeholder engagement: an opportunity for prior and
informed discussion with potentially affected stakeholders in
advance of project approvals.
— A baseline assessment: to establish the environmental
and social baseline conditions prior to the presence of
any activities.
— Impact assessment: to assess the scope and scale of
development activities and the potential impact to the baseline
environmental and social conditions.
— An Environmental and Social Management Plan (‘ESMP’):
developed to monitor and respond to the potential
environmental, social and human rights impacts identified in
the ESIA.
— A grievance mechanism: to provide local affected
communities with an avenue to voice grievances that may
arise, associated with any project activities.
By undertaking ESIAs in this manner, we aim to meet demands
from local host governments and communities in preserving the
integrity of the environment and communities of the areas in
which we operate. Genel follows the guidance provided by the
International Finance Corporation (‘IFC’) throughout this process
and we pride ourselves on application of these best-practice
international standards, which will remain at the core of our
social and environmental responsibility.
During 2023 Genel completed an ESIA for the proposed
drilling of the exploratory wells at block SL10B13 in Somaliland.
The assessment was completed by a specialist third party
consultant, Earthview, and the scope of the ESIA included
the civil infrastructure work completed during 2023.
This assessment resulted in the project’s ESMP which was
applied to all field work in 2023 and which will be applied with
equal rigour to ongoing community engagement in 2024, and all
future exploration activities in Somaliland.
Our approach to environmental management
As we navigate this period of the energy
transition, Genel acknowledges the
critical importance of preserving the
natural environment and furthermore, the
importance of conducting our operations
in such a way that minimises any potential
adverse impact to the environment.
Moreover, we embed consideration of
this into all elements of our business, and
our risk-based approach ensures that we
allocate our efforts and investment where
it is most required, based on our activities
and our regions of operation. In the context
of progressively increased pressure on
natural ecosystems, Genel’s approach to
environmental management focuses on
reducing resource and water use, managing
waste, preventing pollution, maintaining air
quality, and the protection of biodiversity.
Given the diverse nature of our activities and the varied
environmental settings in which we operate, it is our agility that
enables us to adapt to changes in our operating landscape and
ensure ongoing management of the environment remains a
constant thread in our operational activities.
Our approach comprises the
following pillars:
— Environmental Social
Impact Assessments
— Prudent water management
— Robust waste
management practices
— Spill response preparedness
— Continuous air quality monitoring
— Protecting biodiversity
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Water management
In acknowledgement of the increasingly sharpened focus on
global water resources, and in reflection of the water-restricted
regions in which Genel operates, water management forms a
key priority of our commitment to environmental responsibility.
This commitment considers not only our water use but also
our responsible water disposal, and Genel maintained robust
operational practices for both these elements in 2023.
We continued to record water use, its source, and its disposal
for our operations at Sarta during 2023. Our focus remained on
reducing freshwater consumption by increasing the quantity of
water for recycling; for example, through the use of our high-
grade sewage treatment unit which remained operational in
2023. The re-injection of Sarta produced water remained a key
tool for water disposal, and significantly reduced the volumes
required for off-site disposal. Produced water not reinjected was
held in lined ponds prior to treatment and disposal at a licenced
facility, as described in more detail below.
As activities in Somaliland develop, we will take the opportunity
to bolster our existing water management practices to ensure
that these can adapt to the dynamic and unique operating
conditions of this region.
Water management remains a key priority for Genel as we
continually strive for incremental improvements in water
resource use, and in reflection of our ongoing efforts on this
front we were pleased to receive a CDP Water Security score of
C in 2023.
Waste management
— Zero waste to landfill from
Sarta operations
— 100% of hazardous waste from
Sarta operations remediated
or recycled
— 25,336m3 of drill cuttings treated
and disposed
— 24,271 tonnes of drill fluids and
produced water transferred to
licenced facilities for treatment
Genel continued robust waste management practices during
2023 which concluded in successfully and safely treating and
disposing the residual waste that had been generated from
Genel’s exploration and production activities at Sarta.
Prior to Genel’s exit from Sarta, we continued our robust
operational waste management practices that had formed a
fundamental part of our operations throughout our tenure at
the asset. This included continuation of our established waste
segregation programme, where site personnel and contractors
followed the principles and hierarchy of waste management.
In reflection of continued focus in waste management practices,
our waste streams from Sarta resulted in zero non-hazardous
waste being sent to landfill, with approximately 42% being
incinerated and 35% of waste recycled. 100% of Genel’s
hazardous waste from Sarta, generated from our exploration and
production activities at the asset, was recycled or remediated.
For our future operational activities, Genel’s ambitions will be to
implement waste management practices and establish a waste
management supply chain that will support the targets which we
have achieved in the KRI.
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Sustainability Environmental responsibility
Case study: treatment and disposal of
drill cuttings and fluids
In advance of our exit from Sarta, Genel completed a treatment and disposal project for the residual drill cuttings and
fluids that had resulted from Genel’s activities at the asset. The process involved separating debris from the drill cuttings
before treatment with quicklime, prior to disposal in purpose built and lined disposal pits. Additionally, the waste drilling
fluids which had been temporarily stored in lined pits at Sarta 2 were trucked away from the asset for treatment at a
licenced facility.
A summary of the outcome of the treatment and disposal works:
— 25,336m3 of drill cuttings were transferred from six sites across the Sarta asset to the central disposal location and
placed into three separate lined pits.
— 24,271 tonnes of drill fluids and produced water trucked to a licenced facility for treatment and disposal.
This project allowed Genel to showcase its commitment to environmental stewardship and maintain the approach to
waste management that had been in place during Genel’s entire tenure at the asset.
Spill response capability
Genel acknowledges the potential risk represented by spill
events. Our commitment to spill response capabilities, and
our progressive continuous improvements in this area reflects
the critical role that Genel considers this contributes to our
sustainable and responsible business practices.
Genel maintained its tier 1 and 2 oil spill response capability
during 2023, which included provision of specialist equipment to
enhance capabilities to deal with specific spill scenarios. As part
of our annual preparedness exercises Genel conducted a SIMEX
(simulation exercise) relating to operations at Sarta field, and a
separate SIMEX for Somaliland operations in 2023.
On 31 March 2023, a tier 1 environmental spill occurred at Sarta
S4 well pad which was the result of overfilling a lined fluids pit,
and which subsequently over-flowed into the well pad’s drainage
channel. 0.2 bbls of crude was contained within this produced
water spill. Genel’s immediate spill response measures contained
the spill and furthermore, laboratory analysis of surrounding soil
samples as part of the post-spill investigation, indicated that the
spill had not resulted in residual impact to the surrounding area.
In a separate tier 1 environmental spill incident, as part of the
Sarta treatment and disposal work completed at the end of the
year, 2.5 bbls of oily sludge was spilled on 27 December 2023
during the transfer of material for off-site disposal. This spill was
contained and remediated by Genel’s spill response team, and all
material was contained for off-site disposal.
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Protecting biodiversity -
minimising ecological impact
Protection of biodiversity has always been a key consideration
when considering exploration and production opportunities.
Moreover, the role that biodiversity plays in supporting the
natural environment more broadly is not underestimated by
Genel. This was embedded into Genel’s operational practices
in 2022, through formalising our Biodiversity Management
Standard which defines the approach to be taken by Genel in
relation to the assessment, mitigation and management of
biodiversity issues and impacts relating to all our activities.
Implementation of this Standard reflects the considerable
significance which we place on preservation of biodiversity, as
we continue to work in collaboration with partners to protect
nature wherever we operate.
Central to our approach to biodiversity management is the
development and implementation of a biodiversity management
plan during the ESIA phase. This provides a framework for
managing project risks specifically related to biodiversity, and
details the necessary measures required to mitigate these risks.
Our careful management of preserving biodiversity will be
extended to all of Genel’s future operations.
Air Quality
The importance of air quality has always formed a key element of
Genel’s environmental management practices, in consideration
not only of the nearby communities but also of our site
personnel. We have never compromised on maintaining these air
quality standards and have implemented robust and continuous
monitoring throughout the entirety of our operations at Sarta.
In 2023, this was also a focus in our Somaliland operations, on
account of the increased civil infrastructure activities.
KRI monitoring
During 2023 Genel maintained continuous air quality monitoring
from three permanent units in the vicinity of the Sarta
production facility. In doing so allowed Genel to monitor any
potential adverse impacts associated with our operations and to
implement mitigation measures, if needed.
This ongoing programme provided an understanding of local air
quality conditions at Sarta compared to the baseline conditions
established in 2019, and helped prevent any potential adverse
impact to neighbouring communities resulting from poor air
quality. In 2023 the air quality data was compared against
the draft 2020 KRI regulations and with the exception of one
exceedance in particulate matter PM2.5 on account of nearby
agricultural activities, no air quality exceedances were recorded.
Somaliland monitoring
Managing air quality for our host communities in Somaliland
during the civil infrastructure work in 2023 was of key
importance, and mitigation measures were detailed in the
Environmental Management Plan that was developed in advance
of the field work. The robust measures implemented, which
in 2023 included a series of diffusion tubes, ensured that no
community grievances were received in relation to air quality or
dust generation.
Our ongoing performance from our operated assets
demonstrates the importance that we assign to this topic, and
the business-as-usual operational measures we have in place to
manage this risk. This forms one element of the foundation to
Genel’s approach to being a responsible business, and one that
will be applied to all future operations.
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Sustainability Social responsibility
Social responsibility
Genel’s focus on being a responsible operator
extends beyond the environmental topics
detailed earlier in this report, and equally
considers our responsibility towards the
people who could potentially be impacted
by our business; be it the host communities
of the regions in which we operate, our
workforce safety, wellbeing and working
conditions, or considerations of the same
within our supply chain. The following section
of this report provides a summary of the
business-as-usual operational measures in
place at Genel to manage these elements,
and provides an insight as to the steps we
have taken throughout 2023 to support our
social responsibility.
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Sustainability Social responsibility
Health and safety
The success of our business relies on the
safe delivery of operations, and our focus
on health and safety remains resolute,
irrespective of any changes to the business.
The organisational and operational changes
experienced by Genel in 2023, as well as
more on the ground work in Somaliland,
presented unique challenges for our health
and safety teams, and it is testament to
the professionalism and dedication of
these teams, that safety performance
was not impacted during this period.
Throughout 2023, as was the case for all
years which preceded it, the critical role of
managing health and safety provided the
foundation for all of Genel’s activities.
In 2023 Genel’s operations included Sarta oil production and
trucking prior to the closure of the pipeline, tank cleaning, and
moving the EPF to cold standby. Genel also increased activities
in Somaliland with a ramping up of the civil infrastructure
programme. This diverse range of field activities were completed
without any LTIs or Tier 1 process safety events (loss of primary
containment) at any of our operational sites. We have now
achieved over four million work hours since our last LTI, which
occurred in 2021.
— Zero LTIs in 2023 across all Genel
operations, with over 4 million hours
worked since the last incident
— Zero Tier 1 & 2 Process
Safety Events (loss of primary
containment) reported across
all operations
— Successful roll out of the Life Saving
Rules across the business
— Successful restructuring of the
HSE and Security and Emergency
Response teams during the changes
in activities in Somaliland and KRI
— Treatment and disposal of Sarta
fluids and drill cuttings successfully
completed prior to handover of the
asset to the MNR
As part of the exit from Sarta, Genel completed a treatment
and disposal project for all residual drill cuttings and fluids at
the asset. This project was delivered on schedule with zero LTIs
or recordable injuries. This required 348,504 manhours and a
significant distance travelled of 235,614 km. The success of this
project reflects the professionalism and dedication of our field
teams in delivering results without compromising safety.
Safety improvement plan
Prior to 2023 Genel had observed leading indicators that
suggested areas for improvement in our safety performance.
Following analysis of the underlying latent causes for these
indicators we developed a safety improvement plan which
was implemented with active participation by both senior
management and field teams. Improvements were proposed to
strengthen each of the following areas:
— Leadership and Culture
— Competency
— Contractors
— HSE Management System
— Assurance
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Sustainability Social responsibility
Each of the areas identified was championed by a member of Genel’s Executive Committee alongside other senior managers, with
the aim of continuous improvement throughout the organisation. We have taken our own people and our contractors on a safety
improvement journey and the highlights of this journey throughout 2022 and 2023 are described below.
Visible safety leadership and improve safety culture
Leadership
and Culture
In 2023 Genel established a Key Performance Indicator (‘KPI’) for both the Genel Executive Committee and senior management,
to encourage active participation in HSE initiatives and to build Genel’s safety culture of care and compliance. The leadership
groups collectively conducted 18 site tours, actively engaged in the HSE contractor forum, participated in the incident investigation
process, and championed life-saving rule awareness trainings. This collective effort resulted in an impressive 94% completion of the
established KPIs.
Ensure trained and competent staff for safety critical roles
Genel revised its training needs matrix to classify the training requirements for all roles at Genel, into the following four categories:
1.
Mandatory onboarding: HSE induction, lifesaving rules, observations and interventions, and emergency response preparedness
for key positions
Competency
2. Management system: risk assessment, control of work, and incident investigation
3. Risk-based: lifting and rigging, confined space entry, and H2S alarms
4.
Emergency preparedness: Firefighting, spill response, and crisis management
Genel achieved 74% progress on training plans in 2023 with 573 training sessions for 1,360 attendees. A competency development
programme was also initiated for frontline operational roles, with the intention of supporting continuous improvement in the
competency of operational staff.
Senior management engagement with high-risk contractors
Contractors
During the first quarter of 2023, Genel hosted an online contractor HSE forum that was attended by senior management of our key
high-risk contractors. The forum was an opportunity to share learnings from high potential events, and details of safety improvement
plans. It was agreed that Life Saving Rules will be the key tool for seeking ‘improvements and developments’ and supporting
HSE initiatives.
HSE Management System Simplification and roll out
HSE
Management
System
Simplification
Operational HSE procedures, including control of work, permit to work, medical emergency response, emergency response plan, and
incident and investigation reporting procedures, underwent a comprehensive review during 2023. The revised procedures were then
successfully implemented, contributing to an enhanced and more efficient HSE framework.
Genel’s existing investigation procedure was revised during the year, with an emphasis on online management ownership and
industry best practices. A software database (Synergi-Life) which centralised all incident reports was implemented in 2023 and has
significantly improved identification of incident trends and subsequently of establishing mitigation measures.
HSE assurance: schedule Level 1 and 2 completion
Assurance activities at Genel are considered to be a critical part of the Health and Safety function, and involve evaluating the
compliance, capability and effectiveness of systems, operations and processes. Feedback from these assurance activities provides
valuable input for Genel’s senior management team to aid informed decision-making. Additionally, assurance processes are designed
to be constructive, actively contributing to business performance improvement.
Assurance
A documented, risk-based assurance process, including scheduled external and internal audits, inspections and site visits was
established and implemented in 2023 to evaluate compliance with the HSE Management System and identify areas for continual
improvement. The process covers the planning, implementation and documentation of activities relating to Genel and its Contractors.
Further information relating to Genel’s assurance standard is provided on the next page.
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Genel Energy Annual Report 2023
Level 1 audits in 2023
by category topic being audited
Audits
Camp inspection
Chamanke light vehicles
Chemical management
Clinic
Decommissioning
Document control
Emergency Response
Environmental
Excavation Safety
Generator Set
H2S
Inhibits/ Overrides/LOTO
IVMS
Land Transportation
Lifting/Rigging
Occupational health/FTW
PA Mechanical handling
Plant and Equipment
PPE
PSUA
PTW/TRA/JSA
Rainfloods yard/process
Rigging loft
TLS process/loading compliance
Training matrix
WAH/CSE
Warehouse/materials
No.
4
5
4
3
0
1
7
5
1
2
1
12
15
6
6
2
1
0
6
8
78
0
5
1
2
3
4
HSE Assurance
Genel has adopted a risk-based assurance process to evaluate
conformance against the HSE Management System in order
to identify areas of focus for continual improvement. In 2023
this process included external and internal audits, inspections,
and site visits. The scope of these audits covered the planning,
implementation and documentation of selected activities
undertaken by Genel and its contractors. Further details of each
type of audit, and Genel’s activities in 2023 is provided below:
— Level 1 audits are conducted by Genel field staff at site to
audit Genel or contractor personnel and are closely monitored
by on-site HSE teams. This ensures a focused examination
of operational practices, against compliance with specified
requirements. Throughout 2023, 182 Level 1 assurance audits
were completed by Genel contractor personnel.
— Level 2 audits are undertaken by Genel’s management team,
with a particular focus on high-risk activities. This strategic
oversight by leadership not only reinforces the commitment to
stringent safety standards but also provides a comprehensive
evaluation of critical aspects within the organisation. In 2023,
a Level 2 audit was completed during the treatment and
disposal project at Sarta.
— Level 3 audits are completed by an external qualified party to
provide an independent professional assessment of an internal
management process, or an isolated project or activity. In line
with Genel’s 2022 Internal Audit plan, EY delivered the second
of two HSE Management System audit reports (for Sarta and
the Erbil office) during 2023. The purpose of the audit was
to review the framework used by Genel in the management
of HSE risk, and the process used to support effective and
timely accident and incident response. The four agreed actions
resulting from the key audit findings were all closed out before
the end of 2023.
Operational Safety
Genel recognises the high-risk nature of the activities required of
our business and it is for this reason that we apply the necessary
mitigation measures proportional to the risks. We continue
to implement the hazard identification and risk management
process which remains a foundation of Genel’s approach to
Health and Safety management. Similarly, the hierarchy of
controls allows Genel to minimise identified risks to as low as
reasonably practical.
Driving safety and crude oil trucking
As a key element of Genel’s operational activities, driving is
required for the movement of people, products, and materials.
Driving continues to represent a high-risk activity for our field
operations and in acknowledgement of this, we have implemented
the use of an in-vehicle monitoring system (‘IVMS’) for all
high-risk journeys. This has allowed for early identification and
ongoing monitoring of potentially unsafe driver behaviours such
as speeding, seat belt misuse, or inappropriate acceleration or
braking, and ultimately provides a tool for successful mitigation
of what has been identified by Genel as a key risk to maintaining
safe operations.
The IVMS was successfully implemented during the trucking
of crude oil from Sarta EPF, both during production and when
transferring stored oil after production had ceased. The IVMS
was also successfully applied during the cuttings and fluids
treatment and disposal project, prior to handover of Sarta to the
MNR. All trucking activities conducted in 2023 were successfully
completed, with only one motor vehicle incident occurring and no
LTIs or recordable injuries recorded.
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Sustainability Social responsibility
Process safety and integrity
The nature of Genel’s field activities dictates that process
safety and integrity remains an integral part of our approach
to managing major accident hazard-related risks. Safety critical
elements inspection and maintenance programmes are in
place, and process safety risks are assessed through a variety
of process hazard assessments such as hazard and operability
studies, or quantitative risk assessment.
Identifying potential hazards and risks and then working to
eliminate or mitigate these remained a key focus throughout
2023 as we strive to protect the public, safeguard the health
and well-being of employees and contractors, minimise potential
risks to the environment, and protect assets from damage or
loss. Other key elements of Genel’s established process safety
management protocols include the management of change
process, operational readiness reviews, pre-start-up reviews,
and the continuous monitoring of process safety performance
indicators. This combined approach helps support our safe and
reliable operations.
Emergency Response Effectiveness
Throughout 2023, it was identified that restructuring and
reorganisation could have potentially impacted the effectiveness
of the Emergency Response Team, on account of personnel
changes throughout the year. A Major Emergency Management
Initial Response course was identified locally, and various
members of Genel’s in-country team attended the training,
successfully completing the OPITO (Offshore Petroleum Industry
Training Organisation) approved course. This included in-country
local staff who were further developed as Emergency Response
Team Members. Genel also conducted medical emergency
response and crisis management awareness training sessions for
its project teams.
Medical fitness
Genel prioritises the health and safety of its staff through
comprehensive medical fitness protocols for all employees.
These protocols aim to identify any physical or psychological
issues that may impact job performance, that may represent a
risk to an employee, and that ensure compliance with statutory
health surveillance requirements. The assessments serve as a
baseline for detecting changes during employment, assessing
risks related to workplace hazards, identifying necessary job
adjustments, and advising individuals on suitable job positions.
In 2023, Genel conducted fit-to-work check-ups for employees in
all regions of operation through the medical service contractor
DFAD. Out of 72 employees, all were found to be fit-to-work
without restrictions, highlighting the company’s commitment to
employee well-being.
Additionally, Genel conducted eight fit-to-work check-ups
for its local contractors in Somaliland through our medical
service contractor Iqarus, with competent local medical
coordinator support.
Life Saving Rules campaign
A key focus for Genel’s health and safety teams throughout 2023
was the successful rollout of our Life Saving Rules campaign.
Genel’s Life Saving Rules comprise twelve key rules, providing
clear, simple, and consistent communication regarding risks in
the workplace, and the proper use of barriers and safeguards
to protect our workforce. These rules have been integrated into
staff inductions and field safety inductions, ensuring that every
member of the Genel team is aware of the importance of these
rules. In order to maintain focus on these rules, during the 2023
company-wide rollout campaign our aim was to inform and
educate Genel staff and contractors about the details and content
of each rule. To achieve this, we assigned a Genel champion for
each of the twelve topics and these champions were responsible
for hosting online training sessions to provide detailed insights
into each rule, and how each apply to Genel’s operational
activities. The sessions encouraged discussion and feedback, and
were well-received by participants.
In pursuit of mitigating risks:
the hazard identification and risk
management process employed by Genel
In pursuit of controlling identified risks:
the hierarchy of controls adopted by Genel
Most effective
Hazard
identifi cation
Risk control
and mitigation
Develop risk
evaluation
Estimate
risk rating
Risk analysis
Identify
potential
consequences
Estimate
severity
Estimate
likelihood
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Genel Energy Annual Report 2023
Least effective
Elimination
Physically
remove
the hazard
Substitution
Replace
the hazard
Engineering controls
Isolate people
from the hazard
Administrative
controls
Change the way
people work
PPE
Protect the worker with
Personal Protection
Equipment
Somaliland capacity building
As our activities in Somaliland increased, implementing our established health and safety standards
became a priority. This included a detailed in-country assessment of available medical facilities, roads,
transport infrastructure, security threats, and country evacuation protocol.
Prior to a ramp-up in activities, Genel also completed a gap assessment for the future delivery of
prehospital trauma life support (‘PHTLS’) training to local doctors. The mission of PHTLS is to promote
excellence in trauma patient management by all providers involved in the delivery of pre-hospital care.
The programme focused on the treatment of a multi-system trauma patient as a unique entity with
specific needs.
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Sustainability Social responsibility
People and diversity
Genel’s dedicated and experienced teams
have always provided the bedrock of our
performance and remain a key source
of pride to the business. Genel’s diverse
global footprint requires a culturally diverse
workforce, which collectively represents
the key component to Genel’s success.
Our skilled employees share the values of
our socially responsible business, and we
continue to attach high value to attracting
and retaining the best global talent.
Moreover, 2023 showcased our ability
to adapt to shifting operational priorities
with the successful transfer of skills and
knowledge between operations in the KRI
and Somaliland.
Workforce diversity
Genel continues to see a benefit from the promotion of gender
and cultural diversity in our workforce, and encouraging an
inclusive workplace has allowed us to leverage and benefit from
a breadth of opinion and perspective. Our workforce is one of
our finest assets and first-hand experience has taught us that a
continued commitment to diversity helps foster improved ideas,
skills, knowledge, and our overall performance as a business.
This diversity was reflected in the demographic of our workforce
in 2023, when we employed 103 people across four regional
offices, with 37 employees in Turkey, 28 in London, 12 in the
KRI, and 26 in our African operations. Moreover, in reflection
of our global operational footprint, our talented employees
represented 13 different nationalities.
Additionally, Genel apportions significant value in the
continuous promotion of women into leadership positions across
all levels of the Company, with women representing 30% of our
total workforce, making up 17% of Board positions, 20% of the
Executive Committee, and 27% of management positions in
2023. We made 10 new employee hires, comprising four women
and six men, with recruitment growth focused predominantly on
support for our Somaliland operations.
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Nationalities represented in Genel
Employee nationality
American
British
French
Indian
Iranian
Iraqi
Irish
Moroccan
Norwegian
Russian
Somali
Swiss
Turkish
Total
2
23
1
1
1
11
1
1
1
1
22
1
37
103
Where are our teams based
25%
27%
26
12
28
37
12%
36%
London
Turkey
KRI
As at 31 December 2023
Somalil and
Our policies and initiatives
In reflection of the importance of diversity and people
management, we have developed a formal structure to provide
guidance to current and new employees. This allows Genel to
progress and evolve these initiatives to ensure they remain
fit-for-purpose. Our continued pursuit to promote diversity is
an evolving process and more information can be found in our
Diversity & Equal Opportunities Policy, available on our website.
This Policy helps support our commitment to diversity, and
training on this is delivered to all employees at the start of their
employment. This is intended to promote positive employee
relationships that enable all individuals to make use of their
skills, free from discrimination or harassment. Some details of
the broad range of initiatives embedded into our business-as-
usual operations are provided below.
Employee benefits
We are committed to providing a competitive compensation
package, and this is benchmarked through annual market
reviews which enable the Company to attract and retain the
highly skilled talent needed to deliver our strategy. These market
reviews collect data from expert external consultancies to
analyse and compare each position’s level and pay.
Our recruitment and salary review processes ensures that
we make hiring and promotion decisions based on merit and
wherever possible, Genel provides competitive industry pensions
in our regions of operation with contributions that are shared
by both the employer and employee, to contribute to future
financial planning.
Hybrid working
Genel’s established hybrid working model is applied throughout
our corporate offices and provides flexibility to our employees
to enhance a work-life balance and to manage work and personal
commitments. This initiative is also becoming a progressively
important factor to attract and retain talent.
Maternity and paternity allowances
Genel provides parental leave policies in each location, which
are designed to facilitate flexibility for both men and women.
Moreover, we were pleased to provide the first instance of
enacting Genel’s shared parental leave policy in 2023, whereby
extended paternity leave was taken as part of shared allocation.
Gender split in workforce
30%
70%
As at 31 December 2023
Female
Male
Gender split Board of Directors
17%
83%
As at 31 December 2023
Female
Male
Gender split Executive Committee
20%
80%
As at 31 December 2023
Female
Male
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Managing Genel’s workforce
The operational nature of Genel’s activities mean that we rely
on the support of highly skilled contractors who provide valued,
flexible, and temporary expertise. The reduction in Genel’s
workforce during 2023 was largely through a reduction in
contracted workers. Indeed, while various circumstances during
this period have resulted in the need to reduce our contractor
workforce, we have done so while maintaining a core of key
staff and capabilities. This fluctuation in our workforce has
demonstrated our ability to contract and expand our workforce
as business conditions dictates, while preserving a central team
structure which is able to respond to future changes.
Despite the operational challenges experienced in 2023 Genel
maintained single digit voluntary turnover for a third consecutive
year. Similarly, we are pleased to see a continued longevity of
service for full-time staff, with 40% of Genel’s employees staying
with Genel for more than five years, and 30% of our people have
been with the Company for over a decade. A small proportion
of Genel’s workforce are employed on a part-time basis and we
ensure that these individuals receive the same benefits, support,
and opportunities as full-time employees.
A voice to all employees
In order to maintain an inclusive workplace and to encourage
continuous improvement, it is crucial to Genel that the opinions
and views of our employees are heard and acted upon.
Informal channels are available throughout the business, though
the formal avenue to empower Genel’s workforce remains our
Whistleblowing Policy.
This policy has been in place for over a decade now and was
expanded in 2020 in context of the public commitment we have
given to observe the requirements of United Nations Global
Compact, one aspect of which requires Genel to establish
a grievance mechanism under which third parties can raise
grievances with the Company. Alongside our Whistleblowing
and Grievance Policy, Genel operates a whistleblowing hotline
service, which is available in a number of languages, and which
enables employees and third parties to report concerns on a
range of matters. Further details of this policy are provided in
page 55 of this report.
Additionally, Townhall meetings have regularly provided all staff
with updates on our ongoing and upcoming activities, as well as
giving immediate access for employees to raise questions with
Genel’s Executive Committee. Given the changing operational
footprint in KRI and the increase of activities in Somaliland
throughout 2023 these periodic Townhall meetings, chaired
by Genel’s CEO, provided a valuable conduit for sharing of
information throughout the business.
Sustainability Social responsibility
Employee wellbeing
We recognise that any success at Genel is the result of an
engaged and thriving workforce, and it is for this reason that a
focus on staff wellbeing is a key component of Genel’s success.
Genel employs a series of initiatives, each with a focus on
employee wellbeing at its core.
Employee health and fitness to work
An element of Genel’s focus on employee wellbeing is detailed
in the IOGP guidance for ‘Fitness to work’. This provides a
structured process for systematic identification, assessment
and management of risks associated with tasks that place
specific demands (physical and psychological) on employees.
As field activities increased in Somaliland throughout 2023, this
guidance continued to be a valuable tool in meeting the staffing
requirements of our challenging operational environments, and
also continued to be an integral part of assessing staff welfare.
This process comprises the following:
— Fitness to work processes and systems
— Risk assessment process to focus on what needs to
be accomplished
— Legal constraints on what can and cannot be done in
certain jurisdictions
— Medical control options such as fitness to work tests and
examinations, functional capacity evaluations, trade tests,
special considerations
To further enhance the wellbeing of our workforce, annual
training is in place for role-specific requirements that are
identified though an assessment matrix. We also ensure that
our workforce has access to non-occupational health services
through medical insurance plans, tailored to the specific
locations in which we operate.
Genel Wellness
The Genel Wellness programme continued to be available
to all staff via the Wellbees App platform throughout 2023.
This initiative promotes physical and mental wellbeing
throughout the organisation, with the aim of supporting staff in
the workplace and beyond. Genel was pleased to have continued
this initiative after its successful uptake in previous years, and
with a continued focus on staff wellbeing, we look forward to
building on this as a fit-for-purpose programme going forward.
Employee performance
Genel collectively performs at its best when the potential of each
employee is realised, and Genel’s performance management
process provides a structured platform for employees to discuss
career development with their direct managers, and to evaluate
personal performance.
Our focus on talent is supported by our talent management
process - Talent MAP (Measuring Ability and Potential) - which
highlights areas where we can further support employees
to maximise their value and impact in delivering the work
that we do. Furthermore, in continuation of developing
our talented workforce, Genel’s Leadership, Development
and Evolution (‘LEAD’) programme has been designed to
support our succession planning. The LEAD programme will
accelerate the potential of our future leaders through firstly
the formal identification of participants in our annual Talent
Management process and then with the targeted leadership
development support.
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Human rights and modern slavery
Genel’s ongoing commitment to conducting
our business in a manner that respects
human rights across all areas of operation
remains a common and constant thread for
all our activities, irrespective of geographic
location or of the prevailing business
environment. We are committed to acting
ethically and with integrity in our business
dealings, implementing and enforcing
effective systems that mitigate the risk of
modern slavery within all elements of our
business and supply chain. Our policies,
internal training, public disclosures and
grievance mechanisms on this topic
ensure that it remains firmly as a business-
as-usual and fit-for-purpose element of
Genel’s operations.
Where we have the ability to do so, we require the same high
standards from our contractors, suppliers and other business
partners with regard to respecting human rights. As part of
our supply contracting processes, the Company policy requires
that we include specific prohibitions against the use of forced,
compulsory or trafficked labour, or anyone held in slavery or
servitude. Further information is available under our Modern
Slavery Act 2015 disclosure obligations.
In line with a human rights compliance assessment undertaken
in 2021, of our performance against the UN Guiding Principles
on Business and Human Rights (‘UNGPs’) and in order to ensure
the policy remains current, periodic updates are made to Genel’s
Human Rights Policy to better reflect the evolving business
landscape within Genel’s areas of operation. Furthermore, in
reflection of the considerable significance Genel attributes to
this topic, we were pleased to be an early adopter to the United
Nations Global Compact: Communication on Progress, which is
a non-binding United Nations pact to encourage businesses to
adopt sustainable and socially responsible policies (including
human rights), and to report on their implementation.
Whistleblowing and Grievance Policy
Genel is aware of the potential compliance risks which exist in
relation to our operational activities and in acknowledgement of
this, Genel encourages a culture of openness and accountability.
This culture is formalised through our Whistleblowing and
Grievance Policy. This policy has evolved in recent years
in the context of the public commitment we have given to
observe the requirements of United Nations Global Compact,
one aspect of which requires Genel to establish a grievance
mechanism under which third parties can raise grievances with
the Company, including in the human rights context. The policy
applies to all individuals working with Genel, including directors,
officers, employees, and to contractors, and any stakeholder
third parties. The policy is communicated to Genel employees
through internal training and is available for all stakeholders on
Genel’s website.
Alongside our Whistleblowing and Grievance Policy, Genel
operates a whistleblowing hotline service, which is available
in a number of languages, and which enables employees and
third parties to report concerns on a range of matters, including
human rights violations such as slavery and trafficking.
Every whistleblowing incident is investigated fully, and the
General Counsel is responsible for review and investigation
of allegations of potential violations of law. If the allegation
is substantiated, we are committed to taking appropriate
disciplinary action up to and including dismissal. The Policy
requires the Whistleblowing Officer (currently the General
Counsel), in conjunction with the Audit Committee to review this
Policy from a legal and operational perspective at least once a
year. All staff are responsible for the success of this Policy and
are instructed to disclose any suspected danger or wrongdoing.
Staff are invited to comment on this Policy and suggest ways in
which it might be improved. Training on this Policy is provided,
as appropriate, at each new employee’s induction training and
through periodic training for all staff members.
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Sustainability Social responsibility
Community engagement
The relationships developed with our host
communities have always been of great
value to Genel. Engagement with these
communities provides the foundation of
our operations and we remain committed
to our local partnerships and to developing
local capabilities. Our focus on community
engagement helps demonstrate how
responsible investment in natural resources
can provide substantial benefits to the quality
of life in host countries, and we are proud of
the positive impacts we continue to make to
local communities.
The increase of Somaliland field activities throughout 2023
was enabled - in part - by the community relationships that had
been developed in this region over the previous decade, and this
engagement remained a key priority throughout the year.
Not only do we acknowledge our responsibility to host
communities, but we also appreciate the opportunity to work
alongside community members to enable capacity building
that will provide long-term benefit to the regions in which we
operate. In 2023, the following opportunities contributed to
a direct positive impact on economic development within the
respective communities:
— Somaliland civils infrastructure work supported four local
companies and provided contracted value of $5.2 million
— Between January and July 2023, Genel’s operations
supported 58 individual local companies at Sarta with a
combined contract value of approximately $15 million.
Additionally, two local companies supported the cuttings
and fluids treatment and disposal project at the end of the
year; a project which provided a combined contract value of
$1.9 million.
Empowering a community workforce as stakeholders within
Genel’s operations, and by adding value to the local economy
through their participation, enables ownership of the long-term
well-being of these regions. Furthermore, we also encourage our
contractors to hire from the communities in which we operate,
and support training if the necessary skills are absent.
Local economic development
Supporting local economic development is a key objective
for Genel and is an essential component of our broader
sustainability strategy. It has long been a central tenet of Genel’s
operations that our projects are supported by a community
workforce which enable training and skills transfer within that
workforce. Our in-country community liaison teams are guided
by Genel’s Local Content Policy in their engagement with local
communities, while also interacting with applicable regulators to
understand expectations.
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Community engagement in Somaliland
During 2023, Genel’s Community Engagement project was
conducted in partnership with the Somaliland Ministry of Energy
and Minerals (MOEM) on the SL10B13 Licence and formed an
integral part of the civil infrastructure construction operations
in preparation for the drilling of the Toosan-1 exploration well.
The project objectives were to build relationships with local
communities in the area of our operations, identify and resolve
any concerns or issues raised, and support the distribution and
award of local hiring and contracting for goods and services.
The project included 20 villages within a 50km radius of the
well location. Throughout the project, a field team of Genel and
MOEM staff regularly visited the villages to directly engage with
the local communities, supplemented with local and regional
townhall meetings at key stages of the project.
Grievance mechanisms
Genel is proud of the positive economic impact our operations
can have on local communities, through direct employment,
skills sharing, and training opportunities. However, we are also
acutely aware of the limitations in scope and scale of these
activities and accordingly, of the potential community grievances
that can result from this. For example, an expectation of
employment opportunities can materialise far beyond the scale
of Genel’s operations.
Meaningful community engagement is a key part of
understanding and managing community expectations and
grievances, and our in-country liaison teams work with local
communities to ensure that this process is undertaken in
a timely and respectful manner. The process provides an
opportunity not only for Genel to understand any grievances
as operations increase, but also to understand the needs of the
host communities.
Somaliland
Genel’s community engagement activities in Somaliland rose in
line with the increase in operational activities, as we recorded
a total of 237 community engagements throughout the year.
Of these engagements only two grievances were recorded and
of the two grievances recorded, one was in relation to waste
disposal practices, and one in relation to the potential drilling of
a water well.
KRI
Prior to ceasing production from Sarta, Genel maintained
emphasis on engagement with local communities.
The expectations of local community stakeholders resulted
in three grievances received, all of which were in relation to
employment opportunities, though Genel worked to resolve
these issues with affected stakeholders.
Land compensation
Genel acknowledges the significance that land compensation
represents within local communities and we are conscious
of maintaining consistent engagement and dialogue on this
matter. As part of this process, any area adversely impacted by
Genel’s operations is compensated in line with the applicable
policy in KRI or Somaliland. Furthermore, any temporary or
residual impact on the community will be compensated by way of
appropriate local investment to provide a commensurate benefit
to the community. During our 20 years of operations in the KRI
for example, Genel compensated over $3 million by means of
land and crop compensation.
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Genel20 Scholars
2023 saw the first full year the Genel20 Scholars programme, which provides a university scholarship at the American University of
Kurdistan (‘AUK’). The programme was launched in 2022 for 20 talented high school graduates from disadvantaged backgrounds,
and Genel is pleased to be providing full funding for tuition and living expenses. A range of courses were taken up by the students,
including Petroleum Engineering, Nursing, Accounting and Finance Management, and Electronics and Telecommunication
Engineering. This programme is one of great pride for Genel and provides an example of the meaningful and long-term impact of our
social investments. Genel has committed to an annual average investment of approximately $250,000 per year for four years.
Genel was fortunate enough to visit the AUK in 2023 to meet with the scholars following their first year of academic studies. This was
an engaging and worthwhile trip at which the optimism and enthusiasm of the students was abundantly apparent.
Genel is pleased to receive regular updates from the scholars in AUK and feedback presented from the first year of study was
overwhelmingly positive. Further details from two of the Genel20 Scholars is provided below, and Genel thanks them for sharing
their stories.
Balen Abdalla: Computer Software and Security
Rozh Abdalla: Accounting and Finance Management
The Genel scholarship has provided me with a high-quality
education and many opportunities to get involved with the
university through volunteering or other means. The American
University of Kurdistan keeps getting more advanced, and
Genel has provided an opportunity to be a part of this journey.
I have been presented with countless networking opportunities,
and because of my studies I was able to secure a summer
internship with a leading global cybersecurity organisation.
With this education opportunity, I want to bring awareness
of cybersecurity in Kurdistan and promote it throughout our
communities, because as technology advances we will need this
progressively more.
The Genel20 scholarship has made my journey at AUK smooth
and less stressful, allowing me to fully commit to the university
and dedicate all my energy to my studies. Last semester,
I achieved a GPA of 3.67 while taking five courses and I
was pleased to be elected as group leader for two projects
in two courses; Principles of Management and Ethics and
Social Responsibility.
I have also initiated the University Environmental Club,
which focuses on raising environmental awareness. I am
also proud to be an AUK student Ambassador and currently
hold the role of student career service officer in the current
student government. The Genel20 scholarship has reinforced
my commitment to social responsibility and a sense of
belonging, leading to better and improved relationships.
It has fostered a sense of unity and collective success, where
the accomplishments of one can benefit all. My long-term
aspirations, which existed even before receiving the scholarship,
continue to be focused on making a positive impact on
my community.
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Social investments
Investment in our host communities remains
a hugely important feature of Genel’s
business and in 2023 we continued to build
on the progress of previous years. Our social
initiatives provide us with an opportunity to
deliver meaningful investments in our host
countries and improving the wellbeing of
community members remains a significant
driver for Genel, which forms an important
element of our social responsibility.
Genel’s Corporate Social Responsibility (‘CSR’) policy provides
guidance to our CSR strategy, and application of this policy
helps Genel to understand community expectations, and to
implement the most impactful possible social investments.
These investments are only made possible through the work
of Genel’s dedicated country teams working alongside our
trusted in-country partners, who support in implementing these
important projects.
Guided by UN SDGs
Genel’s social investment initiatives are broadly guided by the
five UN Sustainable Development Goals considered to be of
most relevance to our business, and to our regions of operation.
These are reviewed periodically in line with any changes to our
business, and in 2023 we tailored our social projects to align with
these goals.
UN
Sustainability
Goal
Rationale
and initiatives
— Supporting health initiatives is a key foundation of community wellbeing, especially in regions of Genel’s
operations that lack first-class healthcare infrastructure or suffer from external events. The response to the
Turkey earthquakes of February 2023 is an example of this.
— Ongoing initiatives in KRI (specifically Genel Scholars) have proved successful, and a focus on education provides
an opportunity for a long-term positive impact.
— Formed the basis of much of Genel’s previous social investments in Somaliland and represents a potential
ongoing need for investment in Genel’s regions of operation.
— This was emphasised repeatedly during Genel’s materiality assessment by a range of stakeholders; the need for
capacity building and knowledge sharing in supporting economic growth.
— In acknowledgement of the requirement to promote support of sustainable ecosystems and protect
of biodiversity.
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Sustainability Social responsibility
Somaliland
In Somaliland, Genel made a broad range of investments in 2023
which involved engaging new in-country partners to roll out
these important projects. By using partners in country, there is
a benefit to the local communities not only through the outcome
of the projects themselves, but also from the employment of the
people who deliver them. Genel made $325,000 investments
in Somaliland throughout 2023, the details of which are
summarised below.
— Mobile medical clinic: the flagship initiative in Somaliland was a
mobile medical clinic programme which targets communities with
few or no existing medical support services.
— Educational supplies: in continuation of our focus on
education, Genel has also funded a programme of supplies to
existing schools within the Odewayne block, which will benefit
approximately 1000 students across 20 schools.
— Burao Academy of Science and Technology: Genel made a
donation to Burao Academy of Science and Technology, which
provides a science-based education to students from across
the region.
— Orphanage upgrade: Genel also funded improvements to an
orphanage in Burao, which included upgrading the solar power
system, and provision of special needs materials and toys.
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Earthquake donations
2023 saw devastating earthquakes in both Türkiye and Morocco,
and Genel was able to make donations to support the immediate
emergency response to these events. In the case of Türkiye
Genel also made contributions to provide longer-term support
for vulnerable groups through the valuable work of Darussafaka
Society, Turkish Education Foundation and the Tohum Autism
Foundation, all of which supported educational needs for
vulnerable individuals from the earthquake-affected zones.
Looking ahead
Social investments have always formed the foundation of
Genel’s responsible operations, and as we welcome 2024
these investments will continue to be supported across the
entire business. In the coming year Genel is looking forward
to continuing our productive engagements in Somaliland
with our host communities and our in-country partners who
have supported us in implementing our social investments.
Through these engagements, we look forward to providing
meaningful and long-term community benefit through needs-
assessed social investments.
We are also eagerly anticipating how the ambition of the Genel20
scholars will materialise over the next few years and look
forward to seeing how these individuals will help contribute to
the future growth and prosperity of the KRI.
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Sustainability Responsible governance
Responsible governance
Integrity is one of Genel’s core values and it is this core value when combined with our
ongoing commitment to transparency that enables Genel to conduct our business in a
responsible and ethical manner. This approach is supported by a series of procedures and
policies which are applicable for the nature of our activities and our diverse geographical
footprint. These provide robust guidance to the rules which govern our organisation and
furthermore, allow us to meet a broad range of regulatory requirements, and prepare for
unplanned eventualities. This chapter provides details of the measures taken by Genel in our
pursuit of responsible and ethical governance.
Business ethics
Our unwavering commitment to transparency and integrity are
the critical attributes which support Genel’s ethical business
practices, and we place great significance on upholding these
values. We are mindful of the ambitious operational targets
that we set for ourselves, but we are acutely aware that it is the
manner in which we conduct our business that will ultimately
define us as an organisation.
Legal compliance
We all play our part in demonstrating a collective commitment
to fostering a culture of compliance which is underpinned
by the Genel Code of Conduct and our corporate values.
We have established a Legal and Compliance programme which
addresses anti-bribery, financial and trade sanctions and export
controls, preventing the facilitation of third-party tax evasion,
anti-money laundering, modern slavery, and human rights.
Set out below are the six essential elements of Genel’s Legal
Compliance Programme.
1. Leadership and top-level commitment
2. Policies and procedures
3. Risk assessment
4. Due diligence
5. Training and communication
6. Oversight
Genel hosts all-staff legal compliance training each year,
which incorporates a broad range of compliance topics and
includes training given through a combination of online and in-
person sessions.
With our risk-based approach, we also conduct due-diligence
by means of a questionnaire for potential third-party business
partners (who interact with others on Genel’s behalf) prior to
engaging with them. Through our memberships with TRACE
International and Transparency International UK, we exhibit
our commitment to conducting our business ethically, lawfully,
and responsibly.
In particular, Genel has been consistent in our messaging
around anti-bribery, and it is worthwhile to reiterate the
message again here: Genel does not tolerate bribery in any
form and is committed to complying with all applicable laws,
and to preventing, detecting, and deterring corruption in all
its business dealings. We maintain an unmoved position to
this commitment.
This applies to:
- All employees
- All contractors
- All third parties providing services to Genel or operating on
Genel’s behalf
Genel’s Anti Bribery Policy and Procedure are publicly available
on our website and provide guidance for staff on assessing
risks, understanding applicable anti-bribery laws, and reporting
concerns via the applicable channels.
Genel’s Anti Bribery Policy and Procedure are fully endorsed by
the Board and Senior Management and are further supported by
collaboration amongst the Company’s stakeholders.
Leadership
and top-level
commitment
Oversight
Policies and
procedures
Elements of
legal compliance
training
Training and
communication
Risk
assessment
Due diligence
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Code of Conduct
Our Code of Conduct underpins all that we do and provides the
foundation to guide all employees on being an ethical business.
Our Code of Conduct refers to our corporate values and outlines
their application in our daily operations and decisions.
These values have been cemented as a foundation of Genel’s
business practices and continue to set a clear expectation of
how our people conduct themselves when carrying out any
activities that are directly or indirectly related to our business.
Adopting the Code of Conduct is to adopt the Genel way of doing
things that aims to make a tangible difference to people’s lives.
The Code of Conduct forms a key component of our on-boarding
for every new employee and any failure of our employees to
adhere to this, or to our policies, may result in disciplinary
action. Moreover, in order to ensure we collaborate and work
with third parties that reflect our values, our business partners
are required, in accordance with our policies and procedures,
to sign an understanding to adhere to our values as part of the
approval process of registration.
Crisis and Emergency Management
Genel has robust emergency response and crisis management
processes and plans in place. Throughout 2023, where
operational activities required it, we continued to maintain
in-house capabilities such as spill response equipment, a fire
response vehicle and an array of rescue equipment.
We have also developed business continuity plans based
on impact analysis for all critical functions and these
plans are regularly tested for operational preparedness.
Emergency preparedness was one of Genel’s core competency
requirements for selected field staff in 2023 and included
training in firefighting, spill response, and crisis management
capabilities. Hydrogen sulphide (H2S) level 2 training remained
as mandatory for all personnel working at Genel operations
and is delivered by a competent H2S services contractor.
Other trainings included on-scene commander Major Emergency
Management Initial Response (MEMIR), care for people, and
relative response.
On account of Genel’s changing operational footprint in both
KRI and Somaliland during 2023, operational emergency
management procedures, including medical emergency
response (MERP), emergency response plan, and incident and
investigation reporting procedures underwent a comprehensive
review in order that they remained fit-for-purpose.
Trucking and spill mitigation
In recognition of vehicle truck movements representing one
of Genel’s key risks, we continued to enhance our tier 1 and 2
spill response capabilities in order to support our response to
any potential incident. We provide spill response training to
Genel personnel as well as the trucking and production facility
operating contractors. Genel’s crude trucking contractor has
mechanical response equipment situated at key points along the
trucking routes with local contractors. Tactical spill response
plans are in place to organise content and focus on specific
actions and priorities, to bring speed and clarity to any response.
In 2023 these trucking activities included transporting crude oil
from Sarta, when the facility was operational, and transportation
of waste drilling fluids during the cuttings and fluids treatment
and disposal project at the end of the year. In both cases and in
acknowledgement of the potential risk this represents, Genel
mandated the use of an in-vehicle monitoring system in all
vehicles transporting crude or waste fluids.
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Sustainability Responsible governance
Regulatory compliance
As a London-listed exploration and
production company, Genel is subject
to a wide range of sustainability-related
regulations, and we operate in a regulatory
landscape that is subject to frequent
changes. Moreover, our diverse geographical
locations require that we remain conscious
of applicable national and local regulations
which can influence our boundaries of
operation. Our approach to regulatory
compliance is well established in Genel and
provides a foundation for all our activities.
In-country regulatory engagement
A key element of our approach to regulatory compliance is
ongoing in-country engagement with host governments and
regulatory bodies. This process not only enhances our social
licence to operate but also allows Genel to take a proactive
role with regulators in supporting the protection of the
natural environment and enhancing the wellbeing of our local
communities. This is applicable for the entire lifecycle of any of
Genel’s operational activities and in each instance our country
manager will lead this engagement, supported by our local
country teams.
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Genel Energy Annual Report 2023
Supply chain management
Genel is pleased with the meaningful progress we have made in identifying, managing,
and mitigating ESG risks in our direct operations and it is intended that our approach for
ongoing management of this risk will evolve in line with our business. However, we have also
recognised the need to extend consideration of ESG performance beyond our own operations
and to our supply chain.
This is already being considered in Genel’s GHG emissions
reporting, by bringing emissions from suppliers under scrutiny
(i.e., Scope 3 emissions), and this level of supply-side scrutiny
is progressively extending beyond emissions reporting to
encompass a broader suite of ESG topics.
Genel has included key ESG metrics in our current contractor
screening process and to build on the initiatives already in place,
we established a two-year roadmap to support identification
of ESG risks in the supply chain, with the intention of achieving
the following:
1. Identify and minimise ESG risks in Genel’s supply chain.
2. Engage with contractors to increase awareness of ESG risk
within their own operations.
Based on the existing mechanisms in place, the tasks within the
roadmap are formed around each of the following three themes.
Procurement
and contracting
Identification of ESG material topics that
are to be incorporated into Genel’s existing
tender process.
Inclusion of ESG criteria in Genel’s
established procurement process, with
applicable weighting applied for each tender.
Audit
and evaluation
Desktop or site audits of contractors to be
undertaken focusing specifically on the
relevant ESG elements.
Management
The following internal management tasks
are incorporated into the roadmap:
— Raise internal awareness within
procurement and technical teams and
communicate intended timeline of
implementation of measures.
— Review and communicate emerging
legislation relevant to ESG supply
chain risk.
— Develop ESG contractor
evaluation register.
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Sustainability Responsible Governance
Managing and monitoring sustainability risks
The preceding pages of this report presents
Genel’s approach to identifying and
managing sustainability risks throughout
our business. The following pages provide a
summary of the existing controls in place to
mitigate these risks, and also provide the key
sustainability metrics which Genel uses to
monitor our progress against these risks.
Managing sustainability risks
Managing and mitigating sustainability risks is a priority which
is underpinned by strong commitment from Genel’s Board and
senior management, evident through our approved ESG strategy
which encompasses a broad range of environmental, social, and
governance elements. Genel’s internal policies and procedures
guide how we manage these risks and underlining this process is
an alignment with Genel’s risk management approach, which is
described from page 16 of this report.
A key element to managing our sustainability risks is
acknowledging the landscape in which we operate and
identifying relevant stakeholders with whom engagement is
necessary. Genel aims to approach all stakeholder engagement
in an open, honest, and transparent manner that seeks to build
relationships and helps understand the needs and expectations
of all individuals. The Board monitors Genel’s stakeholders and
their impact on key strategic objectives and decisions, and how
the Company engages with each of them. Further information on
stakeholder engagement and how the Board has complied with
s172(1) of the UK Companies Act 2006 is available on page 25 of
this report.
Genel’s ESG strategy helps inform the annual ESG workplan
which outlines specific tasks and action items to serve as
a performance indicator of how well we are mitigating the
identified sustainability risks. Successful execution of our annual
ESG workplan continues to be embedded in the remuneration
schemes for all employees, representing a percentage of the
total annual bonus. Sustainability has been integrated into
the agenda of our Board meetings and Genel’s ESG Manager
chairs quarterly ESG meetings with the Executive Committee,
which provides a platform to increase awareness of these
risks, and any changes required in our approach to mitigate
them. The following table presents each of Genel’s material
sustainability topics and summarises the management approach
and policies and procedures relevant to each topic.
Material topic Management approach
Policies and procedures
ENVIRONMENTAL FACTORS
GHG
emissions
Provide assurance that Genel’s business is sustainable from
a climate and economic standpoint. In doing so, demonstrate
that the life-of-field carbon emissions of operated assets can be
minimised through active gas management or other emission
abatement measures. Furthermore, our Scope 1 emissions
are reported on an equity share approach, ensuring that GHG
emissions from non-operated assets are accounted for.
- GHG Emissions Management Standard
- GHG Accounting & Reporting
- Equity share Scope 1 emissions reporting
- Annual CDP Climate Change submission
- Alignment with TCFD recommendations
Water and
wastewater
management
Water availability, disposal and management is factored into
our planning for all new and operated assets. We identify
potential water risks through the ESIA process and develop
site-specific ESMPs, which includes considerations to manage
water resources, to minimise impact, and to recycle wastewater
whenever possible.
Ecological
impact
Biodiversity considerations form part of the ESIA process to
ensure biodiversity impacts are identified, avoided, or minimised,
where possible.
Air quality
Air quality monitoring against regulatory standards and ESIA
commitments is achieved through routine continuous air quality
monitoring stations and routine field measurements at operated
assets, which is established as part of the ESMP.
- HSE Policy
- Environmental Procedures
- Annual CDP Water Security submission
- Genel’s Biodiversity Management Standard
- HSE Policy
- Biodiversity Management Plan
- Environmental Social Impact Assessments
- Environmental Social Monitoring Plan
- Routine continuous air quality monitoring
at operated assets
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Genel Energy Annual Report 2023
Material topic Management approach
Policies and procedures
SOCIAL FACTORS
Health
and safety
Genel’s HSE management system is underpinned by our HSE
policy. Our HSE plans, training, procedures, and tools provide
guidance to identify and manage hazards, and subsequently
to conduct safe operations. These policies and procedures are
subject to regular review.
Contractor HSE systems are evaluated and bridged to Genel’s
expectations, and audits and inspections are conducted regularly.
Incidents are reported, investigated, actions implemented, and
lessons shared.
Human
rights &
modern
slavery
Genel management at all levels is responsible for ensuring those
reporting to them understand and comply with the relevant
policies, and are given appropriate training on these issues.
This extends to considering human rights in the communities in
which we operate, where mitigation measures are assessed and,
where necessary, put in place to ensure elements such as air
quality, noise monitoring, and road safety factors are considered.
- HSE Policy
- HSE Management System
- HSE Plan
- Permit to Work Procedure
- Occupational Health Procedures
- HSE Risk Registers
- HSE Reports
- Process safety and Integrity Management
- Asset integrity management plan
- Management of change
- Human Rights Policy
- Modern Slavery Act Statement
- Code of Conduct
Community
engagement
Through provision of employment opportunities, training, skills
transfer and knowledge sharing with local community members
Genel aims to generate revenue and economic opportunities for
our host communities.
- Local Content Policy
- Workforce Development Plan
- Anti Bribery Policy
People and
diversity
Social
investments
Genel’s dedicated Human Resources team supports line
managers to implement policies and procedures. We prioritise
localisation where possible and localisation details are presented
in this report.
- Diversity & Equal Opportunities Policy
- Recruitment Policies for each location
Partnering with local NGOs and community organisations in
our regions of operation to build trusted relationships and
enable investment in meaningful social investment projects.
These projects are implemented through collaboration with local
communities, governments, contractors, and suppliers.
- CSR Policy based on ISO 26000
- Local Companies Engagement Plan
- Anti Bribery Policy and Procedure
- Communications & Stakeholder
Engagement Plan
- Corporate Social Investment (CSI) Plan
Material topic Management approach
Policies and procedures
GOVERNANCE FACTORS
Anti Bribery &
corruption
Genel’s Anti Bribery Policy and Code of Conduct are fully
endorsed by the Board and senior management, and annual
compliance training is completed by all staff.
- Code of Conduct
- Anti Bribery Policy
Regulatory
compliance
Crisis and
emergency
management
Compliance with applicable laws and regulations in addition
to voluntary requirements such as industry standards, codes,
principles of good governance and accepted community
standards. The “plan-do-check-act” cycle requires the
management of Genel to act and review the environmental
management system periodically to ensure its suitability and
effectiveness. Review of compliance with emerging sustainability
regulatory requirements also forms part of the responsibility of
the ESG Manager.
Emergency response team members are selected and trained.
Drills and exercises are conducted to develop competency
and maintain emergency preparedness. Unannounced crisis
simulations are conducted to test preparedness. Firefighting and
spill response teams are equipped and supported by regular
training exercises.
- HSE Policy
- Environmental Procedures
- UK listing rules
- TCFD recommendations
- Emergency Response & Crisis
Management Plan
- Medical Emergency Response Plan
- Spill Response Plan
- Fire Safety Plan
- Off-site Emergency Response Plan
Supply chain
management
Our contracting and tendering process prioritises local
companies whenever possible. Service providers are audited to
ensure Genel is pursuing compliant and best possible practices,
with Genel’s supply chain procurement criteria ensuring that
external companies have adequate standards and processes
in place.
- Local Content Policy
- CSR Policy
- Workforce Development Plan
- Anti Bribery Policy
- Community Grievance Mechanisms
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Strategic reportGovernanceFinancial statementsOther information
Sustainability Responsible Governance
Sustainability metrics
The preceding pages of this report have presented Genel’s approach to identifying, managing
and mitigating sustainability risks throughout our business. It is also important that we
monitor our progress against these risks and presented below is summary of our key
sustainability metrics with performance from previous years shown for context. The figures
presented in this table are reported on an operational control basis, unless otherwise stated.
ESG Topic
Indicator
Total Scope 1 & 2 emissions
Scope 1 emissions
Scope 2 emissions
Climate1
Scope 3 emissions
Methane emissions
Carbon intensity
Flaring intensity
SO2
NOX
NMVOC
Fresh water withdrawn
Produced water reinjected
Number of spills
Spill size
Total quantity spilled
Total waste generated
Air quality3
Water usage
Hydrocarbon
spills
Unit
tonnes CO2e
tonnes CO2e
tonnes CO2e
tonnes CO2e
tonnes CO2e
kgCO2e/bbl
kgCO2e/bbl
tonnes
tonnes
tonnes
Cubic meters
Cubic meters
#
1-10 barrel
Barrels
Cubic meters
Total non-hazardous waste generated
Cubic meters
% non-hazardous in landfill
% non-hazardous recycled
% non-hazardous incinerated
% non-hazardous stored
Waste
%
%
%
%
2023
61,533
61,274
259
2022
2021
192,813
190,509
192,637
190,277
176
232
41,926
264,686
356,857
2,439
4,2172
9,006
13.6
6.28
718
17.56
9.18
3,286
16
9.66
4,357
88,704
186,856
186,639
127
2,869
9,019
2
1
2.7 4
7,890
1,830
23%5
35%
42%
0%
488
539
42,624
124,586
32,865
499,398
6
0
<1
9
0
<1
32,494
48,885
6,371
46,207
0%
63%
37%
0%
0%
95%
5%
0%
Total hazardous generated
Cubic meters
6,060
26,123
2,678
% hazardous in landfill
% hazardous stored
% hazardous recycled or remediated
%
%
%
0%
0%
100%
0%
27%
73%
0%
15%
85%
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Genel Energy Annual Report 2023
ESG Topic
Indicator
Hours worked
Number of employee fatalities
Number of contractor fatalities
Process safety events Tier 1
Process safety events Tier 2
Lost Time Injuries (LTIF)
Unit
Million
# per year
# per year
# events/year
# events/year
# per year
Health & Safety
Lost Time Injuries Frequency (LTIF)
Per million hours worked
Total Recordable Injuries (TRIR)
Per million hours worked
0.85
High-Potential events (HiPos)
# per year
High- Potential events frequency (HiPoF)
Per million hours worked
2
1.71
2023
2022
2021
1,170,116
2,276,371
2,599,799
0
0
0
0
0
0
0
0
0
1
0
0
0.90
6
2.69
0
0
0
0
1
0.38
1.92
6
2.3
Kilometers driven
Thousands
720,633
2,023,676
3,664,587
Motor vehicle collision rate
Per million km driven
HSE training completed
%
4.16
74%
Total HSE training
Women in workforce
Women on Board of Directors
Women on Executive Committee
Women in management
Number of attendees
1,3606
%
%
%
%
30
17
20
27
0
0.191-6
90%
3,1136
26
17
17
23
90%
784
34
22
12.5
20
Gender diversity
1 Climate-related figures are reported on an equity share basis, with the exception of Scope 3 emissions, which is reported on an operational control basis
2 Figure corrected from 2022 Sustainability Report
3 Air quality figures are reported on an equity share basis
4 2.5 bbls of oily sludge was spilled on 27 December 2023. 0.2 bbls of crude was spilled within a produced water spill on 31 March 2023
5 All allocated to Somaliland activities
6 Includes all site trainings conducted for contractors
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Genel Energy Annual Report 2023
Chair’s statement on corporate governance
The Company retains a robust financial position, and during
2023 steps were taken to proactively manage this to ensure
that our cash position remains strong. Through a bond buy-back
tender offer and other purchases in the market, we successfully
acquired $26 million of bonds in issue, reducing our outstanding
debt while not materially impacting available cash for the
addition of new cash-generating assets to our portfolio.
Although the Board was due to undertake an external Board
performance review in 2023 it was determined that due to the
external environment being faced by the business it was more
appropriate that an internal review of the Board, each Board
Committee and individual Directors be conducted in 2023. In light
of our reduced operational footprint a key output of the review
was the decision to disband the HSSE Committee. Going forward
the health, safety, security and environmental topics will form
part of the Board’s standing agenda. Further details of the Board
evaluation can be found on page 87.
Following the publication of the revised UK Corporate
Governance Code in January 2024, a review of our corporate
governance framework will be undertaken this year. Where any
areas of enhancements are identified we will endeavour to make
the necessary changes to our framework in order to comply with
the revised Code.
David McManus
Chair
Genel Energy Annual Report 2023
71
Dear Shareholder,
I am pleased to present my fifth Corporate
Governance Report to shareholders as your
Chair. Our 2023 Governance Report illustrates
how our corporate governance framework has
continued to support decision-making by the
Board and its Committees.
The suspension of exports through the Iraq-Türkiye pipeline
on 25 March 2023 has materially impacted our cash flow and
production for the last nine months of the year. The loss of
cash flow and lack of visibility on both the timing of resumption
of exports and the re-establishment of a reliable record of
payments by the KRG resulted in the Board of Directors
suspending the Company’s dividend programme during the
year. The Board also took the decisions to terminate the
Sarta PSC following disappointing drilling results, effective
as of 1 December 2023, and to re-assess the timing of further
investment in Somaliland following the completion of civil
engineering work in Q4. As a consequence of the reduced
operating activity, the Company has taken steps to change the
size and shape of the organisation in order to reduce spending
and preserve cash, including reducing our workforce by more
than half.
Although the climate in which the Company has been operating
during 2023 has been challenging, the Board and management
team remain fully aligned and committed to delivering the
Company’s strategy of growing and diversifying our business as
well as increasing visibility of long-term cash generation, and we
continue to seek the right opportunity to put capital to work.
Strategic reportGovernanceFinancial statementsOther information
Governance statements
Genel Energy plc is a Jersey incorporated company with a standard listing on the London
Stock Exchange. The Board continues to be committed to complying with the UK Corporate
Governance Code as appropriate for our business. Our view is that governance is not just
a matter for the Board and that a strong governance culture must be fostered throughout
the organisation. Our expectations of our employees and of those with whom we conduct
business are set out in our Code of Conduct, which is available on our website
at genelenergy.com.
Compliance statement
In line with our aim to foster a strong governance culture, the
Board has decided to manage Genel’s operations in accordance
with the UK Corporate Governance Code 2018.
A full version of the Code can be found on the Financial
Reporting Council’s (‘FRC’) website at frc.org.uk. During 2023,
the Company complied with the principles of the Code and on
pages 73 to 74 explanations as to how we have complied with
our obligations under the Code are provided. We are in full
compliance with the provisions of the Code.
The Company will not be in compliance with provision 36 of
the Code during 2024 following a decision to suspend the PSP
post vesting holding period for the annual 2024 share awards.
This decision was taken to enhance the competitiveness of
Genel’s remuneration offering to its senior management team,
taking into consideration the remuneration package as a whole
and the global environment in which we compete for talent.
Going concern
The going concern statement is made on page 24.
Robust assessment of principal risks
The Board has undertaken a robust assessment of the Group’s
emerging and principal risks, including those that would threaten
its business model, future performance, solvency, liquidity, and
reputation. Our Annual Report identifies principal risks and
uncertainties on pages 19 to 23 and the procedures followed to
identify these risks on pages 16 to 18.
Review of risk management and internal control
A continuous process for identifying, evaluating and managing the
risks the Company faces has been established. The effectiveness
of the internal control systems are reviewed by the Audit
Committee. Further details are set out on pages 16 to 18.
Fair, balanced and understandable
The Annual Report and Accounts taken as a whole are fair,
balanced and understandable and provide the information
necessary for shareholders to assess the Group’s position,
performance, business model and strategy. See the Audit
Committee report on pages 96 to 99 for further information on
how this conclusion was reached.
Viability
The viability statement is made on page 24. Further details of the
Board’s assessment of the viability of the Company are set out in
the risk management section on pages 16 to 23.
Section 172(1)
A Section 172(1) statement is made on page 25. It provides
cross-references to the required detail set out throughout this
Annual Report.
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Genel Energy Annual Report 2023
Application of UK Corporate
Governance Code Principles
The Code has placed increased emphasis on “comply and explain” with regard to the Principles of the Code. Our explanations about
how we have applied the main principles of the Code can be found as follows:
Board leadership and company purpose
Principle A. A successful company is led by an effective and entrepreneurial board, whose
Strategic report p. 1 to 69
role is to promote the long-term sustainable success of the company, generating value for
Governance p. 71 to 121
shareholders and contributing to wider society.
Directors’ Remuneration report p. 111 to 117
Principle B. The board should establish the company’s purpose, values and strategy, and
Strategic report p. 1 to 69
satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by
Company purpose, values and
example and promote the desired culture.
strategy p. 8 to 9
Division of responsibilities p. 84
Directors’ Remuneration report p. 111 to 117
Principle C. The board should ensure that the necessary resources are in place for the
Sustainability p. 26 to 69
company to meet its objectives and measure performance against them. The board should
Risk management p. 16 to 18
also establish a framework of prudent and effective controls, which enable risk to be assessed
Stakeholder engagement p. 25
and managed.
Audit Committee report p. 96 to 99
Principle D. In order for the company to meet its responsibilities to shareholders and
Sustainability p. 26 to 69
stakeholders, the board should ensure effective engagement with, and encourage
Stakeholder engagement p. 25
participation from, these parties.
Communication with investors p. 77
Principle E. The board should ensure that workforce policies and practices are consistent with
Sustainability p. 26 to 69
the company’s values and support its long-term sustainable success. The workforce should be
Stakeholder engagement p. 25
able to raise any matters of concern.
Division of responsibilities
Directors’ Remuneration report p. 111 to 117
Principle F. The chair leads the board and is responsible for its overall effectiveness in
Division of responsibilities p. 84
directing the company. They should demonstrate objective judgement throughout their
Composition, succession, and
tenure and promote a culture of openness and debate. In addition, the chair facilitates
evaluation p. 86 to 87
constructive board relations and the effective contribution of all non-executive directors, and
ensures that directors receive accurate, timely and clear information.
Principle G. The board should include an appropriate combination of executive and non-
Division of responsibilities p. 84
executive (and, in particular, independent non-executive) directors, such that no one individual
Composition, succession, and
or small group of individuals dominates the board’s decision-making. There should be a clear
evaluation p. 86 to 87
division of responsibilities between the leadership of the board and the executive leadership
Board biographies p. 89 to 91
of the company’s business.
Principle H. Non-executive directors should have sufficient time to meet their board
Composition, succession, and
responsibilities. They should provide constructive challenge, strategic guidance, offer
evaluation p. 86 to 87
specialist advice and hold management to account.
Principle I. The board, supported by the company secretary, should ensure that it has the
Division of responsibilities p. 84
policies, processes, information, time and resources it needs in order to function effectively
and efficiently.
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Strategic reportGovernanceFinancial statementsOther information
Governance statements
Composition, succession and evaluation
Principle J. Appointments to the board should be subject to a formal, rigorous and
Nomination Committee report p. 94 to 95
transparent procedure, and an effective succession plan should be maintained for board and
senior management. Both appointments and succession plans should be based on merit
and objective criteria and, within this context, should promote diversity of gender, social and
ethnic backgrounds, cognitive and personal strengths.
Principle K. The board and its committees should have a combination of skills, experience and
Board biographies p. 89 to 91
knowledge. Consideration should be given to the length of service of the board as a whole
and membership regularly refreshed.
Principle L. Annual evaluation of the board should consider its composition, diversity and
Nomination Committee report p. 94 to 95
how effectively members work together to achieve objectives. Individual evaluation should
Board effectiveness p. 87
demonstrate whether each director continues to contribute effectively.
Audit, risk and internal control
Principle M. The board should establish formal and transparent policies and procedures to
Audit Committee report p. 96 to 99
ensure the independence and effectiveness of internal and external audit functions and
satisfy itself on the integrity of financial and narrative statements.
Principle N. The board should present a fair, balanced and understandable assessment of the
Strategic report p. 1 to 69
company’s position and prospects.
Risk management p. 16 to 18
Audit Committee report p. 96 to 99
Financial statements p. 130 to 159
Principle O. The board should establish procedures to manage risk, oversee the internal
Risk management p. 16 to 18
control framework, and determine the nature and extent of the principal risks the company is
Principal risks and uncertainties p. 19 to 23
willing to take in order to achieve its long-term strategic objectives.
Viability statement p. 24
Audit Committee report p. 96 to 99
Remuneration
Principle P. Remuneration policies and practices should be designed to support strategy
Company purpose, values, and strategy p. 8 to 9
and promote long-term sustainable success. Executive remuneration should be aligned
Directors’ Remuneration report p. 111 to 117
to company purpose and values, and be clearly linked to the successful delivery of the
company’s long-term strategy.
Principle Q. A formal and transparent procedure for developing policy on executive
Directors’ Remuneration report p. 111 to 117
remuneration and determining director and senior management remuneration should be
established. No director should be involved in deciding their own remuneration outcome.
Principle R. Directors should exercise independent judgement and discretion when
Directors’ Remuneration report p. 111 to 117
authorising remuneration outcomes, taking account of company and individual performance,
and wider circumstances.
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Genel Energy Annual Report 2023
Board leadership and
Company purpose
Our objective remains to create long-term value for shareholders through the exploration,
development and production of natural resources. Further information on our business model
can be found on pages 8 to 9.
Activity highlights
January
Approved the trading and operations update
March
Reviewed and approved the 2022
Annual Report
Reviewed the ESG materiality assessment
and approved the Company’s ESG strategy
Reviewed the outcome of the 2022 Board
effectiveness review
Approved the declaration of a 2022 final
dividend payment
AGM
Approved the exit from the Sarta PSC
Endorsed the organisational downsizing
Agreed to reassess the timing of drilling the
Toosan-1 well
Reviewed and approved the half-year
results statements
May
June
July
September
Discussed the Company’s business strategy
and capital allocation priorities
October
Approved the bond buyback tender
November
Approved the trading and operations update
December
Approved the 2024 work programme
and budget
The role of the Board
The Board’s role is to provide leadership in delivering on the long-
term success of the Company within a framework of prudent and
effective controls. It is responsible for approving the Company’s
strategy and business plan and keeping under review the financial
and operational resources of the Company. As part of its role the
Board considers and discusses trends across the industry, the
implications of these trends for the business including areas of
potential opportunities, and risks that could impact the future
success of the business. Further information on our purpose,
business model and strategy can be found on pages 8 to 9.
As part of the Company’s governance processes, the Board
monitors the performance of the business and management
against strategic objectives with the overall aim of creating and
delivering value to shareholders. The performance of the Board
and the contributions of Directors to the Board’s decision-making
processes are essential to fulfilling this role.
The Directors may exercise all the powers of the Company
subject to the provisions of relevant law, the Company’s articles,
and any special resolution of the Company in the furtherance of
their role. The Board has reserved certain matters for its own
consideration and decision-making. Specific matters reserved
for the Board include setting the Company’s purpose, values,
objectives, business and ESG strategy, and its overall supervision.
Acquisitions, divestments and other strategic decisions will all be
considered and determined by the Board in accordance with the
matters reserved for the Board.
Authorities have been delegated to Board Committees and
these are set out clearly in each Committee’s terms of reference
which are reviewed regularly to ensure they remain appropriate
and relevant. Copies of the terms of reference are available on
our website.
The Board of Directors has delegated day-to-day management
of the business to the CEO who operates within delegated
authority limits.
The Board reviews the matters reserved for its decision and the
authorities it has delegated annually, subject to the limitations
imposed by the Company’s constitutional documents and
applicable law.
The Board and its Committees have access to the advice and
services of the General Counsel and Company Secretary and
may seek advice from independent experts at the expense of
the Company as appropriate. Individual Directors may also seek
independent legal advice at the expense of the Company, in
accordance with the Board’s agreed procedure.
In addition, the Board has extensive access to members of senior
management, who attend Board meetings by invitation, and
present regularly to the Board on various aspects of the business.
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Board leadership and company purpose
Code of Conduct
Our Code of Conduct, adopted by the Board defines what we
stand for as a Company, sets out the principles that guide
all of our business activities and how we expect our Board,
employees, suppliers, partners, and others to behave. We strive
for operational excellence and aim to conduct our business in
a responsible, ethical and safe manner with high standards of
financial reporting and corporate governance, and compliance
with applicable laws. A full copy is available on our website.
Culture
The Board of Directors reviews and approves key policies
including the Company’s values and Code of Conduct in order
to establish a tone from the top and ensure they support the
long-term sustainable success of the business. The Board
recognises the importance of monitoring culture throughout the
business, in order to ensure practices and behaviours are aligned
with the Company’s purpose, values, and strategy. In order to
monitor organisational culture throughout the year the Board
and its Committees receive reports on various topics including
organisational effectiveness, the understanding of culture and
values throughout the business, health and safety, compliance
matters, workforce remuneration, and talent development.
SpeakUp
All employees are encouraged to raise any concerns they may
have and to report any suspected or known violations of the
Code of Conduct or company policies without fear of retaliation.
We operate an independently run and confidential ‘SpeakUp’
whistleblowing hotline for all staff. During the year all staff
members were reminded of the SpeakUp facility available
to them. All issues raised via this route are investigated and
reported to the full Board.
Market Abuse Regulation
The Board is responsible for taking all proper and reasonable
steps to ensure full compliance with the Market Abuse
Regulation, including ensuring that staff are fully trained and
understand their obligations under the regime.
Business conduct
We conduct our business in an open, honest, and ethical manner.
We do not tolerate any form of bribery. We aim to ensure that all
financial and non-financial information we create is complete
and accurate, and we strive to provide accurate and timely
information to external stakeholders, including governments,
in the locations in which we operate. We take steps to protect
against inappropriate use of confidential information and we aim
to protect and use our business assets appropriately.
Our policy is not to make political donations and we have not
done so in the year under review (2022: nil).
Conflicts of interest
We seek to avoid conflicts of interest wherever possible.
We believe it is important that the decision-making process
is not impaired by an individual being conflicted by either
an actual or a potential conflict. However, we recognise that
from time to time situations may arise which could result in
actual or potential conflicts and, accordingly, we have a formal
system in place enabling Directors and members of senior
management to declare any such conflicts and for those conflicts
to be reviewed and, if appropriate, authorised by the Board.
A register of conflicts is maintained by the Company Secretary.
The Company’s conflict of interest policy also requires our
employees to declare any actual or potential conflicts of interest.
The Audit Committee and the Board have applied the principles
and processes set out above during 2023 and confirm that they
have operated effectively.
In addition, on an annual basis, the Company Secretary writes to
each of our significant shareholders requesting their cooperation
to identify conflicts of interest and related parties and continues
to engage with them to identify any actual or potential conflict of
interest that may arise on an ongoing basis.
Third-parties
We maintain high standards of business conduct in our dealings
with all third-parties in order to promote mutually beneficial
relationships and protect our reputation. We do not seek to
win or maintain business by acting illegally or contrary to our
contractual agreements. Our relationships with third-parties
are conducted on a fair and honest basis. We expect our third-
parties to maintain the same standards of business conduct as
we adhere to.
Engagement with stakeholders
During the year, the Board continued to monitor the Company’s
key stakeholders, their impact on key strategic objectives
and how the Company was engaging with each stakeholder.
As well as ad hoc updates from management, discussions on
engagement activity with the Company’s key stakeholders
are scheduled in the Board calendar throughout the year.
Further information on stakeholder engagement and how the
Board has complied with s172(1) of the UK Companies Act 2006
can be found on page 25.
The Group’s Code of Conduct also sets a framework for how
it partners with, and invests in, communities (local, regional
and global) to achieve mutual long-term benefits. The Group
contributes to socio-economic development through taxes,
royalties and other local payments and donations. Further details
of our community programmes can be found in our sustainability
section on pages 26 to 69.
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Genel Energy Annual Report 2023
Communities and environment
Protecting and sustaining the communities and environment
in which we operate is fundamental to maintaining our social
licence to operate and to creating a long-term sustainable
business. We strive to maintain high standards of environmental
protection and we do not compromise our environmental values
for profit or production. We seek to maintain proactive and
constructive engagement with the local communities affected by
our operations and assets and invest to help them develop in a
sustainable manner. Further information on how we engage with
communities can be found in the sustainability section of this
report on pages 26 to 69.
Workforce engagement
The Board recognises the importance of our workforce as a key
component in the Company’s ability to deliver its strategy and
has appointed Canan Edibog˘lu as its Designated INED (‘DINED’)
for workforce engagement. On three occasions in 2023 Canan
Edibog˘lu met with staff based in our London and Istanbul offices.
Canan was able to engage with local staff and provide feedback
to the Board of Directors.
Communication with investors
We communicate on a regular basis with our investors via
presentations and calls as part of our annual financial calendar
including holding video conferences with analysts on the
morning of key updates to the business being made to the
market. We also liaise with them on an ad hoc basis as and when
questions arise.
In 2023, the Chair and CEO held meetings with major
shareholders in order to discuss the current position of the
business and its future strategy. Our major shareholders are
encouraged to meet with the Chair to discuss any matters that
they would like to raise outside the formal financial calendar.
We welcome an open dialogue with all our investors.
The Board receives regular investor relations updates covering
key investor meetings and activities, as well as shareholder and
investor feedback.
We also engage with our shareholders via our website at
genelenergy.com
In addition, throughout the year, where appropriate, the
Executive Committee and their direct reports were provided
with the opportunity to present various topics to the Board or
relevant Board Committee for discussion.
2024 AGM
The 2024 AGM will be held on Thursday, 9 May 2024, at
Linklaters LLP, One Silk Street, London, EC2Y 8HQ, UK at
11.00am.
The Notice of AGM accompanies this Annual Report and sets out
the business to be considered at the meeting.
Both this Annual Report and the Notice of AGM are available on
our website at genelenergy.com
2023 investor activity
Genel Energy Annual Report 2023
77
Investor Meet Company presentationInvestor conference (London)Full-year results roadshowInvestor Meet Company presentationInvestor conference (London)Investor conference (London)Investor conference (Miami)AGM with investor Q&AHalf-year results roadshowInvestor Meeting Company presentationInvestor conference (Oslo)Investor conference (London)Investor conference (Singapore)Strategic reportGovernanceFinancial statementsOther information
HSSE Committee
Ensuring a focused approach
to HSSE
Dear Shareholder,
I am pleased to present this report from the
HSSE Committee. The health, safety, and
security of our workforce has always been
central to the culture of Genel. Genel’s HSE
policy continues to reflect international best
practices including, but not limited to, the IFC
Performance Standards and IOGP Standards.
Throughout 2023, the Committee continued to be provided
with regular updates by management on security in the region
and the progress made against the health and safety plan and
the ESG plan, both of which the Committee approved at the
beginning of the year.
During 2023, the civil engineering project on the Toosan-1 well
site on the SL10B/13 block in Somaliland was completed without
incident. At Sarta remediation activity was completed. We have
now achieved over four million work hours since our last LTI
which occurred in 2021.
The annual health and safety plan included actions in the
following areas: HSE training and competency, contractor
management, a level one and two assurance programme
and making enhancements to our HSE Management System.
During the course of the year, progress was made against each
of these areas.
During the year the Committee monitored progress against
the Company’s Environmental, Social and Governance (‘ESG’)
implementation plan. In May 2023, the Company published its
fourth Sustainability Report, which continued to be prepared in
accordance with the Global Reporting Initiative Standards core
option and included Genel’s responses to the recommendations
issued by the TaskForce on Climate-Related Disclosure (‘TCFD’).
The Company’s CDP climate score was maintained at B in 2023
and CDP water security score of C was achieved.
Meetings held in 2023
Three scheduled meetings
Chair:
David McManus
Members:
Canan Edibog˘lu
Rt Hon Sir Michael Fallon
Yetik K. Mert
HSSE Committee time spent
Highlights of HSSE Committee activity
— Monitored progress made against the 2023 H&S plan
— Reviewed progress against the 2023 ESG plan
— Approved the 2024 corporate KPI’s in relation to
H&S and ESG
— Reviewed disclosures made in the 2022 Annual Report in
relation to HSSE
— Reviewed key risks in relation to HSE
— Received security updates
— Reviewed progress made against the localisation agenda
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Genel Energy Annual Report 2023
Planning and monitoring 46%Culture 21%Security 21%Risk monitoring and mitigation 12% Actions
More information on
decisions and outcomes
Objective: To ensure that the Company maintains a responsible and credible approach to HSSE matters
See p. 47 to 51
(including asset integrity and major hazard risk management), in line with international best practices and
emerging legal requirements
— Received regular updates on health and safety from an operational perspective
— Received regular updates on actions being taken against the annual ESG work plan
— Received regular updates on security within the KRI and Somaliland
Objective: To assist the Company in maintaining its relationships with local communities in areas in which it
See p. 56 to 61
operates, including through social investment and sustainable development activities
— The environmental and social impact arising from our operations is reviewed regularly and any
areas of concern are reviewed by the Committee
— Reviewed the Company’s localisation strategy for the KRI
— Reviewed CSR activity in 2023
Objective: To assist the Board and other committees in assessing HSSE risks and their effective
See p. 19 to 23
management in determining, implementing and reviewing the Company’s HSSE strategy and processes
— Risks allocated to the Committee under the risk management system are reviewed in detail and
a report provided to the Audit Committee on the effectiveness of the HSSE controls and risk
mitigation processes
Objective: To assist the Company in developing the HSE culture
See p. 26 to 69 and 87
— Received regular updates on the approach to safety culture and security across the organisation
— Monitored performance against the H&S and ESG KPIs
— Provided feedback to the Remuneration Committee on the HSE performance elements of the
2022 annual bonus performance targets
In line with the UK’s Streamlined Energy and Carbon reporting
requirements, our greenhouse gas emissions in 2023 continue to
be reported using an equity share approach. Further information
can be found on page 33.
In line with the Company’s commitment to developing local
capability in the countries in which it operates the Committee
reviewed the progress made in 2023 against our localisation
agenda. The impact of our decision to exit the Sarta PSC, had
a material impact on our localisation agenda and reduction
in workforce in the KRI. Further information on activities
undertaken by the Company as a socially responsible contributor
to the global energy mix can be found on pages 26 to 69.
In recognition of the importance of HSE to our business the
2023 annual bonus objectives once again contained elements
specifically allocated to the annual health and safety and ESG
workplans. The Committee reviewed progress against the 2023
HSE objectives the details of which may be found on page 113.
The HSSE Committee effectiveness for the year ended
31 December 2023 was reviewed as part of the wider Board
effectiveness review, and details of the Board effectiveness
review can be found on page 87. As a result of the reduction in
operating activity the Board has decided to disband the HSSE
Committee, effective as of 1 January 2024 and items discussed
by the Committee will now form part of the Board agenda
going forward.
David McManus
Chair of the Board and former Chair of the HSSE Committee
Genel Energy Annual Report 2023
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International
Relations
Committee
Monitoring external
developments
Meetings held in 2023
Three scheduled meetings
Chair:
Rt Hon Sir Michael Fallon
Members:
Tolga Bilgin
Canan Edibog˘lu
David McManus
Yetik K. Mert
International Relations Committee
time spent
Highlights of International Relations Committee
activity
— Reviewed and monitored political developments within
the regions in which the Company operates
— Reviewed key risks including prevention and mitigation
controls relevant to international relations
— Discussed external stakeholder engagement
Dear Shareholder,
I am pleased to present this report from the
International Relations Committee. The role
of the Committee is to provide oversight on
external developments and risks that may
impact Genel’s activities.
Genel operates in areas of perceived high political risk, and the
ongoing progress of the Company is interlinked with a clear
understanding of the political environment for the natural
resources industry in both the KRI and other jurisdictions.
The Board has members with significant regional, international,
and political experience, and this provides the International
Relations Committee with a breadth of knowledge that can
be brought to bear on the latest political developments in the
regions in which Genel operates. In turn, this supports the
delivery of a successful strategy. The Committee is supported
in its work by members of the Executive Committee and by
external advisers.
The Committee held three meetings during the year and received
regular reports between meetings on developments within the
KRI and Federal Iraq and possible implications for the business.
These included the decision by the Turkish authorities to halt the
transmission of oil through the Iraq-Türkiye pipeline on 25 March
2023 follow a finding by the ICC in favour of Iraq. The Committee
continued to monitor the operating environment in the KRI
including the impact of the first Iraqi multi-year budget passed
by the Federal Iraqi Government and its impact on the KRI.
The Committee reviewed the key external stakeholders in the
region and discussed engagement strategies.
As the Company commenced civil engineering work in
Somaliland in preparation for the drilling of the Toosan-1 well,
the Committee received reports on political developments
in Somaliland and the neighbouring region. The Committee
also undertook a review of the community stakeholder
engagement strategy.
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Macro environment 74%External risk 20%Governance 6% Actions
More information on
decisions and outcomes
Objective: To monitor and review political developments in the regions in which the Company operates
— Received regular reports on political developments within Iraq and the Middle East
— Received regular reports on political developments in Somaliland and surrounding region
Objective: To provide an independent assessment of the external environment in respect of international
See p. 19 to 23
relations as it affects the Company and decision making by the Board
— Received reports and discussed potential implications of external political events on the Company
and the industry within which it operates
Objective: To review the quality of the Company’s reporting in relation to political risk and controls
— Reviewed disclosures contained within the Annual Report
Objective: To monitor the Company’s efforts in developing and maintaining relationships with key
government stakeholders in the regions in which the Group operates
— Regularly received and held discussions with management in relation to actions being taken in order to
develop and maintain relationships with our stakeholders across the business
In 2024, the Committee will continue to draw on the extensive
international experience of Genel’s Board members to provide an
independent assessment of the external environment in respect
of international relations as they affect the business and impact
decision making by the Board.
The International Relations Committee also completed an
annual review of its terms of reference, which can be viewed at
genelenergy.com. As part of the Company’s governance practice,
an effectiveness review for the year ended 31 December 2023
was completed as part of the wider Board effectiveness review:
further details of this can be found on page 87.
Rt Hon Sir Michael Fallon
Chair, International Relations Committee
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Reserves
Committee
Ensuring a robust reserves
and resources process
Dear Shareholder,
I am pleased to present this report from the
Reserves Committee. As part of the Company’s
governance processes, the Reserves
Committee provides oversight over the
processes undertaken to assess the Company’s
reserves and resources and approves the
reserves and resources statement.
In order for the Committee to discharge its responsibilities it
receives and considers reports from management, technical
experts and external independent reserves evaluators as
required ahead of approving the annual reserves and resources
statement. The Committee examined an assessment from
DeGolyer and MacNaughton on the Tawke licence at which Genel
has a 25% working interest. The outcome of this assessment was
that at the 2023 year-end 2P reserves at the Tawke PSC stood at
326 MMbbls (2022: 327 MMbbls). 2P reserves have been adjusted
for 2023 production of 17 MMbbls and an upwards technical
revision of 16 MMbbls. Genel continues to retain 11.7 MMbbls of
these 2P resources associated with the Tawke field enhanced oil
recovery project as 2C.
The Committee considered that in light of no new wells being
drilled at the Taq Taq licence and production being shut in from
May 2023 no independent assessment of reserves and resources
would take place for the 2023 year end. Reserves at the Taq Taq
licence at which Genel has a 44% working interest would instead
be corrected for 2023 production. Gross 2P reserves stood
at 23.4 MMbbls at year-end 2023 (23.9 MMbbls at end-2022),
following production of 0.5 MMbbls.
As part of our year end reserves process 2P reserves associated
with Sarta were removed as a result of the PSC being terminated
on 1 December 2023.
Meetings held in 2023
Two scheduled meetings
Chair:
David McManus
Members:
Paul Weir
Reserves Committee time spent
Highlights of Reserves Committee activity
— Reviewed the reserves and resources for each of the
Company’s assets
— Approved the 2023 reserves and resources statement
— Review of disclosures made in the Annual Report in
relation to reserves and resources
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Genel Energy Annual Report 2023
Reserves and resources 90%Governance 10%
Actions
More information on
decisions and outcomes
Objective: To increase shareholder confidence by ensuring a robust reserves and resources review process
See p. 14
— Reviewed the reserves and resources assessment procedure
Objective: To review the Company’s statement of reserves, independent reserves evaluator’s reports and
See p. 14 and 82
any material changes in reserves volumes
— Approved the Company’s annual statement of reserves and resources
— Reviewed the independent reserves evaluator reports
Objective: To review the qualification and independence of the independent qualified reserves evaluator
See p. 82
— Endorsed the appointment of each of the assets reserves evaluator
The Reserves Committee has detailed terms of reference which
can be viewed at genelenergy.com and as part of the Company’s
governance practices an effectiveness review of the Committee
for the year ended 31 December 2023 was completed as part of
the wider Board effectiveness review.
David McManus
Chair, Reserves Committee
Genel Energy Annual Report 2023
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Division of responsibilities
Independence of the Board
The Independent Non-Executive Directors Canan Edibog˘lu, Sir
Michael Fallon, and Yetik K. Mert are responsible for ensuring an
appropriate challenge of management and the decisions of the
Board. David McManus (as Chair) was considered independent
at the time of his appointment. The Independent Directors
and the Chair meet regularly in a private session after Board
meetings and on other occasions. Tolga Bilgin is not considered to
be independent.
The Board considers that there is an appropriate balance between
Executive and Non-Executive, Independent and Non-Independent
Directors, with a view to promoting shareholder interests and
governing the business effectively.
Roles and responsibilities
We believe that it is important to ensure that there is a clear division of roles between the Chair, Chief Executive Officer, and Senior
Independent Director of the Company.
Paul Weir
Chief Executive Officer
Paul Weir is the Chief Executive Officer.
The Chief Executive Officer is responsible
for all executive management matters of
the Company. He reports to the Chair and to
the Board directly. Specific responsibilities
include the day-to-day management of
the Group within delegated authority
limits, identifying and executing strategic
opportunities, managing the risk profile
and ensuring appropriate internal controls
are in place, maintaining a dialogue with
the Chair and the Board on important
and strategic issues, ensuring the proper
development of senior management and
succession planning for executive positions.
Sir Michael Fallon
Deputy Chair and
Senior Independent
Non-Executive Director
Sir Michael Fallon is the Deputy Chair and
Senior Independent Director. Sir Michael
Fallon is available to shareholders who
have concerns that cannot be addressed
through the normal channels of the Chair
or the Chief Executive Officer. He acts
as a sounding board for the Chair and an
intermediary for other Directors if and
when necessary.
David McManus
Chair
David McManus is the Chair. The Chair
reports to the Board and is responsible for
the leadership and overall effectiveness
of the Board, overseeing the strategy of
the Company and for setting the Board’s
agenda. Specific responsibilities of the
Chair include ensuring the effective
running of the Board, ensuring that the
Board agenda is forward-looking with an
emphasis on strategic issues and ensuring
the performance of the Board and its
Committees is effective and in line with best
practice. A culture of openness and debate
is encouraged by the Chair by ensuring
constructive relations between Executive
and Non-Executive Directors and ensuring
effective communication between the
Company and its shareholders. The Chair’s
other significant commitments are included
in his biography on page 90.
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Genel Energy Annual Report 2023
Composition, succession, and evaluation
Our committee structure - 2023
Board of Directors
Audit
Committee
Ensuring
integrity and
clarity of
published
financial
information
Remuneration
Committee
Nomination
Committee
Ensuring the
continuation of a
high-calibre
Board
Ensuring an
appropriate
approach to
remuneration that
supports delivery
of the business
strategy
HSSE
Committee
Ensuring a
responsible and
credible
approach
to HSSE
Reserves
Committee
Ensuring a
robust reserves
review process
International
Relations
Committee
Monitoring
external
developments
Chair
Canan Edibog˘lu
Chair
Yetik K. Mert
Chair
David McManus
Chair
David McManus
Chair
David McManus
Chair
Sir Michael Fallon
Members
Yetik K. Mert
Members
David McManus
Sir Michael Fallon
Members
Canan Edibog˘lu
Sir Michael Fallon
Yetik K. Mert
Members
Canan Edibog˘lu
Sir Michael Fallon
Yetik K. Mert
Members
Paul Weir
Meetings in
2023
3 scheduled
Meetings in
2023
3 scheduled
2 ad hoc
Meetings in
2023
2 scheduled
2 ad hoc
Meetings in
2023
3 scheduled
Meetings in
2023
2 scheduled
Members
Tolga Bilgin
Canan Edibog˘lu
David McManus
Yetik K. Mert
Meetings in
2023
3 scheduled
Read more
Read more
Read more
Read more
Read more
Read more
p. 96
p. 100
p. 94
p. 78
p. 82
p. 80
Board attendance
Main Board
Audit
Remuneration Nomination
HSSE
Reserves
International
Relations
David McManus
Sir Michael Fallon1
Paul Weir
Tolga Bilgin
Canan Edibog˘lu1
Yetik K. Mert
denotes scheduled meeting attended
denotes ad hoc meeting attended
denotes scheduled meeting not attended
denotes ad hoc meeting not attended
1 Sir Michael Fallon and Canan Edibog˘lu were unable to attend certain ad hoc Board meetings during the year held at short notice, however did provide their
comments to the Chair ahead of the meeting.
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Composition, succession, and evaluation
Meetings of the Board
The Board meets approximately six times each year and schedules
other meetings as necessary to fulfil its role. During the year the
Board held 15 meetings in total of which 9 were in addition to
those scheduled.
There are detailed agendas for each Board meeting which are
developed by the Chair, the CEO, and the Company Secretary.
The Board also has an annual rolling agenda that sets out the key
topics for consideration at each meeting.
In addition to the scheduled meetings of the Board, Directors
receive updates from management in between meetings on the
performance of the business against the agreed strategy and on
its operations.
Operation of the Board
The Chair is responsible for ensuring that the Board operates
effectively. The Non-Executive Directors provide scrutiny and
oversight to hold to account the performance of management and
the Executive Directors. The Board operates within an open style of
communication and debates issues openly and constructively within
an environment that encourages healthy debate and challenge both
inside and outside the boardroom.
The Directors receive board papers and other relevant information
in a timely manner ahead of meetings. Board papers are delivered
through an electronic portal that enables Directors to access them
wherever they are in the world. The timely provision of relevant
information to Directors is vital in ensuring they are able to fulfil
their role of effective oversight and challenge and for enabling the
Board to make effective decisions.
Board Committees
During 2023 six Board committees were operational: the Audit
Committee, the Remuneration Committee, the Nomination
Committee, the Health, Safety, Security and Environment
Committee, the Reserves Committee and the International
Relations Committee.
Each committee has adopted terms of reference under which
authority is delegated by the Board, copies of which are available
at genelenergy.com. The Audit Committee, Remuneration
Committee, and Nomination Committee consist only of
Independent Non-Executive Directors save that David McManus,
who was independent upon his appointment is a member of the
Remuneration Committee.
The Board of Directors have disbanded the Health, Safety, Security
and Environment Committee as of 1 January 2024 and going
forward topics discussed by this Committee will form part of the
Board’s standing agenda.
Board composition
There are six directors on the Board, one of whom is Executive and
five (including the Chair) are Non-Executive. Three (excluding the
Chair) are independent under the Code. In addition, the Chair was
independent on appointment and one Shareholder representative
Director is not considered independent.
Skills, knowledge, experience, and attributes
of Directors
The Board considers that a diversity of skills, background,
knowledge, experience, perspective, and gender is required in order
to govern the business effectively. The Board and its Committees
work actively to ensure that the Executive and Non-Executive
Directors continue to have the right balance of skills, experience,
independence and group knowledge necessary to discharge
their responsibilities.
The Non-Executive Directors bring with them international and
operational experience gained both in the sectors in which we
operate and in other areas of business and public life.
All Directors are required to devote sufficient time and demonstrate
commitment to their role. Further details of the Directors’ skills and
experience are set out on pages 89 to 91 of this Annual Report.
Board composition, international diversity, skills
and experience of the Board
Board composition
Total number of Directors
Independent Directors
Non-Independent Directors
Executive Directors
International diversity
British
Turkish
Skills and experience of the Board
Natural resources
Managing and leading
Governance
Financial capital markets
HSSE
Remuneration
Foreign affairs
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Genel Energy Annual Report 2023
Board effectiveness
For the 2023 Board effectiveness review, the Board of Directors
considered whether or not to engage an external facilitator
however, ultimately due to the external environment being faced
by the business it was decided that it was more appropriate to
conduct an internal review of the effectiveness of the Board,
each of its Committees, and each Director. The 2023 review was
facilitated by the Chair.
As part of the Board evaluation, an electronic survey among
Board members and one-to-one meetings were held between each
Board Director and the Chair.
Directors’ induction and ongoing development
In order to govern the Group effectively, Non-Executive Directors
must have a clear understanding of the overall strategy, together
with a sound knowledge of the business and the industry within
which it operates.
The Chair, together with the Company Secretary, is responsible
for ensuring that all new Directors receive a full, formal and
tailored induction upon appointment to the Board. This includes
a detailed overview of the Company and its governance practices
and meetings with key personnel from across the Group in order
to develop a full understanding of the business, its strategy and
business priorities in each area.
As part of the ongoing training and development programme
throughout the year training on specific topics including sessions
on the Market Abuse Regulation and equality and diversity
was held. It is intended that this programme will continue
throughout 2024.
Actions taken following the 2022 effectiveness review
Culture
To continue building on efforts to enhance the dynamic
amongst the Board and with management.
Throughout 2023 the dynamic between the Board and
management continued to improve.
Composition
Following the reduction in Board members during 2022, the
composition and size of the Board will be kept under review
during 2023 in order to ensure Board has the correct skills and
experience to drive forward the Company’s strategy.
Strategy
The Board has set a clear strategy for the Company and will
continue to focus on delivering value to shareholders through
its execution. As part of Genel’s ongoing sustainability
commitments, the Board will be reviewing the Company’s ESG
strategy during 2023 in order to implement any necessary
changes, as the Company strives to remain a socially
responsible contributor to the global energy mix.
Actions arising from the 2023 effectiveness review
Board Committees
Composition and succession planning
Strategy implementation
Following a review of the Board composition undertaken by
the Nomination Committee, it was agreed that although no
new appointments would be made during 2023 the Committee
will continue to keep Board size and composition under review
to ensure the appropriate experience and skills to deliver the
Company’s strategy.
The Board performed a review of the Company’s strategy and
confirmed it remained appropriate.
The Board reviewed the Company’s ESG materiality assessment
and approved an ESG strategy during 2023.
Following a review of our Board Committee structure and taking
into consideration the reduction in our operating activity,
the Board have decided to disband the HSSE Committee.
Matters previously considered by the HSSE Committee will be
incorporated into the Board agenda going forward providing
more frequent updates to the Directors on these matters.
The composition and size of the Board will continue to be kept
under review during 2024, to ensure the Board has the correct
skills and experience to drive forward the Company’s strategy
as well as having appropriate succession plans in place.
The Board has set a clear strategy for the Company. In 2024
the Board will continue to focus on the implementation of our
strategy and delivering value to our shareholders.
Overall, the 2023 Board effectiveness review concluded that the Board functions well and each of its Committees are effective with
strong leadership and engagement, allowing adequate time to discuss areas within their remit.
Following these performance reviews, the Board considers that each of the Directors continues to make an effective and valuable
contribution and demonstrates their commitment to the role. Accordingly, the Board recommends the re-election of each Director
at the Company’s forthcoming AGM. It is the Board’s intention to continue to review its performance annually, including that of its
Committees and individual Directors.
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Genel Energy Annual Report 2023
Board of Directors
2.
5.
3.
6.
1.
4.
7.
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2. Paul Weir
Chief Executive Officer
Appointed: Executive Director and Chief
Executive Officer on 3 October 2022.
Committee memberships: Member of the
Reserves Committee.
Key skills and experience: Paul has
worked for almost 40 years in upstream
E&P having spent time in the North
Sea, South East Asia and Africa with
experience of onshore and offshore oil
and gas operations. Paul joined Genel as
Chief Operating Officer in January 2020,
with responsibility for all production
assets and functional leadership of the
operational disciplines before being
appointed as Interim CEO on 9 June 2022.
Paul was then appointed, by the Board, as
CEO in October 2022.
Before joining Genel, Paul was Group
Head of Operations and Safety at Tullow
Oil. Prior to that Paul spent 13 years at
Talisman, where he was VP of Production
& Exploration, leading Operations
in Malaysia.
Current external appointments: None.
Previous relevant experience: Paul
has worked in a variety of operational
roles for Nippon Oil, Elf, Occidental
and Total. Paul holds an MBA in Oil &
Gas Management from Robert Gordon
University in Aberdeen.
3. Rt Hon Sir Michael Fallon
KCB
Senior Independent Non-Executive
Director and Deputy Chair
Appointed: 5 February 2020.
Committee memberships: Chair of
the International Relations Committee
and member of the Remuneration and
Nomination Committees.
Key skills and experience: Sir Michael
is a former UK Defence Secretary with
30 years of senior political and business
experience, serving in four British
Cabinets, and as a Non-Executive Director
on City and commercial boards.
Current external appointments: In
May 2021, Sir Michael was appointed as
Chair of Aberdeen Standard Investcorp
Infrastructure Partners, an Infrastructure
fund. He has been a member of
Investcorp’s International Advisory Board
since 2018. Sir Michael is also Chair of
Avanton Ltd, a property development
firm; and Deputy Chair of Nova
Innovation, a tidal energy company.
Previous relevant experience: Sir
Michael was Energy Minister in the UK
Government from 2013-2014:
responsible for oil, gas, electricity,
nuclear and renewables.
Board of Directors
1. David McManus
Chair
Appointed: 5 February 2020.
Committee memberships: Chair of
the Nomination Committee, and the
Reserves Committee and member of
the Remuneration and International
Relations Committees.
Key skills and experience: David has vast
experience as an international business
leader in the energy sector with strong
technical and commercial skills. He has
over 40 years experience in technical,
commercial, business development,
general management and executive roles
across all aspects of the oil & gas and
energy business, spanning most regions
of the world.
Current external appointments: David
is currently serving as a Non-Executive
Director for a number of listed companies
including Hess Corporation, a large,
integrated US oil and gas company
and FlexLNG a Norwegian-listed LNG
shipping company.
Previous relevant experience: In
February 2020 David retired from
Costain plc, one of the UK’s leading smart
infrastructure solutions providers. He was
also a Non-Executive Director on the
Board of Rockhopper Exploration plc until
May 2019, where he served as Chair from
2016 to 2019. Other past Directorships
include Caza Oil & Gas Inc and Cape plc,
where he served as Chair from 2006 to
2008. David’s earlier career consisted
of a number of executive positions
including at Pioneer Natural Resources,
where he was executive vice president
for international operations, BG Group,
Atlantic Richfield Company (ARCO),
LASMO plc, and Shell UK.
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Genel Energy Annual Report 2023
4. Canan Edibog˘lu
Independent Non-Executive Director
5. Yetik K. Mert
Independent Non-Executive Director
6. Ümit Tolga Bilgin
Non-Executive Director
Appointed: 21 June 2020.
Appointed: 22 December 2021.
Appointed: 5 February 2020.
Committee memberships: Chair of
the Audit Committee, and member
of the Nomination, and International
Relations Committees.
Committee memberships: Chair of the
Remuneration Committee, and member of
the Audit, Nomination, and International
Relations Committees.
Key skills and experience: Canan has
significant financial, corporate and
industry experience. She had almost 30
years of experience at Royal Dutch Shell,
culminating in her role as the country
chair and CEO of Shell Turkey between
2001 and 2009. Prior to this, she was
the CFO of Shell Turkey, preceded by
a series of positions at the company
across numerous aspects of the business,
notably marketing, treasury and planning.
Since leaving Shell, Canan has advised
a number of companies including
Accenture, Maersk, and APM Terminals in
developing their businesses in Turkey.
Current external appointments: Canan
is a Non-Executive Director of ING Bank
and Tupras, in Turkey, since 2010 and
2017 respectively. She is also a voluntary
member of various NGOs, and is a board
member of the Turkish Autism Society,
the Global Relations Forum, and the
World Resource Institute where she
was previously Chair for five years – the
Centre for Sustainable Transport.
Previous relevant experience: Between
2011 and 2017 Canan was a Non-Executive
Director of Aygaz, a Turkish LPG
marketing and distribution company, and
between 2013 and 2019 a Non-Executive
Director of Prysmian Turkey. Canan is
the former President of PETDER (Turkish
Association of Petroleum Industrialists)
and Chair of the Oil Industry Council
Turkish Union of Chambers and
Commodity Exchanges and board
member of WWF.
Key skills and experience: Yetik has
almost 40 years’ technical, commercial,
business development, and general
management experience, including
holding executive and non-executive
Directorship roles across the energy
utility and industrial sectors in MENA,
CEE, and the USA.
Current external appointments: Yetik
is currently serving as a Non-Executive
Director and Chair of the Remuneration,
Governance and Nomination Committees
on the Boards of Turkish companies
Çimsa Çimento Sanayi ve Ticaret A.S¸.
and Afyon Çimento Sanayi Turk A.S¸.
(Sabancı Holding Group Companies),
which operate in the industrial
construction sector.
Previous relevant experience: Between
1982 and 2004 Yetik undertook a
number of engineering, strategic
planning and business development roles
across various industries including the
manufacturing and construction sectors.
In 2004, he became CEO of the Energy
division at Sabancı Holding A.S¸., rising
to become CEO of the Enerjisa Group
(Integrated Energy Utility) in 2011. In 2016,
he became CEO of STFA Group Holding
Company and Chair of the operational
companies within the same group, tasked
with the total restructuring of the Group.
Committee memberships: Member of the
International Relations Committee.
Key skills and experience: Tolga Bilgin
has current experience within the energy
sector as CEO and Deputy Chair of Bilgin
Enerji Yatirim Holding A.S¸., and has held
this position since 2014. Bilgin Energy
is one of the largest companies within
the Turkish energy sector. Through his
current role and various positions held at
Bilgin Energy managing the development,
financing and execution of wind, hydro
and thermal energy projects, Tolga brings
experience in management, leadership,
M&A and project financing to the Board.
Current external appointments: Since
2006 Tolga has been serving as the Chair
of the Wind Power and Hydropower Plants
Businessmen’s Association and was also
appointed as Deputy Chair of Turkish
Electricity Producers Association in 2018.
7. Chandni Karania
Company Secretary
Appointed: 1 November 2022.
Chandni Karania joined Genel in early
2013 as Assistant Company Secretary
and was appointed Deputy Company
Secretary in June 2017. Prior to joining
Genel Chandni was the Company
Secretarial Assistant at Misys PLC and
Azko Nobel. Chandni holds an LLB from
the University of Reading, an MBA from
the University of Chicago Booth School of
Business and is a Fellow of the Chartered
Governance Institute.
Genel Energy Annual Report 2023
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Executive Committee
1.
3.
2.
4.
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Genel Energy Annual Report 2023
1. Mike Adams
Technical Director
3. Jamie Dykes
General Counsel
Formerly Head of Exploration and
New Business, Mike was appointed
as Technical Director on 1 June 2019,
with responsibility for all pre and
pilot production activities relating to
exploration, appraisal, and new business,
as well as the subsurface department.
Mike has over 30 years of experience in
the oil and gas industry in a wide variety
of exploration, exploitation and global
business development roles. Prior to
joining Genel in 2012, Mike worked in
a series of technical and leadership
positions for companies including British
Gas, Amerada Hess, Gulf Keystone
Petroleum and Sterling Energy. Mike holds
a MSc in Petroleum Geology from Imperial
College London.
2. Luke Clements
Chief Financial Officer
Luke joined the Company in 2011 to advise
on the merger of Vallares Plc and Genel
Enerji, and became Group Financial
Controller in 2015, responsible for a broad
range of financial, commercial, M&A and
treasury related activities. Prior to joining
the Company, Luke spent seven years at
KPMG, where he was head of department
and advised multiple FTSE100 and
FTSE350 companies across a range of
sectors. Luke holds an LLB in Law from
the University of Sheffield.
Jamie has practised as a lawyer for
nearly 25 years exclusively in the energy,
natural resources, and international trade
sectors. Prior to joining Genel in 2012, he
worked in-house at Mobil Corporation and
then ExxonMobil Corporation and was
latterly General Counsel of BHP Billiton
Petroleum in Houston, Texas. He advises
on a wide range of conventional oil and
gas related issues including PSCs, JOA’s,
Farm in Agreement negotiations and also
has particular experience in advising
companies operating in emerging
markets with a focus on anti-bribery,
sanctions and legal compliance issues.
Jamie trained as a litigation lawyer
at Norton Rose in the City of London
and holds an MA in Classics from the
University of Cambridge.
4. Berna Özkoç Öztınaz
Chief HR Officer
Berna joined Genel in June 2020 and
has over 25 years of HR and business
support experience. Her most recent
role was Chief Human Resources Officer
at DeFacto. She is the President of
the European Association of People
Management (EAPM) and Board Member
of the World Federation of People
Management Associations (WFPMA),
representing Europe. Prior to DeFacto,
she worked at STFA Holding for 3 years
as Strategy and Human Resources Chief
Officer. She spent 11 years at ENERJISA,
where she held a number of leading HR
and Business Support roles and was a
Board Member of AYEDAS and BASKENT
Electricity Distribution Companies.
She previously worked at KORDSA
and TURSAB.
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Nomination
Committee
Ensuring a Board with the skills
for long-term success
Meetings held in 2023
Two scheduled meetings
Two ad hoc meetings
Chair:
David McManus
Members:
Canan Edibog˘lu
Rt Hon Sir Michael Fallon
Yetik K. Mert
Nomination Committee time spent
Highlights of Nomination Committee activity
— Reviewed Directors’ independence and made
recommendations on proposals for Director re-election/
election
— Discussed key skills and experience around the Board
— Discussed the size and composition of the Board
— Considered talent management across the business
Dear Shareholder,
I am pleased to present this report from the
Nomination Committee. The purpose of the
Committee is to help the Board discharge
its responsibilities by leading the process
for appointments, ensuring plans are in
place for orderly succession to both Board
and senior management positions, and
overseeing the development of a diverse
pipeline for succession.
In discharging its duties, the Committee keeps under review the
composition and balance of the Board. The Committee is aware of
the need to align the Board’s composition with the Company’s
strategy and to ensure the Board has the necessary skills to
ensure the Company’s long-term success. As part of its work,
the Committee assists the Board in ensuring that it consists of
individuals whose background, skills, experience and personal
characteristics will augment the present Board and meet its
future needs.
During the course of 2023 the Committee spent time considering
whether additional skills and experience were required in order to
ensure the Board as a whole contained the appropriate experience
and skills to deliver the Company’s strategy. The Company’s
strategic priorities, main trends and factors affecting the long-
term success and future viability of the Company were taken into
consideration. The Committee has concluded that at this time no
further appointments to the Board are required but intends to keep
this under review to ensure the appropriate experience and skills to
deliver the Company’s strategy.
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Genel Energy Annual Report 2023
Succession 72%Effectiveness 14%Governance 14% Actions
More information on
decisions and outcomes
Objective: Review the structure, size and composition of the Board, having due regard to the Company’s
See p. 94 to 95
strategic, operational and commercial requirements and overall diversity of Board members
— Reviewed the size and composition of the Board taking into consideration the future strategic
direction of the Company and the overall diversity of Board members
Objective: Annually reviewing the time required from Non-Executive Directors and making
See p. 87
recommendations as to their reappointment at the AGM
— As part of the internal Board effectiveness review, a review of the performance of all Directors was
undertaken. A review of the Chair’s performance was carried out by the Deputy Chair and Senior
Independent Director
— Recommended the re-election/election of each Director at the 2023 AGM
Objective: Keeping under review succession arrangements for Directors and other senior executives
See p. 94 to 95
— Undertook a review of talent management across the Company
Although the Board does not have specific Board diversity targets,
the Company’s Diversity and Equal Opportunities policy remains
unchanged, a copy of which can be found on our website. We are
committed to employing a diverse and balanced workforce,
including our Board of Directors. We recognise diversity of ideas,
skills, knowledge, experience, culture, ethnicity and gender are
important when building an effective and talented workforce at all
levels of the organisation, including the Board. The importance of
this is highlighted in our Code of Conduct and underpinned by our
recruitment practices and dealings with our partners and suppliers.
Further information on diversity within the Company can be found
on pages 52 and 53 and the Board and senior leadership’s gender
identity and ethnicity data presented in accordance with Listing
Rule 9.8.6R(10) can be found on page 119.
The Committee reviewed the output of the 2023 talent
management process which is used throughout the Company
to identify current and future talent potential, learning and
development needs, and succession planning gaps. As part of this
review, the Committee considered the diversity of age, gender and
type of employee (full-time or contractors) across the Company.
The Nomination Committee has detailed terms of reference which
can be viewed at genelenergy.com and as part of the Company’s
governance practices, an effectiveness review of the Committee for
the year ending 31 December 2023 was completed as part of the
wider Board Effectiveness Review. Further information can be found
on page 87.
David McManus
Chair, Nomination Committee
Genel Energy Annual Report 2023
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Audit Committee
Ensuring integrity and clarity of
published financial information
Dear Shareholder,
I am pleased to present this report from the
Audit Committee. The role of the Committee
is to aid the Board in ensuring the integrity
and clarity of published financial information,
recommend the appointment of our external
auditors, oversee the internal audit, risk
management assurance framework.
The Committee’s terms of reference are available on our website
at genelenergy.com
Membership
During 2023 all members of the Audit Committee were
Independent Non-Executive Directors. The Committee as a whole
is considered to be competent in the oil and gas sector and I
meet the requirement under the UK Corporate Governance Code
which requires at least one member of the Committee to have
have recent and relevant financial experience.
In order to discharge its duties and responsibilities effectively
during the year the Committee relied on information and support
from management and invited the CEO (Paul Weir), CFO (Luke
Clements), Head of Assurance and Risk Management (VK Gupta),
General Counsel (Jamie Dykes) and Company Secretary (Chandni
Karania) as well as other staff to its meetings.
Meetings held in 2023
Three meetings
Chair:
Canan Edibog˘lu
Members:
Yetik K. Mert
Audit Committee time spent
Highlights of Audit Committee activity
— Reviewed the 2022 Annual Report and Accounts and 2023
half-year results
— Reviewed significant estimates and judgements in relation to
the 2022 full-year accounts and 2023 half-year accounts
— Received reports from the external auditors
— Reviewed internal controls and risks
— Approved the 2023 internal audit plan and received reports
from Internal Audit
— Received updates on the legal compliance programme
— Reviewed risk management processes and the risk register
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Genel Energy Annual Report 2023
Governance and audit 52%Risk management and internal control 28%Financial reporting 12%Financing 4%Reserves and resources 4% Actions
More information on
decisions and outcomes
Objective: To ensure the integrity and objectivity of published financial information, enabling investors to
See p. 10 to 15
make decisions based on appropriate Company information
and 96 to 99
— Considered the Annual Report as a whole including the basis for the going concern assumption, the
viability statement and underlying assumptions
— Assessed the Annual Report in the context of whether, taken as a whole, it is fair, balanced and
understandable
— Scrutinised areas involving significant judgement, estimation or uncertainty in particular
impairments
— Considered the quality and appropriateness of the accounting policies and practices and financial
reporting disclosures and changes thereto
— Reviewed and received reports from the external auditors on the annual financial statements and
interim results statement
Objective: To ensure effective risk management and internal control systems
See p. 16 to 23
— Provided oversight of the Group risk framework and by doing so supported the Board on assessing
the Company’s tolerance for risk on specific risks
— Kept under review the effectiveness of the systems of internal control systems, including the
adherence to Company policies, internal audit outputs and the compliance programme including the
anti-bribery and trade sanctions processes and procedures
— Monitored the development of the Company assurance framework
Objective: To ensure effective financial controls and accuracy of financial reporting
— Monitored the financial control framework of the Company
— Monitored the cash position of the Company and kept the treasury policy under review to ensure it
remained appropriate and aligned with the Company’s cash position
— Kept key accounting policies and practices under review to ensure that they remain appropriate
— Monitored compliance with financial reporting standards and relevant financial and governance
requirements
See p. 10 to 13, 96 to 99
See note 1 p. 135 to 141
Objective: To review the performance of internal and external auditors
See p. 96 to 99
— Monitored the effectiveness and independence of the external auditor and compliance with the non-
audit service’s policy
— Recommended the re-appointment of BDO LLP (‘BDO’) as the Company’s external auditors
— Received reports from the Company’s internal auditor on audits performed in the period and
monitored their performance and effectiveness
— Held private meetings with the external auditors without the presence of management
Objective: To monitor conflicts of interest
See p. 76
— Continued to assist the Board in reviewing conflicts of interests of Directors and senior managers
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Audit Committee report
Significant issues and judgements
The significant issues considered by the Committee in relation to
the 2023 accounts and how these were addressed were:
Oil price forecast – the Committee reviewed the Company’s oil
price forecast at the half-year and full-year. The Company’s oil
price forecast was determined by reference to Brent futures
market and consensus oil price, and smoothed to $70/bbl in the
long-term.
Export shut-in – following the closure of the Iraq-Türkiye pipeline
on 25 March 2023 production from our KRI assets was initially
suspended and re-started following the commencement of local
sales in the second half of the year. The closure of the pipeline
has resulted in the deferment of activity and production, and the
move to local sales has caused a reduction in the realised sale
price therefore the closure of the Iraq-Türkiye pipeline has been
considered as an impairment indicator.
Discount rate – the Committee has reviewed the discount rate
used for assessing the recoverable amount of its producing
assets and maintained it at 14%.
Impairment of producing oil assets – when considering potential
indicators of impairment, the Audit Committee considered
the matters outlined above, together with the production
performance of the assets, activity schedules, costs, pricing
terms and payments.
At the full-year the Committee also considered the output of the
Reserves Committee process. Whilst there were no impairment
/ reversal of past impairment for Tawke PSC or Taq Taq, the
termination of the Sarta PSC has resulted in a write-off expense
of $18.7m.
Trade receivables recoverable value – the Company is owed five
months of sales revenue for the period between November 2022
and March 2023 as at 31 December 2023. The delay in payments
was assessed in terms of the recoverability of trade receivables
and this assessment resulted in an expected credit loss of
$14.5 million.
Going concern – the key inputs and sensitivities applied to the
Company’s viability statement and going concern assessment
were reviewed by the Committee.
The Committee concluded that the Company remains a going
concern and is expected to remain viable over the next three
year period.
Risk management
As part of the Company’s control framework the Committee
assisted the Board in monitoring and reviewing risk management
procedures and risk reporting. An overview of the Company’s
risk management procedures and principal risks can be found on
pages 16 to 23.
Internal Audit and Assurance
The Board recognises that an effective Internal Audit function,
responsible for providing independent and objective assurance
on internal control, governance and risk management, is an
important part of delivering a strong governance culture.
Following a competitive tender process in 2017, Ernst & Young
LLP (‘EY’) was appointed as the Group’s internal auditor, with a
direct reporting line into the Audit Committee Chair
The Committee has approved managements 2024 internal
assurance plan that reflects our reduced activity set in the year
ahead. The 2024 assurance plan will be led by management and
performed using internal resources, EY will provide independent
challenge on assurance activity and provide feedback to the
Audit Committee. EY will continue to perform full internal audits
on topics requested by the Audit Committee on an ad hoc basis.
E&Y will provide regular updates on the closure of outstanding
Internal Audit findings throughout the year.
Throughout the year, the Committee reviewed the outcome of
the internal audit work that had been performed in accordance
with the 2023 internal audit plan. Internal Audit reported that
management had been co-operative for each audit completed
and provided an overview of each of their findings and
recommendations made to management including a timescale
for implementation. Annually, the Committee also reviews the
effectiveness of the internal audit arrangements.
During the year the Audit Committee held private meetings with
the Internal Auditors without the presence of management.
The external auditors also met separately with the Head of
Internal Audit to discuss internal audit findings and areas of
common focus.
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Genel Energy Annual Report 2023
External audit
The effectiveness and the independence of the external auditor
are key to ensuring the integrity of the Group’s published
financial information. Prior to the commencement of the audit,
the Committee reviews the external auditor’s audit plan which is
designed to ensure that there are no material misstatements in
the financial statements for the year ended 31 December 2023.
At the year-end the Committee received and discussed a detailed
report from BDO regarding the work performed as part of the
audit including the scope, materiality thresholds and risks.
The Committee monitors and approves the provision of non-
audit services by the Company’s external auditors in accordance
with the policy on non-audit services. The provision of non-
audit services is generally limited to services that are closely
connected to the external audit or to projects that require a
detailed understanding of the Group (for example the half-year
interim review) and require preauthorisation by the Committee
under the terms of the policy.
In 2023, the ratio of non-audit to audit and audit related fees
paid to BDO was 1:6, the non-audit fee paid was $72,600, further
details of which can be found on page 144 of the notes to the
financial statements. These fees reflect the interim review under
the provisions of ISRE 2410 completed by BDO in respect of the
half year report for the period ended 30 June 2023.
Following a tender process in 2020, BDO was re-appointed as
the Company’s external auditor at our 2023 AGM and Anne
Sayers has been appointed as the Senior Statutory Auditor to
the Company.
Effectiveness
As part of the Company’s governance practices, an
effectiveness review of the Committee for the year ended
31 December 2023 was completed as part of the wider Board
Effectiveness Review, further information can be found on
page 87.
Canan Edibog˘lu
Chair, Audit Committee
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Directors’
remuneration
report
Remuneration Committee
Chair’s statement
On behalf of the Remuneration Committee,
I am pleased to present Genel’s Directors’
Remuneration Report for the year ended
31 December 2023, my second report as
Remuneration Committee Chair for Genel.
As a Jersey registered company we are not required to prepare a
remuneration report in accordance with UK legislation, however,
it remains the policy of Genel to comply with the UK Corporate
Governance Code and remuneration regulations and so we have
once again prepared our Directors’ Remuneration Policy and
Annual Report on Remuneration in accordance with the Large
and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended).
Remuneration Policy
Our Remuneration Policy is designed to attract, retain, and
motivate the high-quality talent required to develop and implement
our strategy, and drive performance to deliver shareholder value.
The incentive elements which are used for Executive remuneration,
including cash bonuses and long-term incentive plans, also apply
to the rest of the workforce. This approach ensures a focus on
delivering the Company’s strategy and aligns the interests of all
employees with the long-term interests of the Company and that of
our shareholders.
In line with our policy to comply with the UK remuneration reporting
regulations we last sought shareholder approval at our 2021 AGM
for our Remuneration Policy. The Policy, therefore, is reaching the
end of its three-year term and so has been reviewed during 2023
to ensure it is aligned with the Company’s strategy of delivering
shareholder value through maximising the value.
The Committee is proposing to renew the 2021 Policy, subject
to a small number of changes. As part of our remuneration
package, Genel Energy provides a cash supplement in lieu of both
pension contributions and benefits such as private medical cover.
However, if an Executive Director participates in the Mandatory
Pension Scheme provided by the Company, the cash supplement
is currently reduced by the contribution made by the Company.
To align with best practice, the new Policy proposes that a reduced
cash supplement in lieu of benefits be provided, with separate
pension provisions in line with those provided to the UK workforce.
The proposed Policy also includes the flexibility to enable the cash
supplement to be reduced in the event the Company introduces
Meetings held in 2023
Three scheduled meetings
Two ad hoc meetings
Chair:
Yetik K. Mert
Members:
David McManus
Rt Hon Sir Michael Fallon
Remuneration Committee time spent
Highlights of Remuneration Committee activity
— The Committee held three scheduled and two ad hoc
meetings during the year. Details of the key activities
carried out are set out on page 102. All of the members of
the Committee are Independent Non-Executive Directors,
including David McManus, Chair of the Board, who was
independent on appointment
100 Genel Energy Annual Report 2023
Executive Director remuneration 29%All employee remuneration 53%Long term incentive plans for all employees 7%Governance 11% other benefits such as private medical cover, and to allow Executive
Directors to participate in HMRC qualifying all-employee share
schemes should these also be introduced.
During the year the Committee also considered the overall
approach to remuneration and the inclusion of certain best
practice features, in particular, the use of bonus deferral and PSP
holding periods. These features are not commonly used by global
and private companies with whom we compete for talent, and go
beyond what is required as a Standard Listed company. To enhance
the competitiveness of the remuneration offering, and to support
the retention of our senior team, the Committee intends to operate
the Policy with more flexibility in the future and to disapply these
features where considered appropriate.
Remuneration for 2023
Every year, the Company seeks to reward performance throughout
the organisation through an annual bonus plan, with performance
measured against corporate and personal elements. In 2023, as a
result of a change to the business environment following the closure
of the Iraq-Türkiye Pipeline on 25 March 2023 it became apparent
that elements of the the 2023 annual corporate bonus scorecard
were no longer appropriate for the business. Therefore the
Committee took the decision to make small adjustments to the
scorecard to better align it with the significant changes to business
objectives for the year. Certain objectives were updated to reflect
the change in the Board’s immediate strategy, for example focusing
on maximum local sales of stored oil rather than production targets,
and on cost reduction rather than net income. These changes were
limited to the production and business sustainability elements of
the scorecard. The new metrics were considered to be of equivalent
stretch to those set at the start of the year. Modest changes
were also made to the weighting of measures so that they better
reflected our immediate priorities and the interests of shareholders.
The Committee considered it was in the interests of shareholders
to ensure management were incentivised with targets relevant to
the changed circumstances. However, we were also mindful of the
shareholder experience and our responsibility to ensure, when
the bonus was assessed following the financial year end, that any
outcome appropriately reflected the experience of shareholders.
The Committee assessed the Company scorecard based upon
the achievement of performance targets, resulting in a corporate
scorecard outcome of 74% of maximum. The outturn of the 2023
scorecard reflected the strong delivery against the revised KPIs
for the production business and pre-production business as well
as the actions taken to materially reduce our cost base following
the closure of the Iraq-Türkiye pipeline as well as on environment,
compliance and culture. Although the formulaic outturn of the
revised 2023 corporate scorecard was 74%, when considering the
wider shareholder and stakeholder experience during 2023 the
Remuneration Committee decided to exercise downwards discretion
to the 2023 corporate scorecard and agreed an overall corporate
scorecard outturn of 60%. Further details of performance against
the targets set for the corporate element of the bonus can be found
on page 112 and 113.
Paul Weir’s 2023 bonus figure is comprised of both the corporate
and individual KPIs. His overall CEO bonus outcome was 66% of
maximum. The Committee determined that the bonus would be
paid in cash.
Paul, along with other members of senior management, were
granted awards under the Company’s Performance Share Plan
(PSP) in April 2023. In line with the Company’s Remuneration
Policy, the PSP aims to support the delivery of the Company’s long-
term strategy and shareholder value. The performance conditions
are measured against 50% relative TSR and 50% absolute TSR.
The performance of the 2020 PSP was measured based on
the Company’s TSR performance and strategic objectives over
the three years to April 2023 and, following an assessment of
performance against the targets, the vesting outcome for the
2020 PSP was 0%. The Committee considered the outcome and
concluded that there would be no application of discretion.
In reaching it’s decision the Committee was careful to balance the
need to align remuneration outturns with the experience of our
shareholders, while also to fairly reward our management team for
their significant achievements in the year. The overall incentive
outturn of an annual bonus award, but with downwards discretion
exercised by the Committee, alongside the 2020 PSP award lapsing
in full, was considered by the Committee to be a reasonable and
balanced approach.
Full details of the Remuneration Committee’s decisions for 2023 are
set out in this Annual Report on Remuneration on pages 111 to 117.
Looking ahead
The Committee approved an increase in Paul’s base salary for
2024 at a rate of 8%, effective 1 January 2024. The increase in
Paul’s base salary is reflective of his growth into the role of CEO
following his appointment in late 2022, and results in a base salary
that remains positioned below previous incumbents in the role and
below our peer group median.
The Committee also recognises a need to provide a competitive
remuneration package in order to retain and motivate our CEO and
therefore has approved the restoration of a 150% bonus for the
CEO, in line with the approved maximum limit under the current
Policy. Paul’s key performance indicators to achieve this bonus will
be based on a combination of achievement against the Company
scorecard metrics at 80% and 20% of the bonus reflecting
personal performance. The Committee believes that the strong
alignment of his remuneration with Company metrics will drive the
desired behaviours to support the Company’s values and strategy.
It is intended that 25% of any bonus earned for 2024 will be subject
to deferral.
The corporate scorecard for 2024 (as seen on page 116) reflects the
focus of the Company with an emphasis on the delivery of culture,
production business and pre-production and focus on capital
structure management and portfolio growth. The Committee
considers that these targets are appropriately stretching and
are aligned to the delivery of the Company’s priorities, and that
maximum vesting would represent significant value creation.
At the AGM in 2024, our shareholders will be asked to approve
our revised Remuneration Policy and this Annual Report on
Remuneration and I encourage you to join the Board and vote in
favour. I will be available at the AGM, along with my Committee
members, to answer any questions you might have.
Yetik K. Mert
Chair of the Remuneration Committee
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Key activities of the Remuneration Committee
Objective
Action
To implement the Remuneration Policy for the Chair, Executive
Directors, and members of the Executive Committee
— Continued to apply the Remuneration Policy principles in discussion and
implementation of remuneration for the Chair, Executive Director, and Executive
Committee members
To review and have regard to remuneration practices across the
Company
— Considered remuneration practices across the Company including management
recommendations for salary increases, bonus payments, and share awards
— Reviewed the executive group’s base salary level in the context of pay for the
wider workforce and the external market
— In light of the change to the business environment following the closure of the
Iraq-Türkiye pipeline, reviewed and approved revisions to the 2023 bonus targets
to ensure incentives remained effective and aligned to shareholder interests
— Reviewed performance objectives of the Executive Directors and Executive
Committee in order to determine the level of bonus earned in respect of the 2023
financial year
To review all aspects of any equity incentive plans operated or to
be established by the Company
— The Committee set targets for 2023 PSP awards and reviewed the relative TSR
peer group for 2023 awards
To have regard in the performance of its duties to any published
guidelines or recommendations regarding the remuneration of
directors of listed companies and formation and operation of
share schemes
— As part of its deliberations during the year, governance updates were received
from both Deloitte and the Company Secretary to ensure that any decisions
taken, and recommendations made, were done so in the context of the wider
remuneration landscape while remaining appropriate for the specific challenges
To ensure that provisions regarding the disclosure of
information, including pensions, as set out in The Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations and the UK Corporate Governance Code, are
considered
facing the Company
— Reviewed the Annual Report on Remuneration for 2023 prior to submission to
shareholders for a Non-Binding vote at the AGM
— Considered the remuneration-related elements of the 2018 UK Corporate
Governance Code
— Reviewed and recommended changes to the Remuneration Policy prior to the
2024 AGM
102 Genel Energy Annual Report 2023
Remuneration Policy
This part of the report sets out our proposed Directors’ Remuneration Policy (the ‘Policy’).
This Policy will be put forward for shareholder approval at the 2024 AGM, and it will take
effect from the date on which it is approved by shareholder vote.
The revised policy set out on pages 103 to 110 will be put forward for
approval at our 2024 AGM.
The revised Policy includes a number of small changes from that
which was approved by shareholders in 2021. These changes
are related to the level of operational flexibility around benefits,
bonus deferral, PSP holding periods and performance measures.
The existing Policy already provides flexibility to disapply
bonus deferral and PSP holding periods, but we have made this
flexibility more explicit in our new Policy to align with our intended
implementation. We have also aligned our Remuneration Policy with
good practice by separating the benefits allowance into distinct
benefits and pension arrangements, and aligning pensions to UK
workforce rates.
The Company is incorporated in Jersey. Accordingly, the Company
does not have the benefit of the statutory protections afforded by
the UK Companies Act 2006 in the event that there were to be any
inconsistency between this Policy and any contractual entitlement
or other rights of a Director. Therefore, in the event that there
were to be any payment which was inconsistent with this Policy, the
Company would not have the statutory right, under section 226E
of the UK Companies Act 2006 to recover such payments from its
Directors. Consistent with the Company’s commitment to adhere
to UK legislation, the Company intends to only make payments to
Directors in accordance with this policy.
In order to avoid any conflicts of interest the Company’s Executives
can only attend meetings of the Remuneration Committee at the
invitation of the Remuneration Committee Chair and will not be
involved in determining their own pay.
Remuneration Policy table
Fixed remuneration
Salary
Purpose and link to strategy
— To provide fixed remuneration which is balanced, taking into account the complexity of the role and the skills and
experience of the individual
— Salary is set at a level to attract and retain individuals with the requisite level of experience/ background necessary to
deliver the Company’s strategy
Operation
— The Committee takes into account a number of factors when setting salaries, including:
— scope and complexity of the role
— the skills and experience of the individual
— salary levels for similar roles within the international industry
— pay elsewhere in the Group
Maximum opportunity
— Salaries are reviewed, but not necessarily increased, annually with any increase usually taking effect in January
— While there is no defined maximum opportunity, salary increases are normally made with reference to the average
increase for the Company’s wider employee population
— The Committee retains discretion to make higher increases in certain circumstances, for example, following an increase in
the scope and/or responsibility of the role or the development of the individual in the role
Performance measures
None
Pension
Purpose and link to strategy
— To provide a simple and broadly market competitive pension provisions
Operation
— A contribution to the Mandatory Pension Scheme operated for UK based employees or cash supplement in lieu of
pension contribution
— Pension contributions and cash supplements are not included in calculating bonus and long-term incentive quantum
Maximum opportunity
— Workforce aligned pension contribution for Executive Directors (as a percentage of salary) who participate in the
Mandatory Pension Scheme provided by the Company to all UK based employees or an equivalent cash supplement of up
to 5% of salary (in line with the contribution rate for UK employees)
— The Committee keeps the pension policy and level of cash supplements under review. The Committee may adjust cash
supplements and pension contribution levels in line with changes for other UK based employees
Performance measures
None
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Benefits
Purpose and link to strategy
— To provide a simple and broadly market competitive benefit cash allowance
Operation
— A cash supplement is provided in lieu of all benefits (excluding pension). Cash supplement is not included in calculating
bonus and long-term incentive quantum
Maximum opportunity
— Other benefits, for example private medical or participation in HMRC qualifying all employee share schemes may be
provided if they are introduced by the Company and if the Committee considers appropriate
— While there is no defined maximum opportunity, the cash supplement in lieu of benefits is currently 15% of base salary.
Where private medical benefits or similar benefits are provided, the value of the cash supplement will be reduced.
The Committee keeps the benefit policy and level of cash supplements under review, and may adjust cash supplements
Performance measures
None
Variable remuneration
Annual bonus
Purpose and link to strategy
— To incentivise and reward the achievement of annual financial, operational and individual objectives which are key to the
delivery of the Company’s strategy
Operation
— Awards are based on objectives set by the Committee over a combination of goals which may include financial,
operational and individual goals, normally measured over one financial year
— Objectives and the mix of goals are set for each award to ensure that they remain targeted and focused on the delivery
of the Company’s short-term goals
— The Committee sets targets which require appropriate levels of performance, taking into account internal and external
expectations of performance
— As soon as practicable after the year-end, the Committee meets to review performance against objectives and
determines payout levels
— The Committee has overall discretion to adjust the extent to which bonuses are paid including reducing payment to nil
where the Committee determines that the outcomes would not reflect underlying performance
— The Committee retains the flexibility to either allow the bonus to be paid in cash or require a portion of the bonus to
be deferred. The level of any deferral will be set by the Committee as appropriate. Deferral can be in cash or shares.
Deferral into shares will be in the form of awards under the Deferred Bonus Plan (DBP). DBP awards may be conditional
share awards or nil-cost options. DBP awards that vest may benefit from the value of dividends (if any) which would
have been paid during the period between award and exercise and may assume reinvestment in the Company’s shares.
The Committee retains the flexibility over the deferral period but would usually apply a two year deferral period.
Any vested options must be exercised within ten years of the date of grant
Maximum opportunity
— Maximum award opportunity for Executive Directors is 150% of base salary for each financial year
Performance measures
— At least 70% of the award will be assessed against Group metrics including financial, operational, health and safety, ESG
and any other measures as may be deemed appropriate and relevant to the period. Any remainder of the award will be
based on performance against individual objectives
— A sliding scale of between 0% and 100% of the maximum award is paid dependent on the level of performance
Performance share plan (‘PSP’)
Purpose and link to strategy
— To incentivise and reward the creation of long-term shareholder value
— To align the interests of the Executive Directors with those of shareholders
Operation
— Awards granted under the PSP (normally in the form of conditional share awards or nil-cost options) vest subject to
achievement of performance conditions normally measured over a period of at least three years other than in the case
of Buy-Out Awards - see below
— The Committee has overall discretion to adjust the extent to which PSP awards vest including where the Committee
determines that the outcomes would not reflect underlying performance
— Awards can be reduced or cancelled in certain circumstances as set out below
— Any shares that vest may benefit from the value of dividends (if any) which would have been paid during the period
between award and exercise and may assume reinvestment in the Company’s shares
— Shares that vest may be subject to a holding period. The Committee retains the discretion to determine the length of
holding period, or whether not to apply a holding period
— Any vested options must be exercised within ten years of the date of grant
— The PSP can also be used to buy out share plans awards forfeited by new Executive Directors on recruitment who
are of sufficient calibre to deliver the Company’s strategy (‘Buy-Out Awards’). Such Buy-Out Awards, as set out in the
recruitment policy below, need not be made subject to the achievement of performance conditions.
Maximum opportunity
— The usual maximum award opportunity in respect of a financial year is 200% of base salary
Performance measures
— However, in circumstances that the Committee deems to be exceptional, such as recruitment scenarios, awards of up to
300% of base salary may be made
— Other than Buy-Out Awards, the vesting of awards is dependent on financial, operational, strategic and/or share price
measures, as set by the Committee, which are aligned with strategic objectives of the Company. No less than half of an
award will be based on share price measures.
— At the minimum level of acceptable performance, no more than 30% of the award will vest rising to 100% for
maximum performance
104 Genel Energy Annual Report 2023
Notes to the Policy table
The Committee reserves the right to make any remuneration
payments and/or payments for loss of office (including
exercising any discretions available to it in connection with
such payments) notwithstanding that they are not in line with
the Policy set out above where the terms of the payment were
agreed (i) before the 2014 AGM (the date the Company’s first
shareholder-approved Directors’ Remuneration Policy came into
effect); (ii) before the Policy contained in this report comes into
effect, provided that the terms of the payment were consistent
with the shareholder-approved Directors’ Remuneration Policy
in force at the time they were agreed; or (iii) at a time when the
relevant individual was not a Director of the Company and, in the
opinion of the Committee, the payment was not in consideration
for the individual becoming a Director of the Company. For these
purposes ‘payments’ includes the Committee satisfying awards
of variable remuneration and, in relation to an award over
shares, the terms of the payment are ‘agreed’ at the time the
award is granted.
Performance measures and targets
Annual bonus
The annual bonus performance measures are designed to
provide an appropriate balance between incentivising Executive
Directors to meet financial targets for the year and to deliver a
combination of specific strategic, operational and/or personal
goals. This balance allows the Committee to review the
Company’s performance in the round against the key elements
of our strategy and appropriately incentivise and reward
Executive Directors.
Bonus targets are set by the Committee each year to ensure
that Executive Directors are focused on the key objectives for
the period. In doing so, the Committee takes into account a
number of internal and external reference points, including the
Company’s business plan.
PSP
The ultimate goal of our strategy is to provide long-term
sustainable returns to shareholders. The Committee currently
considers that a mix of relative and absolute TSR is the most
appropriate measure to assess the underlying financial
performance of the business while creating maximum alignment
with shareholders and encouraging long-term value creation.
Malus and clawback provisions
Malus provisions allow that the Committee may cancel or reduce
(including to nil) any annual bonus payment or DBP award
prior to payment/grant, or cancel or reduce including to nil the
number of shares awarded under the PSP prior to vesting.
Clawback provisions apply to any or all of the annual bonus
(including DBP) and PSP awards where it is considered
appropriate by the Committee. Clawback may be applied up to
one year after payment for bonus awards (or the vesting of the
DBP awards) and two years after vesting for PSP awards.
The circumstances in which the above provisions apply may
include fraud, misconduct or misbehaviour by the participant,
the information used or the calculation of an award or
performance condition is found to be materially incorrect,
a material misstatement of the Company’s audited financial
results for which the participant has significant responsibility
or which led to an award vesting to a greater extent than
would otherwise have been the case, a significant downturn
in financial performance to which the Participant’s actions
significantly contributed, a material breach of health and safety
regulations, or any other similar circumstances as determined by
the Committee.
Plan rules
The PSP and DBP shall be operated in accordance with the rules of
the plans as approved by shareholders and amended from time to
time in accordance with those rules. In particular:
— The plan rules provide for adjustments in certain
circumstances, for example, awards may be adjusted in the
event of variation of the Company’s share capital, demerger,
special dividend, re-organisation or similar event
— In the event of a change of control of the Company, existing
share awards will vest in line with the plan rules to the extent
the Committee determines, taking into account the extent
to which any performance conditions (where applicable)
have been satisfied and, unless the Committee determines
otherwise, the time elapsed since that time. The Committee
may, in the event of a winding-up of the Company, demerger,
delisting, special dividend or other event which the Committee
considers may affect the price of shares, allow awards to vest
on the same basis
— The performance conditions may be replaced or varied if
an event occurs or circumstances arise which cause the
Committee, acting fairly and reasonably, to determine that
a substituted or amended performance condition would be
more appropriate (taking into account the interests of the
shareholders of the Company) provided that the amended
performance condition would not be materially less difficult to
satisfy than when originally set
— The Committee may elect, prior to vesting or exercise in the
case of options, to deliver the value of vested awards as cash
For Annual Bonus awards, the Committee retains the ability
to adjust the targets and/or set different measures and alter
weightings for any performance condition(s) if one or more
events occur which cause it to determine that an amended,
adjusted or substituted performance condition(s) would be more
appropriate so that the conditions achieve their original purpose
(e.g. in the event of a material divestment of a business, capital
transactions, changes to accounting standards and other events
not foreseen at the time the targets were set). The Committee
has overall discretion to determine the level of bonus.
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Chair and Non-Executive Directors
Chair fees
Purpose and link to strategy
— To provide an appropriate reward to attract and retain a high calibre individual with the relevant skills, knowledge and
experience to lead the Board of Directors
Operation
— The fee for the Chair is normally reviewed annually but not necessarily increased
— The remuneration of the Chair is set by the Committee
— The Chair receives a set fee for the role; no additional fees are payable for other Committee memberships
— The fee is payable in cash, although the Committee retains the right to make payment in shares
Maximum opportunity
— While there is no maximum level, fees are set considering:
— market practice for comparative roles
— the time commitment and duties involved
— the requirement to attract and retain the quality of individuals required by the Company
— Travel and accommodation costs and other expenses reasonably and wholly incurred in the performance of the role of
Chair of the Company may be reimbursed or paid for directly by the Company, as appropriate, and may include any tax
due on the expense
— The Chair does not participate in any of the Company’s incentive plans
Performance measures
None
Non-Executive Director (NED) fees
Purpose and link to strategy
— To provide an appropriate reward to attract and retain high calibre individuals with the relevant skills, knowledge
and experience
Operation
— The fees for the Non-Executive Directors are normally reviewed annually but not necessarily increased
— The remuneration of the Non-Executive Directors is a matter for the Chair and the Executive Directors
— Non-Executive Directors receive a standard basic fee. Where applicable, they also receive additional fees for additional
responsibilities. Currently this includes chairing a Committee and for the membership of two or more Committees
— The Committee has the flexibility to pay an additional fee for the roles of Senior Independent Director and Deputy Chair
— Although no additional fee is currently paid for the role of the Chair of the Nomination Committee, the Company retains
the flexibility to pay such a fee if appropriate
— The fee is payable in cash, although the Committee retains the right to make payment in shares
Maximum opportunity
— While there is no maximum level, fees are set considering:
— market practice for comparative roles
— the time commitment and duties involved
— the requirement to attract and retain the quality of individuals required by the Company
— Travel and accommodation costs and other expenses reasonably and wholly incurred in the performance of the role of
Non-Executive Director of the Company may be reimbursed or paid for directly by the Company, as appropriate, and may
include any tax due on the expense
— The Non-Executive Directors do not participate in any of the Group’s incentive plans
Performance measures
None
Non-Executive Directors may receive professional advice in respect of their duties with the Company which will be paid for by
the Company.
Non-Executive Directors are also covered by the Company’s directors’ and officers’ insurance policy and provided with an indemnity.
Recruitment policy
In determining remuneration for new appointments to the Board, the Committee will consider all relevant factors including, but
not limited to, the calibre of the individual and their existing package, the external market and the existing arrangements for the
Company’s current Executive Directors, with a view that any arrangements offered are in the best interests of the Company and
shareholders and without paying any more than is necessary.
Where the new appointment is replacing a previous Executive Director, salaries and total remuneration opportunity may be higher
or lower than the previous incumbent. If the appointee is expected to develop into the role, the Committee may decide to appoint the
new Executive Director to the Board at a lower than typical salary. Larger increases (above those of the wider employee population)
may be awarded over a period of time to move closer to market level as their experience develops.
Pension and benefits will normally be limited to those outlined in the remuneration policy table above. However, additional benefits
may be provided by the Company where the Committee considers it reasonable and necessary to do so. Such circumstances may
include where an Executive Director is required to relocate in order to fulfil their duties. In such cases, additional allowances would
normally be provided under a standard expatriate package in respect of certain benefits, which may include the provision of a housing
allowance, education support, health insurance, tax advice, a relocation or repatriation allowance and a home leave allowance.
It is expected that the structure and quantum of the variable pay elements would reflect those set out in the policy table above.
However, the Committee recognises that, as an independent oil and gas company, it is competing with global firms for its talent. As a
result, the Committee considers it important that the recruitment policy has sufficient flexibility in order to attract the calibre of
individual that the Company requires.
106 Genel Energy Annual Report 2023
Therefore:
— Under the annual bonus, the Committee reserves the right to provide either a one-off or ongoing maximum bonus opportunity of up
to 200% of salary if this is required to secure an external appointment
— The Committee would also retain the discretion to flex the balance between annual and long-term incentives and the measures
used to assess performance for these elements, while maintaining the intention that a significant portion of variable pay would be
delivered in shares
— Variable pay could, in exceptional circumstances, be delivered via alternative structures, again with the intention that a significant
portion would be share-based, but in all circumstances subject to an ongoing over-riding cap of 600% of salary. This cap excludes
any awards made to compensate the Director for incentive awards or any other remuneration arrangements forfeited from their
previous employer (see below)
The above flexibility will only be used if the Committee believes such action is absolutely necessary to recruit and motivate a
candidate from the global market. The Committee commits to explain to shareholders the rationale for the relevant arrangements
following any appointment.
Where an Executive Director is appointed from within the Group, the normal policy of the Company is that any legacy arrangements
would be honoured in line with the original terms and conditions. Similarly, if an Executive Director is appointed following an
acquisition of or merger with another company, legacy terms and conditions would be honoured.
The Committee retains the discretion to make appropriate remuneration decisions outside the standard policy to meet the individual
circumstances of the recruitment, when an interim appointment to fill an Executive Director role is made on a short-term basis or a
Non-Executive Director or the Chair takes on an executive function on a short-term basis.
Buy-outs
In order to facilitate recruitment, the Committee may make a one-off award to ‘buy-out’ incentive awards and any other compensation
arrangements that a new hire has had to forfeit on leaving their previous employer. In doing so, the Committee will take into account
all relevant factors including any performance conditions attached to the forfeited awards, the likelihood of those conditions being
met, the proportion of the vesting/performance period remaining and the form of the award (e.g. cash or shares). Where possible, the
forfeited awards will normally be bought out on an estimated like-for-like basis. Any such awards may be made under the terms of the
PSP or as permitted under the Listing Rules.
The Committee is at all times conscious of the need to pay no more than is necessary, particularly when determining any possible buy-
out arrangements.
Recruitment of Chair and Non-Executive Directors
In the event of the appointment of a new Chair and/or Non-Executive Director, remuneration arrangements will normally be in line
with those detailed in the relevant table above.
Executive Director service contract
The key employment terms and other conditions of the current Executive Directors, as stipulated in their service contracts which are
not of any fixed term, are set out below.
Element
Policy
Notice period
— 12 months’ notice by either the Company or the Executive Director. This is also the policy for new recruits
Termination payment
— It is the Company’s policy for new service contracts that it may terminate employment by making a
payment in lieu of notice (‘PILON’) equivalent to (i) 12 months’ base salary (ii) 12 months’ cash supplement
in lieu of pension and (iii) the Executive Director’s annual benefit allowance
— Upon termination by the Company, an Executive Director has a duty to mitigate, and use reasonable
endeavours to secure alternative employment as soon as reasonably practicable. There are specific
provisions requiring a reduction in any phased PILON payments in the event that the Executive Director
finds alternative employment
Remuneration and
— Participation in all incentive schemes, including the annual bonus, the DBP and the PSP, is non-contractual
benefits
— Outstanding awards will be treated in accordance with the relevant plan rules
Executive Director services contracts and Non-Executive Director letters of appointment are available for inspection at the Company’s
registered office address.
The service contract of an Executive Director may also be terminated immediately and with no liability to make payment in certain
circumstances, such as the Executive Director bringing the Group into disrepute or committing a fundamental breach of their
employment obligations.
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Policy on payment for loss of office
In the event that the employment of an Executive Director is terminated, any compensation payable will be determined in accordance
with the terms of the service contract between the Company and the employee, as well as the rules of any incentive plans.
Payments for loss of office may only be made within the terms of the Remuneration Policy.
The Company considers a variety of factors when considering leaving arrangements for an Executive Director, including individual
and business performance, the obligation for the Director to mitigate loss (for example by gaining new employment) and other
relevant circumstances (e.g. ill health). The Committee may make other payments in connection with a Director’s cessation of office
or employment where the payments are made in good faith in discharge of an existing legal obligation (or by way of damages for
breach of such an obligation) or by way of settlement of any claim arising in connection with the cessation of a Director’s office or
employment. Any such payments may include but are not limited to paying any fees for outplacement assistance and/or the Director’s
legal and/or professional advice fees in connection with his cessation of office or employment.
If an Executive Director’s employment is terminated by the Company, or in good leaver circumstances at the discretion of the
Remuneration Committee, the Executive Director may receive a time pro-rated bonus, subject to Remuneration Committee discretion.
The Company’s Share Retention Policy continues to apply once an Executive Director leaves office, subject to Remuneration
Committee discretion where the Remuneration Committee considers there are exceptional circumstances or on death.
Payments for loss of office can be made where an amendment to the Remuneration Policy authorising the Company to make the
payment has been approved by the shareholders.
The treatment of outstanding share awards is governed by the relevant share plan rules. The following table summarises the leaver
provisions of share plans under which Executive Directors may currently hold awards.
PSP
Leaver reasons where
— Death
awards may continue
to vest
— Redundancy, injury, ill health or disability
— Retirement
— Sale of the Company or business by which the participant is employed outside the Group
— Any other scenario in which the Committee determines good leaver treatment is justified (other than
summary dismissal)
Vesting
arrangements
— Awards will vest to the extent determined by the Committee taking into account the achievement of any
performance conditions at the relevant vesting date and, unless the Committee determines otherwise, the
period of time which has elapsed between grant and cessation of employment
— The vesting date for such awards will normally be the original vesting date and not accelerated, although
the Committee has the flexibility to determine that awards can vest upon cessation of employment
— In the event of death, all unvested awards will normally vest at that time to the extent determined by the
Committee taking into account the achievement of any relevant performance conditions as at the date of
death and, unless the Committee determines otherwise, the period of time that has elapsed since grant
— Under ordinary circumstances the Company’s Share Retention Policy will continue to apply, unless the
Committee determines otherwise
Treatment for any
— Awards lapse in full
other leaver reason
DBP
Leaver reasons where
— Death
awards may continue
— Any other scenario (excluding summary dismissal)
to vest
Vesting
— The vesting date for such awards will normally be the original vesting date and not accelerated, although
arrangements
the Committee has the flexibility to determine that awards can vest upon cessation of employment
— In the event of death, all unvested awards will normally vest at that time to the extent determined by
Treatment for any
— Summary dismissal – awards lapse in full
the Committee
other leaver reason
— If there is an ongoing investigation unless otherwise determined by the Committee, awards will only vest,
become exercisable or settled after the conclusion of the investigation
108 Genel Energy Annual Report 2023
Chair and Non-Executive Director letters of appointment
The Chair and Non-Executive Directors have letters of appointment which set out their duties and responsibilities. They do not have
service contracts with either the Company or any of its subsidiaries.
The key terms of the appointments are set out in the table below.
Provision
Policy
Period
— In line with the UK Corporate Governance Code, the Chair and all Non-Executive Directors are subject to annual re-
election by shareholders at each AGM
— After the initial three-year term, the Chair and the Non-Executive Directors are typically expected to serve a further
three year term
Termination
— The appointment of the Chair and Non-Executive Directors is terminable by either the Company or the Director by
giving three months’ notice
— The Chair and Non-Executive Directors are not entitled to any compensation upon loss of office
— The Chair and Non-Executive Directors are entitled to payment in lieu of notice in line with their letter of appointment
Illustration of the remuneration policy
Genel’s remuneration arrangements have been designed to ensure that a significant proportion of pay is dependent on the delivery of
stretching short-term and long-term performance targets, aligned with the creation of sustainable shareholder value. The Committee
considers the level of remuneration that may be received under different performance outcomes to ensure that this is appropriate in
the context of the performance delivered and the value added for shareholders.
The chart that follows provides illustrative values of the remuneration package for Executive Directors under four assumed
performance scenarios. These charts are for illustrative purposes only and actual outcomes may differ from that shown.
Paul Weir
Minimum
100% £594,864
Target
56% 23%
21% £1,065,798
Maximum
Max +50% SP Growth
29%
24%
36%
30%
36% £2,082,024
45% £2,453,814
£0
£500,000
£1,000,000
£1,500,000
£2,000,000
£2,500,000
Base salary
Annual bonus
Long term incentive plan
Genel Energy Annual Report 2023
109
Strategic reportGovernanceFinancial statementsOther information
Directors’ remuneration report Remuneration Policy
Assumed performance
Assumptions used
All performance
— Consists of total fixed pay, consisting of base salary and cash supplements in lieu of pension and the
scenarios
benefits cash allowance
— Base salary – salary effective as at 1 January 2024
Minimum
performance
— Pension – 5% of base salary
— Benefits – 15% of base salary
— No pay-out under the annual bonus
— No vesting under the PSP
Performance in line
— Half of the maximum pay-out under the planned operation of the annual bonus. This represents 75% of
with expectations
base salary
— 30% vesting under the PSP
Maximum
performance
— Value of awards under the PSP based on award levels of 150% of salary
— 100% of the maximum pay-out under the planned operation of the annual bonus . This represents 150%
of base salary.
— 100% vesting under the PSP
— Value of awards under the PSP based on award levels of 150% of salary
Maximum performance
— 100% of the maximum pay-out under the planned operation of the annual bonus. This represents 150% of
(including 50% share
base salary.
price growth)
— 100% vesting under the Performance Share Plan, and assuming 50% share price growth between grant
and vesting
— Value of awards under PSP based on award levels of 150% of salary
— The basis of the calculation of the share price appreciation is that the share price embedded in the
calculation for the ‘maximum’ bar chart is assumed to increase by 50% across the performance period
Unless otherwise stated, PSP awards have been shown at face value, with no share price growth or dividend accrual assumptions.
Consideration of shareholder views
The Committee continues to be mindful of shareholder views when evaluating and setting ongoing remuneration strategy and we
commit to consulting with shareholders prior to any significant changes to our Remuneration Policy.
It is the Committee’s policy to correspond with shareholders that have engaged on remuneration matters during the year, which it has
done and the Committee has considered their views at its meetings.
Minor changes
The Committee may make minor amendments to the Policy set out above for regulatory, exchange control, tax or administrative
purposes or to take account of a change in legislation without obtaining shareholder approval for that amendment.
Remuneration arrangements throughout the Company
The Remuneration Policy for Executive Directors is designed in line with the remuneration principles that underpin remuneration across the
Company. When making decisions in respect of Executive Director remuneration arrangements, the Committee takes into consideration the
pay and conditions for employees throughout the Company, including the local inflationary impact for the countries in which we operate.
As stated in the Policy table, salary increases are normally made with reference to the average increase for the wider employee population.
The Company places a significant focus on variable remuneration, ensuring that a meaningful proportion of remuneration across all
employees is based on performance, through its operation of the annual bonus plan throughout the Company and participation in
share incentive plans. Genel uses the annual bonus and share incentive schemes to reward its employees and create alignment with the
Company’s culture.
In the UK, employee remuneration packages consist of the same five elements as Executive Directors’ remuneration packages: base
salary, pension, benefits cash allowance, annual bonus and share awards. In all other jurisdictions in which the business operates we aim to
replicate this structure to the extent that it is possible but take local considerations into account.
Genel is committed to strengthening and widening employee share ownership by the use of share incentives granted under our share plans.
As a result currently approximately 68% of employees participate in our share plans.
The Committee does not directly consult with our employees as part of the process of determining executive pay. However the Committee
regularly receives analysis around the wider workforce which allows the Committee to make decisions on executive pay in the context of the
approach being taken across the Company.
110
Genel Energy Annual Report 2023
Annual Report on Remuneration
This part of the Annual Report provides details of the implementation of the Directors’ Remuneration Policy (the ‘Policy’) for the year ended
31 December 2023 and discusses how the Policy will be implemented in the 2024 financial year. Details of the Policy can be found on pages
103 to 110.
Advisers to the Committee
Once again, the Committee was assisted throughout the year in its considerations by Deloitte LLP (‘Deloitte’), who provide independent
advice on remuneration matters. The Committee has chosen to continue with the appointment of Deloitte as it is felt they have the most
relevant experience and expertise on remuneration related matters to effectively advise the Committee.
Deloitte is a leading remuneration adviser and a member of the Remuneration Consultants Group and voluntarily operates under their
Code of Conduct in relation to executive remuneration consulting in the UK. In 2023, Deloitte also provided the Company with due diligence
services, services related to the Company’s conduct reporting platform, and advice in respect of the operation of the Company’s share
plans. Deloitte’s fees in respect of advice to the Committee in the year under review were £68,850 and were charged on the basis of
their standard terms of business for the advice provided. The Committee is satisfied that the advice they have received has been objective
and independent.
During the year, the Committee also consulted with the CEO (Paul Weir), Company Secretary (Chandni Karania) and the Chief Human
Resources Officer (Berna Öztınaz).
No member of the Committee nor any party from whom advice was sought is involved in discussions regarding their own remuneration.
UK Corporate Governance Code: Provision 40
The following table sets out how the Committee has addressed the factors set out in Provision 40 of the UK Corporate Governance Code in
setting and operating the Directors’ Remuneration Policy.
Clarity
— The Policy is designed to support the financial and strategic objectives of the Company, taking into account UK corporate
governance expectations
— The Committee is committed to providing open and transparent disclosure of our approach to pay with our shareholders
Simplicity
— The remuneration structure is simple, comprising three main elements: fixed pay (base salary, benefits allowance and pension
contributions), annual bonus, and PSP awards
— The Committee takes great care to ensure that the different aspects of the remuneration framework throughout the Company
are easy to understand for both participants and shareholders
Risk
— The Committee is mindful of ensuring that incentive arrangements do not encourage excessive risk taking. The Committee
follows a robust process when setting performance targets to ensure that targets are sufficiently stretching and balanced
— Incentive arrangements support alignment with shareholders through the use of equity-based PSP awards . Variable pay awards
are also subject to malus and clawback
Predictability
— The Policy sets out the maximum opportunity levels for different elements of pay
Proportionality
— Payment of the annual bonus and awards under the PSP are subject to the achievement of stretching performance targets
— The targets are considered annually and take into account expectations and strategic priorities at the time
— The Committee also retains the right to apply discretion where these outcomes do not accurately reflect the performance of the
Company and/or the individual
Alignment
to culture
— The Remuneration Policy has been developed in order to align the interests of the Executive Directors with the Company’s KPIs
and the interests of shareholders
Shareholder voting
Votes cast by proxy and at the meeting in respect of the Annual Report on Remuneration for the year ended 31 December 2022, at the AGM
held on 11 May 2023, were as follows:
To approve the Annual Report on Remuneration for the year
ended 31 December 2022
180,649,168
179,458,267
1,190,901
20,155
Number of votes cast
For
Against
Abstentions
99.34%
0.66%
Audited information
The following tables set out the total remuneration for the Executive Director and CEO, and Non-Executive Directors for the period in office
for the year ended 31 December 2023, and comparison figures where appropriate.
Salary/fees
Pension and
Benefits
Total Fixed Pay
Bonus
LTIP2
Total Variable Pay
Total
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
Name
Executive Directors
Paul Weir1
459
238
92
43
551
281
303
159
0
n/a
303
159
854
440
1 2022 data relates to the period from 9 June 2022, the date Paul Weir was appointed Interim CEO
2 LTIP includes 2020 PSP awards which lapsed in full based on performance over the three years to 3 April 2023. Further details are provided on page 114
Genel Energy Annual Report 2023
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Directors’ remuneration report Annual Report on Remuneration
Name
Non-Executive Directors
David McManus
Sir Michael Fallon
Tolga Bilgin
Canan Edibog˘lu3,4
Yetik K Mert5
Salary/fees1
% change in annual fee2
£’000
2023
£’000
2022
2019/
2020
239
104
58
87
87
230
100
56
84
83
n/a
n/a
n/a
n/a
n/a
2020/
2021
0.0%
0.0%
0.0%
8.6%
n/a
2021/
2022
0.0%
0.0%
0.0%
10.5%
14.1%
2022/
2023
4.0%
4.0%
4.0%
4.0%
4.8%
1 Non-executive Directors received only a fee in 2023 and did not receive benefits or an annual bonus
2 The percentage change is calculated on an annualised basis where the fee was paid for part of financial year
3 Canan Edibog˘lu was appointed Chair of the Audit Committee on 24 July 2021
4 Canan Edibog˘lu received an additional fee for being a member of two or more Board Committees
5 Yetik K. Mert was appointed Chair of the Remuneration Committee on 19 April 2022
Additional disclosures in respect of the single total figure table
Base salary
The table below shows base salary which was effective during 2023.
Paul Weir
£459,000
£450,000
Base Salary on 1 January 2023
Base Salary on 3 October 2022
Salary information for 2024 is provided on page 116.
Pension and benefits
The Committee aims to provide a simple, transparent package and, in line with this, Executive Directors receive a cash supplement of a
percentage of base salary in lieu of all benefits, including pension, private health insurance, life assurance and company car provision. This is
also received by the wider workforce. The cash supplement is not used in the calculation of bonus and long-term incentive quantum. In the
event that the Executive Directors participate in the Pension Plan offered by the Company to all employees, the cash supplement will be
reduced by the amount contributed by the Company into the Company Pension Plan. Paul Weir participates in the Company Pension Plan.
The pension offering for Executive Directors is aligned to the wider UK workforce.
Annual bonus
The 2023 annual bonus scorecard was approved based on the Company’s performance against key business objectives with a combination
of 20% personal and 80% company metrics. The Company scorecard outcome was 74% of maximum, reflecting the strong delivery of
cultural key performance indicators and delivery against the revised KPIs for the production business and pre-production business work
programme and the actions taken to materially reduce our cost base following the closure of the Iraq-Türkiye pipeline.
However, in light of the wider shareholder and stakeholder experience during 2023 the Remuneration Committee decided to exercise
discretion and reduced the outturn of the annual bonus scorecard to 60%. Details of performance against the scorecard are
provided below.
Paul’s management of the Company during an uncertain year resulted in an award, by the Committee, with a personal score of 90%.
Paul Weir
Bonus
£’000
2023
£302,940
As % of maximum
66%
2023 – Annual bonus, Remuneration Committee assessment of performance against targets
In light of the closure of the Iraq-Türkiye pipeline on 25 March 2023 and the impact of this on the business as a whole, the Committee took
the decision to make small adjustments to the scorecard so that it aligned with the immediate business objectives for the year. The updated
scorecard is presented on the following page. Company metrics continued to be focused on culture, the production business, pre-production
business and the sustainable dividend category was amended to business sustainability. Due to the impact of the pipeline closure focus
shifted to local oil sales within the KRI, cost reduction and portfolio growth resulting in the weight allocated to the amended business
sustainability measure being increased from 40% to 50%. The production business and pre-production allocations were each reduced by
5% each to reflect the increased reliance on non-operated assets and necessity to reassess the timing of the Toosan-1 well.
The Company scorecard was assessed by the Committee, based upon the achievement of these performance targets, which resulted in a
corporate scorecard outcome of 74% of maximum which was subsequently reduced by the Committee to 60%.
112
Genel Energy Annual Report 2023
Bonus
performance
measure
Culture
delivery
Weighting Performance target
Assessment of performance against metrics
19%
— Implementation of the ESG plan
— Continued compliance focus
— Strong company culture
— Strong performance in all elements was seen,
including the completion of the revised ESG
strategy, maintaining a CDP Climate score of
B, and the successful delivery of our Social
Investment Plan. However full achievement of
this measure was not achieved as the ESG plan
was not achieved in full and roll out of some
actions to reinforce the Company culture were
postponed due to the organisational changes
the business endured during the year
Performance
assessment
15%
Production
business
26%
— Health and Safety
— Maximise local sales of stored oil
— Execute forward plan for Sarta
— There were no Lost Time Incidents or Tier One
Losses of Primary Containment throughout the
year. However not all health and safety targets
were achieved.
20%
Pre-production
business
Business
sustainability
5%
— Delivery of 2023 activity programme
within budget
50%
— Implement actions to reduce costs
— Progress on portfolio growth
— Local sales of stored oil following the closure
of the ITP was achieved and subsequently
production re-started following the
establishment of a domestic market
— Implementation of the decision to surrender
the Sarta PSC licence, and remediation
work completed
— The scope of the revised 2023 activity
programme was delivered on time and
within budget
— Actions to reduce G&A costs were successfully
implemented, as such the Company expects
to be free cash flow neutral from the end of
Q1 2024
— No successful progress towards
portfolio growth
5%
34%
Share plan awards made in 2023
The following table provides details of the awards made under the PSP and DBP during 2023. Performance for the PSP awards is
measured over the three years from the date of grant.
Type of award
Face value1
(£)
Basis of awards
Threshold vesting
(% of face value)
Maximum vesting
(% of face value)
Paul Weir
PSP (2023 award)
£688,500
150% of salary
PSP (2022 award
top up)
£87,565
Top up to 2022 PSP
award 2
DBP
£39,708
25% of 2022
annual bonus
30%
30%
100%
100%
End of
performance
period/Vesting
06/04/2026
06/04/2026
06/04/2025
1 Face value has been calculated using the average share price, ten dealing days prior to the date of grant, of 119 pence
2 The top up award to Paul Weir’s 2022 PSP award was granted to ensure that his overall 2022 PSP award, including the award granted in April 2022,
reflected the portion of the year that he spent as CEO from 3 October 2022. The top up award was calculated so that, in respect of this period, his 2022
PSP award opportunity is based on 150% of his actual salary received as CEO. As a result of the top up award his PSP award for the portion of the year
to 2 October 2022 remains based on his previous PSP opportunity and salary level. Due to the timing of the grant the top up element of the award is
subject to the same performance conditions and time horizons as 2023 PSP awards. This approach is consistent with other mid-year appointments and
promotions below board level
PSP awards continued to be assessed 50% on relative TSR against our peer group and 50% on absolute TSR. The peer group for the 2023
PSP awards is below.
Africa Oil
Aker BP
Capricorn Energy
DNO
Energean Oil and Gas
Jadestone Energy
EnQuest
Gulf Keystone
Harbour Energy
Kosmos Energy
Pharos Energy
ShaMaran Petroleum Corp.
Tethys Oil
Tullow Oil
The Relative TSR element of the award will vest according to the following schedule:
Relative TSR ranking of the Company
Proportion of award vesting
Below median
Median
Between median and upper quartile
Upper quartile
0%
30%
Straight–line basis
100%
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Directors’ remuneration report Annual Report on Remuneration
The Absolute TSR element of the award will vest in accordance with the following schedule:
Absolute TSR performance of the Company
Proportion of award vesting
Below 10% p.a
10% p.a
Between 10% p.a. and 15% p.a.
15% p.a. or more
0%
30%
Straight–line basis
100%
Share awards
The following table provides a summary of all share awards as at 31 December 2023. Further details of the Company’s share plans are set out on pages 156
and 157.
Grant
date
Exercise
price
(pence)
As at 1
January
2023
Granted
during
the
period
Dividend
during
the
period
Vested
during
the
period
Exercised
during the
period
Lapsed
during
the
period
As at 31
December
2023
Performance
period end
Expiry
date
22/06/2020
22/06/2020
06/04/2021
04/04/2022
06/04/2023
06/04/2023
-
-
-
-
-
-
49,275
285,375
203,215
196,055
-
-
-
-
-
-
652,155
33,368
-
-
17,493
16,877
56,141
2,872
-
-
-
-
-
-
-
-
-
-
49,275
49,275
-
285,375
-
-
03/04/2023
22/06/2030
03/04/2023
22/06/2030
-
-
-
-
220,708
06/04/2024
06/04/2031
212,932
04/04/2025
04/04/2032
708,296
06/04/2026
06/04/2033
36,240
06/04/2025
06/04/2033
Scheme
Paul Weir1
RSP
PSP
PSP
PSP
PSP
DBP
1 Awards made to Paul Weir prior to 9 June 2022 were made to him before he became Interim CEO
2020 Performance Share Plan Awards – performance target
2. Strategic objectives (50% weighting)
This element was subject to measures focused on strategic milestones with hard
targets connected to the development of the organic FID pipeline to deliver high margin
production. Due to their commercially sensitivity nature, and the targets not having
being achieved, these targets will not be disclosed.
Performance
— Based on the Company’s TSR performance over the performance period the
Company ranked 10th against the comparator group and achieved vesting of 0%
of this element
— Strategic targets: The strategic targets were not met, resulting in vesting of 0% of
this element
— Cumulative performance outcome: The cumulative impact of the above
performance for the relative and strategic elements resulted in 0% of June 2020
awards vesting
1. Relative TSR vesting schedule and comparator group (50% weighting)
The Relative TSR element of the 2020 PSP award was subject to the following
vesting schedule:
Relative TSR ranking of the Company
Below median
Median
Between median and upper quartile
Upper quartile
Proportion of Award Vesting
0%
30%
Straight line basis
100%
This element was subject to the Company’s ranked TSR performance against the
following Comparator Group:
Africa oil
Aker BP
Cairn Energy
DNO
Enquest
Gulf Keystone
Hurricane Energy
Kosmos Energy
Lundin
Nostrum Oil and Gas
Energean Oil and Gas
Premier Oil
Seplat Petroleum
Soco International
Tullow Oil
Payments to past Directors
In 2023, there were no payments made to past Directors.
Payment for loss of office
In 2023, there were no payments made to Directors for loss of office.
114
Genel Energy Annual Report 2023
Statement of Directors’ shareholding and share interests
The following table sets out details, as at 31 December 2023, of the shareholdings and share interests of those persons (together with,
where relevant, the shareholdings and share interests of their connected persons) who, during the 2023 financial year, served as a Director.
The Company does not currently operate a formal shareholding guideline, but Executive Directors are expected to build up their holding
over time.
Director
David McManus
Sir Michael Fallon
Paul Weir
Tolga Bilgin1
Canan Edibog˘lu
Yetik K. Mert
Ordinary shares as at
31 December 2022
Ordinary shares as at
31 December 2023
Interest in share options granted
as at 31 December 2023
-
9,000
22,588
-
-
-
-
9,000
47,393
-
-
107,000
-
-
1,178,176
-
-
-
1 Bilgin Grup Dog˘al Gaz A.S¸, of which Tolga Bilgin is the CEO and holds 6.20% of the shares, holds 66,350,163 shares in the Company as at 31 December 2023
This represents the end of the audited section of the report.
Historical TSR performance and CEO remuneration outcomes
The following graph shows the Company’s TSR for the past ten years of the Company’s shares trading on the London Stock Exchange against the FTSE350
Oil & Gas Producers Index. The Committee believes that the FTSE350 Oil & Gas Producers Index remains the most appropriate index as these companies are
Genel’s direct UK listed comparators.
Total Shareholder Return
180
160
140
120
100
80
60
40
20
0
31/12/2012
31/12/2013
31/12/2014
31/12/2015
31/12/2016
31/12/2017
31/12/2018
31/12/2019
31/12/2020
31/12/2021
31/12/2022
31/12/2023
Genel Energy
FTSE350 oil & gas producers
The table below summarises the CEO single figure for total remuneration, annual bonus pay-outs and LTIP vesting levels as a percentage of
maximum opportunity for the 10 year period ending 31 December 2023.
2014
2015
2015
2016
2017
2018
2019
2019
2020
2021
2022
2022
2023
Chief Executive
Officer
Tony
Hayward
Tony
Hayward2
Murat
Özgül1
Murat
Özgül
Murat
Özgül
Murat
Özgül
Murat
Özgül2
Bill
Higgs2
Bill
Higgs
Bill
Higgs
Bill
Higgs2
Paul
Weir2
Paul
Weir
CEO single figure
remuneration
(£’000)
Annual bonus
pay-out
(as a % of
maximum
opportunity)4
Long-term
incentive vesting
out-turn
(as a %
of maximum
opportunity)
2,521
468
531
1,519
1,765
1,882
299
1,112
1,281
1,442
400
440
854
90%
0% 36.2%
71.4%
82.1% 72.5%
60%
65%
78%
77% 57.6%
59%
66%
82.5%
0%
0%1
0%
0%
0%
0%
n/a
50%3
65.8%
0%
n/a
0%
1 The Committee exercised its discretion to reduce the vesting under the 2013 PSP awards from 30% to 0%
2 Pro-rated according to period holding Executive Directorship
3 This vesting is in relation to the December 2017 PSP award granted to Bill Higgs prior to his appointment as CEO
4 The CEO single figure remuneration stated in this table is as per the total remuneration report for the year reported annually
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Percentage change in remuneration of the Executive Directors
The table below shows the percentage change in the Executive Directors’ salary, benefits and annual bonus between the financial years
ended 31 December 2019 and 31 December 2023 compared to the average for permanent employees of the Company.
The percentage change in base salary, benefits and annual bonus for the CEO compares outcomes of the period spent holding the position
as CEO for four years between 2019 and 2023.
Base salary
Benefits
Bonus
2019/
2020
38.4%
2020/
2021
2021/
2022
2022/
2023
2019/
2020
2020/
2021
2021/
2022
2022/
2023
2019/
2020
2020/
2021
2021/
2022
2022/
20232
3.5%
(13.3%)
(3.0%)
38.4%
3.5%
(17.8%)
2.5%
66.1%
(0.9%)
(33.84%)
9.5%
10.4%
10.4%
(12.4%)
9.93%
6.8%
(3.2%)
(3.2%)
58.94%
9.7%
(7.4%)
(34.62%)
15.39%
CEO
All
employees
1 For 2022, Bill Higgs stepped down as CEO on 1 June and Paul Weir was appointed as Interim CEO on 9 June
2 This year-on-year increase in annual bonus % reflects the change in company scorecard outcome from 52% for 2022 to 60% for 2023
Relative importance of the spend on pay
The table below illustrates the current year and prior year overall expenditure on pay. The regulations require that we report distributions received by
shareholders through dividends and share buy-backs. The cost to the Company of dividends paid to shareholders in 2023 was $33.5 million (2022: $50 million).
Remuneration paid to all employees
2022
2023
$m
20.02
21.03
Remuneration paid to all employees represents total staff costs from continuing operations.
Implementation of Remuneration Policy in 2024
This section provides an overview of how the Committee is proposing to implement our Remuneration Policy in 2024.
In determining the salary increase for Paul Weir for 2024, the Committee took into consideration a number of factors including:
— The individual’s skills and experience
— Business performance
— Salary levels for similar roles within the industry
— Pay and conditions elsewhere in the Company
— Any recent salary increases
The Committee decided to increase the base salary of Paul Weir by 8% with effect from 1 January 2024, reflecting the leadership he has
demonstrated, his growth into the role of CEO over the past 18 months and the need for the Company to offer a competitive base salary.
The table below shows his base salary for 2024.
Paul Weir
Base salary from 1 January 2024
£495,720
Pension and Benefits
Executive Directors receive a cash supplement in lieu of all benefits, private health insurance, life assurance, and company car provision and
a separate pension contribution is provided. The cash supplement and pension contribution is not included in calculating bonus and long-
term incentive quantum.
For 2024, the cash supplement will be 15% of base salary and Company pension contribution 5% of base salary. This is in line with the
pension contributions for the wider UK workforce. This table shows Paul’s benefits allowance for 2024.
Paul Weir
2024 benefits allowance
2024 pension contribution
£74,358
£24,786
Annual bonus
The bonus opportunity for the Chief Executive Officer for 2024 will revert to the current Policy maximum of 150% of base salary, with
performance measured 20% against personal performance metrics and 80% against Company metrics. It is intended that 25% of any
bonus earned for 2024 will be subject to deferral.
The Committee has once again set a clear focus on short-term delivery for the 2024 annual bonus, and believes that this will drive the
maximum value for shareholders. Targets to maximise value creation through our production business have been set and will be monitored
over the course of the year. Continued success of the delivery in culture is expected as we pursue this via strong targets in compliance, in
high performance and of the delivery of our ESG plan. This scorecard is more weighted to the business sustainability targets as we continue
to focus on managing the capital structure of the business and portfolio growth.
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Genel Energy Annual Report 2023
Bonus performance measures
Specific targets
Culture delivery
— ESG implementation
— Continued compliance focus
— Strong company culture
— Health and Safety targets met
Production business
— Maximise value creation
— Agree a suitable plan to recover overdue receivables
— Establish a route to market for KRI production
Pre-production business
— Delivery of the 2024 activity programme within budget
Business sustainability
— Management of capital structure
— Progress on portfolio growth
Percentage
11%
35%
4%
50%
Performance share plan
PSP awards are normally granted as nil-cost options. The number of awards granted are normally determined by reference to a percentage
of base salary.
The 2024 award for Paul Weir will be based on a face value of 150% of base salary. The awards will vest after the completion of the three
year performance period, subject to relative and absolute TSR targets being met. For 2024 awards no further holding period will apply.
The peer group for the measurement of the relative TSR element of the 2024 award, representing 50% of the award, has been reviewed
and still considered to be appropriate. As such there have been no changes to the peer group from 2023.
Africa Oil
Aker BP
Capricorn Energy
DNO
Enquest
Energean Oil and Gas
Gulf Keystone
Harbour Energy
Jadestone Energy
Kosmos Energy
Pharos Energy
ShaMaran Petroleum
Tethys Oil
Tullow Oil
The relative and absolute TSR vesting schedule will remain the same as for awards made in 2023, as outlined on page 113.
Chair and Non-Executive Director remuneration
Non-Executive Director fees were reviewed in 2023 against benchmark data for companies with a similar market cap, and also against
comparable E&P companies. It was agreed that, from 1 January 2024, a 4.5% increase would be applied to Non-Executive Director fees.
Role
Non–Executive Chair
Deputy Chair
Senior Independent Director
Non–Executive Director
Additional fee for membership of two or more Board Committees
Additional fee for chairing Board Committee:
Role
Audit Committee
Remuneration Committee
Reserves Committee
Nomination Committee
International Relations Committee
Fee for 2023
£239,200
£10,400
£10,400
£58,240
£14,560
Fee for 2024
£249,964
£10,868
£10,868
£60,861
£15,215
Fee for 2023
Fee for 2024
£14,560
£14,560
£10,920
£15,215
£15,215
£11,411
No additional fee
No additional fee
£10,400
£10,868
The Committee is responsible for determining the Remuneration Policy for the Executive Directors and the Chair of the Board. The Chair of
the Board together with the Executive Directors determine the fees and overall remuneration for the Non-Executive Directors.
Yetik K Mert
Chair of the Remuneration Committee
25 March 2024
Genel Energy Annual Report 2023
117
Strategic reportGovernanceFinancial statementsOther information
Other statutory and
regulatory information
Management report
The Directors’ Report, together with the Strategic Report set out on pages 1 to 69, form the Management Report in alignment with the
purposes of Disclosure Guidance and Transparency Rule (DTR) 4.1.5R.
Statutory information contained elsewhere in the Annual Report
Information required to be part of a Directors’ Report can be found elsewhere in the Annual Report as indicated in the table below and
is incorporated into this report by reference.
Information
Results and dividends
Likely future developments in the business of the Company or its subsidiaries
Subsequent events
Corporate social responsibility
Greenhouse gas emissions
Section 172(1) statement and stakeholder engagement
Colleagues (employment of disabled persons, workforce engagement and policies)
Engagement with suppliers, customers and others in a business relationship
Corporate Governance Statements
Directors’ details (including changes made during the year)
Related party transactions
Diversity
Share capital
Viability statement
Going concern and fair, balanced and understandable statements
Location in annual report
Pages 135 to 159
Pages 10 to 13
Page 158
Pages 26 to 69
Page 33
Page 24
Pages 52 to 54
Page 25
Pages 72 to 74
Pages 89 to 91
Note 23 on page 158
Pages 52 and 53
Note 18 on page 154
Page 24
Pages 13 and 72
Employee share schemes (including long-term incentive schemes)
Note 21 on pages 156 and 157
Financial instruments: information on the Group’s financial instruments and risk management
Notes 16 and 17 on pages 152
objectives and policies, including our policy for hedging
Statements of responsibilities
to 153
Page 121
Disclosure table pursuant to Listing Rule (LR) 9.8.4C
The following table provides references to where the information required by Listing Rule 9.8.4C is disclosed:
Listing Rule and requirement 1
9.8.4(4) Long-term incentive schemes (LR 9.4.3R)
Disclosure
Note 21 on pages 156 to 157
1 Each of the other disclosures required under Listing Rule 9.8.4c are not applicable to Genel Energy plc
Principal activities
The Company is the holding company for the Group. The Group is principally engaged in the business of the exploration, development
and production of natural resources.
Genel Energy plc is a Jersey incorporated company with a standard listing on the London Stock Exchange. We are committed to
complying with the regulatory requirements in both Jersey and the UK. We were in full compliance with the provisions of the Code in
2023. A copy of the Code can be found at frc.org.uk/corporate/ukcgcode.cfm.
The Company will not be in compliance with provision 36 of the Code during 2024 following a decision to suspend the PSP post vesting
holding period for the annual 2024 share awards. This decision was taken to enhance the competitiveness of Genel’s remuneration
offering to its senior management team, taking into consideration the remuneration package as a whole and the global environment in
which we compete for talent.
118
Genel Energy Annual Report 2023
AGM
Your attention is drawn to the Notice of AGM enclosed with this
report, which sets out the resolutions to be proposed at the
forthcoming AGM. The meeting will be held at Linklaters, One Silk
Street, London, EC2Y 8HQ, on Thursday, 9 May 2024 at 11.00am.
Articles of Association of the Company
Under the Jersey Companies Law, the capacity of a Jersey
company is not limited by anything contained in its memorandum
or articles of association. Accordingly, the memorandum
of association of a Jersey company does not contain an
objects clause.
Certain provisions have been incorporated into the articles
of association to enshrine rights that are not conferred by
the Jersey Companies Law, but which the Company believes
shareholders would expect to see in a company listed on the
London Stock Exchange.
Provisions in the articles of association also require shareholders
to make disclosures pursuant to Chapter 5 of the Disclosure
and Transparency Rules, and require the Directors to comply
with Chapter 3 of the Disclosure and Transparency Rules and
themselves to require any persons discharging managerial
responsibilities (within the meaning ascribed in the Disclosure
and Transparency Rules) in relation to the Company who are
not Directors to do so, and to use reasonable endeavours to
procure that their own and such persons’ connected persons
do so. The articles of association may be amended by a special
resolution of the shareholders.
Appointment and replacement of Directors
The rules for the appointment and replacement of Directors are
set out in the articles of association.
Directors
The biographical details of the Directors of the Company who
were in office during the year and as at the date of this Annual
Report are set out on pages 89 to 91. Details of Directors’
service agreements and letters of appointment are set out on
pages 107 to 109.
Details of the Directors’ interests in the ordinary shares of the
Company and in the Group’s long-term incentive schemes are set
out in the Annual Report on Remuneration on page 115.
Details of Directors submitting themselves for re-election
and election at the AGM are set out in the Notice of Meeting.
Service contracts and letters of appointment for all Directors are
available for inspection at the registered office of the Company
and will be available for inspection at the AGM.
Subject to applicable law and the articles of association and to
any directions given by special resolution, the business of the
Company will be managed by the Board, which may exercise all
the powers of the Company.
Directors’ indemnities
As at the date of this Annual Report, indemnities granted by the
Company to the Directors are in force to the extent permitted
under Jersey law. The Company also maintains directors’
and officers’ liability insurance cover, the level of which is
reviewed annually.
Diversity data as at 31 December 2023
Our gender identity and ethnicity data in accordance with Listing Rule 9.8.6R(10) in the format set out in LR 9 Annex 2.1 can be found
below. The Board and Executive Committee were asked to complete a diversity disclosure form to confirm how they identify.
The Board does not have specific Board diversity targets and the Company does not meet the requirement to have at least 40% of the
Board comprising of women and none of the positions of Chair, CEO, CFO or Senior Independent Director are held by a woman (as at
31 December 2023). The Board has appointed one Director from an ethnic minority background.
No. of Board
%
No. of senior positions on the
members
of the Board
Board (CEO, CFO, SID and Chair)
No. in
%
Executive
of Executive
Management
Management
Men
Women
Not specified/ prefer not to say
5
1
0
83
17
0
3
0
0
4
1
0
80
20
0
No. of Board
%
No. of senior positions on the
members
of the Board
Board (CEO, CFO, SID and Chair)
No. in
%
Executive
of Executive
Management
Management
White British or other White
(incl. minority white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/
Black British
Other ethnic group, incl. Arab
Not specified/ prefer not to say
5
0
0
0
1
0
83
0
0
0
17
0
3
0
0
0
0
0
5
0
0
0
0
0
100
0
0
0
0
0
Genel Energy Annual Report 2023
119
Strategic reportGovernanceFinancial statementsOther information
Other statutory and regulatory information
Employee share schemes
Details of the Company’s employee share schemes are set out in
note 21 to the financial statements of this Annual Report.
Employee Benefit Trust (‘EBT’)
Equiniti Jersey Limited was appointed as trustee of Genel
Energy’s EBT in 2012. The voting rights relating to the shares
held by the employee benefit trust are exercisable by the
trustees in accordance with their fiduciary duties.
Further details regarding the EBT and of shares issued pursuant
to Genel Energy’s various employee share plans during the year,
are set out in note 21 to the financial statements.
Political donations
No political donations were made, nor was any political
expenditure incurred, by any Group company in the year ending
31 December 2023 (2022: nil).
Share capital
As at 25 March 2024, the Company had allotted and fully paid
up share capital of 280,248,198 ordinary shares of 10 pence
each with an aggregate nominal value of £28,024,819.80.
These consist of 279,402,863 voting ordinary shares and
845,335 shares held as treasury shares.
Resolutions in relation to share capital
At the AGM of the Company held on 11 May 2023, the
shareholders granted the Company authority to make market
purchases of up to 27,940,286 ordinary shares (representing
approximately 10% of the aggregate issued ordinary share
capital of the Company at 30 March 2023) and hold as treasury
shares any ordinary shares so purchased. During 2023, no
shares were purchased by the Company under this authority.
Restrictions on transfer of shares
There are no specific restrictions on the transfer of shares in the
Company other than (i) as set out in the articles of association,
(ii) pursuant to the Company’s share dealing policy and (iii) as
imposed from time to time by law and regulation.
The Company is not aware of any arrangements or agreements
between holders of the Company’s shares that may result in
restrictions on the transfer of securities or on voting rights.
No person has any special rights of control over the Company’s
share capital and all issued shares are fully paid.
Related party transactions
Details of transactions with Directors and Officers are set out in
note 23 to the financial statements. There were no other related
party transactions to which the Company was a party during
the period.
Substantial shareholdings
As at 31 December 2023, the Company had been notified of the
following significant holdings (being 5% or more of the voting
rights in the Company) in the Company’s ordinary share capital.
Name
Bilgin Grup Dog˘al Gaz A.S¸.
Daax Corporation FZE
NR Holdings Limited
Türkiye Is¸ Bankası A.S¸.
Auditors
Number of
ordinary shares
66,350,163
48,830,105
21,214,583
53,419,883
A resolution to reappoint BDO LLP as the Company’s auditor will
be proposed at the 2024 AGM.
Shareholders will be asked to renew this authority at the
forthcoming AGM. Full details are included in the Notice of AGM.
By order of the Board
Rights attaching to the ordinary shares
Holders of ordinary shares are entitled to attend, speak and vote
at general meetings of the Company and may receive a dividend
and, on a winding-up, may share in the assets of the Company.
As of 24 February 2016, the Company no longer has any
suspended voting ordinary shares in issue.
Paul Weir
Chief Executive Officer
120 Genel Energy Annual Report 2023
Statement of Directors’
responsibilities
Website publication
The Directors are responsible for ensuring the Annual Report
and the financial statements are made available on a website.
Financial statements are published on the Company’s website
in accordance with legislation in the United Kingdom and
Jersey governing the preparation and dissemination of
financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company’s
website is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Directors’ responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
— The Group financial statements have been prepared in
accordance with IFRSs as adopted by the European Union, give
a true and fair view of the assets, liabilities, financial position
and profit and loss of the Group
— The Annual Report includes a fair review of the development
and performance of the business and the financial position of
the Group, together with a description of the principal risks
and uncertainties that they face
By order of the Board.
Paul Weir
Chief Executive Officer
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with International
Reporting Standards (IFRSs) as adopted by the European
Union and the Companies (Jersey) Law 1991 and applicable law
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in
accordance with IFRSs as adopted by the European Union.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group for that period.
In preparing these financial statements, the Directors are
required to:
— Select suitable accounting policies and then apply
them consistently;
— Make judgements and accounting estimates that are
reasonable and prudent;
— State whether they have been prepared in accordance with
IFRSs as adopted by the European Union, subject to any
material departures disclosed and explained in the financial
statements; and
— Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Group and enable them to ensure
that the Group financial statements comply with the IFRSs as
adopted by the European Union and the Companies (Jersey) Law
1991 and the Directors’ Remuneration Report complies with the
Companies Act 2006, given the Company voluntarily prepares
a Directors’ Remuneration Report in accordance with the
provisions of the United Kingdom Companies Act 2006.
They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. The Directors are
responsible for ensuring that the annual report and accounts,
taken as a whole, are fair, balanced, and understandable and
provides the information necessary for shareholders to assess
the group’s performance, business model and strategy.
Genel Energy Annual Report 2023
121
Strategic reportGovernanceFinancial statementsOther information
122 Genel Energy Annual Report 2023
Independent auditor’s report to the
members of Genel Energy Plc
Opinion on the financial statements
In our opinion the financial statements:
— give a true and fair view of the state of the Group’s affairs as at
31 December 2023 and its loss for the year then ended;
— have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the
European Union; and
— have been prepared in accordance with the requirements of
Companies (Jersey) Law 1991.
We have audited the financial statements of Genel Energy Plc
(the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the
year ended 31 December 2023 which comprise the consolidated
statement of comprehensive income, the consolidated balance
sheet, the consolidated statement of changes in equity, and
the consolidated cash flow statement and notes to the financial
statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and IFRS as adopted by the
European Union.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion. Our audit opinion is consistent
with the additional report to the audit committee.
Independence
We remain independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard
were not provided to the Group.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s
ability to continue to adopt the going concern basis of
accounting included:
— Obtaining and evaluating the Board papers assessing going
concern for the forecast period as well as reviewing the
assessment of risks and uncertainties within the supporting
cash flow forecasts. We formed our own assessment of
risks and uncertainties based on our understanding of the
business and the oil and gas sector and compared this to the
Board’s assessment;
— Performing a detailed review of the cash flow forecasts
prepared by Management and assessing the appropriateness
of the period over which going concern was assessed;
— Assessing Management’s base case cash flow forecast and
the underlying key assumptions approved by the Board. In so
doing, we considered factors such as the timing of the re-
opening of the Iraq-Türkiye pipeline and re-commencement of
export sales, forecast oil prices against market expectations
and the impact of the KRG’s proposed Kurdistan blend crude
(KBT) pricing mechanism, local sale prices, the levels of
historical operating costs and production forecasts, the level
of Board approved capital expenditure against development
plan, the planned repayment of the bond and the timing of
receipts from the KRG;
— Performing procedures on the going concern forecast model in
order to confirm the clerical accuracy of the model;
— Agreeing the 31 December 2023 cash position to bank
confirmations, and the latest available cash position to
bank statements;
— Verifying that covenants were not breached in the financial
period and assessing whether there were forecast breaches
in the going concern review period. We also re-performed the
underlying calculations of covenants;
— Reviewing the production sharing contracts (PSCs), licences
and work programmes and comparing the commitments to
the forecasts;
— Considering the impact of the pipeline closure and the
implications for the Group, and performed our own sensitivities
based on key assumptions;
— Discussing the going concern assessment with the Chief
Executive officer, Chief Financial Officer, Technical Director
and In-house Legal Counsel in order to understand their views
on the Iraq-Türkiye pipeline closure and its implications on
going concern;
— Obtaining and reviewing Management’s sensitivity analysis and
reflecting further down-side scenarios of lower than forecast
oil price or further significant delays in the receipt of payments
due from the KRG to determine the impact on the cash flows;
— Reviewing post year end press releases, RNS announcements
and board minutes for any indicators of obligations or
significant adverse issues; and
— Reviewing and evaluating the adequacy and completeness
of disclosures in the financial statements in respect of
going concern.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections
of this report.
Genel Energy Annual Report 2023
123
Strategic reportGovernanceFinancial statementsOther information
The financial information of the remaining non-significant
components, where there is no statutory audit requirement,
were principally subjected to analytical review procedures, with
specified audit procedures performed on certain elements of
their trial balances where there were material balances identified
such as in respect of operating costs, finance expenses, cash,
exploration assets and interest-bearing loans.
The accounting functions of the Group are largely performed
from its Istanbul and London office. The audit was performed
through face-to-face visits Group premises in Istanbul and
London as well as remotely using BDO cloud-based audit
tools and through teleconferencing. All of the audit work was
conducted by the Group engagement team.
Climate change
Our work on the assessment of potential impacts on climate-
related risks on the Group’s operations and financial
statements included:
— Enquiries and challenge of Management to understand the
actions they have taken to identify climate-related risks
and their potential impacts on the financial statements and
adequacy of disclosure of climate-related risks within the
annual report;
— Our own qualitative risk assessment taking into consideration
the sector in which the Group operates and how climate
change affects this particular sector;
— Involvement of internal climate-related specialists in evaluating
Managements risk assessment and challenge over the
TCFD disclosures;
— Performing independent research on climate related risks for
the Group; and
— Review of the minutes of Board and Audit Committee meeting
and other papers related to climate change.
We challenged the extent to which climate-related considerations,
including the expected cash flows from the initiatives and
commitments have been reflected, where appropriate, in
Management’s going concern assessment, viability assessment
and impairment assessments.
We also assessed the consistency of Management’s disclosures
included as ‘Other Information’ on pages 26 to 69 within annual
report and the financial statements with our knowledge obtained
during the course of the audit.
Based on our risk assessment procedures, we did not identify
there to be any Key Audit Matters materially impacted by
climate-related risks.
Independent auditor’s report
Overview
Coverage
100% (2022: 100%) of Group losses before tax
100% (2022: 100%) of Group revenue
99.8% (2022: 99.8%) of Group total asset
Key audit matters
2023
2022
Carrying value of oil production and
development assets
Recoverability of KRG receivables
Revenue recognition of suspended
Tawke Overriding Royalty
Income
(ORRI), revenue recognised from the
ORRI on Tawke and revenue recogni-
tion from oil export sales
-
-
The ‘Revenue recognition of suspended Tawke Overriding Royalty
Income (ORRI), revenue recognised from the ORRI on Tawke and
revenue recognition from oil export sales’ was not considered a
key audit matter in the current year due to the ORRI agreement
expiring in 2022 and revenue no longer being subject to signifi-
cant judgements.
Materiality
Group financial statements as a whole
$7.8m (2022: $7.6m) based on 1% of total assets (2022: 5% of
Group adjusted profit before tax).
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of
the Group and its environment, including the Group’s system of
internal control, and assessing the risks of material misstatement
in the financial statements. We also addressed the risk of
management override of internal controls, including assessing
whether there was evidence of bias by the Directors that may
have represented a risk of material misstatement.
The Group’s producing assets are in the Kurdistan Region of
Iraq (KRI), with exploration licences in Somaliland and Morocco.
Our Group audit scope focused on the Group’s principal
producing and exploration assets to gain sufficient coverage over
the Group’s total assets, total revenue and losses before tax while
considering the audit risks identified.
As a result, we determined two significant components
which were subjected to a full scope audit, (1) Genel Energy
International Limited which holds the Kurdistan producing assets
of Taq Taq and Tawke and (2) Genel Energy Holding Company
Limited, which holds the majority of the Group’s cash and cash
equivalents, comprising more than 44% of the Group’s Total
Assets. Non-significant components that require statutory audits
in the UK and Jersey were also subjected to a full scope audit
which contributed to the above-mentioned audit coverage.
124 Genel Energy Annual Report 2023
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the
audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How the scope of our audit addressed the key audit matter
Carrying value of oil production and development assets (see notes 1.2 and 10)
The production assets form a significant part
of the Group’s statement of financial position.
Management is required to consider whether
there are any facts or circumstances (potential
impairment triggers) that would suggest that the
oil production and development assets remaining
on balance sheet as at 31 December 2023 could be
impaired in accordance with IAS 36 Impairment of
assets.
As part of its impairment indicators evaluation,
Management considered key developments that
occurred during 2023 including the Iraq-Türkiye
pipeline closure, suspension of production for export
sales, commencement of local sales from Tawke and
the impact of local and global geopolitical factors.
Management concluded that impairment indicators
existed for the KRI assets due to the suspension of
production due to the Iraq-Türkiye pipeline closure.
Management therefore performed a full impairment
assessment of the Taq Taq and Tawke Cash CGUs as
at 31 December 2023 and concluded there was no
impairment required.
Given the materiality of the assets in the context
of the Group’s statement of financial position, the
judgements involved in making this assessment and
judgements and estimates involved in calculating
the recoverable amounts, we considered the
carrying value of oil production and development
assets, including the related disclosures, to be a key
audit matter.
Our specific audit testing in this regard included:
— Reviewing and assessing Management’s allocation of assets to CGUs for
the purpose of the impairment assessment, and Management’s assessment
of impairment indicators against the requirements of the applicable
accounting standards;
— Assessing performance against budgets/plans in FY 2023 for the Taq Taq
and Tawke CGUs in order to identify possible indicators of impairment or
possible indicators of a reversal of previously recognised impairments;
— Considering for the purpose of our impairment trigger assessment, the
potential consequences of key developments during 2023 including the Iraq-
Türkiye pipeline closure and its impact on operations;
— Performing a review of the key impairment model assumptions, challenging
the appropriateness of estimates with reference to historical data and
external evidence where available (e.g. consistency of oil price assumptions
with oil price forecasts). This included assessing the judgment over the
timing of resumption of export sales and considering the impact of the
KRG’s KBT pricing mechanism and new local sales pricing;
— Evaluating the impairment model against the approved Life of Field plans;
— Confirming the consistency of the reserves and resources in the models
with the latest Competent Person Reports (CPRs);
— Verifying the reasonableness of the discount rate used by Management with
the assistance of our internal valuation experts;
— Holding discussions with Management and Operations to gain an
understanding of the performance of the producing assets and future
production plans;
— Assessing the experts used by Management in compiling the underlying
competent person reports on the reserves, with a particular focus on the
competency of the expert and the scope of their work in order to ensure
they have been prepared under the required guidelines and are appropriate
for their intended purpose;
— Evaluating the impact of climate change on the impairment of the
Group’s producing assets taking into consideration the Group’s initiatives
specifically in regard to gas flaring;
— Assessing sensitivity analysis performed on the key assumptions in the
impairment models and performing further sensitivity analysis as part of
our work;
— Evaluating and challenging Management’s assessment of no reversal of
previously recognised impairments taken against the Taq Taq and Tawke
CGUs; and
— Considering the appropriateness of the related disclosures.
Key observations:
Based on the procedures performed we found the Group’s assessments
that there were indicators of impairment on the KRI producing assets to be
appropriate and the recoverable values of the Taq Taq and Tawke CGUs to be
reasonable.
We also found the Group’s assessment that no previously recognised impairment
for the Taq Taq and Tawke CGU should be reversed in the year to be appropriate.
We found the disclosures in the consolidated financial statements to be in line
with the accounting standards.
Genel Energy Annual Report 2023
125
Strategic reportGovernanceFinancial statementsOther information
Independent auditor’s report
Key audit matter
How the scope of our audit addressed the key audit matter
Recoverability of Kurdistan Regional Government (KRG) receivables (see notes 1.2 and 11)
As at 31 December 2023, the Group has nominal
receivables of $107.4m (31 December 2022: $121.6m)
due from the KRG which represent production
invoices for the period October 2022 to March 2023.
Since the Iraq-Türkiye pipeline closure in March
2023 no export revenue or payments have been
received by the Group from the KRG, so there is an
uncertainty around the recoverability of this
amount.
Management are required to make an assessment of
the Expected Credit Loss (ECL) provisions relating
to the receivable, considering both the likelihood of
receiving payment and the timing of recoverability.
Following this assessment, the Group concluded that
an expected credit loss of $14.5m was appropriate at
31 December 2023.
The amounts relating to this area are material to the
Group and significant judgements and estimation
are involved in reaching a conclusion on the
appropriate ECL at year end. We therefore consider
this to be a key audit matter.
Our specific audit testing in this regard included:
— Challenging Management’s assessment of the recoverability of the balance
under the relevant accounting standard including the appropriateness of
the different scenarios which considered the amount, nature and timing of
receipts. Our work included challenging the appropriateness of probability
percentages applied to recovery start dates and recovery periods against
available information and historical trend analysis of receipts and the
discount rate applied;
— Reviewing correspondence with the KRG to confirm the validity of the
amounts due, and to determine whether any information exists to suggest
non-recovery of the amounts;
— Holding discussions with Management to understand the status of
discussions around the recoverability and method of recovery for
receivables with the KRG;
— Verifying receipts for the year to supporting evidence such as
bank statements;
— Obtaining and reviewing the ECL calculation prepared by Management,
including checking the mathematical accuracy of the calculation.
We assessed the appropriateness of the methodology adopted and
determined whether it was in line with the requirements of IFRS 9 Financial
Instruments; and
— Reviewing and considering the appropriateness of the inputs in the ECL
model, specifically running our internal recovery scenarios and sensitivities
to the discount rate applied.
Key observations:
Based on the work performed we consider the Group’s assessment of the
recoverability of the KRG receivables to be appropriate. We consider the ECL
provision to be appropriately accounted for and reasonable.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality
level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will
not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality
as follows:
Materiality
2023
$m
7.8
Group financial statements
2022
$m
7.6
Basis for determining materiality
1% of Group total assets
5% of adjusted Group profit before tax
Rationale for the
benchmark applied
We consider the use of 1% of total assets to be
the most appropriate benchmark following the
closure of the Iraq-Türkiye pipeline in March
2023 resulting in no export sales since then
and a decline in operations.
We considered the use of 5% of adjusted
Group profit before tax to be the most
appropriate benchmark following the
stabilisation of adjusted profits over the prior
two years and we considered profit before tax
to also be a key measure for the users of the
financial statements.
Performance materiality
$5.4m
$5.3m
Basis for determining
performance materiality
Performance materiality was set at 70% due to the Group having a number of accounts subject
to high degrees of estimation and judgement.
126 Genel Energy Annual Report 2023
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, based on a percentage
of 70% (2022: between 18% and 90%) of Group materiality dependent on the size and our assessment of the risk of material
misstatement of that component. Significant component materiality applied was $5.4m (2022: $1.4m to $6.8m). In the audit of each
of the Significant components, we further applied performance materiality levels of 70% (2022: 70%) of the component materiality to
our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of $0.15m (2022: $0.15m).
We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual
report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
As the Group has voluntarily adopted the UK Corporate Governance Code 2018 we are required to review the Directors’ statement
in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Parent
Company’s compliance with the provisions of the UK Corporate Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern
and longer-term
viability
— The Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 24; and
— The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment
covers and why the period is appropriate set out on page 24.
Other Code
provisions
— Directors’ statement on fair, balanced and understandable set out on page 72;
— Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out
on page 72;
— The section of the annual report that describes the review of effectiveness of risk management and internal
control systems set out on pages 16-18; and
— The section describing the work of the Audit Committee set out on page 96.
Other Companies (Jersey) Law 1991 reporting
We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if,
in our opinion:
— proper accounting records have not been kept, or proper returns adequate for our audit have not been received from branches not
visited by us; or
— the financial statements are not in agreement with the accounting records and returns; or
— we have not received all the information and explanations we require for our audit.
Other voluntary reporting
Directors’ remuneration (United Kingdom Companies Act 2006)
The Parent Company voluntarily prepares a Directors’ Remuneration Report in accordance with the provisions of the United Kingdom
Companies Act 2006. The Directors requested that we audit the part of the Directors’ Remuneration Report specified by the United
Kingdom Companies Act 2006 as if the Group were a quoted company.
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
requirements of the United Kingdom Companies Act 2006 that would have applied had the Parent Company been a quoted company
under the provisions of that Act.
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Independent auditor’s report
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate
the Group or the Parent Company or to cease operations, or
have no realistic alternative but to do so.
Our procedures in respect of the above included:
— Reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with relevant
laws and regulations noted above;
— Enquiries of Management, the Audit Committee and Internal
Legal Counsel of any known or suspected instances of non-
compliance with laws and regulations;
— Reading minutes of meetings of those charged with
governance, and reviewing correspondence with local tax and
regulatory authorities to identify potential litigation and claims
and non-compliance with laws and regulations;
— Performing a review of local and international tax compliance
with the involvement of our tax specialists;
— Reviewing of legal expenditure accounts to understand the
nature of expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to
material misstatement, including fraud. Our risk assessment
procedures included:
— Enquiries of Management and those charged with governance
and Audit Committee of any known or suspected instances
of fraud;
— Obtaining an understanding of the Group’s policies and
procedures relating to:
— Detecting and responding to the risks of fraud; and
— Internal controls established to mitigate risks related
to fraud.
— Review of minutes of meeting of those charged with
governance for any known or suspected instances of fraud;
and
— Holding discussions with the audit engagement team as to how
and where fraud might occur in the financial statements and
where any potential indicators of fraud may arise in the Group
in order to consider how our audit strategy should reflect
our considerations.
Based on our risk assessment, we considered the areas most
susceptible to fraud to be management override of controls
through inappropriate journal entries, revenue recognition, and
bias in key estimates and judgements.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
Non-compliance with laws and regulations
Based on:
— Our understanding of the Group and the industry in which
it operates;
— Discussion with Management, those charged with governance,
in-house Legal Counsel and Audit Committee; and
— Obtaining and understanding of the Group’s policies and
procedures regarding compliance with laws and regulations;
We considered the significant laws and regulations to be IFRS
as adopted by the European Union, the Companies (Jersey)
Law 1991, local and international tax legislations, laws and
regulations in the Kurdistan Region of Iraq, Somaliland and
Morocco including environmental regulations and Oil and Gas
Industry regulations.
The Group is also subject to laws and regulations where the
consequence of non-compliance could have a material effect
on the amount or disclosures in the financial statements,
for example through the imposition of fines or litigations.
We identified such laws and regulations to be the LSE listing
rules, Norway Listing Rules in regards to the bonds held,
UK Sanctions Law, Bribery Act, labour regulations and
environmental compliance.
128 Genel Energy Annual Report 2023
Use of our report
This report is made solely to the Parent Company’s members,
as a body, in accordance with article 113A of the Companies
(Jersey) Law 1991. Our audit work has been undertaken so that
we might state to the Parent Company’s members those matters
we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Parent
Company and the Parent Company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
BDO LLP
Anne Sayers
For and on behalf of BDO LLP
Chartered Accountants
London, UK
25 March 2024
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
Our procedures in respect of the above included:
— Obtaining an understanding of the design and implementation
of relevant controls surrounding the financial reporting close
process such as controls over the posting of journals and the
consolidation process and obtained an understanding of the
segregation of duties in these processes;
— Addressing the risk of fraud through management override
of controls by testing the appropriateness of a sample of
journal entries, which met defined risk criteria, to supporting
documentation where we considered there to be a higher risk
of potential fraud and other adjustment;
— Assessing whether the judgements made in making accounting
estimates, specifically those in the Key Audit Matters section
of the report, are indicative of a potential bias, and evaluating
the business rationale of any significant transactions that are
unusual or outside the normal course of business;
— Testing total oil sales in the year to supporting documentation
from delivery through to cash received;
— Testing journals recorded within revenue, using specific risk
criteria, to supporting evidence;
— Performing cut-off testing on sales revenue around year
end by verifying the volume transferred to signed loading
statements and third party operator statements;
— Applying professional scepticism in our audit procedures
and performing randomised procedures to include a level of
unpredictability; and
— Performing an assessment of the Group’s IT and the wider
control environment and as part of this work we obtained
an understanding of the design and implementation of IT
access controls.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members
who were all deemed to have appropriate competence and
capabilities and remained alert to any indications of fraud or
non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising
that the risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by,
for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
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Strategic reportGovernanceFinancial statementsOther information
Consolidated statement
of comprehensive income
For the year ended 31 December 2023
Revenue
Production costs
Depreciation and amortisation of oil assets
Gross profit
Exploration expense
Other operating costs
Net write-off of intangible assets
Net (expected credit loss (‘ECL’)) / reversal of ECL of receivables
General and administrative costs
Operating (loss) / profit
Operating (loss) / profit is comprised of:
EBITDAX
Depreciation and amortisation
Exploration expense
Net write-off of intangible assets
Net (ECL) / reversal of ECL of receivables
Finance income
Bond interest expense
Net other finance expense
(Loss) / profit before income tax
Income tax expense
(Loss) / profit and total comprehensive (expense) / income from continuing operations
Loss from discontinued operations
Loss and total comprehensive expense
Attributable to:
Owners of the parent
(Loss) / Earnings per ordinary share
From continuing operations:
Basic
Diluted
From continuing and discontinued operations:
Basic
Diluted
Basic (LPS) / EPS excluding impairments1
2023
$m
Restated
2022
$m
Note
2
3
3
3
3
3
3
3
3
3
3
3
5
5
5
6
7
8
8
8
8
8
84.8
(21.3)
(43.9)
19.6
(0.1)
(3.6)
1.2
(9.1)
(27.2)
(19.2)
401.9
(34.3)
(134.2)
233.4
(1.0)
-
(75.8)
8.6
(18.6)
146.6
32.8
349.1
(44.0)
(134.3)
(0.1)
1.2
(9.1)
(1.0)
(75.8)
8.6
20.6
6.7
(24.8)
(25.9)
(4.9)
(28.3)
(0.2)
(28.5)
(32.8)
(61.3)
(5.3)
122.1
(0.2)
121.9
(129.2)
(7.3)
(61.3)
(61.3)
(7.3)
(7.3)
¢
¢
(10.2)
(10.2)
(22.0)
(22.0)
(11.9)
43.7
43.7
(2.6)
(2.6)
66.7
1 Basic (LPS) / EPS excluding impairment is loss and total comprehensive expense adjusted for the add back of net impairment/write-off of oil and gas assets
and net ECL/reversal of ECL of receivables divided by weighted average number of ordinary shares
Previous year’s figures have been restated for discontinued operation disclosure in relation to Sarta PSC (see note 7).
130 Genel Energy Annual Report 2023
Consolidated balance sheet
At 31 December 2023
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Trade and other payables
Deferred income
Provisions
Interest bearing loans
Current liabilities
Trade and other payables
Deferred income
Total liabilities
Net assets
Owners of the parent
Share capital
Share premium account
Accumulated losses
Total equity
2023
$m
2022
$m
Note
9
84.7
10,20
246.5
11
11
12
66.5
397.7
34.0
363.4
397.4
79.1
248.1
-
327.2
121.7
494.6
616.3
795.1
943.5
13,20
14
15
16
13,20
14
(0.5)
(8.2)
(1.2)
(6.5)
(45.2)
(52.2)
(243.7)
(266.6)
(297.6)
(326.5)
(57.6)
(6.0)
(63.6)
(82.4)
(6.8)
(89.2)
(361.2)
(415.7)
433.9
527.8
18
43.8
43.8
3,863.9
3,897.4
(3,473.8)
(3,413.4)
433.9
527.8
These consolidated financial statements on pages 130 to 159 were authorised for issue by the Board of Directors on 25 March 2024 and
were signed on its behalf by
Paul Weir
Chief Executive Officer
Luke Clements
Chief Financial Officer
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Strategic reportGovernanceFinancial statementsOther information
Consolidated statement
of changes in equity
For the year ended 31 December 2023
At 1 January 2022
Share
capital
Share
premium
Accumulated
losses
Total
equity
Note
$m
$m
$m
$m
43.8
3,947.5
(3,410.2)
581.1
Loss and total comprehensive expense
-
-
(7.3)
(7.3)
Contributions by and distributions to owners
Share-based payments
Dividends provided for or paid1
At 31 December 2022 and 1 January 2023
Loss and total comprehensive expense
Contributions by and distributions to owners
Share-based payments
Purchase of own shares for employee share plan
Dividends provided for or paid1
21
19
21
19
-
-
-
(50.1)
4.1
4.1
-
(50.1)
43.8
3,897.4
(3,413.4)
527.8
-
-
(61.3)
(61.3)
-
-
-
-
2.7
(1.8)
2.7
(1.8)
-
(33.5)
-
(33.5)
At 31 December 2023
43.8
3,863.9
(3,473.8)
433.9
1 The Companies (Jersey) Law 1991 does not define the expression “dividend” but refers instead to “distributions”. Distributions may be debited to any
account or reserve of the Company (including share premium account)
132 Genel Energy Annual Report 2023
Consolidated cash
flow statement
For the year ended 31 December 2023
Cash flows from operating activities
Loss for the year
Adjustments for:
Net finance expense
Taxation
Depreciation and amortisation
Exploration expense
Net impairments, write-offs
Other non-cash items (royalty income and share-based cost)
Changes in working capital:
Decrease in trade and other receivables
(Decrease) / Increase in trade and other payables
Cash generated from operations
Interest received
Taxation paid
Net cash generated from operating activities
Cash flows from investing activities
Payments of intangible assets
Payments of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Dividends paid to company’s shareholders
Purchase of own shares
Bond repayment
Lease payments
Interest paid
Net cash used in financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
2023
$m
2022
$m
Note
(61.3)
(7.3)
9.4
0.2
25.4
0.2
46.7
152.0
0.1
28.1
0.8
14.4
(3.7)
34.7
20.6
(0.2)
55.1
1.0
193.1
(7.4)
47.2
1.7
405.9
6.7
(0.2)
412.4
(9.7)
(20.0)
(88.8)
(128.2)
(98.5)
(148.2)
(33.5)
(47.9)
(1.8)
(24.9)
(2.8)
(24.8)
(87.8)
(131.2)
494.6
363.4
-
(6.0)
(3.8)
(25.6)
(83.3)
180.9
313.7
494.6
5,7
6
3,7
3
3,7
5
19
16
12
12
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134 Genel Energy Annual Report 2023
Notes to the consolidated
financial statements
1.
1.1
Summary of significant accounting policies
Basis of preparation
Genel Energy Plc – registration number: 107897 (the Company), is a public limited company incorporated and domiciled in Jersey with
a listing on the London Stock Exchange. The address of its registered office is 26 New Street, St Helier, Jersey, JE2 3RA.
The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union and interpretations issued by the IFRS Interpretations Committee (together ’IFRS’); are
prepared under the historical cost convention except as where stated; and comply with Company (Jersey) Law 1991. The significant
accounting policies are set out below and have been applied consistently throughout the period.
The Company prepares its financial statements on a historical cost basis, unless accounting standards require an alternate
measurement basis. Where there are assets and liabilities calculated on a different basis, this fact is disclosed either in the relevant
accounting policy or in the notes to the financial statements.
Items included in the financial information of each of the Company’s entities are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in
US dollars to the nearest million ($ million) rounded to one decimal place, except where otherwise indicated.
For explanation of the key judgements and estimates made by the Company in applying the Company’s accounting policies, refer to
significant accounting judgements and estimates on pages 136 and 137.
Going concern
The Company regularly evaluates its financial position, cash flow forecasts and its compliance with financial covenants by considering
multiple combinations of oil price, discount rates, production volumes, payments, capital and operational spend scenarios.
The Company has reported cash of $363 million, with its debt of $248 million maturing in the second half of 2025 and significant
headroom on both the equity ratio and minimum liquidity financial covenants.
The Federal Iraq Supreme Court majority decision in February 2022 regarding the Kurdistan Oil and Gas Law (2007) and the
subsequent actions taken by the Federal Minister of Oil in Baghdad Commercial Court did not have a significant impact on the
Company’s cash generation. However, since then, the International Chamber of Commerce in Paris ruling in favour of Iraq in the long
running arbitration case against Türkiye concerning the Iraqi-Turkish pipeline agreement signed in 1973, resulted in exports through
the pipeline being suspended from 25 March 2023.
The Company is currently selling in the domestic market at lower prices and lower volumes than are available from exports, with
significantly reduced cash generation.
The Company forecasts that, even with continued suspension of exports, it will have a significant net cash balance for the
foreseeable future.
As a result, the Directors have assessed that the Company’s forecast liquidity provides adequate headroom over its forecast
expenditure for the 12 months following the signing of the annual report for the period ended 31 December 2023 and consequently
that the Company is considered a going concern.
Consolidation
The consolidated financial statements consolidate the Company and its subsidiaries. These accounting policies have been adopted by
all companies.
Subsidiaries
Subsidiaries are all entities over which the Company has control. The Company controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the
date that control ceases. Transactions, balances and unrealised gains on transactions between companies are eliminated.
Joint arrangements and associates
Arrangements under which the Company has contractually agreed to share control with another party, or parties, are joint ventures
where the parties have rights to the net assets of the arrangement, or joint operations where the parties have rights to the assets and
obligations for the liabilities relating to the arrangement. Investments in entities over which the Company has the right to exercise
significant influence but has neither control nor joint control are classified as associates and accounted for under the equity method.
The Company recognises its assets, liabilities, income and expenses relating to its interests in joint operations, including its share of
assets and income held jointly and liabilities and expenses incurred jointly with other partners.
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Farm-in/farm-out
Farm-in/farm-out transactions undertaken in the exploration phase of an oil and gas asset are accounted for on a no gain/no
loss basis due to inherent uncertainties in the exploration phase and associated difficulties in determining fair values reliably
prior to the determination of commercially recoverable proved reserves. The resulting exploration and evaluation asset is then
assessed for impairment indicators under IFRS 6. Any cash payment or proceeds are presented as an increase or reduction to
additions respectively.
1.2
Significant accounting judgements and estimates
The preparation of the financial statements in accordance with IFRS requires the Company to make judgements and estimates that
affect the reported results, assets and liabilities. Where judgements and estimates are made, there is a risk that the actual outcome
could differ from the judgement or estimate made.
Significant judgements
The following are the significant judgements that the directors have made in the process of applying the Group and Company’s
accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Sarta PSC (note 10 and 7)
At 31 December 2022, the Company’s assessment on the recoverable value of the Sarta PSC had resulted with an impairment expense
of $125.5 million following the disappointing results of the two appraisal wells and pilot production.
In 2023, the Company has informed the KRG of its intention to exit the Sarta licence and the remaining recoverable value of the
Sarta PSC have been reduced to nil and a write-off expense of $18.7 million has been booked. Following the termination of the PSC on
1 December 2023, decommissioning provisions have also been derecognised.
Significant estimates
The following are the critical estimates that the directors have made in the process of applying the Group and Company’s accounting
policies and that have the most significant effect on the amounts recognised in the financial statements.
Estimation of hydrocarbon reserves and resources and associated production profiles and costs
Estimates of hydrocarbon reserves and resources are inherently imprecise and are subject to future revision. The Company’s
estimation of the quantum of oil and gas reserves and resources and the timing of its production, cost and monetisation impact
the Company’s financial statements in a number of ways, including: testing recoverable values for impairment; the calculation of
depreciation, amortisation and assessing the cost and likely timing of decommissioning activity and associated costs. This estimation
also impacts the assessment of going concern and the viability statement.
Proved and probable reserves are estimates of the amount of hydrocarbons that can be economically extracted from the Company’s
assets. The Company estimates its reserves using standard recognised evaluation techniques which are based on Petroleum
Resources Management System 2018. Assets assessed as having proven and probable reserves are generally classified as property,
plant and equipment as development or producing assets and depreciated using the units of production methodology. The Company
considers its best estimate for future production and quantity of oil within an asset based on a combination of internal and external
evaluations and uses this as the basis of calculating depreciation and amortisation of oil and gas assets and testing for impairment
under IAS 36.
Hydrocarbons that are not assessed as reserves are considered to be resources and the related assets are classified as exploration
and evaluation assets. These assets are expenditures incurred before technical feasibility and commercial viability is demonstrable.
Estimates of resources for undeveloped or partially developed fields are subject to greater uncertainty over their future life
than estimates of reserves for fields that are substantially developed and being depleted and are likely to contain estimates and
judgements with a wide range of possibilities. These assets are considered for impairment under IFRS 6.
Once a field commences production, the amount of proved reserves will be subject to future revision once additional information
becomes available through, for example, the drilling of additional wells or the observation of long-term reservoir performance under
producing conditions. As those fields are further developed, new information may lead to revisions.
Assessment of reserves and resources are determined using estimates of oil and gas in place, recovery factors and future commodity
prices, the latter having an impact on the total amount of recoverable reserves.
Where the Company has updated its estimated reserves and resources any required disclosure of the impact on the financial
statements is provided in the following sections.
Estimation of oil and gas asset values (note 9 and 10)
Estimation of the asset value of oil and gas assets is calculated from a number of inputs that require varying degrees of estimation.
Principally oil and gas assets are valued by estimating the future cash flows based on a combination of reserves and resources, costs
of appraisal, development and production, production profile, climate-related risks, pipeline reopening and future sales price and
discounting those cash flows at an appropriate discount rate.
Future costs of appraisal, development and production are estimated taking into account the level of development required to
produce those reserves and are based on past costs, experience and data from similar assets in the region, future petroleum prices
and the planned development of the asset. However, actual costs may be different from those estimated.
136 Genel Energy Annual Report 2023
Notes to the consolidated financial statements Discount rate is assessed by the Company using various inputs from market data, external advisers and internal calculations. A post
tax nominal discount rate of 14% (2022: 14%) derived from the Company’s weighted average cost of capital (WACC) is used when
assessing the impairment testing of the Company’s oil assets at year-end. Risking factors are also used alongside the discount rate
when the Company is assessing exploration and appraisal assets.
Estimation of future oil price and netback price
The estimation of future oil price has a significant impact throughout the financial statements, primarily in relation to the estimation
of the recoverable value of property, plant and equipment and intangible assets. It is also relevant to the assessment of ECL, going
concern and the viability statement.
The Company’s estimate of average Brent oil price for future years is based on a range of publicly available market estimates and is
summarised in the table below.
$/bbl
Actual / Estimate
HY2023 estimate
Prior year estimate
2023
2024
2025
2026
2027
2028
82
82
82
80
78
78
76
74
74
74
70
70
71
70
70
70
70
70
The netback price is used to value the Company’s revenue, trade receivables and its forecast cash flows used for impairment testing
and viability. It is the aggregation of reference oil price average less transportation costs, handling costs and quality adjustments.
Effective from 1 September 2022, sales have been priced by the MNR under a new pricing formula based on the realised sales price
for Kurdistan blend crude (‘KBT’) during the delivery month, rather than on dated Brent. The Company has not agreed on this new
pricing formula and continued to invoice on Brent. The Company does not have direct visibility on the components of the netback
price realised for its oil because sales are managed by the KRG, but the latest payments were based on the netback price provided by
the KRG. Therefore, the export revenue from 1 September 2022 was recognised in accordance with IFRS15 using KBT pricing, resulting
in the recognition of $13 million less of revenue.
The export pipeline closure in March 2023 has resulted in volumes sold in the local market starting in June 2023 on a cash and carry
basis at lower realised oil prices than previously achieved through export.
A sensitivity analysis of netback price on producing asset values has been provided in note 10.
The Company has also taken the change into account in its assessment of impairment reversal and considered it appropriate not to
reverse any previous impairments.
Estimation of the recoverable value of deferred receivables and trade receivables (note 11)
As of 31 December 2023, the Company is owed six months of payments. Management has compared the carrying value of trade
receivables with the present value of the estimated future cash flows based on the prevailing discount rate at the time sales
made (14%) and a number of collection scenarios. The ECL is the weighted average of these scenarios and is recognised in the
income statement. The weighting is applied based on expected repayment timing by considering the recovery of previous deferred
receivables. The result of this assessment is an ECL provision of $14.5 million. Each 1% increase in discount rate would increase the
ECL by $0.9 million. Sensitivity of the calculation to different scenarios has been provided in note 11.
Other estimates
The following are the other estimates that the directors have made in the process of applying the Group and Company’s accounting
policies and that have effect on the amounts recognised in the financial statements.
Decommissioning provision (note 15)
Decommissioning provisions are calculated from a number of inputs such as costs to be incurred in removing production facilities
and site restoration at the end of the producing life of each field which is considered as the mid-point of a range of cost estimation.
These inputs are based on the Company’s best estimate of the expenditure required to settle the present obligation at the end of
the period inflated at 2% (2022: 2%) and discounted at 4% (2022: 4%). 10% increase in cost estimates would increase the existing
provision by c.$4 million and 1% increase in discount rate would decrease the existing provision by c.$3 million, the combined impact
would be c.$1 million. The cash flows relating to the decommissioning and abandonment provisions are expected to occur between
2028 and 2036.
Taxation
Under the terms of KRI PSC’s, corporate income tax due is paid on behalf of the Company by the KRG from the KRG’s own share of
revenues, resulting in no corporate income tax payment required or expected to be made by the Company. It is not known at what rate
tax is paid, but it is estimated that the current tax rate would be between 15% and 40%. If this was known it would result in a gross up
of revenue with a corresponding debit entry to taxation expense with no net impact on the income statement or on cash. In addition, it
would be necessary to assess whether any deferred tax asset or liability was required to be recognised.
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Strategic reportGovernanceFinancial statementsOther information
1.3
Accounting policies
The accounting policies adopted in preparation of these financial statements are consistent with those used in preparation of the
annual financial statements for the year ended 31 December 2022, adjusted for transitional requirements where necessary, further
explained under revenue and changes in accounting policies headings.
Revenue
Revenue from contracts with customers is earned based on the entitlement mechanism under the terms of the relevant PSC and,
overriding royalty income (‘ORRI’), which was earned on 4.5% of gross field revenue from the Tawke licence up until July 2022.
Under IFRS 15, entitlement revenue and ORRI is recognised when the control of the product is deemed to have passed to the customer,
in exchange for the consideration amount determined by the terms of the contract. For exports the control passes to the customer
when the oil enters the export pipe. For local sales, the control passes to the customer when the oil is delivered to the trucks.
Entitlement has two components: cost oil, which is the mechanism by which the Company recovers its costs incurred on an asset, and
profit oil, which is the mechanism through which profits are shared between the Company, its partners and the KRG. The Company
pays capacity building payments on profit oil entitlement earned on the Sarta and Taq Taq licences, which become due for payment
once the Company has received the relevant proceeds. Profit oil revenue is always reported net of any capacity building payments
that will become due.
The Company’s export oil sales made to the KRG are valued at a netback price which is explained further in significant accounting
estimates and judgements. The Company’s local sales are valued at the price agreed with the local buyers.
The Company is not able to measure the tax that has been paid on its behalf and consequently has not been able to assess where
revenue should be reported gross of implied income tax paid.
The Company’s revenue from other sources includes a non-cash royalty income which is recognised in the statement of
comprehensive income in a manner consistent with entitlement mechanism.
Intangible assets
Exploration and evaluation assets
Oil and gas assets classified as exploration and evaluation assets are explained under Oil and Gas assets below.
Tawke RSA
Intangible assets include the Receivable Settlement Agreement (‘RSA’) effective from 1 August 2017, which was entered into in
exchange for trade receivables due from KRG for Taq Taq and Tawke past sales. The RSA was recognised at cost and is amortised on a
units of production basis in line with the economic lives of the rights acquired.
Property, plant and equipment
Producing and Development assets
Oil and gas assets classified as producing and development assets are explained under Oil and Gas assets below.
Oil and gas assets
Costs incurred prior to obtaining legal rights to explore are expensed to the statement of comprehensive income.
Exploration, appraisal and development expenditure is accounted for under the successful efforts method. Under the successful
efforts method only costs that relate directly to the discovery and development of specific oil and gas reserves are capitalised
as exploration and evaluation assets within intangible assets so long as the activity is assessed to be de-risking the asset and the
Company expects continued activity on the asset into the foreseeable future. Costs of activity that do not identify oil and gas reserves
are expensed.
All licence acquisition costs, geological and geophysical costs, inventories and other direct costs of exploration, evaluation and
development are capitalised as intangible assets or property, plant and equipment according to their nature. Intangible assets
comprise costs relating to the exploration and evaluation of properties which the directors consider to be unevaluated until assessed
as being 2P reserves and commercially viable.
Once assessed as being 2P reserves they are tested for impairment and transferred to property, plant and equipment as development
assets. Where properties are appraised to have no commercial value, the associated costs are expensed as an impairment loss in
the period in which the determination is made. Development assets are classified under producing assets following the commercial
production commencement.
Development expenditure is accounted for in accordance with IAS 16 – Property, plant and equipment. Producing assets are
depreciated once they are available for use and are depleted on a field-by-field basis using the unit of production method. The sum of
carrying value and the estimated future development costs are divided by total barrels to provide a $/barrel unit depreciation cost.
Changes to depreciation rates as a result of changes in forecast production and estimates of future development expenditure are
reflected prospectively.
The estimated useful lives of property, plant and equipment and their residual values are reviewed on an annual basis and changes
in useful lives are accounted for prospectively. The gain or loss arising on the disposal or retirement of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of comprehensive
income for the relevant period.
138 Genel Energy Annual Report 2023
Notes to the consolidated financial statements Where exploration licences are relinquished or exited for no consideration or costs incurred are neither de-risking nor adding value to
the asset, the associated costs are expensed to the income statement.
Impairment testing of oil and gas assets is considered in the context of each cash generating unit. A cash generating unit is generally a
licence, with the discounted value of the future cash flows of the CGU compared to the book value of the relevant assets and liabilities.
Subsequent costs
The cost of replacing part of an item of property and equipment is recognised in the carrying amount of the item if it is probable that
the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The net book
value of the replaced part is expensed. The costs of the day-to-day servicing and maintenance of property, plant and equipment are
recognised in the statement of comprehensive income.
Discontinued operations
A part of the Company’s operations is classified as a discontinued operation if the component has either been disposed of or is
classified as held for sale and represents a separate major line of business or geographic area of operations, is part of a single
coordinated plan to dispose of a separate major line of business or geographic area of operations, or is a subsidiary acquired
exclusively with a view to resale. Discontinued operations are excluded from the net income/loss from continuing operations and are
presented as a single amount as gain/loss from discontinued operations, in the consolidated statement of comprehensive income.
When an operation is classified as a discontinued operation, the comparative consolidated statement of comprehensive income is
restated and presented as if the operation had been classified as such from the start of the comparative year.
Right of use (RoU) assets / Lease liabilities
The Company recognises a right to use asset and lease liability, depreciate the associated asset, re-measure and reduce the liability
through lease payments unless the underlying leased asset is of low value and/or short term in nature. The Company uses the
following judgements permitted by the standard: applying a single discount rate to a portfolio of leases with reasonably similar
characteristics, exemption from recognition of right of use assets with a lease term of less than 12 months at the inception and using
hindsight in determining the lease term where the contract contains options to extend or terminate the lease. Right-of-use assets are
depreciated over the lifetime of the related lease contract.Lease liabilities were measured at the present value of the remaining lease
payments, discounted using the lessee’s incremental borrowing rate and included within trade and other payables.
Drill rig contracts are service contracts where contractors provide the rig together with the services and the contracted personnel
on a day-rate basis for the purpose of drilling exploration or development wells. The Company has no right of use of the rigs.
The aggregate payments under drilling contracts are determined by the number of days required to drill each well and are capitalised
as exploration or development assets as appropriate.
Financial assets and liabilities
Classification
The Company assesses the classification of its financial assets on initial recognition at amortised cost, fair value through other
comprehensive income or fair value through profit and loss. The Company assesses the classification of its financial liabilities on initial
recognition at either fair value through profit and loss or amortised cost.
Recognition and measurement
Regular purchases and sales of financial assets are recognised at fair value on the trade-date – the date on which the Company
commits to purchase or sell the asset. Trade and other receivables, trade and other payables, borrowings and deferred contingent
consideration are subsequently carried at amortised cost using the effective interest method.
Trade and other receivables
Trade receivables are amounts due from crude oil sales, sales of gas or services performed in the ordinary course of business.
If payment is expected within one year or less, trade receivables are classified as current assets otherwise they are presented as
non-current assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method, less provision for expected credit loss. The Company’s assessment of expected credit loss model is
explained below under financial assets.
Cash and cash equivalents
In the consolidated balance sheet and consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits
held on call with banks, other short-term highly liquid investments which are assessed as cash and cash equivalents under IAS 7 and
includes the Company’s share of cash held in joint operations..
Interest-bearing borrowings
Borrowings are recognised initially at fair value, net of any discount in issuance and transaction costs incurred. Borrowings are
subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is
recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan.
Borrowings are presented as long or short-term based on the maturity of the respective borrowings in accordance with the loan
or other agreement. Borrowings with maturities of less than twelve months are classified as short-term. Amounts are classified
as long-term where maturity is greater than twelve months. Where no objective evidence of maturity exists, related amounts are
classified as short-term.
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Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost
using the effective interest method.
Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the
liability simultaneously.
Provisions
Provisions are recognised when the Company has a present obligation as a result of a past event, and it is probable that the Company
will be required to settle that obligation. Provisions are measured at the Company’s best estimate of the expenditure required to
settle the obligation at the balance sheet date and are discounted to present value where the effect is material. The unwinding of any
discount is recognised as finance costs in the statement of comprehensive income.
Decommissioning
Provision is made for the cost of decommissioning assets at the time when the obligation to decommission arises. Such provision
represents the estimated discounted liability for costs which are expected to be incurred in removing production facilities and site
restoration at the end of the producing life of each field. A corresponding cost is capitalised to property, plant and equipment and
subsequently depreciated as part of the capital costs of the production facilities. Any change in the present value of the estimated
expenditure attributable to changes in the estimates of the cash flow or the current estimate of the discount rate used are reflected as
an adjustment to the provision and capitalised as part of the cost of the assets.
Impairment
Exploration and evaluation assets
Spend on exploration and evaluation assets is capitalised in accordance with IFRS 6. The carrying amounts of the Company’s
exploration and evaluation assets are reviewed at each reporting date to determine whether there is any indication of impairment
under IFRS 6. Impairment assessment of exploration and evaluation assets is considered in the context of each cash generating unit,
which is generally represented by relevant the licence.
Producing and Development assets
The carrying amounts of the Company’s producing and development assets are reviewed at each reporting date to determine whether
there is any indication of impairment or reversal of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated. The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs
of disposal. For value in use, the estimated future cash flows arising from the Company’s future plans for the asset are discounted
to their present value using a nominal post tax discount rate that reflects market assessments of the time value of money and the
risks specific to the asset. For fair value less costs of disposal, an estimation is made of the fair value of consideration that would be
received to sell an asset less associated selling costs (which are assumed to be immaterial). Assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other
assets or groups of assets (cash generating unit).
The estimated recoverable amount is then compared to the carrying value of the asset. Where the estimated recoverable amount is
materially lower than the carrying value of the asset an impairment loss is recognised. Non-financial assets that suffered impairment
are reviewed for possible reversal of the impairment at each reporting date.
Property, plant and equipment and intangible assets
Impairment testing of oil and gas assets is explained above. When impairment indicators exist for other non-financial assets,
impairment testing is performed based on the higher of value in use and fair value less costs of disposal. The Company assets’
recoverable amount is determined by fair value less costs of disposal.
Financial assets
Impairment of financial assets is assessed under IFRS 9 with a forward-looking expected credit loss (‘ECL’) model. The standard
requires the Company to book an allowance for ECL for its financial assets. The Company has assessed its trade receivables as at
31 December 2023 for ECL. Further explanation is provided in significant accounting judgements and estimates.
Equity
Share capital
Amounts subscribed for share capital at nominal value. Ordinary shares are classified as equity.
When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable
costs, is net of any tax effects and is recognised as a deduction in equity. Repurchased shares are classified as treasury shares and
are presented as a deduction from total equity. When treasury shares are subsequently sold or reissued, the amount received is
recognised as an increase in equity and the resulting surplus or deficit of the transaction is transferred to/from retained earnings.
Share premium
Amounts subscribed for share capital in excess of nominal value.
140 Genel Energy Annual Report 2023
Notes to the consolidated financial statements Accumulated loss
Cumulative net losses recognised in the statement of comprehensive income net of amounts recognised directly in equity.
Dividend
Liability to pay a dividend is recognised based on the declared timetable. A corresponding amount is recognised directly in equity.
Employee benefits
Short-term benefits
Short-term employee benefit obligations are expensed to the statement of comprehensive income as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a
present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can
be estimated reliably.
Share-based payments
The Company operates equity-settled share-based compensation plans. The expense required in accordance with IFRS 2 is recognised
in the statement of comprehensive income over the vesting period of the award and partially capitalised as oil and gas assets in line
with the hours incurred by the employees. The expense is determined by reference to option pricing models, principally Monte Carlo
and adjusted Black-Scholes models.
At each balance sheet date, the Company revises its estimate of the number of options that are expected to become exercisable.
Any revision to the original estimates is reflected in the statement of comprehensive income with a corresponding adjustment to
equity immediately to the extent it relates to past service and the remainder over the rest of the vesting period.
Finance income and finance costs
Finance income comprises interest income on cash invested, foreign currency gains and the unwind of discount on any assets held at
amortised cost. Interest income is recognised as it accrues, using the effective interest method.
Finance expense comprises interest expense on borrowings, foreign currency losses and discount unwind on any liabilities held at
amortised cost. Borrowing costs directly attributable to the acquisition of a qualifying asset as part of the cost of that asset are
capitalised over the respective assets.
Taxation
Under the terms of the KRI PSCs, the Company is not required to pay any cash corporate income taxes as explained in significant
accounting judgements and estimates. Current tax expense is incurred on profits of service companies.
Segmental reporting
IFRS 8 requires the Company to disclose information about its business segments and the geographic areas in which it operates.
It requires identification of business segments on the basis of internal reports that are regularly reviewed by the CEO, the chief
operating decision maker, in order to allocate resources to the segment and assess its performance.
Related parties
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence
over the party in making financial or operational decisions. Parties are also related if they are subject to common control.
Transactions between related parties are transfers of resources, services or obligations, regardless of whether a price is charged and
are disclosed separately within the notes to the consolidated financial information.
New standards
The following new accounting standards, amendments to existing standards and interpretations are effective on 1 January 2023.
Amendments to IAS 12 Income taxes: International Tax Reform – Pillar Two Model Rules (issued on 23 May 2023), Amendments
to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information (issued on 9 December 2021),
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (issued on 7 May
2021), Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies
(issued on 12 February 2021), Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition
of Accounting Estimates (issued on 12 February 2021), IFRS 17 Insurance Contracts (issued on 18 May 2017). These standards did
not have a material impact on the Company’s results or financial statements disclosures in the current reporting period except
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (issued
on 12 February 2021). The Company has adopted the amendments to IAS 1 for the first time in the current year as to disclose material
accounting policies.
The following new accounting standards, amendments to existing standards and interpretations have been issued but are not
yet effective and/or have not yet been endorsed by the EU: Amendments to IAS 21 The Effects of Changes in Foreign Exchange
Rates: Lack of Exchangeability (issued on 15 August 2023), Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures: Supplier Finance Arrangements (issued on 25 May 2023), Amendments to IAS 1 Presentation of Financial
Statements: Classification of Liabilities as Current or Noncurrent (issued on 23 January 2020); Classification of Liabilities as Current
or Noncurrent - Deferral of Effective Date (issued on 15 July 2020); and Non-current Liabilities with Covenants (issued on 31 October
2022), Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022). Nothing has been
early adopted, and these standards are not expected to have a material impact on the Company’s results or financials statement
disclosures in the periods they become effective.
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Strategic reportGovernanceFinancial statementsOther information
Segmental information
2.
The Company has two reportable business segments: Production and Pre-production. Capital allocation decisions for the production
segment are considered in the context of the cash flows expected from the production and sale of crude oil. The production segment
is comprised of the producing fields on the Tawke PSC (Tawke and Peshkabir fields) and the Taq Taq PSC which are located in the KRI
and make export sales to the KRG and local sales to the local buyers. The pre-production segment is comprised of exploration activity,
principally located in Somaliland and Morocco. ‘Other’ includes corporate assets, liabilities and costs, elimination of intercompany
receivables and intercompany payables, which are non-segment items.
For the year ended 31 December 2023
Revenue from contracts with customers (export)
Revenue from contracts with customers (local)
Revenue from other sources
Cost of sales
Gross profit
Exploration expense
Other operating costs
Reversal of decommissioning provision
Reversal of ECL of trade receivables
ECL of trade receivables
General and administrative costs
Operating profit / (loss)
Operating profit / (loss) is comprised of
EBITDAX
Depreciation and amortisation
Exploration expense
Reversal of decommissioning provision
Reversal of ECL of receivables
ECL of receivables
Finance income
Bond interest expense
Net other finance expense
Profit / (loss) before income tax from continuing operations
Loss from discontinued operations
Profit / (Loss) before income tax
Production
$m
45.8
38.2
0.8
(65.2)
19.6
-
(3.6)
1.2
4.2
(13.3)
-
8.1
59.9
(43.9)
-
1.2
4.2
(13.3)
-
-
(3.2)
4.9
(32.8)
(27.9)
Pre-
production
$m
Other
$m
Total
$m
45.8
38.2
0.8
(65.2)
19.6
(0.1)
(3.6)
1.2
4.2
(13.3)
(27.2)
(19.2)
-
-
-
-
-
-
-
-
-
-
(27.2)
(27.2)
(27.1)
32.8
(0.1)
(44.0)
-
-
-
-
(0.1)
1.2
4.2
(13.3)
-
-
-
-
-
(0.1)
-
-
-
-
-
(0.1)
-
-
(0.1)
-
-
-
-
-
20.6
20.6
(24.8)
(24.8)
(0.1)
(0.2)
-
(1.6)
(4.9)
(33.0)
(28.3)
-
(32.8)
(0.2)
(33.0)
(61.1)
Capital expenditure
Total assets
Total liabilities
58.9
412.1
(91.0)
9.1
-
68.0
26.8
356.2
795.1
(12.0)
(258.2)
(361.2)
Sarta PSC figures have been disclosed as discontinued operation following the PSC termination in the year (see note 7).
Total assets and liabilities in the other segment are predominantly cash and debt balances.
142 Genel Energy Annual Report 2023
Notes to the consolidated financial statements For the year ended 31 December 2022
Revenue from contracts with customers
Revenue from other sources
Cost of sales
Gross profit
Exploration expense
Net write-off of intangible asset
Reversal of ECL of receivables
ECL of receivables
General and administrative costs
Operating profit / (loss)
Operating profit / (loss) is comprised of
EBITDAX
Depreciation and amortisation
Exploration expense
Net write-off of intangible assets
Reversal of ECL of receivables
ECL of receivables
Finance income
Bond interest expense
Other finance expense
Profit / (Loss) before income tax from continuing operations
Loss from discontinued operations
Profit / (Loss) before income tax
Capital expenditure
Total assets
Total liabilities
Production
$m
388.7
13.2
(168.5)
233.4
-
-
10.8
(4.2)
-
Pre-
production
$m
Other
$m
-
-
-
-
(1.0)
(75.8)
-
-
-
-
-
-
-
-
-
2.0
-
(18.6)
(16.6)
240.0
(76.8)
Total
$m
388.7
13.2
(168.5)
233.4
(1.0)
(75.8)
12.8
(4.2)
(18.6)
146.6
367.6
(134.2)
-
-
10.8
(4.2)
-
-
(2.4)
237.6
(129.2)
108.4
133.4
447.3
(111.9)
-
-
(18.5)
349.1
(0.1)
(134.3)
(1.0)
(75.8)
-
-
-
-
2.0
-
(1.0)
(75.8)
12.8
(4.2)
-
-
6.7
6.7
(25.9)
(25.9)
(0.4)
(77.2)
-
(2.5)
(38.3)
(5.3)
122.1
-
(129.2)
(77.2)
(38.3)
(7.1)
9.7
23.5
(17.7)
-
143.1
472.7
943.5
(286.1)
(415.7)
Revenue from contracts with customers includes $94.5 million arising from the ORRI and $34.7 million in relation to the
suspended ORRI.
Total assets and liabilities in the other segment are predominantly cash and debt balances.
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3.
Operating (loss) / profit
Production costs
Depreciation of oil and gas property, plant and equipment (excl. RoU assets)
Amortisation of oil and gas intangible assets
Cost of sales
Exploration expense
Other operating costs1
2023
$m
(21.3)
(39.6)
(4.3)
2022
$m
(34.3)
(95.0)
(39.2)
(65.2)
(168.5)
(0.1)
(1.0)
(3.6)
-
1 Other operating costs relate to Taq Taq costs which were incurred after production ceased in May 2023, following the pipeline closure.
-
1.2
1.2
-
4.2
(13.3)
(9.1)
(12.4)
(13.1)
(1.6)
(0.1)
(78.0)
2.2
(75.8)
2.0
10.8
(4.2)
8.6
(14.0)
(3.7)
(0.8)
(0.1)
(27.2)
(18.6)
(0.3)
(0.1)
(0.4)
(0.1)
(0.5)
(0.3)
(0.1)
(0.4)
(0.1)
(0.5)
Write-off of intangible assets (note 9)
Net reversal of accruals and provisions
Net write-off of intangible assets
Reversal of ECL of other receivables
Reversal of ECL of trade receivables (note 1,11)
ECL of trade receivables (note 1,11)
Net (ECL) / reversal of ECL of receivables
Corporate cash costs
Non-recurring costs
Corporate share-based payment expense
Depreciation and amortisation of corporate assets (excl. RoU assets)
General and administrative expenses
Auditor’s remuneration:
Audit of the Group’s consolidated financial statements
Audit of the Group’s subsidiaries pursuant to legislation
Total audit services
Interim review
Total audit related and non-audit services
All fees paid to the auditor were charged to operating loss in both years.
144 Genel Energy Annual Report 2023
Notes to the consolidated financial statements 4.
Staff costs and headcount
Wages and salaries
Contractors costs
Social security costs
Share based payments
Average headcount was:
Türkiye
KRI
UK
Somaliland
Contractors
5.
Finance expense and income
Bond interest
Other finance expense (non-cash)
Finance expense
Bank interest income
Gain on bond buyback
Finance income
Net finance expense
2023
$m
(19.3)
(13.8)
(1.9)
(3.7)
(38.7)
2022
$m
(21.1)
(20.6)
(4.3)
(4.1)
(50.1)
2023
2022
number
number
38
23
30
27
84
202
2023
$m
(24.8)
(6.0)
(30.8)
20.6
1.1
21.7
39
38
34
18
129
258
2022
$m
(25.9)
(5.3)
(31.2)
6.7
-
6.7
(9.1)
(24.5)
Bond interest payable is the cash interest cost of the Company’s bond debt. Other finance expense (non-cash) primarily relates to the
discount unwind on the bond and the asset retirement obligation provision.
Income tax expense
6.
Current tax expense is incurred on profits of service companies. Under the terms of the KRI PSCs, the Company is not required to pay
any cash corporate income taxes as explained in note 1.
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Discontinued operations
7.
Sarta PSC was terminated on 1 December 2023. The results of the discontinued operations, which have been included in the loss for
the year, were as follows:
Revenue
Production costs
Depreciation of oil and gas property, plant and equipment
Gross loss
Other operating costs1
Write-off / impairment of property, plant and equipment (note 1,10)
Reversal of provisions
Reversal of ECL of trade receivables
ECL of trade receivables
General and administrative costs
Operating loss
Other finance expense (non-cash)
Loss from discontinued operations
2023
$m
3.6
2022
$m
30.8
(3.6)
(16.8)
(0.7)
(0.7)
(14.9)
(0.9)
(20.0)
-
(18.7)
(125.5)
8.2
0.4
(1.2)
(0.5)
-
-
(0.4)
(1.5)
(32.5)
(128.3)
(0.3)
(0.9)
(32.8)
(129.2)
1 Other operating costs relate to costs incurred after production ceased in March 2023, following the pipeline closure and costs incurred in
relation to exiting the PSC.
Cash flows from discontinued operations
Net cash (used in) / generated from operating activities
Net cash used in investing activities
Net cash used in financing activities
2023
$m
(27.8)
(3.8)
(2.1)
2022
$m
18.5
(53.7)
(2.9)
146 Genel Energy Annual Report 2023
Notes to the consolidated financial statements (Loss) / Earnings per share
8.
Basic
Basic loss per share is calculated by dividing the loss attributable to owners of the parent by the weighted average number of shares
in issue during the year.
(Loss) / Profit from continuing operations ($m)
Loss from discontinued operations ($m)
Loss attributable to owners of the parent ($m)
Weighted average number of ordinary shares – number 1
Basic (loss) / earnings per share – cents per share (from continuing operations)
Basic loss per share – cents per share
1 Excluding shares held as treasury shares
Diluted
2023
(28.5)
(32.8)
(61.3)
2022
121.9
(129.2)
(7.3)
278,836,216
278,654,909
(10.2)
(22.0)
43.7
(2.6)
The Company purchases shares in the market to satisfy share plan requirements so diluted earnings per share is adjusted for
performance shares, restricted shares, share options and deferred bonus plans not included in the calculation of basic earnings per
share. Because the Company reported a loss for the year ended 31 December 2023 and 31 December 2022, the performance shares,
restricted shares and share options are anti-dilutive and therefore diluted LPS is the same as basic LPS:
(Loss) / Profit from continuing operations ($m)
Loss from discontinued operations ($m)
Loss attributable to owners of the parent ($m)
2023
(28.5)
(32.8)
(61.3)
2022
121.9
(129.2)
(7.3)
Weighted average number of ordinary shares – number1
278,836,216
278,654,909
Adjustment for performance shares, restricted shares, share options and deferred bonus plans
-
-
Weighted average number of ordinary shares and potential ordinary shares
278,836,216
278,654,909
Basic (loss) / earnings per share – cents per share (from continuing operations)
Diluted loss per share – cents per share
1 Excluding shares held as treasury shares
(10.2)
(22.0)
43.7
(2.6)
Basic (LPS) / EPS excluding impairments
Basic (LPS) / EPS excluding impairment is loss and total comprehensive expense adjusted for the add back of net impairment/write-
off of oil and gas assets and net ECL/reversal of ECL of receivables divided by weighted average number of ordinary shares.
Loss attributable to owners of the parent ($m)
Add back of net impairment/write-off of oil and gas assets
Add back of net ECL/reversal of ECL of receivables
(Loss) / profit attributable to owners of the parent ($m) - adjusted
2023
(61.3)
18.2
9.9
(33.2)
2022
(7.3)
201.3
(8.2)
185.8
Weighted average number of ordinary shares – number 1
Basic (loss) / earnings per share excluding impairments – cents per share
278,836,216
278,654,909
(11.9)
66.7
1 Excluding shares held as treasury shares
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
9.
Intangible assets
Cost
At 1 January 2022
Additions
Write-off in the year (note 1)
Other
At 31 December 2022 and 1 January 2023
Additions
Other
At 31 December 2023
Accumulated amortisation and impairment
At 1 January 2022
Amortisation charge for the period
At 31 December 2022 and 1 January 2023
Amortisation charge for the year
At 31 December 2023
Net book value
At 1 January 2022
At 31 December 2022
At 31 December 2023
Book value
Somaliland PSC
Exploration and evaluation assets
Exploration
Tawke capacity building payment waiver
Tawke RSA assets
Exploration
and evaluation
assets
$m
81.4
9.7
(78.0)
(0.2)
12.9
9.1
0.8
Tawke
RSA
$m
Other
assets
$m
425.1
7.5
-
-
-
-
-
-
425.1
7.5
-
-
-
-
Total
$m
514.0
9.7
(78.0)
(0.2)
445.5
9.1
0.8
22.8
425.1
7.5
455.4
-
-
-
-
-
(319.7)
(39.2)
(358.9)
(4.3)
(363.2)
81.4
12.9
22.8
105.4
66.2
61.9
(7.5)
-
(7.5)
-
(7.5)
-
-
-
2023
$m
22.8
22.8
61.9
61.9
(327.2)
(39.2)
(366.4)
(4.3)
(370.7)
186.8
79.1
84.7
2022
$m
12.9
12.9
66.2
66.2
148 Genel Energy Annual Report 2023
Notes to the consolidated financial statements
10.
Property, plant and equipment
Cost
At 1 January 2022
Net additions
Right-of-use assets (note 20)
Other1
Producing
assets
Other
assets
$m
3,117.2
129.1
-
5.9
$m
17.1
0.9
(0.4)
-
Total
$m
3,134.3
130.0
(0.4)
5.9
At 31 December 2022 and 1 January 2023
3,252.2
17.6
3,269.8
Additions
Right-of-use assets (note 20)
Other1
At 31 December 2023
Accumulated depreciation and impairment
At 1 January 2022
Depreciation charge for the year
Impairment (note 1)
At 31 December 2022 and 1 January 2023
Depreciation charge for the year
Write-off (note 1)
At 31 December 2023
Net book value
At 1 January 2022
At 31 December 2022
At 31 December 2023
1 Other line includes non-cash asset retirement obligation provision and share-based payment costs.
Book value
Tawke PSC
Taq Taq PSC
Sarta PSC
Producing assets
Oil production
Oil production
Oil production/development
58.9
-
2.1
-
(0.3)
-
58.9
(0.3)
2.1
3,313.2
17.3
3,330.5
(2,769.2)
(12.6)
(2,781.8)
(112.8)
(125.5)
(1.6)
-
(114.4)
(125.5)
(3,007.5)
(14.2)
(3,021.7)
(42.3)
(18.7)
(1.3)
(43.6)
-
(18.7)
(3,068.5)
(15.5)
(3,084.0)
348.0
244.7
244.7
4.5
3.4
1.8
352.5
248.1
246.5
2023
$m
210.0
34.7
-
244.7
2022
$m
199.1
28.8
16.8
244.7
Sarta PSC was terminated on 1 December 2023 and this resulted in a reduction in the carrying value to nil and write-off of assets of
$18.7 million as of 31 December 2023. Further explanation is provided in note 1.
The sensitivities below provide an indicative impact on net asset value of a change in netback price, discount rate or production, assuming
no change to any other inputs.
Sensitivities
Netback price +/- $5/bbl
Discount rate +/- 1%
Production +/- 10%
Local sales only for 1 year
Taq Taq
CGU
$m
+/- 2
+/- 0
+/- 2
+/- 0
Tawke
CGU
$m
+/- 30
+/- 8
+/- 32
- 19
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Strategic reportGovernanceFinancial statementsOther information
11.
Trade and other receivables
Trade receivables – non-current
Trade receivables – current
Other receivables and prepayments
2023
$m
66.5
26.4
7.6
100.5
2022
$m
-
117.0
4.7
121.7
At 31 December 2023, the Company is owed six months of payments (31 December 2022: five months).
Period when sale made
Not due
Overdue
2023
Overdue
2022
Deferred
2020
Total
nominal
ECL
provision
Trade
receivables
$m
-
60.7
$m
49.3
-
$m
58.1
44.4
$m
$m
-
107.4
16.5
121.6
$m
(14.5)
(4.6)
$m
92.9
117.0
2023
$m
117.0
87.6
-
(61.2)
(41.0)
-
4.6
(14.5)
0.2
0.2
92.9
2022
$m
158.1
384.8
34.7
(473.3)
-
(0.1)
10.8
(4.6)
5.2
1.4
117.0
31 December 2023
31 December 2022
Movement on trade receivables in the year
Carrying value at 1 January
Revenue from contracts with customers
Revenue recognised for suspended ORRI
Cash for export sales
Cash for local sales
Offset of payables due to the KRG
Reversal of previous year’s expected credit loss (note 1)
Expected credit loss for current year (note 1)
Capacity building payments
Sarta processing fee payments
Carrying value at 31 December
Recovery of the carrying value of the receivable
All trade receivables relate to export sales as the local sales are on a cash and carry basis. As explained in note 1, the booked nominal
receivable value of $107.4 million has been recognised based on KBT due to IFRS 15 requirements and it would be $13 million higher under
Brent pricing mechanism. The Company expects to recover the full value of receivables owed from the KRG under Brent pricing mechanism,
but the terms of recovery are not determined yet. An explanation of the assumptions and estimates in assessing the net present value of the
deferred receivables are provided in note 1.
Booked nominal balance to be recovered
Estimated net present value of total cash flows
Total
$m
107.4
92.9
150 Genel Energy Annual Report 2023
Notes to the consolidated financial statements Sensitivities/Scenarios
The table below shows the sensitivity of the net present value of the overdue trade receivables to start and timing of repayment that the
company has used during its ECL assessment. Each scenario has been weighted in accordance with the management’s expected outcome.
NPV14.0 ($m)
Months until
repayment
commences
0
107
103
99
96
93
0
3
6
9
12
Months it takes to recover the nominal amount owed
3
105
102
98
95
92
6
103
100
97
94
91
12
100
97
94
91
88
18
97
94
91
88
85
24
94
91
88
85
82
12.
Cash and cash equivalents
Cash and cash equivalents
2023
$m
363.4
363.4
2022
$m
494.6
494.6
Cash is primarily invested with major international financial institutions, in US Treasury bills or liquidity funds. $0.6 million (2022:
$0.1 million) of cash is restricted.
13.
Trade and other payables
Trade payables
Other payables
Accruals
Non-current
Current
2023
$m
23.0
2.2
32.9
58.1
0.5
57.6
58.1
2022
$m
25.3
5.2
53.1
83.6
1.2
82.4
83.6
Current payables are predominantly short-term in nature and there is minimal difference between contractual cash flows related to
the financial liabilities and their carrying amount. For non-current payables, liabilities are recognised at discounted fair value using
the effective interest rate. Lease liabilities are included in other payables, further explanation is provided in note 20.
14.
Deferred income
Balance at 1 January
Interest (non-cash)
Royalty income (non-cash)
Balance at 31 December
Non-current (within 1-2 years)
Current
2023
$m
13.3
1.7
(0.8)
14.2
8.2
6.0
14.2
2022
$m
20.5
1.0
(8.2)
13.3
6.5
6.8
13.3
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Strategic reportGovernanceFinancial statementsOther information
15.
Provisions
Balance at 1 January
Interest unwind
Additions
Reversals
Balance at 31 December
2023
$m
52.2
1.8
0.7
(9.5)
45.2
2022
$m
42.6
2.6
7.0
-
52.2
Provisions cover expected decommissioning, abandonment and exit costs arising from the Company’s assets which are further explained in
note 1. Reversals are related to Sarta and Qara Dagh licences as a result of the termination of the PSCs.
16.
Interest bearing loans and net cash
2025 Bond 9.25% (non-current)
Cash
Net cash
1 Jan
2023
$m
(266.6)
494.6
228.0
Discount
unwind
Repurchase
of bond
Dividend
paid
Net other
changes1
$m
(2.7)
-
(2.7)
$m
25.6
(24.9)
0.7
$m
-
(33.5)
(33.5)
$m
-
(72.8)
(72.8)
31 Dec
2023
$m
(243.7)
363.4
119.7
At 31 December 2023, the fair value of the $248 million (2022: $274 million) of bonds held by third parties is $236.5 million (2022:
$257.6 million).
The Company repurchased $26 million of its existing $274 million senior unsecured bond at a price equal to 93.5% of the
nominal amount.
The bonds maturing in 2025 have two financial covenant maintenance tests:
Financial covenant
Equity ratio (Total equity/Total assets)
Minimum liquidity
Test
> 40%
> $30m
YE 2023
YE 2022
55%
56%
$363.4m
$494.6m
2025 Bond 9.25% (non-current)
Cash
Net cash
1 Jan
2022
$m
(269.8)
313.7
43.9
Discount
unwind
Repurchase
of bond
Dividend
paid
Net other
changes
$m
(2.5)
-
(2.5)
$m
5.7
(6.0)
(0.3)
$m
-
(47.9)
(47.9)
$m
-
234.8
234.8
31 Dec
2022
$m
(266.6)
494.6
228.0
1
Net other changes are free cash flow plus purchase of own shares
152 Genel Energy Annual Report 2023
Notes to the consolidated financial statements
Financial Risk Management
17.
Credit risk
Credit risk arises from cash and cash equivalents, trade and other receivables and other assets. The carrying amount of financial assets
represents the maximum credit exposure. The maximum credit exposure to credit risk at 31 December was:
Trade and other receivables
Cash and cash equivalents
2023
$m
97.4
363.4
460.8
2022
$m
119.1
494.6
613.7
All trade receivables are owed by the KRG. Cash is deposited with major international financial institutions and the US treasury that
are assessed as appropriate based on, among other things, sovereign risk, CDS pricing and credit rating.
Liquidity risk
The Company is committed to ensuring it has sufficient liquidity to meet its payables as they fall due. At 31 December 2023 the
Company had cash and cash equivalents of $363.4 million (2022: $494.6 million).
Oil price risk
The Company’s export revenues are calculated from netback price and local sales revenues are from a price established on an arms
length basis as further explained in note 1, and a $5/bbl change in average price across local and export sales would result in a (loss) /
profit before tax change of circa $10 million.
Currency risk
Other than head office costs, substantially all of the Company’s transactions are denominated and/or reported in US dollars.
The exposure to currency risk is therefore immaterial and accordingly no sensitivity analysis has been presented.
Interest rate risk
The Company reported borrowings of $243.7 million (2022: $266.6 million) in the form of a bond maturing in October 2025, with fixed
coupon interest payable of 9.25% on the nominal value of $248.0 million (2022: $274 million). Although interest is fixed on existing
debts, whenever the Company wishes to borrow new debt or refinance existing debt, it will be exposed to interest rate risk. A 1%
increase in interest rate payable on a balance similar to the existing debts of the Company would result in an additional cost of circa
$2.5 million per annum.
Capital management
The Company manages its capital to ensure that it remains sufficiently funded to support its business strategy and maximise
shareholder value. The Company’s short-term funding needs are met principally from the cash flows generated from its operations
and available cash of $363.4 million (2022: $494.6 million).
Financial instruments
All financial assets and liabilities are measured at amortised cost. Due to their short-term nature except interest bearing loans
and non-current portion of trade receivables, the carrying value of these financial instruments approximates their fair value.
Their carrying values are as follows:
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
Interest bearing loans
2023
$m
97.4
363.4
460.8
55.9
243.7
299.6
2022
$m
119.1
494.6
613.7
78.4
266.6
345.0
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Strategic reportGovernanceFinancial statementsOther information
18.
Share capital
At 1 January 2022 – fully paid1
At 31 December 2022, 1 January 2023 and 31 December 2023 – fully paid1
Total
Ordinary
Shares
280,248,198
280,248,198
1 Ordinary shares include 845,335 (2022: 845,335) treasury shares. Share capital includes 2,224,090 (2022: 629,769) of trust 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.
Dividends
Ordinary shares
Final dividend (2023: 12¢ per share, 2022: 12¢ per share)
Interim dividend (2023: nil, 2022: 6¢ per share)
Total dividends provided for or paid
Paid in cash
Foreign exchange on dividend paid
Total dividends provided for or paid
2023
$m
33.5
-
33.5
33.5
-
33.5
2022
$m
33.4
16.7
50.1
47.9
2.2
50.1
154 Genel Energy Annual Report 2023
Notes to the consolidated financial statements Right-of-use assets / Lease liabilities
20.
The Company’s right-of-use assets are related to the offices and included within property, plant and equipment.
Cost
At 1 January 2022
Disposals due to terminations
At 31 December 2022 and 1 January 2023
Disposals due to terminations
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Depreciation charge for the period
At 31 December 2022 and 1 January 2023
Depreciation charge for the period
At 31 December 2023
Net book value
At 1 January 2022
At 31 December 2022
At 31 December 2023
Book value
Offices
Cars
Production facility
Right-of-use assets
Right-of-use
assets
$m
13.2
(0.4)
12.8
(0.3)
12.5
(5.1)
(3.7)
(8.8)
(2.6)
(11.4)
8.1
4.0
1.1
2023
2022
$m
1.1
-
-
1.1
$m
1.8
0.2
2.0
4.0
The weighted average lessee’s incremental borrowing rate applied to the lease liabilities. The lease terms vary from one to five years.
Lease liabilities
At 1 January
Additions
Disposals due to terminations
Payments of lease liabilities
Interest expense on lease liabilities
At 31 December (note 13)
2023
$m
(4.1)
-
0.3
2.8
(0.1)
(1.1)
2022
$m
(8.3)
-
0.5
3.8
(0.1)
(4.1)
Included within lease liabilities of $1.1 million (2022: $4.1 million) are non-current lease liabilities of $0.5 million (2022: $1.2 million).
The identified leases have no significant impact on the Company`s financing, bond covenants or dividend policy. The Company does
not have any residual value guarantees. The contractual maturities of the Company’s lease liabilities are as follows:
31 December 2023
31 December 2022
Less than
1 year
Between
1 - 2 years
Between
2 - 5 years
$m
(0.7)
(3.0)
$m
(0.3)
(0.7)
$m
(0.2)
(0.5)
Total
contractual
cash flow
$m
(1.2)
(4.2)
Carrying
Amount
$m
(1.1)
(4.1)
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Strategic reportGovernanceFinancial statementsOther information
Share based payments
21.
The Company has five share-based payment plans under which awards are currently outstanding: performance share plan (2011),
performance share plan (2021), restricted share plan (2011), share option plan (2011), and deferred bonus plan (2021). The main
features of these share plans are set out below.
PSP (2011)
PSP (2021)
DBP (2021)
RSP (2011)
SOP (2011)
Form of awards
Performance shares.
The intention is to
deliver the full value of
vested shares at no cost
to the participant (as
conditional shares or
nil-cost options).
Either Performance
shares or restricted
shares. The intention is
to deliver the full value
of vested shares at no
cost to the participant
(as conditional shares or
nil-cost options).
Deferred bonus shares.
The intention is to
deliver the full value
of shares at no cost
to the participant (as
conditional shares or
nil-cost options).
Restricted shares.
The intention is to
deliver the full value
of shares at no cost
to the participant (as
conditional shares or
nil-cost options).
Market value options.
Exercise price is set
equal to the average
share price over a
period of up to 30 days
to grant.
Performance conditions
may or may not apply.
For awards granted to
date, there are no
performance conditions.
Performance conditions
may or may not apply.
For awards granted to
date, there are no
performance conditions.
Performance conditions
may or may not apply.
For awards granted to
date, there are no
performance conditions.
Awards typically vest
after two years.
Awards typically
vest in tranches over
three years.
Awards typically vest
after three years.
Performance conditions
Performance
conditions will apply.
Awards granted from
2017 are measured
against relative
and absolute total
shareholder return
(‘TSR’) measured
against a group of
industry peers over a
three-year period.
Vesting period
Awards will vest when
the Remuneration
Committee determines
whether the performance
conditions have been
met at the end of the
performance period.
Performance conditions
may or may not apply.
Awards granted with
performance conditions
are measured against
relative and absolute
TSR measured against
a group of industry
peers over a three-
year period.
For awards subject to
performance conditions,
they will vest when
the Remuneration
Committee determines
whether the performance
conditions have been
met at the end of the
performance period.
For awards that are not
subject to performance
conditions, awards
typically vest in tranches
over three years.
Dividend equivalents
Provision of additional
cash/shares to reflect
dividends over the
vesting period may or
may not apply.
Provision of additional
cash/shares to reflect
dividends over the
vesting period and the
period where the options
have vested and have
not yet been exercised
(where applicable) may
or may not apply.
Provision of additional
cash/shares to reflect
dividends over the
vesting period and the
period where the options
have vested and have
not yet been exercised
(where applicable) may
or may not apply.
Provision of additional
cash/shares to reflect
dividends over the
vesting period may or
may not apply.
Provision of additional
cash/shares to reflect
dividends over the
vesting period may or
may not apply.
156 Genel Energy Annual Report 2023
Notes to the consolidated financial statements In 2023, awards were made under the performance share plan only. The numbers of outstanding shares as at 31 December 2023 are
set out below:
Share awards
with performance
conditions
Share awards
without performance
conditions
Weighted
avg. exercise
price of priced
options
Outstanding at 1 January 2022
Granted during the year
Dividend equivalents
Forfeited during the year
Lapsed during the year
Exercised during the year
Outstanding at 31 Dec 2022 and 1 Jan 2023
Granted during the year
Dividend equivalents
Forfeited during the year
Lapsed during the year
Exercised during the year
Outstanding at 31 December 2023
9,508,167
2,549,151
710,605
(2,248,542)
(2,555,194)
(11,647)
7,952,540
2,961,900
607,589
(3,805,594)
(191,374)
(64,085)
7,460,976
Share
options
85,232
-
-
-
1,415,816
505,645
115,753
-
(125,326)
(33,967)
(883,603)
-
1,028,285
51,265
540,834
91,973
-
-
-
-
(191,768)
(26,443)
(366,082)
1,103,242
(6,370)
18,452
817p
-
-
-
753p
-
858p
-
-
-
767p
742p
1,046p
The exercise price for share options outstanding at the end of the period is 1,046.00p.
Fair value of awards granted during the year has been measured by use of the Monte-Carlo pricing model. The model takes into
account assumptions regarding expected volatility, expected dividends and expected time to exercise. Expected volatility was also
analysed with the historical volatility of FTSE-listed oil and gas producers over the three years prior to the date of grant. The expected
dividend assumption was set at 0%. The risk-free interest rate incorporated into the model is based on the term structure of UK
Government zero coupon bonds. The inputs into the fair value calculation for PSP awards granted in 2023 and fair values per share
using the model were as follows:
Share price at grant date
Fair value on measurement date
Expected life (years)
Expected dividends
Risk-free interest rate
Expected volatility
Share price at balance sheet date
Change in share price between grant date and 31 December 2023
PSP (without
condition)
PSP
PSP (without
condition)
PSP
06/04/2023
06/04/2023
12/09/2023
12/09/2023
124p
124p
1-3
-
124p
80p
1-3
-
82p
82p
1-3
-
82p
43p
1-3
-
3.25%
3.25%
4.73%
4.73%
47.21%
47.21%
42.21%
42.21%
71p
-43%
71p
-43%
71p
-13%
71p
-13%
The weighted average fair value for PSP awards (without condition) granted in 2023 is 121p and for PSP awards granted in 2023 is 80p.
The inputs into the fair value calculation for PSP awards granted in 2022 and fair values per share using the model were as follows:
Share price at grant date
Fair value on measurement date
Expected life (years)
Expected dividends
Risk-free interest rate
Expected volatility
Share price at balance sheet date
Change in share price between grant date and 31 December 2022
PSP (without
condition)
04/04/2022
PSP
PSP (without
condition)
PSP
04/04/2022
08/09/2022 08/09/2022
186p
186p
1-3
-
186p
127p
1-3
-
137p
137p
1-3
-
137p
82p
1-3
-
1.41%
1.41%
3.04%
3.04%
39.76%
39.76%
41.42%
41.42%
125p
-33%
125p
-33%
125p
-9%
125p
-9%
The weighted average fair value for PSP awards (without condition) granted in 2022 is 164p and for PSP awards granted in 2022 is 124p.
Total share-based payment charge for the year was $3.7 million (2022: $4.1 million).
Genel Energy Annual Report 2023
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Strategic reportGovernanceFinancial statementsOther information
Capital commitments
22.
Under the terms of its production sharing contracts (‘PSC’s) and joint operating agreements (‘JOA’s), the Company has certain
commitments that are generally defined by activity rather than spend. The Company’s capital programme for the next few years is
explained in the operating review and is in excess of the activity required by its PSCs and JOAs.
Related parties
23.
The directors have identified related parties of the Company under IAS 24 as being: the shareholders; members of the Board; and
members of the executive committee, together with the families and companies, associates, investments and associates controlled by
or affiliated with each of them. The compensation of key management personnel including the directors of the Company is as follows:
Board remuneration
Key management emoluments and short-term benefits
Share-related awards
2023
2022
$m
0.7
4.1
2.7
7.5
$m
0.8
6.0
1.0
7.8
There have been no changes in related parties since last year and no related party transactions that had a material effect on financial
position or performance in the year.
Events occurring after the reporting period
24.
The London-seated international arbitration hearing (factual and expert evidence) which includes Genel’s claim for substantial
compensation from the KRG following the termination by the KRG of the Miran and Bina Bawi PSCs ended on 1 March 2024. The timing
of the result is uncertain but is expected by the end of 2024 following the Parties making closing written submissions in April 2024
and reply written submissions in May 2024.
158 Genel Energy Annual Report 2023
Notes to the consolidated financial statements Subsidiaries and joint arrangements
25.
The Company has four joint arrangements in relation to its producing assets Taq Taq, Tawke, Sarta and pre-production asset
Qara Dagh PSC. The Company holds 44% working interest in Taq Taq PSC and owns 55% of Taq Taq Operating Company Limited.
The Company holds 25% working interest in Tawke PSC which is operated by DNO ASA.
For the period ended 31 December 2023 the principal subsidiaries of the Company were the following:
Entity name
Barrus Petroleum Cote D'Ivoire Sarl 1
Barrus Petroleum Limited 2
Genel Energy Africa Exploration Limited 3
Genel Energy Finance 4 plc 3
Genel Energy Gas Company Limited 4
Genel Energy Holding Company Limited 4
Genel Energy International Limited 5
Genel Energy Miran Bina Bawi Limited 3
Genel Energy Morocco Limited 3
Genel Energy No. 6 Limited 3
Genel Energy Petroleum Services Limited 3
Genel Energy Qara Dagh Limited 3
Genel Energy Sarta Limited 3
Genel Energy Somaliland Limited 3
Genel Energy UK Services Limited 3
Genel Energy Yönetim Hizmetleri A.S¸.6
Taq Taq Drilling Company Limited 7
Taq Taq Operating Company Limited 7
Country of
Incorporation
Ownership %
(ordinary
shares)
Cote d'Ivoire
Isle of Man
UK
UK
Jersey
Jersey
Anguilla
UK
UK
UK
UK
UK
UK
UK
UK
Turkey
BVI
BVI
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
55
55
1
Registered office is 7 Boulevard Latrille Cocody, 25 B.P. 945 Abidjan 25, Cote d’Ivoire
2 Registered office is 6 Hope Street, Castletown, IM9 1AS, Isle of Man
3
Registered office is Fifth Floor, 36 Broadway, Victoria, London, SW1H 0BH, United Kingdom
4 Registered office is 26 New Street, St Helier, JE2 3RA, Jersey
5 Registered office is PO Box 1338, Maico Building, The Valley, Anguilla
6 Registered office is Vadi Istanbul 1 B Block, Ayazaga Mahallesi, Azerbaycan Caddesi, No:3 Floor: 18, 34396, Sariyer, Istanbul, Turkey
7
Registered office is Kingston Chambers, P.O. Box 173, Road Town, Tortola, VG1110, British Virgin Islands
Annual report
26.
Copies of the 2023 annual report will be despatched to shareholders in April 2024 and will also be available from the Company’s
registered office at 26 New Street, St Helier, Jersey, JE2 3RA and at the Company’s website – www.genelenergy.com.
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Strategic reportGovernanceFinancial statementsOther information
Report on payments to
governments for the year 2023
Introduction and basis for preparation
This report sets out details of the payments made to governments by Genel Energy plc and its subsidiary undertakings (“Genel”) for the
year ended 31 December 2023 as required under the Disclosure and Transparency Rules of the UK Financial Conduct Authority (the ‘DTRs’)
and in accordance with our interpretation of the Industry Guidance issued for the UK’s Report on Payments to Governments Regulations
2014, as amended in December 2015 (‘the Regulations’). The DTRs require companies in the UK and operating in the extractives sector
to publically disclose payments made to governments in the countries where they undertake exploration, prospection, development and
extraction of oil and natural gas deposits or other materials.
This report is available to download at www.genelenergy.com/investor-relations/results-reports-presentations.
Governments
All of the payments made in relation to licences in the Kurdistan Region of Iraq (‘KRI’) have been made to the Ministry of Natural Resources
of the Kurdistan Regional Government (‘KRG’).
Production entitlements
Production entitlements are the host government’s share of production during the reporting period from projects operated by Genel.
Production entitlements from projects that are not operated by Genel are not covered by this report. The figures reported have been
produced on an entitlement basis rather than on a liftings basis. Production entitlements are paid in-kind and the monetary value disclosed
is derived from management’s calculation of revenue from the field.
Royalties
Royalties represent royalties paid in-kind to governments during the year for the extraction of oil. The terms of the Royalties are described
within our Production Sharing Contracts and can vary from project to project. Royalties have been calculated on the same barrels of oil
equivalent basis as production entitlements.
Materiality threshold
Total payments below £86,000 made to a government are excluded from this report as permitted under the Regulations.
Payments to governments – 2023
Country/Licence
Production entitlement (bbls)
Royalties in kind (bbls)
Total (bbls)
Value of production entitlements ($million)
Value of royalties ($million)
Capacity building payments ($million) 4
Total ($million)
KRI Total 1
Taq Taq 2
Sarta 3
303,607.97
162,762.40
140,845.57
71,094.70
36,775.60
34,319.10
374,702.67
199,538.00
175,164.67
17.83
4.15
0.29
22.27
10.60
2.39
0.21
13.20
7.23
1.76
0.08
9.07
1 Under the lifting arrangements implemented by the KRG, the KRG takes title to crude at the wellhead and then transports it to Ceyhan in Turkey by pipeline.
The crude is then sold by the KRG into the international market. All proceeds of sale are received by or on behalf of the KRG, out of which the KRG then
makes payment for cost and profit oil in accordance with the PSC to Genel, in exchange for the crude delivered to the KRG. Under these arrangements,
payments are in fact made by or on behalf of the KRG to Genel, rather than by Genel to the KRG. For the purposes of the reporting requirements under
the Regulations however, we are required to characterise the value of the KRG’s entitlement under the PSC (for which they receive payment directly from
the market) as a payment made to the KRG. Therefore, estimated value in $millions is not paid to the KRG, and is calculated to meeting the reporting
requirements under the regulations.
2 The amount reported for Taq Taq is the gross payment made to the KRI by the operating company (TTOPCO), Genel’s share of these payments is equal to
55% (with the exception of capacity building payments).
3 The amount reported for Sarta is the gross payment made to the KRI by the operating company (Genel), Genel’s share of these payments is equal to 50%
(with the exception of capacity building payments).
4 Capacity building payments reported are payments made by Genel directly to the KRI in cash as required by the PSC.
160 Genel Energy Annual Report 2023
Genel Energy Annual Report 2023
161
Strategic reportGovernanceFinancial statementsOther information
Glossary of technical terms
annual general meeting
BDO LLP
Cash Generating Unit
Companies Act 2006, as amended
Genel Energy plc
environmental, social, and governance
Federal Government of Iraq
UK Financial Reporting Council
FTSE International Limited
may refer to Genel Energy plc and/or one of its subsidiaries and/or one or more
employees as the case may be. It is used for convenience only and is in no way indicative
of how the Genel group, or any entity within it, is structured, managed or controlled
greenhouse gases
the Genel Energy group of companies
health, safety, and environment
the performance standards set out by the International Finance Corporation
Iraq-Türkiye Pipeline
international oil company
Companies (Jersey) Law 1991 (as amended)
Kurdistan Regional Government
Kurdistan Region of Iraq
the Listing Rules of the UK Listing Authority
lost time incident
Ministry of Natural Resources
non-governmental organisation
the voting ordinary shares and/or the suspended voting ordinary shares as the
context requires
production sharing contract
performance share plan
receivable settlement agreement
restricted share plan
Sustainability Accounting Standards Board
share option plan
a standard listing under Chapter 14 of the Listing Rules
Task Force on Climate-related Financial Disclosures
total shareholder return
Taq Taq Operating Company Limited
United Nations Sustainable Development Goals
proved reserves
proved plus probable reserves
proved plus probable plus possible reserves
contingent resources
Barrel
barrels of oil per day
kilograms of carbon dioxide equivalent
Kilometres
kilowatt hour
millions of barrels
million barrels of oil equivalent
tonnes of carbon dioxide equivalent
‘AGM’
‘BDO’
‘CGU’
‘Companies Act 2006’
‘Company’
‘ESG’
‘FGI’
‘FRC’
‘FTSE’
‘Genel’
‘GHG’
‘Group’
‘HSE’
‘IFC Performance Standard’
‘ITP’
‘IOC’
‘Jersey Companies Law’
‘KRG’
‘KRI’
‘Listing Rules’
‘LTI’
‘MNR’
‘NGO’
‘Ordinary Shares’
‘PSC’
‘PSP’
‘RSA’
‘RSP’
‘SASB’
‘SOP’
‘Standard Listing’
‘TCFD’
‘TSR’
‘TTOPCO’
‘UN SDGs’
Certain resources and reserves terms
‘1P’
‘2P’
‘3P’
‘2C’
Units of measurement
‘bbl’
‘bopd’
‘kgCO2e
‘km’
‘kWh’
‘MMbbls’
‘MMboe’
‘tCO2e’
162 Genel Energy Annual Report 2023
Shareholder information
ShareGift
If you hold a small number of shares and find it uneconomical to sell them,
you may wish to donate your shares to charity free of charge through
ShareGift. ShareGift collects donations of unwanted shares, sells them
and donates the proceeds to UK charities. Further details are available at
www.sharegift.org or by calling +44 (0) 20 7930 3737.
AGM
This year’s AGM will be held at Linklaters, One Silk Street, London EC2Y 8HQ,
on Thursday, 9 May 2024 at 11.00am.
Details of the business to be considered at the AGM are set out in the
accompanying notice of meeting.
Dividend and dividend history
The Company’s 2022 final dividend was paid on 19 May 2023. No final
dividend is proposed in respect of the year ended 31 December 2023.
Ordinary shares
The Company’s ordinary shares of nominal value 10p each are traded
on the main market for listed securities on the London Stock Exchange
(LON: GENL).
Registrars
Our registrars are Equiniti Registrars.
All enquiries relating to the administration of shareholdings should be
directed to Equiniti Registrars, Aspect House, Spencer Road, Lancing,
West Sussex, BN99 6DA.
Telephone: 0371 384 2893 lines are open Monday – Friday excluding UK
Bank Holidays, 8.30am – 5.30pm (from outside the UK: +44 121 415 7593).
Share price information
The current price of the Company’s shares is available on the Company’s
website at genelenergy.com.
Contacts and Auditors
Registrar
Equiniti (Jersey) Limited
C/O Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Independent auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Registered office
26 New Street
St Helier
Jersey
JE2 3RA
Channel Islands
London office
Fifth Floor
36 Broadway
Victoria
London
SW1H 0BH
Istanbul office
Vadi Istanbul 1 B Block
Ayazag˘a Mahallesi
Azerbaycan Caddesi
No:3 Floor: 18
Sarıyer/Istanbul
34396
Jersey Company Registration
Number: 107897
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Strategic reportGovernanceFinancial statementsOther information
Image credits
Asset images in this annual report were taken by Genel Energy employees.
Image on page 11 of the Tawke PSC, photo credit - DNO ASA
Printed by Park Communications on FSC® certified paper.
Park works to the EMAS standard and its Environmental Management System is certified to ISO 14001.
This publication has been manufactured using 100% offshore wind electricity sourced from UK wind.
100% of the inks used are HP Indigo ElectroInk which complies with RoHS legislation and meets the
chemical requirements of the Nordic Ecolabel (Nordic Swan) for printing companies, 95% of press
chemicals are recycled for further use and, on average 99% of any waste associated with this
production will be recycled and the remaining 1% used to generate energy.
This document is printed on Arena Smooth Extra White paper made of material from well-managed,
FSC®-certified forests and other controlled sources.
Designed and produced by Anna Mackee Design
annamackee.com
164 Genel Energy Annual Report 2023
Registered Office
26 New Street
St Helier
Jersey
JE2 3RA
Channel Islands
London Office
Fifth Floor
36 Broadway
Victoria
London
SW1H 0BH
Erbil Office
Pearl Towers
Empire World
Erbil 44001
Kurdistan Region of Iraq
Istanbul office
Vadi Istanbul 1 B Block
Ayazag˘a Mahallesi
Azerbaycan Caddesi
No:3 Floor: 18
Sarıyer/Istanbul
34396
genelenergy.com
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