Genel Energy co-founder Tony Hayward open to sale
Tony Hayward, former chief executive of BP, is prepared to sell Genel Energy, the lossmaking Kurdistan oil producer he co-founded, should a buyer hunting “high-quality assets” make an approach at the right price.
Mr Hayward, who has stepped back from his role as chief executive to become Genel’s chairman, signalled his readiness to negotiate a deal, telling the Financial Times that he would “always contemplate interesting offers” for the group, which he set up with financier Nat Rothschild and former Goldman Sachs banker Julian Metherell.
“We see ourselves both as a potential consolidator and, given the nature of the oil industry and natural state of affairs, we also see ourselves as potentially being consolidated,” Mr Hayward said.
“We have a unique set of assets, world class assets, a very focused business. So, looked at from the perspective of someone out to acquire high-quality assets, it would be quite attractive.”
Mr Hayward, who is also chairman of FTSE 100 commodities group Glencore, said Genel had “a very strong future either independently or within the scope of a larger enterprise”.
His remarks came as the group, which has been hobbled by political difficulties in Kurdistan, said it had parted company with chairman Rodney Chase and confirmed that Murat Özgül, president of the company’s Turkey and Kurdistan region, had become chief executive.
Mr Hayward denied his move to become chairman was linked to his role as full-time chairman of Glencore.
“This is not about Glencore, this is about Genel,” he said. “This is about my life, what I want to do. I’m 58 years old and I want a slightly less full-on life. I’ve done it for four-and-a-half years. I’ve got a very good CEO to succeed me.”
Just a few weeks before Mr Hayward’s permanent appointment at Glencore in May last year, Ivan Glasenberg, the commodities group’s chief executive and one of its largest investors, said: “I doubt you could have a chairman of a major FTSE 100 company who is also CEO of another company.”
The latest changes at Genel follow the departure in February of Mr Metherell, then chief financial officer, who was replaced by Ben Monaghan, a JPMorgan investment banker with a strong record in dealmaking.
In perfect conditions, businesses would not kick their chief executives up to chairman, as Genel has done with Tony Hayward. But The conditions in which explorer Genel operates are hardly perfect, says Jonathan Guthrie.
Speculation has since swirled around the company, with suggestions that Royal Dutch Shell, which in April announced a £55bn agreed offer for BG Group, has given thought to a deal, possibly in partnership with the Chinese. ExxonMobil, the US giant, has been cited as another potential buyer.
Genel, which has an equity market capitalisation of about £1.3bn, could be worth several billion dollars. But the political risk for an oil major such as Shell, with operations in southern Iraq, would be significant. Any buyer already active in the south would need to weigh the merits of a deal against the risk of antagonising Baghdad.
Moreover, the company has been bedevilled by missed payments for its exports after a disagreement between the Iraqi federal administration and the Kurdistan Regional Government over the distribution of oil revenues.
This led to the freezing of payments by Baghdad to the KRG, which has in turn resulted in the regional government not paying Genel and other oil producers for much of their oil exports.
Genel on Monday disclosed in a trading update that it was owed $378m by the KRG at the end of June, up from $230m at the end of 2014. However, it maintained revenue guidance at $350m to $400m for 2015, assuming $50 a barrel Brent crude. Another UK-listed Kurdistan producer, Gulf Keystone, is also owed about $250m.
Kurdistan is one of the cheapest places in the world to extract crude. But much of its revenue is used to finance peshmerga fighters battling insurgents from the Islamic State of Iraq and the Levant, also known as Isis.
Amid continued tension with Baghdad, the KRG has since June been selling most of its crude exports independently, a development seen as likely to increase its revenues. JPMorgan Cazenove analysts said it remained to be seen whether this meant Kurdistan would begin repaying contractors.
Genel said its production had grown 41 per cent year-on-year to an average 88,800 barrels per day for the first half of 2015. It was pumping more than 100,000 b/d on peak days and was upbeat on payment prospects.
Its shares, which have fallen 34 per cent this year, dropped 3.9 per cent to 457.2p as oil prices tumbled amid expectations of a nuclear deal between Iran and the west that would lead to a lifting of sanctions against Tehran.