TIDMENOG
RNS Number : 1365R
Energean PLC
03 November 2021
Energean plc
("Energean" or the "Company")
Trading Statement & Operational Update
London, 3 November 2021 - Energean plc (LSE: ENOG TASE: ) is
pleased to provide an update on recent operations and the Group's
trading performance in the 9-months to 30 September 2021.
Mathios Rigas, Chief Executive of Energean, commented:
"In the third quarter of 2021, Energean continued to deliver
excellent operational and financial results. Production was above
expectations and combined with the quarter's high commodity prices
has yielded strong financial results. We are on track to deliver
record full year numbers, with annual revenues expected to be in
excess of $450 million and EBITDAX in excess of $190 million .
"Our flagship project Karish remains on track to deliver first
gas in mid-2022 and we will spud the first well of our new Israel
growth campaign in 1Q 2022. Good progress is also being made across
our key development projects in Egypt, Italy and Greece. We remain
on target to grow production to over 200 kboed and achieve our
medium-term revenue and EBITDAX targets of $2 billion and $1.4
billion, respectively.
"This will position Energean to deliver an industry-leading,
sustainable and meaningful dividend.
"On the ESG-front, we are on track to reduce CO2 emissions
intensity by approximately 20% year-on-year and are advancing our
plans to accelerate our 2050 net zero target. The pre-FEED at our
"Green Prinos" Carbon Capture and Storage project is progressing
well and we are also investigating the feasibility of tying back a
small scale eco-hydrogen project."
Highlights
-- Average working interest production for the period was 42.6
kboed (72% gas), ahead of full year guidance
o Production continued to exceed expectations across all
countries of operation
o Planned summer maintenance was successfully undertaken
-- Strong performance has led to an increase in the lower end of
the range with guidance now 40 - 42 kboed (from 38 - 42 kboed)
-- Revenues for the period were $350 million and EBITDAX was $141 million
o Energean is on track to deliver record full-year consolidated
results with revenues in excess of $450 million and EBITDAX of more
than $190 million
-- At 30 September 2021, Energean had gross cash resources of
$895 million[1] and remains fully-funded for all of its key
development projects, which remain on track and on budget
-- The Karish development remains on budget and is on track to deliver first gas in mid-2022
o On 30 September 2021, the project was 91.8% complete[2]
o The FPSO, which is the critical path item in delivery of first
gas, was 97.3% complete as of this date
-- New gas supply agreement ("GSA") signed with A2A in Italy
9-Months to 30 September 2021
Revenues $ million 349.0
----------- ------------------------------
Cost of production
(excluding flux) $ million 172.5
----------- ------------------------------
Cost of production
(excluding flux) $/boe 14.8
----------- ------------------------------
G&A $ million 25.0
----------- ------------------------------
EBITDAX $ million 141.3
----------- ------------------------------
Operating Cash Flow $ million 82.9
----------- ------------------------------
Capital Expenditure $ million 262.0
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Exploration Expenditure $ million 41.1
----------- ------------------------------
Decommissioning Expenditure $ million 3.0
----------- ------------------------------
Cash (including restricted
amounts) $ million 895.4
----------- ------------------------------
Net debt - consolidated $ million 1,948.1
----------- ------------------------------
Net debt - plc excluding
Israel $ million 79.3
----------- ------------------------------
Net debt - Israel (Israel
debt is non-recourse) $ million 1,868.8
----------- ------------------------------
Outlook
-- Full year production guidance range narrowed to 40 - 42 kboed (from 38 - 40 kboed)
o Looking ahead, Energean has taken advantage of current strong
European gas prices, hedging 17% of expected 2022 Italian gas
production at approximately $14/mcf
-- Improved net debt / EBITDAX medium term guidance, now
expected to be <1.5x (versus <2.0x previously)
-- Sailaway of the Energean Power FPSO from Singapore to Israel
in 1Q 2022 with first gas from Karish expected mid-2022
-- Commencement of the high-impact growth drilling campaign in 1Q 2022, starting with Athena
o First drilling results anticipated during 2Q 2022, marking a
catalyst-rich start to 2022
-- Continued progress on key gas development projects in Egypt
(NEA / NI) and Italy (Cassiopea)
-- Finalisation of funding for the Epsilon project in Greece and
commencement of the development programme, expected 4Q 2021
-- Continued progress towards net zero target, and detailing of
plans to accelerate ahead of 2050
-- Acceleration of the Green Prinos suite of projects
o Pre-Front-End Engineering Design ("pre-FEED") on the carbon
capture and storage ("CCS") project underway and expected to
complete by end 1Q 2022
Enquiries
Kate Sloan, Head of IR, ECM and Communications Tel: +44 7917 608
645
Energean Operational & Financial Review
Production
In the 9-months to 30 September 2021, average working interest
production was 42.6 kboed (72% gas), ahead of full year guidance,
which is revised to 40 - 42 kboed.
9-Months to September FY 2021 guidance
2021 Kboed
Kboed
Egypt 30.3 28.5 - 30
---------------------- -----------------
Italy 10.0 9.5 - 10
---------------------- -----------------
Greece 1.5 1.5
---------------------- -----------------
UK 0.7 0.5
---------------------- -----------------
Croatia 0.2 0.1
---------------------- -----------------
Total production 42.6 40 - 42
---------------------- -----------------
Israel
Karish Project Progress
Energean remains on track to deliver first gas from the Karish
gas development project in mid-2022. At 30 September 2021, the
project was approximately 91.8% complete[3].
The FPSO is expected to leave the yard in Singapore for Israel
in 1Q 2022. This journey will take around 35 days. Hook-up and
pre-first gas commissioning will then take approximately three
months.
% Completion at 30 September
2021[4]
Production Wells 100.0
-----------------------------
FPSO 97.3
-----------------------------
Subsea 83.3
-----------------------------
Onshore 99.7
-----------------------------
Total 91.8
-----------------------------
On 2 November 2021, further to its initiation of arbitration
proceedings in August 2021, Dalia served a notice upon Energean
purporting to terminate the GSPA (the "Notice of Termination"),
which represents 0.8 Bcm/yr of contracted gas sales. The notice
does not specify what date, on Dalia's view, the purported
termination takes effect. Alongside the Notice of Termination,
Dalia sent a separate letter informing Energean that if the Notice
of Termination is determined by the arbitral tribunal to be invalid
or wrongly issued, the contract will not have been terminated and
Dalia will perform its obligations. Energean wholly rejects the
validity of the Notice of Termination. It believes that it was
served in breach of Dalia's obligations under the contract.
Energean will vigorously pursue all rights at its disposal.
Energean has identified multiple incremental buyers, both
domestic and international, for its gas reserves and prospective
resources and is confident of selling all volumes profitably.
Drilling Campaign
Energean's preparatory work ahead of the 2022 drilling campaign
is progressing in line with expectations. The first well, Athena on
Block 12, is expected to be spudded in 1Q 2022 using Stena
Drilling's IceMax rig. Export commercialisation routes are being
matured to access international gas prices if (and when) additional
volumes become available.
Egypt
In the 9-months to 30 September 2021, w orking interest
production from the Abu Qir area averaged 30.3 kboed (87% gas),
with full year production guidance increased to between 28.5 - 30
kboed (from 28 - 30 kboed).
NEA/NI is progressing on budget and on schedule, being 22.1%
complete as of 30 September 2021. First gas from one well is
anticipated in 2H 2022, with the remaining three wells expected
online in 1Q 2023.
At 30 September 2021, net receivables (after provision for bad
and doubtful debts) in Egypt were $145.3 million, of which $114
million was classified as overdue. Cash collection from EGPC during
9-months of 2021 was $120 million.
Italy
In the 9-months to 30 September 2021, w orking interest
production from Italy averaged 10.0 kboed (42% gas), with full year
production guidance increased to between 9.5 - 10 kboed (from 9 -
10 kboed).
In September 2021, ENI began construction of the gas treatment
plant for the Cassiopea project (Energean = 40% non-operated
interest). First gas from Cassiopea remains on track for 1H 2024
and at peak production will provide more than 30% of the region's
gas consumption. In line with Energean's sustainability strategy,
the project will, according to ENI, have close to zero emissions
and the installation of 1 MWp of photovoltaic solar panels will
allow the project to achieve carbon neutrality.
In October 2021, Energean (49%), alongside operator ENI, spudded
a sidetrack from an existing development well from the Calipso
platform. Calipso is a gas field located in the northern Adriatic
Sea and the well is being drilled by the Key Manhattan jack-up
rig.
New gas supply agreement ("GSA") signed with A2A
On 5 August 2021, Energean Italy and A2A S.p.A. entered into a
new GSA for the delivery of gas commencing 1 April 2022 (being the
effective date of termination of Energean Italy's current GSA with
Edison SpA), until 30 September 2023. Under the agreement, Energean
will sell its full entitlement production to A2A, which agrees to
purchase, take and pay for the quantities. For each of Energean's
concessions, gas will be delivered at the relevant entry point to
the Italian gas network. The realised price will be the day ahead,
PSV (Italian hub) price net of entry costs to the Italian gas
network, and has no penalties or liquidated damages (e.g.
shortfall) in case of over and under deliveries.
Hedging
Energean has taken advantage of current strong market pricing
and hedged its 2022 Italian gas production, entering into the
following swap contracts, hedging a total of 17% of expected 2022
Italian gas production:
1. 9% (240 MWH) of 2022 Italian gas production hedged at an
average price of EUR51.15/MWH (approximately $14.43/mcf)
2. 8% (180 MWH) of 2022 Italian gas production hedged at an
average price of EUR50.05/MWH (approximately $14.30/mcf)
Greece
In the 9-months to 30 September 2021, w orking interest
production from the Prinos area averaged 1.5 kboed (100% oil), in
line with full year production guidance at 1.5 kboed.
Energean expects the EUR100 million funding package for the
Epsilon development to be finalised in 4Q 2021. First gas is
expected in 1H 2023.
Pre-FEED for the Prinos CCS project is underway and progressing
well.
United Kingdom
During the first nine months of 2021, production in the UK North
Sea was 0.7 kboed (11% gas), ahead of full year guidance of 0.5
kboed.
Croatia
In the 9-months to 30 September 2021, working interest
production from the Izabela field (Energean 70%) averaged 0.2 kboed
(100% gas).
Energean is currently in FEED for the development of the Irena
gas field. If progressed, first gas is anticipated for Q4 2024,
generating net working interest production of 3.5 kboed at
peak.
ESG
In September 2021, Energean improved its Sustainalytics ESG risk
rating by 5.8 points, positioning it 22 out of 256 in the oil and
gas producers' industry group, and 11 out of 149 in the E&P
industry group. Sustainalytics, a Morningstar company, provides ESG
ratings for listed companies across the world.
Also in September 2021, Energean was awarded the 'Best ESG
Energy Growth Strategy - Europe 2021' by CFI.
3.
9-month to 30 September 2021 performance and 2021 guidance
FY 2021 9-Months to September
2021
Consolidated net debt ($
million) 2,000 - 2,100[5] 1,948.1
----------------------------- -----------------------------
Cost of Production (Operating
Costs plus Royalties)
----------------------------- -----------------------------
* Egypt ($ million) 55 - 60 41.3
----------------------------- -----------------------------
130 - 140 (including 103.1 (including
* Italy ($ million) Flux costs of approximately Flux costs of approximately
$20 million) $17 million)
----------------------------- -----------------------------
* Greece ($ million) 25 19.0
----------------------------- -----------------------------
* Croatia ($ million 0 - 5 1.4
----------------------------- -----------------------------
* UK North Sea ($ million) 25 20.6
----------------------------- -----------------------------
Total Cost of Production
($ million) 235 - 255 185.4
----------------------------- -----------------------------
Cash SG&A ($ million) 30 21.5
----------------------------- -----------------------------
Development and production
capital expenditure
----------------------------- -----------------------------
* Israel ($ million) 300 - 350[6] 188.6
----------------------------- -----------------------------
* Egypt ($ million) 60 - 65 42.2
----------------------------- -----------------------------
* Italy ($ million) 40 - 45 16.5
----------------------------- -----------------------------
* Greece and Croatia ($ million) 5 - 10 6.4
----------------------------- -----------------------------
* UK North Sea ($ million) 10 - 15 8.4
----------------------------- -----------------------------
Total Development & Production
Capital Expenditure ($
million) 415 - 485 262.0
----------------------------- -----------------------------
Exploration Expenditure
----------------------------- -----------------------------
* Israel ($ million) 10 - 15 4.5
----------------------------- -----------------------------
* Egypt ($ million) 0 - 5 1.0
----------------------------- -----------------------------
* Italy, Greece and Croatia ($ million) 5 - 10 4.7
----------------------------- -----------------------------
* UK North Sea ($ million) 40 - 45 30.9
----------------------------- -----------------------------
Total Exploration Expenditure
($ million) 55 - 75 41.1
----------------------------- -----------------------------
Decommissioning
----------------------------- -----------------------------
* UK North Sea 0.0 0.0
----------------------------- -----------------------------
* Italy 5.0 3.0
----------------------------- -----------------------------
Decommissioning expenditure
($ million) 5.0 3.0
----------------------------- -----------------------------
[1] Including restricted amounts of $200 million
[2] As measured by project milestones under the TechnipFMC
EPCIC
[3] As measured by project milestones under the TechnipFMC
EPCIC
[4] As measured by project milestones under the TechnipFMC
EPCIC
[5] Actual net debt, exclusive of amortisation
[6] Including amounts that will be capitalized in 2021 capital
expenditure, payment for which will be deferred under the EPCIC
with TechnipFMC
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END
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