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Genesis Energy Limited, diversified energy company

Team Veye | 28 Oct 2020 ASX - GNE
Genesis Energy Limited, diversified energy company

Genesis Energy Limited (ASX: GNE)

FY21 Q1 Performance Report

Genesis Energy Limited (ASX: GNE) on 21 October 2020 released to the NZX/ASX its FY21 Q1 Performance Report for the three months ended 30 September 2020.

(Graphic Source – Company Reports)

Retail

The Retail segment performed strongly in the first quarter with total electricity sales volumes up 3.4% on pcp, bottled LPG sales volumes up 5.3% on pcp and netbacks up materially across all fuels. This was despite SME sales volumes declining 6.6% due to the Auckland lockdown. Customers with more than one fuel increased 3.5% on pcp and 1.7% on the prior quarter reflecting the ongoing Genesis dual-fuel strategy. However, total net churn increased 1.3ppt on the pcp, as retailers aggressively re-entered the acquisition market following the recent lockdowns. Brand net promoter score returned to normal levels after a short term increase during the first lockdown period. Cost to serve declined a further 2.2% on the previous quarter and 4.3% on pcp – noting this was partly due to cost deferrals due to the lockdown period.

Wholesale

Declining lake levels across New Zealand catchments through the quarter and continued gas production constraints required Genesis’ flexible thermal back-up generation to support New Zealand’s electricity requirements. New Zealand hydro storage fell to 58% of average before a recovery in September which resulted in Genesis back-up thermal generation being up 20% on pcp. The unit cost of thermal fuels declined by 3% as had been anticipated. Genesis hydro generation was flat on pcp but lower inflows meant storage ended the quarter below average at Waikaremoana. Plant availability in the quarter was strong with EAF of 98%.

(Chart source: TradingView)

Kupe

Production at Kupe began to decline during Q1 FY 21, due to a decline in field pressure that is in-line with previous guidance and expectations of field performance. It is expected that a single well will need to be taken offline in November and re-instated in Q4 FY21 to manage production in line with seasonal demand. This will result in a reduction in the production of between 6.5 and 9.0 TJ/day. (Data Source – Company Reports)

 

Veye’s Take

Genesis Energy’s Retail segment performed strongly in the first quarter with total electricity sales volumes up 3.4% on pcp, bottled LPG sales volumes up 5.3% on pcp and netbacks up materially across all fuels. This was despite SME sales volumes declining 6.6% due to the Auckland lockdown. Declining lake levels across New Zealand catchments through the quarter and continued gas production constraints required Genesis’ flexible thermal back-up generation to support New Zealand’s electricity requirements. New Zealand hydro storage fell to 58% of average before a recovery in September which resulted in Genesis back-up thermal generation being up 20% on pcp. The stock is trading above 50 MA on monthly t/f. It is also comfortably protecting its short term and long term supports. Upon crossing a near resistance at $3.04 it can have the potential of a significant growth in short to medium term. Veye recommends a “Buy" on “Genesis Energy Limited” at the current price of $3.00

Disclaimer

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