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Genesis Energy Limited (NZX: GNE) Gas Supply Contractual Dispute Concluded Unfavourably

Monday 2nd August 2021

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Genesis Energy Limited advises that the arbitration process in respect of a dispute relating to carbon liability under the terms of a long-term gas supply agreement with Beach Energy (ASX:BPT) has concluded unfavourably. Arbitration was based on whether carbon liability for the gas supplied was with the producer (Beach) or the buyer (Genesis). The decision is final and binding.

As a result, Genesis is required to meet the carbon liability for the gas supplied since 2018 and for the remainder of the unexpired term of the agreement. Genesis will be impacted by $53 million in respect of a one-off payment and other costs to 30 June 2021. FY21 EBITDAF guidance has been updated to $358 million. The Board are still to decide on the FY21 final dividend, but this decision is unlikely to impact the final payment.

Beyond 30 June 2021, Genesis’ emissions obligations will increase by approximately 530,000 NZUs for each year to the end of the contract in 2025. The increased obligations will be met by Genesis’ current stockpile of NZUs. Including the increased obligations, Genesis is now fully hedged through FY25.

Marc England, CEO of Genesis, said the outcome is disappointing and unexpected. “We had high confidence in a positive outcome, but the arbitrator didn’t see it our way. We accept the result and will put the disappointment behind us and be even more resolute in delivering on our Future-gen strategy.”

Throughout the process both parties have acted professionally, and we look forward to continuing our relationship as joint venture partners in Kupe. The Genesis Board will be undertaking an independent expert review of the processes and decisions which resulted in this outcome.

Please see the link below for details

Genesis Energy - Contractual Dispute Concluded Unfavourably

Source: Genesis Energy Limited

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