REG - Energean PLC - Results for Half-Year Ended 30 June 2024
11/09/2024 07:00
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RNS Number : 6625D Energean PLC 11 September 2024
Energean plc
("Energean" or the "Company")
Results for Half-Year Ended 30 June 2024
London, 11 September 2024 - Energean plc (LSE: ENOG TASE: אנאג) is pleased
to announce its half-year results for the six months ended 30 June 2024 ("H1
2024").
Operational Highlights:
· Record production to date in the period, with Group production in
June 2024 averaging 177 kboed (84% gas), including 140 kboed (86% gas) from
the continuing operations 1 (#_ftn1) , reflecting the step-up in demand
during the summer in Israel.
· Group production during H1 2024 was 146 kboed (82% gas), a 38%
increase year-on-year (H1 2023: 106 kboed).
o Production from the continuing operations(1) during H1 2024 was 106 kboed
(84% gas), a 47% increase year-on-year (H1 2023: 72 kboed).
o Group production for the eight-months to August 2024 was 154 kboed, of
which 115 kboed was from the continuing operations(1).
o Day-to-day production in Israel continues to be unimpacted by the ongoing
geopolitical developments. FPSO uptime 2 (#_ftn2) (excluding planned
shutdowns) was 99% in H1 2024.
· Strategic sale of Egypt, Italy and Croatia portfolio (the
"Transaction") to an entity controlled by Carlyle International Energy
Partners ("Carlyle") targeted to complete by year-end 2024, subject to
customary regulatory and antitrust approvals.
o Anti-trust and government approvals submitted and progressing on schedule.
Carlyle received unconditional clearance from the Italian Competition
Authority in August and approval of the Italian Presidency of the Council of
Ministers in September, in respect of the Italian Golden Power Law.
o Energean continues to expect to have sufficient funds at closing to repay
in full the $450 million PLC Corporate Bond in priority and facilitate a
special dividend of up to $200 million.
· Key projects brought online.
o In Israel, Karish North first gas and the second gas export riser
completion was achieved in February 2024. Second oil train heavy lift vessel
contract signed, expected to be installed in the coming months.
o In Italy, Cassiopea started-up in August 2024. The remaining three wells
and associated facilities are expected to be brought online, tested and
commissioned over the coming months.
o In Egypt, Location B gas production was brought online in August 2024.
· Core gas projects underway and decarbonisation business
progressing to facilitate future growth.
o Final Investment Decision ("FID") on Katlan (Israel) taken in July 2024;
first gas is planned for H1 2027. Energean expects spending to accelerate
reflecting progress so far and anticipated progress for the year.
o Anchois (Morocco) drilling operations continue, with preliminary analysis
indicating volumes found in the Anchois-3 well are lower than pre-drill
estimates. Further updates to follow once Anchois-3 ST drilling operations and
ongoing technical evaluation are complete.
o Prinos carbon storage project: (1) Front-End Engineering Design ("FEED")
activities progressing, including phase 2 that targets to establish a facility
with a capacity of up to 3 million tons of CO2 per year; (2) storage permit
for phase 1 (1 million tons of CO2 per year) anticipated to be received in the
coming months.
Financial Highlights:
· Record financial results for the 6-months to 30 June 2024,
following the start-up of Karish North and the completion of the second gas
export riser (Israel).
o Revenues of $867 million, a 47% increase (H1 2023: $588 million), of which
$643 million is associated with the continuing operations(1).
o Adjusted EBITDAX 3 (#_ftn3) of $568 million, a 65% increase (H1 2023:
$345 million), of which $436 million is associated with the continuing
operations(1).
o The Group recorded total impairments of $76 million during the period, $61
million of which was in relation to the Orion X1 exploration well in Egypt.
o Profit after tax of $89 million, a 27% increase (H1 2023: $70 million), of
which $116 million is associated with the continuing operations(1).
· Group leverage 4 (#_ftn4) (net debt/annualised Adjusted EBITDAX)
reduced to 2.5x (FY 2023: 3.1x).
o Group cash as of 30 June 2024 was $345 million, including restricted
amounts of $86 million 5 (#_ftn5) , and total liquidity was $511 million 6
(#_ftn6) . This includes cash for the continuing operations(1) of $317
million, including restricted amounts of $86 million(6), and total liquidity
of $483 million.
Corporate Highlights:
· Q2 2024 dividend of 30 US$ cents/share declared today, scheduled
to be paid on 30 September 2024 7 (#_ftn7) .
o Including the Q2 2024 dividend, approximately $486 million will have been
returned to shareholders since payments began.
o Energean reiterates its commitment to the existing dividend policy, which
targets to return $1 billion to shareholders by the end of 2025. The Group
expects to redefine its dividend policy upon Transaction closing.
· Group Scope 1 and 2 emissions intensity of 8.5 kgCO2e/boe, a 20%
reduction versus H1 2023 8 (#_ftn8) . Scope 1 and 2 emissions intensity for
the continuing operations(1) was 6.2 kgCO2e/boe.
2024 guidance:
· Group production guidance narrowed to 155 - 165 kboed (from
155-175 kboed) for 2024, to reflect year-to-date performance in Israel and the
actual start-date and expected ramp-up to full production of Cassiopea
(Italy). 115-125 kboed is associated with the continuing operations(1).
· Group cash cost of production (including royalties) reduced to
$550-600 million (from $570-630 million), predominantly due to lower
forecasted royalties in Israel. $375-405 million is associated with the
continuing operations(1).
· Development and production capital expenditure increased to
$600-700 million (from $500-600 million), $60 million of this increase is
related to Israel and the remainder to the disposal group. The increase in
Israel is due to expected completion of milestones on the Katlan project
(Israel) in 2024 versus 2025, reflecting progress so far and anticipated
progress for the year. $320-380 million is associated with the continuing
operations(1).
Financial Summary
H1 2024 H1 2023 Increase/ (Decrease) % H1 2024 H1 2023 Increase/ (Decrease) %
Energean Group Energean Group Continuing operations Continuing operations
Average daily working interest production (kboed) 146 106 38% 106 72 47%
Sales revenue ($m) 867 588 47% 643 376 71%
Cash cost of production per barrel ($/boe) 10 12 (17%) 10 11 (9%)
Cash G&A 9 (#_ftn9) 19 18 6% 10 9 11%
Adjusted EBITDAX(3) ($m) 568 345 65% 436 230 90%
Profit after tax ($m) 89 70 27% 116 27 330%
Capital expenditure ($m) 393 291 35% 211 151 40%
Decommissioning expenditure ($m) 16 4 300% 5 0 100%
H1 2024 FY 2023
Energean Group Energean Group
Net debt ($m) (including restricted cash) 2,902 2,849
Leverage(4) (net debt / adjusted EBITDAX) 2.5x 3.1x
Mathios Rigas, Chief Executive of Energean, commented:
"I am pleased to report our highest ever set of half-year results, with double
digit year-on-year growth in production, revenue and adjusted EBITDAX. In
Israel, we achieved record monthly production, reflecting the step-up in
demand during the summer and excellent uptime of the FPSO. Our operations
remain resilient in the face of ongoing geopolitical developments and our
day-to-day production has remained unimpacted.
"During this period, we also continued our track record of maximising value
for our shareholders, announcing the divestment of our Egyptian, Italian and
Croatian portfolio to Carlyle for more than 3x 10 (#_ftn10) the value that we
paid for them. Good progress is being made towards completion, upon which we
expect to reduce gross debt and return money to shareholders in line with
previous announcements.
"Our strong operational and financial performance underpins our quarterly
dividend, which we have consistently paid in line with our policy. As
previously communicated, we expect to redefine our dividend policy upon
Transaction closing.
"We have also made significant progress on our key strategic areas, from
advancing our gas-focused growth projects through the Katlan FID and the
start-up of Cassiopea and Location B, to progressing our decarbonisation
business via the Prinos Carbon Storage project, where we anticipate receiving
the storage permit for phase 1 (1 million tons of CO2 per year) in the coming
months.
"This is only the start of a new chapter in the Energean story. The
combination of operational excellence and entrepreneurial deal-making is the
foundation on which a new Energean will continue to deliver for its
shareholders. We continue to be committed to our objectives of consistent
returns to shareholders, capital discipline and responsibly produced energy
with outstanding Environmental, Social and Governance ("ESG") ratings."
Enquiries
For capital markets: ir@energean.com (mailto:ir@energean.com)
Kyrah McKenzie, Investor Relations Manager Tel: +44 (0) 7921 210 862
For media: pblewer@energean.com (mailto:pblewer@energean.com)
Paddy Blewer, Corporate Communications Director & Head of CSR Tel: +44 (0) 7765 250 857
Conference call
A webcast will be held today at 08:30 BST / 10:30 Israel Time.
Webcast: https://brrmedia.news/ENOG_HY_24 (https://brrmedia.news/ENOG_HY_24)
Dial-In: +44 (0) 33 0551 0200
Dial-in (Israel only): +972 (0) 3 376 1321
Confirmation code (if prompted): Energean Half Year
The presentation slides will be made available on the website shortly
www.energean.com (http://www.energean.com/) .
Energean Operational Review
Production
Energean continued to deliver strong production levels in H1 2024. Group
average working interest production was 146 kboed (82% gas), up 38%
year-on-year, primarily as a result of the start up of Karish North and the
completion of the second gas export riser in Israel.
H1 2024 H1 2023 H1 % Eight-months to 31 August 2024
Kboed Kboed change Kboed
Israel 104 70 49% 113
(inc. 2.5 bcm of (inc. 1.8 bcm of (inc. 3.7 bcm of sales gas)
sales gas) sales gas)
Europe 2.1 1.6 31% 2.1
Total continuing operations 106 72 47% 115
Disposal Group 40 (inc. 31 in Egypt) 34 (inc. 25 in Egypt) 18% 39 (inc. 31 in Egypt)
Total Group production 146 106 38% 154
Israel
Production
In the 6-months to 30 June 2024, working interest production from Israel
averaged 104 kboed (86% gas). Gas production increased by 44% year-on-year
primarily due to the start-up of Karish North and the completion of the second
gas export riser. Liquids production increased by 84% year-on-year. Day-to-day
production in Israel continues to be unimpacted by the ongoing geopolitical
developments. FPSO uptime (excluding planned shutdowns) was 99% 11 (#_ftn11)
in H1 2024.
In May 2024, the FPSO successfully completed a scheduled 5-day turnaround for
routine maintenance.
In June 2024, production during the period reached record levels, with output
averaging 137 kboed, as a result of strong summer gas demand. Average
production in August 2024 was 139 kboed.
Energean continues to focus on optimising production from the FPSO, including
the integration of Karish North, and looks forward to bringing on M10 to
provide further flexibility in its liquids and gas handling capacity.
Commercial
In line with Energean's ongoing strategy to secure long-term reliable cash
flows from long-term gas contracts, a Gas Sale and Purchase Agreement ("GSPA")
with Eshkol Energies Generation LTD was signed in February 2024. The contract
is for the supply of an initial 0.6 bcm/yr, which commenced in June 2024,
rising to 1 bcm/yr from 2032 onwards and represents circa $2 billion in
revenues over the life of the 15 year contract.
Energean has also signed two contracts with two peaker stations for the supply
of 0.1 bcm/yr each, commencing in October 2024 and May 2025 respectively,
representing around $400 million in revenues over the life of the contracts.
Development
Karish Growth Projects
In February 2024, Karish North first gas and the completion of the second gas
export riser were safely achieved.
Energean has signed a contract for the heavy lift vessel to transport and lift
the second oil train, which will increase the FPSO's liquids production
capacity. This lift is expected to occur in the coming months and will utilise
the scheduled shutdown of production from the FPSO for routine maintenance.
Post-lift, installation and commissioning activities are expected to take up
to 6-months to complete, with liquids production expected to increase to 20-25
kbbl/d in H2 2025.
Katlan
In July 2024, Energean took FID on its Katlan development project, following
the grant of the associated 30-year lease from the Ministry of Energy and
Infrastructure. Capital expenditure is expected to be approximately $1.2
billion and entails:
· Drilling: re-entry and completion of the Athena and Zeus wells.
· Facilities: (1) Installation, amongst others, of a four-well-slot
tieback capacity to a single large ~30 kilometre production line that can be
used by future phases, for which Energean has awarded the integrated
engineering, procurement, construction and installation ("iEPCI(TM)") contract
to TechnipFMC through its subsidiary Technip UK Limited. (2) An upgrade of the
FPSO topsides related to MEG treatment, injection and storage (which will
benefit all future subsea tie-back developments).
First gas is planned for H1 2027.
Morocco
In April 2024, Energean completed the farm-in to Chariot Limited's ("Chariot",
AIM:CHAR) acreage offshore Morocco.
In August 2024, Energean (W.I. 45%; operator), alongside its partners Chariot
(30%) and ONHYM (25%), started drilling the Anchois-3 appraisal well using the
Stena Forth drillship on the Lixus licence. Drilling operations on the licence
continue, with preliminary analysis indicating volumes found in the Anchois-3
well are lower than pre-drill estimates. Further updates will follow once
Anchois-3 ST drilling operations and ongoing technical evaluation are
complete.
Greece
The Prinos Carbon Storage project (W.I. 100%), which has the potential to
store up to 3 million tons of CO2 per year over 25 years, is one of the
largest and most advanced carbon storage projects in Southern Europe.
Energean, through its subsidiary EnEarth, has made good progress during 2024,
with the Storage Permit application and the Environmental Impact Assessment
submitted for the project's first phase of 1 million tons of CO2 per year.
Energean anticipates that it will receive the storage permit for phase 1 in
the coming months. FEED activities for the second phase, which targets to
establish a facility with a capacity of up to 3 million tons of CO2 per year,
are progressing.
UK
Energean is focused on optimising production from its late life assets and
effectively managing its decommissioning projects.
An infill well was drilled on the Scott field (W.I. 10%) in H1 2024 and is
expected to be brought online later this year. In 2025, an injector well on
the Scott field is expected to be drilled.
In July 2024, Energean UK Limited awarded a contract to Petrodec UK Limited
("Petrodec") for the decommissioning of the Tors (W.I. 68%; operator) and
Wenlock (W.I. 80%; operator) assets. This contract includes: the plugging and
abandoning of eight platform wells with optional scope for one E&A well,
the removal of three platforms and the cleaning of inter-field pipelines.
Total net decommissioning expenditure for Tors and Wenlock is expected to be
around GBP 80 million over the next five years and includes expenditure
outside of the Petrodec contract for, amongst others, operational and project
management costs, regulatory fees and subsea remediation works.
Strategic sale of Egypt, Italy & Croatia portfolio targeted to complete by
year-end 2024
In June 2024, Energean entered into a binding agreement for the sale of its
portfolio in Egypt, Italy and Croatia to an entity controlled by Carlyle for
an enterprise value ("EV") of up to $945 million, of which $820 million is
firm. This represents more than a 3x 12 (#_ftn12) return since the portfolio
was acquired for $284 million in 2020. The economic effective date of the
Transaction is 31 December 2023.
This sale enables Energean to rationalise the portfolio and focus on its
gas-weighted, gas-development strategy. It also optimises the portfolio by
divesting later life assets, removing over 60% of the Group's decommissioning
liabilities, and improving free cashflow generation in the short to
medium-term.
Completion is targeted by year end-2024, with all regulatory and antitrust
approvals having been submitted to the relevant authorities. Carlyle received
unconditional clearance from the Italian Competition Authority in August and
approval of the Italian Presidency of the Council of Ministers in September,
in respect of the Italian Golden Power Law.
Disposal group - operational update
Working interest production from Egypt, Italy and Croatia in H1 2024 averaged
40 kboed (75% gas), up 18% year-on-year due to the completion of NEA/NI
(Egypt) in December 2023 and the start-up of the NAQPII#2 infill well on the
Abu Qir field in January 2024.
Egypt
In March 2024, the Orion X1 exploration well (W.I. 19%) reached the target
reservoir. Post-drilling well analysis indicates no commercial hydrocarbons.
In August 2024, Energean (W.I. 100%) brought the Location B infill well on the
Abu Qir licence in Egypt onstream.
Italy
In August 2024, initial test production began from one of the four subsea
wells on the Cassiopea field, offshore Italy (W.I. 40%). The remainder of the
wells and associated facilities are expected to be brought online, tested and
commissioned over the coming months.
ESG and climate change
Energean is committed to net zero emissions by 2050 and industry-leading
disclosure of its energy transition intentions.
Energean's scope 1 and 2 emissions intensity in H1 2024 was 8.5 kgCO2e/boe, a
20% reduction versus H1 2023. This year-on-year reduction was primarily driven
by: (1) the growth of production in Israel which has a lower emissions
intensity compared to the wider group and (2) reduced fugitive methane
emissions in Egypt following Leak, Detection and Repair ("LDAR") campaigns.
The Group's 2024 emissions intensity is expected between 8.5-9.0 kgCO2e/boe.
Scope 1 and 2 emissions intensity for the continuing operations(1) was 6.2
kgCO2e/boe. Post-close the Group's scope 1 and 2 emissions intensity will
reduce by around 40% to ~5 kgCO2e/boe, accelerating its 2035 target of 4-6
kgCO2e/boe by 10 years.
ESG reporting and ratings
Energean is pleased to report, following Sustainalytics' May 2024 update, that
it continues to be ranked in the top quartile of its sector, ranking 46 out of
307 oil and gas producers.
Financing
As announced in June 2024, Energean expects sufficient cash proceeds at
closing of the Transaction to repay in full the $450 million PLC Corporate
Bond.
Energean intends to refinance its 2026 Energean Israel Limited bond to
maintain an efficient capital structure, freeing up liquidity for its Katlan
development.
Full Year 2024 guidance
Group Continuing operations
Total production (kboed) 155 - 165 (narrowed from 155 - 175) 115-125
Consolidated net debt ($ million) 2,900-3,000 (increased from 2,800 - 2,900) -
Cash Cost of Production (operating costs plus royalties; $ million) 550-600 (reduced from 570-630) 375-405
Development & production capital expenditure ($ million) 600-700* (increased from 500-600) 320-380
Exploration expenditure ($ million) 115-150 (reduced from 120-155) 80-105
Decommissioning expenditure ($ million) 40-50 (unchanged) 15-20
*Energean's development and production capital expenditure guidance includes
Katlan and Location B expenditure. However, under IFRS accounting standards,
the H1 2024 results classifies this expenditure under exploration and
appraisal expenditure.
Energean Financial Review
Financial results summary
H1 2024 H1 2023 Increase/ (Decrease) % H1 2024 H1 2023 Increase/ (Decrease) %
Energean Group 13 (#_ftn13) Energean Group(1) Continuing operations Continuing operations
Average daily working interest production (kboed) 146 106 38% 106 72 47%
Sales revenue ($m) 867 588 47% 643 376 71%
Realised weighted average liquid price ($/boe) 74.8 65.1 15% 79.8 71.0 12%
Realised weighted average gas ($/mcf) 4.6 5.2 -12% 4.3 4.4 -2%
Cash cost of production 14 (#_ftn14) ($m) 271 231 17% 189 139 36%
Cash cost of production per barrel ($/boe) 10 12 -17% 10 11 -9%
Cash G&A 15 (#_ftn15) 19 18 6% 10 9 11%
Adjusted EBITDAX 16 (#_ftn16) ($m) 568 345 65% 436 230 90%
Profit after tax ($m) 89 70 27% 116 27 330%
Earnings per share (cents per share) $0.48 $0.39 23% $0.63 $0.17 271%
Cash flow from operating activities ($m) 527 233 126% 447 141 217%
Capital expenditure ($m) 393 291 35% 211 151 40%
H1 2024 FY 2023
Energean Group Energean Group
Total borrowings ($m) 3,247 3,221
Cash and cash equivalents and restricted cash ($m) 345 372
Net debt ($m) (including restricted cash) 2,902 2,849
Leverage Ratio (Net Debt/ Adjusted EBITDAX) 2.5x 3.1x
Revenue, production and commodity prices
Group
Group working interest production averaged 146 kboed with the Karish and
Karish North fields contributing over 70% of total output. Increased
production in Israel compared to the previous year, coupled with full-period
production from NEA/NI, led to a 38% increase in group production output
during H1 2024. However, this was partially offset by an 11% decrease in gas
production in Italy, while oil production remained stable. Despite regional
variations, the overall group production mix remained consistent at 82% gas
and 18% liquids (H1 2023: 82% gas and 18% liquids).
H1 2024 revenue in Group level totalled $867 million, reflecting a 47%
increase from the prior period (H1 2023: $588 million). This growth was
primarily driven by sales from Israel, which accounted for 70% of Group total
revenue (H1 2023: 59%).
The weighted average realised gas price for the Group was $4.6/mcf, 12% lower
than in H1 2023 of $5.2/mcf leading to an 8% year-on-year decline in revenue.
Gas prices in Italy were subdued at the beginning of 2024, leading to an
average realised PSV price of $10.0/mcf (H1 2023: $16.7/mcf), resulting in a
7% decline in revenue year-on-year. Total gas sales increased by 25% to $504
million (H1 2023: $403 million), driven by higher sales volumes.
Total liquid, crude, and petroleum product sales reached $361 million for the
period (H1 2023: $182 million) and a realised weighted average liquid price of
$74.8/boe (H1 2023: $65.1/boe). The higher liquids prices realised in H1 2024
contributed to a 15% increase in total revenue compared to the prior period.
Adjusted EBITDAX for the period was $568 million (H1 2023: $345 million). The
overall 65% increase was primarily driven by higher revenue, combined with a
17% reduction in cash production costs per boe, half of which was attributed
to continuing operations.
Continuing operations
Working interest production from continuing operations averaged 106 kboed,
with the Karish and Karish North fields contributing 98% of total output.
Increased production in Israel compared to the previous year, led to a 47%
increase in production output during H1 2024. The production mix was at 85%
gas and 15% liquids (H1 2023: 89% gas and 11% liquids). Notably, production in
Greece and the UK each grew by 31% compared to H1 2023.
Revenue from continuing operations rose to $643 million, a 71% increase
compared to the previous period (H1 2023: $376 million). This growth was
primarily driven by sales from Israel, which accounted for 94% of revenue from
continuing operations (H1 2023: 93%).
Gas sales from continuing operations increased by 45% to $389 million (H1
2023: $268 million), due to higher sales volumes.
Liquid, crude, and petroleum product sales reached $252 million (H1 2023: $106
million), and a realised weighted average liquid price of $79.8/boe (H1 2023:
$71.0/boe). The higher liquids prices realised in H1 2024 contributed to a 10%
increase in total revenue compared to the prior period. During H1 2024, the
average Brent oil price was $83.5/bbl (H1 2023: $79.6/bbl).
Adjusted EBITDAX for the period was $436 million (H1 2023: $230 million). The
overall 90% increase primarily driven by higher revenue, combined with a 9%
reduction in cash production costs per boe, half of which was attributed to
continuing operations.
Underlying cash production costs
Group
Total cash production costs for the period were $271 million (H1 2023: $231
million) with 61% attributed to production in Israel. Cash production costs
for the rest of the Group, excluding Israel, amounted to $107 million (H1
2023: $123 million). Unit costs for the period were $10/boe (H1 2023:
$12/boe), primarily reflecting the impact of increased production on a largely
fixed cost base. As detailed in note 5 of the financial statements,
royalties-payable in Italy and Israel-are a significant component of
production costs. Excluding royalties, production costs would be $155 million
(H1 2023: $158 million) with a representative unit cost of $6/boe (H1 2023:
$8/boe).
Continuing operations
Cash production costs for the period were $189 million (H1 2023: $139
million), with 87% attributed to production in Israel. Unit costs for the
period were $10/boe (H1 2023: $11/boe), decreased by 9% from the previous
period. As detailed in note 5 of the financial statements, royalties-payable
in Israel-are a significant component of production costs. Excluding
royalties, production costs would be $83 million (H1 2023: $76 million), with
a representative unit cost of $4/boe (H1 2023: $6/boe).
Depreciation
Group
Depreciation charges on production and development assets rose to $184 million
(H1 2023: $116 million). The growth was driven by increased production in
Israel and Egypt. In Egypt, depreciation charges increased by 129% to $46
million (H1 2023: $20 million), while Israel's charges increased by 55% to
$124 million (H1 2023: $80 million). On a per barrel of oil equivalent basis,
this represented a 15% increase, rising to $7/boe (H1 2023: $6/boe).
Continuing operations
Depreciation charges on production and development assets rose to $132 million
(H1 2023: $84 million) primarily due to the 55% increase in Israel's charges
to $124 million (H1 2023: $80 million).
Exploration and evaluation expenditure and new ventures
Group
During the period, the Group expensed $79 million (H1 2023: $2 million) for
exploration and new venture evaluation activities. Total impairment costs of
$76 million were recognised during the period for projects that will not
progress to development. In 2024, the Orion X1 exploration well in Egypt
reached the target reservoir but indicated no commercial hydrocarbons,
resulting in a full impairment of the related exploration asset valued at $61
million. Additionally, the exploration license for Ioannina expired on 2 April
2024, leading to a full impairment of the exploration asset valued at $15
million.
Continuing operations
During the period, $16 million (H1 2023: $1 million) were expensed for
exploration and new venture evaluation activities. Impairment costs of $15
million were recognised during the period for Ioannina license which expired
on 2 April 2024, leading to a full impairment of the exploration asset.
Other income and expenses
Group
Other expenses increased to $7 million (H1 2023: $2 million). The $7 million
in other expenses primarily consists of $4 million in transaction costs
related to ECL Group disposal and $1 million expected credit loss provision on
trade receivables within the disposal group. Other income totalled $2 million
(H1 2023: $7 million), mainly due to the reversal of prior period provisions,
reassessed in the current year based on updated facts and circumstances.
Continuing operations
Other expenses from continuing operations increased to $4 million (H1 2023: $1
million). The $4 million in other expenses primarily consists of the $4
million in transaction costs related to ECL Group disposal. Other income from
continuing operations totalled $1 million, unchanged from the prior period (H1
2023: $1 million).
Finance income / costs
Group
Total finance costs in H1 2024 amounted to $138 million (H1 2023: $114
million). Total financing costs before capitalisation were $143 million. The
finance costs included $100 million in interest expense on Senior Secured
notes, $8 million on debt facilities, $1 million in interest expense related
to long-term payables, $30 million from the unwinding of discounts on
contingent consideration, long-term payables, and decommissioning provisions,
and $4 million in commissions for guarantees and other bank charges. Net
finance costs also reflect foreign exchange gains of $11 million and finance
income of $5 million, which includes interest income from time deposits.
Continuing operations
Total finance costs in H1 2024 for continuing operations amounted to $122
million (H1 2023: $103 million). Total financing costs before capitalisation
were $127 million. The finance costs included $100 million in interest
expense on Senior Secured notes, $8 million on debt facilities, $1 million in
interest expense related to long-term payables, $14 million from the unwinding
of discounts on contingent consideration, long-term payables, and
decommissioning provisions, and $4 million in commissions for guarantees and
other bank charges. Net finance costs also reflect finance income of $5
million, which includes interest income from time deposits.
Taxation
Group
The Group had a tax expense of $86 million in H1 2024 (H1 2023: $65 million),
consisting of a current tax expense of $52 million and a deferred tax expense
of $34 million, resulting in an effective tax rate of 49% (up from 48% in H1
2023). The increase in tax expense compared to the prior period is primarily
due to higher taxable profits and changes in deferred tax, largely driven by
the utilisation of tax losses in Israel and Italy.
Taxation charges in H1 2024 also included $19 million (H1 2023: $26 million)
related to non-cash taxes deducted at source in Egypt and $12 million deferred
tax expense related to changes in the decommissioning provision in Italy.
Continuing operations
Tax charges for continuing operations totalled $46 million (H1 2023: $20
million), including $30 million in corporation tax charges and $16 million in
deferred tax charges.
Profit after tax
Group
Profit after tax was $89 million (H1 2023: $70 million). The increase in
profit compared to the prior period is primarily due to higher taxable
profits, despite an increased tax expense (H1 2024: $86 million versus H1
2023: $65 million). Profit before tax rose by 30% to $175 million (H1 2023:
$135 million).
Continuing operations
Profit after tax from continuing operations was $116 million (H1 2023: $27
million). The increase in profit compared to the prior period is primarily due
to higher taxable profits, despite an increased tax expense (H1 2024: $46
million versus H1 2023: $20 million). Profit before tax rose by 245% to $162
million (H1 2023: $47 million).
Earnings per share
Group
In H1 2024, earnings per share were $0.48 (H1 2023: $0.39), with diluted
earnings per share remaining the same.
Continuing operations
Earnings per share from continuing operations were $0.63 (H1 2023: $0.17). The
diluted earnings per share for continuing operations were also $0.63 (H1 2023:
$0.16), reflecting mainly the impact of convertible loan notes in H1 2023.
Operating cash flow
Group
In H1 2024, the Group had a net cash inflow from operations of $527 million
(H1 2023: $233 million). The significant increase in operating cash flow
compared to the prior period was primarily driven by the significant growth in
revenues from Israel.
Continuing operations
In H1 2024, Energean recorded a net cash inflow from operations of $447
million (H1 2023: $141 million).
Capital Expenditures
Group
During the period, the Group incurred capital expenditures of $393 million (H1
2023: $292 million). The expenditures were primarily focused on development
activities, including $50 million for the Karish Main Field, Second Oil Train,
and the riser, as well as the Karish North Field in Israel, and $105 million
for the Cassiopea field in Italy. Exploration and appraisal expenditures were
mainly directed towards the Katlan field in Israel ($130 million) and the
North East Hap'y and Location B developments in Egypt ($49 million).
Additionally, in April 2024, the Group invested $13 million to acquire
licenses for the Anchois gas development in Morocco.
Continuing operations
During the period, capital expenditures of $211 million related to continuing
operations (H1 2023: $151 million) were incurred. The expenditures were
primarily focused on development and exploration activities in Israel as
discussed above in addition to investment to acquire licenses in Morocco.
Decommissioning provision
A total change in the decommissioning provision of less than $1 million (H1
2023: $22 million) was expensed during the period. An impairment reversal of
$3 million related to discontinued operations, resulting from a decrease in
the decommissioning provision estimate in Italy due to increased discount
rates, was partially offset by an additional impairment charge of $3 million
in the UK (continuing operations). In H1 2024, the Group spent $16 million on
decommissioning activities, including $5 million on the Tors and Wenlock
decommissioning related to continuing operations, and $11 million in Italy
related to discontinued operations. (H1 2023: $4 million).
Net Debt
As of 30 June 2024, net debt totalled $2,902 million (FY23: $2,849 million),
comprising $2,625 million in Israeli senior secured notes, $450 million in
corporate senior secured notes, and $105 million from the Greek Black Sea
Trade Development Bank loan, offset by deferred amortized fees and cash, bank
deposits, and restricted cash balances of $345 million (including $86 million
of restricted cash). In the debt capital markets, Energean is only exposed to
floating interest rates for the Greek loan and Revolving credit facility,
while the Senior Secured Notes at both Energean Plc and Energean Israel carry
fixed interest rates.
Shareholder Distributions
In line with the Group's dividend policy, Energean returned US$0.60 per share
to shareholders in H1 2024, totalling $110 million, representing two-quarters
of dividend payments. In H1 2023, Energean returned US$0.60 per share.
Non-IFRS measures
The Group uses certain measures of performance that are not specifically
defined under IFRS or other generally accepted accounting principles. These
non-IFRS measures include adjusted EBITDAX, underlying cash cost of production
and G&A, capital expenditure, net debt and leveraging.
Adjusted EBITDAX
Adjusted EBITDAX is a non-IFRS measure used by the Group to measure business
performance. It is calculated as profit or loss for the period, adjusted for
discontinued operations, taxation, depreciation and amortisation, share-based
payment charge, impairment of property, plant and equipment, other income and
expenses, net finance costs and exploration costs. The Group presents adjusted
EBITDAX as it is used in assessing the Group's growth and operational
efficiencies because it illustrates the underlying performance of the Group's
business by excluding items not considered by management to reflect the
underlying operations of the Group.
H1 2024 H1 2023
Continuing operations Continuing operations
$m $m
Adjusted EBITDAX 436 230
Reconciliation to profit for the period:
Depreciation and amortisation (132) (84)
Share-based payment charge (4) (3)
Exploration and evaluation expense (16) (1)
Change in decommissioning provision (3) 7
Expected credit loss - (1)
Other (expenses)/income (2) 2
Finance income 5 3
Finance cost (122) (103)
Net foreign exchange loss - (3)
Taxation expense (46) (20)
Profit for the period 116 27
While adjusted EBITDAX excludes the financial results of discontinued
operations by definition, the Group has chosen to present equivalent non-IFRS
financial metrics for the entire Energean Group, including discontinued
operations, for comparison purposes.
H1 2024 H1 2023
Energean Group Energean Group
$m $m
Adjusted EBITDAX 568 345
Reconciliation to profit for the period:
Depreciation and amortisation (184) (116)
Share-based payment charge (4) (3)
Exploration and evaluation expense (79) (2)
Change in decommissioning provision - 22
Expected credit loss (1) (1)
Other (expenses)/income (3) 6
Finance income 5 7
Finance cost (138) (114)
Net foreign exchange loss 11 (9)
Taxation income / (expense) (86) (65)
Profit for the period 89 70
Cash Cost of Production
Cash Cost of Production is a non-IFRS measure that is used by the Group as a
useful indicator of the Group's underlying cash costs to produce hydrocarbons.
The Group uses the measure to compare operational performance
period-to-period, to monitor cost and assess operational efficiency. Cash cost
of production is calculated as cost of sales, adjusted for depreciation and
hydrocarbon inventory movements.
H1 2024 H1 2023 H1 2024 H1 2023
Energean Group Energean Group Continuing operations Continuing operations
$m $m $m $m
Cost of sales 461 338 327 221
Adjusted for:
Depreciation (181) (113) (131) (83)
Change in inventory (9) 6 (7) 1
Cost of production 271 231 189 139
Total production for the period (MMboe) 26,650 19,173 19,364 13,050
Cost of production per boe ($/boe) 10.2 12.0 9.8 10.6
Cash General & Administrative Expense (G&A)
Cash G&A excludes certain non-cash accounting items from the Group's
reported G&A. Cash G&A is calculated as follows: administrative and
distribution expenses, excluding depletion and amortisation of assets and
share-based payment charge that are included in G&A.
H1 2024 Energean Group H1 2023 H1 2024 H1 2023
Energean Group Continuing operations Continuing operations
$m $m $m $m
Administrative expenses 26 23 15 12
Less:
Depreciation (3) (3) (1) (1)
Share-based payment charge included in G&A (4) (3) (3) (2)
Cash G&A 19 18 10 9
The Group's total cash G&A expenses for H1 2024 amounted to $19 million,
with $10 million attributed to continuing operations. This reflects a 6%
overall increase from the previous period, and a 11% increase specifically for
continuing operations. The rise in costs is primarily driven by an increase in
staff expenses in Israel due to ram-up of operations.
Capital Expenditure
Capital expenditure is a useful indicator of the Group's organic expenditure
on oil and gas assets and exploration and appraisal assets incurred during a
period. Capital expenditure is defined as additions to property, plant and
equipment and intangible exploration and evaluation assets less
decommissioning asset additions, right-of-use asset additions, capitalised
share-based payment charge and capitalised borrowing costs:
H1 2024 H1 2023 H1 2024 H1 2023
Energean Group Energean Group Continuing operations Continuing operations
$m $m $m $m
Additions to property, plant and equipment 172 274 59 147
Additions to intangible exploration and evaluation assets 193 19 142 16
Less:
Capitalised borrowing costs 5 4 5 4
Leased assets additions and modifications 1 41 - 13
Lease payments related to capital activities (10) (8) (5) (2)
Change in decommissioning provision (25) (35) (9) -
Total capital expenditures 393 292 211 151
Movement in working capital (51) (8) 16 69
Cash capital expenditures per the cash flow statement 342 284 227 220
Net Debt
Net debt is defined as the Group's total borrowings less cash and cash
equivalents. Management believes that net debt serves as a valuable indicator
of the Group's indebtedness, financial flexibility, and capital structure
because it reflects the level of borrowings after accounting for any cash and
cash equivalents that could be utilised to reduce borrowings.
Net debt reconciliation H1 2024 FY 2023
Energean Group Energean Group
$m $m
Current borrowings 105 80
Non-current borrowings 3,142 3,141
Total borrowings 3,247 3,221
Less: Cash and cash equivalents (259) (347)
Less: Restricted cash held for loan repayment (86) (25)
Net Debt 17 (#_ftn17) 2,902 2,849
Net Debt Excluding Israel(4) 604 569
Going Concern
The Directors assessed the Group's ability to continue as a going concern over
a going concern assessment period to 31 December 2025. As a result of this
assessment, the Directors are satisfied that the Group has sufficient
financial resources to continue in operation for the foreseeable future and
for this reason they continue to adopt the going concern basis in preparing
the condensed consolidated interim financial statements. Detail of the Group's
going concern assessment for the period can be found within note 2.2 of the
condensed consolidated interim financial statements.
Subsequent Events
In July 2024, management made a final investment decision for the Katlan
development project in Israel. The carrying value of the exploration asset at
30 June 2024 was $207 million. The Katlan area will be developed in a phased
approach through a subsea tieback to the existing Energean Power FPSO, which
currently serves the Karish and Karish North fields. The first gas production
is expected in the first half of 2027.
In August 2024, first gas production was achieved at the Cassiopea field,
located offshore in Italy.
In August 2024, the prospective buyer of the ECL Group obtained unconditional
clearance from the Italian Competition Authority followed by approval of the
Italian Presidency of the Council of Ministers in respect of the Italian
Golden Power Law in September 2024.
Principal risks at half-year 2024 and key developments since the 2023 Annual
Report
Effective risk management is fundamental to achieving Energean's strategic
objectives and protecting its personnel, assets, shareholder value and
reputation. The Board has overall responsibility for determining the nature
and extent of the risks it is willing to take in achieving the strategic
objectives of the Group and ensuring that such risks are managed effectively.
Key developments in relation to Energean's risks
On 19 June 2024, the Company entered into a sale and purchase agreement with
CIEP Spin BidCo Limited (the "Buyer"), an entity controlled by Carlyle,
regarding the strategic sale of the Company's Egyptian, Italian and Croatian
portfolio. On the basis that the Transaction amounts to a significant
transaction, its implementation is expected to have an impact on Energean,
either as a result of the Transaction, or related to the Transaction in the
sense that material risk factors will be affected by the Transaction. These
material risks are described in section 3.1 as announced on 29 August 2024
pursuant to the UK Listing Rule 7.3. As the Transaction is subject to
conditions being satisfied by a longstop date of 20 March 2025 (or such other
date as may be agreed by Energean and Carlyle), there can be no certainty that
the Transaction will complete. As a result, other than the risk of the
Transaction not completing, the Board has made no changes to the Group's
principal risks as a result of the Transaction at this time.
Looking to the second half of 2024, Energean highlights the following
developments as important in relation to its principal risks. Since 7 October
2023 and the ongoing conflict in Israel, the magnitude of regional
geopolitical risk remains elevated. Growing concerns of escalations in the
Middle East have intensified the security risk in the region, as essential
infrastructure systems (such as the Energean Power FPSO offshore Israel) may
be targets for missile fire and sabotage operations. While the Karish field
has continued to produce in line with guidance and with no disruption to its
production since the start of the conflict, any event that impacts production
from this field could have a material adverse impact on the business, results
of operations, cash flows, financial condition and prospects of the Group. In
the first half of 2024, Energean has ensured that all measures are in place to
continue business operations, maintain the mobility of our people and make
certain that the security of information is unaffected.
Despite these challenges, Energean has achieved a number of positive
milestones during the first half of 2024, including: (i) the start-up of
Karish North and the second gas export riser installation, which enables
Energean to utilise the FPSO's maximum capacity; (ii) FID on Katlan with first
gas planned for H1 2027; (iii) good progress on the Cassiopea gas development,
with initial test production from one of the four subsea wells started in
August 2024 and; (iv) success at the Abu Qir infill well drilling campaign in
Egypt, with first gas achieved in August 2024.
Principal risks and uncertainties
Energean has closely monitored its risks and uncertainties throughout the year
and has identified one new principal risk, which is detailed below. All other
principal risks that the Group will be exposed to in the second half of 2024,
alongside the trends and developments as highlighted above, are the same as
those described in the principal risks section in Energean's 2023 Annual
Report (pages 85-96) and are summarised below.
Overview of key risks and principal uncertainties since 31 December 2023
1. Strategic risk: Regional and domestic geopolitical and security
risks in Israel
2. Operational risk: Delayed delivery of further growth projects
3. Strategic risk: Lack of new commercial discoveries and reserves
replacement
4. Operational risk: Production uptime reliability and operating
efficiency (including reliability of the production systems, i.e. FPSO and
subsea)
5. Financial risk: Maintaining liquidity and solvency
6. Macro-economic risk (including inflation, interest rates and
commodity price fluctuations)
7. Organisational & HR risk: Failure to attract, retain and
develop staff
8. Deterioration or misalignment of JV relationships risk
9. Recoverability of production cost and receivables in Egypt risk
10. Significant IT and OT cyber risk, including a security breach of
internal systems or a cyber attack
11. Ethics and Business Conduct. Fraud, Bribery and corruption risk
12. Health Safety and Environment (HSE) risk
13. Failure to manage the risk of climate change and to adapt to the energy
transition
14. Climate Change risk: Physical risks
15. Strategic risk: Geopolitical conflicts outside of Israel in areas of
operation affecting production and distribution (including fiscal
uncertainties)
16. New: Risk of the Transaction not proceeding
The Transaction is conditional upon the satisfaction or, where applicable,
waiver of the following conditions: (1) regulatory approvals in Italy and
Egypt; (2) anti-trust approvals in Italy, Egypt and COMESA; and (3) transfer
of the North Sea Assets from Energean Capital Limited to a member of the
Group. Progress is ongoing to satisfy or, where permitted, waiver these
conditions by the long stop date of 20 March 2025. Although Energean is
optimistic about achieving these conditions by the long stop date, the Group
recognises that there is a residual risk that the conditions may not be met.
Failure to satisfy or obtain waiver of any condition may result in the
Transaction not being completed. The Sale and Purchase Agreement may also be
terminated for any breach of certain fundamental warranties and the occurrence
of certain material adverse events affecting the Target Group following
signing, subject to customary rights to remedy.
If the Transaction is not completed, or the Sale and Purchase Agreement is
terminated, the Group will not receive any of the consideration payable in
respect of it. This would prejudice its ability to create shareholder value by
being unable to repay the 2027 PLC Notes in full prior to their scheduled
maturity and facilitate a special dividend of up to $200 million.
If Completion does not occur, or the Sale and Purchase Agreement is
terminated, the Company will also have incurred significant costs and
management time in connection with the Transaction, which it will not be able
to recover (other than through the Non-Completion Payment, to the extent
applicable). It will also not realise the anticipated benefits of the
Transaction and its ability to implement its stated strategy may be
prejudiced.
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge:
· The condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted in
the United Kingdom.
· The interim management report includes a fair review of the
information required by the Disclosure Transparency Rules (DTR) 4.2.7R, namely
an indication of important events during the six months ended 30 June 2024 and
a description of the principal risks and uncertainties for the remaining six
months of the financial year.
· The interim management report includes a true and fair view of
the information required by the DTR 4.2.8R, including disclosure of related
party transactions and any changes therein during the reporting period.
Mathios Rigas Panos Benos
Chief Executive Officer Chief Financial Officer
10 September 2024 10 September 2024
Forward looking statements
This announcement contains statements that are, or are deemed to be,
forward-looking statements. In some instances, forward-looking statements can
be identified by the use of terms such as "projects", "forecasts", "on track",
"anticipates", "expects", "believes", "intends", "may", "will", or "should"
or, in each case, their negative or other variations or comparable
terminology. Forward-looking statements are subject to a number of known and
unknown risks and uncertainties that may cause actual results and events to
differ materially from those expressed in or implied by such forward-looking
statements, including, but not limited to: general economic and business
conditions; demand for the Company's products and services; competitive
factors in the industries in which the Company operates; exchange rate
fluctuations; legislative, fiscal and regulatory developments; political
risks; terrorism, acts of war and pandemics; changes in law and legal
interpretations; and the impact of technological change. Forward-looking
statements speak only as of the date of such statements and, except as
required by applicable law, the Company undertakes no obligation to update or
revise publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. The information contained in this
announcement is subject to change without notice.
Numbers outside of the unaudited consolidated interim financial statements,
where applicable, are rounded to the nearest million US$ and therefore may
differ in the order of a million US$.
INDEPENDENT REVIEW REPORT TO ENERGEAN PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2024 which comprises the interim consolidated income statement, the
interim consolidated statement of comprehensive income, the interim
consolidated statement of financial position, interim consolidated statement
of changes in equity, the interim consolidated statement of cash flows and the
related explanatory notes 1 to 29. We have read the other information
contained in the half-yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
10 September 2024
Interim Consolidated Income Statement
Six months ended 30 June 2024
30 June 2024 (Unaudited) 30 June 2023 (Unaudited/Restated *)
$'000 $'000
Note
Continuing operations:
Revenue 4 642,413 375,891
Cost of Sales 5(a) (326,572) (220,730)
Gross profit 315,841 155,161
Administration expenses 5(b) (15,848) (12,259)
Change in decommissioning provision 21 (2,638) 7,297
Exploration and evaluation expenses 5(c) (15,898) (680)
Expected credit loss 5(d) - (871)
Other expenses 5(e) (3,960) (577)
Other income 5(f) 1,088 1,118
Operating profit 278,585 149,189
Finance Income 6 5,003 3,196
Finance Costs 6 (121,757) (102,732)
Unrealised loss on derivatives 7 (7) -
Net foreign exchange loss 6 (60) (2,567)
Profit before tax from continuing operations 161,764 47,086
Taxation expense 8 (45,895) (19,762)
Profit for the period from continuing operations 115,869 27,324
Discontinued operations:
(Loss)/Profit for the period from discontinued operations 24 (27,332) 42,434
Profit for the period 88,537 69,758
Attributable to:
Owners of the parent 88,537 69,758
88,537 69,758
Basic and diluted earnings per share (cents per share)
Basic $0.48 $0.39
Diluted $0.48 $0.39
Basic and diluted earnings per share for continuing operations (cents per
share)
Basic 9 $0.63 $0.17
Diluted 9 $0.63 $0.16
*Restated for discontinued operations, refer to Note 24 for further detail.
Interim Consolidated Statement of Comprehensive Income
Six months ended 30 June 2024
30 June 2024 (Unaudited) 30 June 2023 (Unaudited/Restated *)
$'000 $'000
Profit / (Loss) for the period from:
Continuing operations 115,869 27,324
Discontinued operations (27,332) 42,434
Profit for the period 88,537 69,758
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Cash Flow hedges:
Loss arising in the period (407) -
Income tax relating to items that may be reclassified to profit or loss 94 -
Exchange difference on the translation of foreign operations, net of tax (14,701) 489
Items that will not be reclassified subsequently to profit or loss
Remeasurement of defined benefit plan 13 (107)
Income taxes on items that will not be reclassified to profit and loss (3) 26
Other comprehensive (loss) / profit after tax (15,004) 408
Total comprehensive profit for the period 73,533 70,166
Total comprehensive profit attributable to:
Owners of the parent 73,533 70,166
73,533 70,166
*Restated for discontinued operations, refer to Note 24 for further detail.
Interim Consolidated Statement of Financial Position
As at 30 June 2024
30 June 2024 (Unaudited) 31 December 2023
(Audited)
Note $'000 $'000
ASSETS
Non-current assets
Property, plant and equipment 10 3,290,323 4,371,325
Intangible assets 11 397,418 325,389
Equity-accounted investments - 4
Other receivables 16 32,315 33,682
Deferred tax asset 12 87,121 217,504
Restricted cash 14 3,036 3,124
3,810,213 4,951,028
Current assets
Inventories 15 36,944 110,126
Trade and other receivables 16 149,885 353,257
Restricted cash 14 82,538 22,482
Cash and cash equivalents 13 230,779 346,772
Assets held for sale 24 1,557,816 -
2,057,962 832,637
Total assets 5,868,175 5,783,665
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 17 2,449 2,449
Share premium 17 465,331 465,331
Merger reserve 139,903 139,903
Other reserves 5,672 5,975
Foreign currency translation reserve (13,065) 1,636
Share-based payment reserve 37,027 32,917
Retained earnings 16,606 37,904
Total equity 653,923 686,115
Non-current liabilities
Borrowings 19 3,141,525 3,141,197
Deferred tax liabilities 12 141,748 122,785
Retirement benefit liability 20 448 1,595
Provisions 21 262,398 786,362
Trade and other payables 22 102,043 166,923
3,648,162 4,218,862
Current liabilities
Trade and other payables 22 342,478 737,603
Current portion of borrowings 19 105,000 80,000
Current tax Liability 29,702 9,261
Derivative financial instruments 7 406 -
Provisions 21 44,898 51,824
Liabilities held for sale 24 1,043,606 -
1,566,090 878,688
Total liabilities 5,214,252 5,097,550
Total equity and liabilities 5,868,175 5,783,665
30 June 2024 (Unaudited)
31 December 2023
(Audited)
Note
$'000
$'000
ASSETS
Non-current assets
Property, plant and equipment
10
3,290,323
4,371,325
Intangible assets
11
397,418
325,389
Equity-accounted investments
-
4
Other receivables
16
32,315
33,682
Deferred tax asset
12
87,121
217,504
Restricted cash
14
3,036
3,124
3,810,213
4,951,028
Current assets
Inventories
15
36,944
110,126
Trade and other receivables
16
149,885
353,257
Restricted cash
14
82,538
22,482
Cash and cash equivalents
13
230,779
346,772
Assets held for sale
24
1,557,816
-
2,057,962
832,637
Total assets
5,868,175
5,783,665
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital
17
2,449
2,449
Share premium
17
465,331
465,331
Merger reserve
139,903
139,903
Other reserves
5,672
5,975
Foreign currency translation reserve
(13,065)
1,636
Share-based payment reserve
37,027
32,917
Retained earnings
16,606
37,904
Total equity
653,923
686,115
Non-current liabilities
Borrowings
19
3,141,525
3,141,197
Deferred tax liabilities
12
141,748
122,785
Retirement benefit liability
20
448
1,595
Provisions
21
262,398
786,362
Trade and other payables
22
102,043
166,923
3,648,162
4,218,862
Current liabilities
Trade and other payables
22
342,478
737,603
Current portion of borrowings
19
105,000
80,000
Current tax Liability
29,702
9,261
Derivative financial instruments
7
406
-
Provisions
21
44,898
51,824
Liabilities held for sale
24
1,043,606
-
1,566,090
878,688
Total liabilities
5,214,252
5,097,550
Total equity and liabilities
5,868,175
5,783,665
Mathios Rigas Panos Benos
Chief Executive Officer Chief Financial Officer
10 September 2024 10 September 2024
Interim Consolidated Statement of Changes in Equity
Six months ended 30 June 2024
Share Capital Share Premium(21) Hedges and defined benefit plans reserve(22) Equity Share based payment reserve (24) Translation reserve(25) Retained earnings Merger reserve Total
component
of convertible
bonds(23)
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 1 January 2024 2,449 465,331 5,975 - 32,917 1,636 37,904 139,903 686,115
Profit for the period - - - - - - 88,537 - 88,537
Remeasurement of defined benefit pension plan, net of tax - - 10 - - - - - 10
Cashflow hedge, net of tax - - (313) - - - - - (313)
Exchange difference on the translation of foreign operations - - - - - (14,701) - - (14,701)
Total comprehensive income - - (303) - - (14,701) 88,537 - 73,533
Transactions with owners of the company
Share based payment charges (note 23) - - - - 4,110 - - - 4,110
Dividends (note 18) - - - - - - (109,835) - (109,835)
At 30 June 2024 (Unaudited) 2,449 465,331 5,672 - 37,027 (13,065) 16,606 139,903 653,923
(21) The share premium account represents the total net proceeds on issue of
the Company's shares in excess of their nominal value of £0.01 per share less
amounts transferred to any other reserves.
(22) The reserve is used to recognise remeasurement gain or loss on cash flow
hedges and actuarial gain or loss from the defined retirement benefit plan. In
the Statement of Financial Position this reserve is combined with the Equity
component of convertible bonds' within the caption 'Other reserves'.
(23) Refers to the Equity component of $50 million of convertible loan notes,
which were issued in February 2021 and converted into equity at maturity in
December 2023. In the Statement of Financial Position this reserve is
presented within the caption 'Other reserves'.
(24) The share-based payment reserve is used to recognise the value of
equity-settled share-based payments granted to parties including employees and
key management personnel, as part of their remuneration.
(25) The translation reserve is used to record unrealised exchange differences
arising from the translation of the financial statements of entities within
the Group that have a functional currency other than US dollar.
Interim Consolidated Statement of Changes in Equity
Six months ended 30 June 2023
Share Capital Share Premium(21) Hedges and defined benefit plans reserve(22) Equity Share based payment reserve (24) Translation reserve(25) Retained earnings Merger reserve Total
component
of convertible
bonds(23)
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 1 January 2023 2,380 415,388 6,098 10,459 25,589 (5,827) 56,208 139,903 650,198
Profit for the period - - - - - - 69,758 - 69,758
Remeasurement of defined benefit pension plan, net of tax - - (81) - - - - - (81)
Exchange difference on the translation of foreign operations - - - - - 489 - - 489
Total comprehensive income - - (81) - - 489 69,758 - 70,166
Transactions with owners of the company
Share based payment charges (note 23) - - - 3,294 - - 3,294
- -
Exercise of employment share options 13 - - - (13) - - - -
Dividends (note 18) - - - - - - (106,663) - (106,663)
At 30 June 2023 (Unaudited) 2,393 415,388 6,017 10,459 28,870 (5,338) 19,303 139,903 616,995
Interim Consolidated Statement of Cash Flows
Six months ended 30 June 2024
30 June (Unaudited)
2024 2023 (Restated)*
Note $'000 $'000
Operating activities
Profit before taxation from continuing operations 161,764 47,086
Profit before taxation from discontinuing operations 13,221 87,958
Profit before taxation 174,985 135,044
Adjustments to reconcile profit before taxation to net cash provided by
operating activities:
Depreciation, depletion and amortisation 10, 11 183,917 115,953
Impairment loss on exploration and evaluation assets 10, 11 76,189 -
Change in decommissioning provision estimates 21 (16,129) (25,712)
Loss from the sale of property, plant and equipment 27 -
Defined benefit loss 19 72
Movement in other provisions 1,767 (2,425)
ECL on trade receivables 961 1,281
Compensation to gas buyers 4 - 4,928
Finance income 6 (5,120) (7,316)
Finance 6 137,892 113,707
costs
Non-cash revenues from Egypt(26) (19,269) (25,763)
Share-based payment charge 23 4,110 3,294
Net foreign exchange (income)/loss 6 (11,145) 9,344
Cash flow from operations before working capital adjustments 528,204 322,407
Increase in inventories (198) (3,471)
Increase in trade and other receivables (62,801) (22,255)
Increase/(Decrease) in trade and other payables 63,822 (58,749)
Cash inflow from operations 529,027 237,932
Income tax paid (1,948) (4,918)
Net cash inflow from operating activities 527,079 233,014
Investing activities
Payment for purchase of property, plant and equipment 10 (262,419) (198,355)
Payment for exploration and evaluation, and other intangible assets 11 (79,798) (85,255)
Payment for other non-current assets (87) -
Proceeds from disposal of exploration and evaluation and other intangible 1,464 -
Movement in restricted cash 14 (60,065) 63,297
Amounts received from INGL related to the transfer of property, plant and 1,801 56,906
equipment
Interest received 5,647 7,777
Net cash outflow for investing activities (393,457) (155,630)
Financing activities
Drawdown of borrowings 19 65,000 44,265
Repayment of borrowings 19 (40,000)
Transaction costs related to Senior secured notes paid - (1,214)
Dividend Paid 18 (109,835) (106,663)
Repayment of obligations under leases 19 (10,253) (7,793)
Finance costs paid (125,717) (89,925)
Net cash outflow from financing activities (220,805) (161,330)
Net decrease in cash and cash equivalents (87,183) (83,946)
Cash and cash equivalents at beginning of the period 346,772 427,888
Effect of exchange rate fluctuations on cash held (412) 2,427
Cash and cash equivalents at end of the period (including cash held in 13 259,177 346,369
disposal group)
Cash and cash equivalents held in disposal group presented as held for sale at 24 28,398 -
30 June
(26) Non-cash revenues from Egypt arise due to taxes being deducted at source
from invoices, as such revenue and tax charges are grossed up to reflect this
deduction but no cash inflow or outflow results.
*Restated for discontinued operations, refer to Note 24 for further detail.
(
)
1. Corporate Information
Energean plc (the 'Company') was incorporated in England & Wales on 8 May
2017 as a public company limited by shares, under the Companies Act 2006. Its
registered office is at 44 Baker Street, London W1U 7AL, United Kingdom. The
Company and all subsidiaries controlled by the Company, are together referred
to as 'the Group'.
The Group has been established with the objective of exploration, production
and commercialisation of crude oil, hydrocarbon liquids and natural gas in
Greece, Israel, Italy, North Africa, United Kingdom ('UK') and the wider
Eastern Mediterranean.
The Group's subsidiaries and core assets, as of 30 June 2024, are presented in
notes 28 and 29.
2. Basis of preparation
2.1 Basis of preparation
The unaudited condensed consolidated interim financial statements for the six
months ended 30 June 2024 included in this interim report have been prepared
in accordance with UK-adopted International Accounting Standard 34 'Interim
Financial Reporting' ('IAS 34'), and, unless otherwise disclosed, have been
prepared on the basis of the same accounting policies and methods of
computation as applied in the Group's Annual Report for the year ended 31
December 2023 subject to the following:
A. Accounting for non-current assets held for sale and discontinued
operations
On 20 June 2024, the Group publicly announced its Board of Directors' decision
to sell its portfolio in Egypt, Italy, and Croatia, collectively referred to
as 'Energean Capital Limited Group' (ECL), which is fully owned and controlled
by the Group. The sale of ECL is expected to be completed by the end of 2024.
The Group has assessed whether ECL meets the definition of being held for sale
and discontinued operations.
The Group classifies an operation as discontinued when it has disposed of or
intends to dispose of a business component that represents a separate major
line of business or geographical area of operations. Non-current assets and
disposal groups classified as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the disposal of an asset disposal
group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the
sale is highly probable, and the asset or disposal group is available for
immediate sale in its present condition. Actions required to complete the sale
should indicate that it is unlikely that significant changes to the sale will
be made or that the decision to sell will be withdrawn. Management must be
committed to the plan to sell the asset and the sale expected to be completed
within one year from the date of the classification. Property, plant and
equipment and intangible assets are not depreciated or amortised once
classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as
current items in the statement of financial position. The comparative balance
sheet and the related notes to the financial statements have not been restated
to reflect this presentation, resulting in significant fluctuations between
the two reporting periods. The post-tax profit or loss of the discontinued
operations is shown as a single line on the face of the consolidated statement
of profit or loss, separate from the continuing operating results of the
Group. When an operation is classified as a discontinued operation, the
comparative consolidated statement of profit or loss is represented as if the
operation had been discontinued from the start of the comparative year.
Expenses are presented as discontinued if they will cease to be incurred on
disposal of the discontinued operation. Transactions between continuing and
discontinued operations have been consistently eliminated as intragroup
balances without any adjustments for both current and comparative reporting
periods.
While the completion is contingent upon securing regulatory approvals in Italy
and Egypt and antitrust approvals in Italy, Egypt and COMESA, the Group is
confident that the transactions will likely be finalised within 12 months of
the announcement date. The disposal group is ready for immediate sale in its
current state, with the exception of the transfer of legal ownership of
certain assets outside the disposal group to other parts of the Energean
Group. This transfer is customary in transactions of this nature.
Additional disclosures are provided in Note 24. All other notes to the
financial statements include amounts for continuing operations, unless
indicated otherwise.
B. Exploration and evaluation expenditures: Farm-in arrangements
Farm-in transactions typically occur during the exploration or development
phase and involve the transferor (the farmor) giving up future economic
benefits, such as reserves, in exchange for a permanent reduction in future
funding obligations.
Under a carried interest arrangement, the carried party transfers a portion of
the risks and rewards of a property in exchange for a funding commitment from
the carrying party. In contrast, a farm-in arrangement involves the farmor
transferring all risks and rewards of a proportion of a property in exchange
for the farmee's commitment to fund specific expenditures. This effectively
represents the complete disposal of a proportion of the property and is
similar to purchase/sale-type carried interest arrangements.
In April 2024, the Group entered into a partnership with Chariot Limited in
Morocco to invest in the Anchois gas development.
As the farmee, the Group recognises its expenditure under this arrangement in
the same way as directly incurred expenditure. Since the carry of Chariot's
costs is conditional upon the successful commencement of production, Energean
accounts for 100% of the expenses related to appraisal and other exploration
activities concerning the two licences. These costs are fully capitalised on
the balance sheet until the start of production.
Refer to Note 11 for further details.
The unaudited condensed consolidated interim financial statements have been
prepared on a historical cost basis and are presented in US Dollars, which is
also the Company's functional currency, rounded to the nearest thousand
dollars ($'000) except as otherwise indicated. The US dollar is the currency
that mainly influences sales prices and revenue estimates, and also highly
affects the Group's operations. The functional currencies of the Group's main
subsidiaries are as follows: for Energean Oil & Gas S.A, Energean Sicilia
S.r.l. and Energean Italy S.p.a. the functional currency is Euro; for Energean
Group Services Ltd., Energean E&P Holdings Ltd., Energean International
Limited, Energean Capital Ltd., Energean Egypt Ltd., and Energean Israel Ltd.
the functional currency is US$; for Energean UK Ltd. and Energean Exploration
Ltd. is GBP.
The unaudited condensed consolidated interim financial statements do not
constitute statutory accounts of the Group within the meaning of Section 435
of the Companies Act 2006 and do not include all the information and
disclosures required in the annual financial statements. These financial
statements should be read in conjunction with the Group's Annual Report for
the year ended 31 December 2023, which were prepared UK-adopted International
Accounting Standards ('UK-adopted IAS'). The auditor's report on those
financial statements was unqualified with no reference to matters to which the
auditor drew attention by way of emphasis and no statement under s498(2) or
s498(3) of the Companies Act 2006.
2.2 Going concern
The Group carefully manages the risk of a shortage of funds by closely
monitoring its funding position and its liquidity risk. The Going Concern
assessment covers the period up to 31 December 2025 'the forecast period'.
As of 30 June 2024, the Group's available liquidity was approximately $511
million including $28 million of cash related to the disposal group. In
addition to $345 million of cash and cash equivalents held by the Group at 30
June 2024, this available liquidity figure includes: (i) c. $46 million
available under the $300 million Revolving Credit Facility ("RCF") signed by
the Group in September 2022 and as amended in May 2023 (with the remainder
being utilised to issue Letters of Credit for the Group's operations) and (ii)
c. $120 million under the $120 million Revolving Credit Facility signed up by
the Group in October 2023.
The going concern assessment is founded on a cashflow forecast prepared by
management, which is based on a number of assumptions, most notably the
Group's latest life of field production forecasts, budgeted expenditure
forecasts, estimated of future commodity prices (based on recent published
forward curves) and available headroom under the Group's debt facilities. The
going concern assessment contains a "Base Case" and a "Reasonable Worst Case"
("RWC") scenario. The base case scenario assumes the completion of the
disposal of ECL by the end of 2024 followed by the receipt of the cash
consideration in January 2025.
The Base Case scenario assumes Brent at $80/bbl in 2024 and 2025 and PSV
(Italian gas price) at €30/MWH in 2024 assumed throughout the going concern
assessment period, with prices for gas sold assumed at contractually agreed
prices for Egypt (in 2024) and Israel (in 2024-2025). Under the Base Case,
sufficient liquidity is maintained throughout the going concern period.
The Group also routinely performs sensitivity tests of its liquidity position
to evaluate adverse impacts that may result from changes to the macro-economic
environment, such as a reduction in commodity prices. These downsides are
considered in the RWC scenario. The Group is not materially exposed to
floating interest rate risk since the majority of its borrowings are fixed
rate. The group also looks at the impact of changes or deferral of key
projects and downside scenarios to budgeted production forecasts in the RWC.
The two primary downside sensitivities considered in the RWC are: (i) reduced
commodity prices; (ii) reduced production - these downsides are applied to
assess the robustness of the Group's liquidity position over the Assessment
Period. Within this scenario the Group also assumes the non-completion of the
disposal of ECL throughout the going concern period. In a RWC downside case,
there are appropriate and timely mitigation strategies, within the Group's
control, to manage the risk of funding shortfalls and to ensure the Group's
ability to continue as a going concern. Mitigation strategies, within
management's control, modelled in the RWC include deferral of capital
expenditure on operated assets and/or management of operating expenses to
improve the liquidity. Under the RWC scenario, after considering mitigation
strategies, liquidity is maintained throughout the going concern period.
Reverse stress testing was also performed to determine what production
shortfall could need to occur for liquidity headroom to be eliminated. The
conditions necessary for liquidity headroom to be eliminated are judged to
have a remote possibility of occurring, given the diversified nature of the
Group's portfolio and the "natural hedge" provided by virtue of the Group's
fixed-price gas contracts in Israel. In the event a remote downside scenario
occurred, prudent mitigating strategies, consistent with those described
above, could also be executed in the necessary timeframe to preserve
liquidity. There is no material impact of climate change within the Assessment
Period and therefore, it does not form part of the reverse stress testing
performed by management.
In forming its assessment of the Group's ability to continue as a going
concern, including its review of the forecasted cashflow of the Group over the
Forecast Period, the Board has made judgements about:
• Reasonable sensitivities appropriate for the current status of the
business and the wider macro environment; and
• the Group's ability to implement the mitigating actions within the Group's
control, in the event these actions were required.
After careful consideration, the Directors are satisfied that the Group has
sufficient financial resources to continue in operation for the foreseeable
future, for the Assessment Period from the date of approval of these unaudited
condensed consolidated interim financial statements on 10 September 2024 to 31
December 2025. For this reason, they continue to adopt the going concern basis
in preparing these condensed consolidated interim financial statements.
2.3 New and amended accounting standards and interpretations
The following amendments became effective as at 1 January 2024:
· Amendments to IAS 1 - Classification of Liabilities as Current or
Non-current and Non-current Liabilities with Covenants;
· Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback;
· Amendments to IAS 7 and IFRS 7 - Disclosures: Supplier Finance
Arrangements.
The adoption of the above amendments to UK-adopted IAS did not result in any
material changes to the Group's accounting policies and did not have any
material impact on the financial position or performance of the Group.
2.4 Approval of unaudited condensed consolidated interim financial statements
by Directors
These unaudited condensed consolidated interim financial statements were
approved by the Board of Directors on 10 September 2024.
3. Segmental Reporting
The information reported to the Group's Chief Executive Officer and Chief
Financial Officer (together the Chief Operating Decision Makers) for the
purposes of resource allocation and assessment of segment performance is
focused on three continuing operating segments: Europe (including Greece and
UK), Israel, and New Ventures. The Group's reportable segments under IFRS 8
Operating Segments are Europe and Israel. Segments that do not exceed the
quantitative thresholds for reporting information about operating segments
have been included in Other.
Discontinued operations consist of the Egypt segment and Italy and Croatia
operations previously included in the Europe reportable segment, which are
expected to be disposed of in 2024 (refer to Note 24 for further detail).
Information regarding the results of each reportable segment is included below
and prior periods are represented to reflect discontinued operations to
provide comparability.
Segment revenues, results and reconciliation to profit before tax
The following is an analysis of the Group's revenue, results and
reconciliation to profit/ (loss) before tax by reportable segment:
Six months ended 30 June 2024 (unaudited) Europe Israel Other & inter-segment transactions Continuing operations, total Discontinued operations Total
$'000 $'000 $'000 $'000 $'000 $'000
Revenue from gas sales 775 388,459 - 389,234 114,327 503,561
Revenue from hydrocarbon liquids sales 145 213,719 - 213,864 21,726 235,590
Revenue from crude oil sales 37,596 - - 37,596 80,669 118,265
Revenue from LPG sales 227 - - 227 7,241 7,468
Other 6,640 - (5,148) 1,492 215 1,707
Total revenue 45,383 602,178 (5,148) 642,413 224,178 866,591
Adjusted EBITDAX(27) 6,460 429,977 (319) 436,118 131,741 567,859
Reconciliation to profit before tax:
Depreciation and amortisation expenses (8,701) (123,559) 245 (132,015) (51,902) (183,917)
Share-based payment charge (675) (518) (2,917) (4,110) - (4,110)
Exploration and evaluation expenses (15,282) - (616) (15,898) (63,096) (78,994)
Change in decommissioning provision (2,638) - - (2,638) 3,023 385
Expected credit (loss) - - - - (961) (961)
Other expense (66) (4) (3,890) (3,960) (1,525) (5,485)
Other income 1,005 - 83 1,088 754 1,842
Finance income 853 4,485 (335) 5,003 117 5,120
Finance costs (10,481) (93,847) (17,429) (121,757) (16,135) (137,892)
Unrealised loss on derivatives - (7) - (7) - (7)
Net foreign exchange gain/(loss) (149) (290) 379 (60) 11,205 11,145
Profit/(loss) before income tax (29,674) 216,237 (24,799) 161,764 13,221 174,985
Taxation expense 3,311 (48,981) (225) (45,895) (40,553) (86,448)
Profit/(loss) for the period (26,363) 167,256 (25,024) 115,869 (27,332) 88,537
Six months ended 30 June 2023 (unaudited) (Restated*) Europe Israel Other & inter-segment transactions Continuing operations, total Discontinued operations Total
$'000 $'000 $'000 $'000 $'000 $'000
Revenue from gas sales 1,105 266,471 - 267,576 135,653 403,229
Revenue from hydrocarbon liquids sales 4 81,272 - 81,276 14,752 96,028
Revenue from crude oil sales 24,889 - - 24,889 53,483 78,372
Revenue from LPG sales 250 - - 250 7,534 7,784
Other 5,403 - (3,503) 1,900 329 2,229
Total revenue 31,651 347,743 (3,503) 375,891 211,751 587,642
Adjusted EBITDAX(26) (8,607) 235,303 2,868 229,564 115,289 344,853
Reconciliation to profit before tax:
Depreciation and amortisation expenses (4,415) (80,049) 375 (84,089) (31,864) (115,953)
Share-based payment charge (152) (312) (2,109) (2,573) (368) (2,941)
Exploration and evaluation expenses (279) (50) (351) (680) (1,468) (2,148)
Change in decommissioning provision 7,297 - - 7,297 14,633 21,930
Expected credit (loss) (871) - - (871) (409) (1,280)
Other expense (571) - (6) (577) (292) (869)
Other income 938 2 178 1,118 6,069 7,187
Finance income 972 1,044 1,180 3,196 4,120 7,316
Finance costs (12,341) (67,569) (22,822) (102,732) (10,975) (113,707)
Net foreign exchange gain/(loss) 2,117 (5,578) 894 (2,567) (6,777) (9,344)
Profit/(loss) before income tax (15,912) 82,791 (19,793) 47,086 87,958 135,044
Taxation expense (139) (20,215) 592 (19,762) (45,524) (65,286)
Profit/(loss) for the period (16,051) 62,576 (19,201) 27,324 42,434 69,758
*Restated for discontinued operations, refer to Note 24 for further detail.
(27)Adjusted EBITDAX is a non-IFRS measure used by the Group to measure
business performance. It is calculated as profit or loss for the period,
adjusted for discontinued operations, taxation, depreciation and amortisation,
share-based payment charge, impairment of property, plant and equipment, other
income and expenses (including the impact of derivative financial instruments
and foreign exchange), net finance costs and exploration and evaluation
expenses.
Segment financial position
The following tables present assets and liabilities information for the
Group's operating segments as at 30 June 2024 and 31 December 2023,
respectively:
Six months ended 30 June 2024 (unaudited) Europe Israel Other & inter-segment transactions Continuing operations, total Discontinued operations Total
$'000 $'000 $'000 $'000 $'000 $'000
Oil & Gas properties 247,687 3,042,772 (136) 3,290,323 - 3,290,323
Other fixed assets 7,204 11,650 16,497 35,351 - 35,351
Intangible assets 2,156 374,406 20,856 397,418 - 397,418
Trade and other receivables 26,468 136,025 (12,608) 149,885 - 149,885
Deferred tax asset 87,121 - - 87,121 - 87,121
Other assets 152,666 232,490 (34,895) 350,261 - 350,261
Assets held for sale - - - - 1,557,816 1,557,816
Total assets 523,302 3,797,343 (10,286) 4,310,359 1,557,816 5,868,175
Trade and other payables 113,136 284,534 (55,192) 342,478 - 342,478
Borrowings 105,317 2,591,098 550,110 3,246,525 - 3,246,525
Decommissioning provision 216,059 91,237 - 307,296 - 307,296
Current tax payable - 29,702 - 29,702 - 29,702
Deferred tax liability - 141,748 - 141,748 - 141,748
Other liabilities 60,340 100,816 (58,259) 102,897 - 102,897
Liabilities held for sale - - - - 1,043,606 1,043,606
Total liabilities 494,852 3,239,135 436,659 4,170,646 1,043,606 5,214,252
Other segment information
Capital expenditure:
- Property, plant and equipment 14,590 52,862 62 67,514 131,362 198,876
- Intangible, exploration and evaluation assets 9 130,651 13,194 143,854 50,311 194,165
Year ended 31 December 2023 Europe Israel Egypt Other & inter-segment transactions Total
$'000 $'000 $'000 $'000 $'000
Oil & Gas properties 734,265 2,783,914 473,628 311,295 4,303,102
Other fixed assets 35,110 13,918 19,996 (801) 68,223
Intangible assets 20,303 243,965 46,846 14,275 325,389
Trade and other receivables 88,729 130,135 154,095 (19,702) 353,257
Deferred tax asset 217,504 - - - 217,504
Other assets 849,649 573,855 47,601 (954,915) 516,190
Total assets 1,945,560 3,745,787 742,166 (649,848) 5,783,665
Trade and other payables 375,390 391,379 74,893 62,864 904,526
Borrowings 108,392 2,588,491 - 524,314 3,221,197
Decommissioning provision 738,063 92,613 - 6,819 837,495
Current tax payable 7,597 - - 1,664 9,261
Deferred tax liability - 122,785 - - 122,785
Other liabilities 7,502 - 1,601 (6,817) 2,286
Total liabilities 1,236,944 3,195,268 76,494 588,844 5,097,550
Other segment information
Capital Expenditure:
- Property, plant and equipment 220,461 138,490 130,099 (1,630) 487,420
- Intangible, exploration and evaluation assets 4,152 24,959 26,253 1,288 56,652
Segment Cash flows
The following tables present cash flow information for the Group's operating
segments for six months ended 30 June:
Europe Israel Other & inter-segment transactions Continuing operations, total Discontinued operations Total
$'000 $'000 $'000 $'000 $'000 $'000
Six months ended 30 June 2024 (unaudited)
Net cash from / (used in) operating activities 6,668 430,651 9,258 446,577 80,502 527,079
Net cash (used in) investing activities (18,478) (253,309) (8,494) (280,281) (113,176) (393,457)
Net cash from financing activities 5,960 (254,326) (22,359) (270,725) 49,920 (220,805)
Net increase/(decrease) in cash and cash equivalents, and restricted cash (5,850) (76,984) (21,595) (104,429) 17,246 (87,183)
Cash and cash equivalents at beginning of the period 17,884 286,625 30,414 334,923 11,849 346,772
Effect of exchange rate fluctuations on cash held (211) 1,025 (529) 285 (697) (412)
Cash and cash equivalents at the end of the period 11,823 210,666 8,290 230,779 28,398 259,177
Six months ended 30 June 2023 (unaudited) Europe Israel Egypt Other & inter-segment transactions Total
$'000 $'000 $'000 $'000 $'000
Net cash from / (used in) operating activities 56,014 172,217 19,987 (15,204) 233,014
Net cash (used in) investing activities (79,573) (62,694) (17,324) 3,961 (155,630)
Net cash from financing activities 43,680 (68,823) (1,465) (134,722) (161,330)
Net increase/(decrease) in cash and cash equivalents 20,121 40,700 1,198 (145,965) (83,946)
At beginning of the year 58,229 24,825 26,825 318,009 427,888
Effect of exchange rate fluctuations on cash held 853 (837) (2,238) 4,649 2,427
Cash and cash equivalents at end of the period 79,203 64,688 25,785 176,693 346,369
4. Revenue
30 June (Unaudited)
2024 2023 (Restated)*
$'000 $'000
Revenue from gas sales 389,234 272,504
Revenue from hydrocarbon liquids sales 213,864 81,276
Revenue from crude oil sales 37,596 24,889
Revenue from LPG sales 227 250
Compensation to gas buyers - (4,928)
Rendering of services 1,492 1,900
Total revenue from continuing operations 642,413 375,891
*Restated for discontinued operations, refer to note 24 for further detail.
Sales volumes for the six months to 30 June from continuing operations (kboe) 30 June (Unaudited)
2024 2023 (Restated)*
kboe kboe
Israel 19,009 12,488
Gas 16,323 11,322
Hydrocarbon liquids 2,686 1,166
UK 265 149
Gas 17 15
Crude Oil 248 134
Greece 219 196
Crude Oil 219 196
Total sales volumes from continuing operations 19,493 12,833
*Restated for discontinued operations, refer to note 24 for further detail.
5. Operating profit before taxation from continuing operations
30 June (Unaudited)
2024 2023 (Restated)*
$'000 $'000
(a) Cost of sales
Staff costs 12,307 10,296
Energy cost 6,417 7,216
Royalty payable 106,560 63,474
Other operating costs(28) 64,076 58,180
Depreciation and amortisation 130,638 82,524
Oil stock movement 1,919 (726)
Stock overlift / (underlift) movement 4,655 (234)
Total cost of sales 326,572 220,730
(b) Administration expenses
Staff costs 7,539 7,431
Share-based payment charge included in administration expenses 4,110 2,573
Depreciation and amortisation 1,377 1,536
Audit fees 1,016 696
Other general & administration expenses 1,806 23
Total administration expenses 15,848 12,259
(c) Exploration and evaluation expenses
Staff costs for Exploration and evaluation activities 321 64
Exploration costs written off(29) 14,961 -
Other exploration and evaluation expenses 616 616
Total exploration and evaluation expenses 15,898 680
(d) Expected credit loss
Expected credit loss expense - 871
Total expected credit loss - 871
(e) Other expenses
Restructuring costs - 202
Transaction expenses (30) 3,861 -
Loss from disposal of Property, plant & Equipment 28 -
Other expenses 71 375
Total other expenses 3,960 577
(f) Other income
Other income 1,088 1,118
Total other income 1,088 1,118
*Restated for discontinued operations, refer to note 24 for further detail.
(28) Other operating costs comprise of insurance costs, gas transportation and
treatment fees, concession fees and planned maintenance costs.
(29) Exploration expenses write-off pertains to the cessation of exploration
activities in the Ioannina area in Greece by the Group during the reporting
period. Refer to Note 11 for further details
(30) Transaction expenses consist of costs associated with the anticipated
sale of the Group's portfolio in Egypt, Italy, and Croatia. The decision to
sell was announced in June 2024 (refer to note 24 for further details).
Pre-sale activities have resulted in additional expenses recognized during the
reporting period, including consulting ($1.4 million) and legal fees ($2.5
million).
6. Net finance cost from continuing operations
30 June (Unaudited)
2024 2023 (Restated)*
$'000 $'000
Interest on bank borrowings 7,589 2,664
Interest on Senior Secured Notes 100,236 82,326
Interest expense on long term payables 1,249 1,554
Less amounts included in the cost of qualifying assets (4,655) (7,592)
104,419 78,952
Finance and arrangement fees 1,677 6,831
Commission charges for bank guarantees 1,369 1,085
Other finance (income)/costs and bank charges 844 253
Unwinding of discount on right of use asset 483 148
Unwinding of discount on long-term trade payables 7,804 2,060
Unwinding of discount on provision for decommissioning 5,506 5,662
Unwinding of discount on deferred consideration - 5,674
Unwinding of discount on convertible loan - 2,155
Less amounts included in the cost of qualifying assets (345) (88)
Total finance costs 121,757 102,732
Interest income from time deposits (5,003) (3,196)
Total finance income (5,003) (3,196)
Net foreign exchange losses 60 2,567
Net financing costs 116,814 102,103
*Restated for discontinued operations, refer to note 24 for further detail.
7. Fair value measurements
Set out below is information about how the Group determines the fair values of
various financial assets and liabilities.
Contingent consideration
The share purchase agreement (the "SPA") dated 4 July 2019 between Energean
and Edison Spa provides for a contingent consideration of up to $100 million.
The amount of the Cassiopea contingent payment varies between nil and $100
million, depending on future gas prices in Italy at the point at which first
gas production is delivered from the field. The consideration is contingent on
the basis of future gas prices (PSV) recorded at the time of the first gas,
which was achieved on 19 August 2024. No payment will be due if the arithmetic
average of the year one (i.e., the first year after first gas production) and
year two (i.e., the second year after first gas production) Italian PSV
Natural Gas Futures prices is less than €10/MWh when first gas production is
delivered from the field. $100 million is payable if that average price
exceeds €20/MWh, with a range of outcomes between $0 million and $100
million if the average price is between €10/MWh and €20/MWh. The Group's
payment obligation is due 90 days after the later of the first day of the
month following the first month in which production from the Cassiopea field
has continued on a regular basis for at least 25 days or the date upon which
formal notice of production from Cassiopea has been accepted by the relevant
competent authority in Italy (or failing which once production has continued
on a regular basis for 90 days). The fair value of the contingent
consideration is estimated by reference to the terms of the SPA and the
simulated PSV pricing by reference to the forecasted PSV pricing, historical
volatility and a log normal distribution, discounted at a cost of debt.
As at 30 June 2024, the forward curve of PSV prices indicate an average price
in excess of €20/MWh. Therefore, the Group's estimate at 30 June 2024 of the
fair value of the contingent consideration payable in December 2024 is $95.4
million, based on a Monte Carlo simulation (31 December 2023: $91.1 million).
The fair value of the consideration payable has been recognized at level 3 in
the fair value hierarchy.
2024
Contingent consideration $'000
1 January 2024 91,075
Discount unwinding 4,358
30 June 2024 95,433
Management believes there are no reasonably possible change to any key
assumptions since 31 December 2023 that would materially impact the contingent
consideration valuation.
Cash Flow Hedging
In February 2024, the Company entered into a forward transaction to hedge
against foreign currency volatility risk associated with its deferred payment
to Technip. The hedge relationship was deemed effective at inception, and in
accordance with the Group's accounting policy, the transaction was subject to
cash flow hedge accounting. Consequently, as of 30 June 2024, the Group
recorded a derivative liability of $0.4 million, an other comprehensive loss
of $0.4 million, and $0.07 million in finance income related to this
transaction during the reporting period.
Fair values of financial instruments
The following financial instruments are measured at amortised cost and are
considered to have fair values different to their book values:
30 June 2024 (Unaudited) 31 December 2023
$'000 Carrying value Fair value Carrying value Fair value
Senior Secured notes 3,141,525 2,828,950 3,032,783 2,775,135
The fair value of the notes is within level 1 of the fair value hierarchy and
has been determined by discounting future cash flows by the relevant market
yield curve at the reporting date.
The fair value of other financial instruments not measured at fair value
including cash and short - term deposits, trade receivables and other payables
equate approximately to their carrying values. There were no transfers between
the levels during the reporting period.
8. Taxation
30 June (Unaudited)
2024 2023 (Restated)*
$'000 $'000
Continuing operations:
Corporation tax - current period (29,953) (227)
Adjustments in respect of current income tax of previous year(s) (29) -
Total current tax charge (29,982) (227)
Deferred tax relating to origination and reversal of temporary differences (15,913) (19,535)
Income tax expense reported in the Income statement (45,895) (19,762)
*Restated for discontinued operations, refer to note 24 for further detail.
(b) Reconciliation of the total tax charge
The Group calculates its income tax expense as per IAS 34 by applying a
weighted average tax rate calculated based on the statutory tax rates of
Greece (25%), Cyprus (12.5%), Israel (23%), Italy (24%), United Kingdom
(25%/75%) and Egypt (40.55%), weighted according to the profit before tax
earned in each jurisdiction where deferred tax is recognised excluding fair
value uplifts profits.
On the 29th July 2024, the UK Government announced changes in the Energy
Profits Levy (EPL) with effective date 1st November 2024. Specifically, the
EPL rate will increase to 38% from 1 November 2024, bringing the headline
rate of tax on upstream oil and gas activities to 78%. The government will
also remove the investment allowances from the Energy Profits Levy, including
by abolishing the levy's main 29% investment allowance for qualifying
expenditure incurred on or after 1 November 2024. The Group is not expected to
be materially affected as a result of the announced changes in the EPL.
Pillar Two legislation has been enacted or substantively enacted in certain
jurisdictions in which the Group operates. However, this legislation does not
currently apply to the Group as its consolidated revenue has not exceeded the
threshold of €750 million in at least two of the four preceding fiscal years
prior to the enactment of the legislation.
The effective tax rate for the period is 49% (30 June 2023: 48%). The tax
(charge)/ credit of the period can be reconciled to the profit per the
unaudited interim consolidated income statement as follows:
30 June (Unaudited)
2024 2023 (Restated)*
$'000 $'000
Accounting profit before tax from continuing operations 161,764 47,086
Profit before tax from discontinued operations 13,221 87,958
Accounting profit before tax 174,985 135,044
Tax calculated at 21.0% weighted average rate (2023: 28.3%) (38,163)
(36,786)
Impact of different tax rates(31) (1,822) 1,621
Non recognition of deferred tax on current year tax losses and other temporary (11,712) (25,937)
differences
Derecognition of previously recognised deferred tax(32) (10,987) -
Permanent differences(33) (27,946) (2,616)
Foreign taxes (29) -
Tax effect of non-taxable income and allowances 936 1,187
Other adjustments (169) 222
Prior year tax 2,067 (1,600)
Income tax expense reported in the statement of profit or loss (45,895) (19,762)
Income tax attributable to discontinued operations (40,553) (45,524)
Total taxation (expense)/income (86,448) (65,286)
* Restated for discontinued operations, refer to Note 24 for further detail.
(31)Impact of different tax rates mainly relates to the different tax rate
applied in the reconciliation of non-taxable income (intragroup dividends) and
the impairment loss in Egypt.
(32) In 2024, the Group reassessed the recoverability of its deferred tax
asset related to the decommissioning provision in Italy, resulting in an
approximate tax charge of $11 million. This is attributable to the
discontinued operations.
(33) Permanent differences primarily consisted of a non-deductible impairment
loss of exploration assets in Egypt ($26.8 million), non-deductible M&A
costs ($1.0m), other non-deductible expenses ($1.1m) and foreign exchange
income ($1.0 million).
9. Earnings per share
Basic earnings per ordinary share amounts are calculated by dividing net
income for the year attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during the year.
Diluted income per ordinary share amounts is calculated by dividing net income
for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year plus
the weighted average number of ordinary shares that would be issued if
dilutive employee share options were converted into ordinary shares.
30 June (Unaudited)
2024 2023 (Restated)*
$'000 $'000
Total profit from continuing operations attributable to equity shareholders 115,869 27,324
Effect of dilutive potential ordinary shares - 2,155
115,869 29,479
Number of shares
Basic weighted average number of shares 183,480,959 178,454,765
Dilutive potential ordinary shares 1,070,515 5,815,646
Diluted weighted average number of shares 184,551,474 184,270,411
Basic earnings per share, continuing operations $0.63 $0.17
Diluted earnings per share, continuing operations $0.63 $0.16
* Restated for discontinued operations, refer to Note 24 for further detail.
10. Property, plant and equipment
Oil and gas properties Leased assets Other property, plant and equipment Total
Property, plant and equipment $'000 $'000 $'000 $'000
Cost
At 1 January 2023 4,739,424 58,712 60,118 4,858,254
Additions 469,023 38,278 2,203 509,504
Lease modification - 8,706 - 8,706
Disposal of assets (111,448) - (111,448)
Capitalised borrowing cost 17,658 - - 17,658
Change in decommissioning provision (2,504) - - (2,504)
Other movements (313) - (307) (620)
Foreign exchange impact 89,811 2,582 2,090 94,483
At 31 December 2023 5,201,651 108,278 64,104 5,374,033
Additions 190,433 1,755 206 192,394
Lease modifications(34) - (998) - (998)
Disposal of assets - - (28) (28)
Capitalised borrowing cost 5,000 - - 5,000
Change in decommissioning provision (24,546) - - (24,546)
Transfer to inventory (448) - - (448)
Transfer to assets held for sale (1,277,911) (71,939) (1,001) (1,350,851)
Foreign exchange impact (86,507) (2,331) (1,880) (90,718)
At 30 June 2024 (Unaudited) 4,007,672 34,765 61,401 4,103,838
Accumulated Depreciation
At 1 January 2023 542,894 29,298 54,158 626,350
Charge for the period 287,926 15,432 1,808 305,166
Impairment 342 - - 342
Foreign exchange impact 67,387 1,607 1,856 70,850
At 31 December 2023 898,549 46,337 57,822 1,002,708
Charge for the period expensed 172,470 10,135 787 183,392
Impairment 159 - - 159
Transfer to assets held for sale (271,045) (32,740) (2,121) (305,906)
Foreign exchange impact (63,763) (1,409) (1,666) (66,838)
At 30 June 2024 (Unaudited) 736,370 22,323 54,822 813,515
Net carrying amount
At 31 December 2023 4,303,102 61,941 6,282 4,371,325
At 30 June 2024 (Unaudited) 3,271,302 12,442 6,579 3,290,323
(34) The lease modification pertains to the sublease of leased assets in
Italy. A corresponding financial asset of $1.0 million for the sublet property
has been recorded under Other Receivables on the balance sheet of the disposal
group. For more details, refer to Note 24.
Included in the carrying amount of leased assets at 30 June 2024 are right of
use assets related to Oil and gas properties and Other property, plant and
equipment of $8.8 million and $3.6 million respectively (31 December 2023:
$58.0 million and $3.9 million). The depreciation charged on these classes for
the six-month ending 30 June 2024 were $8.3 million and $1.9 million
respectively (six months ended 30 June 2023: $6.3 million and $0.3 million).
The additions to Oil & gas properties for the period of six months ended
30 June 2024 are mainly due to development costs of the Karish main, Karish
North, second gas exporter riser costs and the second oil train in Israel at
the amount of $49.5 million and the Cassiopea project in Italy at the amount
of $105 million.
On 20 June 2024, property, plant, and equipment owned by the disposal group,
with a carrying value of $1,045 million (primarily in Italy and Egypt; see
note 24 for further details), were reclassified as assets held for sale.
Depreciation on these assets ceased once they were classified as held for
sale.
Borrowing costs capitalised for qualifying assets, included in oil & gas
properties, for the six months ended 30 June 2024 amounted to $5.0 million (30
June 2023: $3.5 million). The weighted average interest rates used was 1.58%
for the six months ended 30 June 2024 (30 June 2023: 5.42%).
There were no impairment indicators identified at 30 June 2024.
11. Intangible assets
Exploration and evaluation assets Goodwill Other Intangible assets Total
$'000 $'000 $'000 $'000
Intangibles at Cost
At 1 January 2023 338,354 101,146 10,975 450,475
Additions 56,379 - 273 56,652
Other movements 313 - 307 620
Exchange differences 2,670 - (12) 2,658
At 31 December 2023 397,716 101,146 11,543 510,405
Additions 192,538 - 401 192,939
Transfer to assets held for sale (99,069) (4,860) (6,978) (110,907)
Exchange differences (3,961) - (359) (4,320)
At 30 June 2024 (Unaudited) 487,224 96,286 4,607 588,117
Accumulated amortisation and impairments
At 1 January 2023 130,448 18,310 5,339 154,097
Charge for the period 46 - 932 978
Impairment 26,583 2,175 - 28,758
Exchange differences 1,197 - (14) 1,183
At 31 December 2023 158,274 20,485 6,257 185,016
Charge for the period 36 - 489 525
Impairment 76,030 - - 76,030
Transfer to assets held for sale (63,450) - (3,821) (67,271)
Exchange differences (3,297) - (304) (3,601)
At 30 June 2024 (Unaudited) 167,593 20,485 2,621 190,699
Net Carrying Amount
At 31 December 2023 239,442 80,661 5,286 325,389
At 30 June 2024 (Unaudited) 319,631 75,801 1,986 397,418
Goodwill arises principally because of the requirement to recognise deferred
tax assets and liabilities for the difference between the assigned values and
the tax bases of assets acquired and liabilities assumed in a business
combination.
During the period, the Group made significant additions to key ongoing
projects, including $13 million for the Company's partnership with Chariot
Limited in Morocco's Anchois gas development, $130 million mainly related to
the Katlan project in Israel, and $49 million for the Location B project in
Egypt and the Orion exploration (the latter has subsequently been impaired).
Total impairments of $76.0 million were recognised during the period for
projects that will not progress to development. In 2024, the Orion X1
exploration well in Egypt reached the target reservoir but indicated no
commercial hydrocarbons, resulting in a full impairment of the related
exploration asset valued at $61.2 million. Additionally, the exploration
license for Ioannina expired on 2 April 2024, leading to a full impairment of
the exploration asset valued at $14.8 million.
The Group exited the Isabella license in December 2023, resulting in the full
impairment of the related exploration asset valued at $26.6 million and
goodwill of $2.2 million.
On 20 June 2024, intangible assets owned by the disposal group, with a
carrying value of $ 43.6 million (primarily in Italy and Egypt; see note 24
for further details), were reclassified as assets held for sale. Amortisation
on these assets ceased once they were classified as held for sale.
12. Net deferred tax (liability)/ asset
Deferred tax (liabilities)/assets Property, plant and equipment Right of use asset IFRS 16 Decommi-ssioning Prepaid expenses and other receivables Inventory Tax losses Deferred expenses for tax Retire-ment benefit liability Accrued expenses and other short‑term liabilities Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 1 January 2023 (148,923) (1,078) 126,246 186 440 197,008 6,208 165 5,860 186,112
Increase / (decrease) for the period through:
Profit or loss (13,874) (2,644) (26,955) (2,225) (440) (57,185) (630) 163 3,958 (99,832)
Other comprehensive income - - - - - - - 38 - 38
Exchange difference (1,197) (15) 4,269 (12) 6 5,043 - 3 304 8,401
At 31 December 2023 (163,994) (3,737) 103,560 (2,051) 6 144,866 5,578 369 10,122 94,719
Increase / (decrease) for the period through:
Continuing operations:
Profit or loss (11,213) 733 318 137 401 (5,576) (316) (35) (363) (15,914)
Other comprehensive income - - - - - - - 94 - 94
Exchange difference 1,081 17 (47) 18 (4) (3,368) - (3) (204) (2,510)
Discontinued operations:
Profit or loss 844 - (12,159) - - (7,092) - - 64 (18,343)
Other comprehensive income - - - - - - - - (3) (3)
Exchange difference (532) - (2,834) - - (541) - - 1 (3,906)
Transfer to assets / (liabilities) held for sale (17,083) - (79,656) - - (11,950) - 10 (85) (108,764)
At 30 June 2024 (Unaudited) (190,897) (2,987) 9,182 (1,896) 403 116,339 5,262 435 9,532 (54,627)
30 June 2024 (Unaudited) 31 December 2023
$'000 $'000
Deferred tax liabilities (141,748) (122,785)
Deferred tax assets 87,121 217,504
Net deferred tax (liabilities)/ assets (54,627) 94,719
The Group transferred to "Asset and Liabilities held for sale" deferred tax
assets totally amounted to $108.8 million coming from Italy, as further
described in Note 24.
As of 30 June 2024, the Group had gross unused tax losses of $838.2 million
(as of 31 December 2023: $907.4 million), of which $101.6 million related to
discontinued operations, available to offset against future profits and other
temporary differences. The Group did not recognise deferred tax on tax losses
and other differences of total amount of $690.9 million, of which $179.9
million related to discontinued operations.
A deferred tax asset of $128.3 million (2023: $144.9 million) has been
recognised on tax losses of $499.4 million, based on the forecasted profits. A
deferred tax asset of $12.0 million recognised on Italian tax losses of $49.8
million, classified under discontinued operations, so as the deferred tax
asset of $79.7 million recognised on Italian decommissioning costs.
In Greece and the UK, the net DTA for carried forward losses recognised in
excess of the other net taxable temporary differences was $78.8 million and
$8.3 million (2023: $77.8 million and $8.7 million) respectively.
Greek tax losses (Prinos area) can be carried forward without limitation up
until the relevant concession agreement expires (by 2039), whereas, the tax
losses in Israel, Italy and the United Kingdom can be carried forward
indefinitely. Based on the Prinos area forecasts (including the Epsilon
development), the deferred tax asset is fully utilised by 2032. Finally, in
the UK, decommissioning losses is expected to be tax relieved up until 2027 in
accordance with the latest taxable profits forecasts.
13. Cash and cash equivalents
30 June 31 December
2024 (Unaudited) 2023
$'000 $'000
Cash and bank deposits 230,779 346,772
230,779 346,772
Bank deposits comprise deposits and other short-term money market deposit
accounts that are readily convertible into known amounts of cash. The annual
average interest rate on short‑term bank deposits was 4.678% for the six
months period ended 30 June 2024 (12 months ended 31 December 2023: 4.371%).
14. Restricted Cash
Restricted cash comprises cash retained under the Israel Senior Secured Notes
and the Greek State Loan requirement as follows:
Current
The current portion of restricted cash at 30 June 2024 was $82.54 million (31
December 2023: $22.48 million). It mainly relates to the September 2024 coupon
payment on Senior Secured Notes.
Non-Current
The cash restricted for more than 12 months after the reporting date was $3.0
million (31 December 2023: $3.1 million) mainly comprising $2.2 million (31
December 2023: $2.3 million) held on the Interest Service Reserve Account
('ISRA') in relation to the Greek Loan Notes and $0.8 million (31 December
2023: $0.8 million) for Prinos Guarantee.
15. Inventories
30 June 2024 31 December 2023
(Unaudited)
$'000 $'000
Crude oil 17,776 55,414
Hydrocarbon liquids 1,201 1,685
Gas 542 552
Raw materials and supplies 17,425 52,475
Total inventories 36,944 110,126
16. Trade and other receivables
30 June 31 December
2024 (Unaudited) 2023
$'000 $'000
Trade and other receivables - Current
Financial items:
Trade receivables 133,209 297,305
Receivables from partners under JOA 435 1,996
Other receivables 5,106 9,479
Government subsidies 79 82
Refundable VAT 1,364 19,273
Accrued interest income 399 1,016
140,592 329,151
Non-financial items:
Deposits and prepayments(35) 8,752 19,174
Other deferred expenses 541 4,932
9,293 24,106
149,885 353,257
Trade and other receivables - Non-Current
Financial items:
Other tax recoverable 15,462 15,544
15,462 15,544
Non-financial items:
Deposits and prepayments 16,208 17,612
Other non-current assets 645 526
16,853 18,138
32,315 33,682
( )
(35) Included in deposits and prepayments, are mainly prepayments for goods
and services under the GSP Engineering, Procurement, Construction and
Installation Contract (EPCIC) for Epsilon project.
17. Share capital
The below tables outline the share capital of the Company.
Equity share capital allotted and fully paid Share capital Share premium
Number $'000 $'000
Issued and authorized
At 1 January 2023 178,040,505 2,380 415,388
Issued during the year
- New shares 4,422,013 57 49,943
- Share based payment 1,018,441 12 -
At 31 December 2023 183,480,959 2,449 465,331
Issued during the period
- Share based payment - - -
At 30 June 2024 (Unaudited) 183,480,959 2,449 465,331
18. Dividends
In line with the Group's dividend policy, Energean returned $0.60/share to
shareholders during the reporting period, representing two-quarters of
dividend payments (6 months ended 30 June 2023: $0.60/ share).
$ cents per share $' 000
Dividends announced and paid in cash 2024 2023 2024 2023
March 30 30 54,844 53,252
June 30 30 54,991 53,411
60 60 109,835 106,663
19. Borrowings
30 June 31 December
2024 (Unaudited) 2023
$'000 $'000
Non-current
Bank borrowings - after two years but within five years
4.875% Senior Secured notes due 2026 ($625 million) 621,013 619,932
Bank borrowings - more than five years
6.5% Senior Secured notes due 2027 ($450 million) 445,109 444,313
5.375% Senior Secured notes due 2028 ($625 million) 618,863 618,145
5.875% Senior Secured notes due 2031 ($625 million) 617,218 616,762
8.50% Senior Secured notes due 2033 ($750 million) 734,004 733,653
BSTDB Loan and Greek State Loan Notes 105,318 108,392
Carrying value of non-current borrowings 3,141,525 3,141,197
Current
Revolving credit facility 105,000 80,000
Carrying value of current borrowings 105,000 80,000
Carrying value of total borrowings 3,246,525 3,221,197
The Group has provided security in respect of certain borrowings in the form
of share pledges, as well as fixed and floating charges over certain assets of
the Group.
At 30 June 2024, the Group holds US$2.625 billion in aggregate principal
amount of senior secured notes, issued in four series as follows:
· US$625 million, issued on 24 March 2021, maturing on 30 March
2026, with a fixed annual interest rate of 4.875%.
· US$625 million, issued on 24 March 2021, maturing on 30 March
2028, with a fixed annual interest rate of 5.375%.
· US$625 million, issued on 24 March 2021, maturing on 30 March
2031, with a fixed annual interest rate of 5.875%.
· US$750 million, issued on 11 July 2023, maturing on 30 September
2033, with a fixed annual interest rate of 8.5%.
The interest on each series is paid semi-annually on 30 March and 30
September. The notes are listed for trading on the TACT Institutional of the
Tel Aviv Stock Exchange Ltd (TASE), and the TASE-UP for the 2023 issuance.
The Group has provided various collateral, including fixed charges over
shares, leases, sales agreements, bank accounts, operating permits, insurance
policies, exploration licenses, and the Energean Power FPSO. Floating charges
cover present and future assets of relevant subsidiaries.
Additionally, the Group issued US$450 million in senior secured notes on 18
November 2021, maturing on 30 April 2027 with a fixed annual interest rate of
6.5%. These notes are listed on the Official List of the International Stock
Exchange (TISE), with interest paid semi-annually on 30 April and 30 October.
Energean Oil and Gas SA entered into a loan agreement on 27 December 2021 with
Black Sea Trade and Development Bank for €90.5 million for the development
of the Epsilon Oil Field, with an interest rate of EURIBOR plus margins, and
another agreement with the Greek State for €9.5 million maturing in 8 years
with a fixed rate plus margin.
Finally, the Group signed a three-year $275 million Revolving Credit Facility
(RCF) on 8 September 2022, increased to $300 million in May 2023, led by ING
Bank N.V. The RCF provides additional liquidity for corporate needs, with an
interest rate of 5% plus SOFR on drawn amounts. During the reporting period,
the Company utilised $65 million from this facility at an average interest
rate of 10.3%, with $30 million repaid subsequent to the reporting date.
Capital management
The Group defines capital as the total equity and net debt of the Group.
Capital is managed in order to provide returns for shareholders and benefits
to stakeholders and to safeguard the Group's ability to continue as a going
concern.
Energean is not subject to any externally imposed capital requirements. To
maintain or adjust the capital structure, the Group may put in place new debt
facilities, issue new shares for cash, repay debt, engage in active portfolio
management, adjust the dividend payment to shareholders, or undertake other
such restructuring activities as appropriate.
30 June 2024 (Unaudited) 31 December 2023
$'000 $'000
Net Debt
Current borrowings 105,000 80,000
Non-current borrowings 3,141,525 3,141,197
Total borrowings 3,246,525 3,221,197
Less: Cash and cash equivalents (230,779) (346,772)
Restricted cash (85,574) (25,606)
Net Debt 2,930,172 2,848,819
Total equity 653,923 686,115
Reconciliation of liabilities arising from financing activities
1 January 2024 Cash inflows Cash outflows Reclassification Additions Lease modification Borrowing costs including amortisation of arrangement fees Transfer to liabilities held for sale Foreign exchange impact 30 June 2024 (Unaudited)
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
2024 3,423,522 65,000 (212,772) 14,801 422 335 111,731 (138,130) (4,803) 3,260,106
Secured Senior Notes 3,032,783 - (110,951) 14,278 - - 100,076 - - 3,036,186
Revolving credit facility 80,000 65,000 (40,000) - - - - - - 105,000
Long -term borrowings 108,414 - (4,203) 122 - - 4,393 - (3,387) 105,339
Lease liabilities 65,096 - (10,253) 401 422 335 1,658 (42,697) (1,381) 13,581
Deferred licence payments 46,154 - (47,400) - - - 1,246 - - -
Contingent consideration 91,075 - - - - - 4,358 (95,433) - -
20. Retirement benefit liability
20.1 Provision for retirement benefits
30 June 2024 (Unaudited) 31 December 2023
$'000 $'000
Defined benefit obligation 448 1,595
Provision for retirement benefits recognised 448 1,595
Allocated as:
Non-current portion 448 1,595
20.2 Defined benefit obligation
30 June 2024 (Unaudited) 31 December 2023
$'000 $'000
At 1 January 1,595 1,675
Transfer to liabilities held for sale (1,133) -
Current service cost 49 88
Interest cost 26 59
Extra payments or expenses - 1
Actuarial gains/(losses) - from changes in financial assumptions (13) 161
Benefits paid (24) (433)
Exchange differences (52) 44
At 30 June / 31 December 448 1,595
21. Provisions
Decommissioning provision Litigation and other provisions Total
$'000 $'000 $'000
At 1 January 2024 830,676 7,510 838,186
Change in estimates (24,931) 220 (24,711)
Recognised in property, plant and equipment (24,546) (24,546)
Recognised in operating profit (385) 220 (165)
Spend (15,744) (15,744)
Unwinding of discount 16,047 - 16,047
Transfer to liabilities held for sale (481,161) (7,678) (488,839)
Currency translation adjustment (17,591) (52) (17,643)
At 30 June 2024 (Unaudited) 307,296 - 307,296
Current provisions 44,898 - 44,898
Non-current provisions 262,398 - 262,398
Decommissioning provision:
The decommissioning provision represents the present value of decommissioning
costs relating to oil and gas properties, which are expected to be incurred up
to 2044, when the producing oil and gas properties are expected to cease
operations. The decrease in the estimate for continuing operations is
primarily due to changes in the discount rate and inflation assumptions as of
30 June 2024.
The key assumptions underpinning the estimated decommissioning provision are
as follows:
Inflation Discount rate Cessation of Spend in 2024 30 June 31 December 2023
assumption assumption production 2024 (Unaudited) $'000
30 June 2024 30 June 2024 assumption $'000
Continuing operations:
Greece 2,6%-1,9% 3.73% 2034 - 18,689 19,359
UK 2.02% 3.88% 2030 5,210 197,370 202,874
Israel(36) 3.3%-2.15% 4.68% 2042 - 91,237 92,613
Discontinued operations:
Italy 2,2-2% 4.44% 2024-2039 10.534 464,679 497,827
Croatia 2,2-2% 4.44% 2036 - 16,482 18,003
Total 15,744 788,457 830,676
(36)US inflation rate and US Bond rates have been used.
22. Trade and other payables
30 June 2024 (Unaudited) 31 December 2023
$'000 $'000
Trade and other payables - Current
Financial items:
Trade accounts payable 212,792 225,451
Payables to partners under JOA(37) 8,694 170,470
Deferred licence payments due within one year(40) - 46,154
Other payables(38) 40,267 53,756
Contingent consideration - 91,075
Short term lease liability 5,361 16,498
Deferred income - 548
VAT payable 1,498 20
268,612 603,972
Non-financial items:
Accrued expenses 21,927 65,033
Other finance costs accrued 50,013 63,893
Social insurance and other taxes 1,926 4,705
73,866 133,631
342,478 737,603
Trade and other payables - Non Current
Financial items:
Trade and other payables(39) 93,187 117,796
Long term lease liability 8,220 48,598
101,407 166,394
Non-financial items:
Social insurance 636 529
636 529
102,043 166,923
( )
(37) Payables to partners under the JOA include both payables and working
capital estimates provided by the operators. The decrease in 2024 is due to
the payables to partners for JOAs in Italy and Egypt being classified as held
for sale. Refer to Note 24 for further details.
(38) Other payables primarily consist of royalties accrued in Israel ($40.1
million as of 30 June 2024, $32 million as of 31 December 2023) and in Italy
($18 million as of 31 December 2023, with no inclusion as of 30 June 2024).
(39) 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 reduced to $210 million. The amount is payable in
twelve equal quarterly deferred payments starting in March 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). As
of 30 June 2024, two instalments have been paid.
(40) In December 2016, Energean Israel acquired the Karish and Tanin offshore
gas fields for an initial payment of $40.0 million, with an additional
obligation of $108.5 million plus interest, to be paid in ten equal annual
instalments at an annual inflation rate of 4.6%. In November 2023, a
settlement agreement was reached, allowing the remaining balance to be settled
in two instalments, both completed in the first half of 2024. As of 30 June
2024, the full consideration has been paid.
23. Share based payments
Analysis of share-based payment charge:
30 June (Unaudited)
2024 2023 (Restated)*
$'000 $'000
Energean Deferred Bonus Plan (DSBP) 1,083 781
Energean Long Term Incentive Plans (LTIP) 3,027 2,140
Total share-based payment charge 4,110 2,921
Expensed as cost of sales - 348
Expensed as administration expenses 4,110 2,573
Total share-based payment charge 4,110 2,921
*Restated for discontinued operations, refer to note 24 for further detail.
Energean Long Term Incentive Plan (LTIP)
Under the Energean plc's 2018 LTIP rules, senior executives may be granted
conditional awards of shares or nil cost options. Nil cost options are
normally exercisable from three to ten years following grant provided an
individual remains in employment. Awards are subject to performance conditions
(including Total Shareholder Return (TSR) normally measured over a period of
three years. Vesting of awards or exercise of nil cost options is generally
subject to an individual remaining in employment except in certain
circumstances such as good leaver and change of control. Awards may be subject
to a holding period following vesting. No dividends are paid over the vesting
period; however, Energean's Board may decide at any time prior to the issue or
transfer of the shares in respect of which an award is released that the
participant will receive an amount (in cash and/or additional shares) equal in
value to any dividends that would have been paid on those shares on such terms
and over such period (ending no later than the Release Date) as the Board may
determine. This amount may assume the reinvestment of dividends (on such basis
as the Board may determine) and may exclude or include special dividends.
The weighted average remaining contractual life for LTIP awards outstanding at
30 June 2024 was 1.5 years, number of shares outstanding 1,947,405 and
weighted average price of $10.58.
Deferred Share Bonus Plan (DSBP)
Under the DSBP, a portion of any annual bonus of a Senior Executive nominated
by the Remuneration & Talent Committee, may be deferred into shares.
Deferred awards are usually granted in the form of conditional share awards or
nil-cost options (or, exceptionally, as cash-settled equivalents). Deferred
awards usually vest two years after award although may vest early on leaving
employment or on a change of control.
The weighted average remaining contractual life for DSBP awards outstanding at
30 June 2024 was 1.23 years, number of shares outstanding 323,774 and weighted
average price of $13.58.
24. Discontinued operations
On 20 June 2024, the Group publicly announced the decision of its Board of
Directors to sell its portfolio in Egypt, Italy and Croatia (together referred
to as "Energean Capital Limited Group", "ECL" or "ECL Group"), fully owned and
controlled by the Group. The sale of ECL is expected to be completed by the
end of 2024. Upon completion of the disposal, the Group will receive:
o $504 million in upfront cash consideration at the closing of the
transaction;
o Adjustments for working capital and cash between 31 December 2023, and the
closing date;
o A $139 million Vendor Loan with a tenor of 6 years and 3 months, accruing
interest at SOFR + 7% in the first year, increasing by 0.5% annually
thereafter;
o Up to $125 million in contingent consideration, adjusted for inflation
based on the US CPI index from 1 January 2024, contingent upon:
o Italian oil and gas production exceeding annual reference volumes from
2025-2028, as outlined in the YE23 Competent Person's Report (CPR).
o Brent and Italian PSV gas prices exceeding annual reference prices from
2025-2028.
o The contingent payment is calculated as 25% of the incremental commodity
price multiplied by actual production, payable annually from 2025 to 2028; and
o An uncapped contingent payment related to the recently drilled Location B
well in Egypt which will be calculated based off (i) the 2P reserves (as
determined by an independent auditor at YE24) plus (ii) the actual 2024
production, that are in excess of specific pre-drill estimated volumes
At 30 June 2024, ECL Group was classified as a disposal group held for sale
("HFS") and as a discontinued operation. The business of ECL Group represented
the entirety of the Group's Egypt operating segment until 20 June 2024. With
ECL being classified as discontinued operations, the Egypt segment is no
longer presented in the segment note. ECL operations in Italy and Croatia were
previously included in the Group's Europe operating segment, they are no
longer presented within this segment. The results of ECL for the six months
ended 30 June 2024 are presented below:
Note A: The tables below present the ECL Group's financial results, showing
financial results from discontinued operations before and after adjustments
for the reporting periods. The adjustments include (1) intra-group
transactions such as interest income and expenses, allowances for related
party loans, and costs from transactions between the disposal group and other
entities within the Energean plc Group (continuing operations) and (2)
adjustments made by the Group related to discontinued operations
classification including the adjustment to depreciation and amortisation
following the HFS classification date. These items were not eliminated in
the carve-out view (refer to "Discontinued operations, before adjustments"),
thereby reflecting the related party transactions for the ECL Group before
consolidation adjustments for discontinued operations. Financial results
presented for discontinued operations before the mentioned adjustments are
non-IFRS measures.
30 June 2024 (Unaudited) 30 June 2023 (Unaudited)
Discontinued operations, before adjustments Discontinued operations, total Discontinued operations, before adjustments Discontinued operations, total
(Note A) $'000 $'000
Revenue 226,041 224,178 213,720 211,751
Cost of Sales (139,694) (134,315) (118,094) (117,588)
Gross profit 86,347 89,863 95,626 94,163
Administration expenses (11,427) (10,024) (13,305) (11,105)
Change in decommissioning provision 3,023 3,023 14,633 14,633
Exploration and evaluation expenses (63,096) (63,096) (1,468) (1,468)
Expected credit loss (961) (961) (409) (409)
Other expenses (1,366) (1,525) (292) (292)
Other income 595 754 6,069 6,069
Operating profit 13,115 18,034 100,854 101,591
Finance Income 1,155 117 5,002 4,120
Finance Costs (21,105) (16,135) (18,003) (10,975)
Net foreign exchange loss 11,117 11,205 (6,781) (6,778)
Profit before tax from discontinuing operations 13,221 87,958
4,282 81,072
Taxation (expense)/ income:
- Related to pre-tax profit/(loss) from the ordinary activities (40,553) (45,524)
for the period
(40,553) (45,524)
- Related to remeasurement to fair value less costs to sell - -
- -
(Loss)/ Profit for the period from discontinuing operations (27,332) 42,434
(36,271) 35,548
The major classes of assets and liabilities of ECL Group classified as held
for sale as at 30 June are, as follows:
30 June 2024
Discontinued operations, before adjustments Discontinued operations,
total
(Note A) $'000 $'000
ASSETS
Property, plant and equipment 1,041,153 1,044,945
Intangible assets 38,805 43,636
Equity-accounted investments 4 4
Deferred tax asset 108,764 108,764
Inventories 71,118 71,118
Loans receivable from related party 102,394 -
Trade and other receivables 267,329 260,951
Cash and cash equivalents 28,398 28,398
Total assets 1.657.965 1,557,816
LIABILITIES
Retirement benefit liability 1,133 1,133
Provisions 488,840 488,840
Trade and other payables 559,670 543,364
Loans payable to related party 244,183 -
Current tax Liability 10,269 10,269
Total liabilities 1,304,095 1,043,606
Net assets directly associated with disposal group 353,870 514,210
The net cashflows incurred by ECL during six months are, as follows:
2024 2023
$'000 $'000
Operating 80,549 92,296
Investing (113,176) (29,079)
Financing 49,920 (11,838)
Net cash (outflow)/inflow 17,293 51,379
2024 2023
Earnings per share $ cents $ cents
Basic, (loss)/profit for the year from discontinued operations $(0.15)/ share $0.24/share
Diluted, (loss)/profit for the year from discontinued operations $(0.15)/share $0.23/share
As at 30 June 2024, there was no write-down as the fair value less costs to
sell did not fall below the carrying amount of the disposal group.
As of 30 June 2024, the disposal group has capital commitments totalling $79.6
million to be fulfilled by the end of 2024, that mainly relates to Cassiopea
project in Italy. This includes a $15.7 million commitment to the Government
of Egypt and $63.9 million for capital commitments with partners based on
future work programs in Italy.
As of 30 June 2024, the disposal group has $7.7 million in litigation and
other provisions. This includes a €3.3 million (approximately $3.5 million)
provision for ongoing litigation with the Termoli Port Authority in Italy
regarding fees for the marine concession for FSO Alba Marina, currently under
appeal in the Campobasso Court of Appeal.
Additionally, Energean Italy Spa is involved in litigation with three
municipalities in Italy over real estate municipality taxes (IMU/TASI),
interest, and penalties for 2016 to 2019. Under the sale and purchase
agreement, Edison S.p.A. bears liability for pre-2019 taxes, while Energean is
liable for 2019. Appeals have been filed with strong legal arguments, and the
likelihood of outflow beyond the $2.1 million provision recognised is
considered remote.
The remaining balance in other provisions relates to a potential claim in
Egypt. The timing of the settlement and any cash outflows is uncertain, so
these provisions are classified as non-current liabilities based on expected
court hearing dates beyond 12 months from 30 June 2024.
The Group will indemnify at completion, the prospective buyer of the ECL Group
against risks associated with the failure of specific legal cases mentioned
above.
30 June 2024 (Unaudited) 31 December 2023
Performance guarantees:
Greece (relates to Energean Italy exploration license) 1,823
Italy 11,955 16,140
13,778 16,140
25. Related parties
Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated upon consolidation and are not disclosed
in this note.
The Directors of Energean Plc are considered the only key management personnel
as defined by IAS 24.
There were no related party transactions conducted by the Group with other
related parties during the reporting period.
26. Commitments and contingencies of continuing operations
In acquiring its oil and gas interests, the Group has pledged that various
work programmes will be undertaken on each permit/interest. The exploration
and development capital commitments in the following table are an estimate of
the net cost to the Group of performing these work programmes:
30 June 2024 (Unaudited) 31 December 2023
$'000 $'000
Capital Commitments:
Due within one year 91,858 195,903
Due later than one year but within two years 20,945 20,963
Due later two years but within five years 11,885 6,230
124,688 223,096
For capital commitments related to discontinued operations as of 30 June 2024,
please refer to note 24.
As of 30 June 2024, there are no capital commitments towards Governments (31
December 2023: $16.7 million). An amount of $124.7 million (31 December 2023:
$206.4 million) pertains to capital commitments with partners based on future
work programs. These capital commitments include $91.2 million for the Anchois
gas development in Morocco, $12.7 million for the development of the Scott
field in the United Kingdom, and $20.8 million for asset integrity expenses
related to the Scott and Telford fields.
30 June 2024 (Unaudited) 31 December 2023
Performance guarantees:
Greece 1,061 4,522
Israel 50,568 53,006
UK 135,347 95,743
Morocco 375 -
Greece, Italy (Note 24) - 16,140
187,351 169,411
For performance guarantees related to discontinued operations as of 30 June
2024, please refer to note 24.
Open guarantees at the reporting date:
· Karish and Tanin Leases ($25 million) - As required by the Karish
and Tanin Lease deeds, the Group provided the Ministry of National
Infrastructures, Energy, and Water with bank guarantees for each lease. These
guarantees were renewed in May 2024 and are valid until June 2025.
· Blocks 12, 21, 23 and 31 ($21 million) - To meet the conditions
for obtaining exploration and appraisal licenses during the Israeli offshore
bid in December 2017, the Group provided the Ministry of National
Infrastructures, Energy, and Water with bank guarantees totalling $6 million
in January 2018, covering all mentioned blocks. These guarantees expire in
January 2025. Additionally, the Group furnished separate guarantees specific
to drilling activities in Blocks 12, 23, and 31, amounting to $15 million. The
guarantee for Block 12 expires in November 2024, while those for Blocks 23 and
31 are valid until June 2025.
· Israeli Natural Gas Lines ("INGL") ($2.5 million) - As part of
the agreement signed with INGL in June 2019, the Group provided a bank
guarantee to secure the milestone payments from INGL. This guarantee expires
on 24 July 2024.
· Israel Other ($2.1 million) - The Group has provided various bank
guarantees to third parties in Israel as part of ongoing operations.
· United Kingdom ($135.4 million)- The Group has issued letters of
credit for United Kingdom decommissioning obligations and other obligations
under the United Kingdom licenses.
· Greece - The Group issued letters of credit to cover obligations
under the Block 2 licenses.
Legal cases and contingent liabilities:
As of 30 June 2024, the Group has a contingent liability of $15 million
payable subject to Final Investment Decision being taken on Anchois
Development. The Group had no material contingent liabilities as at 31
December 2023.
27. Subsequent events
In July 2024, management made a final investment decision for the Katlan
development project in Israel. The carrying value of the exploration asset at
30 June 2024 was $207 million. Capital expenditure is expected to be
approximately US$1.2 billion. The Katlan area will be developed in a phased
approach through a subsea tieback to the existing Energean Power FPSO, which
currently serves the Karish and Karish North developments. The first gas
production is expected in the first half of 2027.
In August 2024, the prospective buyer of the ECL Group obtained unconditional
clearance from the Italian Competition Authority followed by approval of the
Italian Presidency of the Council of Ministers in respect of the Italian
Golden Power Law in September 2024.
28. Subsidiary undertakings
At 30 June 2024, the Group had investments in the following subsidiaries:
Name of subsidiary Country of incorporation / registered office Principal activities Shareholding Shareholding
At 30 June 2024
At 31 December 2023
(%)
(%)
Energean E&P Holdings Ltd. 22 Lefkonos Street, 2064 Nicosia, Cyprus Holding Company 100 100
Energean Capital Ltd. 22 Lefkonos Street, 2064 Nicosia, Cyprus Holding Company 100 100
Energean Group Services Ltd. 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas exploration, development and production 100 100
Energean Oil & Gas S.A. 32 Kifissias Avenue, Marousi Athens, 151 25, Greece Oil and gas exploration, development and production 100 100
Energean International Ltd. 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100
Energean Israel Ltd. 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100
Energean Montenegro Ltd. 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100
Energean Israel Transmission Ltd. Andre Sakharov 9, Haifa, Israel Gas transportation license holder 100 100
Energean Israel Finance Ltd. Andre Sakharov 9, Haifa, Israel Financing activities 100 100
Energean Egypt Ltd. 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100
Energean Hellas Ltd. 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100
Energean Italy S.p.a. 31 Foro Buonaparte, 20121 Milano, Italy Oil and gas exploration, development and production 100 100
Energean Sicilia S.r.l. Via Salvatore Quasimodo 2 - 97100 Ragusa (Ragusa) Oil and gas exploration, development and production 100 100
Energean Exploration Ltd. 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas exploration, development and production 100 100
Energean UK Ltd. 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas exploration, development and production 100 100
Energean Egypt Energy Services JSC Block #17, City Center, 5th Settlement, New Cairo, 11835, Egypt Oil and gas exploration, development and production 100 100
Energean Investments Ltd. 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas exploration, development and production 100 100
Energean Morocco Ltd. 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas exploration, development and production 100 100
Enearth Limited 22 Lefkonos Street, 2064 Nicosia, Cyprus Holding Company 100 -
Enearth Greece S.A. 32 Kifissias Avenue, Marousi Athens, 151 25, Greece Carbon Capture Storage 100 -
29. Exploration, development and production interests
Development and production:
Country Licence/unit area Fields Fiscal regime Group's working interest Joint operation Operator
Israel
Karish Karish North, Karish Main Concession 100% No NA
Tanin Tanin Concession 100% No NA
Egypt
Abu Qir Abu Qir, Abu Qir North, Abu Qir West, Yazzi (32.75%) PSC 100% No NA
NEA Yazzi (67.25%), Python PSC 100% No NA
NI Field A (NI-1X), Field B (NI-3X), NI-2X, Viper (NI-4X) PSC 100% No NA
Greece
Prinos Prinos, Epsilon Concession 100% No NA
South Kavala Concession 100% No NA
Katakolo Katakolo (undeveloped) Concession 100% No NA
Italy
C.C6.EO Vega A (Vega B, undeveloped) Concession 100%(( 18 (#_ftn18) )) Yes Energean
B.C8.LF Rospo Mare Concession 100%(( 19 (#_ftn19) )) Yes Energean
Fiume tenna Verdicchio Concession 100% No Energean
B.C7.LF Sarago, cozza, vongola Concession 95% Yes Energean
B.C11.AS GIANNA Gianna (undeveloped) Concession 49% Yes ENI
Garaguso Accettura Concession 50% Yes Energean
A.c14.AS Rosanna and Gaia Concession 50% Yes ENI
A.C15.AX Valentina, Raffaella, Emanuela, Melania Concession 10% Yes ENI
A.c16.AG Delia, Demetra, Sara, Dacia, Nicoletta Concession 30% Yes ENI
A.C8.ME Anemone and Azelea 20 (#_ftn20) Concession 19% and 15.675% Yes ENI
Masseria Monaco Appia and Salacaro (undeveloped) Concession 50% Yes Energean
G.C1.AG Cassiopea , Gemini, Centauro Concession 40% Yes ENI
B.C14.AS Calipso and Clara West Concession 49% Yes ENI
B.C20.AS Carlo, Clotilde e Didone (undeveloped) Concession 49% Yes ENI
Montignano Cassiano and Castellaro Concession 50% Yes Energean
B.C13.AS Clara Est, Clara Nord, Clara NW, (Cecilia undeveloped) Concession 49% Yes ENI
Comiso (EIS) Comiso Concession 100% No NA
A.c13.AS Daria, ( Manuela ,Arabella, Ramona undeveloped) Concession 49% Yes ENI
B.C10.AS Emma West and Giovanna Concession 49% Yes ENI
A.C36.AG Fauzia Concession 40% Yes ENI
Torrente menocchia Grottammare (undeveloped) Concession 76% Yes Petrorep
Montegranaro Leoni Concession 50% Yes Gas Plus
Lucera Lucera Concession 4.8% Yes GPI
Monte Urano San Lorenzo Concession 40% Yes Energean
A.C21.AG Naide Concession 49% Yes ENI
Colle di lauro Portocannone Concession 83.32% Yes Energean
Porto civitanova Porto civitanova Concession 40% Yes GPI
Quarto Quarto Concession 33% Yes Padana Energia
A.C17.AG Regina Concession 25% Yes ENI
S. Andrea Concession 50% Yes Canoel
B.C2.LF San Giorgio Mare Concession 100% Yes Energean
San Marco San Marco Concession 20% No ENI
B.C1.LF Santo Stefano Concession 95% Yes Energean
Mafalda Sinarca Concession 40% Yes Gas Plus
B.C9.AS Squalo Centrale Concession 33% Yes ENI
Massignano Talamonti Concession 50% Yes Energean
Masseria Grottavecchia Traetta Concession 14% Yes Canoel
S. Anna (EIS) Tresauro Concession 25% Yes Enimed
Torrente Celone Vigna Nocelli (Masseria Conca undeveloped) Concession 50% Yes Rockhopper Italia
UK
Tors Garrow, Kilmar Concession 68% Yes Energean
Markham Concession 3% Yes Spirit Energy
Scott Concession 10% Yes CNOOC
Telford Concession 16% Yes CNOOC
Wenlock Concession 80% Yes Energean
Croatia
Izabela PSC 70% No NA
Exploration:
Country Concession Fields Fiscal regime Group's working interest Joint operation Operator
Israel
Blocks 12, 21, 23, 31 Katlan, Hermes and Hercules Concession 100% No N/A
Egypt
East North Bir El Nus PSC 50% Yes Energean
Greece
Block-2 Concession 75% Yes Energean
Prinos Prinos CO2 Storage Concession 100% No N/A
Italy
G.R13.AG Lince prospect Concession 40% Yes ENI
G.R.14.AG Panda, Vela prospect Concession 40% Yes ENI
Croatia
Irena PSC 70% No NA
Morocco
Anchois Lixus Concession 45% No NA
Anchois Rissana Concession 37.5% No NA
1 (#_ftnref1) On 20 June 2024, the Group publicly announced the decision of
its Board of Directors to sell its portfolio in Egypt, Italy and Croatia
(together referred to as "Energean Capital Limited Group" or "ECL"), fully
owned and controlled by the Group. The continuing operations comprises of the
Group's remaining operations in Israel, Greece, UK and Morocco.
2 (#_ftnref2) Uptime is defined as the number of hours that the Energean
Power FPSO was operating; the H1 2024 figure excludes the scheduled 5-day
shutdown that occurred in May.
3 (#_ftnref3) Adjusted EBITDAX is defined later in the financial review.
Energean uses Adjusted EBITDAX as a core business KPI.
(( 4 (#_ftnref4) )) H1 2024 leverage based upon H1 2024 annualised Adjusted
EBITDAX.
5 (#_ftnref5) $83 million is associated with the upcoming Energean Israel
coupon payment in September.
6 (#_ftnref6) Available liquidity includes amounts available under the
Revolving Credit Facilities ("RCF").
7 (#_ftnref7) Payment date is stated as the date upon which payment is
initiated by Energean.
8 (#_ftnref8) H1 2023 emissions intensity was approximately 10.6 kgCO2e/boe.
9 (#_ftnref9) Cash G&A is defined later in the financial review.
10 (#_ftnref10) 3x increase based upon the Transaction EV of up to $945
million and the Edison E&P acquisition EV of $284 million. The Edison
E&P acquisition also included the UK portfolio, which was ascribed minimal
value.
11 (#_ftnref11) Uptime is defined as the number of hours that the Energean
Power FPSO was operating; the H1 2024 figure excludes the scheduled 5-day
shutdown that occurred in May.
12 (#_ftnref12) 3x increase based upon the Transaction EV of up to $945
million and the Edison E&P acquisition EV of $284 million. The Edison
E&P acquisition also included the UK portfolio, which was ascribed minimal
value.
13 (#_ftnref13) The figures presented for the Energean Group in the table
and narrative below represent total group numbers, including discontinued
operations. For IFRS reporting purposes, discontinued operations are
summarized as a single line item on the Interim Consolidated Income Statement,
while revenue and costs shown in the statement reflect only continuing
activities.
14 (#_ftnref14) Cash cost of production is defined later in the financial
review.
15 (#_ftnref15) Cash G&A is defined later in the financial review.
16 (#_ftnref16) Adjusted EBITDAX is defined later in the financial review.
Energean uses adjusted EBITDAX as a core business KPI.
17 (#_ftnref17) Inclusive of restricted cash
18 (#_ftnref18) Energean has agreed
with ENI to acquire the latter's WI and the request is pending approval from
the Italian authorities. However by means of an agreement between ENI and
Energean Italy all the production and cost are retained by Energean from 1
January 2021 and, according to the JOA, the decommissioning costs will be
borne by both parties according to their initial WI (Energean 60%, ENI 40%).
19 (#_ftnref19) Energean has
requested from the operator to exit the licence.
20 (#_ftnref20) Energean has
requested from the operator to exit the licence.
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