TIDMENOG
RNS Number : 6164T
Energean PLC
16 November 2023
Energean plc
("Energean" or the "Company")
Trading Statement & Operational Update
London, 16 November 2023 - Energean plc (LSE: ENOG, TASE: ) is
pleased to provide an update on recent operations and the Group's
trading performance in the nine months to 30 September 2023.
Mathios Rigas, Chief Executive Officer of Energean,
commented:
"I am sincerely grateful to all our employees, who have shown
remarkable resilience, dedication and professionalism in the face
of the challenging environment. Their unwavering commitment to our
business and our values has been instrumental in delivering both
operational excellence and growth. We are proud of our diverse and
talented team, and we will continue to invest in their development
and well-being .
"The ongoing security situation has not impacted our production.
The successful ramp-up of production from our flagship Karish gas
field in Israel has increased Group production to above 150 kboed
in recent days. We have delivered revenues of over $1 billion and
adjusted EBITDAX of $623 million in the nine months to 30 September
2023, reflecting our low-cost, high-margin business model. We have
also reduced our Group leverage ratio to 3.5x and continued our
dividend payments, demonstrating our commitment to delivering
shareholder value.
"We have made significant progress on our growth projects, which
will support our near-term targets of 200 kboed, $2.5 billion
revenues, $1.75 billion adjusted EBITDAX and deleveraging target of
c.1.5x, the timing of which may be impacted by the delay to the
second oil train installation. We have commenced drilling of the
Orion 1x well in Egypt, where we have signed a farm-out agreement
[1] that will reduce our net exposure and enhance our returns. This
is in addition to an attractive portfolio of exploration assets
that have the potential to add significant value.
"Finally, we have made a major step forward at our Prinos carbon
storage project in Greece. It has been adopted by the European
Commission as a Project of Common Interest, and we have been
committed EUR 150 million of grants from the Greek Government to
support its development. These actions set the foundation for a
transition of our mature Prinos oil field to an exciting growth
investment opportunity and demonstrates our commitment to our
broader energy transition strategy and being the best version of
Energean we can be."
Operational Highlights
-- Production during the nine months to 30 September 2023 was
118.5 kboed (nine months 2022: 35.2 kboed); Q3 2023 production was
143 kboed
o On track to deliver full year production in line with latest
guidance of 120 - 130 kboed
o No production impact from the ongoing security situation in
Israel
-- Strong progress on our growth projects
o Karish North and second gas export riser on track for
completion by end-2023
o Second oil train to be installed as soon as the security
situation in Israel allows
o Katlan FID on track for around year-end 2023
o NEA/NI completion on track for year-end 2023; Cassiopea first
gas on track for 2024
o Good progress towards the delivery of near-term targets of 200
kboed, $2.5 billion revenues, $1.75 billion adjusted EBITDAX and
leverage c.1.5x
-- Attractive portfolio of exploration wells targeting
additional upside, including the Orion 1x exploration well in Egypt
(Energean 19%, previously 30%), which commenced drilling in October
2023; farm-out agreement signed and expected to complete within the
coming weeks, subject to government approvals
Financial Highlights
-- Strong financial performance for the nine months to 30
September 2023, underpinned by a quarter of steady production from
Karish
o Revenues of $1,016 million, a 85% increase (nine months 2022:
$550.2 million)
o Adjusted EBITDAX of $623 million, a 79% increase (nine months
2022: $348.5 million)
-- Strong balance sheet maintained; ongoing deleveraging
o Group leverage [2] continued reduction to 3.5x (H1 2023: 3.9x;
FY 2022: 6.0x)
o Group cash as of 30 September 2023 was $329.0 million,
including restricted amounts of $27.5 million, and total liquidity
was $578.6 million
-- Energean Israel's $750 million 2033 bond was released from
escrow in September and was used to repay Energean Israel's $625
million 2024 bond (redemption date on 30 September 2023).
Corporate Highlights
-- Q3 2023 dividend of 30 US$ cents/share declared today, in
line with Energean's dividend policy, scheduled to be paid on 29
December 2023
-- Scope 1 and 2 emissions intensity of approximately 9.7
kgCO2e/boe, a 12% reduction versus H1 2023
Strategic Highlights
-- Energy transition plan progressing well
o Prinos Carbon and Storage ("CS") project in Greece adopted by
the European Commission as a Project of Common Interest
o EUR 150 million of grants committed from the Greek Recovery
& Resilience Facility
Nine months 2023 Nine months 2022 Increase / (Decrease)
$m $m %
Average working interest production (kboed) 118.5 (84% gas) 35.2 (73% gas) 236%
------------------ ------------------ -----------------------
Sales and other revenues 1,016.3 550.2 85%
------------------ ------------------ -----------------------
Cash Cost of Production [3] 360.7 181.4 99%
------------------ ------------------ -----------------------
Cash Cost of Production per boe ($/boe) 11.2 18.9 (41)%
------------------ ------------------ -----------------------
Cash G&A 26.4 21.1 25%
------------------ ------------------ -----------------------
Adjusted EBITDAX 623.3 348.5 79%
------------------ ------------------ -----------------------
Development and production expenditure 423.2 494.4 (14)%
------------------ ------------------ -----------------------
Exploration capital expenditure 24.7 71.4 (65)%
------------------ ------------------ -----------------------
Decommissioning expenditure 3.1 3.8 (18)%
------------------ ------------------ -----------------------
Nine months 2023 H1 2023 Increase / (Decrease)
$m $m %
------------------ ------------------ -----------------------
Net Debt (including restricted cash) 2,926.3 2,715.3 8%
------------------ ------------------ -----------------------
Leverage (Net Debt / annualised Adjusted EBITDAX [4]
) 3.5 3.9 (10%)
------------------ ------------------ -----------------------
Enquiries
For capital markets: ir@energean.com
Kate Sloan, Head of IR and M&A Tel: +44 7917 608 645
For media: pblewer@energean.com
Paddy Blewer, Head of Corporate Communications
Tel: +44 7765 250 857
Energean Operational & Financial Review
Production
In the nine months to 30 September 2023, average working
interest production was 118.5 (84% gas). Q3 2023 production
averaged 143.0 kboed (85% gas), up 22% versus Q2 2023 due to the
ramp-up of production at Karish to its initial capacity.
In Israel, production has remained at a steady state over the
past two months, averaging around 570 mmscfd (6 bcm/yr equivalent).
Day-to-day production has not been impacted as a result of the
security situation in Israel, but it has impacted the timing of the
installation of the second oil train, which will be installed once
the security situation allows.
In Egypt, NEA#5 has continued to produce at a steady state of 27
mmscfd (5 kboed). The NEA#6 well is expected to shut-in by
year-end, in line with previous communication.
Nine months to Nine months to
30 September 2023 30 September 2022 FY 2023 guidance
Kboed Kboed % change Kboed
Israel 82.6 - - 87 - 94
(including 3.1 (including
bcm of gas) 4.4-4.7 bcm
of gas)
------------------- ------------------- --------- -----------------
Egypt 25.2 24.5 3% 23 - 25
------------------- ------------------- --------- -----------------
Rest of portfolio 10.6 10.7 (1%) 10 - 11
------------------- ------------------- --------- -----------------
Total production 118.5 [5] 35.2 237% 120 - 130
------------------- ------------------- --------- -----------------
Development
Israel - Karish Growth Projects
Karish North and the second gas export riser remain on track for
completion for the end of the year. All infrastructure associated
with these projects is in place ahead of final commissioning
planned for early December.
Construction of the second oil train has been completed and the
module was scheduled to leave Dubai in early October. However,
because of the security situation in Israel, it has impacted the
timing of the installation of the second oil train, which will be
installed once the security situation allows.
Israel - Katlan
In October 2023, Energean signed a FEED contract with Technip UK
Limited. FID is expected around year-end 2023.
Egypt
The PY#1 well finished drilling in September 2023 and has been
suspended ahead of first gas. The NI#1 well spudded in September
2023 and is expected to complete in December 2023; results to date
are in line with the pre-drill prognosis. Both wells are expected
onstream by year-end 2023, marking the completion of the NEA/NI
development project. Following the completion of the NEA/NI wells,
the El Qaher-1 rig will move to drill an infill well (NAQ-PII#2) on
the Abu Qir licence.
At 30 September 2023, net receivables (after provision for bad
and doubtful debts) in Egypt were $161.9 million (30 June 2023:
$143.1 million), of which $118.5 million (30 June 2023: $107.8
million) was classified as overdue. In October 2023, a $23 million
collection was made, which has reduced the receivables position, as
of 31 October 2023, to $151.2 million.
Italy
At Cassiopea, drilling is expected to commence in early December
2023. First gas remains on track for 2024.
Greece
Energean's Prinos Carbon and Storage ("CS") project in Greece
has been adopted by the European Commission as a Project of Common
Interest. Non-binding memorandum of understandings have been signed
for 5 million tonnes per annum of storage and EUR 150 million of
grants have been committed. Energean is advancing the conversion of
its exploration licence into a storage permit.
Exploration and Appraisal
The Orion-1X exploration well located on the North East Hap'y
Concession, offshore Egypt, started drilling in October 2023. The
gross unrisked P50 GIIP is 283 bcm (9,996 bcf / 1.8 bnboe).
Energean has signed farm-out agreements to reduce its working
interest in the licence to 19% (from 30%) and this is expected to
complete within the coming weeks, subject to government
approvals.
Net Zero progress
Energean's scope 1 and 2 emissions intensity in the nine months
to 30 September 2023 was estimated to be approximately 9.7
kgCO2e/boe, a 12% reduction versus H1 2023 (11.0 kgCO2e/boe). FY
2023 emissions intensity are expected between 9.5 - 10.5
kgCO2e/boe.
Financing
In July 2023, Energean issued $750 million of senior secured
notes via its subsidiary Energean Israel Finance Ltd ("Energean
Israel"). The funds were released from escrow in September 2023 and
were used to repay Energean Israel's $625 million notes due in
March 2024 and pay fees and expenses associated with this
refinancing, contribute towards funding the interest payment
reserve account, and contribute towards the payment of the final
deferred consideration to Kerogen in relation to Energean's
previous acquisition in 2021 of the remaining 30% minority interest
in Energean Israel.
In October 2023, the $350 million unsecured term loan facility
was amended and restated to $120 million.
Corporate
As previously communicated, in November 2022, Italy introduced a
new windfall tax, which totalled EUR 87.0 million ($94.5 million).
This amount was paid in July 2023.
Also in July 2023, the deferred consideration ($150 million) due
to Kerogen, as part of the 2021 acquisition of Kerogen's 30%
minority interest in Energean Israel Ltd, was paid.
In November 2023, Energean Israel reached a settlement with
NewMed Energy for the remaining deferred consideration under the
original purchase agreement of the Karish and Tanin leases of
approximately $47.4 million, which includes the agreed annual
interest. This will be paid in 2024 in two instalments. This
agreement is final and unappealable.
Guidance
FY 2023
Guidance
Production
-----------------------------
Israel (kboed) 87 - 94
(including 4.4 - 4.7 bcm of
gas)
-----------------------------
Egypt (kboed) 23 - 25
-----------------------------
Rest of Portfolio (kboed) 10 - 11
-----------------------------
Total Production (kboed) 120 - 130
-----------------------------
Consolidated net debt ($ million) 2,700 - 2,900
-----------------------------
Cash Cost of Production (operating
costs plus royalties)
-----------------------------
Israel ($ million) 275 - 300
-----------------------------
Egypt ($ million) 40 - 50
-----------------------------
Rest of portfolio ($ million) 160 - 200
-----------------------------
Total Cash Cost of Production ($
million) 475 - 550
-----------------------------
Development and production capital
expenditure
-----------------------------
Israel ($ million) 200 - 220 (revised from 170
- 200)
-----------------------------
Egypt ($ million) 120 - 130 (reduced from 140
- 150)
-----------------------------
Rest of portfolio ($ million) 230 - 250 (reduced from 270
- 290)
-----------------------------
Total development & production capital 550 - 600 (reduced from 580
expenditure ($ million) - 640)
-----------------------------
Exploration expenditure ($ million) 50 - 60
-----------------------------
Decommissioning expenditure ($ million) 10 - 20 (reduced from 20
- 30)
-----------------------------
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.
[1] Subject to government approvals
[2] Net debt / annualised adjusted EBITDAX
([3]) Includes flux costs of $25.3 million in nine months 2023
and $26.8 million in nine months 2022
([4]) Nine months 2023 leverage based upon nine months 2023
annualised Adjusted EBITDAX
[5] Numbers may not sum due to rounding
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