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Genel Energy shareholders are a loyal bunch. The Kurdistan-focused oil company has throttled production this year because of a pipeline shutdown, sending earnings way down. Its share price has fallen by just over 20 per cent since March 27 (the pipeline closed two days earlier). Admittedly, that’s better than some other energy companies: Kistos, for example, was down 30 per cent over the same period.
Genel investors are now banking on the company finding cash-generative assets from somewhere that isn’t at the crux of regional disagreement, while local oil sales keep some revenue coming in.
That’s not to say Kurdistan hasn’t been good for Genel in the recent past — its dividend yield was over 10 per cent when the pipeline shut. Indeed, the region has been central to the company since its foundation in 2011 by former BP chief Tony Hayward, with exploration and other expansion plans largely leading to share price falls. The 25 per cent stake in Tawke, operated by DNO, remains its only real asset.
“While Genel is receiving some revenues from local sales ahead of the resumption of exports and receipt of payments from the KRG, the company has made no secret of its desire to use its significant cash resources to diversify the portfolio away from Kurdistan to strengthen and support ongoing cashflows,” said SP Angel analyst David Mirzai this month.
The company’s cash holdings stood at $425mn (£348mn) as of June 30. Net cash was $158mn.
Finance costs will also come down after Genel spent $16mn buying back bonds this month. Major shareholders may also be happy to hand over more cash to facilitate this shift from Tawke: Bilgin Group owner and Genel non-executive Tolga Bilgin has built on his 23 per cent holding by buying another 3mn shares for just under £2.5mn.
Doctor orders more IDH shares
Dr Hend El Sherbini, chief executive of Integrated Diagnostics Holdings, has recently placed some decisive bets on the company’s future success. Shares in the diagnostic services provider, which operates in Africa and the Middle East, are down 29 per cent across the year to date. But El Sherbini is clearly confident things will pick up for the company — given that she purchased over $900,000 worth of stock across two transactions last week.
The first deal saw her pick up 827,000 shares at $0.48 apiece on October 13. Three days later, she bought more than 1mn shares at $0.49 each. The combined sterling value of the transactions is over £750,000. This follows around £60,000 worth of purchases across that El Sherbini made in the previous week.
The fate of Integrated Diagnostics is inevitably tied to that of the Egyptian pound, given that the company makes more than 80 per cent of its revenue in its home market. The currency has fallen by around a fifth against the US dollar across the year, though the vast majority of this devaluation happened in early January, just after the country agreed to move to a flexible currency regime as part of an IMF bailout programme.
Egypt was forced to turn to the lender of last resort following Russia’s invasion of Ukraine, which sent its already-fragile economy into an inflationary spiral. However, at Integrated Diagnostics’ interim results in August, El Sherbini indicated that the company had already absorbed the worst of this shock.
“Despite our cost base continuing to reflect the impacts of rising inflation and a weakening EGP, in the coming months we see them progressively normalising heading into 2024,” she said.
