Strong first half for Genesis Energy

Strong first half financial result for Genesis Energy

A strong trading performance, including additional revenue from frequency keeping, plus attention to operating expenses, contributed to an unaudited Net Profit After Tax (NPAT) of $64.6 million for Genesis Energy in the six months to 31 December 2009.

The result, which compared favourably to the 2008 Interim NPAT of $48.9 million, was achieved against an electricity market back-drop of variable wholesale prices and high inflows of water into the country’s hydro storage lakes.

Operating revenue for the six months to 31 December 2009 was down to $961.4 million from $1,042.1 million in the same period in 2008. Revenue from external wholesale electricity sales decreased to $269 million (from $354 million) due to lower generation volumes and lower wholesale prices. Revenue from retail electricity and gas sales remained static at $682 million due to aggressive competitor activity in both markets.

Generation output in the six months to the end of December 2009 of 3,919GWh was 411GWh less than the comparable period with both renewable and thermal generation volumes down. The average price received for generation output in the six months to December 2009 was $51/MWh compared with $77/MWh for the same period in 2008.

Genesis Energy Chairman Rt Hon Dame Jenny Shipley, DNZM, said the first half result was pleasing and reflected the company’s focus on driving greater commercial returns on its assets for its shareholder.

“More than ever, this company is focused on operating profitably and efficiently. We are re-shaping this business to improve shareholder value. This is being achieved by revising the asset management programme of our generation assets and ensuring our retail load profile is aligned with our generation and trading strategies,” the Chief Executive, Albert Brantley, said.

During the six months the company made significant progress on a number of fronts. A major milestone was the commencement of commissioning the Kupe Oil and Gas Field. Two production wells were opened in December 2009 and the first sales gas and condensate were processed at the on-shore production station. All of Kupe’s natural gas is contracted to Genesis Energy and the company will also benefit from its 31 per cent share of Kupe’s other fuel products.

Genesis Energy has a target to consent and construct 300MW of renewable energy projects by 2015. Progress continued on this objective with accelerated work on a range of generation development projects. The most visible of these are two wind farm sites in the Wairarapa. Six 80-metre high wind monitoring masts have been installed in the northern site, east of Eketahuna, and two masts have been erected on the southern site, just west of the Genesis Energy-owned Hau Nui Wind Farm.

The roll out of Advanced Meters for electricity customers continued to grow in pace during the half year. Just over 30,000 Advanced Meters were installed by the end of December 2009. To test customer interest in new products based on Advanced Meters, a peak/off peak tariff was offered to customers with Advanced Meters in West Auckland. The take up of the offer continues to grow as customers realise the benefits of changing their electricity consumption behaviour.

The Chief Executive said the company is on track to exceed the financial performance targets in its Statement of Corporate Intent for the year ending 30 June 2010.

The company has declared a dividend of $28.7 million for the first half of the financial year 2009/2010.
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