New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>It's a case of what could have been for Genesis Energy (GNE), with rain coming at a good time for the sector, but a little too early from GNE's perspective.</li><li>The effects of the 4Q24/1Q25 dry period are evident in GNE's 1Q25 operating statistics, with record high thermal fuel costs and a lower gas retail margin impacting profitability.</li><li>It is very hard for thermal generators to make money in the New Zealand market, and 1Q25 is another example of that. </li></ul>

It's a case of what could have been for Genesis Energy (GNE), with rain coming at a good time for the sector, but a little too early from GNE's perspective.The effects of the 4Q24/1Q25 dry period are evident in GNE's 1Q25 operating statistics, with record high thermal fuel costs and a lower gas retail margin impacting profitability.It is very hard for thermal generators to make money in the New Zealand market, and 1Q25 is another example of that. 

Genesis Energy - Dry Spell Upside A Mirage — 1Q25 Op Stats

<ul><li>FY24 can only be described as a challenging year for Genesis Energy (GNE).</li><li>Its Unit 5 gas generation plant suffered a six month outage, the Kupe KS-9 well was unsuccessful, and FY24 followed a record hydro generation year.</li><li>Unsurprisingly, the FY24 result was well down on FY23. Current market conditions are more suited to GNE's back-up generation fleet, so FY25 is looking better, albeit the record high prices means there is a greater range of possible earnings outcomes than usual. </li></ul>

FY24 can only be described as a challenging year for Genesis Energy (GNE).Its Unit 5 gas generation plant suffered a six month outage, the Kupe KS-9 well was unsuccessful, and FY24 followed a record hydro generation year.Unsurprisingly, the FY24 result was well down on FY23. Current market conditions are more suited to GNE's back-up generation fleet, so FY25 is looking better, albeit the record high prices means there is a greater range of possible earnings outcomes than usual. 

Genesis Energy - The Only Way Is Up — FY24 Result

<ul><li>An increasingly uncertain gas outlook has led us to downgrade our Genesis Energy (GNE) rating to NEUTRAL from OUTPERFORM.</li><li>Higher gas costs and gas generation portfolio restrictions has resulted in a lower and more uncertain earnings forecast from FY26 onwards.</li><li>In addition, despite GNE now operating its third Rankine unit, it does not appear to be in the position to take advantage of the situation as much as previously thought. </li></ul>

An increasingly uncertain gas outlook has led us to downgrade our Genesis Energy (GNE) rating to NEUTRAL from OUTPERFORM.Higher gas costs and gas generation portfolio restrictions has resulted in a lower and more uncertain earnings forecast from FY26 onwards.In addition, despite GNE now operating its third Rankine unit, it does not appear to be in the position to take advantage of the situation as much as previously thought. 

Genesis Energy - Costs Cut Outlook and Rating - 4Q24 Op Stats

<ul><li>Genesis Energy (GNE) has confirmed the expected FY25 earnings decline due to the failure of the KS-9 production well, and provided an indication of the impact on reserves.</li><li>Whilst FY25 earnings are better than expected, reserves are going to be lower than previously forecast.</li><li>With these factors largely offsetting themselves, our target price and OUTPERFORM rating are unchanged. </li></ul>

Genesis Energy (GNE) has confirmed the expected FY25 earnings decline due to the failure of the KS-9 production well, and provided an indication of the impact on reserves.Whilst FY25 earnings are better than expected, reserves are going to be lower than previously forecast.With these factors largely offsetting themselves, our target price and OUTPERFORM rating are unchanged. 

Genesis Energy - Confirming the Level of Kupe Pain

<ul>
<li>Genesis Energy's (GNE) worst Kupe fears have been realised, with the KS-9 well proving to be a dud.</li>
<li>Production issues have not been resolved and so future Kupe production and earnings will be correspondingly lower than previously expected.</li>
<li>In addition to the earnings impact on Kupe, there is an indirect impact on the Energy business, with less gas available to run its gas-fired Unit 5 plant.</li>
</ul>


Genesis Energy's (GNE) worst Kupe fears have been realised, with the KS-9 well proving to be a dud.
Production issues have not been resolved and so future Kupe production and earnings will be correspondingly lower than previously expected.
In addition to the earnings impact on Kupe, there is an indirect impact on the Energy business, with less gas available to run its gas-fired Unit 5 plant.


Genesis Energy - Well That's No Good; Kupe Well Unproductive

New Zealand

Genesis Energy Ltd. generates, transports, and retails electricity. The Company owns and operates hydroelectric generating stations to produce electricity, as well as explores natural gas and bottled liquefied petroleum gas.

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Genesis Energy (GNE NZ)

Genesis Energy - Dry Spell Upside A Mirage — 1Q25 Op Stats

It's a case of what could have been for Genesis Energy (GNE), with rain coming at a good time for the sector, but a little too early...

Forsyth Barr

Genesis Energy - The Only Way Is Up — FY24 Result

Its Unit 5 gas generation plant suffered a six month outage, the Kupe KS-9 well was unsuccessful, and FY24 followed a record hydro generation year.

Forsyth Barr

Genesis Energy - Costs Cut Outlook and Rating - 4Q24 Op Stats

An increasingly uncertain gas outlook has led us to downgrade our Genesis Energy (GNE) rating to NEUTRAL from OUTPERFORM.

Forsyth Barr

Genesis Energy - Confirming the Level of Kupe Pain

Genesis Energy (GNE) has confirmed the expected FY25 earnings decline due to the failure of the KS-9 production well, and provided an indication of...

Forsyth Barr

Genesis Energy - Well That's No Good; Kupe Well Unproductive

Our target price is down -15cps (-4.9%) to NZ$2.90, but since February 2024 the market has more than priced in reduced Kupe production volumes....

Forsyth Barr

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