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Genesis Energy share price on watch after mixed quarterly update

The Genesis Energy Ltd (ASX: GNE) share price is one to watch after its early Q4 2019 quarterly update showed mixed performance across a number of areas for the group.

What were the highlights from Genesis’ Q4 2019 update?

In terms of the company’s customers, Genesis reported that its gross churn has continued to fall over the quarter, down 3 percentage points (ppt) on the prior year, with net churn down 2 ppt.

Customers with more than one fuel increased by 7,400 on the prior comparable period (pcp) and total ICP’s increased by 2,800, with the standout performance being in LPG.

Netback margins were up materially across all fuels while Genesis noted electricity demand was down by 5% on the prior year, with mild temperatures a contributor to lower consumption.

In its Wholesale segment, Genesis reported Pohokura outages and low inflows into North Island catchments prevailed throughout the quarter, impacting generation mix.

Thermal generation was up 16% on the prior year and hydro generation down 13% on pcp while Wholesale spot prices remained elevated with  the price received for generation up $33/MWh  on pcp.

Genesis’ average portfolio fuel cost increased 24% on pcp while the New Zealand-based group also signed a 130 MW Waverley Wind Farm off-take agreement with Tilt Renewables, an important milestone in implementing its ‘Future-gen’ framework.

At the company’s Kupe plant, reliability remained high and operating at 99.7% of available capacity over the period.

Gas production was up 15% versus the prior comparable period, while Genesis’ LPG yield was up 2.6% and its oil yield was down 15% due to the natural decline in the field.

Oil sales for Genesis were recorded at 170,000 barrels, down 13% on pcp due to the timing of shipments, and a realised oil price of NZ$89/bbl, up 6% on pcp.

How has the Genesis share price performed in 2019?

While the company noted a number of positives in its latest quarterly update, lower realised prices and lower oil production at the company’s Kupe plant are also negatives for investors.

The Genesis Energy share price is up 15% so far this year, which is a solid performance if not outstanding, as many of the ASX oil and gas giants have seen capital gains soar since the start of January.

The company’s share price fell 5% yesterday prior to today’s trading update but it will be interesting to see what investors focus on in this morning’s pre-market quarterly update.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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