GENEL ENERGY ANNUAL REPORT 2022
Annual Report
2022
A socially responsible contributor
to the global energy mix
Strategic report
1 Introduction from the Chair
2 Genel at a glance
4 Key performance indicators
6 Chief Executive Officer’s statement
8 Our business model and strategy
10 Financial review
14 Operating review
16 Sustainability
30 Risk management
34 Viability statement
35 Stakeholder engagement
Governance
37 Chair’s statement on
corporate governance
38 Governance statements
44 HSSE Committee
46 International Relations Committee
48 Reserves Committee
50 Division of responsibilities
51 Composition, succession and evaluation
55 Board of Directors
58 Executive Committee
60 Nomination Committee report
62 Audit, risk and internal control
65 Audit Committee report
69 Directors’ remuneration report
87 Other statutory and
regulatory information
91 Statement of Directors’ responsibilities
Financial statements
92 Independent auditor’s report
98 Financial statements and notes
Other information
126 Report on payments to governments
127 Glossary of technical terms
128 Shareholder information
Contents
Who we are
Genel is a socially responsible oil
producer with an asset portfolio that
positions us well for a future of fewer and
better natural resources projects.
Our strategy is focused on generating cash
that supports our material, sustainable,
and progressive dividend programme, as
we strive to deliver on our ambition of
being a world-class creator of shareholder
value, fulfilling our goal of being a socially
responsible contributor to the global
energy mix.
Highlights
Net production
30,150 bopd
Dividends paid
$50 million
Cash at end 2022
$495 million
Free cash flow
$235 million
2P oil reserves
92 MMbbls
Producing emissions
17.6 kgCO
2
e/bbl
I am pleased to welcome you to Genel’s eleventh annual report.
It was a truly exceptional year for cash generation, one that has transformed our
balance sheet and supports the next stage of the Company’s evolution.
We have repositioned our strategy, focused on shareholder returns primarily
through our established material, sustainable, and progressive dividend
programme. This has seen us return $177 million to shareholders since inception of
the programme in 2019, and we are focused on increasing these returns through
using our financial strength to add the right assets, with the right return profiles.
As we continue to focus on delivery for shareholders, we are keenly aware of
our responsibility to the local community. In 2022 we celebrated 20 years of
operations in the Kurdistan Region of Iraq, which we marked through new social
initiatives, notably the Genel20 Scholars programme.
You can read more about this and our ongoing efforts to support local
communities, while delivering the low-cost and low-carbon barrels that will be the
ones required during the energy transition, in the sustainability section of this
report. Our fully GRI/SASB compliant Sustainability Report will then once again be
issued at the time of our AGM in May, further detailing our efforts to be a socially
responsible contributor to the global energy mix.
David McManus
Chair
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 1
Genel at a glance
What we do
Genel is a socially responsible energy company, with robust production
that funds a material and sustainable dividend programme.
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.
Our values are
fundamental to our
behaviour, decision
making, and the delivery
both of our purpose and
strategic objectives.
2 Genel Energy Annual Report 2022
United
Kingdom
Morocco
Turkey
Somaliland
Kurdistan Region
of Iraq
Strategic report Governance Financial statements Other information
Where we do it
Key
Corporate offices
Licences
Genel Energy Annual Report 2022 3
Key performance indicators
Net production Free cash flow Net 2P reserves Dividends announced Lost time incidents Spills – loss of primary containment
30,150 bopd $235 million 92 MMbbls $50 million 0 frequency 0
31,710
31,980
36,250
33,700
2022
2021
2020
2019
2018
30,150
86
-4
99
164
2022
2021
2020
2019
2018
235
104
117
124
155
2022
2021
2020
2019
2018
92
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.
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.
Definition
Loss of primary containment records any
tier 1 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
Genel’s production was in line with
expectations in 2022, driven by the
ongoing robust performance of the
Tawke PSC, where increased activity kept
production broadly flat on the prior year.
Taq Taq’s performance was at the top end
of expectations, while the performance
of Sarta was disappointing, following
the failure of either appraisal well to add
to production.
Performance
With production slightly lower in 2022
than the previous year, free cash flow
(pre dividend payment) was boosted by
an increase in the oil price, with Brent
averaging $101/bbl in 2022, $30/bbl more
than the $71/bbl in 2021. Cash receipts
were also bolstered by the receipt of
$124 million relating to the Tawke PSC
override payments, and $94 million relating
to unpaid oil sales from November 2019 to
February 2020 and the suspended override
from March to December 2020.
Performance
Production of 11 MMbbls formed the
material part of the fall in 2P reserves,
with a gross upward technical revision
of 9 MMbbls at the Tawke licence almost
offsetting the downward revision in
reserves at Sarta following assessment of
the results of the 2022 appraisal wells and
pilot production.
Performance
Genel has a committed dividend
programme that has paid $177 million
of dividends (over 50p per share) since
inception in 2019. Given the strong cash
generation in 2022, Genel retained its total
dividend distribution of $18 cents per share
($50 million). Genel is committed to raising
the dividend when the business and capital
structure supports it, as was the case in
both 2021 and 2022.
Performance
Genel strives for safe operations with zero
lost time injuries (‘LTI’), and this goal was
achieved in 2022. There have now been
over three million hours worked since the
last incident.
Performance
There were zero incidents of tier 1 losses of
primary containment in 2022, and it is now
five years since our last incident.
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.
Relevance to strategy
Production from operating activities forms
Genel’s revenue generation. Free cash flow
illustrates the success of monetisation
of these activities, reflecting both
money received and the minimisation of
operating costs.
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
Genel’s strategy aims to pay a material,
sustainable, and ultimately progressive
dividend. Dividend distributions are
therefore a signifier of the success of
this 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 for 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 contractors and
subcontractors so as to minimise risk and
mitigate potential impact.
Measuring our progress
4 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Net production Free cash flow Net 2P reserves Dividends announced Lost time incidents Spills – loss of primary containment
30,150 bopd $235 million 92 MMbbls $50 million 0 frequency 0
0
44
41
41
2022
2021
2020
2019
2018
50
0.29
0
0
0
0
2022
2021
2020
2019
2018
2018
0
2022
0
2021
2019
2020
0
0
0
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.
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.
Definition
Loss of primary containment records any
tier 1 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
Genel’s production was in line with
expectations in 2022, driven by the
ongoing robust performance of the
Tawke PSC, where increased activity kept
production broadly flat on the prior year.
Taq Taq’s performance was at the top end
of expectations, while the performance
of Sarta was disappointing, following
the failure of either appraisal well to add
to production.
Performance
With production slightly lower in 2022
than the previous year, free cash flow
(pre dividend payment) was boosted by
an increase in the oil price, with Brent
averaging $101/bbl in 2022, $30/bbl more
than the $71/bbl in 2021. Cash receipts
were also bolstered by the receipt of
$124 million relating to the Tawke PSC
override payments, and $94 million relating
to unpaid oil sales from November 2019 to
February 2020 and the suspended override
from March to December 2020.
Performance
Production of 11 MMbbls formed the
material part of the fall in 2P reserves,
with a gross upward technical revision
of 9 MMbbls at the Tawke licence almost
offsetting the downward revision in
reserves at Sarta following assessment of
the results of the 2022 appraisal wells and
pilot production.
Performance
Genel has a committed dividend
programme that has paid $177 million
of dividends (over 50p per share) since
inception in 2019. Given the strong cash
generation in 2022, Genel retained its total
dividend distribution of $18 cents per share
($50 million). Genel is committed to raising
the dividend when the business and capital
structure supports it, as was the case in
both 2021 and 2022.
Performance
Genel strives for safe operations with zero
lost time injuries (‘LTI’), and this goal was
achieved in 2022. There have now been
over three million hours worked since the
last incident.
Performance
There were zero incidents of tier 1 losses of
primary containment in 2022, and it is now
five years since our last incident.
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.
Relevance to strategy
Production from operating activities forms
Genel’s revenue generation. Free cash flow
illustrates the success of monetisation
of these activities, reflecting both
money received and the minimisation of
operating costs.
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
Genel’s strategy aims to pay a material,
sustainable, and ultimately progressive
dividend. Dividend distributions are
therefore a signifier of the success of
this 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 for 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 contractors and
subcontractors so as to minimise risk and
mitigate potential impact.
Genel Energy Annual Report 2022 5
Chief Executive Officer’s statement
Clear strategic
priorities
In the past six months we have simplified
and refined our strategic priorities and put
the funding of our established dividend
programme at the heart of our business
model. This is the lens through which we
assess capital allocation decisions.
Building and managing a portfolio to support the dividend
over the long-term is our clear focus. That work requires both
judicious management of our existing opportunities already
within the business, together with the objective of adding new
assets that expand and diversify our asset base and, importantly,
improve both the cash generation of the business and the
resulting investor returns.
We have a very strong balance sheet with $495 million of cash,
net cash of $228 million, at the end of 2022 and no debt maturity
until 2025. We have achieved this position through a combination
of factors. Disciplined capital allocation combined with excellent
Tawke production results, recovery of old debts and, of course,
the high oil price in 2022 have all resulted in exceptional cash
generation for Genel, despite only receiving 10 payments from
the Kurdistan Regional Government.
We had hoped that the Sarta development would have been a
major contributor to our cash generation, but appraisal well
results in 2022 were disappointing. Further investment will
only take place now if we can be confident of positive returns
and profitability, consistent with our focus on cost control and
carefully considered expenditure.
A clear focus
The business is now determined to add new revenue streams that
build a stronger business and replace the cash generation in 2022
that came from historic debts owed by the KRG.
We have an established dividend programme that, following
approval of the proposed final dividend for 2022, will have
returned over $200 million to shareholders since 2019.
Delivering on this dividend programme while increasing the value
of the business is our primary objective to deliver long-term
shareholder returns, and the business is progressing with a real
clarity of purpose.
A strong balance sheet, including liquidity of almost half a billion
dollars, provides us with a tremendous opportunity. We are
determined to use it in order to add shareholder value through
strong operational delivery and properly considered investment.
We also continue to work diligently towards arbitration regarding
our claim for substantial compensation from the KRG following
the termination of the Miran and Bina Bawi PSCs, with the trial
scheduled for February 2024.
Adding to our production business
Growing our portfolio through the addition of the right assets
is key. We have a highly competent and dedicated team in
place assessing a great many opportunities in a disciplined and
systematic manner. We only progress opportunities that deliver
the right outcomes when subjected to multiple scenario analysis,
that ultimately provide support for our dividend programme and
at the same time maintain business resilience and balance sheet
strength. Genel’s significant cash position does not distract us
from our focus on cost discipline and risk mitigation.
Genel has a robust production business and a free cash flow
projection that covers dividend payments in the medium-term.
Doing deals takes time and doing the right deal takes even longer,
but we are confident in our ability to take advantage of the
opportunities that are out there to deliver for our shareholders.
6 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
“We have a firm commitment
to invest our cash to add
shareholder value, and both the
means and determination to do
it”
Organic reserves replacement opportunities
As we continue to enhance the business, we are also
progressing exciting opportunities within our existing portfolio.
The Somaliland opportunity is frontier exploration, with all of the
challenges that entails, but rare in terms of scale and potential.
In a success case, there is a clear route to market through
existing port facilities and this opens up the tantalising prospect
of creating shareholder value in a region where our activities can
also have a hugely positive impact on the surrounding society.
We are attempting to replicate the Somaliland farm-out success
in Morocco, seeking a partner to drill a well in the Lagzira block,
with high-graded material prospects. Both of these exploration
opportunities support our aim of adding low-cost and large-scale
assets to our portfolio to provide resilient, diversified, and value
accretive cash generation that funds our dividend programme
and offer catalysts to deliver shareholder value.
Making a positive difference
As all of these opportunities unfold, Genel sees the need to have
a positive impact in the areas where it is present as being an
essential part of business success. In 2022 we marked 20 years
of operations in KRI by launching a number of social initiatives,
the centre of which was our Genel20 Scholars programme.
This was an appropriate way to mark our 20 years of operations
in KRI, a period which has seen an entire industry develop,
thousands of jobs created, and more than $20 billion generated
for the KRG. Our social activities in Somaliland will now begin
to ramp up as our operational activities increase there and, as
an Anglo-Turkish company, we are of course providing support
following the horrendous impact of the recent earthquakes.
Our work on emissions continues and we are very pleased that
our emissions intensity remains below the industry average
at 17.6kg CO
2
/bbl. We have been very proud to work with our
partner DNO on Kurdistan’s first gas reinjection project, which
has captured 1.2 million tonnes of CO
2
e since its inception in
2020. Not only has this facility greatly reduced flaring at Tawke,
but it has also led to a marked improvement in field performance.
On a smaller scale, our pilot solar powered well site at the Sarta-1
well pad has saved almost nine tonnes of CO
2
emissions there
and established a new standard design for Genel well pads.
As we seek to diversify our business, we will retain our clear
commitment to being a socially responsible contributor to the
global energy mix.
Outlook
The production base that the Tawke licence provides is set to
deliver free cash flow that supports the progression of business
catalysts and payment of our material dividend. We have a firm
commitment to invest our cash to add shareholder value, and
both the means and determination to do it. Our team is dedicated
to delivering strong future cash flow and shareholder returns.
Paul Weir
Chief Executive Officer
Genel Energy Annual Report 2022 7
Our business model and strategy
Our business model
and strategy
Our strategy
Values that define us
RESILIENT
CASH-GENERATIVE
PRODUCTION
STRONG
BALANCE
SHEET
INVESTMENT
IN NEW
CASH FLOWS
MATERIAL, SUSTAINABLE
& PROGRESSIVE DIVIDEND
UNDERPINNED BY A RESILIENT BUSINESS MODEL
Financial discipline | Rigorous risk management | Focus on ESG and sustainability
8 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
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, as we aim to increase our low-cost and high-margin production
through disciplined investment, generating material cash that supports a material and progressive dividend
Host governments
We aim to have a positive economic impact by growing the production of the hydrocarbons. Since starting production,
$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 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 2022 9
Financial review
Capital allocation centred
around the dividend
Strategy focused on our dividend
In 2022, we refocused our business towards delivering
shareholder returns primarily through our established dividend
programme. The dividend programme has three key pillars:
— Material: it is competitive with the ordinary dividend of peers
— Sustainable: it is repeatable and reliable
— Progressive: it increases as the repeatable cash generation of
the business grows
That dividend programme has paid $177 million to shareholders
since inception in 2019.
Funding the dividend programme is the frame that we apply to
our capital allocation decisions and the type of assets that we
want in our portfolio, with a focus on acquiring or developing
low-cost, cash generative assets to build a business with
consistent, long-dated, diversified, and resilient cash generation.
Total dividends paid in 2022 amounted to $50 million (2021:
$44 million), representing 18¢ per share (2021: 16¢ per share).
The Board has now approved the retention of the final dividend
at 12¢ per share, in addition to the interim dividend of 6¢ per
share that was paid in October 2022.
The payment timetable for the final dividend is below:
— Ex-dividend date: 20 April 2023
— Record date: 21 April 2023
— Annual General Meeting: 11 May 2023
— Payment date: 19 May 2023
(all figures $ million)
Brent average oil price
FY 2022
$101/bbl
FY 2021
$71/bbl
Revenue 432.7 334.9
Production costs (51.1) (45.9)
Cost recovered production
asset capex
(85.9) (49.9)
Production business net income
after cost recovered capex
295.7 239.1
G&A (excl. non-cash) (19.2) (12.4)
Net cash interest
1
(19.2) (26.1)
Working capital (9.7) (19.7)
Payments for deferred receivables 94.4 35.1
Changes to payment days
2
(44.4) (65.0)
Free cash flow before
investment in growth
297.6 151.0
Pre-production capex (57.2) (88.6)
Working capital and other (5.6) 23.5
Free cash flow 234.8 85.9
Dividend paid (47.9) (44.4)
Other - (1.3)
Bond repayment (6.0) (81.0)
Net change in cash 180.9 (40.8)
Cash 494.6 313.7
Amounts owed for
deferred receivables
16.5 114.6
1
Net cash interest is bond interest payable less bank interest income (see note 5)
2
At year-end the KRG owed five months of sales, adversely impacting free cash flow for
the year by $44.4 million (2021: $65.0 million)
10 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
2022 financial priorities
The table below summarises our progress against the 2022 financial priorities of the Company as set out at our 2021 results.
2022 financial priorities Progress
— Maintain our financial strength and put that
financial strength to work through investing in
growth opportunities
— Material cash generation
— Material recovery of deferred receivables
— Net cash increased
— Sarta appraisal delivered
— Maximise NPV by prioritising highest value investment
in assets with ongoing or near-term cash and
value generation
— Focus of capital allocation on cash generative investment in the
Tawke PSC
— Deliver 2022 work programme on time and on budget — Work programme activity delivered, capital expenditure
guidance maintained
— Continue to focus on growing our income streams and
cash generation, bringing greater resilience and diversity
to the business and supporting our sustainable and
progressive dividend programme
— Allocation of capital to Sarta appraisal programmes and progression
of Somaliland
— Morocco farm-out process underway
— Continue to explore value-accretive additions
Genel Energy Annual Report 2022 11
Financial review
Outlook and financial priorities for 2023
We carry significant liquidity and are net cash positive with
our outlook cash generation expected to cover our established
dividend in the medium-term.
The focus of the business is now on investing capital to add
income streams and drive the long-term cash generation profile
of the business, building a stronger Company and providing
shareholders with a clear line of sight for a long-term and
ultimately progressive dividend. We continue to see a long-term
oil price that is supportive to our business, and coupled with
our focus on the right barrels in the right locations, means we
are committed to our business model and remaining resilient to
volatility and the challenges faced by the sector.
For 2023, our financial priorities are the following:
— Maintain business resilience and balance sheet strength
— Put our significant cash balance to work, earning appropriate
returns to deliver value to shareholders primarily through our
dividend programme and diversify our cash generation
— Deliver the 2023 work programme on time and on budget,
and continue simplification of the business with a focus
on optimisation and cost control and investment in
business improvement
Financial results for the year
Income statement
(all figures $ million)
Brent average oil price
FY 2022
$101/bbl
FY 2021
$71/bbl
Production (bopd, working interest) 30,150 31,710
Profit oil 149.2 120.6
Cost oil 141.1 100.4
Override royalty 142.4 113.9
Revenue 432.7 334.9
Production costs (51.1) (45.9)
G&A (excl. depreciation and amortisation) (20.0) (13.9)
EBITDAX 361.6 275.1
Depreciation and amortisation (149.2) (172.8)
Exploration expense (1.0) -
Net impairment / write-off of oil and
gas assets
(201.3) (403.2)
Net reversal of impairment of receivables 8.2 24.1
Net finance expense (25.4) (31.0)
Income tax expense (0.2) (0.2)
Loss (7.3) (308.0)
With our predictable production over 30,000 bopd (2021: 31,710
bopd) the 40% increase in oil price resulted in a significant
increase in revenue to $433 million from $335 million last year.
Production costs of $51 million increased from the prior year
(2021: $46 million), with cost per barrel $4.6/bbl in 2022 (2021:
$4.0/bbl), principally caused by higher operating costs per barrel
at Sarta.
Corporate cash costs were $18 million (2021: $12 million), with an
additional $5 million incurred on legal spend.
The increase in revenue resulted in a similar increase to
EBITDAX, which was $362 million (2021: $275 million).
EBITDAX is presented in order to illustrate the cash profitability
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.
Depreciation of $110 million (2021: $115 million) and Tawke
intangibles amortisation of $39 million (2021: $58 million)
decreased due to lower production and the completion of
amortisation of the Tawke override intangible asset in July 2022.
The Company has reported a write-off expense of $78 million
relating to Qara Dagh, and an impairment expense of $126 million
relating to Sarta. A net impairment reversal of $8 million has
been recognised relating to receivables. Further explanation is
provided in note 1 to the financial statements.
Interest income of $7 million (2021: $0.2 million) has significantly
increased as a result of increase in interest rates, in turn
reducing our cost of debt, which is helpful as we carefully view
acquisition opportunities. Bond interest expense of $26 million
(2021: $26 million) was in line with previous year. Other finance
expense of $6 million (2021: $5 million) related to non-cash
discount unwinding on provisions.
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 (2022: $0.2 million, 2021: $0.2 million).
Capital expenditure
Key to our business model remains financial discipline, with
investment focused on cash generation and in turn free cash
flow and the support of our dividend. Capital expenditure was
reduced to $143 million (2021: $164 million), with spend on
production assets of $133 million, and pre-production assets of
$10 million.
(all figures $ million) FY 2022 FY 2021
Cost recovered production capex 85.9 49.9
Pre-production capex – oil 47. 5 55.4
Pre-production capex – gas - 5.0
Other exploration and
appraisal capex
9.7 53.4
Capital expenditure 143.1 163.7
12
Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Cash flow, cash, net cash and debt
Gross proceeds received totalled $473 million (2021:
$281 million), of which $124 million (2021: $73 million) was
received for the override royalty and $94 million for receivable
recovery (2021: $35 million).
This was despite the receipt of 10 payments from the KRG
in 2022, instead of the expected 12. Genel continues to work
with other IOCs in the KRI and the KRG to deliver timely
payments, which in turn enable ongoing investment in
Kurdistan. Expenditure in the KRI will be appropriate to the
payment environment.
(all figures $ million)
Brent average oil price
FY 2022
$101/bbl
FY 2021
$71/bbl
EBITDAX 361.6 275.1
Working capital 50.8 (47.0)
Operating cash flow 412.4 228.1
Producing asset cost
recovered capex
(77.8) (46.9)
Development capex (50.4) (41.6)
Exploration and appraisal capex (20.0) (24.1)
Interest and other (29.4) (29.6)
Free cash flow 234.8 85.9
Free cash flow is presented in order to illustrate the free cash
generated for equity. Free cash flow was $235 million (2021:
$86 million) with an overall increase mainly as a result of
higher Brent.
(all figures $ million) FY 2022 FY 2021
Free cash flow 234.8 85.9
Dividend paid (47.9) (44.4)
Other - (1.3)
Bond repayment (6.0) (81.0)
Net change in cash 180.9 (40.8)
Opening cash 313.7 354.5
Closing cash 494.6 313.7
Debt reported under IFRS (266.6) (269.8)
Net cash 228.0 43.9
The bonds maturing in 2025 have two financial covenant
maintenance tests:
Financial covenant Test YE 2022
Equity ratio
(Total equity/Total assets)
> 40% 56%
Minimum liquidity > $30m $495m
Net assets
Net assets at 31 December 2022 were $528 million (31 December
2021: $581 million) and consist primarily of oil and gas assets of
$327 million (31 December 2021: $539 million), trade receivables
of $117 million (31 December 2021: $158 million) and net cash of
$228 million (31 December 2021: $44 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 or on time deposits 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 period ended 31 December 2022 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 2022 13
Operating review
Robust production and
attractive exploration opportunities
Reserves and resources development
Genel’s proven (1P) and proven plus probable (2P) net
working interest reserves totalled 69 MMbbls (31 December
2021: 63 MMbbls) and 92 MMbbls (31 December 2021: 104 MMbbls)
respectively at the end of 2022.
Ongoing positive performance at the Tawke PSC has boosted the 1P
number, and helped to offset the reduction in 2P reserves at Sarta.
Production
Production averaged 30,150 bopd in 2022, driven by the ongoing
positive performance of the Tawke licence.
Producing assets
Tawke PSC (25% working interest)
Gross production at the Tawke licence averaged 107,090 bopd in
2022, of which the Peshkabir field contributed 62,040 bopd, and
the Tawke field 45,050 bopd.
By the end of 2022 the Tawke field had delivered three consecutive
quarters of production growth, the first quarterly increases since
2015, as new wells were drilled, workovers conducted on existing
ones and gas injection stepped up to counter natural field decline.
In 2022, the field partners also completed the $25 million expansion
of the Peshkabir-to-Tawke gas project, Kurdistan’s only gas capture
and enhanced recovery injection project. Since 2020, the project
has captured 1.2 million tonnes of CO
2
e through avoided flaring.
Taq Taq (44% working interest, joint operator)
Gross production at Taq Taq averaged 4,490 bopd in 2022.
Activity in 2023 is expected to include one sidetrack well
targeting the Upper Shiranish formation.
Remaining reserves (MMbbls) Resources (MMboe)
Contingent Prospective
1P 2P 1C 2C Best
Gross Net Gross Net Gross Net Gross Net Gross Net
31 December 2021 238 63 391 104 163 49 400 122 5,443 3,274
Production (42) (11) (42) (11) - - - - - -
Acquisitions and disposals - - - - (13) (5) (55) (22) (585) (234)
Extensions and discoveries - - - - - - - - - -
New developments - - - - - - - - - -
Revision of previous estimates 71 17 0 (1) (113) (33) (216) (63) (136) (34)
31 December 2022 267 69 349 92 37 11 129 36 4,722 3,006
Mike Adams
Technical Director
14
Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Sarta (30% working interest, operator)
Gross production averaged 4,710 bopd in 2022. Following the
disappointing appraisal results and pilot production, Genel’s focus
is on making ongoing production from Sarta profitable, with any
further capital investment contingent on both licence profitability
and the extent to which there can be confidence that such
investment can add cash generative production.
Pre-production assets
Somaliland
Preparation continues for the drilling of the Toosan-1 well on
the highly prospective SL10B13 block (51% working interest
and operator).
The Toosan prospect contains stacked Mesozoic reservoir
objectives, with multiple individual prospective resource
estimates each ranging from 100 to 200 MMbbls.
Environmental and social impact assessments are continuing,
and community engagement efforts are ramping up.
Tendering for the rig and well services is ongoing.
Genel continues to target a spud date in the next 12-16 months,
acknowledging the challenges of operating in such a frontier
area with limited existing infrastructure.
In Q3 2022, samples from a water well drilled by the Ministry of
Water Resources Development near a village on the Odewayne
licence (50% working interest and operator) indicated trace
hydrocarbons. Traces of oil have historically been found in
surface seepages across Somaliland, and Genel is set to obtain
a more meaningful sample in 2023, helping to define any future
work programme on the licence.
Morocco (Lagzira block - 75% working interest, operator)
The Petroleum Agreement and Association Contract was signed
with ONHYM in February 2023 for a full eight-year exploration
term (in three exploration periods), with attractive fiscal terms.
The Lagzira block (formerly Sidi Moussa) is a large offshore
licence, in water depths of 200-1,200 metres, with a proven
petroleum system following Genel’s 2014 SM-1 well which
recovered oil from Upper and Middle Jurassic reservoirs.
3D seismic acquired in 2018 resulted in a significant uplift and
improvement in subsurface imaging and prospects have been
high-graded, and the new data has highlighted new plays and
provided an enhanced understanding of the SM-1 well result.
In total, 18 prospects and leads have been identified, with over
2.5 Bboe mean recoverable resource potential with individual
prospects estimated at 100-700 MMbbls each.
Genel has launched a process to find a partner to take a material
equity position and jointly pursue the exploration programme in
the block, with the opportunity to drill and test one of the high-
graded prospects.
Genel Energy Annual Report 2022 15
Sustainability
A responsible operator during the
energy transition
To commemorate our 20-year anniversary in the KRI, I was
delighted to announce the launch of our Genel20 Scholars
initiative in 2022, which will provide a full four years of university
education for 20 students from disadvantaged backgrounds
across the Kurdistan Region of Iraq. Engagement with our host
communities and delivering social investments has been a
central pillar of Genel’s sustainability plans, and after 20 years of
investment into the KRI, I am proud of the impact we have made
in the region. We have also increased our social investments in
Somaliland during the past year, to support host communities
that are continuing to deal with famine and drought.
In a year which saw continued attention on climate change
risks, we remain focussed on the role Genel can play as a
responsible operator during the energy transition. We continue
to manage our emissions by implementation of our GHG
Emissions Management Standard, and an encouraging step was
made in 2022 to reduce our own operational emissions with
the installation of a solar power unit at the Sarta-1D wellsite, a
technological development that we plan to replicate at other well
sites in future. This unit was made operational in July 2022 and
has already realised a saving of almost 9 tonnes of CO
2
.
Our environmental efforts have been acknowledged with an
improved CDP Climate score from C in 2021 to B in 2022, which
reflects the dedicated work during the preceding years. However,
we remain conscious of the broader suite of sustainability
challenges beyond climate-related risks. This year saw a roll out
of Genel’s Biodiversity Management Standard, successful waste
recycling of drill cuttings from our Qara Dagh operations, and
an expansion of local capacity building in Somaliland. Our focus
on Health and Safety is unwavering and I am pleased to report
that there were no lost time incidents or tier 1 losses of primary
containment during the year. A new HSE Leadership programme
began within Genel in 2022, and I was pleased to participate
in this programme with my senior management colleagues
throughout the year. Our training included visits to various Genel
facilities and visits to our operational field sites at Sarta.
Our focus on sustainability flows from our corporate values,
which drive not only the way we conduct our business, but also
the way we treat our stakeholders. These values are cemented
across all aspects of the organisation and provide the basis
for our Code of Conduct. These values are also reflected in
our membership of Transparency International UK and Trace.
In 2022 Genel was pleased to be part of the Early Adopter
Programme for the communication of progress to the UN Global
Compact’s 10 Principles on human rights, labour standards,
environment and anti-corruption. Genel’s robust governance
structure and company culture help provide a sense of pride for
our employees, to be part of a company that is known for acting
in the right way in all that we do, and we will not compromise our
high ethical standards.
As we now look beyond our 20-year milestone in the KRI
towards new horizons, our ongoing commitment to supporting
local communities as a responsible operator remains a bedrock
for our operations. Moreover, this foundation for managing
sustainability risks will be applied with equal rigour to our
ongoing and future activities in Somaliland and elsewhere.
The following pages provide a summary of the progress we have
made in 2022 and will be expanded in our annual Sustainability
Report, which will once again be published on the day of our
AGM in May. I am very pleased with the progress Genel is making
to address these complex sustainability challenges, and I look
forward to sharing more updates throughout the year.
Paul Weir
Chief Executive Officer
16 Genel Energy Annual Report 2022
Genel’s
sustainability
strategy
Our sustainability vision
Genel aims to be a leading creator of shareholder value as a
socially responsible producer of oil and gas, contributing to the
global energy mix.
We aim to fulfil this vision by structuring our sustainability
strategy in the following way:
1. Energy transition
Genel is acutely aware of the global energy transition required
in the decades to come and we are pleased to be part of that
transition. Being a part of this transition means addressing
our own operational energy use to reduce emissions, but also
applying gas management strategies that minimise flaring where
feasible to do so.
2. Being a responsible business
Genel is also aware of the broad range of sustainability
challenges within our industry, beyond those considered under
climate change risks. We intend to navigate the energy transition
as a responsible organisation and as such, we have a role to play
with respect to:
- The health, safety, and wellbeing of our workforce
- Our people
- Our host communities
- The natural environment in which we operate
- Our business ethics
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 17
2022 highlights
- Zero LTIs in 2022 across all Genel operations, with over
3 million hours worked since the last incident
- Zero tier 1 Process Safety Events (loss of primary
containment) reported across all operations
- HSE leadership programme initiated, with a focus on
tours of field operational facilities
- Contractor HSE engagement enhanced with a theme of
‘One Team – Being Safe Together’
- HSE training programme enhanced for all roles across
the Company
- Driving safety maintained - 1.5 million km driven with no
serious motor vehicle incidents
- Capacity building in Somaliland and local development
in KRI
- Waste management: focus on recycling of drill cuttings
and general waste
- Life Saving Rules: monthly campaign developed and
rolled out to all staff
During 2022 we continued to operate Sarta in the KRI and
increased our activities in Somaliland, in preparation for the
drilling of the Toosan-1 well. Sarta oil production, trucking,
drilling and well-testing operations were delivered safely without
any lost time injuries or tier 1 process safety events (loss of
primary containment) at any of our operational sites. We have
now achieved over three million work hours since our last LTI,
which occurred in 2021.
Safety improvement plan
Earlier in the year we observed leading indicators that suggested
areas for improvement. We analysed the underlying latent
causes for these indicators and developed a safety improvement
plan which was implemented with active participation by both
senior management and field teams. Key themes identified were
leadership, competency, contractors, compliance and learning,
with each area championed by a member of the Executive
Committee alongside other senior managers. We have taken
our own people and our contractors on a safety improvement
journey that is clearly delivering results. Some of the highlights
of this journey are elaborated below.
Leadership
The theme was visible safety leadership and accountability at
all levels in the organisation. Over 90 staff attended a two-day
HSE Leadership training course which comprised a day in the
classroom and a field site visit the following day to practice the
skills of identifying hazards, holding a coaching conversation
on risk, and seeking personal commitment to improve. We also
provided a pocket booklet as an aide memoir to plan and conduct
future site tours. We have stepped up in this area and over 60
site tours were conducted in 2022 as we continue to build our
safety culture of care and compliance.
Competency
This theme was to train skilled and competent staff for safety
critical roles. We have enhanced our training program to cover
training requirements for all roles across the organisation into the
following four categories:
- Mandatory onboarding: HSE induction, lifesaving rules,
observations and interventions, and emergency response for
key positions.
- Management system: risk assessment, control of work, and
incident investigation.
- Risk-based: lifting and rigging, confined space entry, and
H2S alarms.
- Emergency preparedness: Firefighting, spill response, and
crisis management.
We achieved 90% progress on training plans in 2022 with 642
training sessions for 3,113 attendees. A competency development
program was also initiated for frontline operational roles.
Contractor
The theme in this case was ‘one team with shared goals and
commitment, being safe together’. We held a contractor HSE
forum that was attended by senior management of our key high-
risk partner contractors. We shared learnings from incidents and
details of our improvement journey. Four categories of risk were
agreed as areas of focus, namely: process safety, driving, line of
fire and electrical. We agreed that Life Saving Rules will be our key
tool for seeking ‘improvements and developments’ and supporting
initiatives. Through 2023 we will report and discuss ‘leading
indicators’ with contractors such as assurance inspections,
training events, good behaviours, and observations cards.
Compliance
This theme focused on risk management, internal controls and
assurance. We developed an assurance standard that defined
our Level 1, 2 and 3 audit schedules. HSE audit trainings were
conducted in 2022 based on ISO standards. A documented,
risk-based assurance process, including scheduled external
and internal audits, inspections and site visits was established
which will be implemented in 2023 to evaluate compliance
with the HSE Management System and identify areas for
continual improvement.
Learning
This theme centered on open reporting, quality investigation and
closing actions in a timely manner. We developed and delivered
incident investigation trainings for over 60 personnel including
senior management. Genel’s existing investigation procedure
was also revised with a focus on line management ownership and
industry best practices. A software database (Synergi-Life) which
centralised all incident reports was implemented in 2022, which
has improved identifying incident trends and action tracking.
Sustainability
Health and safety
18 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Guided by Sustainable
Development Goals
The Sustainable Development Goals are a collection of 17 global goals established by the UN which are intended to
provide a ‘blueprint to achieve a better and more sustainable future for all’. Genel values the guidance provided by
the UN SDGs and we see our commitment to these as a means of making a tangible difference to the lives of people in
communities in which we operate. Further distilling these goals to those considered most relevant to our business and to
our host communities has enabled us to concentrate our efforts on delivering in a targeted and impactful way.
These target goals are reviewed periodically, and the selection will be contingent on our operating environment each
year. Based on our current operations the goals considered of most relevance to guide our activities are:
Capacity building
As our activities in Somaliland increased, establishing our health
and safety standards became a priority as we look towards
our drilling campaign in 2023. This included a gap assessment
for the local doctors and delivery of Prehospital Trauma Life
Support (‘PHTLS’) training to 12 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 focuses on the treatment of a multi-system
trauma patient as a unique entity with specific needs. It promotes
critical thinking as the foundation for providing quality care.
Medical fitness and COVID-19
Genel has medical fitness protocols in place for staff in field
operations as well as for international travellers. During 2022,
we adopted a mandatory COVID-19 vaccination policy for these
workgroups based on expert medical advice and supported
operational staff to achieve 96% fully vaccinated status early in
the year. This ensured the safety of our workforce and allowed
business operations to continue seamlessly while reducing the
hardships related to previous protocols of PPE, segregation, and
social distancing.
Emergency preparedness and business continuity
Genel has a robust emergency response and crisis management
plan in place. During 2022, role-based trainings and simulation
exercises were conducted for field operational teams, business
support staff, and in-country incident management teams, as well
as Genel’s senior management who have overall responsibility for
crisis management. We continue to maintain in-house capabilities
such as spill response equipment, a fire response vehicle, and
an array of rescue equipment to protect lives in case of a fire or
rescue incident. We have also developed business continuity plans
based on impact analysis for all critical functions. These plans are
regularly tested for operational preparedness.
Driving safety and crude trucking
Driving required for the movement of people and goods
continues to represent a high-risk activity for our field operations.
In acknowledgement of this, we have mandated the use of in-vehicle
monitoring system in all vehicles. This has allowed for monitoring
of potentially unsafe driver behaviours such as speeding, seat belt
misuse or inappropriate acceleration/deceleration.
Trucking of crude oil from the Sarta facility to the offloading
station 100 km away is a high-risk operation for Genel. We train
all tanker drivers for driving safety and the correct procedures in
different conditions and terrain, hazard identification, working in
operational facilities, and spill response. We have completed over
1.5 million km driven and over 8,279 tanker journeys without a
serious incident.
Lifting and rigging safety
Lifting is another high-risk activity for Genel and in order to
mitigate this risk we have retained the service of an independent
contractor to inspect and certify all lifting equipment. This is
intended as an additional assurance on top of the existing
equipment certification and is applied to all equipment including
that provided and used by all contractors, and in 2022 we
extended this to mechanical handling equipment involved in
construction activities. We conducted extensive lifting and
rigging training based on industry standards in 2022 and did not
experience a serious incident involving lifting equipment.
Process safety and integrity
Process safety and integrity is an integral part of our approach to
managing major accident hazard-related risks and achieving safe
and reliable operations. Safety Critical Elements inspection and
maintenance programs 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 is a key focus as we strive to protect
the public, safeguard the health and wellbeing 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.
Genel Energy Annual Report 2022 19
Sustainability
Employee management
The talent, experience, diversity, and commitment of our people
drive the success of our business. Development of our global
talent has seen ever more focus over recent years, and we are
able to retain and attract talent through fostering a rewarding
work environment, supported by our corporate values and equal
opportunities for all. Our Diversity and Equal Opportunities
Policy, regularly reviewed and delivered to all employees at
the start of their employment, promotes positive employee
relationships that enable all individuals to make use of their
skills, free from discrimination or harassment.
Our commitment to providing a competitive compensation
package involves annual market reviews and enables the
Company to attract and retain the highly skilled talent needed
to deliver our strategy. These market reviews, undertaken by
the Human Resources Department, collect data from expert
external consultancies to analyse and compare each position’s
level and pay. 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.
Employee wellbeing
An ongoing legacy of COVID-19 at Genel is our hybrid working
model, which is applied throughout our corporate offices, and
is periodically reviewed. This model provides flexibility to our
employees as well as representing an incentive to attract and
retain talent.
Our staff welcome our regular internal global surveys, which
have a high response rate and provide us with a direct insight
as to how various initiatives have been received; for example,
our mid-2022 survey showed us that 75% of our staff were
‘very happy’ with the hybrid working model. These surveys
raise the voice of employees to Board level, and we have seen
consistent feedback that demonstrates that the vast majority of
our employees are happy working at Genel. The surveys contain
open questions, and it is through analysis of this feedback that
we are able to examine the impact of our actions. Our town
hall meetings are similarly well received which provide updates
on our ongoing and upcoming activities, as well as giving
immediate access for employees to raise questions with Genel’s
Executive Committee.
Genel Wellness continues to be supported via the Wellbees
App platform which provides a varied set of resources and
information for physical and mental wellbeing throughout
the organisation.
Cultural awareness
In late 2022, following interest from our staff over the course of
the previous 12 months, we delivered a programme of cultural
awareness sessions to our people globally. This took the form of
four online sessions, half of which were devised and presented
by our own employees. The intention of these courses was to
raise awareness of cultures prevalent in our main locations of
the UK, Turkey, KRI and Somaliland, with the aim of supporting
our values of respect and collaboration. The sessions allowed
for sharing of cultural customs and looked at our often-
contrasting communication styles and how we can embrace
the commonalities amongst us all. Staff were encouraged to
attend each session including the one applicable to their home
culture, in order that self-awareness can lead to discussion
and adjustment if needed. These sessions were popular and
well received; feedback collected indicated that the majority
of our staff enjoyed the opportunity to participate and would
recommend attendance at future sessions. As such, these will be
re-run to reinforce our goal of a One Company culture.
Diversity
The make up of our locations and people demonstrate our firm
commitment to diversity, and this principle exists throughout
Genel, including through ideas, skills, knowledge, experience,
culture, ethnicity and through gender diversity. Our policies and
procedures aim to support this principle.
Throughout 2022, on average, we employed 129 people across
four regional offices, including 34 in London, 39 employees
in Turkey, 38 in the Kurdistan Region of Iraq, and 18 in our
African operations.
Our talent represented nine different nationalities, which is a
clear reflection of our global footprint. Women represent 26% of
our total workforce and 16% of Board of Director positions, 16%
of the Executive Committee and 23% of management.
People and diversity
20 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Respecting human rights
Genel’s ongoing commitment to conducting our business in a
manner that respects human rights across all areas of operation
remains central to our ESG management. 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.
In line with a 2021 independent human rights compliance
assessment of our performance against the UN Guiding
Principles on Business and Human Rights, in 2022 updates
were made to Genel’s Human Rights Policy to better reflect the
evolving business landscape within Genel’s areas of operation.
Furthermore, as a 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 in 2022, 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.
Where we have the ability to do so, we require the same high
standards from all our contractors, suppliers, and other business
partners with regard to respecting human rights. As part of
our supply contracting processes, 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.
Grievance policy
Throughout our operations, Genel encourages a culture of
openness and accountability. 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 incident of whistleblowing
is reported to our Board of Directors and investigated fully.
Our annual legal training always contains guidance on this
Policy, as a reminder that this applies to all individuals working
at all levels within the Company, including directors, officers,
employees, as well as to contractors, and third parties.
Genel Energy Annual Report 2022 21
As Genel’s footprint in Somaliland looks to increase in 2023 and
beyond, we can look back on our experiences during 20 years
in the KRI to provide an example of how a focus on community
engagement represents a key element of our operational
success. Not only do we acknowledge our responsibility to host
communities but moreover, we appreciate the opportunity to
work alongside community members to enable capacity building
and to deliver social investments that will provide long-term
benefit to these regions.
Fostering local partnerships, building community relationships,
and implementing our social investment programme have all
combined to allow Genel to promote the wellbeing of local
communities and develop economic opportunities.
Social investments
Genel’s CSR policy was formalised in 2019 and remains in
place to provide guidance to our CSR strategy. Application of
this policy helps Genel understand community expectations,
promotes sustainability, and expands our horizons with regard
to the implementation of our social investments. Genel’s
approach to social investments is broadly guided by the five (of
the 17) United Nations Sustainable Development Goals that are
considered of most relevance to our business and to our regions
of operation. These are reviewed periodically in line with any
changes in our activities, for example, given the anticipated
increase in our Somaliland operations the UN SDG of Clean Water
and Sanitation has been included for 2023.
Throughout 2022 areas of Somaliland were subject to drought
conditions which were subsequently identified as at risk of
famine during the latter part of the year. In response to these
conditions, Genel increased its efforts in social investments,
which in 2022 totalled $500,000. The first initiative was a
drought relief project in March 2022, which distributed drinking
water to 99 villages and ultimately benefitted over 118,000
people within our host communities. Following this, a food
relief programme successfully delivered food aid to over 2,500
households, and a second – larger scale – food relief programme
was launched at the end of the year which targeted over 6,800
households across 162 villages for provision of emergency
food distribution to drought-affected communities. As our
activities increase in Somaliland, Genel will continue our focus
on this region by targeting areas of most need with meaningful
social investment.
The year also saw a broad range of social investments in KRI
valued at over $350,000. The launch of our Genel20 Scholars
programme represented a proud moment for Genel and was a
fitting way to commemorate 20 years of our activities in the KRI.
Education formed a recurring theme of Genel’s social investment
efforts in KRI this year which saw renovation, in the Sarta
region, of two classrooms at Bawakhalan Elementary School,
and full renovations of Bawakhalan High School and Khalawan
Elementary School.
Maintaining close relations with our host communities is a
central pillar of Genel’s operational protocols and it is through
this engagement that Genel identified the need for several
community projects in the Qara Dagh region in 2022. During the
early part of the year Genel delivered heating fuel to schools
and vulnerable families, in an effort to support the community
through the harsh winter conditions of this region. In the
springtime, Genel implemented a waste collection and disposal
project during the annual celebrations for Kurdish New Year
(Nawroz) and we were also able to replace water trucks in the
Sewsenana district, which are essential for providing fresh
drinking water to local villages. We also attended the opening
of the Genel-funded newly-constructed youth training centre at
Qara Dagh, which will provide vocational training opportunities
for communities from around the entire Qara Dagh region for
many years to come.
We value our local partnerships and were pleased to engage a
local NGO, Rwanga Foundation, to complete a social baseline
assessment for Sarta which provided guidance for needs in
the region for community investments going forward. It was a
valuable study which Genel will look to replicate in our other
areas of operation.
Economic development and local employment
Reflecting on the two decades since signing our first PSC in
the KRI, Genel commissioned an independent study in 2022 to
understand the impact of our investment. The study found that
Genel has contributed an average of $0.5 billion each year to
KRI’s GDP and supported an average of ten thousand jobs per
year. Over the same period, Genel also enabled a yearly average
of $0.4 billion in GDP and an additional thirty thousand jobs in
the KRI. The role we have played in developing the oil industry
and our investments of over $3.5 billion in the region has
contributed to direct employment, local capacity building, and
the establishment of local supply chains.
These findings underpin what 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. Moreover, by making the community
workforce active stakeholders empowers these individuals to
take ownership of the overall wellbeing of the area.
To promote career development of local students during 2022
we were pleased to provide two weeks of technical training at
Sarta for a group of 19 interns from Erbil Polytechnic University,
and later in the year Genel provided English language training to
23 of our local personnel at Sarta.
Supporting local economic development is a key objective
for Genel and we encourage our contractors to hire from the
communities in which we operate, and support training if the
necessary skills are absent. In 2022 we were pleased to see
this theme continue with opportunities presented to the local
community with respect to job opportunities, machinery hire, or
employee development and training. In 2022, 18 local companies
provided services across Sarta and Qara Dagh, all of which
contributed to a direct positive impact on economic development
within the community.
Sustainability
Community engagement
22 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel20 Scholars
To mark 20 years of operations in the KRI Genel was pleased to launch our Genel20 Scholars programme.
The programme will provide a university scholarship for 20 talented high school graduates, from
disadvantaged backgrounds.
The programme was open to citizens of the KRI, with strong academic credentials and the potential to be future industry
leaders in Kurdistan. Genel is pleased to be providing full funding for tuition and living expenses, as well as offering civic
leadership and career-oriented workshops, and faculty mentorship and guidance from Genel staff. A range of courses
is being studied by the students, including Petroleum Engineering, Nursing, Accounting and Finance Management, and
Electronics and Telecommunication Engineering.
The Genel20 Scholars programme provides a long-term commitment in the KRI and has the potential to transform the
education and career opportunities for many families.
Genel Energy Annual Report 2022 23
Sustainability
Climate risk mitigation
2022 Scope 1 and Scope 2 GHG and energy figures on an equity share approach
Year 2022 2021*
Geography Global UK Global UK
Scope 1 (tCO
2
e) 192,637 - 190,277 -
Scope 2 (tCO
2
e) 176 6.4 232 18
Associated energy use (kWh) 179,004,401 30,171 163,971,269 76,513
Intensity ratio (kgCO
2
e/bbl) 17.56 - 16 -
* figures corrected from those published in Genel’s 2021 Annual Report, following third party audit
GHG management and forecasting
Genel acknowledges the risks represented by climate change
and the challenges represented by the necessary energy
transition. A key tool for Genel within this transition is the
application of our GHG Emissions Management Standard which
aims to support our ambition to meet our goal of providing the
low carbon barrels still necessary for a world that needs oil.
This Standard provides a systematic framework that emphasises
asset life-cycle approach to emission mitigation and applies to
all operating and non-operating assets, and is also considered in
future acquisitions.
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 2022 and 2021, the
contribution of UK operations to global energy consumption
and GHG emissions, and information relating to energy
efficiency action, 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.
Scope 1 and 2 emissions
Genel reports Scope 1 and 2 emissions on an equity share
approach, which we consider to be the most transparent
representation of our emissions footprint. GHG emissions
data from non-operated assets are provided by our joint
venture partners and Genel’s total Scope 1 and 2 emissions
have been subject to assurance by an accredited third-party
assurance provider, ERM CVS. The assurance statement and
Genel’s methodology for emissions reporting is provided on
Genel’s website.
We are pleased to report a carbon intensity of 17.56 kgCO
2
e/
bbl, which remains below industry average, though Genel
acknowledges that this represents an increase from 2021.
Scope 3 emissions
Previously, Genel has reported our Scope 3 emissions on an
operational control basis. However, as we make progressive
steps in our emissions reporting, for 2022 we have conducted
dual reporting, as we look to incrementally extend the boundary
of our reported Scope 3 emissions. We have reported on
an operational basis, as per the previous year, and we have
also reported an equity-based reporting for category 11
(sold products). The rationale for doing so is that category 11
represents the overwhelming contributor to Genel’s emissions
footprint, and so by extending the reporting boundary for
this category allows us to better represent Genel’s Scope 3
emissions. Our Scope 3 emissions are subject to a pre-assurance
by third party auditors. This assurance is ongoing at the time of
reporting and will be confirmed in our 2022 Sustainability Report
in May 2023. Genel’s 2022 Scope 3 emissions shown both as an
operational control basis and as an equity share for category 11.
Year 2022 2021
Scope 3 operational control
(tCO
2
e)
264,686 356,847
Scope 3 Category 11 equity share
(tCO
2
e)
4,757,588 Not reported
in 2021
Emission reduction efforts
We focus on effective design, efficient operations, and responsible
energy use to reduce emissions to as low as reasonably
practicable. One of the biggest factors influencing our GHG
emissions profile is flaring, and gas management remains a
primary element of Genel’s emissions reduction strategy. With our
joint venture partner and operator of the Tawke PSC, DNO, we
continue to be part of the first gas injection project in the KRI.
Since 2020, the project has captured 1.2 million tonnes of CO
2
e
through reduced flaring, while improving Tawke field performance
through gas injection and enhanced oil recovery.
Emissions reduction strategies have also been central to
approval of the Sarta Field Development Plan. A three-year
flaring permit was granted by the MNR which came into effect
on 23 November 2020 and is due to expire on 22 November
2023. Since 2019 Genel has explored potential gas management
solutions which would enable the flares-out target to be met by
this date, and a range of surface and subsurface solutions were
considered prior to field appraisal. The results of the appraisal
programme and pilot production do not currently support a viable
flares-out programme, and Genel will consider appropriate gas
24
Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
management options should any future investment be deemed
viable. We currently expect to request the MNR grant a 12-month
extension to the existing flaring permit.
TCFD disclosures
Genel is committed to transparency in reporting climate-
related risks and opportunities. As such, Genel supports the
recommendations of the Task Force on Climate-related Financial
Disclosures (‘TCFD’), which aims to increase transparency
in climate-related risks. In 2022 Genel has considered the
‘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, and
considers 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). As part of its ESG workplan in 2023, Genel is developing a
TCFD roadmap to provide actions over the next two 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), and the details of these actions are provided below.
The four TCFD recommendations are provided below, with a
description of Genel’s actions for each of the disclosures where
applicable, or with a reference within this report.
TCFD Recommendation: Governance
(a) TCFD recommended disclosure: Describe the Board’s
oversight of climate-related risks and opportunities.
Climate topics are included in Board meeting agendas at least
once a year, during its main strategy session. The Board is
also informed more frequently through ongoing engagement
opportunities and other meetings, as well as when climate-related
issues arise in relation to major plans of action, annual budgets
and business plans. For example, the HSSE Committee reports
to the Board with progress on the ESG workplan which includes
an evaluation of our GHG performance, including emissions
reduction initiatives, which allows for monitoring of these
climate-related risks. GHG performance (in the form of life-cycle
Solar power reducing emissions
One of the key elements of our sustainability strategy is addressing our own operational emissions, and an encouraging
step was made in 2022 on this front with the installation of a solar panel and battery storage unit at the Sarta-1D wellsite.
This development is powering production equipment at the S-1 pad and will reduce the use of diesel generators at this
location, which will therefore lower our emissions at Sarta. The unit was made operational in July 2022 and by the end of
the year had achieved a gross saving of 8.8 tonnes of CO
2
.
This achievement represents an incremental step in addressing our own emissions footprint which could be replicated at
other locations, thereby reducing operational emissions further.
Genel Energy Annual Report 2022 25
Sustainability
carbon budgets) was also included in Asset Development Plans
(‘ADPs’) presented to the Board in 2022. Furthermore, our Board’s
commitment to robust sustainability governance is illustrated
in the inclusion of an ESG component of the Company’s annual
performance score card, which allows oversight and monitoring of
progress, with details of this process provided on pages 69-73 of
this report.
(b) TCFD recommended disclosure: Describe management’s
role in assessing and managing climate-related risks
and opportunities.
Genel’s Executive Committee oversees implementation of the
sustainability strategy, which includes climate-related risks and
opportunities, and which is achieved through implementing
Genel’s annual ESG workplan. The ESG Manager is responsible
for implementing the ESG plan (applicable to all Genel assets),
and reports progress to the Head of HSE and Risk Management, a
permanent Executive Committee Member. This allows a direct line
of communication, for information and monitoring of progress, on
climate-related matters to the Executive Committee, which in turn
reports to the Board on such matters.
Once a risk or opportunity has been identified and evaluated at
either the corporate, asset or project level, Genel takes a proactive
approach to design and implement robust controls to mitigate any
potential negative implications and enhance positive outcomes.
Sustainability risks, including the physical, socio-economic
political, and economic elements associated with climate change
have been identified at Genel as a Board reserved matter.
TCFD Recommendation: Strategy
(a) TCFD disclosure: Describe the climate-related risks and
opportunities the organisation has identified over the
short, medium, and long-term.
Genel continuously reviews major risks or opportunities to which
its operations are exposed. This is achieved through leveraging
local expertise, industry knowledge, and strategic relationships.
Genel also aims to hold ourselves accountable to robust regulatory
environmental standards in our operations, and we comply with
climate-related reporting within the UK. Through the strategic
review and assessment of climate-related risks and opportunities
detailed above, Genel has identified the following climate related
risks which could have a material financial impact on Genel as
identified in the table below. For the purpose of this classification,
short-term has been defined as one to three years, medium-term
as three to five years, and long-term as five years and beyond.
(b) TCFD recommended disclosure: Describe the impact
of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning.
Genel’s GHG Emissions Management Standard (the Standard)
underpins Genel’s approach to incorporating climate-related
risks and opportunities in our strategy and financial planning.
The implementation of the Standard informs our ADPs which
were reviewed by the Board in 2022 and which form the basis
of business strategy and financial decisions. The same level
of climate-related scrutiny is also considered in any potential
new acquisitions. More broadly, scenario analysis allows Genel
to assess the resilience of our business under a range of
climate scenarios.
In 2022 Genel completed installation of a solar panel and battery
storage unit at the Sarta-1D wellsite. This has provided local
capacity building and introduced solar power capabilities to a
region which would otherwise not be exposed to such technology.
Furthermore, Genel developed an ESG supply chain roadmap in
2022 which provides the steps required over the next two years to
encourage engagement with contractors to increase awareness of
ESG risk with their own operations.
We have considered the impact of climate-related issues on
our businesses, strategy, and financial planning, and Genel
acknowledges that access to capital may be impacted by
reputational concerns as a result of climate-related issues.
However, we do not currently fully disclose the impact of climate-
related issues on our financial performance or financial position.
As part of Genel’s TCFD roadmap which is being developed
under the ESG workplan in 2023, Genel will provide the specific
actions and timeline for Genel’s future approach to meeting
this requirement.
Climate-related risk Time horizon Detail
Reputation
SHORT-TERM
Stakeholder and investor perceptions and expectations during the energy
transition, resulting in potential divestment.
Climate disclosures
Current regulation
Regulatory responses to climate and carbon abatement.
Acute physical
Water-related risks (availability and operating in water scarce regions).
Event-driven, e.g., extreme weather impacting Genel’s assets, or Genel’s
ability to mobilise to assets.
Market SHORT-MEDIUM
Fluctuating oil demand and price. Limited financing for fossil fuels having
implications on ability to raise capital.
Legal
MEDIUM-LONG
International changes to climate-related legislation impacting assumptions in
Genel’s current business model.
Technology
Availability and cost of technology to minimise carbon emissions (e.g.,
relating to gas management or alternative energy).
Supply chain
Availability of suppliers in regions of operation, and potential climate-related
impacts in supply chain (i.e. Scope 3 emissions).
Emerging regulation
Potential future climate-related regulation requiring carbon reductions or
abatement measures.
Chronic physical LONG-TERM
Longer-term climatic changes beyond five years, potentially impacting
Genel’s regions of operation.
26
Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
(c) TCFD recommended disclosure: Describe the resilience
of the organisation’s strategy, taking into consideration
different climate-related scenarios, including a 2°C or
lower scenario.
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
carbon taxes and oil prices. These were chosen to provide a
broad range of potential future scenarios.
For the purpose of this analysis, we apply 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 (introduction of carbon tax in
the regions where Genel operates represents a situation where
Genel’s acknowledges financial performance could be impacted).
To the selected base case, and under our existing cost structure,
we apply the oil price and carbon tax values under two of the
IEA’s potential climate scenarios; namely the Announced Pledges
Scenario and the Sustainable Development Scenario (a 2°C or
lower scenario), with the time horizon for our analysis of 2030
corresponding with Genel’s time horizon for our existing assets.
Under these scenarios, Genel’s margin was calculated in the
2021 reporting period to erode to 96% and 78% respectively
and it is apparent that under Genel’s operational time horizon,
the selected IEA scenarios will have a manageable impact on our
margin. As a result, we expect that our strategy remains resilient
to climate-related risks and opportunities, taking into account
these two different scenarios. This exercise will be repeated by
Genel for publication in the 2022 annual Sustainability Report.
TCFD Recommendation: Risk Management
TCFD recommended disclosures
(a) Describe the organisation’s processes for identifying and
assessing climate-related risks.
(b) Describe the organisation’s processes for managing
climate-related risks.
(c) Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Genel’s established risk management process is detailed on
pages 30 – 33 of this report, which helps support the TCFD’s Risk
Management recommendation. For this reason, we have chosen
to group these recommended disclosures together.
The management of climate-related risks and opportunities is
incorporated 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 the HSSE Committee.
Climate-related risks are considered under ESG risks at Genel,
which consider existing and emerging regulation. The process
of identifying climate-related risks, and the relative significance
of these risks, is integrated within Genel’s established risk
management framework, through the processes described on
page 64 of this report. The outcome of this risk identification
process establishes Genel’s risk register. This risk register
is reviewed and further distilled to Principal Risks and
Uncertainties, and the 2022 iteration of these risks is presented
on pages 31-33 of this report, which provides details on potential
opportunities, threats and mitigation measures to manage the
risk. The size and potential impact of this risk, and potential
mitigation and controls, are managed in Genel by communication
channels from the ESG Manger to the Executive Committee,
which in turn assesses the relative priority of each risk, and
raises these matters, when applicable, with the Board.
The risk owners for climate-related risks are the ESG Manager
and the Head of HSE and Risk Management, with the HSSE
Committee supporting the Board on overall management of
the identified risks. The identified risks are managed through
implementation of the annual ESG plan, the progress of which
is communicated to the Executive Committee, and in turn with
the Board.
TCFD Pillar: Metrics and Targets
(a) TCFD disclosure: disclose the metrics used by the
organisation to assess climate-related risks and
opportunities in line with its strategy and risk
management process.
Scope 1, Scope 2, and Scope 3 GHG emissions (tonnes CO
2
e) are
presented each year in Genel’s Annual Report. This year, they
are presented on page 24 of this report where a reference to
the methodology applied in calculating these metrics is also
provided. Genel also discloses the following climate-related
metrics in the annual Sustainability Report: methane emissions
(tonnes CO
2
e), carbon intensity (kgCO
2
/bbl), and flaring intensity
(kgCO
2
/bbl). For each of these metrics, the preceding year’s
figure is also provided to allow for trend analysis. In relation to
water-related climate risks, we report freshwater withdrawals
and produced water reinjected (cubic meters) in Genel’s annual
Sustainability Report. In 2022 we received a score of B- for
our CDP Water Security disclosure, which represented an
improvement from the previous year. Genel remains open to
consideration of additional metrics as the business evolves.
(b) TCFD disclosure: disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas emissions and the
related risks.
Genel’s 2022 Scope 1, Scope 2 and Scope 3 greenhouse gas
emissions are presented above on page 24 with a description of
reporting boundaries for each.
(c) TCFD disclosure: describe the targets used by the
organisation to manage climate-related risks and
opportunities and performance against targets.
Genel reports absolute emissions and the carbon intensity of
our portfolio assets on an annual basis, with our portfolio being
assessed against the life-of-field carbon budgets outlined in the
GHG Emissions Management Standard.
As part of Genel’s TCFD roadmap which is being developed
under the ESG workplan in 2023, Genel will identify gaps against
current disclosure requirements and provide the specific actions
and timeline for full compliance against said requirements.
This will include the nature and the time horizon of emissions
targets, which will be a function of the portfolio assets over the
same time period. This process will consider potential targets
relating to emissions reductions, internal energy use, and
application of alternative energy sources in operations.
Additional climate disclosures
Genel is committed to communicating its climate strategy
and resilience to the investor community in order to illustrate
the efforts we are taking to reduce our carbon footprint.
Following our 2022 climate change submission to CDP (formerly
the Carbon Disclosure Project) Genel was pleased to have
been awarded a B score from in 2022, which represents an
improvement to our previous score of C. This progression is a
result of the dedicated work over the preceding years, which
shows our ongoing commitment to climate-related disclosures.
Genel Energy Annual Report 2022 27
Sustainability
Environmental stewardship
Environment management system
Beyond our emission reduction ambitions, Genel’s approach
to environmental management focuses on managing waste,
reducing resource and water use, preventing pollution, and
protecting the natural environment. Accordingly, we continue to
design our policies, procedures and plans to align with ISO14001
requirements and we are making progress towards accreditation.
Environmental, social and health impact
assessment (‘ESHIA’)
Identifying and managing any potential impact from our
operations forms an essential part of our project planning and
as such we engage independent consultants to develop ESHIA
reports as part of regulatory approvals required prior to all
exploration or development activities. This process is guided by
in-country legislation as well as the IFC Performance Standards.
An environmental and social management plan is developed
to monitor the environment and respond to any potential
impacts and grievances that may arise within local communities.
Looking forward, this important operational process will be
applied to our activities in Somaliland in 2023.
Water management
Water management forms a key priority in our approach to
environmental stewardship. We recognise our presence in
water-restricted regions of the world, and we understand the
necessity of freshwater availability. Moreover, we acknowledge
the increasing importance of this topic and it therefore remains
a key priority of Genel to efficiently manage water consumption
and continually strive for incremental improvements in
recycling practices.
Throughout 2022 we continued to record water use, its source,
and its disposal at all operational sites. We have focused on
reducing freshwater consumption by increasing the quantity
of water for recycling, which is achieved, for example, through
our high-grade sewage treatment unit at Sarta. Furthermore,
re-injection of produced water at Sarta eliminates the need
for any off-site disposal. In reflection of our efforts in water
management, following our annual CDP Water Security
disclosure in 2022, we were pleased to see an increase in our
score from D to B-.
As our activities in Somaliland progress, we will be undertaking
an initial baseline water assessment in advance of our proposed
drilling operation.
Waste management
Genel continued to build upon its strong waste management
record in the KRI in 2022. At Sarta, the established waste
segregation programme remains in place where site personnel
and contractors continue to follow the principles and hierarchy
of waste management. During this year, we have issued contracts
for recycling of general waste and waste treatment and disposal
of hazardous waste at Sarta, which collectively focus on reducing
impact to operational areas.
As part of our drive for local capacity building, our teams
maintain close relations with our waste contractors, introducing
new recycling initiatives and mentoring the workforce in
effective and safe waste handling and management practices.
In further evidence of continued improvements in waste
management practices, for our waste streams from Sarta, zero
waste was sent to landfill, just over 9% was incinerated, and over
91% of waste was recycled.
Furthermore, in a key milestone in 2022, Genel was able to
successfully recycle over 7,500 tons of drill cuttings from the
Qara Dagh asset. The waste cuttings contained high content of
chloride and heavy metals and following a successful thermal
treatment process at a local cement factory, this has resulted in
zero residual waste from this source.
Continuous air quality monitoring
We continue to monitor and mitigate any potential adverse
impacts associated with Sarta operations. Throughout 2022
we maintained our continuous air quality monitoring from
three monitoring units in the vicinity of the Sarta production
facility. This ongoing programme provides an understanding of
local air quality conditions at Sarta, compared to the baseline
conditions established in 2019. This constant monitoring helps
prevent any potential adverse impact resulting from poor air
quality to the neighbouring communities. In 2022 the air quality
data was compared against the draft 2020 KRI regulations and
with the exception of exceedances in particulate matter due
to agricultural activities in the surrounding area, no air quality
exceedances were recorded, even when applying these more
stringent guidelines.
Spill response capability
We maintained tier 1 and 2 spill response capability during
the year, and we purchased additional equipment to enhance
our capabilities in order to deal with specific spill scenarios.
Training was provided for operational and tactical oil spill
responses. We also simulated a large oil spill incident as part of
our annual preparedness exercise in one of the high-risk crude
oil tanker operations in Sarta field.
28
Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Biodiversity and land management
In 2022 Genel was pleased to finalise our Biodiversity
Management Standard, which defines the approach to be
adopted by Genel in relation to the assessment, mitigation and
management of biodiversity issues and impacts relating to
worldwide operations. The development and internal approval of
this document reflects the considerable significance which Genel
places on preservation of biodiversity, as we continue to work in
collaboration with partners to protect nature and to achieve no
net loss of biodiversity wherever we operate.
A key element of biodiversity management is the development
and implementation of a biodiversity management plan (‘BMP’).
This provides a framework for managing project risks specifically
related to biodiversity and details the necessary measures
required to mitigate these risks. In specific acknowledgement
of the sensitive environmental setting of our operations in
the region of Qara Dagh, Genel continues to work with local
stakeholders and will continue to monitor the measures laid
out in the existing BMP. In line with the IFC Performance
Standard 6 on Biodiversity, in 2023 Genel will be establishing
an offset programme at Qara Dagh in collaboration with
local stakeholders.
ESG management and responsible
business practices
Management of ESG remains a key consideration for Genel and
in 2022 ESG actions were discussed at Board meetings, senior
management meetings, and employee town hall meetings.
Furthermore, in reflection of our drive to foster a culture of ESG
integration and effective governance, we linked completion of
annual corporate ESG related goals with a portion of annual
remuneration for all Genel employees, which has again been
approved for 2023.
Genel Energy Annual Report 2022 29
Risk management
Risk management
Introduction
Mitigating downside risk is a key component of our business
model. The benefits of this approach, and the resilience that it
provides, was demonstrated in 2022, as Genel managed various
headwinds related to geopolitical uncertainty, leadership
changes, sub-optimal appraisal performance, and continued to
deliver on its operational strategy. We finished the year with a
healthy balance sheet that positions us well to take advantage of
future growth opportunities.
In 2022 we took steps to evolve and mature the current risk
management and control system and risk reporting so that it
can be more effective in providing greater agility in the decision
making processes, as follows:
- Simplify: streamline and enhance the tools currently in
place to collect, record and communicate risk information
- Focus: enable quality conversation about emerging risks as
well as for key changes and overall assessment of current
risk and controls
- Assure: internal audit process and programme to provide
assurance on key risk areas and relevant controls
We have a diligent approach to individual risks, bringing
the same rigour to Genel’s organisational risk management
processes as we do to health, safety and the environment.
VK Gupta
Head of HSE and Risk Management
30 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Principal risks
and uncertainties
KRI natural resources industry and regional risk
Paul Weir, CEO
Commercial terms and payment for Kurdistan oil sales
Luke Clements, CFO
International
Relations Committee
Trend Read more p.46
International
Relations Committee
Trend Read more p.12
Context
Stable government within KRI and stable Federal Government of Iraq
dictate effectiveness of business environment in KRI.
Opportunities
— Strong relationships and stakeholder engagement facilitates
ongoing operations
— Stable environment for operations allows Genel to pursue
strategic objectives
Threats
— Complex relations between KRG and FGI
— Adverse decisions from Iraqi Federal Supreme Court and Baghdad
Commercial Court
— ICC:FGI-Turkey Pipeline arbitration outcome
— Limited ability to influence KRG
— Russia targeted sanctions that could impact the supply chain and
movement and trading of KRG oil
Mitigations
— Dialogue with decision makers in the KRI
— Work in a cohesive manner with other IOCs
— Stakeholder management plan
— Close monitoring of rapidly moving sanctions developments
Context
KRG purchases all crude oil at the wellhead and arranges for payment to
be made to Genel for ongoing exports.
Opportunities
— Payments in line with expectations support investment and pursuit of
business objectives and improve market valuation of the business
Threats
— Payments from the KRG delayed, reducing the Company’s ability to
reinvest in line with its strategic priorities
— Adverse commercial terms on oil sales unilaterally imposed by KRG
Mitigations
— Dialogue with decision makers in the KRI
— Work in a cohesive manner with other IOCs
— Stakeholder management plan
— Close monitoring of rapidly moving sanctions developments
— Maintain balance sheet strength
Development and recovery of oil reserves
Paul Weir, CEO
Reserve replacement
Mike Adams, TD
Reserves Committee Trend Read more p.14 Reserves Committee Trend Read more p.14
Context
Genel aims to realise the reserves value in its portfolio through
deploying capital in line with the value creation expected from our asset
development plans.
Opportunities
— Cost effective development of fields
Threats
— Underestimation of reservoir uncertainty and reservoir performance
to the downside
— Poor drilling execution performance
— Poor reservoir performance
Mitigations
— Life of field asset development plans in place
— Appropriately categorised reserves
— Active and optimised drilling across all producing assets
— Active reservoir management
— HSE, Asset Integrity and Operations Management Systems
Context
Genel aims to grow through adding reserves and in turn long-term
cash-generative production both from existing and new assets added to
the portfolio.
Opportunities
— Successful exploration and appraisal activity increase resources
— Moving projects and developments into execution increases reserves
— Successful addition of inorganic opportunities to the portfolio
— Successful Somaliland exploration
Threats
— Inability to progress assets in the portfolio and convert contingent
resources to reserves
— Failure to add inorganic opportunities to the portfolio
— Geopolitical challenges associated with frontier exploration
Mitigations
— Life of field asset development plans in place
— Correctly categorising uncertainty
— Somaliland drilling expected in 2024
— New business activity
Trends key
Risk improved
Risk unchanged
Risk deteriorated
Genel Energy Annual Report 2022 31
New business activity
Mike Adams, TD
Corporate governance failure
David McManus, Chair
Board Trend Read more p.6 Board Trend Read more p.37
Context
The pursuit of new business opportunities is a key part of the Company’s
growth strategy.
Opportunities
— Execution of a transaction positively impacts the Company’s valuation,
asset quality, and equity story, among other factors
Threats
— Execution of a transaction that adversely impacts the Company’s long-
term liquidity, balance sheet, asset quality, and equity story, among
other factors
— Misalignment with major shareholders
Mitigations
— Clear strategic objectives and experienced team
— Board oversees and signs off on all material new business decisions
Context
The Company’s strategy is to maintain high standards of
corporate governance.
Opportunities
— Good corporate governance is proven to provide benefits to business
and value to shareholders
Threats
— Corporate governance failure would have a negative impact on
investor perception of the Company
Mitigations
— Carrying out detailed Board Evaluation exercises (including externally
facilitated reviews periodically) to monitor and assess performance of
the Board
— Effective set of governance policies deployed across Genel
Environmental, social & governance expectations
Paul Weir, CEO
Capital structure and financing
Luke Clements, CFO
Board Trend Read more p.16 Audit Committee Trend Read more p.12
Context
Position the Company during the energy transition; supporting
communities where we operate.
Opportunities
— Develop a competitive advantage for Genel and distinguish it from
its peers
— Position Genel as a socially responsible contributor to the global
energy mix, widening the pool of potential investors
Threats
— Reduced access to capital
— Negative stakeholder publicity
— Introduction of punitive carbon or other taxation
— Loss of local community support gives rise to disruption to
field operations
Mitigations
— Board and senior management commitment, with approved
ESG strategy
— Corporate Social Investment strategy in place
— Commitment to local employment and local contractors
— ESG scorecard in annual performance targets
— GRI compliant Sustainability Report issued annually
— CDP Climate score improved to B, and CDP Water score improved to B-
Context
The Company aims to retain a strong balance sheet and flexibility in our
capital structure in order to pursue its strategic objectives and underpin
future growth.
Opportunities
— Strong balance sheet protects the company against volatility in both
commodity prices and geopolitics
— Strong and visible liquidity runway ensures debt repayment
— Appropriate capital structure and discipline in allocating capital allows
for the company to self-finance organic growth and to benefit from
in-organic opportunities
Threats
— Delay by KRG in making payments for sales
— Material deterioration in the oil price
— Lack of access to capital due to macro developments
— A failure to replace reserves
Mitigations
— Disciplined capital allocation, clear investment priorities and strong
expenditure controls
— Low cost of production, competitive onshore development costs
— Strong balance sheet
— No debt maturity until 2025
Risk management
32 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Attract and maintain organisational capabilities
Berna Öztınaz, CHRO
Health and safety risks
VK Gupta, Head of HSE and Risk
Remuneration
Committee
New Read more p.20 HSSE Committee Trend Read more p.18
Context
The Company aims to attract, retain, and develop the right talent and
organisational capability for sustainable success.
Opportunities
— Retention of key staff creates stability, while careful recruitment of
talent brings relevant expertise into the organisation
Threats
— Any gap in capability will affect our ability to operate safely in
our regions
— Recruitment without adherence and discussion with local government
and communities will affect our reputation and ability to carry out
activity on time
— Lack of up to date market information in frontier areas
— Extractive industry talent drain
Mitigations
— Annual performance management process supports high performance
and highlights any areas of required development
— Annual TalentMAP process identifies key individuals and provides wide
succession planning
— Balanced internal and external talent acquisition provides immediate
insights and swift reaction to any staff changes
Context
Health, safety and environment management is a primary consideration
across all Genel operations.
Opportunities
— Continued strong HSE performance reduces business loss, boosts
employee motivation and enhances Company reputation
— Positive HSE reputation enables timely approvals of environmental
permits and development plans
Threats
— Failure of HSE procedures and controls leads to injuries/illnesses
and/or adverse environmental impact, asset damage, process safety
accidents and material reputational damage
— Poor HSE performance can have licence to operate risks and
impact motivation
Mitigations
— Ongoing continuous improvement in HSE management system
processes, procedures and trainings as we aim for incident-
free operations
— Enhanced HSE plan and KPIs in place
— HSE and process safety risk assessments
— Assurance inspections and audits
— HSE Leadership site tours
— Incident investigation training
— Site HSE supervision and coaching
Trends Key
Risk Improved
Risk Unchanged
Risk Deteriorated
Genel Energy Annual Report 2022 33
Viability statement
Principal risks and uncertainties
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.
Choice of assessment period
The Directors retain their assessment of five years as
the appropriate period for their viability statement.
Although inevitably introducing cash flow uncertainty given the
inherent volatility in long-term oil price, cost and production
forecasting, five years was assessed to be an appropriate period
for the following reasons:
— The production assumptions are supported by recent external
reserve reports on all existing producing assets
— The period captures the maturity of the Company’s bonds,
maturing October 2025
— The period captures when there is potential for material
capital investment on the Company’s pre-production assets
— The Board runs a five-year plan, beyond which there is
considered to be limited visibility
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, commodity price assumptions,
capital allocation, and payments.
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:
— Payment for KRI sales
— Development and recovery of reserves and resources
— KRI natural resources industry
— Capital structure and 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 five-year period to
December 2027.
Our 2022 Strategic Report from pages 1 to 35 has been reviewed
and approved by the Board of Directors on 21 March 2023.
Paul Weir
Chief Executive Officer
34
Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Stakeholder engagement
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 of Genel considers, both
individually and collectively, that they have acted in good faith
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 2022 (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 34:
(a) The likely consequences of any decision in the long-term
Genel has a portfolio of assets, with material production. Our
organic portfolio continues to be funded by cash generated from
our producing assets, and our financial strength and business
outlook supports ongoing investment and the payment of a
material dividend, 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 continue to
be proactively managed.
(b) The interests of the Company’s employees
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. The value we place
on equal opportunities and diversity of ideas, skills, knowledge,
experience, culture, ethnicity, and gender is evident in our daily
operations as well as formalised in our policies and procedures.
As the world returned to normal after the pandemic, and following
input from employees, Genel established a hybrid working model
for its office-based staff. In late 2022, the first phase of a new
Company Culture project was completed and this research will be
used to design and deliver appropriate elements in 2023, with the
overall aim of supporting a One Company Culture across Genel.
Further information on employee management can be found on
page 20.
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 43.
(c) The need to foster the Company’s business relationships
with suppliers, customers, and others
Long-term strategic thinking, allying 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 2022, the Company
continued to engage with host governments at all levels in order
to drive forward our business strategy. Genel also hosted its
inaugural contractor forum in Erbil, centred around learning from
each other and improving safety performance.
(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. In 2022,
we continued to support community investment initiatives that
demonstrate our commitment to being a socially responsible
contributor to the global energy mix. This helps us maintain
and strengthen relations with the local communities near
our operations. In addition, we continued to promote local
employment and contracting so that the economic benefits
generated from our operations are shared within the regions in
which we operate.
2022 represented 20 years of operations by Genel in the KRI
and this milestone was marked with an increase in our social
investments, which continued to be guided by the UN Sustainable
Development Goals. In November 2022, 20 talented high school
graduates from disadvantaged backgrounds were awarded
scholarships through the Genel20 Scholars Programme to pursue
a bachelor’s degree at the American University of Kurdistan.
The Company also increased social projects in Somaliland in
2022, with a focus on food and water distribution projects to
communities affected by drought conditions.
Genel takes significant steps to minimise its operating emissions
and Genel’s approach to environmental management extends
to a focus on managing waste, reducing resource and water use,
preventing pollution, and protecting the natural environment.
More information can be found in the sustainability section of this
report on pages 16 to 29.
(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.
Notwithstanding our standard listing, we are committed to
complying with applicable regulatory requirements in both Jersey
and the UK. 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 2022 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’ ambition is to behave responsibly toward
our shareholders and treat 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.
As a Jersey registered company, Genel Energy plc is not required to prepare a s172(1)
statement in accordance with UK legislation, however, it remains the policy of the Company
to comply with high standards of corporate governance and so we have voluntarily chosen to
report how we take our stakeholders into consideration in running the business.
Genel Energy Annual Report 2022 35
36 Genel Energy Annual Report 2022
Finally, on 1 November 2022, the Company announced the
appointment of Chandni Karania as Company Secretary
following the retirement of Stephen Mitchell, who had worked
for the Board since 2011. I would like to take this opportunity to
thank Bill Higgs, Esa Ikaheimonen, Tim Bushell, Hassan Gozal,
Nazli K. Williams, and Stephen Mitchell for their contributions to
the Company
Following the results of our 2022 AGM and in line with the UK
Corporate Governance Code 2018, the Company engaged with
major shareholders to understand their views on resolutions
4 and 16, each of which had over 20% of votes cast against
them and resolutions 5,8 and 10 which did not receive the
required 50% majority of votes in favour. Noting that proxy
agencies were unanimously in favour of each resolution that
was put forward at the meeting, and following discussions with
shareholders, the Board’s view is that the votes cast against the
resolutions reflected differing opinions held by the Company’s
major shareholders in relation to a number of matters. As a
consequence, the Board does not believe it is necessary or
appropriate to take any additional action and along with the
management team the Board is committed to delivering the
Company’s strategy.
While 2022 saw a number of changes to the Board of Directors
and Executive Committee, the Board and management team
are fully aligned and committed to delivering the Company’s
strategy of putting capital to work to grow our production and
cash generation, while maintaining our resilience and seeking
to progress our established dividend programme. In 2022, the
Company generated material free cash flow of $235 million,
with a further $50 million returned to shareholders as part
of our ongoing dividend programme. We are now firmly
focused on putting our balance sheet to work and adding
the right assets to our portfolio, increasing the visibility of
long-term cash generation and supporting our material and
progressive dividend.
In accordance with the Company’s commitment to comply
with the UK Corporate Governance Code, the Board undertook
an internal evaluation of its own performance and that of its
Committees and each individual Director. The internal evaluation
found that the Board, each of its Committees and each Director
were operating effectively to support the Company’s long-term
strategic objectives. Further details of the Board evaluation can
be found on page 53.
David McManus
Chair
Chair’s statement on corporate governance
Dear Shareholder,
I am pleased to present my fourth Corporate
Governance Report to shareholders as your
Chair. Our 2022 Governance Report illustrates
how the Board and its Committees have
supported business activities while enforcing
our governance culture.
Our Board experienced a number of changes during 2022.
On 1 June 2022, Bill Higgs stepped down as CEO. As CEO, Bill
oversaw a positive change in the strategic direction, operational
capability and culture of Genel, and left behind a robust
foundation on which the Company can build.
Paul Weir was appointed by the Board of Directors as Interim
CEO and subsequently permanent CEO and Executive Director
on 3 October 2022. Paul has been a key contributor to the
transition of Genel into an operator, and, given his longstanding
operational experience, is well placed to lead the business as it
seeks to progress its next phase of growth.
Earlier in the year, on 20 May 2022, the Board of Directors
appointed Luke Clements as CFO, following the departure of
Esa Ikaheimonen.
Other departures during the year included Nazli K. Williams,
who resigned as a Director on 13 April 2022, having served as
a member of the Board since the 2011 merger with Vallares.
Bill Higgs, Tim Bushell, and Hassan Gozal also left the Board
following the 2022 AGM, as they did not receive the requisite
majority of votes in favour of their re-election as Directors.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 37
Governance statements
Governance statements
The Board continues to be committed to complying with the
UK Corporate Governance Code and with the Remuneration
Regulations. 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
The Board is committed to high standards of corporate
governance and 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 2022,
the Company complied with the principles of the Code and on
pages 39 to 40 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 with the exception
of provision 32, as between 22 November 2021 and 19 April
2022, David McManus served as the Interim Chair of the
Remuneration Committee. Yetik K. Mert was appointed Chair of
the Remuneration Committee on 19 April 2022, and the Company
has been in full compliance with the provisions of the Code
since then.
Going concern
The going concern statement is made on page 13.
Viability
The viability statement is made on page 34. Further details of
the Board’s assessment of the viability of the Company are set
out in the Audit, risk and internal control section on pages 62
to 64.
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 31 to 33 and the procedures followed to
identify these risks on pages 62 to 64.
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 in the Audit, risk
and internal control section on pages 62 to 64.
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 65 to 68 for further information on
how this conclusion was reached.
Section 172(1)
A Section 172(1) statement is made on page 35. It provides
cross-references to the required detail set out throughout this
Annual Report.
Genel Energy plc is a Jersey incorporated company with a standard listing on the London
Stock Exchange. We are committed to complying with applicable regulatory requirements in
both Jersey and the UK.
38 Genel Energy Annual Report 2022
Application of UK corporate
governance code principles
The Code has placed increased emphasis on ‘apply 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
role is to promote the long-term sustainable success of the company, generating value for
shareholders and contributing to wider society.
Strategic report p.1-36
Governance report p.37-91
Directors’ Remuneration report p.69-86
Principle B. The board should establish the company’s purpose, values and strategy, and
satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by
example and promote the desired culture.
Strategic report p.1-36
Company purpose, values and strategy p.8-9
Division of responsibilities p.50
Directors’ Remuneration report p.69-86
Principle C. The board should ensure that the necessary resources are in place for the
company to meet its objectives and measure performance against them. The board should
also establish a framework of prudent and effective controls, which enable risk to be assessed
and managed.
Sustainability section p.16-29
Principal risks and uncertainties p.31-33
Section 172(1) statement p.35
Audit, risk and internal control p.62-64
Audit Committee report p.65-68
Principle D. In order for the company to meet its responsibilities to shareholders and
stakeholders, the board should ensure effective engagement with, and encourage
participation from, these parties.
Sustainability section p.16-29
Section 172(1) statement p.35
Communication with investors p.43
Principle E. The board should ensure that workforce policies and practices are consistent with
the company’s values and support its long-term sustainable success. The workforce should be
able to raise any matters of concern.
Sustainability section p.16-29
Section 172(1) statement p.35
Directors’ Remuneration report p. 69-86
Division of responsibilities
Principle F. The chair leads the board and is responsible for its overall effectiveness in
directing the company. They should demonstrate objective judgement throughout their
tenure and promote a culture of openness and debate. In addition, the chair facilitates
constructive board relations and the effective contribution of all non-executive directors, and
ensures that directors receive accurate, timely and clear information.
Division of responsibilities p.50
Composition, sucession and
evaluation p.52-53
Principle G. The board should include an appropriate combination of executive and non-
executive (and, in particular, independent non-executive) directors, such that no one individual
or small group of individuals dominates the board’s decision-making. There should be a clear
division of responsibilities between the leadership of the board and the executive leadership
of the company’s business.
Division of responsibilities p.50
Composition, sucession and
evaluation p.52-53
Board biographies p.55-57
Principle H. Non-executive directors should have sufficient time to meet their board
responsibilities. They should provide constructive challenge, strategic guidance, offer
specialist advice and hold management to account.
Composition, sucession and
evaluation p.52-53
Principle I. The board, supported by the company secretary, should ensure that it has the
policies, processes, information, time and resources it needs in order to function effectively
and efficiently.
Sustainability section p.16-29
Composition, sucession and
evaluation p.52-53
Audit, risk and internal control p.62-64
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 39
Governance statements
Composition, succession and evaluation
Principle J. Appointments to the board should be subject to a formal, rigorous and
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.
Nomination Committee report p.60-61
Principle K. The board and its committees should have a combination of skills, experience and
knowledge. Consideration should be given to the length of service of the board as a whole
and membership regularly refreshed.
Board biographies p.55-57
Principle L. Annual evaluation of the board should consider its composition, diversity and
how effectively members work together to achieve objectives. Individual evaluation should
demonstrate whether each director continues to contribute effectively.
Nomination Committee report p.60-61
Board effectiveness p.53
Audit, risk and internal control
Principle M. The board should establish formal and transparent policies and procedures to
ensure the independence and effectiveness of internal and external audit functions and
satisfy itself on the integrity of financial and narrative statements.
Audit, risk and internal control p.62-64
Audit Committee report p.65-68
Principle N. The board should present a fair, balanced and understandable assessment of the
company’s position and prospects.
Strategic report p.1-36
Audit, risk and internal control p.62-64
Audit Committee report p.65-68
Financial statements p.98-125
Principle O. The board should establish procedures to manage risk, oversee the internal
control framework, and determine the nature and extent of the principal risks the company is
willing to take in order to achieve its long-term strategic objectives.
Principal risks and uncertainties p.31-33
Viability statement p.34
Audit, risk and internal control p.62-64
Audit Committee report p.65-68
Remuneration
Principle P. Remuneration policies and practices should be designed to support strategy
and promote long-term sustainable success. Executive remuneration should be aligned
to company purpose and values, and be clearly linked to the successful delivery of the
company’s long-term strategy.
Company purpose, values and strategy p.8-9
Directors’ Remuneration report p.69-86
Principle Q. A formal and transparent procedure for developing policy on executive
remuneration and determining director and senior management remuneration should be
established. No director should be involved in deciding their own remuneration outcome.
Directors’ Remuneration report p.69-86
Principle R. Directors should exercise independent judgement and discretion when
authorising remuneration outcomes, taking account of company and individual performance,
and wider circumstances.
Directors’ Remuneration report p.69-86
40
Genel Energy Annual Report 2022
Activity highlights
January Approved the trading and
operations update
March Reviewed and approved the 2021
Annual Report
Reviewed the outcome of the 2021
internal Board effectiveness review
Approved the declaration of a 2022
final dividend payment
May AGM
Appointment of CFO
June Appointment of Interim CEO
July Reviewed and approved the half-year
results statements
September Reviewed asset development plans
October Appointment of permanent CEO
Discussed the Company’s business strategy
and capital allocation priorities
November Appointment of Company Secretary
Approved the trading and operations update
December Approved the 2023 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.
Board leadership and
Company purpose
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.
Our objective remains to create long-term value for shareholders through the exploration,
development and production of natural resources. We have low-cost producing assets that are
important to the economy of the KRI. Further information on our business model can be found
on pages 8 to 9.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 41
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. A full copy is available
on our website. 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.
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 (2021: 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 2022 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 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, three 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 35.
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 16 to 29.
42
Genel Energy Annual Report 2022
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 16 to 29.
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. In May 2022, Canan Edibog˘lu
attended the opening of our Istanbul office where she interacted
with members of staff that had relocated from Ankara to Istanbul
as well as new recruits to the Istanbul office. In November
2022, Canan also visited our Erbil office and operations at
Sarta, providing her with the opportunity to engage with local
employees and provide feedback to the Board of Directors.
Canan was also provided with and reviewed the results of
employee engagement surveys conducted in 2022.
In March 2022, the Board of Directors held a dinner with the
Company’s Leadership, Evolution and Development programme
(LEAD) participants, providing them with an opportunity to
interact with some high-potential employees. During a visit to
Istanbul in July 2022, a dinner was held with senior members
of the Istanbul office. 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.
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 2022, 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
2023 AGM
The 2023 AGM will be held on Thursday, 11 May 2023,
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
2022 investor activity
Investor Meet Company
presentation
Investor conference (London)
Full-year results roadshow
Investor Meet Company
presentation
Investor conference (London)
Investor conference (London)
AGM with investor Q&A
Half-year results roadshow
Investor conference (Oslo)
Investor conference (London)
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 43
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 2022, 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 and ESG
plan which the Committee approved at the beginning of the
year. As the global pandemic moved into a lower risk phase
the Committee was kept abreast of changes to protocols which
continued to be designed to ensure the safety of our workforce
and enable business operations to continue.
During 2022, Sarta oil production, trucking, drilling and well-
testing operations were delivered safely without any LTIs or tier
one loss of primary containment events at all our sites. We have
now achieved over three million work hours since our last LTI
which occurred in 2021.
It was recognised early in the year that we were starting to
see leading indicators that suggested room for improvement.
A Safety Improvement Plan was developed and implemented
professionally and enthusiastically by the field team and
Management. Key themes included leadership, competency,
contractors, compliance and learning, with each area being
championed by a member of the Executive Committee alongside
other senior managers. We have taken our own staff and our
contractors on a safety improvement journey that is clearly
delivering results.
The annual health and safety plan included actions in the
following areas: leadership and culture, training and competency,
management systems, risk management, health and COVID-19,
process safety, operational safety, driving safety, contractor
management, emergency preparedness, learning from incidents,
assurance and safe delivery of the asset development plans.
During the course of the year, progress was made against each
of these areas.
Meetings held in 2022
Three scheduled meetings
Chair:
David McManus
1
Members:
Canan Edibog˘lu
2
Rt Hon Sir Michael Fallon
2
Yetik K. Mert
2
Tim Bushell
3
1
David McManus was appointed as Chair of the HSSE Committee on 27
July 2022
2
Canan Edibog˘lu, Sir Michael Fallon and Yetik K. Mert were appointed as
members of the HSSE Committee on 27 July 2022
3
Tim Bushell was Chair of the Committee for the period up to 12 May 2022
HSSE Committee time spent
Highlights of HSSE Committee activity
— Monitored progress made against the 2022 H&S plan
— Reviewed progress against the 2022 ESG plan
— Endorsed the 2023 corporate KPI’s in relation to H&S and ESG
— Received an update on COVID-19 health and safety
measures
— Reviewed disclosures made in the 2021 Annual Report in
relation to HSSE
— Reviewed key risks in relation to HSE
— Received security updates
— Reviewed progress made against the localisation agenda
Planning and monitoring 51%
Culture 21%
Security 18%
Risk monitoring and mitigation 10%
44 Genel Energy Annual Report 2022
Actions
More information on
decisions and outcomes
Objective: To ensure that the Company maintains a responsible and credible approach to HSSE matters
(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
— Continued to monitor the approach taken to ensure the safety of the workforce and operations in
response to the global pandemic
— Received regular updates on security within the KRI
See p.18-19
Objective: To assist the Company in maintaining its relationships with local communities in areas in which it
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 asset CSR activity and corporate social investment projects in 2022
See p.22-23
Objective: To assist the Board and other committees in assessing HSSE risks and their effective
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
See p.31-33
Objective: To ensure the quality of the Company’s reporting and disclosure (both internally and to
shareholders) in relation to HSSE matters
— Reviewed and monitored disclosure made in the Annual Report on health, safety, security,
environmental, and community engagement matters
See p.5, 18-19 and 22-29
Objective: To assist the Company in developing the HSE culture
— Received regular updates on the approach to safety culture and security across the organisation
— Monitored the development and implementation of the safety improvement plan
— 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
See p.16-29 and 73
During the year the Committee monitored progress against
the Company’s environmental, social and governance (‘ESG’)
implementation plan. In May 2022, the Company published its
third Sustainability Report, which continues to be prepared in
accordance with the Global Reporting Initiative Standards core
option and aligns with the recommendations issued by the Task
Force on Climate-Related Disclosure. The Company’s CDP climate
score improved from C in 2021 to B in 2022 and CDP water
security score from D to B.
In line with the UK’s Streamlined Energy and Carbon reporting
requirements, our greenhouse gas emissions in 2022 continue to
be reported using an equity share approach. Further information
can be found on page 24.
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 2022 against our localisation
agenda. Further information on activities undertaken by the
Company as a socially responsible contributor to the global
energy mix can be found on pages 16 to 29.
In recognition of the importance of HSE to our business
the 2022 annual bonus objectives once again contained
elements specifically allocated to health and safety and ESG.
The Committee reviewed progress against the 2022 HSE
objectives and made recommendations to the Remuneration
Committee on these elements, the details of which may be found
on page 73.
The HSSE Committee effectiveness for the year ending
31 December 2022 was reviewed as part of the wider Board
effectiveness review, and details of the Board effectiveness
review can be found on page 53. The Committee also reviews
its terms of reference annually, which can be viewed at
genelenergy.com.
David McManus
Chair, HSSE Committee
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 45
International
Relations
Committee
Monitoring external
developments
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 an area of perceived high political risk, and
the ongoing success 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. July 2022 saw the departure
of Sefa Aytekin, the Company’s Head of Government Affairs and
I would like to take this opportunity to thank Sefa for his service
to the Company. The Committee continues to be supported in
its work by members of the Executive Committee and various
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 15 February 2022 Iraqi Supreme Court
judgement that purported to deem the oil and gas law regulating
the oil industry in Kurdistan unconstitutional.
During the year, the Committee continued to monitor the
operating environment in the KRI including the revenue
sharing agreement with the Federal Iraqi Government and the
receipt of monthly payments for exports. The Committee also
monitored the developments in Federal Iraq in relation to the
formation of the Federal Government following the October
2021 parliamentary elections. Following the Russian invasion of
Ukraine and trade sanctions implemented by the USA, UK and
EU on Russia, the Committee considered the implications the
sanctions could have on the business. The Company has engaged
external advisors to aid us in monitoring trade sanctions and
as a result of increased international focus on this area also
reviewed and enhanced our financial and trade sanctions and
Meetings held in 2022
Three scheduled meetings
Chair:
Rt Hon Sir Michael Fallon
Members:
Tolga Bilgin
Canan Edibog˘lu
David McManus
Yetik K. Mert
Hassan Gozal
1
1
Hassan Gozal was a member of the Committee for the period up to 12 May
2022
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
— Considered the implications on the Company of trade
sanctions being enforced by the USA, UK and EU
Macro environment 48%
External risk 24%
Governance 28%
46 Genel Energy Annual Report 2022
export control policies and procedures. The Committee reviewed
the key external stakeholders in the region and discussed with
management actions being taken to engage with them in order
to progress the Company’s strategic objectives.
As part of its remit, the Committee reviewed each of the risks
allocated to it under the Company’s risk management system,
including the effectiveness of the controls and mitigations
in place.
In 2023, 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 ending 31 December 2022
was completed as part of the wider Board effectiveness review:
further details of this can be found on page 53.
Rt Hon Sir Michael Fallon
Chair, International Relations Committee
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
Objective: To provide an independent assessment of the external environment in respect of international
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
— Reviewed risks allocated to the Committee under the risk management system and provided a
report to the Audit Committee on the effectiveness of controls and risk mitigation put in place
See p.31-33
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
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 47
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 and external
independent reserves evaluators 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 2022 year-end 2P reserves at the Tawke PSC stood at
327 MMbbls (2021: 357 MMbbls). 2P reserves have been adjusted
for 2022 production of 39 MMbbls and an upwards technical
revision of 9 MMbbls. Following implementation and observation
of the performance of phase 1 of the Tawke Field Enhanced Oil
Recovery project the Committee agreed to move 11.7 MMbbls of
the 23.3 MMbbls gross 2P reserves that have historically kept as
2C resources into 2P reserves.
The Committee considered an independent assessment of the
Taq Taq licence at which Genel has a 44% working interest
performed by McDaniel & Associates. Gross 2P reserves stood at
24 MMbbls at year-end 2022 (26 MMbbls at end-2021), following
production of 1.6 MMbbls.
The Committee also reviewed reserves at Sarta, at which
Genel has a 30% working interest and obtained operatorship
on 1 January 2022, and determined that the gross 2P reserves
estimate at year-end 2022 was 9 MMbbls (32 MMbbls at the
end of 2021), following production of 1.7 MMbbls and a technical
revision after assessment of the results of the 2022 appraisal
wells and pilot production.
Further information on our reserves and resources can be found
on page 14.
Meetings held in 2022
Two scheduled meetings
Chair:
David McManus
1
Members:
Paul Weir
1
Tim Bushell
2
Bill Higgs
2
1
David McManus was appointed as Chair of Reserves Committee and
Paul Weir as a member of the Committee on 7 February 2023
2
Tim Bushell was Chair and Bill Higgs a member of the Committee for the
period up to 12 May 2022
Reserves Committee time spent
Highlights of Reserves Committee activity
— Reviewed the reserves and resources for each of the
Company’s assets
— Approved the 2021 reserves and resources statement
— Review of disclosures made in the Annual Report in
relation to reserves and resources
— Reviewed the Reserves and Resources reporting schedule
and including endorsing the appointment of each
Independent Qualified Reserves Evaluator
Reserves and resources 90%
Governance 10%
48 Genel Energy Annual Report 2022
Actions
More information on
decisions and outcomes
Objective: To increase shareholder confidence by ensuring a robust reserves and resources review process
— Reviewed the reserves and resources assessment procedure
See p.14
Objective: To review the Company’s statement of reserves, independent reserves evaluator’s reports and
any material changes in reserves volumes
— Approved the Company’s annual statement of reserves and resources
— Reviewed the independent reserves evaluator reports
See p.14 and 48
Objective: To review the qualification and independence of the independent qualified reserves evaluator
— Endorsed the appointment of each of the assets reserves evaluators
See p.48
Following the results of the 2022 AGM, in September 2022
the Reserves Committee was not quorate therefore the asset
development plans which provide an opportunity for the
Committee to review the asset level strategy, opportunities, and
risks and scrutinise the way forward to monetise value from each
of our assets, were reviewed by the full Board of Directors.
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 ending 31 December 2022 was completed as part of
the wider Board effectiveness review.
David McManus
Chair, Reserves Committee
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 49
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.
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 56.
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.
50 Genel Energy Annual Report 2022
Board of Directors
Our committee structure
Audit
Committee
Ensuring
integrity and
objectivity of
published
financial
information
Remuneration
Committee
Ensuring an
appropriate
approach to
remuneration that
supports delivery
of the business
strategy
Nomination
Committee
Ensuring the
continuation of a
high-calibre
Board
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 Edib
og˘l
u
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 Edib
og˘l
u
Sir Michael Fallon
Yetik K. Mert
Members
Canan Edib
og˘l
u
Sir Michael Fallon
Yetik K. Mert
Members
Paul Weir
Members
Tolga Bilgin
Canan Edib
og˘l
u
David McManus
Yetik K. Mert
Meetings in
2022
3 scheduled
Meetings in
2022
3 scheduled
4 ad hoc
Meetings in
2022
2 scheduled
2 ad hoc
Meetings in
2022
3 scheduled
Meetings in
2022
2 scheduled
Meetings in
2022
3 scheduled
Board attendance
Main Board Audit Remuneration Nomination HSSE Reserves
International
Relations
David McManus
Sir Michael Fallon
1
Bill Higgs
2
Paul Weir
4
Tolga Bilgin
Tim Bushell
2
Canan Edibog˘lu
1
Hassan Gozal
2
Yetik K. Mert
1
3
Nazli K. Williams
5
denotes scheduled meeting attended denotes ad hoc meeting attended
denotes scheduled meeting not attended denotes ad hoc meeting not attended
1
Sir Michael Fallon, Canan Edibog˘lu and Yetik K. Mert were appointed to the HSSE committee on 27 July 2022
2
Bill Higgs, Tim Bushell, and Hassan Gozal were not re-elected at the AGM held on 12 May 2022
3
Yetik K. Mert was appointed Chair of the Remuneration Committee with effect from 19 April 2022
4
Paul Weir was appointed to the Board on 3 October 2022
5
Nazli K. Williams resigned as a Director on 13 April 2022
Composition, succession and evaluation
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 51
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 19 meetings in total of which 13 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
The Board has established six committees: 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 as Chair, chairs the Nomination
Committee and since April 2022 has been a member of the
Remuneration Committee.
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 55 to 57 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
52 Genel Energy Annual Report 2022
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. Following his appointment to the
Board in December 2021, during 2022 Yetik K. Mert received a
full and comprehensive induction to the operations, processes,
policies and procedures across the business. In October 2022,
Paul Weir was provided with a detailed induction focusing on the
Company’s governance practices.
As part of the ongoing training and development programme
throughout the year training on specific topics including sessions
on trade sanctions and health and safety was held. It is intended
that this programme will continue throughout 2023.
Board effectiveness
For the 2022 Board effectiveness review, an internal review of
the effectiveness of the Board, each of its Committees, and each
Director was conducted. The 2022 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.
Actions taken following the 2021 effectiveness review
Strategy
The Board recognises that progress was made in 2021 on
progressing the Company’s strategy and intends to continue to
work on advancing the strategy in 2022.
The Board held two strategy workshops in 2022 and have
reaffirmed their commitment to the Company’s strategy which
can be viewed on page 8.
Board development
The Directors agreed that additional training concerning the
business would be beneficial. This will be scheduled in the Board
calendar throughout the year as appropriate.
Board training sessions on trade sanctions and safety
improvement were incorporated into the 2022 calendar.
Going forward it is intended that training sessions will form part
of the regular Board calendar.
Actions arising from the 2022 effectiveness review
Culture
To continue building on efforts to enhance the dynamic
amongst the Board and with management.
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.
Overall, the 2022 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 election/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.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 53
54 Genel Energy Annual Report 2022
Board of Directors
1.
4.
7.
2.
5.
3.
6.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 55
Board of Directors
1. David McManus
Chair
Appointed: 5 February 2020.
Committee memberships: Chair of
the Nomination Committee, the HSSE
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.
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 more than 30 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,
Nomination and HSSE 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.
56
Genel Energy Annual Report 2022
4. Canan Edibog˘lu
Independent Non-Executive Director
Appointed: 21 June 2020.
Committee memberships: Chair of the
Audit Committee, and member of the
Nomination, HSSE, 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 Tüpras, 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.
5. Yetik K. Mert
Independent Non-Executive Director
Appointed: 22 December 2021.
Committee memberships: Chair of the
Remuneration Committee, and member
of the Audit, Nomination, HSSE, and
International Relations Committees.
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.
6. Ümit Tolga Bilgin
Non-Executive Director
Appointed: 5 February 2020.
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.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 57
Executive Committee
Executive Committee
1.
4.
2.
5.
3.
1. Mike Adams
Technical Director
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.
58
Genel Energy Annual Report 2022
3. Jamie Dykes
General Counsel
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. VK Gupta
Head of HSE and Risk Management
Previously Genel’s Head of HSE, VK
was appointed Head of HSE and Risk
Management on 1 June 2019 with
additional responsibilities for the
Company’s risk management and internal
controls system, and ESG. VK has 33
years of upstream E&P experience.
Before joining Genel, he was Vice
President for HSSE for BG Group, UK.
At the beginning of his career he worked
with ONGC and Enron Oil & Gas at
offshore platforms in operational roles
for 12 years and became an offshore
installation manager. He then, moved to
HSSE management and worked in India,
UK, North Africa and the Caribbean for
BG Group delivering transformational
performance improvement. VK holds a
B.Tech Honours in Electrical Engineering
and an MBA from Indian Institute
of Technology.
5. 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 Vice 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 the
Board Member of AYEDAS and BASKENT
Electricity Distribution Companies.
She previously worked at KORDSA
and TURSAB.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 59
Nomination
Committee
report
Ensuring a Board with the skills for
long-term success
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.
Following the resignation of Nazli K. Williams, and the result of
the 2022 AGM during which Bill Higgs, Tim Bushell and Hassan
Gozal were not re-elected as Directors by the Shareholders,
the Committee spent time considering the appointment of a
new CEO and 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.
Following the appointment of Paul Weir as Interim CEO on 9 June
2022, the Nomination Committee recommended the appointment
of Paul Weir to the Board of Directors for the role of permanent
CEO. On 3 October 2022 Paul Weir was appointed as CEO and
Executive Director.
Meetings held in 2022
Two scheduled meetings
Two ad hoc meetings
Chair:
David McManus
Members:
Canan Edibog˘lu
Rt Hon Sir Michael Fallon
Yetik K. Mert
Tim Bushell
1
1
Tim Bushell was a member of the Committee for the period up to 12 May
2022
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
— Recommended the appointment of the CEO and changes
to Board committee compositions to the Board of
Directors
— Considered talent management across the business
Succession 75%
Effectiveness 5%
Governance 20%
60 Genel Energy Annual Report 2022
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 page 20.
The Committee reviewed the output of the 2022 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.
In the year ahead, the Nomination Committee will continue to
Actions
More information on
decisions and outcomes
Objective: Review the structure, size and composition of the Board, having due regard to the Company’s
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 overall diversity of Board members
— Discussed changes to the Listing Rules which require additional disclosures in relation to gender and
ethnic diversity for financial years starting on or after 1 April 2022
See p.60-61
Objective: Annually reviewing the time required from Non-Executive Directors and making
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 2022 AGM
See p.53
Objective: Keeping under review succession arrangements for Directors and other senior executives
— During the course of the year recommended the appointment of Paul Weir as CEO and Executive
Director to the Board of Directors
— Undertook a review of talent management across the Company
See p.60-61
keep the composition and balance of the Board under review
to ensure the appropriate experience and skills to deliver the
Company’s strategy.
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 2022 was completed as part of the
wider Board Effectiveness Review. Further information can be found
on page 53.
David McManus
Chair, Nomination Committee
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 61
Audit, risk and internal control
Audit, risk, and
internal control
Risk monitoring and reporting
The Company keeps under continuous review the major risks
and opportunities, both current and emerging, to which its
operations in all regions are exposed by leveraging its local
expertise, industry knowledge and strategic relationships.
In particular, the Company continues to have a regular dialogue
with its key stakeholders in the Kurdistan Region of Iraq, such as
the KRG and other regional public bodies.
We maintain similar relationships in Somaliland and Morocco
to ensure the risks across the organisation as a whole are
fully understood and mitigated appropriately and within the
Company’s tolerance for risk. As the Company prepares to drill
its first exploration well in Somaliland, in 2022 engagement with
key stakeholders was significantly increased.
Our risk management procedures facilitate the identification of
the key risks and indicators, the assessment and management of
risks by designing and implementing prevention and mitigation
controls, monitoring of these controls and reviewing their
continuing effectiveness. Senior management review and
update the risk management process and collectively keep
the risk register under regular review. The Board conducts a
robust assessment of the principal risks facing the Company at
least annually with a focus on those risks that could impact our
business model, strategy, solvency, liquidity, future performance
and reputation. The Board also reviews and monitors the risk
management and internal control systems and each such review
covers all material controls, including financial, operational and
compliance controls.
Further details of the principal risks and uncertainties to which
the Group’s operations are exposed is set out on pages 31 to 33.
Risk management
The Company has put in place robust risk management policies
and procedures in order to manage day-to-day risks. In line with
our strategy to mitigate downside risk the Company takes a
proactive approach to risk management to design and implement
appropriate controls to mitigate as much as possible any
potential negative outcomes.
Overall responsibility for risk management remains with the
Board of Directors in order to ensure that appropriate oversight
is provided. Risks have been classified as strategic, external,
operational and financial, and allocated to the appropriate
Board Committee or the Board. As part of the Company’s risk
management process relevant Committees and the Board
review the summary of the annual risk sign-off forms that are
submitted by the risk owners. Risk owners are members of the
Executive Committee.
The Company risk register has been divided into:
— External risks: these are largely dependent on external
factors for example macro-economy, geo-politics, regional
political situation, security threats
— Internal risks: these are managed by the internal controls
framework
Risk management process
A qualitative risk assessment matrix (5x5) that is aligned to
industry best practices is used to aid risk assessment processes
and where considered appropriate, for prioritisation of activities
and resources.
Management holds regular risk register workshops for all
asset operations and projects to identify and assess risks,
review current controls and implement additional mitigation
actions when needed to reduce the residual risk to As Low
As Reasonably Practical (‘ALARP’). The outcomes of these
workshops are reported back to senior management, the
relevant Board Committee, and Board as a whole.
Bowtie method
For operational risks, the bowtie method of risk assessment is
used to improve the identification, design and management of
prevention and mitigation controls. Departmental champions are
identified to develop and maintain bowtie diagrams for the risks
that they are managing. An example of a bowtie is shown below.
Leading
indicator
Escalation
factor
Escalation
factor
Escalation
factor
Escalation
factor
Mitigation
control/s
Consequence
Cause
Prevention
control/s
Consequence
Cause
Prevention
control/s
Mitigation
control/s
The left-hand side of the diagram is constructed from fault tree
(causal) analysis and involves those causes (threats) associated
with the hazard, the prevention controls (barriers) associated
with each cause and any escalation factor control (that has the
potential to increase the likelihood).
The right-hand side of the diagram is constructed from the
event tree (consequence) analysis and involves mitigation
controls (recovery measures and emergency response) and
escalation factor control (that has the potential to increase
the consequence).
The centre of the bowtie is referred to as the ‘risk event’ or ‘top
event’, the undesired event at the end of the fault tree and at the
beginning of the event tree.
62
Genel Energy Annual Report 2022
Leading indicators
Leading indicators are identified measures to test the robustness
of controls. These are developed and implemented for selected
critical controls to manage and measure risk proactively
including for drilling, projects and production operations and
other principal risks as per the Company risk register, as part of
our risk management process.
Risk deep dive
Risk deep dive reviews are done for selected internal risks and
presented to the Board to enhance oversight and understanding
of Company risks and the controls in place.
Internal controls
The Board is responsible for maintaining and reviewing the
effectiveness of the Company’s system of internal control.
This system is designed to identify, evaluate and manage the
significant risks to which the Group is exposed. The Board has
also 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 to continually monitor systems of risk management and
internal control. These processes include having clear lines of
responsibility, documented levels of delegated authority 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.
Our long-term viability statement can be found on page 34.
Audit
The Audit Committee supports the Board in the performance
of its responsibilities by reviewing those procedures that relate
to risk management and internal control. A risk-based multi-
year internal audit program aligned with the Company’s risk
register has been developed. The Audit Committee considers the
reports of the internal audit function and the external auditor
and reports to the Board on such matters as it feels should be
brought to the Board’s attention. Further information on the
actions taken by the Audit Committee during the year can be
found on pages 65 to 68.
A detailed budget and work programme for the Company
is produced annually in accordance with our processes and
reviewed and approved by the Board. Operational reports are
provided to the Executive Committee on a monthly basis and
performance against the budget is kept under regular review
in accordance with the Group’s financial procedures manual.
The CEO reports to the Board on performance and key issues as
they arise.
The assessment of controls and risk management processes
provides a reasonable basis for the Board to make proper
judgements on an ongoing basis as to the financial position and
prospects of the Group.
The Board has conducted a review of the effectiveness of the
system of internal control for the year ended 31 December 2022
and up to the date of the signing of the financial statements, and
is satisfied that it remains appropriate to the business.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 63
Audit, risk and internal control
Company risk management process and structure
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
Risk owners
— Assess and report risks and controls to Board / Committees, including the
annual risk sign off form
— Put in place process and procedures that execute the decision taken by the
Board for the appropriate management or mitigation of each principal risk
— Design and operate prevention controls and mitigation actions and related
policies and procedures
— Monitor the design and operating effectiveness of controls in place
through reporting, assurance and detailed reviews in order to assess
where action is required
— Provide oversight of the daily operations of the key areas of the business
Risk owner
reports on
effectiveness
of controls and
assurance
Risk owner reports
assessment of
risks to the board/
committee
Risk owner designs,
operates, monitors
and reports on controls
Board and Committees
The Board is supported by its Committees, which apply their expertise to the assessment and management of allocated risks. The Committees
report findings and/or recommendations to the Board.
Board and Committees Responsibility
Board
— Overall responsibility for risk oversight
— Overall responsibility for all principal risks
Audit Committee
— Risk management and internal control system
— Financial controls
HSSE Committee
— Health, safety, and environmental risks
— Security and community risks
Reserves Committee
— Review reserves and resources
— Review asset development plans
International Relations Committee
— Manage external risks
Renumeration Committee
— Compensation and reward
Nomination Committee
— Board composition
64
Genel Energy Annual Report 2022
Audit Committee
report
Ensuring integrity and clarity of
published financial information
Dear Shareholder,
I am pleased to present a report from the
Audit Committee describing our activities
during the year.
The remit of the Committee includes:
— Monitoring the integrity of the financial statements and
formal announcements relating to the Company’s financial
performance, and reviewing significant financial reporting
judgements contained in them
— Advising the Board on whether the Annual Report
and Accounts, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy
— Reviewing the Company’s internal financial controls and
internal control and risk management systems
— Ensuring the external auditor is independent and making
recommendations to the Board regarding the re-appointment
of the external auditor
— Monitoring and reviewing the effectiveness of the internal
audit function
The Committee’s terms of reference are available on our website
at genelenergy.com
Membership
During 2022 all members of the Audit Committee were
Independent Non-Executive Directors and Canan Edibog˘lu is
considered by the Board to have recent and relevant financial
experience. The Committee as a whole is considered to be
competent in the oil and gas sector.
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 and formerly
Bill Higgs), CFO (Luke Clements and formerly Esa Ikaheimonen),
Head of HSE and Risk Management (VK Gupta), General Counsel
(Jamie Dykes) and Company Secretaries (Chandni Karania and
formerly Stephen Mitchell) to its meetings.
Meetings held in 2022
Three scheduled meetings
Chair:
Canan Edibog˘lu
Members:
Yetik K. Mert
Tim Bushell
1
1
Tim Bushell was a member of the Committee for the period up to 12 May
2022
Audit Committee time spent
Highlights of Audit Committee activity
— Reviewed the 2021 Annual Report and Accounts and 2022
half-year results
— Reviewed significant estimates and judgements in relation to
the 2021 full-year accounts and 2022 half-year accounts
— Received reports from the external auditors
— Reviewed internal controls and risks
— Approved the 2022 internal audit plan and received reports
from Internal Audit
— Received updates on the legal compliance programme
— Reviewed risk management processes and the risk register
Governance and audit
61%
Risk management and internal control 26%
Financial reporting
10%
Reserves and resources
3%
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 65
Audit Committee report
Actions
More information on
decisions and outcomes
Objective: To increase shareholder confidence by ensuring the integrity and objectivity of published
financial information
— Scrutinised areas involving significant judgement, estimation or uncertainty in particular
impairments
— Monitored changes to reserves and resources
— Reviewed and received reports from the external auditors on the annual financial statements and
interim results statement
— Ensured compliance with financial reporting standards and relevant financial and governance
requirements
— Response to any queries from the FCA in relation to published financial information
See p.10-15
See p.67-68
Objective: To advise the Board on whether the Annual Report taken as a whole is fair, balanced and
understandable, and provides the information necessary for shareholders to assess the Company’s
performance, business model and strategy
— Considered the quality and appropriateness of the accounting policies and practices and financial
reporting disclosures and changes thereto
— 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
See p.65-68
Objective: To assist the Board in meeting its financial reporting, risk management and internal control
responsibilities
— Monitored compliance with financial reporting standards and relevant financial and governance
requirements
— Kept under review the risk register and retained oversight of the Group risk framework and by doing
so support the Board on assessing the Company’s tolerance for risk
— Kept key accounting policies and practices under review to ensure that they remain appropriate
See p.62-64
See note 1 p.103-110
Objective: To assist the Board in ensuring the effectiveness of the internal accounting and financial
controls of the Company
— Kept under review the effectiveness of the systems of internal control, including the adherence to
Company policies, internal audit outputs and the compliance programme including the anti-bribery
and trade sanctions processes and procedures
See p.62-64 and 67
Objective: To monitor the Company’s treasury and financing arrangements
— Monitored the cash position of the Company and kept the treasury policy under review to ensure it
remains appropriate and aligned with the Company’s cash position
See p.13
Objective: To strengthen the independent position of the Company’s external auditors by providing
channels of communication between them and the Non-Executive Directors
— Held private meetings with the external auditors without the presence of management
See p.68
Objective: To review the performance of the Company’s internal and external auditing arrangements
— Recommended the re-appointment of BDO LLP (‘BDO’) as the Company’s external auditors
— Monitored the effectiveness and independence of the external auditor and compliance with the non-
audit services policy
— Received reports from the Company’s internal auditor on audits performed in the period and
monitored their performance and effectiveness
See p.67-68
Objective: To assist the Board in monitoring and addressing potential conflicts of interest between
members of the Group and the Directors and/or senior managers of the Company
— Continued to assist the Board in reviewing conflicts of interests of Directors and senior managers
See p.42
66
Genel Energy Annual Report 2022
Significant issues and judgements
The significant issues considered by the Committee in relation to
the 2022 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 based on the forward curve and
smoothed to $70/bbl in the long-term.
Netback calculations – the MNR has changed the reference price
for crude oil sales from Dated Brent to the local benchmark
KBT (‘KRG Blend Realised Price’), effective 1 September 2022.
Although terms have not been agreed by the Company and are
still being negotiated with the MNR, the Company has assessed
and recognised revenue from September to December 2022
under the proposed pricing mechanism. Since the reporting date
September payments have been received under the proposed
new pricing mechanism. Change in pricing terms was considered
to be an impairment indicator.
Discount rate – following the changes in the macro geo-political,
economic and industry environment, the Committee has
assessed and updated the discount rate used for assessing the
recoverable amount of its producing assets from 13% to 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, KBT 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 results of the Sarta appraisal and pilot production
has resulted in an impairment of the Sarta PSC of $125.5m.
Impairment of exploration assets – following the expiration of
the Qara Dagh licence on 2 January 2023, the book value of
$78.0 million has been written off under IFRS 6.
Suspended override – in 2022 the Company received payments
of $18.2m in relation to the suspended override which was
recognised in the accounts. As at 31 December 2022, it was
assessed that there was now sufficient confidence in the
suspended override repayment mechanism to recognise the
remaining amounts due under it, but not yet received. This has
resulted in $16.5 million being recognised in the reporting period.
All of this amount has been received since the reporting date.
Trade receivables – as a result of slips in payments by the KRG,
the Company was owed 5 months of sales revenue as of the
year-end. The delay in payments was assessed in terms of the
recoverability of trade receivables and this assessment resulted
in an expected credit loss of $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 five year period.
Risk management
As part of the Company’s control framework the Committee
assisted the Board in monitoring and reviewing risk management
procedures, risk reporting and the full risk register. An overview
of the Company’s risk management procedures and principal
risks can be found on pages 62 to 64 and 31 to 33.
Internal Audit
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.
In November 2022 the Committee approved an internal audit
plan which is aligned to the Group’s risk profile to be executed
during 2023. Ahead of approving the 2022 plan the Audit
Committee took into consideration recent internal audits that
have been performed as well as an indicative multi-year plan
ensuring the Internal Audit function provides assurance across a
range of focus areas. Audit fieldwork planning, review and follow
up is delivered by EY. Internal Audit has a direct reporting line to
the Audit Committee and provides regular updates throughout
the year on the findings identified in the audits and opportunities
to improve the design and operating effectiveness of internal
controls together with updates on the status of management’s
implementation of agreed actions.
In November 2022, the Committee reviewed the outcome of
the internal audit work that had been performed in accordance
with the 2022 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. Due to business priorities, a portion of the
internal audit plan was deferred to Q1 2023. This was approved at
the December Audit Committee and is now being taken forward
with management. 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.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 67
External audit
Following a tender process in 2020, BDO was re-appointed as
the Company’s external auditor at our 2022 AGM and Anne
Sayers has been appointed as the Senior Statutory Auditor to
the Company.
The effectiveness and the independence of the external auditor
is 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 2022.
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 2022, the ratio of non-audit to audit and audit related fees
paid to BDO was 1:6, the non-audit fee paid was $69,500, further
details of which can be found on page 113 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 2022.
During the year, the FRC informed the Company that it had
included our 2021 Annual Report in a sample of annual reports
reviewed as part of their thematic review of judgements and
estimate disclosed published in July 2022. As part of this review,
the FRC performed a limited score review of the judgements and
estimates disclosure, in our 2021 Annual Report and provided
two recommendations. (1) distinguishing between significant
estimates and other estimates, and (2) including of details of the
methodology used when providing reserves estimates. Our 2022
Annual Report has incorporated changes to enhance disclosures
as suggested by the FRC.
Effectiveness
As part of the Company’s governance practices, an effectiveness
review of the Committee for the year ending 31 December 2022
was completed as part of the wider Board Effectiveness Review,
further information can be found on page 53.
Canan Edibog˘lu
Chair, Audit Committee
Audit Committee report
68 Genel Energy Annual Report 2022
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 2022, my first 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 high standards of
corporate governance and so we have once again prepared our
Directors’ Remuneration Policy Report and Annual Report on
Remuneration in accordance with the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008
(as amended).
Board Changes
We announced Paul Weir’s appointment as Interim CEO effective
9 June 2022, a position made permanent on 3 October 2022.
The principal elements of Paul’s remuneration are set out in this
Report. During the Interim and permanent CEO appointment
process the Committee ensured that the terms of his appointment
reflected the scope and complexity of the Company and the
challenges that the Company faces. The Committee also took into
account his skills and experience, his remuneration package as a
whole, and external benchmarking. I welcome him to the Board
as CEO, and I look forward to working more closely with him in his
new role.
Bill Higgs did not receive the required 50% majority of votes in
favour of election at the Company’s 2022 AGM and accordingly
was not reappointed as a Director, and he stood down from his role
as CEO on 1 June. He continued as a Special Adviser to the Chair
until 1 September 2022. Details of Bill’s remuneration for 2022 are
presented throughout this Remuneration Report.
Remuneration for 2022
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 2022, the
Committee considered performance against the targets set out in
the scorecard on page 73 for the corporate element of the bonus.
The Committee assessed the Company scorecard based upon
the achievement of performance targets, resulting in a corporate
scorecard outcome of 52% of maximum. The score reflects the
Meetings held in 2022
Three scheduled meetings
Four ad hoc meetings
Chair:
Yetik K. Mert
1
Members:
David McManus
Rt Hon Sir Michael Fallon
1
Yetik K. Mert was appointed Chair of the Committee with effect from 19
April 2022
Remuneration Committee time spent
Highlights of Remuneration Committee activity
— The Committee held three scheduled and four ad-hoc
meetings during the year. Details of the key activities
carried out are set out on page 70. All of the members of
the Committee are Independent Non-Executive Directors,
including David McManus, Chair of the Board, who was
independent on appointment
All employee remuneration 29%
Executive Director remuneration 46%
Long term incentive plans for all employees 10%
Governance 16%
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 69
Directors’ remuneration report
Company’s continued high performance in relation to cultural
delivery and the successful execution of the firm production activity
on budget. Nevertheless, the disappointing results at Sarta, in
particular in light of the importance of the delivery of production
activity, resulted in a score that is significantly lower than the
outcome of 73.75% in 2021. The Committee exercised downward
discretion to reduce the outturn of Health and Safety KPIs despite
the performance target being met in full, as leading indicators
during 2022 suggested room for improvement in this area. Paul’s
2022 bonus figure is comprised of his annual bonus and the bonus
related to KPIs set from the date of his appointment as Interim CEO,
therefore, his overall CEO bonus outcome was 59% of maximum.
Paul and Bill, along with other members of senior management,
were granted awards under the Company’s Performance Share
Plan (PSP) in April 2022, the first under the new plans approved
by shareholders at the 2021 AGM. 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 2019 PSP was measured based on the
Company’s TSR performance over the three years to May 2022
and, following an assessment of performance against the targets,
the vesting outcome for the 2019 PSP was 0%. The Committee
considered the outcome and concluded that there would be no
application of discretion.
Full details of the Remuneration Committee’s decisions for 2022 are
set out in this Annual Report on Remuneration on pages 71 to 78.
Looking ahead
The Committee approved an increase in Paul’s base salary for
2023 at a rate of 2%, effective 1 January 2023. This is less than
the increase for the wider UK workforce as his salary had been
increased upon being appointed CEO.
The corporate scorecard for 2023 (as seen on page 77) reflects
the focus of the Company with an emphasis on delivery of culture,
dividend, production business and pre-production, measuring
delivery of the work plan and budget and annual performance.
The Committee has adjusted the weightings of the targets set
out in the 2023 scorecard in order to drive performance in our
key strategic areas. 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.
The 2023 annual bonus for Paul will be based on a combination of
achievement against the Company scorecard metrics at 80% and
20% of the bonus reflecting personal performance. At the time of
his appointment as CEO the Committee also agreed to grant Paul
a PSP award in respect of his time as CEO during 2022 that was
not reflected in his 2022 PSP grant. This award will have a face
value of £87,565 and will be made at the same time and with the
same terms as the 2023 PSP award. 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.
As we have chosen to comply with UK remuneration reporting
regulations, we sought shareholder approval at our 2020 AGM
for our Remuneration Policy. While a small number of minor
administrative changes in relation to our new share plans were
put to shareholders at the 2021 AGM, the Remuneration Policy is
reaching the end of its three-year term and will be reviewed in 2023
to ensure it is aligned with the Company’s strategy.
At the AGM in 2023, our shareholders will be asked to approve 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
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 Executive Directors, 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 respect of performance related elements of the Remuneration
Policy formulate suitable performance related criteria and
monitor their operation
— Completed a mid-year review of performance against bonus targets
— Reviewed performance objectives of the Executive Directors and Executive
Committee in order to determine the level of bonus earned in respect of the 2022
financial year
To review all aspects of any equity incentive plans operated or to
be established by the Company
— The Committee set targets for 2022 PSP awards and reviewed the relative TSR
peer group for 2022 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
facing the Company
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 fulfilled
— Reviewed the Annual Report on Remuneration for 2021 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
70 Genel Energy Annual Report 2022
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. Deloitte’s fees in respect of advice to the
Committee in the year under review were £60,628 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 Chair, (David
McManus), CEOs (Paul Weir and Bill Higgs), Company Secretaries
(Chandni Karania and Stephen Mitchell) 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.
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 2022 and discusses how the Policy
will be implemented in the 2023 financial year. Details of the Policy
can be found on pages 79 to 86.
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 and benefits allowance), annual
bonus (a percentage of which is defered by way of the Deferred Bonus Plan (‘DBP’) for Executive Directors), and PSP awards
— The Committee takes great care to ensure that the different aspects of the remuneration framework throughout the Company is
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
— The use of deferral of annual bonus awards and holding periods on PSP awards ensure that Executive Directors are exposed to
the long-term performance of the Company. 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 account of 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 2021, at the AGM
held on 12 May 2022, were as follows:
Number of votes cast For Against Abstentions
To approve the Annual Report on Remuneration for the year
ended 31 December 2021
211,403,664 211,269,755 133,909 20,245
99.94% 0.06%
Audited information
The following tables set out the total remuneration for the Executive Directors and CEOs, and Non-Executive Directors for the period in
office for the year ended 31 December 2022, and comparison figures where appropriate.
Salary/fees Benefits Total Fixed Pay Bonus LTIP
3
Total Variable Pay
Total
Name
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
Executive Director/CEO
Paul Weir
1
n/a 238 n/a 43 n/a 281 n/a 159 n/a n/a n/a 159 n/a 440
Bill Higgs
2
546 235 109 47 655 282 418 118 369 0 787 118 1,442 400
1
2022 data relates to the period from 9 June 2022, the date Paul Weir was appointed Interim CEO
2
2022 data relates to the period to 1 June 2022, the date Bill Higgs stepped down from the position of CEO. The bonus value shown is in respect of the period
to 12 May in line with his Executive Directorship
3
LTIP includes share awards under the Company’s PSP which vested in the relevant year, based on the share price on the date of vesting. The 2019 PSP
award did not achieve the required performance conditions and therefore did not vest
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 71
Directors’ remuneration report
Salary/fees
1
% change in annual fee
2
Name
£’000
2021
£’000
2022
2019/
2020
2020/
2021
2021/
2022
Non-Executive Directors
David McManus 230 230 n/a 0% 0%
Sir Michael Fallon 100 100 n/a 0% 0%
Tolga Bilgin 56 56 n/a 0% 0%
Canan Edibog˘lu 76 84 n/a 8.6%
3
10.5%
4
Yetik K. Mert 2 80 n/a n/a 14.1%
5
Tim Bushell
6
91 33 0% 0% 0%
Hassan Gozal
6
56 21 n/a 0% 0%
Nazli K. Williams
7
56 16 0% 0% 0%
1
Non-executive Directors received only a fee in 2022 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
6
Tim Bushell and Hassan Gozal were not re-elected at the AGM held on 12 May 2022
7
Nazli K. Williams resigned from the Board on 13 April 2022
Additional disclosures in respect of the single total figure table
Base salary
Bill Higgs received an annual base salary of £565,116 from 1 January 2022 to his date of departure. Paul Weir received £127,074 in respect of
his role as Interim CEO, and his base salary was set at £450,000 from his appointment as CEO on 3 October 2022.
Salary information for 2023 is provided on page 77.
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 workforce.
Annual bonus
The 2022 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 52% of maximum, reflecting the continued high
performance in the delivery of the Company’s work programme, in combination with the disappointing results at Sarta.
Paul’s strong management of the Company during a year of transition was rewarded by the Committee with a personal score of 87%.
Upon his appointment as Interim CEO, Paul Weir became eligible for a bonus, designed to incentivise him in his Interim CEO role. This has
been pro-rated to the date of his appointment as permanent CEO and was tested against the KPI’s agreed following appointment to the
interim position. These agreed KPI’s remained in place for the rest of 2022 and the personal element of his annual bonus award was
measured against these.
Bill Higgs achieved a personal performance score of 80%, recognising his leadership and personal success against his objectives. The bonus
he was awarded for his role as CEO was measured as at the date he stepped down from the Board, taking into account the progress made
against the Company scorecard as at that date.
Under the Deferred Bonus Plan, Bill Higgs chose to defer £104,560 of his 2021 bonus into Company shares. Paul Weir will defer 25% of his
2022 annual bonus relating to his period as CEO into Company shares. Any bonus that is deferred will vest after a two year period and will
be subject to malus provisions during this period.
2022 bonus As % of maximum
Paul Weir
1
£158,830 59%
Bill Higgs
2
£117,718 57.6 %
1
For Paul Weir, the 2022 bonus figure is comprised of (i) the pro-rated portion of his annual bonus, (ii) his bonus related to KPIs set from date of appointment
as Interim CEO, (both pro-rated for the period he held the position of Interim CEO), and (iii) his CEO bonus award (pro-rated for the period 3 October 2022 to
31 December 2022)
2
For Bill Higgs, the 2022 bonus number is pro-rated according to the period holding an Executive Directorship, ending on 12 May 2022
72 Genel Energy Annual Report 2022
2022 – Annual bonus, Remuneration Committee assessment of performance against targets
For 2022, the Committee approved company metrics focused on the delivery of culture, dividend, and our production and pre-
production businesses.
Company culture and health and safety continue to be strong elements of delivery across all measurables. However, targets were missed in
relation to overall production being carried out in line with budget and lack of progress at Sarta.
The company scorecard was assessed by the Committee, based upon the achievement of these performance targets, which resulted in a
corporate scorecard outcome of 52% of maximum.
Bonus
performance
measure Weighting Performance target Assessment of performance against metrics
Performance
assessment
Culture
delivery
25%
— Health and Safety
— ESG implementation
— Strong compliance culture
— High performance culture
— Strong performance in all elements however
the Committee exercised downwards discretion
due to comparison of achievements against
HSE targets with prior years
21%
Production
Business
35%
— Production delivered on budget
— Production activity delivers in line
with expectation
— Production of 30,150 bopd not in line with
firm budget
— Activity delivered on budget
17.5%
Pre-production
Business
22.5%
— Activity programme delivered within budget
— Progress at Sarta and Somaliland delivered
on time
— Disappointing results at Sarta (see page 15)
— Somaliland activity progressed and is on track
6.5%
Dividend story 17.5%
— Free cash flow target to be met — Adjusted free cash flow below target due to low
production at Sarta
7%
Share plan awards made in 2022
PSP awards continued to be assessed 50% on relative TSR against our peer group and 50% on absolute TSR. The peer group for the
2022 PSP awards is below.
Africa Oil Energean Oil and Gas Jadestone Energy ShaMaran Petroleum Corp.
Aker BP EnQuest Kosmos Energy Tethys Oil
Capricorn Energy Gulf Keystone Pharos Energy Tullow Oil
DNO Harbour Energy Savannah Energy
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 0%
Median 30%
Between median and upper quartile Straight–line basis
Upper quartile 100%
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 0%
10% p.a 30%
Between 10% p.a. and 15% p.a. Straight–line basis
15% p.a. or more 100%
The following table provides details of the awards made under the PSP and DBP during 2022.
1
Performance for the PSP awards is mea-
sured over the three years from the date of grant.
Type of award
Face value
(£) Basis of awards
Threshold vesting
(% of face value)
Maximum vesting
(% of face value)
End of
performance
period/Vesting
Bill Higgs PSP
2
£847,674 150% of salary 30% 100% 03/04/2025
DBP
3
£104,560 voluntary election 03/04/2024
1
Paul Weir was granted awards under the PSP prior to his becoming Interim CEO
2
The face value of the PSP is calculated as a percentage of base salary as at award date
3
Bill Higgs was invited to defer a percentage of his 2022 bonus into Company shares under the DBP. The face value (£) is calculated using the average share
price ten dealing days prior to the date of grant, of 178 pence
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 73
Directors’ remuneration report
Share awards
The following table provides a summary of all share awards as at 31 December 2022, or as at the date the individual stepped down from
their role as CEO, as applicable. Further details of the Company’s share plans are set out on pages 122 and 124.
Scheme Grant date
Exercise
price
(pence)
As at
9 June
2022
Granted
during
the
period
Dividend
during
the
period
Vested
during
the
period
Exercised
during the
period
Lapsed
during
the
period
As at 31
December
2022
Performance
period end Expiry date
Paul Weir
1
RSP 22/06/2020 - 46,505 - 2,770 - - - 49,275 03/04/2023 22/06/2030
PSP 22/06/2020 - 274,416 - 10,959 - - - 285,375 03/04/2023 22/06/2030
PSP 06/04/2021 - 195,411 - 7,804 - - - 203,215 06/04/2024 06/04/2031
PSP 04/04/2022 - 188,526 - 7,5 29 - - - 196,055 04/04/2025 04/04/2032
Scheme Grant date
Exercise
price
(pence)
As at 1
January
2022
Granted
during
the
period
Dividend
during
the
period
Vested
during
the
period
Exercised
during the
period
Lapsed
during
the
period
As at
1 June
2022
Performance
period end Expiry date
Bill Higgs
2
PSP 07/05/2019 - 451,408 - 22,104 - - 473,512 0 07/05/2022 07/05/2029
RSP 07/05/2019 - 107,990 - 5,288 113,278 - - 113,278 07/05/2022 07/05/2029
PSP 22/06/2020 - 714,957 - 35,010 - - - 749,967 03/04/2023 22/06/2030
DBP 22/06/2020 - 70,640 - 3,459 - - - 74,099 22/06/2022 22/06/2030
PSP 06/04/2021 - 503,545 - 24,657 - - - 528,202 06/04/2024 06/04/2031
DBP 06/04/2021 - 64,812 - 3,173 - - - 67985 06/04/2023 06/04/2031
PSP 04/04/2022 - - 476,274 23,322 - - - 499,596 04/04/2025 04/04/2032
DBP 04/04/2022 - - 58 ,74 8 2,876 - - - 61,624 04/04/2024 04/04/2032
1
Awards made to Paul Weir prior to 9 June 2022 were made to him before he became Interim CEO
2
No element of the 2022 LTIP value shown for Bill Higgs on page 71 is due to share price growth between grant and vesting for the 7 May 2019 PSP
2019 Performance Share Plan Awards – performance target
1. Relative TSR vesting schedule and comparator group
The Relative TSR element of the Award will vest in accordance with the
following schedule:
Relative TSR ranking of the Company Proportion of Award Vesting
Below median 0%
Median 30%
Between median and upper quartile Straight line basis
Upper quartile 100%
The Award will be subject to the Company’s ranked TSR performance against the
following Comparator Group:
Africa oil Gulf Keystone Premier Oil
Aker BP Hurricane Energy Seplat Petroleum
Cairn Energy Kosmos Energy Soco International
DNO Lundin Tullow Oil
Enquest Nostrum Oil and Gas
Energean Oil and Gas Ophir Energy
2. Absolute TSR vesting schedule
The Absolute TSR Performance Target means the compound annual growth rates
(CAGR) in the TSR of the Company.
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 12.5% p.a 0%
12.5% p.a 30%
Between 12.5% p.a. and 25% p.a. Straight line basis
25% p.a. or more 100%
Performance
— Based on the Company’s TSR performance over the performance period the
Company is ranked 10th against the comparator group and achieved vesting of
0% of this element.
— Absolute TSR performance: The Company’s absolute TSR performance over
the three year performance period was 0.7% p.a., resulting in vesting of 0% of
this element.
— Cumulative performance outcome: The cumulative impact of the above
performance for the relative and absolute TSR elements results in 0% of May
2019 awards vesting.
Board changes during the year
Bill Higgs did not receive the required 50% majority of votes in favour of his re-election at the 2022 AGM and accordingly was not
reappointed as a Director on 12 May 2022. He stepped down from his role as CEO on 1 June 2022. He continued his employment with the
Company on his CEO salary as a Special Adviser to the Chair until 1 September 2022, a role which did not include any Board responsibilities.
In 2022, Bill Higgs was paid 12 months salary and cash in lieu of benefits as part of his settlement agreement and in lieu of his notice period,
plus an outplacement payment of £50,000 and up to £3,000 in legal fees. He was treated as a Good Leaver with respect to his share
awards, which were subject to time pro-rating to 1 September 2022 and will vest at the normal time subject to performance. In relation to his
role as a Special Adviser he received a pro-rated bonus based on Company and personal performance metrics achieved in the year, which
resulted in a payment of £184,749 for this period.
There were no other payments made to Directors for loss of office in 2022.
74
Genel Energy Annual Report 2022
Statement of Directors’ shareholding and share interests
The following table sets out details, as at 31 December 2022 (or the date on which the relevant individual stepped down from the Board, as
the case may be), 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 2022 financial year, served as a Director.
The Company does not currently operate a formal shareholding guideline as Executive Directors must normally hold any vested shares
under the PSP (2021 and 2011), and RSP (2011) for two years following vesting for share awards. Executive Directors are expected to build up
their holding over time.
Director
Ordinary shares
as at 31 Dec 2021
Ordinary shares
as at 31 Dec 2022
Interest in share options granted under
the Company share plans
as at 31 Dec 22 or on date stepped down
David McManus - - -
Sir Michael Fallon 9,000 9,000 -
Paul Weir
1
– 22,588 733,920
Tolga Bilgin
2
- - -
Canan Edibog˘lu – - –
Yetik K. Mert - - -
Bill Higgs
3
307,256 307,256 2,094,751
Tim Bushell
3
– - –
Hassan Gozal
3
46,338,622
4
46,338,622
4
-
Nazli K. Williams
5
– – –
1
Paul Weir joined the Board on 3 October 2022
2
Bilgin Grup Dog˘al Gaz A.S¸, of which Tolga Bilgin is the CEO and holds 0.28% of the shares, holds 62,523,017 shares in the Company as at 31 December 2022
3
Bill Higgs, Tim Bushell, and Hassan Gozal were not re-elected at the Company’s 2022 AGM on 12 May 2022. Their shareholdings and/or options in the table
above are as at the date of leaving the Board
4
These shares are held by Daax Corporation FZE, of which Hassan Gozal is the sole owner
5
Nazli K. Williams resigned from the Board on 13 April 2022
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
0
20
40
60
80
100
120
140
160
180
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
Genel Energy FTSE350 oil & gas producers
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 75
Directors’ remuneration report
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 over the period since listing to the end of the 2022 financial year.
2013 2014 2015 2015 2016 2017 2018 2019 2019 2020 2021 2022 2022
Chief Executive
Officer
Tony
Hayward
Tony
Hayward
Tony
Hayward
2
Murat
Özgül
2
Murat
Özgül
Murat
Özgül
Murat
Özgül
Murat
Özgül
2
Bill
Higgs
2
Bill
Higgs
Bill
Higgs
Bill
Higgs
2
Paul
Weir
2
CEO single figure
remuneration
(£’000)
1,779 2,521 468 531 1,519 1,765 1,882 299 1,112 1,281 1,539 879 800
Annual bonus
pay-out
(as a % of
maximum
opportunity)
95% 90% 0% 36.2% 71.4% 82.1% 72.5% 60% 65% 78% 77% 57. 6% 59%
Long-term
incentive vesting
out-turn
(as a %
of maximum
opportunity)
n/a 82.5% 0% 0%
1
0% 0% 0% 0% n/a 50%
3
65.8% 0% n/a
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
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 2022 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 three years between 2019 and 2022. The figures below include pro-rated calculations for Bill and Paul’s mid-year dates.
The decrease in the percentage change in the employee base salary, benefits and bonus reflects the transitory reduction in employee
numbers during 2022 due to the office move from Ankara to Istanbul.
% change in base salary % change in benefits % change in annual bonus
2019/
2020
2020/
2021
2021/
2022
2019/
2020
2020/
2021
2021/
2022
2019/
2020
2020/
2021
2021/
2022
3
CEO
1
38.4% 3.5% (13.3%) 38.4% 3.5% (17.8%) 66.1% (0.9%) (33.84%)
All employees 10.4% 10.4%
2
(12.4%)
6.8% 19.8%
(3.2%)
9.7% (7.4%) (34.62%)
1
For 2022, Bill Higgs stepped down as CEO on 1 June and Paul Weir was appointed as Interim CEO on 9 June
2
The 2020/2021 % change in base salary has been restated from 9.4% due to an miscalculation in this table in the 2021 report
3
This year on year decrease in annual bonus % reflects the change in company scorecard outcome from 73.75% for 2021 to 52% for 2022
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 2022 was
$50 million (2021: $44 million).
Remuneration paid to all employees $m
2021 24.44
2022 20.02
Remuneration paid to all employees represents total staff costs from continuing operations.
76
Genel Energy Annual Report 2022
Implementation of Remuneration Policy in 2023
This section provides an overview of how the Committee is proposing to implement our Remuneration Policy in 2023.
In determining the salary increase for Paul Weir for 2023, 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 2% with effect from 1 January 2023, a smaller increase than the wider
workforce increase reflecting that his salary had been increased upon his appointment as permanent CEO. The table below shows his base
salary for 2023.
Base salary from 1 Jan 2023
Paul Weir £459,000
Benefits
As outlined above, the Executive Directors receive a cash supplement in lieu of all benefits, including pension, private health insurance, life
assurance, and company car provision. The cash supplement is not included in calculating bonus and long-term incentive quantum.
For 2023, the cash supplement remains at 20% of base salary. This is in line with Company ambition to align Executive remuneration with
the wider workforce and is in line with our Executive Committee members. This table shows Paul’s benefits allowance for 2023.
2023 benefits allowance
Paul Weir £91,800
2023 – Annual bonus targets
The target bonus for the Chief Executive Officer for 2023 will be at a maximum of 100% of base salary, and his performance will be
measured 20% against personal performance metrics and 80% against Company metrics.
The Committee has once again set a clear focus on short-term delivery for the 2023 cash bonus, and believes that this will drive the
maximum value for shareholders. Financial targets for production and budgets have been set and will be assessed 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 reinvigoration, business growth and the dividend story than in previous
years, with a continued focus on health and safety.
Bonus performance measures Specific targets Percentage
Culture
— ESG implementation
— Continued compliance focus
— Strong company culture
21%
Production business
— Health and Safety
— Production delivered on budget
— Production activity delivers in line with expectation
31%
Pre-production business
— Activity programme delivered within budget 8%
Sustainable dividend
— Net income after capex
— Progress on portfolio growth
40%
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 77
Directors’ remuneration report
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 2023 award for Paul Weir will be based on a face value of 150% of base salary. At the time of his appointment as CEO the Committee
also agreed to grant Paul a PSP award in respect of his time as CEO during 2022 that was not reflected in his 2022 PSP grant. This award
will have a face value of £87,565 and will be made at the same time and with the same terms as the 2023 PSP award.
The peer group for the measurement of the relative TSR element of the 2022 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 2022, except for the removal of Savannah
Energy due to the temporary suspension of their shares from trading.
Africa Oil Enquest Jadestone Energy Tethys Oil
Aker BP Energean Oil and Gas Kosmos Energy Tullow Oil
Capricorn Energy Gulf Keystone Pharos Energy
DNO Harbour Energy ShaMaran Petroleum
The relative and absolute TSR vesting schedule will remain the same as for awards made in 2022, as outlined on page 73.
Chair and Non-Executive Director remuneration
Non-Executive Director fees were reviewed in 2022 against benchmark data for companies with a similar market cap, and also against
comparable E&P companies. It was agreed that, from 1 January 2023, a 4% increase would be applied to Non-Executive Director fees.
Role Fee for 2022 Fee for 2023
Non–Executive Chair £230,000 £239,200
Deputy Chair £10,000 £10,400
Senior Independent Director £10,000 £10,400
Non–Executive Director £56,000 £58,240
Additional fee for membership of two or more Board Committees £14,000 £14,560
Additional fee for chairing Board Committee:
Role Fee for 2022 Fee for 2023
Audit Committee £14,000 £14,560
Remuneration Committee
1
£14,000 £14,560
HSSE Committee £10,500 £10,920
Reserves Committee £10,500 £10,920
Nomination Committee No additional fee No additional fee
International Relations Committee £10,000 £10,400
1
David McManus, as Chair, receives an all-inclusive fee therefore did not receive any additional payment for his position as the Interim Remuneration
Committee Chair
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
21 March 2023
78 Genel Energy Annual Report 2022
Remuneration Policy
The Committee will keep the Policy under review to ensure that it
continues to promote the attraction, retention and motivation of
the high-performing executive talent required to deliver the
business strategy. It is the Committee’s intention that the Policy
be put to shareholders for approval every three years. Should any
changes be required before the end of the three-year period, the
amended Policy will be put to shareholders, following shareholder
consultation as appropriate.
This part of the report sets out a summary of the Directors’
remuneration policy as determined by the Remuneration
Committee (‘the Committee’) and approved by shareholders
at the 2021 Annual General Meeting. A copy of the shareholder
approved Policy is available at genelenergy.com in the Investor
Relations section.
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 commits to only making 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.
This part of the report sets out our Directors’ Remuneration Policy. As outlined above in the
letter from the Chair of the Remuneration Committee, this Policy was put forward for binding
shareholder approval at the 2021 AGM and the Policy replaced the previous Remuneration
Policy approved at the 2020 AGM. The effective date of the Policy is the date on which the
Policy is approved by shareholders – 6 May 2021. Further details regarding the operation of
the Policy can be found on pages 71 to 78.
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
— Salaries are reviewed, but not necessarily increased, annually with any increase usually taking effect in January
Maximum opportunity
— 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
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 benefits (including pension)
— The cash supplement is not included in calculating bonus and long-term incentive quantum
Maximum opportunity
— Cash supplement is set as a percentage of base salary and paid in lieu of all benefits (including pension)
— While there is no defined maximum opportunity, the cash supplement is currently 20% of base salary
— Should an individual participate in the Mandatory Pension Scheme provided by the Company to all UK based employees
the cash supplement will be reduced in line with the Company contribution made
— The Committee keeps the benefit policy and level of cash supplement under review. The Committee may adjust cash
supplement levels in line with market movements
— For any newly appointed Executive Director, that part of the benefits allowance which relates to pension will be limited to
the rate for the Company’s wider workforce in the jurisdiction in which the Executive Director is employed or resides
Performance measures None
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 79
Directors’ remuneration report
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 measured over one financial year
— Objectives and the mix of goals are set annually 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
— A minimum of 25% of the bonus will normally be subject to deferral, although the Committee retains the flexibility to
set a higher or lower level of deferral (including zero) where appropriate. Deferral can be in cash or shares. Deferral into
shares will be in the form of awards under the 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, safety
and environment, and CSR performance. 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 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 are normally subject to a holding period of two years from the vesting date although the Committee
retains the discretion to apply a different holding period, or no 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
— 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
Performance measures
— Other than Buy-Out Awards, the vesting of awards is dependent on financial, operational 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. The remainder will be based on financial, operational or 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
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.
80 Genel Energy Annual Report 2022
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
next 12 months. 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 that the Participant’s actions significantly
contributed towards, 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
— The Committee may elect, prior to vesting or exercise in the
case of options, to deliver the value of vested awards as cash
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
four elements as Executive Directors’ remuneration packages:
base salary, benefits, 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 80% 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, there
is wide employee participation in our share plans.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 81
Directors’ remuneration report
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
— 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 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
— 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.
82
Genel Energy Annual Report 2022
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.
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.
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.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 83
Directors’ remuneration report
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 and (ii) 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
benefits
— Participation in all incentive schemes, including the annual bonus, the DBP and the PSP, is non-contractual
— 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.
Unless otherwise approved, an Executive Director may accept only one position as a Non-Executive Director (but not as a Non-
Executive Chair) of a FTSE 100 company that is not a competitor of the Company, subject to prior notification to the Chair of the
Company and the approval of the Board or duly authorised Committee thereof.
84
Genel Energy Annual Report 2022
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, 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
awards
may continue to vest
— Death
— 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
other leaver reason
— Awards lapse in full
DBP
Leaver reasons where
awards
may continue to vest
— Death
— Any other scenaro
Vesting
arrangements
— 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
Treatment for any
other leaver reason
— Summary dismissal – awards lapse in full
— 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
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 85
Directors’ remuneration report
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
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.
86
Genel Energy Annual Report 2022
Management report
The Directors’ Report, together with the Strategic Report set out on pages 1 to 36, 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 Location in annual report
Results and dividends p.98-125
Likely future developments in the business of the Company or its subsidiaries p.10-13
Subsequent events p.124
Corporate social responsibility p.16-29
Greenhouse gas emissions p.24
Section 172(1) statement and stakeholder engagement p.35
Colleagues (employment of disabled persons, workforce engagement and policies) p.20-21
Engagement with suppliers, customers and others in a business relationship p.35
Corporate Governance Statement p.39-40
Directors’ details (including changes made during the year) p.55-57
Related party transactions Note 22 on p.124
Diversity p.20
Share capital Note 17 on p.120
Viability statement p.34
Going concern and fair, balanced and understandable statements p.13, 34 and 38
Employee share schemes (including long-term incentive schemes) Note 20 on p.122-124
Financial instruments: information on the Group’s financial instruments and risk management
objectives and policies, including our policy for hedging
Notes 15 and 16 on p.119-120
Statements of responsibilities p.91
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
Disclosure
9.8.4(4) Long-term incentive schemes (LR 9.4.3R) Note 20 on p.122-124
1
Each of the other disclosures required under Listing Rule 9.8.4c are not applicable to Genel Energy plc.
Principal activities
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 are in full compliance with the provisions of the Code
with the exception of provision 32, as between 22 November 2021 and 19 April 2022 David McManus served as the Interim Chair
of the Remuneration Committee. Yetik K. Mert was appointed Chair of the Remuneration Committee on 19 April 2022, and the
Company has been in full compliance with the provisions of the Code since then. A copy of the Code can be found at frc.org.uk/
corporate/ukcgcode.cfm.
Other statutory and
regulatory information
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 87
Other statutory and regulatory information
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, 11 May 2023 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 55 to 57. Details of Directors’
service agreements and letters of appointment are set out on
pages 84 to 86.
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 74.
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.
Employee share schemes
Details of the Company’s employee share schemes are set out in
note 20 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 20 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 2022 (2021: nil).
Share capital
As at 20 March 2023, 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 12 May 2022, the
shareholders granted the Company authority to make market
purchases of up to 27,830,211 ordinary shares (representing
approximately 10% of the aggregate issued ordinary share
capital of the Company at 25 March 2022) and hold as treasury
shares any ordinary shares so purchased. During 2022, no
shares were purchased by the Company under this authority.
Shareholders will be asked to renew this authority at the
forthcoming AGM. Full details are included in the Notice of AGM.
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.
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, (iii) as
imposed from time to time by law and regulation and (iv) as set
out in the Merger Agreement.
Save as set out in the Merger Agreement, 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 22 to the financial statements. There were no other related
party transactions to which the Company was a party during
the period.
88
Genel Energy Annual Report 2022
Shareholder agreements
Merger Agreement
On 7 September 2011, the Company, Elysion Energy Holding B.V.
(formerly Genel Energy Holdings B.V.), Focus Investments and
PRM entered into a merger agreement (the ‘Merger Agreement’)
pursuant to which the Company agreed to purchase, and the
Sellers agreed to sell, the entire issued ordinary share capital of
Genel Energy International Limited in consideration for the issue
of 130,632,522 ordinary shares (the ‘Consideration Shares’).
The Merger Agreement was amended by a deed of amendment
entered into on 29 October 2011.
Relationship Agreement
On 7 September 2011, the Company, Elysion and Focus
Investments entered into a relationship agreement to regulate
the ongoing relationship between Elysion, Focus Investments and
the Company (the ‘Relationship Agreement’).
On 14 October 2015 Mehmet Sepil retired as President and on
18 November 2015 Mehmet Sepil’s holding in the Company fell
to below 10% of the voting rights in the Company. Accordingly,
certain rights of Elysion under the Relationship Agreement
ceased to have effect including the right to nominate a
representative to the Genel Board.
In December 2021, the Company was notified that Focus
Investments was no longer controlled by Mehmet Emin
Karamehmet. Accordingly, certain rights of Focus Investments
under the Relationship Agreement ceased to have effect,
including the right to nominate a representative to the
Genel Board.
The Relationship Agreement terminated in April 2022, as a result
of Elysion and Focus Investments, together with their respective
Associates, ceasing between them to be entitled to exercise,
or control the exercise of, in aggregate 10% or more of the
Voting Rights. On 13 April 2022, Nazli K. Williams, who had been
nominated as a Director by Focus Investments pursuant to its
previous rights under the Relationship Agreement resigned as a
Non-Executive Director of the Company with immediate effect.
Substantial shareholdings
As at 31 December 2022, 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
Number of
ordinary shares
Bilgin Grup Dog˘al Gaz A.S¸. 62,523,017
Türkiye Is¸ Bankası A . S¸ . 53,419,883
Daax Corporation FZE 46,338,622
NR Holdings Limited 21,214,583
Auditors
A resolution to reappoint BDO LLP as the Company’s auditor will
be proposed at the 2022 AGM.
By order of the Board
Paul Weir
Chief Executive Officer
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 89
90 Genel Energy Annual Report 2022
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.
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
Statement of Directors’
responsibilities
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 91
Independent auditor’s report
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 2022 and of 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 (together the
‘Group’) for the year ended 31 December 2022 which comprise
the consolidated statement of comprehensive income, the
consolidated balance sheet, the consolidated statement of
changes in equity, 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.
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. 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;
— Discussing the going concern assessment with the Chief
Executive Officer, Chief Financial Officer, In-House Legal, and
the Technical Director to understand their views on the ability
of the Group to continue as a going concern;
— Performing a detailed review of the cash flow forecasts
prepared by Management and approved by the Board 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 levels of historical
operating costs and production forecasts against actual
performance in 2022, the level of Board approved capital
expenditure against development plans, forecast oil prices and
KRG’s pricing formula against market expectations;
— Performing procedures on the going concern forecast model in
order to confirm the arithmetical accuracy of the model;
— Agreeing the 31 December 2022 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 reperformed the
underlying calculations of covenants;
— Reviewing the recent payment trends from the KRG for the
current receivables as part of our work on the assessment
of senstivities;
— Reviewing the production sharing contracts (PSCs), licences
and work programmes and comparing the commitments to
the forecasts;
— Considering the media reports on Iraqi Federal Supreme Court
rulings over the legality of the PSC and any implications on
the Group;
— Obtaining and reviewing Management’s sensitivity analysis and
reflecting further down-side scenarios of lower than forecast
oil price or experiencing significant delays in the receipt of
payments 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 in light of the Board’s going concern risk assessment.
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.
In relation to the Parent Company’s voluntary reporting on how it
has applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’
statement in the financial statements about whether the
Directors considered it appropriate to adopt the going concern
basis of accounting.
92
Genel Energy Annual Report 2022
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections
of this report.
Overview
Coverage
100% (2021: 100%) of Group losses before tax
100% (2021: 100%) of Group revenue
99.8% (2021: 100%) of Group total assets
Key audit matters
2022 2021
Carrying value of exploration assets - √
Carrying value of oil production and development
assets
√ √
Recoverability of overdue KRG receivables - √
Revenue recognition of suspended Tawke
Overriding Royalty Income (ORRI), revenue
recognised from the ORRI on Takwe and revenue
recognition from oil export sales
√ -
The ‘Carrying value of exploration assets’ and the ‘Recoverability
of overdue KRG receivables’ were not considered key audit matters
in the current year following the impairment of the Qara Dagh
asset with the remaining exploration assets not being subject to
significant judgements, and the overdue KRG receivables being
fully settled in the year.
Materiality
Group financial statements as a whole
$7.6 million (2021: $10.1 million) based on 5% of Group adjusted
profit before tax (2021: 1% of total assets).
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 key producing assets are in the Kurdistan Region of
Iraq (KRI), with exploration assets 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 three significant components which
were subjected to a full scope audit, two of which own the
producing assets namely: (1) Genel Energy International Limited
owns the Taq Taq and Tawke PSCs, and (2) Genel Energy Sarta
Limited holds the oil producing Sarta PSC. One further entity,
Genel Energy Holding Company Limited, which holds the majority
of the Group’s cash and cash equivalents, was also considered
a significant component given its assets (mainly cash and cash
equivalents) comprised more than 15% 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.
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 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 to Istanbul and London as well
as remotely using BDO cloud-based audit tools and through
teleconferencing. The Sarta and Taq Taq fields were also visited
in the year. All of the audit work was conducted by the Group
engagement team.
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
Carrying value of oil production and development assets
(see notes 1.2 and 9)
The production and development 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 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 2022 including
the impact of oil prices, the KRG’s pricing formula, field productivity
and appraisal results, media reporting relating to the Iraqi Supreme
Court decisions on the legality of the PSCs and the impact of local
and global geopolitical factors.
Management concluded that impairment indicators existed for the
KRI assets due to adverse realised price per barrel and, for the
Sarta cash generating unit (CGU) only, reduction in reserves and
resources following the results of the Sarta appraisal and pilot
production programme.
Management therefore performed a full impairment assessment of
the Taq Taq, Tawke and Sarta Cash CGUs as at 31 December 2022.
This resulted in an impairment charge of US$125.5m for the Sarta
CGU.
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.
How the scope of our audit addressed the 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 2022 for
the Taq Taq, Tawke and Sarta 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 2022 including the Iraqi Supreme Court decisions
and announcements;
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 93
Independent auditor’s report
— 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 considering the impact of the
KRG’s pricing mechanism;
— 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 the impact of the Sarta appraisal results and pilot
production on 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 assessment
of potential triggers for impairment of the Group’s producing
assets taking into consideration the Group’s initiatives;
— 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
with reference to Management’s impairment assessment and
the requirements of the applicable accounting standards.
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, the recoverable values of the
Taq Taq, Tawke and Sarta CGUs to be reasonable and the calculation
of the related Sarta impairment charge appropriate.
We also found the Group’s assessment that no previously recognised
impairments 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.
Key audit matter
Revenue recognition of suspended Tawke Overriding Royalty
Income (ORRI), revenue recognised from the ORRI on Takwe
and revenue recognition from oil export sales
(see notes 1.2 and 2)
The Group’s revenue is primarily generated from oil export sales
and the ORRI arising from the Receivable Settlement Agreement
(‘RSA’) signed in 2017, which expired in July 2022. Revenue totalling
$385m has been recognised in the year in respect of these two
streams.
Revenue recognition is considered to include a presumed risk of
fraud which has been linked to the potential risk of fictitious revenue
being recorded through manual journals and cut-off risk. During the
year, the MNR has changed the reference price for crude oil sales
from Dated Brent to the local benchmark KBT (‘KRG Blend Realised
Price’), effective 1 September 2022. Management considered
it appropriate to recognise oil export revenue based on the new
pricing mechanism from September onwards, considering the
recognition requirements of the applicable accounting standards.
An amount recorded as revenue has also been recognised in the
current period relating to the suspension of the ORRI from Tawke
production between 1 March 2020 and 31 December 2020. This
revenue has not historically been recognised due to the lack of
visibility as to how or when this contractual right would be received.
The suspended ORRI is material to the Group and significant
judgement is required in reaching a conclusion on the revenue
recognition criteria of the relevant accounting standard.
Taking into consideration the matters set out above, we considered
revenue recognition to be a key audit matter.
How the scope of our audit addressed the key audit matter
Our specific audit testing in this regard included:
— Assessing the revenue recognised in the year against the
Group’s revenue recognition policy and the requirements of
the relevant accounting standard;
— Considering the appropriateness of applying KBT pricing
for revenue generated from oil sales since September
2022 against the requirements of the applicable
accounting standards;
— Testing the total oil sales and Tawke ORRI in the year
to supporting documentation from delivery through to
cash received;
— Testing manual journals recorded within revenue, using
specific risk criteria, to supporting evidence;
— Performing cut off testing on sales revenue around the
year end by verifying the volume transferred to officially
approved statements;
— Challenging Management’s assessment on amount to be
recognised in respect of the suspended ORRI against the
recognition requirements of the relevant accounting standard;
— Verifying receipts of the suspended ORRI received to date
and reviewing the related correspondence with the Kurdistan
Regional Government; and
— Evaluating the appropriateness of the related
disclosures against the requirements of the applicable
accounting standards.
Key observations:
Based on the work performed we found the export and ORRI
revenue recognised in the year to be in line with the requirements
of the relevant accounting standard.
We found Management’s assessment and treatment of the
suspended ORRI to be appropriate.
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.
94
Genel Energy Annual Report 2022
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as
follows:
Group financial statements
2022 2021
Materiality $7.6m $10.1m
Basis for
determining materiality
5% of adjusted Group profit before tax 1% of Total Assets
Rationale for the
benchmark applied
We consider the use of 5% of adjusted Group
profit before tax to be the most appropriate
benchmark following the stabilisation of adjusted
profits over the last two years. We also consider
profit before tax to also be a key measure of the
Groups performance for the users of the financial
statements.
Given the asset-based focus of the Group with its
significant producing and exploration asset base,
historic track record of variable profits and the key
risk areas being balance sheet-related, we consider
it appropriate to adopt a total assets-based measure
of materiality.
Performance materiality $5.3m $7.1m
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.
Statement of
comprehensive income
testing threshold
Not applicable in the current year as we have moved
from an asset-based materiality to a profit based
materiality.
We applied a lower testing threshold of $7.1m based
on 7% of loss before impairment, interest and tax
to the testing of the statement of comprehensive
income to ensure appropriate testing of costs
incurred in the year.
Component materiality
We set materiality for each significant component of the Group
based on a percentage of between 18% and 90% (2021: 15%
and 90%) of Group materiality dependent on the size and
our assessment of the risk of material misstatement of that
component. Component materiality ranged from $1.4m to
$6.8m (2021: $1.5m to $9m). In the audit of each component,
we further applied performance materiality levels of 70%
(2021: 70%) of the component materiality to our testing to
ensure that the risk of errors exceeding component materiality
were appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report
to them all individual audit differences in excess of $0.2m
(2021: $0.2m). 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 34; 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 34.
Other
Code
provisions
— Directors’ statement on fair, balanced and
understandable set out on page 38;
— Board’s confirmation that it has carried out
a robust assessment of the emerging and
principal risks set out on page 38;
— The section of the annual report that
describes the review of effectiveness of risk
management and internal control systems
set out on pages 62-64; and
— The section describing the work of the Audit
Committee set out on page 65.
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 95
Independent auditor’s report
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 by the Parent
Company, 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.
Responsibilities of Directors
As explained more fully in the statement of Directors’
responsibilities, 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 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 to cease
operations, or have no realistic alternative but to do so.
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. Our procedures included:
— Enquiries of management, and the Audit Committee,
including obtaining and reviewing supporting documentation,
concerning the Group’s policies and procedures relating to:
— Identifying, evaluating and complying with laws and
regulations and whether they were aware of any instances
of non-compliance;
— Detecting and responding to the risks of fraud and whether
they have knowledge of any actual, suspected or alleged
fraud, and
— Obtaining an understanding of the internal controls
established to mitigate risks related to fraud or non-
compliance with laws and regulations.
— 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; and
— Obtaining an understanding of the legal and regulatory
frameworks that the Group operates in, focusing on those
laws and regulations that had a direct effect on the financial
statements or that had a fundamental effect on the operations
of the Group. The key laws and regulations we considered
in this context included the Company law in the countries in
which the Group operates. For example, our considerations
covered laws and regulations in the Kurdistan Region of Iraq,
Somaliland and Morocco, IFRS as adopted by the European
Union, the Companies (Jersey) Law 1991, the LSE Listing
Rules, Norway Listing Rules in regards to the bonds held, UK
Sanctions Law, Bribery Act, Oil and Gas Industry regulation,
environmental compliance, labour regulations, health and
safety regulations and local and international tax legislation.
— We also assessed the susceptibility of the financial statements
to material misstatement, including fraud and considered the
fraud risk areas to be management override of controls and
revenue recognition (see above procedures noted in the key
audit matters section of the report).
96
Genel Energy Annual Report 2022
In addition to the above, our procedures to respond to risks
identified, included the following:
— Reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with relevant
laws and regulations noted above;
— Enquiring of Management, the Audit Committee and Internal
legal counsels of known or suspected instances of fraud,
potential litigation and claims, and 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;
— 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 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;
— 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 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.
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
21 March 2023
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 97
Consolidated statement
of comprehensive income
For the year ended 31 December 2022
2022 2021
Note $m $m
Revenue 2 43 2. 7 334.9
Production costs 3 (51.1 ) (45. 9 )
Depreciation and amortisation of oil assets 3 (14 9 . 1 ) (172. 7 )
Gross profit 23 2.5 116. 3
Exploration expense 3 (1.0 ) -
Net write-off of intangible assets 1,3,8 (7 5.8 ) (403.2 )
Impairment of property, plant and equipment 3,9 (12 5.5 ) -
Net reversal of impairment of receivables 3,10 8.2 24 . 1
General and administrative costs 3 (20. 1 ) (14.0 )
Operating profit / (loss) 18.3 (27 6.8 )
Operating profit / (loss) is comprised of:
EBITDAX 36 1.6 2 75 .1
Depreciation and amortisation 3 (149 .2 ) (172.8 )
Exploration expense 3 (1.0 ) -
Net write-off of intangible assets 3,8 (7 5.8 ) (403.2 )
Impairment of property, plant and equipment 3,9 (125 .5 ) -
Net reversal of impairment of receivables 3,10 8.2 24 . 1
Finance income 5 6 .7 0. 2
Bond interest expense 5 (2 5. 9 ) (26.3 )
Other finance expense 5 (6.2 ) (4. 9 )
Loss before income tax (7 . 1 ) (307 .8 )
Income tax expense 6 (0.2 ) (0.2 )
Loss and total comprehensive expense (7 .3 308. 0
Attributable to:
Owners of the parent (7 .3 ) (308. 0 )
(7 .3 ) (308. 0 )
Earnings / (Loss) per ordinary share ¢ ¢
Basic 7 (2.6 ) (111.4 )
Diluted 7 (2.6 ) (111.4 )
EPS excluding impairments
1
1
EPS excluding impairments is loss and total comprehensive expense adjusted for the add back of net impairment/write-off of oil and gas assets and net
reversal of impairment of receivables divided by weighted average number of ordinary shares
98 Genel Energy Annual Report 2022
Consolidated balance sheet
At 31 December 2022
2022 2021
Note $m $m
Assets
Non-current assets
Intangible assets 8 79.1 186.8
Property, plant and equipment 9,19 24 8 . 1 35 2.5
Trade and other receivables 10 - 18. 4
Current assets
Trade and other receivables 10 121. 7 14 5.0
Cash and cash equivalents 11 494. 6 3 1 3 .7
Total assets 943 .5 1,016. 4
Liabilities
Non-current liabilities
Trade and other payables 12,19 (1.2 ) (4 . 9 )
Deferred income 13 (6.5 ) (14 .0 )
Provisions 14 (52.2 ) (42.6 )
Interest bearing loans 15 (266.6 ) (26 9 .8 )
(3 26.5 ) (331.3 )
Current liabilities
Trade and other payables 12,19 (82.4 ) (97 .5 )
Deferred income 13 (6.8 ) (6.5 )
(89 .2 ) (104.0 )
Total liabilities (415 . 7 ) (435 .3 )
Net assets 5 2 7. 8 5 8 1 .1
Owners of the parent
Share capital 17 43.8 43.8
Share premium account 3 , 8 9 7. 4 3 , 9 4 7. 5
Accumulated losses (3,4 13.4 ) (3 ,410 .2 )
Total equity 5 2 7. 8 58 1 .1
These consolidated financial statements on pages 103 to 125 were authorised for issue by the Board of Directors on 21 March 2023 and were
signed on its behalf by:
Paul Weir Luke Clements
Chief Executive Officer Chief Financial Officer
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 99
Consolidated statement
of changes in equity
For the year ended 31 December 2022
Share
capital
Share
premium
Accumulated
losses
Total
equity
Note
$m
$m
$m
$m
At 1 January 2021 43.8 3, 991.9 (3, 105. 9 ) 92 9. 8
Loss and total comprehensive expense - - 308.0 308.0
Contributions by and distributions to owners
Share-based payments 20 - - 5.0 5.0
Purchase of shares for employee share awards - - (1.3 ) (1.3 )
Dividends provided for or paid
1
18 - (44.4 ) - (44. 4 )
At 31 December 2021 and 1 January 2022 43.8 3 , 9 4 7. 5 (3,4 10.2 ) 5 8 1 .1
Loss and total comprehensive expense - - 7.3 7 .3
Contributions by and distributions to owners
Share-based payments 20 - - 4 .1 4.1
Dividends provided for or paid
1
18 - (50. 1 ) - (50 . 1 )
At 31 December 2022 43.8 3 , 8 9 7. 4 (3,413 .4 ) 5 2 7. 8
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)
100 Genel Energy Annual Report 2022
Consolidated cash
flow statement
For the year ended 31 December 2022
2022 2021
Note $m $m
Cash flows from operating activities
Loss for the year (7 .3 ) (308.0 )
Adjustments for:
Net finance expense 5 25. 4 31 .0
Taxation 6 0.2 0.2
Depreciation and amortisation 3 152. 0 1 75. 3
Exploration expense 3 1 .0 -
Net impairments, write-offs 3 1 9 3.1 379 .1
Other non-cash items (royalty income and share-based cost) (7 .4 ) (5.4 )
Changes in working capital:
Decrease / (Increase) in trade receivables 4 7. 2 (42.4 )
(Increase) in other receivables - (0 .4 )
Increase / (Decrease) in trade and other payables 1 .7 (1.4 )
Cash generated from operations 405. 9 2 28 .0
Interest received 5 6 .7 0. 2
Taxation paid (0.2 ) (0. 1 )
Net cash generated from operating activities 412.4 228 .1
Cash flows from investing activities
Net payments of intangible assets (2 0.0 ) (2 4 .1 )
Net payments of property, plant and equipment (12 8.2 ) (88.5 )
Net cash used in investing activities (148.2 ) (112.6 )
Cash flows from financing activities
Dividends paid to company’s shareholders 18 (47 . 9 ) (44.4 )
Purchase of own shares - (1.3 )
Bond repayment 15 (6.0 ) (81.0 )
Lease payments (3.8 ) (3.3 )
Interest paid (25 .6 ) (2 6.3 )
Net cash used in financing activities (83.3 ) (156.3 )
Net increase / (decrease) in cash and cash equivalents 180. 9 (40 .8 )
Cash and cash equivalents at 1 January 11 3 1 3 .7 354.5
Cash and cash equivalents at 31 December 11 494 .6 3 1 3.7
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 101
102 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 103
Notes to the consolidated financial statements
104 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 105
Notes to the consolidated financial statements
106 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 107
Notes to the consolidated financial statements
108 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 109
Notes to the consolidated financial statements
110 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 111
Notes to the consolidated financial statements
112 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 113
Notes to the consolidated financial statements
114 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 115
Notes to the consolidated financial statements
116 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 117
Notes to the consolidated financial statements
118 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 119
Notes to the consolidated financial statements
120 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 121
Notes to the consolidated financial statements
122 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 123
Notes to the consolidated financial statements
124 Genel Energy Annual Report 2022
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 125
Report on payments to
governments for the year 2022
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 2022 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 – 2022
Country/Licence KRI Total
1
Taq Taq
2
Production entitlement (bbls) 831,450.09 831,450.09
Royalties in kind (bbls) 157, 5 27.9 7 1 57,527.9 7
Total (bbls) 988,978.06 988,978.06
Value of production entitlements ($million) 76.61 76.61
Value of royalties ($million) 14.14 14.14
Capacity building payments ($million)
3
5.23 5.23
Total ($million) 95.98 95.98
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 meet 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
Capacity building payments reported are payments made by Genel directly to the KRI in cash as required by the PSC
126 Genel Energy Annual Report 2022
‘AGM’ annual general meeting
‘BDO’ BDO LLP
‘CGU’ Cash Generating Unit
‘Companies Act 2006’ Companies Act 2006, as amended
‘Company’ Genel Energy plc
‘Elysion’ Elysion Energy Holding B.V.
‘ESG’ environmental, social, and governance
‘FGI’ Federal Government of Iraq
‘Focus Investments’ Focus Investments Limited
‘FRC’ UK Financial Reporting Council
‘FTSE’ FTSE International Limited
‘Genel’ 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
‘GHG’ greenhouse gases
‘Group’ the Genel Energy group of companies
‘HSE’ health, safety, and environment
‘IFC Performance Standard’ the performance standards set out by the International Finance Corporation
‘IOC’ international oil company
‘Jersey Companies Law’ Companies (Jersey) Law 1991 (as amended)
‘KRG’ Kurdistan Regional Government
‘KRI’ Kurdistan Region of Iraq
‘Listing Rules’ the Listing Rules of the UK Listing Authority
‘LTI’ lost time incident
‘MNR’ Ministry of Natural Resources
‘NGO’ non-governmental organisation
‘Ordinary Shares’ the voting ordinary shares and/or the suspended voting ordinary shares as the
context requires
‘PRM’ Petroleum Resources Management N.V.
‘PSC’ production sharing contract
‘PSP’ performance share plan
‘RSA’ receivable settlement agreement
‘RSP’ restricted share plan
‘SOP’ share option plan
‘Standard Listing’ a standard listing under Chapter 14 of the Listing Rules
‘TCFD’ Task Force on Climate-related Financial Disclosures
‘TSR’ total shareholder return
‘TTOPCO’ Taq Taq Operating Company Limited
‘UN SDGs’ United Nations Sustainable Development Goals
Certain resources and reserves terms
‘1P’ proved reserves
‘2P’ proved plus probable reserves
‘3P’ proved plus probable plus possible reserves
‘2C’ contingent resources
Units of measurement
‘bbl’ barrel
‘bopd’ barrels of oil per day
‘km’ kilometres
‘MMbbls’ millions of barrels
‘MMboe’ million barrels of oil equivalent
‘tCO
2
e’ tonnes of CO
2
equivalent
Glossary of technical terms
Strategic report Governance Financial statements Other information
Genel Energy Annual Report 2022 127
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, 11 May 2023 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 2021 final dividend was paid on 18 May 2022 and an interim
dividend on 14 October 2022. Further information can be found on p.10.
Payment of dividends to UK resident shareholders
Shareholders whose dividends are currently sent to their registered address
should consider having their dividends paid directly into their personal bank
or building society account. This has a number of advantages, including the
crediting of cleared funds on the actual dividend payment date. If you would
prefer to have future dividends paid in this way, please contact the Registrar for
a bank mandate form. Under this arrangement, dividend confirmations are still
sent to your registered address.
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 (if calling from outside the UK, please ensure the
country code is used).
Share price information
The current price of the Company’s shares is available on the Company’s
website at genelenergy.com
Shareholder information
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
12 Castle Street
St Helier
Jersey
JE2 3RT
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
128
Genel Energy Annual Report 2022
Image credits
Asset images in this annual report were taken by Genel Energy employees:
Abdulwahed Salih
Emma Weston
John Fisher
Reband Azad
Sean Gibson
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 Arcoprint 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
Registered Office
12 Castle Street
St Helier
Jersey
JE2 3RT
London Office
Fifth Floor
36 Broadway
Victoria
London
SW1H 0BH
Erbil Office
1st Floor
Divan Hotel
Gulan Street
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
GENEL ENERGY ANNUAL REPORT 2022