REG - Energean PLC - Energean Israel 1Q 2024 Accounts
23/05/2024 07:15
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RNS Number : 5462P Energean PLC 23 May 2024
ENERGEAN ISRAEL LIMITED
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 MARCH 2024
ENERGEAN ISRAEL LIMITED
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 MARCH 2024
INDEX
Page
Interim Consolidated Statement of Comprehensive Income 3
Interim Consolidated Statement of Financial Position 4
Interim Consolidated Statement of Changes in Equity 5
Interim Consolidated Statement of Cash Flows 6
Notes to the Interim Consolidated Financial Statements 7-19
- - - - - - - - - - - - - - - - - - - -
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
THREE MONTHS ENDED 31 MARCH 2024
31 March (Unaudited)
Notes 2024 2023
$'000 $'000
Revenue 3 266,286 158,853
Cost of sales 4 (126,268) (83,905)
Gross profit 140,018 74,948
Administrative expenses 4 (3,409) (3,922)
Exploration and evaluation expenses 4 - (50)
Operating profit 136,609 70,976
Finance income 5 3,061 1,526
Finance costs 5 (46,554) (32,487)
Net foreign exchange gains (losses) 5 125 (257)
Profit for the period before tax 93,241 39,758
Taxation expense 6 (13,331) (9,482)
Net profit for the period 79,910 30,276
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss:
Loss on cash flow hedge for the period (165) -
Income tax relating to items that may be reclassified subsequently to 9 38 -
profit/(loss)
Other comprehensive loss for the period (127) -
Total comprehensive income for the period 79,783 30,276
The accompanying notes are an integral part of the interim consolidated
financial statements.
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF 31 MARCH 2024
31 March 2024 31 December
(Unaudited) 2022
$'000 $'000
Notes (Unaudited) 2023
$'000 $'000
$'000 $'000
ASSETS:
NON-CURRENT ASSETS:
Property, plant and equipment 7 2,776,839 2,797,831
Intangible assets 8 174,297 168,165
Other receivables 10 4,951 5,365
2,956,087 2,971,361
CURRENT ASSETS:
Trade and other receivables 10 150,251 130,135
Inventories 11 11,275 7,141
Restricted cash 12(A) 1,291 22,482
Cash and cash equivalents 172,215 286,625
335,032 446,383
TOTAL ASSETS 3,291,119 3,417,744
EQUITY AND LIABILITIES:
EQUITY:
Share capital 1,708 1,708
Share Premium 212,539 212,539
Hedges Reserve (127) -
Retained earnings 44,691 74,781
TOTAL EQUITY 258,811 289,028
NON-CURRENT LIABILITIES:
Senior secured notes 12(A) 2,590,102 2,588,492
Decommissioning provisions 86,467 92,613
Deferred tax liabilities 9 60,032 46,985
Trade and other payables 13 117,453 127,044
2,854,054 2,855,134
CURRENT LIABILITIES:
Trade and other payables 13 178,254 273,582
TOTAL LIABILITIES 3,032,308 3,128,716
TOTAL EQUITY AND LIABILITIES 3,291,119 3,417,744
22 May 2024
Date of approval of the consolidated financial statements Panagiotis Benos Matthaios Rigas
Director Director
The accompanying notes are an integral part of the interim consolidated
financial statements.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
THREE MONTHS ENDED 31 MARCH 2024
Share capital Share Premium Hedges Accumulated losses Total equity
$'000 $'000 Reserve $'000 $'000
$'000
Balance as of 1 January 2024 1,708 212,539 - 74,781 289,028
Transactions with shareholders:
Dividend, see note 14 - - - (110,000) (110,000)
Comprehensive Income:
Profit for the period - - - 79,910 79,910
Other comprehensive loss, net of tax (127) - (127)
Total comprehensive income - - (127) 79,910 79,783
Balance as of 31 March 2024 1,708 212,539 (127) 44,691 258,811
Balance as of 1 January 2023 1,708 212,539 - (70,528) 143,719
Comprehensive Income:
Profit for the period - - - 30,276 30,276
Other comprehensive loss, net of tax - - - - -
Total comprehensive income - - - 30,276 30,276
Balance as of 31 March 2023 1,708 212,539 - (40,252) 173,995
The accompanying notes are an integral part of the interim consolidated
financial statements.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS PERIOD ENDED 31 MARCH 2024
31 March (Unaudited)
Notes 2024 2023
$'000 $'000
Operating activities
Profit for the period before tax 93,241 39,758
Adjustments to reconcile loss before taxation to net cash provided by:
operating activities:
Depreciation, depletion and amortisation ( ) 4 54,787 30,871
Compensation to gas buyers, payment made in advance ( ) 3 - 4,928
Finance Income ( ) 5 (3,061) (1,526)
Finance expenses ( ) 5 46,554 32,487
Net foreign exchange loss /(gain) ( ) 5 (125) 257
Cash flow from operations before working capital 191,396 106,775
Increase in trade and other receivables (20,495) (18,315)
Decrease/(increase) in inventories (4,134) 172
(Decrease)/increase in trade and other payables (18,950) 314
Cash from operations 147,817 88,946
Income taxes paid (1,946) (368)
Net cash inflows from operating activities 145,871 88,578
Investing activities
Payment for purchase of property, plant and equipment 7(C) (69,160) (55,752)
Payment for exploration and evaluation, and other intangible assets 8(B) (5,724) (25,318)
Amounts received from INGL related to transfer of property, plant and 7(C) 1,712 -
equipment
Movement in restricted cash, net 12(A) 21,191 63,316
Interest received 3,870 1,509
Net cash outflow used in investing activities (48.111) (16,245)
Financing activities
Transaction costs in relation to senior secured notes issuance - (229)
Senior secured notes - interest paid 12(A) (96,326) (64,453)
Dividends paid 14 (110,000) -
Other finance cost paid (280) (44)
Finance costs paid for deferred license payments 13(2) (3,900) -
Repayment of obligations under leases 13 (1,381) (250)
Net cash outflow used in financing activities (211,887) (64,976)
Net increase (decrease) in cash and cash equivalents (114,127) 7,357
Cash and cash equivalents at beginning of the period 286,625 24,825
Effect of exchange differences on cash and cash equivalents (283) (101)
Cash and cash equivalents at end of period 172,215 32,081
The accompanying notes are an integral part of the interim consolidated
financial statements.
NOTE 1: - GENERAL
a. Energean Israel Limited (the "Company") was incorporated in Cyprus on
22 July 2014 as a private company with limited liability under the Companies
Law, Cap. 113. Its registered office is at Lefkonos 22, 1(st) Floor,
Strovolos, 2064 Nicosia, Cyprus.
b. The Company and its subsidiaries (the "Group") has been established
with the objective of exploration, production and commercialisation of natural
gas and hydrocarbon liquids. The Group's main activities are performed in
Israel by its Israeli Branch.
c. As of 31 March 2024, the Company had investments in the following
subsidiaries:
Name of subsidiary Country of incorporation / registered office Principal activities Shareholding Shareholding
At 31 March
At 31 December 2023
(%)
2024
(%)
Energean Israel Transmission LTD 121, Menachem Begin St. Gas transportation license holder 100 100
Azrieli Sarona Tower, POB 24,
Tel Aviv 67012039 Israel
Energean Israel Finance LTD 121, Menachem Begin St. Financing activities 100 100
Azrieli Sarona Tower, POB 24,
Tel Aviv 67012039 Israel
d. The Group's core assets as of 31 March 2024 included the following:
Country Asset Field Working interest Field phase
Israel Karish (*) Karish Main including Karish North 100% Production
Israel Tanin (*) Tanin 100% Development
Israel Block 12 Katlan 100% Appraisal
Israel Blocks 21, 23, 31 Hercules and Hermes 100% Exploration
(*) The concession agreement expires in 2044.
NOTE 2: - Accounting policies and basis of preparation
The interim financial information included in this report has been prepared in
accordance with IAS 34 "Interim Financial Reporting". The results for the
interim period are unaudited and, in the opinion of management, include all
adjustments necessary for a fair presentation of the results for the period
ended 31 March 2024. All such adjustments are of a normal recurring nature.
The unaudited interim consolidated financial statements do not include all the
information and disclosures that are required for the annual financial
statements and must be read in conjunction with the Group's annual
consolidated financial statements for the year ended 31 December 2023.
The financial information presented herein has been prepared in accordance
with the accounting policies expected to be used in preparing the Group's
annual consolidated financial statements for the year ended 31 December 2024
which are the same as those used in preparing the annual consolidated
financial statements for the year ended 31 December 2023.
The directors consider it appropriate to adopt the going concern basis of
accounting in preparing these interim financial statements.
Israel-Hamas conflict- The Group continues to monitor the ongoing conflict
between the State of Israel and Hamas. While the situation has not impacted
the Company's production from the FPSO (Floating Production Storage and
Offloading vessel), it is not possible to predict whether the conflict will
have a material adverse effect on our future earnings, cash flows and
financial conditions.
NOTE 3: - Revenues
31 March (Unaudited)
2024 2023
$'000 $'000
Revenue from gas sales ((1)) 182,245 113,090
Revenue from hydrocarbon liquids sales ((2)) 84,041 50,691
Compensation to customers ((3)) - (4,928)
Total revenue 266,286 158,853
((1)) Sales gas for three months ended 31 March 2024 totaled approximately 1.2
bcm and for three months ended 31 March 2023 totaled approximately 0.72 bcm.
((2)) Sales from hydrocarbon liquids for three months ended 31 March 2024
totaled approximately 1.07 mmbbl and for three months ended 31 March 2023
totaled approximately 0.714 mmbbl.
((3)) During 2021 and in accordance with the GSPAs signed with a group of gas
buyers, the Company paid compensation to these counterparties following delays
to the supply of gas from the Karish project. The compensation is deducted
from revenue in 2023, as variable consideration, as the gas is delivered to
the gas buyers, in accordance with IFRS 15 Revenue Recognition.
NOTE 4: - Operating profit before taxation
31 March (Unaudited)
2024 2023
$'000 $'000
(a) Cost of sales
Staff costs 4,186 1,885
Energy cost 420 1,288
Royalty payable 47,122 29,474
Depreciation (Note 7) 54,317 30,279
Other operating costs ((1)) 22,938 20,110
Oil stock movement (2,715) 869
Total cost of sales 126,268 83,905
(b) Administrative expenses
Staff costs 1,478 960
Share-based payment charge 181 99
Depreciation and amortisation (Note 7, 8) 470 592
Auditor fees 52 48
Other general & administration expenses ((2)) 1,228 2,223
Total administrative expenses 3,409 3,922
(c) Exploration and evaluation expenses
Other exploration and evaluation expenses - 50
Total exploration and evaluation expenses - 50
((1)) Other operating costs mainly consist of insurance and planned
maintenance costs.
((2)) The Other general & administration expenses mainly consist of legal
expenses, management fees recharged by other Energean Group companies and
external advisors fees.
NOTE 5: - Net finance income/(expenses)
31 March (Unaudited)
2024 2023
$'000 $'000
Interest on Senior Secured Notes (Note 12) 42,525 34,375
Interest expense on long terms payables (Note 13(2)) 1,046 612
Less amounts included in the cost of qualifying assets (Note 7(A)) (3,686) (3,568)
39,885 31,419
Costs related to parent company guarantees 932 145
Other finance costs and bank charges 594 107
Unwinding of discount on trade payable (Note 13(3)) 4,051 -
Unwinding of discount on provision for decommissioning 926 861
Unwinding of discount on right of use asset 226 15
(1)
Less amounts included in the cost of qualifying assets (Note 7(A)) (60) (60)
6,669 1,068
Total finance costs 46,554 32,487
Interest income from time deposits 3,056 654
Profits from valuation of hedging operations 5 -
Change of discount estimate on payables - 872
Total finance income 3,061 1,526
Net foreign exchange profits (losses) 125 (257)
Net finance costs (43,368) (31,218)
NOTE 6: - Taxation
1. Corporate Tax rates applicable to the Company:
Israel:
The Israeli corporate tax rate is 23% in 2024 and 2023.
Cyprus:
For its activity in Cyprus, the Company is subject to corporation tax on its
taxable profits at the rate of 12.5%.
Starting from 1 January 2024, the Company's control and management was
transferred from the Republic of Cyprus ("Cyprus") to the United Kingdom
("UK") and as such the Company's tax residency migrated from Cyprus to UK.
2. The Income and Natural Resources Taxation Law, 5771-2011 -
Israel- the main provisions of the law are as follows:
n April 2011, the Knesset passed the Income and Natural Resources Tax Law,
5771-2011 ("the Law"), which imposed an oil and gas profits levy at a rate set
out below. The rate of the levy is calculated according to a proposed R factor
mechanism, according to the ratio between the net accrued revenues from the
project and the cumulative investments as defined in the Law. A minimum levy
of 20% is levied at the stage where the R factor ratio reaches 1.5, and when
the ratio increases, the levy will increase gradually until the maximum rate
of 50% until the ratio reaches 2.3. In addition, it was determined that the
rate of the levy as stated will be reduced starting in 2017 by multiplying
0.64 by the difference between the corporate tax rate prescribed in section
126 of the Income Tax Ordinance for each tax year and the tax rate of 18%. In
accordance with the corporate tax rate from 2018 onwards, the maximum rate
will be 46.8%.
In addition, additional provisions were prescribed regarding the levy, inter
alia, the levy is recognised as an expense for the purpose of calculating
income tax; the limits of the levy shall not include export facilities; the
levy will be calculated and imposed for each reservoir separately (Ring
Fencing); payment by the owner of an oil right calculated as a percentage of
the oil produced, the recipient of the payment will be liable to pay a levy
according to the amount of the payment received, and this amount will be
subtracted from the amount of the levy owed by the holder of the oil right.
NOTE 6: - Taxation (Cont.)
The Law also sets rules for the unification or separation or consolidation of
oil projects for the purposes of the Law. In accordance with the provisions of
the Law, the Group is not yet required to pay any payment in respect of the
said levy, and therefore no liability has been recognised in the financial
statements in respect of this payment.
3. Taxation charge:
31 March (Unaudited)
2024 2023
$'000 $'000
Current income tax charge (246) (143)
Deferred tax relating to origination and reversal of temporary differences (13,085) (9,339)
(Note 9)
Total taxation expense (13,331) (9,482)
NOTE 7: - Property, Plant and Equipment
a. Composition:
Oil and gas Assets Leased assets Furniture, fixtures and equipment Total
$'000 $'000 $'000 $'000
Cost:
At 1 January 2023 2,932,789 4,740 1,994 2,939,523
Additions 135,126 12,246 396 147,768
Handover to INGL((1)) (111,448) - - (111,448)
Capitalised borrowing cost 17,658 - - 17,658
Change in decommissioning provision 4,913 - - 4,913
Total cost at 31 December 2023 2,979,038 16,986 2,390 2,998,414
Additions 36,962 47 7 37,016
Capitalised borrowing cost 3,746 - - 3,746
Change in decommissioning provision (7,072) - - (7,072)
Total cost at 31 March 2024 3,012,674 17,033 2,397 3,032,104
Depreciation:
At 1 January 2023 11,226 1,459 525 13,210
Charge for the year 183,898 2,966 509 187,373
Total Depreciation at 31 December 2023 195,124 4,425 1,034 200,583
Charge for the period 53,380 1,203 99 54,682
Total Depreciation at 31 March 2024 248,504 5,628 1,133 255,265
At 31 December 2023 2,783,914 12,561 1,356 2,797,831
At 31 March 2024 2,764,170 11,405 1,264 2,776,839
The additions to oil & gas assets in 2024 and 2023 are primarily due to
development costs for the FPSO, Karish North and 2(nd) Oil Train.
((1)) Handover to INGL took place on 22 March 2023, please refer to Note
10(1).
NOTE 7: - Property, Plant and Equipment (Cont.)
b. Depreciation expense for the year has been recognised as
follows:
31 March (Unaudited)
2024 2023
$'000 $'000
Cost of sales 54,317 30,279
Administration expenses 365 507
Total 54,682 30,786
c. Cash flow statement reconciliations:
31 March (Unaudited)
2024 2023
$'000 $'000
Additions and disposals to property, plant and equipment, net 33,690 77,368
Associated cash flows
Payments and receipts for additions to property, plant and equipment, net (67,448) (55,752)
Non-cash movements/presented in other cash flow lines
Capitalised borrowing costs (3,746) (3,628)
Right-of-use asset additions (47) -
Change in decommissioning provision 7,072 (1,020)
Lease payments related to capital activities 1,381 -
Movement in working capital 29,098 (16,968)
d. Details of the Group's rights in petroleum and gas assets
are presented in note 1.
NOTE 8: - Intangible Assets
a. Composition:
Exploration and evaluation assets Software licences Total
$'000 $'000 $'000
Cost:
At 1 January 2023 141,869 1,968 143,837
Additions 24,597 362 24,959
At 31 December 2023 166,466 2,330 168,796
Additions 6,237 - 6,237
At 31 March 2024 172,703 2,330 175,033
Amortisation:
At 1 January 2023 - 283 283
Charge for the year - 348 348
Total Amortisation at 31 December 2023 - 631 631
Charge for the period - 105 105
Total Amortisation at 31 March 2024 - 736 736
At 31 December 2023 166,466 1,699 168,165
At 31 March 2024 172,703 1,594 174,297
Additions to exploration and evaluation assets are mainly related to pre-FID
cost for Katlan.
b. Cash flow statement reconciliations:
31 March (Unaudited)
2024 2023
$'000 $'000
Additions to intangible assets 6,237 9,089
Associated cash flows
Payment for additions to intangible assets (5,724) (25,318)
Non-cash movements/presented in other cash flow lines
Movement in working capital (513) 16,229
c. Details on the Group's rights in the intangible assets:
Right Type of right Valid date of the right Group's interest as at
31 Match 2024
Block 12 Exploration license 13 January 2025 100%
Block 21 Exploration license 13 January 2025 100%
Block 23 Exploration license 13 January 2025 100%
Block 31 Exploration license 13 January 2025 100%
NOTE 8: - Intangible Assets (Cont.)
d. Additional information regarding the Exploration and
Evaluation assets:
As of 31 March 2024, the Group holds four licences to explore for gas and oil
in Block 12, Block 21, Block 23 and Block 31, which are located in the
economic waters of the State of Israel. In January 2024 the licences were
extended until 13 January 2025, and they may be extended for a further one
year.
In 2022, during the Company's growth drilling programme, it discovered gas in
Block 12, offshore Israel. The Company expects to take FID upon the
finalisation of EPC ("Engineering, Procurement and Construction") terms, which
are currently under negotiation.
NOTE 9: - Deferred taxes
The Group is subject to corporation tax on its taxable profits in Israel at
the rate of 23%. The Capital Gain Tax rates depends on the purchase date and
the nature of asset. The general capital tax rate for a corporation is the
standard corporate tax rate.
Tax losses can be utilised for an unlimited period, and tax losses may not be
carried back.
According to Income Tax (Deductions from Income of Oil Rights Holders)
Regulations, 5716-1956, the exploration and evaluation expenses of oil and gas
assets are deductible in the year in which they are incurred.
The Group expects that there will be sufficient taxable profit in the
following years and that deferred tax assets, recognised in the consolidated
financial statements of the Group, will be recovered.
NOTE 9: - Deferred taxes (Cont.)
Below are the items for which deferred taxes were recognised:
Property, plant and equipment & intangible assets Right of use asset Tax losses Deferred expenses for tax Staff leaving indemnities Accrued expenses and other short‑term liabilities and other long‑term Trade and other payables - Derivative liability Total
liabilities
$'000 IFRS 16 $'000 $'000 $'000
$'000 $'000
$'000
$'000
At 1 January 2024 (61,050) (2,888) 8,983 4,082 337 3,551 - (46,985)
Increase/(decrease) for the year through:
Profit or loss (4,776) 299 (8,644) (63) 70 29 - (13,085)
Other comprehensive income 38 38
At 31 March 2024 (65,826) (2,589) 339 4,019 407 3,580 38 (60,032)
At 1 January 2023 (40,344) (754) 56,415 6,209 167 1,193 - 22,886
Increase/(decrease) for the year through:
Profit or loss (20,706) (2,134) (47,432) (2,127) 170 2,358 - (69,871)
At 31 December 2023 (61,050) (2,888) 8,983 4,082 337 3,551 - (46,985)
31 March 2024 31 December
(Unaudited) 2023
$'000 $'000
Deferred tax liabilities (68,415) (63,938)
Deferred tax assets 8,383 16,953
(60,032) (46,985)
NOTE 10: - Trade and other receivables
31 March 2024 31 December
(Unaudited) 2023
$'000 $'000
Current
Financial items
Trade receivables
Trade receivables 134,253 114,139
Other receivables ((1)) 4,995 6,994
Accrued interest income 122 -
Refundable VAT 6,609 1,196
145,979 122,329
Non-financial items
Accrued interest income - 1,015
Prepayments and prepaid expenses 4,272 6,791
4,272 7,806
Total current trade and other receivables 150,251 130,135
Non-current
Non-financial items
Prepayments and prepaid expenses 4,951 5,365
Total non-current trade and other receivables 4,951 5,365
((1) ) The balance relates to the agreement with Israel Natural Gas
Lines ("INGL") for the transfer of title (the "Hand Over") of the near shore
and onshore segments of the infrastructure that delivers gas from the Energean
Power FPSO into the Israeli national gas transmission grid. The Hand Over
became effective in March 2023 and the final amount of $5.0 million is
expected to be collected in September 2024.
NOTE 11: - Inventories
31 March 2024 31 December
(Unaudited) 2023
$'000 $'000
Hydrocarbon liquids 4,443 1,685
Natural gas 510 553
Raw materials and supplies 6,322 4,903
Total 11,275 7,141
NOTE 12: - Senior secured notes
a. Senior secured notes:
On 24 March 2021 (the "Issue Date"), Energean Israel Finance Ltd (a 100%
subsidiary of the Company) issued US$2,500,000,000 of senior secured notes.
The proceeds were primarily used to prepay in full the Project Finance
Facility.
On 11 July 2023, Energean Israel Finance Ltd. completed the offering of US$750
million aggregate principal amount of senior secured notes with a fixed annual
interest rate of 8.500%. The funds were released from escrow in September 2023
and were used mainly to repay Energean Israel's US$625 million notes that were
due in March 2024.
The Notes were issued in four tranches as follows:
Series Maturity Annual fixed Interest rate 31 March 2024 31 December 2023
(Unaudited)
Carrying value $'000 Carrying value $'000
US$ 625 million 30 March 2026 4.875% 620,529 619,932
US$ 625 million 30 March 2028 5.375% 618,560 618,145
US$ 625 million 30 March 2031 5.875% 617,058 616,762
US$ 750 million 30 September 2033 8.500% 733,955 733,653
US$2,625 million 2,590,102 2,588,492
The interest on each series of the Notes is paid semi-annually, on 30 March
and on 30 September of each year.
The Notes are listed on the TACT Institutional of the Tel Aviv Stock Exchange
Ltd. (the "TASE").
With regards to the indenture document, signed on 24 March 2021 with HSBC BANK
USA, N.A (the "Trustee"), no indenture default or indenture event of default
has occurred and is continuing.
Collateral:
The Company has provided/undertakes to provide the following collateral in
favor of the Trustee:
a. First rank fixed charges over the shares of Energean Israel
Limited, Energean Israel Finance Ltd and Energean Israel Transmission Ltd, the
Karish & Tanin Leases, the gas sales purchase agreements ("GSPAs"),
several bank accounts, operating permits, insurance policies, the Company's
exploration licences and the INGL Agreement.
b. Floating charge over all of the present and future assets of
Energean Israel Limited and Energean Israel Finance Ltd.
c. The Energean Power FPSO.
Restricted cash:
As of 31 March 2024, the Company had short-term restricted cash of US$1.29
million (31 December 2023: US$22.48 million), which will be used for the
September 2024 interest payment.
Credit rating:
The senior secured notes have been assigned a Ba3 rating by Moody's and a BB-
rating by S&P Global.
NOTE 13: - Trade and other payables
31 March 2024 31 December
(Unaudited) 2023
$'000 $'000
Current
Financial items
Trade accounts payable ((1)) 107,505 97,350
Payables to related parties 17,812 19,023
Deferred licence payments due within one year ((2)) 17,198 46,154
Other creditors ((4)) 17,687 32,034
Income taxes - 1,585
Derivative liability 165 -
Short term lease liabilities 3,948 4,718
164,315 200,864
Non-financial items
Accrued expenses ((1)) 12,059 16,765
Other finance costs accrued - 55,411
Social insurance and other taxes 1,880 542
13,939 72,718
Total current trade and other payables 178,254 273,582
Non-current
Financial items
Trade and other payables ((3)) 108,437 117,796
Long term lease liabilities 8,532 8,880
116,969 126,676
Non-financial items
Accrued expenses to related parties 484 368
484 368
Total non-current trade and other payables 117,453 127,044
((1) ) Trade payables and accrued expenses relate primarily to
development expenditure on the Karish project, with the main contributors
being mainly the FPSO, Karish North, and the second oil train. Trade payables
are non-interest bearing.
((2) ) In December 2016, Energean Israel acquired the Karish and Tanin
offshore gas fields for $40.0 million closing payment with an obligation to
pay additional consideration of $108.5 million plus interest inflated at an
annual rate of 4.6% in ten equal annual payments. A settlement agreement was
signed in November 2023, whereby it was agreed that the final amount owed
would be paid in two instalments. As of 31 March 2024, after the payment of
the first installment amount $30 million, the total discounted deferred
consideration was $17.2 million (as at 31 December 2023: $46.2 million). In
May 2024 the Company paid the second and final installment of $17.4 million.
((3) ) The amount represents a long-term amount payable in terms of the
EPCIC contract. Following the amendment to the terms of the deferred payment
agreement with Technip signed in February 2024 the remaining amount payable
under the EPCIC contract has been reduced to $210 million. The amount is
payable in twelve equal quarterly deferred payments starting in March 2024 and
therefore has been discounted at 8.668%. p.a. (being the yield rate of the
senior secured loan notes, maturing in 2026, at the date of agreeing the
payment terms).
NOTE 13: - Trade and other payables (Cont.)
((4) ) The amount mainly comprises of royalties payables to the Israel
government and third parties with regards to the Karish Lease, including $6.6
million (2023: $12.1 million) of royalties payable to third parties.
Contractual royalties are payable to NewMed (previously Delek Drilling) and
third-party holders at a total rate of 7.5%, increasing to 8.25% after the
date at which the lease in question starts to pay the oil and gas profits
levy. The royalty payable to NewMed under the SPA is calculated on the value
of the total amount of natural gas and condensate produced at the wellhead
without any deduction (except for natural gas and Petroleum (as defined under
the Petroleum Law) used in the production process). No contractual royalties
under the SPA will be payable on future discoveries that were not part of the
original acquisition of the Karish and Tanin leases. Royalties under the SPA
are deductible for corporate tax and for the Oil Levy tax base.
NOTE 14: - Equity
Interim dividend
An interim dividend of US$110 million was declared and paid during Q1 2024.
NOTE 15: - Financial Instruments
Fair Values of other financial instruments
The following financial instruments are measured at amortised cost and are
considered to have fair values different to their book values.
31 March 2024 (Unaudited) 31 December 2023
Book Value $'000 Fair Value $'000 Book Value $'000 Fair value $'000
Senior Secured Notes (Note 12) 2,590,102 2,456,250 2,588,492 2,371,125
The fair value of the Senior Secured Notes is within level 1 of the fair value
hierarchy and has been estimated by discounting future cash flows by the
relevant market yield curve at the balance sheet date. The fair values of
other financial instruments not measured at fair value including cash and
short-term deposits, trade receivables and trade and other payables equate
approximately to their carrying amounts.
NOTE 16: - Significant events and transaction during the reporting period
a) In February 2024, Karish North first gas was achieved and the second
gas export riser was completed.
b) In February 2024, the Company signed a new GSPA with Eshkol Energies
Generation LTD, majority owned Dalia Energy Companies Ltd, for the supply of
an initial quantity of 0.6 bcm/year starting June 2024, rising to 1 bcm/ year
from 2032 onwards. The GSPA is for a term of approximately 15 years, for a
total contract quantity of up to approximately 12 bcm. The contract contains
provisions regarding floor and ceiling pricing, take or pay and price
indexation (not Brent-price linked). The GSPA has been signed at levels that
are in line with the other large, long-term contracts within Energean's
portfolio.
NOTE 17: - Subsequent events
a) An interim dividend of US$35 million was declared and paid in April
2024.
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