Good morning and welcome to the Genel Energy PLC investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of the screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself, however, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll, and I'll now like to hand you over to Luke Clements, CFO. Good morning, sir.
Good morning. Thank you for making time for our regular quarterly trading updates. My name is Luke Clements. I'm the CFO of Genel Energy. I will provide a short presentation and then open up to Q&A. I'm going to start with a reminder on what we are working towards. We have a clear objective of becoming a business that supports the establishment of a sustainable dividend program. We believe this is the best model for us to deliver value to our shareholders. What does that mean in practice? It means that the test that we apply to our significant business and capital allocation decisions is whether that decision moves us closer towards being a business that firstly generates consistent, resilient, and diversified cash flows, secondly provides expectation of reserves replacement, and thirdly has potential for significant value upside as the portfolio is de-risked. Today's presentation is in two parts.
First, I'm going to talk about the existing business, which is outlined in the box on the left. We have a strong balance sheet with net cash of $125 million, and we will keep the balance sheet strong. We have a disciplined capital allocation philosophy, applying that dividend lens that I just talked about, and we have an interest in the world-class Tawke PSC that generates significant cash flow even when selling only to the domestic market at under $40 a bbl. That cash flow is sufficient to cover all our spend.
In the second part, I'm going to briefly touch on our two areas of focus right now, the two boxes in the middle, which mean that the value delivery of this business can be well in excess of its value today, getting our Kurdistan business exporting again and acquiring new production assets to diversify our business and improve our profitability, and then finally a reminder on arbitration. Next slide, please. So I'm going to start with a quick look at our balance sheet, which we've evolved considerably in the past year while maintaining its position of strength. We have cash of $191 million at the end of October, bond debt now of $66 million, reduced by $182 million since the half year following our purchasing of bonds first via a tender in August, and then we part-exercised our call option in October.
That remaining debt of $66 million matures in October next year, so we will soon take a view on what action we take next. Our net cash position means we have the option to repay it, or we may look to retain some debt and keep a higher cash balance. The decision on what we do with our debt will be a sliding scale choice between lowering net interest costs to maximize profitability or benefiting from the optionality of having a higher, readily available cash balance. You will also see on the bottom right of this slide that I've also shown our working capital evolution through the year. Nearly all of the receivables is made up of the overdue receivables balance owed to us by the KRG. These are IFRS-reported nominal balances.
For example, that KRG receivable balance that we are owed is actually quite a bit higher than the nominal balance that we've recognized in the past under IFRS. It's higher than the number in the table. Although there's been no formal agreement with the KRG on how the receivables balance is resolved, for some time we've been offsetting amounts owed to the KRG for, among other things, contractual obligations under the PSC, the normal provision of oil field police, and we've also had some positive working capital movements. You can see from the movement on the net balance that our working capital is now more efficient.
Maintaining the right tension between a strong balance sheet and capital efficiency is a priority for this business, and we will continue to manage the balance sheet and capital allocation with the same discipline as we have shown in the past couple of years. Next slide, please. Next, the cash generation. All our cash generation comes from the Tawke PSC. We now have another quarter of consistent demand in sales through the well-established process, with regular and known buyers paying in advance to an international bank account. You can also see price has slightly improved in Q3 to $37 a bbl, and you can see that the operator of the Tawke PSC has done a great job in meeting that demand with stable production despite no new wells being drilled in the year. Next slide, please.
You can see here that the Tawke cash flow is more than enough to cover our spend in the quarter. Our G&A has reduced from the first half as both asset and non-asset related activity have reduced, and decisions and actions taken in the first half have started to show benefit. Our interest income has just about covered the cash interest paid in the quarter, which was accelerated on the bonds that we bought back. And going forward, we expect Tawke free cash flow to continue to cover our spend. It's worth noting these are cash numbers. If you take the working capital movements out of these movements, then the income still covers the expense. Next slide, please. On the pipeline, it goes without saying that the export pipeline is very important to us. The difference in value between our business selling domestically and our business exporting is very large.
We've seen recent reports of some progress regarding the Iraqi budget, which sets the frame for payment from the federal government budget to the KRG, which includes the funding of payment for KRG production. Importantly, the recent developments do not include reference to IOCs, but we do hope that it evolves into a tangible position that supports an export offtake arrangement that is in line with our contractual position. We see no reason why the pace of resumption should not be quick once the political challenges have been resolved and the right offtake arrangement is in place. On to the next slide, please. We continue to look for the right assets to add to our portfolio at the right price. We are looking for resilient, cash-generative production assets. We're looking for a deal that's value accretive with potential for upside value delivery or follow-on activity.
Importantly, this is a strategic diversification rather than simply just adding assets to the portfolio, so it needs to be the right deal. On average, we get about one deal per quarter through to the board to make an approved firm bid. That's a good run rate. It takes a lot of work to get assets from origination to making a firm bid, and sometimes it's taken years for owner sentiment to change. So sometimes we find an asset we like, but it takes time for the owner to be ready to sell. So our origination is good, and we're getting enough deals through our processes so that we have confidence that we will transact on the right deal. But until then, we will keep our discipline and ensure we only transact on the right deal that is appropriately value accretive for our shareholders.
So we finish on a repeat of the first slide. We have a solid platform to build on. We already have the Tawke asset generating significant cash flow, and we will continue to work with the operators to optimize that cash generation while at the same time ensuring our organizational cost base and capability are appropriate for the company to achieve its key objectives. We have a strong balance sheet providing resilience and optionality. Then the two items of focus, each of which can transform the value delivery proposition of the business. We will continue to work with our peers to push for the deal space that can restart Kurdistan exports, and we will continue to look for the right deal to bring new assets into our portfolio, originating and maturing opportunities to keep making firm bids.
And then finally, but importantly, we expect the outcome of the arbitration by the end of the year. Thank you for your time, and I will now open up to questions.
Luke, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the right-hand corner of your screen. Just while the company takes a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via our investor dashboard. As you can see, we've received a number of questions throughout today's presentation. I'll please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.
Thank you. I'm going to start with a couple of leftover questions from last time. So one of the questions from last time, which came in a bit late so we didn't get to it, was, is M&A contingent on addressing bond maturities first? Not necessarily, but in practice, because any deal we do will need to deal appropriately with the bond maturing in October next year. If that deal's of any size at all, then you kind of need to deal with them hand in hand. So it's probably part of the puzzle, yes. Second question, what financial metrics do you use to assess potential acquisitions? We use lots of metrics. We use lots of metrics, and we use lots of scenarios, so there isn't one base case scenario on one metric we use.
We look at IRR, we look at payback, we look at max cash out, we look at NPV, we look at downside scenarios, we look at upside scenarios. So what we're trying to assess really is, are the kind of high confidence returns in line with the risk that we think we're taking with the deal? So multiple metrics, multiple scenarios is how we assess the deals. Now moving on to current questions. There's quite a few questions on Kurdistan and $16 bucks a bbl, which I'm going to try and pull together. So it's looking like there may be an adjustment to the federal government budget, which enables the federal government to pay the Kurdistan government a base price of $16 a bbl plus an adjustment either up or down.
We would hope for it to be up, which is the result of a process which isn't fully understood yet. It's important to know that's a government-to-government arrangement, so that's what Baghdad would pay to Kurdistan, and it's for oil production and for transportation, so it includes pipe costs. We do not yet know how that will turn into an offtake arrangement for IOCs, so we hope this is a good step forward. I think hopefully what it shows is there seems to be appetite on both the federal government and the KRG side to find a deal space. We hope that this will turn into something that we can restart exports on, but it's too early really to tell exactly how it plays out. Just going to scan the questions for some more. On the arbitration, we have not yet received the award.
We're expecting that by the end of the year. Latest update on Taq Taq is it is not producing. The commercial terms available on Taq Taq do not support operating that field at this point in time, so we are assessing our next steps on that field. What is our take on the third-party consultant production cost analysis related to the $16 a bbl? We don't understand it yet. We hope to be part of developing a solution for that, but we don't understand exactly how that works at this stage. I'm just going through a few questions about 2025 and what happens in 2025. We're currently going through both the asset level WP&B with the host government and our own corporate WP&B for next year, so we will guide on that at the normal time, which is in January. What is Tawke gross output now?
Guidance still at 80,000 bbl a day. DNO confirmed their guidance last week, so it will be in line with that. Quite a few questions on arbitration, which we can't answer at this stage, but needless to say, when we find out the result, we will update the market accordingly on some of the questions that are being asked here. And a few questions on the bond. As I alluded to in the presentation, we'll take a view of that relatively soon. The balance being between, do you pay a bit more interest cost and keep some cash available, or do you take all the debt down and maximize your profitability? And that's the decision we'll take relatively soon. A few questions on dividend. We've been pretty clear. We think dividend is an important part of an investor proposition for an E&P business and even more so for ours.
Our preferred dividend process is a sustainable dividend program. I think in terms of guiding on what we might do on dividend, with us not through our WP&B process yet, not knowing the outcome on arbitration yet, not knowing the export scenario yet, it's a bit premature on that, but it's certainly on my mind. It looks like that may be all the questions. Okay, one here. Any upcoming M&A plans? As I said, M&A is an important part of what we're trying to do and what we're trying to use our balance sheet for. We see diversification, not just of single asset risk, but also of country risk as an important part of building a business with resilient, diversified cash flows. So absolutely, M&A is on our mind, and we continue to work on that.
As I said, one deal a quarter going to the board for a firm bid is pretty good going. Some of these assets we identified a couple of years ago, and it's taken time for the stars to align and the opportunity to bid to come into play. So far, we haven't quite got there, but we are confident that our process of origination and evaluation is good, and we just need to get one over the line. Local sales, DNO said there were some challenges recently. Yeah, coming up to the elections, there were some kind of road blockages, which meant it was hard for the trucks to get around, so there was a little bit of interruption, nothing material. It looks like, as DNO said last week, it looks like that's now dissipating, so we're not seeing any ongoing challenges with the domestic sales, demand, and transportation. Okay.
Luke, thank you for answering those questions you've had from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Invest or Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Luke, I'm pleased to ask you for a few closing comments.
So I think our plans are clear. We're trying to build this business with diversified, resilient cash flows. We've got a strong balance sheet. We've got an effective origination and deal evaluation process. We're working hard on exports, and we are hoping that recent developments turn into something tangible for IOCs, and we also have our arbitration award ahead of us. So we feel like we have a lot of value for us to get after, and we hope to be delivering on that over the next 12 to 18 months. Many thanks.
Luke, thanks for updating investors today. Can I please ask investors not to close the session, as you'll now be automatically redirected to provide your feedback in order for the management team to better understand your views and expectations? This will only take a few moments to complete, and I'm sure it will be greatly valued by the company. On behalf of the management team of Genel Energy PLC, we'd like to thank you for attending today's presentation.