TIDMENOG

RNS Number : 6996Y

Energean PLC

08 September 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Energean plc

("Energean" or the "Company")

Results for Half Year Ended 30 June 2022

London, 8 September 2022 - Energean plc (LSE: ENOG TASE: ) is pleased to announce its half-year results for the six months ended 30 June 2022 ("H1 2022").

Mathios Rigas, Chief Executive of Energean, commented:

"During H1 2022, Energean delivered strong operational and financial results. The ex-Edison assets have outperformed our expectations and our flagship Karish project is on track to start production within weeks and will enhance energy security in Israel and the region. In addition, our growth drilling and development operations offshore Israel have enhanced our portfolio by de-risking 58 bcm of natural gas, and we are evaluating multiple geographical routes to monetisation through either increased Israeli domestic sales or key regional export markets. The strong financial performance of our existing assets, the current readiness status of our Karish project, and our strong liquidity position have allowed us to, today, declare our maiden quarterly dividend, in line with our previously announced dividend policy. We are concurrently raising our medium-term targets to annual revenues of $2.5 billion and Adjusted EBITDAX of $1.75 billion, underpinned by production of more than 200 kboed.

"In a year where global focus has shifted to security of energy supply and affordability of energy for the consumers, we remain proud of our landmark ESG commitments, which remain at the heart of our operations. From choosing to focus on gas as the driver of energy transition; to a 74% reduction in emissions intensity since 2019 [1] ; to our commitment to be net zero by 2050, and our ongoing positive engagement with the communities that host our operations, we commit to being the best version of Energean possible.

"Finally, the global energy dynamic changed in February 2022. Russia's tragic invasion of Ukraine revealed a major weakness in European energy security and, by extension, European energy policy. Overreliance on a single supplier has - and will continue to - fundamentally disrupt the European global energy dynamic. We therefore call on governments and the broader international energy stakeholder community to recognise the value of natural gas as the foundation of, and catalyst for, a just transition. Policy must be adjusted to encourage domestic upstream projects that will enhance security of energy supply as well as international energy transportation projects that will interconnect Europe with the East Med, which can be a stable and reliable supplier of energy for the European consumer."

Highlights - Operational and Corporate

   --              Declared maiden quarterly dividend of 30 US$ cents/share 

o Accelerated timetable due to strong cash flows from the ex-Edison E&P assets, readiness of Karish project and strong liquidity position

   o     Aligned with commitment to: 

-- Return an initial $50 million per quarter no later than the end of 2022 and at least $1 billion by the end of 2025

-- Provide a reliable and progressive dividend stream to shareholders, expecting to reach a minimum of $100 million per quarter once medium-term targets are achieved

   --              On track to deliver first gas from Karish within weeks 

-- 58 bcm of resources de-risked across the Olympus Area following successful results from the Athena exploration well in May 2022; Zeus elected for the fifth drilling slot with the aim of further refining volumetrics and enabling faster progress to commercialisation

-- Ongoing drilling operations on the Hermes prospect, with results expected later this year

-- New spot gas sales agreement signed with Israel Electric Corporation (" IEC ") in March 2022, enhancing ability to fill the capacity of the Energean Power FPSO

   --              Improved gas sales prices confirmed in Egypt and Israel 
   o     Abu Qir Production Sharing Contract ("PSC") amendment increases gas sales prices 

o 13% increase in the Israeli Price Tariff ("PT") raises current weighted average sales price to $4.3/mmBTU (approximately $4.6/mcf)

Highlights - Financial

   --      Strong half-year financial results underpinned by strong commodity prices 

o Revenues were $339.0 million, a 65% increase versus H1 2021 ($205.5 million)

o Adjusted EBITDAX was $198.2 million [2] , a 165% increase versus H1 2021 ($74.7 million)

o Group cash as of 30 June 2022 was $812.1 million (including restricted amounts of $138.4 million)

-- H1 production was 35.4 kboed (73% gas), a 19.5% reduction year-on-year, primarily due to anticipated natural decline at Abu Qir, which is expected to be offset by production from NEA/NI, expected onstream by the end of 2022

-- One-off windfall tax in Italy totalling $29.3 million (40% paid in H1 2022, with the remainder to be paid by end-November 2022). The Company continues to advocate for domestic energy investment to support Italian energy and socio-economic security

 
                                 H1 2022     H1 2021    Increase / 
                                                        (Decrease) 
                                    $m          $m           % 
 Average working interest 
  production (kboed)              35.4        44.0       (19.5) 
                               ----------  ---------  ------------ 
 Sales and other revenue          339.0      205.5        65.0 
                               ----------  ---------  ------------ 
 Cash Cost of Production 
  [3]                             123.3      122.4         0.7 
                               ----------  ---------  ------------ 
 Cash Cost of Production 
  per boe                         19.2        15.4        24.7 
                               ----------  ---------  ------------ 
 Cash S,G&A(6)                    15.1        17.0       (11.4) 
                               ----------  ---------  ------------ 
 Adjusted EBITDAX [4]           198.2 (3)     74.7        165.3 
                               ----------  ---------  ------------ 
 Operating cash flow 
  [5]                             146.6       53.1        176.0 
                               ----------  ---------  ------------ 
 Development capital 
  expenditure                     345.7      200.8        72.2 
                               ----------  ---------  ------------ 
 Exploration capital 
  expenditure                     37.0        29.2        26.7 
                               ----------  ---------  ------------ 
 Decommissioning expenditure       1.5        1.7        (11.8) 
                               ----------  ---------  ------------ 
 Net debt (including 
  restricted cash)               2,174.6    1,692.6       28.5 
                               ----------  ---------  ------------ 
 

Outlook

-- Medium-term targets increased following confirmation of improved gas prices in Israel and Egypt

o Annual revenues now expected to be $2.5 billion (up from $2.0 billion)

o Annual Adjusted EBITDAX(6) now expected to be $1.75 billion (up from $1.4 billion)

   --    First gas from Karish on track for delivery within weeks 
   --    First gas from NEA/NI, Egypt is on track for year-end 2022 
   --    Results from the Hermes and Zeus wells, expected later this year 
   --    2022 net debt guidance reduced to $2.4 - $2.5 billion (down from $2.6 - $2.8 billion) 
   --    2022 production guidance (ex-Israel) narrowed to 34 - 37 kboed (from 35 - 40 kboed) 

o H2 production (ex-Israel) expected to benefit from the start-up of the Abu Qir NAQ-PII#6 infill well and recommencement of production at fields in Italy following planned maintenance in June 2022

o Israel production rate in Q4 2022 expected to average 60 - 100 kboed (15 - 25 kboed on a 2022 annualised basis)

-- Per barrel financial and operational metrics expected to be significantly enhanced following first gas from Karish

o Cash Cost of Production expected to reduce to $14 - 18/boe

o Emissions intensity expected to reduce to 7 - 8 kgCO2e/boe, approximately half the current average for the global oil and gas industry

Enquiries

For capital markets: ir@energean.com

Kate Sloan, Head of IR and ECM Tel: +44 7917 608 645

For media: pblewer@energean.com

Paddy Blewer, Head of Corporate Communications Tel: +44 7765 250 857

Conference call

A webcast will be held today at 08:30 BST / 10:30 Israel Time.

Webcast: https://edge.media-server.com/mmc/p/79ysvw5a

Dial-In: https://register.vevent.com/register/BIe2a07fbb3e0745b29986a53e01755548 (Please note, once you register for the conference call line you will receive a unique pin code and dial-in details.)

The presentation slides will be made available on the website shortly www.energean.com .

Maiden Dividend Declaration

Strong financial performance in H1 2022 has allowed Energean to accelerate payment of its maiden quarterly dividend, and the Company has today declared a dividend of 30 US$ cents per share. This represents Energean's first payment under its commitment to pay average quarterly dividends of $50 million, rising to $100 million once it achieves its medium-term targets. Energean remains committed to sharing its success with shareholders and re-confirms its target of returning at least $1 billion to shareholders by end-2025.

Energean Operational Review

Production

H1 2022 average working interest production was 35.4 kboed (73% gas), down 19.5% year-on-year due to natural decline in Egypt, maintenance activities at Rospo Mare, Italy, and the shut-in of production at Prinos, Greece. Energean is narrowing the full year guidance range (excluding Israel) to 34 - 37 kboed (from 35 - 40 kboed). Karish is expected to commence production within weeks, with Q4 2022 production contribution of 60 - 100 kboed (15 - 25 kboed annualised).

Production during H2 2022 is expected to benefit from:

   --      Commencement of production from the Abu Qir NAQ-PII#6 infill well 
   --      Resumption of production at Rospo Mare, Italy, following planned maintenance in June 2022 
   --      Commencement of production from Karish 
 
                        H1 2022     FY 2022 guidance      H1 2021 
                         Kboed            Kboed            Kboed 
 Israel                    -           15.0 - 25.0           - 
                                   (including 0.7 - 1.2 
                                        bcm of gas) 
                       --------  ----------------------  -------- 
 Egypt                   24.8          24.0 - 26.0         31.4 
                       --------  ----------------------  -------- 
 Italy                    9.3           9.0 - 9.5          10.2 
                       --------  ----------------------  -------- 
 Greece, Croatia 
  and UK                  1.3           1.0 - 1.5           2.4 
                       --------  ----------------------  -------- 
 Total production 
  (including Israel)     35.4          49.0 - 62.0         44.0 
                       --------  ----------------------  -------- 
 Total production 
  (excluding Israel)     35.4          34.0 - 37.0         44.0 
                       --------  ----------------------  -------- 
 

Israel

Karish Project

The Energean Power FPSO arrived in Israel on 5 June 2022, after which it was moored to the seabed and connected to the risers as planned. Energean remains on track to deliver first gas from the Karish development project within weeks.

During H1 2022, Energean negotiated an amendment to the deferred payment to TechnipFMC. Payment for a total of $250 million relating to capital expenditure accrued due to 2022 activities will be deferred, with payment made in eight equal quarterly instalments commencing nine months following practical completion of the project. Deferred amounts do not incur any interest. Energean's capital expenditure guidance of $560 - 610 million for Israel includes the full $250 million that will be deferred. As part of the amendment, the period from which liquidated damages due to Energean apply now commences on 30 September 2022.

Growth Projects

The Karish North KN-01 development well was successfully drilled and completed in early August 2022.

First gas from Karish North, as well as the completion and installation of the second gas sales export riser and the second oil train, remains on track for end-2023.

Drilling Campaign

   1.    Athena Gas Discovery 

In May 2022, Energean announced a commercial discovery from the Athena exploration well, which is estimated to contain recoverable gas volumes of 8 bcm (283 bcf / 51 mmboe) on a standalone basis. The discovery de-risked an additional 50 bcm (1.8 tcf / 321 mmboe) of mean unrisked prospective resources across Energean's Olympus Area (total 58 bcm / 372 mmboe including Athena).

Multiple commercialisation options continue to be under evaluation for a standalone tie-back to the Energean Power FPSO or as part of a new Olympus Area development.

   2.    Karish Main (KM-04) 

In June 2022, Energean safely and successfully completed the KM-04 appraisal well. The KM-04 appraisal well achieved the following:

-- Gas and associated liquids were encountered in the previously undrilled fault block between Karish Main and Karish North;

-- Gas was encountered in the A-sands on the flanks of the Karish Main structure, these sands were tested and fluid samples obtained; and

-- An oil rim was confirmed in the central part of the field, with thickness towards the lower end of the pre-drill expectation range (5-10 metres vs. 0-100 metres pre-drill). A sample of oil was obtained for testing. Energean expects to be able to commercialise the oil volumes through the existing well stock.

Additional analysis is being undertaken to further refine reserves volumes and the liquids-to-gas ratio across the Karish lease.

   3.    Hermes Exploration Well 

The Hermes exploration well spudded in August 2022. Drilling operations are ongoing, with results expected later this year. Energean has an option to drill a sixth well, which may be exercised, depending on the results from Hermes.

   4.    Zeus Well 

Energean has elected to drill the Zeus structure, Block 12 (Olympus Area) using its fifth drilling rig slot and the well will spud following drilling of the Hermes well. Zeus is estimated to contain 10 - 12 bcm of gross prospective unrisked gas resources in the A/B/C sands and results will enable Energean to gather additional data to further refine resource estimates across the entire Olympus Area.

Gas and Liquids Contracts and Gas Pricing

In July 2022, Israel Electric Authority announced a 13% increase in the PT from 27.6 to 31.4. This translates into a weighted average sales price under Energean's Gas Sales and Purchase Agreements ("GSPAs") to $4.3/mmBTU (approximately $4.6/mcf).

In March 2022, Energean signed a limited-term exclusivity agreement and term sheet for the marketing of its Karish liquids with Vitol SA. A firm offtake agreement is in the final stages of negotiation and is expected to be signed before Karish first gas.

In May 2022, Energean signed a new GSPA, representing up to 0.8 bcm/yr, to supply gas to the East Hagit Power Plant Limited Partnership ("EH Partnership"), a partnership between the Edeltech Group and Shikun & Binui Energy. The GSPA is for a term of approximately 15 years, for a total contract quantity of up to 12 bcm. The contract contains provisions regarding floor pricing, offtake exclusivity and a price indexation mechanism (not Brent price linked).

In July 2022, Energean Israel signed a new GSPA, representing 0.08 bcm/yr, to supply gas to Shapir-G.E.S Concessionaire IPP Ltd for the Ashdod Desalination Plant. The GSPA is for a term of 20 years starting from January 2024 and includes take-or-pay provisions and floor pricing.

Energean has now signed a total of 20 GSPAs for the firm supply of 7.2 bcm/yr of gas on plateau. The contract signed with IEC during March 2022 helps to optimise Energean's gas sales portfolio and may enable Energean to fully utilise the available capacity of its FPSO. Under the contract with IEC, the gas price will be determined month ahead with volumes determined on a daily basis. Starting upon commencement of first gas, the agreement is valid for an initial one-year period with an option to extend, subject to ratification by both parties.

Egypt

Production

Working interest production from the Abu Qir area averaged 24.8 kboed (86% gas) during H1 2022 with full year production guidance narrowed to between 24 - 26 kboed.

NEA/NI

NEA/NI was 72% complete as of 31 July 2022. Subsea installation activities are complete and the first well is expected to spud imminently. Remaining activities include the finalisation of the Abu Qir platform modifications and the tie-in and commissioning of the subsea production systems. First gas from the first well is on track for end-2022.

Abu Qir

Commercial

During August 2022, Abu Qir Petroleum and EGPC agreed an amendment to the PSC, resulting in improved gas sales pricing.

Drilling programme

Energean is completing the NAQ-PII#6 well to support production in the Abu Qir concession. Four additional infill wells on the Abu Qir field are expected to be drilled between 2023 and 2024.

Receivables

At 30 June 2022, net receivables (after provision for bad and doubtful debts) in Egypt were $109.6 million (30 June 2021: $158.7 million), of which $64.2 million (30 June 2021: $94.0 million) was classified as overdue.

Italy

Working interest production from Italy averaged 9.3 kboed (43% gas) during H1 2022 with full year production expected to be between 9.0 and 9.5 kboed.

First gas from Cassiopea remains on track for H1 2024.

Windfall tax

During H1 2022, Italy introduced a windfall tax in the form of a law decree which imposed a 25% one-off tax on profit between October 2021 and April 2022 compared to the same period in the prior year. At 30 June 2022, an advance payment of 40%, or approximately $11.7 million, had been remitted to the Italian Revenue Agency, with the remaining balance, $17.6 million, to be paid by the end of November 2022.

Rest of producing portfolio

In the six-months to 30 June 2022, w orking interest production from the rest of the portfolio averaged 1.3 kboed (30% gas). Full year production is expected to be between 1.0 - 1.5 kboed.

Greece

First oil from the Epsilon development is expected in H1 2024.

In July 2022, the Greek government passed legislation setting out the legal framework for Carbon Capture, Utilisation and Storage ("CCUS") licences. Pre-FEED activities with Wood Group and the subsurface studies with Haliburton have progressed well and are expected to complete before the end of this month. This progresses Energean's plans to achieve net zero emissions by 2050.

Croatia

Energean is continuing FEED activities for the development of the Irena gas field. The target for final investment decision remains Q4 2022.

United Kingdom

The Isabella appraisal well spudded in September 2022.

Energean Corporate Review

ESG

Net Zero

Energean's Scope 1 and 2 carbon emissions intensity in H1 2022 was estimated to be approximately 17.3 kgCO2e /boe, a 5.5% reduction versus 2021 emissions levels [6] ; and a 74% reduction versus the 2019 base measurement year [7] . Post-first gas from Karish, emissions are expected to be approximately 7-8 kgCO2e /boe, which is approximately half the current average for the global oil and gas industry, and Energean expects to maintain or reduce this lower level going forward.

The decrease between YE21 and H122 carbon emissions intensity was due to energy use optimisation activities in Egypt and the prolonged shut-down of the Prinos facilities in Greece.

Environmental, Social and Governance ("ESG") Reporting and Ratings

In April 2022, Energean was rated as AA by MSCI for a second year running.

In July 2022, Israeli's Maala Index updated its rating for Energean to Platinum, up from Gold in the previous year. The Maala Index is an ESG rating system and stock market index that rates the largest companies in Israel on an annual basis. Also in July, Moody's published ESG Issuer Profiles, wherein Energean ranked above average on all three categories compared to 89 E&P peers.

In August 2022, Energean was confirmed as a constituent of the FTSE4Good Index Series, following the FTSE4Good Index Series June 2022 review. The FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong ESG practices.

Energean has also continued to comply with the Task Force on Climate Related Financial Disclosure ("TCFD") recommendations, full disclosure of which is provided in the 2021 Annual Report and Accounts as well as the 2021 Sustainability Report.

Corporate

In July 2022, Energean re-entered the Tel Aviv Stock Exchange 35 Index.

2022 guidance

 
                                                     FY 2022 
 Production 
                                          ----------------------------- 
 Israel (kboed)                                    15.0 - 25.0 
                                            (including 0.7 - 1.2 bcm of 
                                                        gas) 
                                          ----------------------------- 
 Egypt (kboed)                                     24.0 - 26.0 
                                          ----------------------------- 
 Italy (kboed)                                      9.0 - 9.5 
                                          ----------------------------- 
 Greece, Croatia & UK North Sea (kboed)             1.0 - 1.5 
                                          ----------------------------- 
 Total production, including Israel                49.0 - 62.0 
  (kboed) 
                                          ----------------------------- 
 Total production, excluding Israel                34.0 - 37.0 
  (kboed) 
                                          ----------------------------- 
 
 Financials 
                                          ----------------------------- 
 Consolidated net debt ($ million)                2,400 - 2,500 
                                          ----------------------------- 
 
 Cash Cost of Production (operating 
  costs plus royalties) 
                                          ----------------------------- 
 Israel ($ million)                                 100 - 110 
                                          ----------------------------- 
 Egypt ($ million)                                      50 
                                          ----------------------------- 
 Italy ($ million)                         170 including flux costs of 
                                                        30 
                                          ----------------------------- 
 Greece, Croatia & UK North Sea ($ 
  million)                                              50 
                                          ----------------------------- 
 Total Cash Cost of Production ($ 
  million)                                          370 - 380 
                                          ----------------------------- 
 
 Cash S,G&A ($ million)                              35 - 40 
                                          ----------------------------- 
 
 Development and production capital 
  expenditure 
                                          ----------------------------- 
 Israel ($ million)                                 560 - 610 
                                          ----------------------------- 
 Egypt ($ million)                                     140 
                                          ----------------------------- 
 Italy ($ million)                                      60 
                                          ----------------------------- 
 Greece, Croatia & UK North Sea ($ 
  million)                                              40 
                                          ----------------------------- 
 Total development & production 
  capital expenditure ($ million)                   800 - 850 
                                          ----------------------------- 
 
 Exploration expenditure 
                                          ----------------------------- 
 Israel ($ million)                            150 - 180 (5 wells) 
                                          ----------------------------- 
 Egypt, Italy, Greece, Croatia & 
  UK North Sea ($ million)                              15 
                                          ----------------------------- 
 Total exploration expenditure ($ 
  million)                                          165 - 195 
                                          ----------------------------- 
 
 Decommissioning 
                                          ----------------------------- 
 UK North Sea                                           5 
                                          ----------------------------- 
 Italy                                                  10 
                                          ----------------------------- 
 Decommissioning expenditure ($ 
  million)                                              15 
                                          ----------------------------- 
 

Energean Financial Review

Financial results summary

 
                                        H1 2022   H1 2021   Change 
 Average daily working interest 
  production (kboed)                     35.4      44.0     (19.5%) 
                                       --------  --------  -------- 
 Sales revenue ($m)                      339.0     205.5     65.0% 
                                       --------  --------  -------- 
 Realised weighted average 
  oil price ($/boe)                      87.5      47.3      85.0% 
                                       --------  --------  -------- 
 Realized weighted average gas 
  price pre-hedging ($/mcf)              10.4       4.2     147.6% 
                                       --------  --------  -------- 
 Realized PSV gas (Italian gas) 
  price pre-hedging ($/mcf)              30.9       7.3     323.3% 
                                       --------  --------  -------- 
 Cash cost of production [8] ($m)        123.3     122.4     0.74% 
                                       --------  --------  -------- 
 Cash cost of production per barrel 
  ($/boe) [9]                            19.2      15.4      24.7% 
                                       --------  --------  -------- 
 Cash SG&A [10]                          15.1      17.0     (11.2%) 
                                       --------  --------  -------- 
 Adjusted EBITDAX [11] ($m)              198.2     74.7     165.3% 
                                       --------  --------  -------- 
 Profit/(Loss) after tax ($m)            118.7    (35.7)    432.5% 
                                       --------  --------  -------- 
 Cash flow from operating activities 
  ($m)                                   146.6     53.1     176.0% 
                                       --------  --------  -------- 
 Capital expenditure ($m)                398.3     230.0     73.2% 
                                       --------  --------  -------- 
 
 
                                        H1 2022      FY 2021   Change 
 Total borrowings ($m)                  2,986.8      2,947.1    1.4% 
                                     -------------  --------  -------- 
 Cash and cash equivalents and 
  restricted cash ($m)                   812.1        930.6    (12.7%) 
                                     -------------  --------  -------- 
 Net debt / (cash) ($m) (including 
  restricted cash)                    2,174.6 [12]   2,016.6    7.8% 
                                     -------------  --------  -------- 
 

Revenue, production and commodity prices

Group working interest production averaged 35.4 kboed, a decrease of 19.5% for the period (H1 2021: 44.0 kboed), with the Abu Qir field, offshore Egypt, accounting for approximately 70% of total output. The production split was 73% gas (H1 2021: 72%) and 27 % oil (H1 2021: 28%). Production decreased due to planned maintenance activities in Italy commenced in June 2022 and the shut-down of Prinos. Egypt production expected to benefit in H2 2022 from the start-up of the Abu Qir NAQ-PII#6 infill well and the re-start of production at Prinos. The Company has narrowed its guidance for production (excluding Israel) to 34 to 37 kboed for the full year (49.0 to 62.0 kboed for the full year including Israel).

H1 2022 revenue was $339.0 million, a 65.0% increase for the period (H1 2021: $205.5 million), primarily due to the higher commodity prices achieved:

-- During H1 2022, the average Brent oil price was $104.9/bbl (H1 2021: $65.2/bbl) and the average PSV (Italian gas) price was EUR101.2/MWh ($32.4/mcf) (1H 2021: EUR21.2/MWh ($7.3/mcf))

-- Commodity price strength underpinned 1H 2022 total revenues of $339 million (H1 2021: $206 million). Gas sales were $211 million (H1 2021: $106 million) with a post-hedge realised PSV price in Italy EUR82.6/MWh or $26.6/mcf (H1 2021: EUR20.6/MWh or $4.7/mcf). Liquid sales, crude and petroleum product, were $145 million (H1 2021: $99 million), with a realised price of $87.5/boe (H1 2021: $47.3/boe).

Adjusted EBITDAX for the period was $198.2 million (H1 2021: $74.7 million), the increase of 165% is predominantly a result of the higher revenue achieved due to strong commodity prices.

Underlying cash production costs

Cash production costs for the period were $123.3 million (H1 2021: 122.4 million). Although production costs are relatively stable year on year, the unit costs for the period were $19.2 /boe (H1 2021: $15.4 /boe), this increase in unit production costs was primarily driven by decreased production in Italy and Egypt, as applied to a primarily fixed cost base.

Additionally, production costs were also impacted by increased royalties in Italy associated with the commodity price-drive higher revenues.

Depreciation, impairments and write-offs

Depreciation charges on production and development assets decreased by 7 % to $ 33.9 million (H1 2021: $36.3 million). On a per barrel of oil equivalent of production basis, this represented a 15% increase, to $ 5.3 /boe (H1 2021: $4.6/boe).

During the current period and comparative prior period no impairment of cash generating units (CGUs) was recognised. An impairment of intangible assets of $0.4million was recognised in Italy, following relinquishment of an exploration licence.

Other income and expenses

Other expenses of $8.8 million (H1 2021: $3.1 million) includes $3.5 million of one-off restructuring costs incurred in Greece, $1.3 million write down of inventory supplies, $1.1 million loss incurred from disposal of property, plant and equipment and $1.4 million increase in legal provisions.

Other income of $1.6 million (H1 2021: $3.6 million) relates to reversal of prior period provisions, that were reassessed in the current year based on the latest facts and circumstances.

Finance income / costs

Net finance costs in H1 2022 were $35.9 million (H1 2021: $42.2 million). Finance costs ($38.6 million (H1 2021: $44.9million)) are composed of $19.8 million (H1 2021: $17.0 million) of interest on borrowings excluding amounts capitalised and other finance cost of $18.8 million (H1 2021: $27.9 million), excluding amounts capitalised. Other finance costs include debt arrangement fees and unwinding of the discount on the right of use assets, decommissioning provisions, deferred consideration, convertible loan notes and contingent consideration. Finance income was $2.7 million for the period (H1 2021: $2.7 million).

Commodity hedging

Energean undertakes hedging activities as part of the ongoing financial risk management to protect against commodity price volatility and to ensure the availability of cash flow for re-investment in capital programmes that are driving business delivery. Commodity hedge contracts entered into in Italy aim to mitigate the risk of changes to the selling price of natural gas.

Energean has commodity price hedges of $33 million outstanding as of 30 June 2022 (H1 2021 $nil). The hedges reflect 300,000 MWh hedged at an average price of EUR39.60/MWh($12.7mcf).

Taxation

Energean recorded a net income tax recovery of $8.9 million in H1 2022 (H1 2021 taxation expense: $15.2 million), composed of corporation tax charges of $67.1 million as offset by a deferred tax recovery of $76.0 million. The deferred tax recovery is a result of the utilisation of carried forward tax losses in the period and the recognition of previously unrecognised deferred tax on carried forward losses, of which the largest is Italy ($66.5million), to offset forecast taxable profits stemming from increased Brent and PSV price expectations. Taxation charges in the period ended 30 June 2022 include $27.1 million relating to taxes (non-cash in nature) being deducted at source in Egypt plus windfall tax payable in Italy of $29.3 million. During H1 2022, Italy introduced a windfall tax in the form of a law decree which imposed a 25% one-off tax on profit between October 2021 and April 2022 compared to the same period a year earlier. At 30 June 2022 an advance payment of 40%, or approximately $11.7 million, had been remitted to the Italian Revenue Agency, with remaining balance, $17.6million, to be paid by the end of November 2022.

Profit after tax

Profit after tax was $118.7 million (1H 2021: $35.7 million loss). This increase is primarily due to the $134 million year-on-year increase in revenue, relatively stable operating cost, $9 million decrease in foreign exchange losses and $24 million increase in a net income tax recovery when compared to H1 2021.

Earnings per share were $0.67 per share compared to a loss of $0.20 per share for H1 2021. The increased earnings per share was driven by increased profit after tax. The diluted earnings per share were $0.66 per share which consider the impact of Long Term Incentive Plans (LTIPs), the Deferred Bonus Plans (DBP) and the convertible loan notes.

Operating cash flow

In H1 2022, Energean recorded a cash inflow from operations before changes in working capital of $159.1 million (1H 2021: $48.6 million). After working capital movements and taxation received/(paid), the cash inflow in H1 2022 was $146.6 million (H1 2021: $53.1 million). The year-on-year increase in operating cash flow has been predominantly driven by the growth in revenues delivered between the two periods. As discussed above, the increase in revenues during the period is predominantly due the higher commodity price environment.

Capital Expenditures

During the period, the Group incurred capital expenditure of $398.3 million (H1 2021: $230 million). Capital expenditure mainly consisted of development expenditure in relation to the Karish Main and Karish North Fields ($286.8 million) in Israel, the NEA/NI project in Egypt ($40.9 million), the Cassiopea field in Italy ($9.9 million), the Scott field in the UK ($0.2 million) and exploration and appraisal expenditure relating to Athena in Israel ($34.4 million) plus the Glengorm and Isabella discoveries in the UK ($1.4 million).

Net Debt

As at 30 June 2022, net debt of $2,174.6 million (FY21: $2,016.6 million) consisted of $2,500 million of Energean Israel senior secured notes, $450 million of Energean plc senior secured notes, $50 million of convertible loan notes (relating to the acquisition of the minority stake in Energean Israel), $10 million of Greek Loan notes, $26 million draw down on the Greek Black Sea Trade Development Bank loan, less deferred amortised fees, the equity component of the convertible loan ($10.5 million) and cash balances of $812.1 million (including $138.4million of restricted cash).

The Senior Secured Notes (both at Energean Plc and Energean Israel) have fixed interest rates, a blended average interest rate of approximately 5%, and have decreased Energean's interest rate exposure and increased Energean's weighted average debt maturity to approximately six years.

Shareholder Distributions

Strong financial performance in H1 2022 has allowed Energean to accelerate payment of its maiden quarterly (Q2) dividend, and the Board is pleased to declare a dividend of 30 US$ cents per ordinary share to be paid on 30 September 2022.

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 S,G&A, capital expenditure, net debt and gearing.

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 and evaluation expenses. The Group presents adjusted EBITDAX as it is used in assessing the Group's growth and operational efficiencies as 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 2022     H1 2021 
                                            $m          $m 
 Adjusted EBITDAX [13]                   198.2        74.7 
                                      -----------  --------- 
 Reconciliation to profit / (loss): 
                                      -----------  --------- 
 Depreciation and amortisation           (33.9)      (36.3) 
                                      -----------  --------- 
 Share-based payment charge              (2.7)       (2.3) 
                                      -----------  --------- 
 Exploration and evaluation expense      (4.3)       (1.0) 
                                      -----------  --------- 
 Other expenses                          (8.8)       (3.1) 
                                      -----------  --------- 
 Other income                             1.6         3.6 
                                      -----------  --------- 
 Finance income                           2.7         2.7 
                                      -----------  --------- 
 Finance cost                            (38.6)      (44.9) 
                                      -----------  --------- 
 Net foreign exchange loss               (4.5)       (13.9) 
                                      -----------  --------- 
 Taxation income / (expense)              8.9        (15.2) 
                                      -----------  --------- 
 Profit / (loss) from continuing 
  operations                           118.7 [14]    (35.7) 
                                      -----------  --------- 
 

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 2022    H1 2021 
                                           $m         $m 
 Cost of sales                          158.0      147.6 
                                      ---------  --------- 
 Less: 
                                      ---------  --------- 
 Depreciation                           (32.3)     (33.8) 
                                      ---------  --------- 
 Change in inventory                    (2.4)       8.6 
                                      ---------  --------- 
 Cost of production                     123.3      122.4 
                                      ---------  --------- 
 Total production for the period 
  (MMboe)                                6.4        7.9 
                                      ---------  --------- 
 Cost of production per boe ($/boe)    19.2(15)     15.4 
                                      ---------  --------- 
 

Cash Selling, General & Administrative Expense (SG&A)

Cash SG&A excludes certain non-cash accounting items from the Group's reported SG&A. Cash SG&A is calculated as follows: Administrative and Selling and distribution expenses, excluding depletion and amortisation of assets and share-based payment charge that are included in SG&A.

 
                                         H1 2022    H1 2021 
                                           $m         $m 
                                       ----------  -------- 
 Administrative expenses                  19.1       21.7 
                                       ----------  -------- 
 Selling and distribution expenses         0.3        0.1 
                                       ----------  -------- 
 Less: 
                                       ----------  -------- 
 Depreciation                              1.5        2.5 
                                       ----------  -------- 
 Share-based payment charge included 
  in SG&A                                  2.7        2.3 
                                       ----------  -------- 
 Cash SG&A                              15.1 [15]    17.0 
                                       ----------  -------- 
 

Energean incurred Cash SG&A costs of $15.1 million in H1 2022. This represents a 11.2% decrease versus the comparable period last year (1H 2021: $17.0 million) and is due to cost efficiencies implemented across the Group.

Capital Expenditure

Capital Expenditure is defined as additions to property, plant and equipment and intangible exploration and evaluation assets, cash lease payments made in the period, less lease asset additions, asset additions due to decommissioning provisions, capitalised share-based payment charge, capitalised borrowing costs and certain other non-cash adjustments. Management believes that capital expenditure is a useful indicator of the Group's organic expenditure on oil and gas development assets, exploration and evaluation assets incurred during a period because it eliminates certain accounting adjustments such as capitalised borrowing costs and decommissioning asset additions.

 
 
                                               H1 2022    H1 2021 
                                             ----------  -------- 
                                                 $m         $m 
                                             ----------  -------- 
 Additions to property, plant and 
  equipment                                     404.5      317.8 
                                             ----------  -------- 
 Additions to intangible exploration 
  and evaluation assets                         37.0       30.3 
                                             ----------  -------- 
 Less: 
                                             ----------  -------- 
 Capitalised borrowing cost                     60.1       114.0 
                                             ----------  -------- 
 Leased assets additions and modifications      (0.2)      12.3 
                                             ----------  -------- 
 Lease payments related to capital 
  activities                                    (5.8)      (5.8) 
                                             ----------  -------- 
 Capitalised share-based payment 
  charge                                         0.1        0.2 
                                             ----------  -------- 
 Capitalised depreciation                        0.4        0.1 
                                             ----------  -------- 
 Change in decommissioning provision           (11.5)      (2.5) 
                                             ----------  -------- 
 Total capital expenditures                   398.3(16)    230.0 
                                             ----------  -------- 
 Movement in working capital                   (185.3)    (60.0) 
                                             ----------  -------- 
 Cash capital expenditures per the 
  cash flow statement                         213.0(16)    170.0 
                                             ----------  -------- 
 

The breakdown of capital expenditure during H1 2022 and H1 2021 was as follows:

 
                                     H1 2022               H1 2021 
                               Capital expenditure   Capital expenditure 
                                        $m                    $m 
                              --------------------  -------------------- 
 Development and Production 
                              --------------------  -------------------- 
 Israel                               286.8                 161.8 
                              --------------------  -------------------- 
 Egypt                                40.9                  17.5 
                              --------------------  -------------------- 
 Italy                                 9.9                  11.4 
                              --------------------  -------------------- 
 Greece, Croatia, UK 
  and Other                            8.7                  10.1 
                              --------------------  -------------------- 
 Total                                346.3                 200.8 
                              --------------------  -------------------- 
 
 Exploration and Appraisal 
                              --------------------  -------------------- 
 Israel                               34.4                   3.7 
                              --------------------  -------------------- 
 Egypt                                  -                    0.3 
                              --------------------  -------------------- 
 Italy                                  -                    2.0 
                              --------------------  -------------------- 
 Greece, Croatia, UK 
  and Other                            2.6                  23.2 
                              --------------------  -------------------- 
 Total                                37.0                  29.2 
                              --------------------  -------------------- 
 

Net Cash / Debt

Net debt is defined as the Group's total borrowings less cash and cash equivalents and restricted cash held for loan repayments. Management believes that net debt is a useful indicator of the Group's indebtedness, financial flexibility and capital structure because it indicates the level of borrowings after taking account of any cash and cash equivalents that could be used to reduce borrowings.

 
  Net debt reconciliation                        H1 2022       FY 2021 
                                                      $m            $m 
 Current borrowings                                    -             - 
                                           -------------  ------------ 
 Non-current borrowings                          2,986.8       2,947.1 
                                           -------------  ------------ 
 Total borrowings                                2,986.8       2,947.1 
                                           -------------  ------------ 
 Less: Cash and cash equivalents                 (673.7)       (730.8) 
                                           -------------  ------------ 
 Restricted cash held for loan repayment         (138.4)       (199.7) 
                                           -------------  ------------ 
 Net Debt [16]                              2,174.6 [17]   2,016.6(18) 
                                           -------------  ------------ 
 Net Debt Excluding Israel(18)                      61.7         102.6 
                                           -------------  ------------ 
 

Going Concern

The Directors assessed the Group's ability to continue as a going concern over a going concern assessment period to 31 December 2023. 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 consolidated financial statements. Detail of the Group's going concern assessment for the period can be found within note 2.2 of the interim condensed consolidated financial statements.

Subsequent Events

Zone D

On 27 July 2022 the Company sent a formal notice to the Ministry of Energy asking the relinquishment of Zone D licenses and discontinue any work regarding them. The licenses will expire at the end of their term, i.e., on 27 October 2022.

Principal Risks and Uncertainties

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. A key aspect of this is ensuring the maintenance of a sound system of internal control and risk management. For all the known risks facing the business, Energean attempts to minimise the likelihood and mitigate the impact. Energean has a zero-tolerance approach to financial fraud or ethics non-compliance and ensures that HSE risks are managed to levels that are as low as reasonably practicable.

Overview of key risks and key changes since 31 December 2021

The Group's principal risks for the remaining 6 months of the year and key changes since 31 December 2021 are set out below. For further information on key risks, please refer to Energean's 2021 Annual Report and Accounts:

Strategic risks

#1 Progress key development project in Israel

Principal risk : Delay to first gas at Karish.

H1 2022 movement : The risk remained static in H1 2022. The Energean Power FPSO arrival on location in Israel in June 2022 and is expected to deliver first gas within weeks.

The closer to completion the project gets, the lower the risk of delays.

#2 Progress other key development projects

Principal risk: Delayed delivery of future development projects (including NEA / NI in Egypt, Cassiopea in Italy and Epsilon in Greece).

H1 2022 movement: The risk increased in H1 2022. Although Energean continued to make progress on its growth projects, Joint Venture ("JV") and contractor misalignment risks associated with the Cassiopea project in Italy increase the exposure to potential cost and schedule overruns.

#3 Deliver exploration success and reserves addition

Principal risk: Lack of new commercial discoveries and reserves replacement

H1 2022 movement: The risk decreased in H1 2022. In May 2022, the Athena exploration well discovered 8 bcm of recoverable gas volumes on a standalone basis. This discovery is particularly significant as it de-risks an additional 50 bcm of mean unrisked prospective resources across Energean's Olympus Area (total 58 bcm including Athena).

Multiple commercialisation options are under evaluation for a standalone tie-back to the Energean Power FPSO or as part of a new Olympus Area development.

#4 Market risk in Israel

Principal risk: The potential for Israeli gas market oversupply may result in offtake being at the take-or-pay level of existing GSPAs and could result in the failure to secure new GSPAs.

H1 2022 movement: The risk remained static in H1 2022.

#5 Maintaining liquidity and solvency

Principal risk: Insufficient liquidity and funding capacity

H1 2022 movement: The risk remained static in H1 2022.

#6 Organisational & HR risk

Principal risk: The potential risk of group level roles being overwhelmed by the additional workload associated with the Company's growth.

H1 2022 movement: The risk remained static in 1H 2022.

#7 Misalignment with JV operators

Principal risk: Misalignment with JV operators.

H1 2022 movement: The risk increased in H1 2022. Non-operated positions are held in the entire UK portfolio and a large component of the Italian portfolio. Contractor misalignment risks associated with the Cassiopea project in Italy increase the exposure to potential cost and schedule overruns. Energean will continue to manage any risks associated with non-operator roles by actively participating in operational and technical meetings to challenge, apply influence and/or support partners to establish a cohesive JV view.

#8 Egypt receivables

Principal risk: Recoverability of revenues and receivables in Egypt.

H1 2022 movement: The risk remained static in H1 2022. At 30 June 2022, net receivables (after provision for bad and doubtful debts) in Egypt were $109.6 million (30 June 2021: $158.7 million), of which $64.2 million (30 June 2021: $94.0 million) was classified as overdue.

#9 Decommissioning liability

Principal risk: Higher than expected decommissioning costs and acceleration of abandonment schedules.

H1 2022 movement: The risk remained static in H1 2022.

Organisational, Compliance and Regulatory Risks

#10 Cyber/Information Communication Technologies ("ICT") security

Principal risk: Major cyber-attack or information security incident.

H1 2022 movement: The risk increased in H1 2022. Information and operations technology systems are being closely monitored as Energean grows into a >200 kboed producer, following first gas from Karish and the start-up of its other growth projects.

#11 Fraud, bribery and corruption

Principal risk: Major breach of values, business principles and 'Ethos'

H1 2022 movement: The risk remained static in H1 2022.

#12 Health Safety and Environment (HSE)

Principal risk: Lack of adherence to health, safety, environment and security policies.

H1 2022 movement: The risk remained static in H1 2022.

Climate Change Risks

#13 Climate change - Transition

Principal risk: Failure to manage the risk of climate change and to adapt to the energy transition.

H1 2022 movement: The risk remained static in H1 2022.

#14 Climate change - Physical

Principal risk : Disruption to operations and/or development projects due to severe weather (both acute and chronic).

H1 2022 movement: This risk remained static in H1 2022.

External Risks

#15 External geopolitical, political and social risks

Principal risk : Political and fiscal uncertainties in the Eastern Mediterranean.

H1 2022 movement: The risk increased in H1 2022. Energean continues to monitor any risks associated with the ongoing dispute between Israel and Lebanon over their maritime boundary. Following the arrival of the FPSO on location in June 2022, the State of Israel restated that the Company's assets are located in Israeli territory, several kilometres south from the area over which negotiations are being conducted between the State of Israel and the Republic of Lebanon, mediated by the United States, and that the State of Israel prioritises the protection of its strategic assets.

#16 Global pandemic

Principal risk: Risk related to the spread of pandemics and epidemics and the continuing impact of Covid-19, including the associated deterioration of health response capacity, financial and business disruption, whilst maintaining operability.

H1 2022 movement: The risk decreased in H1 2022. Global Covid-19-related restrictions and security measures have been removed or reduced, which has reduced the related risks to the business.

Statement of Directors' responsibilities

The Directors confirm that to the best of their knowledge:

1) The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted in the UK;

2) The interim management report contains a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year);

3) The interim management report includes a true and fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

Mathios Rigas Panos Benos

Chief Executive Officer Chief Financial Officer

7 September 2022 7 September 2022

Inside Information

Some of the information contained within this announcement is considered by Energean to constitute inside information, as defined under the EU Market Abuse Regulation, EU No.596/2014 (which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018. By the publication of this Announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of Energean is Eleftheria Kotsana, Company Secretary.

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.

INDEPENT REVIEW REPORT TO ENERGEAN PLC

Conclusion

We have been engaged by Energean plc (the Company) to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 which comprises the interim condensed consolidated income statement, the interim condensed consolidated statement of comprehensive income, the interim condensed consolidated statement of financial position, the interim condensed consolidated statement of changes in equity, the interim condensed consolidated statement of cash flows and the related explanatory notes 1 to 27. 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 2022 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 of 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

8 September 2022

 
 Interim Condensed Consolidated Income Statement 
  Six months ended 30 June 2022 
------------------------------------------------ 
 
 
                                                    30 June (Unaudited) 
                                                        2022        2021 
                                                       $'000       $'000 
-------------------------------------  ---------  ----------  ---------- 
                                        Notes 
 Revenue                                   4         338,955     205,466 
 Cost of Sales                            5(a)     (158,043)   (147,640) 
-------------------------------------  ---------  ----------  ---------- 
 Gross profit                                        180,912      57,826 
 
 Administrative and selling expenses    5(b)/(c)    (19,349)    (21,770) 
 Exploration and evaluation expenses      5(d)       (4,254)     (1,041) 
 Other expenses                           5(e)       (8,826)     (3,071) 
 Other income                             5(f)         1,630       3,571 
-------------------------------------  ---------  ----------  ---------- 
 Operating profit                                    150,113      35,515 
 Finance Income                            6           2,701       2,700 
 Finance Costs                             6        (38,551)    (44,912) 
 Net foreign exchange loss                 6         (4,473)    (13,787) 
-------------------------------------  ---------              ---------- 
 Profit/ (Loss) before tax                           109,790    (20,484) 
 
 Taxation income / (expense)               8           8,944    (15,174) 
-------------------------------------  ---------  ----------  ---------- 
 Profit/ (Loss) from continuing 
  operations                                         118,734    (35,658) 
-------------------------------------  ---------  ----------  ---------- 
 
 Attributable to: 
 Owners of the parent                                118,734    (35,550) 
 Non-controlling Interests                                 -       (108) 
-------------------------------------  ---------              ---------- 
                                                     118,734    (35,658) 
=====================================  =========  ==========  ========== 
 
 Basic and diluted total loss per share (cents per share) 
------------------------------------------------------------------------ 
 Basic                                  9              $0.67     ($0.20) 
 Diluted                                9              $0.66     ($0.20) 
-------------------------------------  ---------  ----------  ---------- 
 
 
 
 Interim Condensed Consolidated Statement of Comprehensive Income 
  Six months ended 30 June 2022 
----------------------------------------------------------------- 
 
 
                                                      30 June (Unaudited) 
                                                                     2022       2021 
                                                                    $'000      $'000 
----------------------------------------   ------------------------------  --------- 
 
 Profit/ (Loss) for the period                                    118,734   (35,658) 
-----------------------------------------      --------------------------  --------- 
 
 Other comprehensive income: 
 Items that may be reclassified 
  subsequently to profit or loss 
 Cash Flow hedges 
  Gain/(loss) arising in the period                              (22,945)      2,278 
  Reclassification to profit and 
   loss upon repayment of related 
   borrowings                                                           -      4,641 
  Income tax relating to items 
   that may be reclassified to 
   profit or loss                                                   5,507    (1,591) 
 Exchange difference on the translation 
  of foreign operations, net of 
  tax                                                             (8,234)    (6,576) 
 Items that will not be reclassified 
  subsequently to profit or loss 
 Remeasurement of defined benefit 
  plan                                                                 65          - 
 Income taxes on items that will 
  not be reclassified to profit 
  and loss                                                           (16)          - 
----------------------------------------                                   --------- 
 Other comprehensive loss after 
  tax                                                            (25,623)    (1,248) 
-----------------------------------------  ------------------------------  --------- 
 
 Total comprehensive profit/ 
  (loss) for the period                                            93,111   (36,906) 
=========================================  ==============================  ========= 
 
 Total comprehensive loss attributable 
  to: 
 Owners of the parent                                              93,111   (36,800) 
 Non-controlling Interests                                              -      (106) 
-----------------------------------------                                  --------- 
                                                                   93,111   (36,906) 
 ========================================  ==============================  ========= 
 
 
 
  Interim Condensed Consolidated Statement of Financial Position 
    As at 30 June 2022 
  --------------------------------------------------------------- 
-------------------------------------------------------------------------------- 
                                                      30 June        31 December 
                                                  2022 (Unaudited)       2021 
                                         Notes         $'000            $'000 
--------------------------------------  ------  ------------------  ------------ 
 ASSETS 
 Non-current assets 
 Property, plant and equipment            10             3,822,664     3,499,473 
 Intangible assets                        11               256,788       228,141 
 Equity-accounted investments                                    4             4 
 Other receivables                        16                26,694        52,639 
 Deferred tax asset                       12               216,182       154,798 
 Restricted cash                          14                 2,799       100,000 
--------------------------------------  ------  ------------------  ------------ 
                                                         4,325,131     4,035,055 
--------------------------------------  ------  ------------------  ------------ 
 Current assets 
 Inventories                              15                80,307        87,203 
 Trade and other receivables              16               326,037       288,526 
 Restricted cash                          14               135,610        99,729 
 Cash and cash equivalents                13               673,708       730,839 
                                                         1,215,662     1,206,297 
--------------------------------------  ------  ------------------  ------------ 
 Total assets                                            5,540,793     5,241,352 
--------------------------------------  ------  ------------------  ------------ 
 
 EQUITY AND LIABILITIES 
 Equity attributable to owners 
  of the parent 
 Share capital                            17                 2,380         2,374 
 Share premium                            17               415,388       915,388 
 Merger reserve                                            139,903       139,903 
 Other reserves                                            (9,901)         7,488 
 Foreign currency translation reserve                     (21,057)      (12,823) 
 Share-based payment reserve                                22,172        19,352 
 Retained earnings                                         264,175     (354,559) 
 Equity attributable to equity 
  holders of the parent                                    813,060       717,123 
--------------------------------------  ------  ------------------  ------------ 
 Non-controlling interests                                       -             - 
--------------------------------------  ------  ------------------  ------------ 
 Total equity                                              813,060       717,123 
--------------------------------------  ------  ------------------  ------------ 
 Non-current liabilities 
 Borrowings                               18             2,986,757     2,947,126 
 Deferred tax liabilities                 12                64,542        67,425 
 Retirement benefit liability             19                 1,957         2,767 
 Provisions                               20               724,374       801,026 
 Other payables                           21               265,664       225,987 
                                                         4,043,294     4,044,331 
--------------------------------------  ------  ------------------  ------------ 
 Current liabilities 
 Trade and other payables                 21               607,853       449,707 
 Current Tax Liability                                      31,148         5,279 
 Derivative financial instruments          7                33,305        12,546 
 Provisions                               20                12,133        12,366 
                                                           684,439       479,898 
--------------------------------------  ------  ------------------  ------------ 
 Total liabilities                                       4,727,733     4,524,229 
--------------------------------------  ------  ------------------  ------------ 
 Total equity and liabilities                            5,540,793     5,241,352 
--------------------------------------  ------  ------------------  ------------ 
 
 
 Interim Condensed Consolidated Statement of Changes in Equity 
  Six months ended 30 June 2022 
-------------------------------------------------------------- 
 
 
                                         Hedge       Equity 
                                          and       component     Share 
                                        Defined        of         based 
                              Share     Benefit    convertible   payment   Translation                                                          Non 
                   Share     Premium    Pension     bonds(3)     reserve     Reserve     Retained             Merger                        -Controlling 
                  Capital      (1)      Plan (2)                   (4)         (5)       earnings             reserve             Total      Interests      Total 
                   $'000      $'000      $'000        $'000       $'000       $'000       $'000               $'000               $'000        $'000        $'000 
 At 1 January 
  2022              2,374     915,388    (2,971)        10,459    19,352                 (12,823)      (354,559)       139,903    717,123              -    717,123 
                 --------  ----------  ---------  ------------  --------  -----------------------  -------------  ------------  ---------  -------------  --------- 
 Profit for the 
  period                -           -          -             -         -                        -        118,734             -    118,734              -    118,734 
 Remeasurement 
  of 
  defined 
  benefit 
  pension plan, 
  net 
  of tax                -           -         49             -         -                        -              -             -         49              -         49 
 Hedges , net 
  of 
  tax                   -           -   (17,438)             -         -                        -              -             -   (17,438)              -   (17,438) 
 Exchange 
  difference 
  on the 
  translation 
  of foreign 
  operations            -           -          -             -         -                  (8,234)              -             -    (8,234)              -    (8,234) 
 Total 
  comprehensive 
  income                -           -   (17,389)             -         -                  (8,234)        118,734             -     93,111              -     93,111 
                 --------  ----------  ---------  ------------  --------  -----------------------  -------------  ------------  ---------  -------------  --------- 
 Transactions 
 with 
 owners of the 
 company 
 Share based 
  payment 
  charges (note 
  22)                   -           -          -             -     2,826                        -              -             -      2,826              -      2,826 
 Exercise of 
  employment 
  share options         6           -          -             -       (6)                        -              -             -          -              -          - 
 Share premium 
  reduction(6)          -   (500,000)          -             -         -                        -        500,000             -          -              -          - 
 At 30 June 
  2022              2,380     415,388   (20,360)        10,459    22,172                 (21,057)        264,175       139,903    813,060              -    813,060 
                 ========  ==========  =========  ============  ========  =======================  =============  ============  =========  =============  ========= 
 
 

(1) The share premium account represents the total net proceeds on issue of the Company's shares in excess of their nominal value of GBP 0.01 per share less amounts transferred to any other reserves.

(2) 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' reserve.

(3) Refers to the Equity component of $50 million of convertible loan notes, which were issued in February 2021 and have a maturity date of 29 December 2023

(4) The share-based payments 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.

(5) The foreign currency 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.

(6) Energean plc by special resolution reduced its share premium account, as confirmed by an Order of the High Court of Justice on the 14 June 2022.

 
 Interim Condensed Consolidated Statement of Changes in Equity 
  Six months ended 30 June 2022 
-------------------------------------------------------------- 
 
 
                                         Hedge      Equity 
                                          and      component 
                                        Defined       of         Share 
                                        Benefit   convertible    based 
                               Share    Pension    bonds(3)     payment   Translation                                        Non- 
                     Share    Premium    Plan                   reserve     Reserve     Retained    Merger                Controlling 
                    Capital     (1)       (2)                     (4)         (5)        earnings   reserve     Total      Interests      Total 
                     $'000     $'000     $'000       $'000       $'000       $'000        $'000      $'000      $'000        $'000        $'000 
 At 1 January 
  2021                2,367   915,388     1,792             -    13,419          (42)   (144,734)   139,903     928,093       266,299   1,194,392 
                   --------  --------  --------  ------------  --------  ------------  ----------  --------  ----------  ------------  ---------- 
 Loss for the 
  period                  -         -         -             -         -             -    (35,550)         -    (35,550)         (108)    (35,658) 
 Hedges , net 
  of tax                  -         -     5,326             -         -             -           -         -       5,326             2       5,328 
 Exchange 
  difference 
  on the 
  translation 
  of foreign 
  operations              -         -         -             -         -       (6,576)           -         -     (6,576)             -     (6,576) 
 Total 
  comprehensive 
  income                  -         -     5,326             -         -       (6,576)    (35,550)         -    (36,800)         (106)    (36,906) 
                   --------  --------  --------  ------------  --------  ------------  ----------  --------  ----------  ------------  ---------- 
 Transactions 
  with owners 
  of the company 
 Employee share 
  schemes (note 
  22)                     1         -         -             -     2,474             -           -         -       2,475                     2,475 
 Acquisition 
  of 
  non-controlling 
  Interests               -         -         -        10,459         -             -   (113,779)         -   (103,320)     (266,193)   (369,513) 
 At 30 June 
  2021                2,368   915,388     7,118        10,459    15,893       (6,618)   (294,063)   139,903     790,448             -     790,448 
                   ========  ========  ========  ============  ========  ============  ==========  ========  ==========  ============  ========== 
 
 
 Interim Condensed Consolidated Statement of Cash Flows 
  Six months ended 30 June 2022 
------------------------------------------------------------------------------ 
                                                         30 June (Unaudited) 
                                                         2022         2021 
                                               Note      $'000        $'000 
-------------------------------------------  -------  ----------  ------------ 
 Operating activities 
-------------------------------------------  -------  ----------  ------------ 
 Profit/ (Loss) before taxation                          109,790      (20,484) 
 Adjustments to reconcile profit/(loss) 
  before taxation to net cash provided 
  by operating activities: 
 Depreciation , depletion and amortisation    10, 11      33,885        36,343 
 Impairment loss on intangible 
  assets                                        11           362             - 
 Loss from the sale of property, 
  plant and equipment                                      1,074            36 
 Defined benefit (gain)/expense                 19         (676)       (1,120) 
 Finance income                                 6        (2,701)       (2,700) 
 Finance costs                                  6         38,551        44,912 
 Non-cash revenues from Egypt(1)                        (27,177)      (21,577) 
 Movement in provisions                         20       (1,239)           483 
 Other income                                   5              -       (3,602) 
 Share-based payment charge                     22         2,717         2,474 
 Net foreign exchange gain/(loss)               6          4,473        13,787 
-------------------------------------------  -------  ----------  ------------ 
 Cash flow from/(used in) operations 
  before working capital adjustments                     159,059        48,552 
-------------------------------------------  -------  ----------  ------------ 
 Decrease/ (Increase) in inventories                       2,748       (5,185) 
 Increase in trade and other receivables                  14,309        42,392 
 (Decrease) in trade and other 
  payables                                              (17,282)      (33,082) 
-------------------------------------------  -------  ----------  ------------ 
 Cash inflow from operations                             158,834        52,677 
 Income tax paid                                        (12,267)           388 
-------------------------------------------  -------  ----------  ------------ 
 Net cash inflow from operating 
  activities                                             146,567        53,065 
-------------------------------------------  -------  ----------  ------------ 
 Investing activities 
 Payment for purchase of property, 
  plant and equipment                                  (194,491)     (141,182) 
 Payment for exploration and evaluation, 
  and other intangible assets                           (18,513)      (28,818) 
 Acquisition of a subsidiary                                   -       (3,335) 
 Proceeds from disposal of property,                       1,996             - 
  plant and equipment 
 Movement in restricted cash                    14        61,320     (266,241) 
 Amounts received from INGL related                       17,371             - 
  to the future transfer of property, 
  plant and equipment 
 Interest received                                         2,911           861 
-------------------------------------------  -------  ----------  ------------ 
 Net cash outflow for investing 
  activities                                           (129,406)     (438,715) 
-------------------------------------------  -------  ----------  ------------ 
 Financing activities 
 Drawdown of borrowings                         18        35,835       293,000 
 Repayment of borrowings                        18             -   (1,452,509) 
 Senior secured notes Issuance                  18             -     2,500,000 
 Transaction costs related to Senior 
  secured notes paid                                           -      (37,218) 
 Acquisition of non-controlling 
  interests                                     18             -     (175,000) 
 Transaction costs related to acquisition 
  of non-controlling interest                                  -       (1,677) 
 Repayment of obligations under 
  leases                                                 (5,785)       (5,875) 
 Finance cost paid for deferred 
  license payments                                             -       (3,494) 
 Finance costs paid                                     (87,341)      (55,641) 
-------------------------------------------  -------  ----------  ------------ 
 Net cash inflow from financing 
  activities                                            (57,291)     1,061,586 
-------------------------------------------  -------  ----------  ------------ 
 Net increase / (decrease) in cash 
  and cash equivalents                                  (40,130)       675,936 
-------------------------------------------  -------  ----------  ------------ 
 Cash and cash equivalents at beginning 
  of the period                                          730,839       202,939 
 Effect of exchange rate fluctuations 
  on cash held                                          (17,001)         1,142 
-------------------------------------------  -------  ----------  ------------ 
 Cash and cash equivalents at end 
  of the period                                 13       673,708       880,017 
-------------------------------------------  -------  ----------  ------------ 
 

(1) 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.

Notes to the Interim Condensed Consolidated Financial Statements (continued)

1. Corporate Information

Energean plc (the 'Company') was incorporated in England & Wales on 8 May 2017 as a public company with limited liability, 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 and natural gas in Greece, Israel, Italy, North Africa and the wider Eastern Mediterranean.

The Group's subsidiaries and core assets, as of 30 June 2022, are presented in notes 26 and 27 respectively.

2. Basis of preparation

2.1 Basis of preparation

The unaudited interim condensed consolidated financial statements for the six months ended 30 June 2022 included in this interim report have been prepared in accordance with UK-adopted International Accounting Standard 34 'Interim Financial Reporting', 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 2021.

The interim condensed consolidated 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 ($'000) except as otherwise indicated. The US dollar is the currency that mainly influences sales prices and revenue estimates, and also highly affects the Group's operations. The functional currencies of the Group's main subsidiaries are as follows: for Energean Oil & Gas S.A, Energean Montenegro, Energean Italy Spa and Energean International E&P Spa the functional currency is Euro, for Energean E&P Holdings Ltd, Energean International Limited, Energean Capital Ltd, Energean Egypt Ltd and Energean Israel Limited the functional currency is US$.

The 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. The interim financial statements should be read in conjunction with the Group's Annual Report and Accounts for the year ended 31 December 2021, which were prepared UK-adopted International Accounting Standards ('UK-adopted IAS') and also in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board (IASB) as applied to financial periods beginning on or after 1 January 2021. 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 2023 'the Forecast Period'.

Cash forecasts are regularly produced based on, inter alia, the Group's latest life of field production, budgeted expenditure forecasts, management's best estimate of future commodity prices (based on recent published forward curves) and headroom under its debt facilities. The Base Case cash flow model used for the going concern assessment assumes first gas from Karish in October 2022, Brent at $100/bbl for the YTG (Year to Go) 2022 and $90/bbl in 2023 and PSV (Italian gas price) at EUR200/MWh for the YTG 2022 and EUR150/MWh in 2023.

In addition, on a regular basis, the Group performs sensitivity analysis 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 and reduction in the Group production (due to deferral of key projects) t hroughout the going concern period. In this combined downside scenario applied to the base case forecast, the Group is forecasted to have sufficient financial headroom throughout the Forecast Period.

Reverse stress testing was performed to determine what levels of prices and/or production would need to occur for the liquidity headroom to be eliminated, prior to any mitigating actions; the likelihood of such conditions occurring was concluded to be remote. The portfolio can withstand a material drop in commodity price and average production largely because most of the revenue is generated from fixed gas price contracts. In the event an extreme downside scenario occurred, prudent mitigating actions could be executed in the necessary timeframe such as postponement of discretionary exploration and development expenditures. Energean is predominantly Operator of its assets, therefore the majority of the key development projects are 100% within its control. There is no material impact of climate change within the Forecast Period therefore it does not form part of the reverse stress testing performed by management.

As of 30 June 2022, the Group's available liquidity was $880 million ($674 million unrestricted cash, $138 million restricted cash and $68 million available under Greek State-Backed Loan).

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, such as deferral of Capex expenditure in the Group's control, in the event this 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 Forecast Period to 31 December 2023. For this reason, they continue to adopt the going concern basis in preparing the consolidated financial statements.

2.3 New and amended accounting standards and interpretations

The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are the same as those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2021, except for the adoption of the new standards and interpretations effective as of 1 January 2022 listed below:

   --    Annual improvements to IFRS 2018-2020 
   --    Property, Plant and Equipment : Proceeds before intended use ( Amendments to IAS 16) 
   --    Onerous Contracts - Cost of Fulfilling a Contract ( Amendments to IAS 37 ) 
   --    Reference to the Conceptual Framework (Amendments to IFRS 3) 

-- AIP IFRS 9 Financial Instruments - Fees in the '10 per cent' test for derecognition of financial liabilities

None of the above amendments had a significant impact on the Group's interim condensed consolidated financial statements.

2.4 Approval of interim condensed consolidated financial statements by Directors

These unaudited interim condensed consolidated financial statements were approved by the Board of Directors on 7 September 2022.

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 four operating segments: Europe, (including Greece, Italy, UK, Croatia), Israel, Egypt and New Ventures (Montenegro and Malta).

The Group's reportable segments under IFRS 8 Operating Segments are Europe, Israel and Egypt. Segments that do not exceed the quantitative thresholds for reporting information about operating segments have been included in Other.

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:

 
                                   Europe      Israel       Egypt        Other &         Total 
                                                                       inter-segment 
                                                                       transactions 
                                    $'000       $'000       $'000         $'000          $'000 
-------------------------------  ----------  ----------  ----------  ---------------  ---------- 
 Six months ended 30 
  June 2022 (unaudited) 
 Revenue from Oil                   111,007           -           -                -     111,007 
 Revenue from Gas                   137,717           -      73,511                -     211,228 
 Petroleum product sales              1,288           -      33,040                -      34,328 
 Rendering of services                4,008           -           -          (3,383)         625 
 Loss on forward transactions      (18,233)           -           -                -    (18,233) 
 Total revenue                      235,787           -     106,551          (3,383)     338,955 
 Adjusted EBITDAX(1)                122,423     (5,343)      79,914            1,171     198,165 
 Reconciliation to profit 
  before tax: 
 Depreciation and amortisation 
  expenses                         (11,303)       (110)    (22,258)            (214)    (33,885) 
 Share-based payment charge         (2,501)        (88)        (30)             (98)     (2,717) 
 Exploration and evaluation 
  expenses                          (2,499)           -     (1,482)            (273)     (4,254) 
 Other expense                      (6,263)     (1,074)       (342)          (1,147)     (8,826) 
 Other income                         1,391          53         552            (366)       1,630 
 Finance income                       1,467       4,504         521          (3,791)       2,701 
 Finance costs                     (10,436)     (4,671)       (453)         (22,991)    (38,551) 
 Net foreign exchange 
  gain/(loss)                        20,548     (1,778)       (219)         (23,024)     (4,473) 
 Profit/(loss) before 
  income tax                        112,827     (8,507)      56,203         (50,733)     109,790 
 Taxation income / (expense)         33,429       2,889    (27,177)            (197)       8,944 
 Profit/(loss) from continuing 
  operations                        146,256     (5,618)      29,026         (50,930)     118,734 
-------------------------------  ----------  ----------  ----------  ---------------  ---------- 
 Six months ended 30 
  June 2021 (unaudited) 
 Revenue from Oil                    70,736           -      27,431                -      98,167 
 Revenue from Gas                    34,765           -      70,929                -     105,694 
 Petroleum products sales               492           -           -                -         492 
 Rendering of services                5,228           -           -          (4,115)       1,113 
 Total revenue                      111,221           -      98,360          (4,115)     205,466 
 Adjusted EBITDAX (1)                 9,685     (1,563)      69,113          (2,584)      74,651 
 Reconciliation to profit 
  before tax:                                                     - 
 Depreciation and amortisation 
  expenses                         (21,586)        (50)    (14,256)            (451)    (36,343) 
 Share-based payment charge           (431)       (122)           -          (1,699)     (2,252) 
 Exploration and evaluation 
  expenses                            (630)           -           -            (411)     (1,041) 
 Other expense                      (1,458)        (28)        (88)          (1,497)     (3,071) 
 Other income                         2,887           -         641               43       3,571 
 Finance income                       1,667       1,808         676          (1,451)       2,700 
 Finance costs                     (10,797)     (9,436)       (624)         (24,055)    (44,912) 
 Net foreign exchange 
  gain/(loss)                         2,879       (727)     (1,055)         (14,884)    (13,787) 
 Profit before income 
  tax                              (17,784)    (10,118)      54,407         (46,989)    (20,484) 
 Taxation income / (expense)          3,342       2,571    (21,535)              448    (15,174) 
 Profit from continuing 
  operations                       (14,442)     (7,547)      32,872         (46,541)    (35,658) 
-------------------------------  ----------  ----------  ----------  ---------------  ---------- 
 

(1) 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.

The following table presents assets and liabilities information for the Group's operating segments as at 30 June 2022 and 31 December 2021, respectively:

 
                              Europe      Israel      Egypt      Other & inter-segment       Total 
                                                                      transactions 
                               $'000       $'000      $'000              $'000               $'000 
--------------------------  ----------  ----------  ---------  -------------------------  ---------- 
 Six months ended 30 June 
 2022 (unaudited) 
 Oil & Gas properties          505,690   2,922,369    366,077                   (10,326)   3,783,810 
 Other fixed assets             14,723       5,570     19,786                    (1,225)      38,854 
 Intangible assets              69,043     130,327     20,484                     36,934     256,788 
 Trade and other 
  receivables                  159,459      55,110    123,702                   (12,234)     326,037 
 Deferred tax asset            218,349     (1,210)          -                      (957)     216,182 
 Other assets                  761,556     218,793    109,471                  (170,698)     919,122 
 Total assets                1,728,820   3,330,959    639,520                  (158,506)   5,540,793 
 Trade and other payables      169,045     156,395     53,187                    229,226     607,853 
 Borrowings                     33,528   2,467,251          -                    485,978   2,986,757 
 Decommissioning provision     700,088      26,609          -                          -     726,697 
 Other current liabilities      64,418           -          -                         34      64,452 
 Other non-current 
  liabilities                  125,510     225,129     21,872                   (30,537)     341,974 
 Total liabilities           1,092,589   2,875,384     75,059                    684,701   4,727,733 
--------------------------  ----------  ----------  ---------  -------------------------  ---------- 
 Other segment information 
 Capital Expenditure: 
 - Property, plant and 
  equipment                     21,753     288,964     41,132                      4,551     356,400 
 - Intangible, exploration 
  and evaluation assets          1,496      34,386          -                      1,076      36,958 
--------------------------  ----------  ----------  ---------  -------------------------  ---------- 
 Year ended 31 December 
 2021 
--------------------------  ----------  ----------  ---------  -------------------------  ---------- 
 Oil & Gas properties          537,600   2,584,828    342,528                    (9,694)   3,455,262 
 Other fixed assets             16,578       3,917     24,076                      (360)      44,211 
 Intangible assets              74,868      95,941     20,484                     36,848     228,141 
 Trade and other 
  receivables                  164,131      22,769   102, 605                      (979)     288,526 
 Deferred tax asset            154,798           -          -                          -     154,798 
 Other assets                  674,157     379,248     98,720                   (81,711)   1,070,414 
 Total assets                1,622,132   3,086,703    588,413                   (55,896)   5,241,352 
 Trade and other payables      202,797      74,115     25,511                    152,563     454,986 
 Borrowings                          -   2,463,524          -                    483,602   2,947,126 
 Decommissioning provision     766,573      35,525          -                          -     802,098 
 Other current liabilities    (20,395)           -          -                     32,941      12,546 
 Other non-current 
  liabilities                  134,203     180,689     24,663                   (32,082)     307,473 
 Total liabilities           1,083,178   2,753,853     50,174                    637,024   4,524,229 
--------------------------  ----------  ----------  ---------  -------------------------  ---------- 
 Other segment information 
 Capital Expenditure: 
 - Property, plant and 
  equipment                     72,782     247,463     52,085                   (14,330)     358,000 
 - Intangible, exploration 
  and evaluation assets         40,523       6,342        215                      3,329      50,409 
--------------------------  ----------  ----------  ---------  -------------------------  ---------- 
 
 

Segment Cash flows

 
                               Europe      Israel      Egypt        Other &         Total 
                                                                  inter-segment 
                                                                  transactions 
                               $'000        $'000      $'000         $'000          $'000 
---------------------------  ---------  -----------  ---------  ---------------  ----------- 
 Six months ended 
  30 June 2022 (unaudited) 
 Net cash from / (used 
  in) operating activities      87,922      (5,286)     64,578            (647)      146,567 
 Net cash (used in) 
  investing activities        (23,560)     (56,932)   (43,931)          (4,983)    (129,406) 
 Net cash from financing 
  activities                  (85,460)     (66,819)        280           94,708     (57,291) 
 Net increase/(decrease) 
  in cash and cash 
  equivalents, and 
  restricted cash             (21,098)    (129,037)     20,927           89,078     (40,130) 
 Cash and cash equivalents 
  at beginning of the 
  period                        71,316      349,828     19,254          290,441      730,839 
 Effect of exchange 
  rate fluctuations 
  on cash held                 (4,542)      (2,080)      (919)          (9,460)     (17,001) 
 Cash and cash equivalents 
  at the end of the 
  period                        45,676      218,711     39,262          370,059      673,708 
--------------------------- 
 Six months ended 
  30 June 2021 (unaudited) 
 Net cash from / (used 
  in) operating activities      22,329      (2,802)     52,958         (19,420)       53,065 
 Net cash (used in) 
  investing activities        (41,614)    (378,265)   (15,695)          (3,141)    (438,715) 
 Net cash from financing 
  activities                    22,447    1,075,374   (87,054)           50,819    1,061,586 
 Net increase/(decrease) 
  in cash and cash 
  equivalents                    3,162      694,307   (49,791)           28,258      675,936 
 At beginning of the 
  year                          13,609       37,421     76,240           75,669      202,939 
 Effect of exchange 
  rate fluctuations 
  on cash held                     409        (146)        (1)              880        1,142 
 Cash and cash equivalents 
  at end of the period          17,180      731,582     26,448          104,807      880,017 
---------------------------  ---------  -----------  ---------  ---------------  ----------- 
 

4. Revenue

 
                                          30 June (Unaudited) 
                                            2022        2021 
                                           $'000       $'000 
--------------------------------------  -----------  --------- 
 Revenue from crude oil sales               111,007     70,736 
 Revenue from gas sales                     211,228    105,694 
 Gain/ (Loss) on forward transactions      (18,233)          - 
 Petroleum products sales                    34,328     27,923 
 Rendering of services                          625      1,113 
--------------------------------------  -----------  --------- 
 Total revenue                              338,955    205,466 
 

5. Operating profit/(loss) before taxation

 
                                                      30 June (Unaudited) 
                                                    2022           2021 
                                                   $'000          $'000 
 --------------------------------------------   --------  --------------------- 
 (a)        Cost of sales 
            Staff costs                           27,895                 32,626 
            Flux costs                            17,391                  6,957 
            Energy cost                            5,716                  3,475 
            Royalty payable                       11,678                  5,814 
            Other operating costs                 60,661                 73,546 
            Depreciation and amortisation         32,345                 33,845 
            Stock overlift/(underlift) 
             movement                              2,357                (8,623) 
---------  -----------------------------------  --------  --------------------- 
            Total cost of sales                  158,043                147,640 
 
 (b)        Administrative expenses 
            Staff costs                            9,765                  7,329 
            Other General & administration 
             expenses                              4,103                  8,815 
            Share-based payment charge 
             included in administrative 
             expenses                              2,717                  2,247 
            Depreciation and amortisation          1,539                  2,498 
            Auditor fees                             951                    779 
---------  -----------------------------------  -------- 
            Total administrative expenses         19,075                 21,668 
            Selling and distribution 
 (c)         expense 
            Staff costs                              116                     29 
            Other Selling and distribution 
             expense                                 158                     73 
---------  -----------------------------------  --------  --------------------- 
            Total selling and distribution 
             expense                                 274                    102 
 (b)        Total Administrative and 
 + (c)       Selling Expenses                     19,349                 21,770 
 
            Exploration and evaluation 
 (d)         expenses 
            Staff costs for Exploration 
             and evaluation activities             2,118                    355 
            Exploration costs written 
             off                                     362                      - 
            Other exploration and evaluation 
             expenses                              1,774                    686 
---------  -----------------------------------  --------  --------------------- 
  Total exploration and evaluation 
   expenses                                        4,254                  1,041 
 
 

5. Operating profit/(loss) before taxation (continued)

 
 
                                                           30 June (unaudited) 
                                                              2022           2021 
                                                             $'000          $'000 
 (e)    Other expenses 
  Transaction costs in relation 
   to Edison E&P acquisition                                     -          1,470 
  Restructuring costs(1)                                     3,481 
        Provision for litigation and 
         claims                                              1,443              - 
  Loss from disposal of Property 
   plant & Equipment                                         1,074             36 
        Write down of inventory                              1,335              - 
  Expected credit losses                                       342            279 
  Other expenses                                             1,151          1,286 
                                            ----  ----------------  ---  -------- 
                                                             8,826          3,071 
 (f)    Other income 
  Reversal of prior period accruals                          1,630                3,496 
  Other income                                                   -                   75 
 -----------------------------------------  ----  ----------------  ---  -------------- 
                                                             1,630                3,571 
 
 

(1) One-off restructuring costs incurred in Greece

6. Net finance cost

 
                                                             30 June (Unaudited) 
                                                              2022        2021 
                                                              $'000       $'000 
---------------------------------------------------  ----  ----------  ---------- 
 
 Interest on bank borrowings                                      307      55,710 
 Interest on Senior Secured Notes                              83,630      33,791 
 Interest expense on long term payables                         4,734         467 
 Interest expense on short term liabilities                         -          28 
 Less amounts included in the cost of 
  qualifying assets                                          (68,866)    (72,969) 
---------------------------------------------------------  ----------  ---------- 
                                                               19,805      17,027 
 Finance and arrangement fees                                   4,003      11,869 
 Unamortised financing costs related 
  to the repayment of the Karish 
  project finance(2)                                                -      36,200 
 Other finance costs and bank charges                             593       2,172 
 Loss on interest rate hedges                                       -       6,988 
 Unwinding of discount on right of use 
  asset                                                           694         837 
 Unwinding of discount on provision for 
  decommissioning                                               5,261       4,946 
 Unwinding of discount on deferred consideration                7,912       5,124 
 Unwinding of discount on convertible 
  loan                                                          1,963           - 
 Unwinding of discount on contingent consideration              1,322         744 
 Less amounts included in the 
  cost of qualifying assets                                   (3,002)    (40,995) 
 Total finance costs                                           38,551      44,912 
 Interest income from time deposits                           (2,701)     (1,534) 
 Gain from revised estimated loan cash 
  flow                                                              -     (1,166) 
 Total finance revenue                                        (2,701)     (2,700) 
---------------------------------------------------------  ----------  ---------- 
 Foreign exchange losses/(gain)                                 4,473      13,787 
 Net financing costs                                           40,323      55,999 
---------------------------------------------------------  ----------  ---------- 
 
 

(2) On 29 April 2021, the Group fully repaid the Israel Project Finance Facility before the maturity date of 31 December 2021 and, as such, the unamortised financing costs have been expensed in the period.

7. Fair value measurements

The information set out below provides information about how the Group determines the fair values of various financial assets and liabilities.

The fair values of the Group's non-current liabilities measured at amortised cost are considered to approximate their carrying amounts at the reporting date.

The carrying value less any estimated credit adjustments for financial assets and financial liabilities with a maturity of less than one year are assumed to approximate their fair values due to their short term-nature. The fair value of the Group's finance lease obligations is estimated using discounted cash flow analysis based on the group's current incremental borrowing rates for similar types and maturities of borrowing and are consequently categorized in level 2 of the fair value hierarchy.

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 $100.0 million subject to the commissioning of the Cassiopea development gas project in Italy. The consideration was determined to be contingent on the basis of future gas prices (PSV) recorded at the time of the commissioning of the field, which is expected in 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 EUR10/MWh when first gas production is delivered from the field. US$100 million is payable if that average price exceeds EUR20/MWh. 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.

The contingent consideration to be payable in 2024 is estimated at acquisition date to amount to $61.7 million, which discounted at the acquisition date resulted in a present value of $55.2 million.

As at 30 June 2022, the two year future curve of PSV prices indicate an average price in excess of EUR 20/MWh. Therefore, the Group's estimate as at 30 June 2022 of the fair value of the contingent consideration payable in 2024 is $79.8 million, based on a Monte Carlo simulation (31 December 2021: $78.5 million).

The fair value of the consideration payable has been recognized at level 3 in the fair value hierarchy.

Contingent consideration reconciliation

 
 
  Contingent consideration      2022 
---------------------------  ------- 
 1 January 2022               78,450 
 Fair value adjustment         1,322 
 30 June 2022                 79,772 
 

Management believes there are no reasonably possible change to any key assumptions that would impact the contingent consideration valuation.

Fair values of derivative financial instruments

The Group held financial instruments at fair value at 30 June 2022 related to commodity derivatives. All derivatives are recognised at fair value on the balance sheet with valuation changes recognised immediately in the income statement, unless the derivatives have been designated as a cash flow hedge. Fair value is the amount for which the asset or liability could be exchanged in an arm's length transaction at the relevant date. Where available, fair values are determined using quoted prices in active markets. To the extent that market prices are not available, fair values are estimated by reference to market-based transactions or using standard valuation techniques for the applicable instruments and commodities involved. Values recorded are as at the balance sheet date and will not necessarily be realised.

The Group undertakes hedging activities as part of the ongoing financial risk management to protect against commodity price volatility and to ensure the availability of cash flow for re-investment in capital programmes that are driving business delivery. Commodity hedge contracts entered into in Italy aim to mitigate the risk of changes to the selling price of natural gas.

 
 Hedged Quantity   Contract Month    Cargo Month     Gas Sales   Fixed Price 
      (MWs)                                             Size         EUR 
     50,000          July 2022        July 2022       222,110       39.13 
                  ---------------  ---------------  ----------  ------------ 
     50,000         August 2022      August 2022      222,679       39.13 
                  ---------------  ---------------  ----------  ------------ 
     50,000        September 2022   September 2022    216,103       39.13 
                  ---------------  ---------------  ----------  ------------ 
     50,000         October 2022     October 2022     215,290       40.07 
                  ---------------  ---------------  ----------  ------------ 
     50,000        November 2022    November 2022     200,205       40.07 
                  ---------------  ---------------  ----------  ------------ 
     50,000        December 2022    December 2022     206,640       40.07 
                  ---------------  ---------------  ----------  ------------ 
 

The Group's commodity derivatives are level 2. There were no transfers between fair value levels during the period.

The fair value hierarchy of financial assets and financial liabilities that are not measured at fair value (but for which disclosure of fair value is required) is as follows:

 
                                           Fair value hierarchy as of 30 June 2022 (Unaudited) 
                                                  Level 1    Level 2    Level 3                    Total 
                                                    $'000      $'000      $'000                    $'000 
-------------------------  ----  ------------------------  ---------  ---------  ----------------------- 
 Financial assets 
 Trade and other receivables 
  (note 16)                                             -    292,896          -                  292,896 
 Cash and cash equivalents 
  (note 13)                                       673,708          -          -                  673,708 
 Restricted cash (note 14)                        138,409          -          -                  138,409 
-------------------------------  ------------------------  ---------  ---------  ----------------------- 
 Total                                            812,117    292,896          -                1,105,013 
-------------------------------  ------------------------  ---------  ---------  ----------------------- 
 Financial liabilities 
 Financial liabilities 
  held at amortised cost: 
 Trade and other payables 
  - current                                             -    270,096          -                  270,096 
 Trade and other payables- 
  non-current                                           -    122,579          -                  122,579 
 Senior Secured Notes 
  (note 18)                                     2,591,675          -          -                2,591,675 
 Borrowings (note 18)                                   -     76,824          -                   76,824 
 Deferred consideration 
  for acquisition of 
  minority                                              -    175,140          -                  175,140 
 Net obligations under 
  finance leases (note 
  21)                                                   -     35,412          -                   35,412 
 Deferred licence payments 
  (note 21)                                             -     60,098          -                   60,098 
 Financial liabilities 
 held at fair value 
 through 
 OCI: 
 Derivative                                             -     33,305          -                   33,305 
 Financial liabilities 
  held at FVTPL: 
 Contingent consideration 
  (note 7)                                              -          -     79,772                   79,772 
-------------------------------  ------------------------  ---------  ---------  ----------------------- 
 Total                                          2,591,675    773,454     79,772                3,444,901 
-------------------------------  ------------------------  ---------  ---------  ----------------------- 
 
 
 
                                          Fair value hierarchy as at 31 December 2021 
                                        Level 1         Level 2      Level        Total 
                                                                       3 
                                          $'000           $'000       $'000        $'000 
Financial assets 
Trade and other receivables                       -        284,692        -          284,692 
Cash and cash equivalents                   730,839              -        -          730,839 
Restricted Cash                             199,729                                  199,729 
Total                                       930,568        284,692        -        1,215,260 
 
  Financial liabilities 
Financial liabilities held 
 at amortised cost: 
Trade and other payables 
 -current                                         -        173,319        -          173,319 
Senior Secured Notes                      2,931,950              -                 2,931,950 
Borrowings                                        -         41,495        -           41,495 
Deferred consideration 
 for acquisition of minority                      -        167,228        -          167,228 
Net obligations under finance 
 leases                                           -         44,425        -           44,425 
Deferred licence payments                         -         57,230        -           57,230 
Financial liabilities                                                                      - 
 held at FVTPL: 
Interest rate derivatives                         -         12,546        -           12,546 
Contingent consideration                          -              -   78,450           78,450 
Total                                     2,931,950        496,243   78,450        3,506,643 
 
 

8. Taxation

 
                                     30 June (Unaudited) 
                                          2022       2021 
                                         $'000      $'000 
Corporation tax - current period      (67,069)   (21,565) 
Corporation tax - prior years                -        448 
Deferred tax (Note 12)                  76,013      5,943 
Total taxation income / (expense)        8,944   (15,174) 
 
 

(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 in Greece (25%), Israel (23%), Italy (24%), Cyprus (12.5%), Egypt (40.55%) and United Kingdom (40%) weighted according to the profit or loss before tax earned by the Group in each jurisdiction where deferred tax is recognised, or material current tax charge arises. The effective tax rate for the period is -8% (30 June 2021: -74%).

The tax (charge)/ credit of the period can be reconciled to the loss per the consolidated income statement as follows:

 
                                                   30 June (Unaudited) 
                                                        2022       2021 
                                                       $'000      $'000 
 
Profit/(loss) before tax                             109,790   (20,484) 
 
Tax calculated at 29.5% weighted average 
 rate (2021: 19.7%)                                 (32,197)      4,035 
Impact of different tax rates                          1,920         13 
Utilisation of unrecognised deferred tax/ 
 (non-recognition of deferred tax)                    89,417    (4,834) 
Permanent differences(1)                            (12,758)    (1,912) 
Foreign taxes                                        (5,171)   (21,535) 
Windfall tax(2)                                     (29,274)          - 
Tax effect of non-taxable income and allowances      (3,304)     10,985 
Other adjustments                                        311    (2,374) 
Prior year tax                                             -        448 
Taxation income/(expense)                              8,944   (15,174) 
 

(1) Permanent differences mainly consisted of non-deductible expenses, consolidation differences, intercompany dividends and foreign exchange differences.

(2) During H1 2022, Italy introduced a windfall tax in the form of a law decree which imposed a 25% one-off tax on profit margins that rose by more than 5 million euros between October 2021 and April 2022 compared to the same period a year earlier. The amount of the windfall tax to be paid by Energean Italy is estimated to be $29.3mil with an advance payment of 40% or c$11.7million remitted to the Italian Revenue Agency at the end of June 2022, while the remaining balance shall be paid by the end of November 2022. The windfall tax has been determined to be an income tax as defined by IAS 12.

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) 
                                                                 2022            2021 
                                                                $'000           $'000 
 
Total profit/(loss) attributable to equity shareholders       118,734        (35,550) 
Effect of dilutive potential ordinary shares                    1,963               - 
                                                              120,697        (35,550) 
Number of shares 
Basic weighted average number of shares                   177,821,533     177,117,612 
Dilutive potential ordinary shares                          6,362,834               - 
Diluted weighted average number of shares                 184,184,367     177,117,612 
Basic earnings/ (loss) per share                          $0.67/share   ($0.20)/share 
Diluted earnings/ (loss) per share                        $0.66/share   ($0.20)/share 
 
 

10. Property, plant and equipment

 
                         Oil and gas properties  Leased assets   Other property, plant               Total 
                                                                     and equipment 
Property, plant and              $'000               $'000               $'000                       $'000 
equipment at Cost 
At 1 January 2021                     3,430,329         50,841                   60,237                      3,541,407 
Additions                               345,180          6,428                    1,623                        353,231 
Lease modification                            -          2,261                        -                          2,261 
Disposal of assets                         (23)              -                     (34)                           (57) 
Capitalized borrowing 
 cost                                   178,891              -                        -                        178,891 
Capitalized 
 depreciation                               227              -                        -                            227 
Change in 
 decommissioning 
 provision                             (13,174)              -                        -                       (13,174) 
Transfer from 
 Intangible assets                       14,317              -                       26                         14,343 
Foreign exchange impact                (57,960)        (2,285)                  (2,806)                       (63,051) 
At 31 December 2021                   3,897,787         57,245                   59,046                      4,014,078 
Additions                               353,374            746                    2,280                        356,400 
Lease modifications                           -          (897)                        -                          (897) 
Disposal of assets                        (900)              -                        -                          (900) 
Capitalized borrowing 
 cost                                    60,131              -                        -                         60,131 
Capitalised 
 depreciation                               357              -                        -                            357 
Change in environmental 
 rehabilitation 
 provision                             (11,469)              -                        -                       (11,469) 
Foreign exchange impact                (52,051)        (1,088)                  (1,308)                       (54,447) 
At 30 June 2022                       4,247,229         56,006                   60,018                      4,363,253 
 
Accumulated 
Depreciation 
At 1 January 2021                       376,643          6,979                   50,513                        434,135 
Charge for the period 
Expensed                                 81,234         12,274                    1,998                         95,506 
Impairments                                 774                                                                    774 
Disposal of assets                            -              -                       21                             21 
Foreign exchange impact                (16,129)          (151)                      449                       (15,831) 
At 31 December 2021                     442,522         19,102                   52,981                        514,605 
Charge for the period 
 expensed                                29,130          4,661                      354                         34,145 
Write down on disposal 
 of assets                                  250              -                        -                            250 
Disposal of assets                        (433)              -                        -                          (433) 
Foreign exchange impact                 (8,050)            393                    (321)                        (7,978) 
At 30 June 2022                         463,419         24,156                   53,014                        540,589 
Net carrying amount 
At 31 December 2021                   3,455,265         38,143                    6,065                      3,499,473 
At 30 June 2022                       3,783,810         31,850                    7,004                      3,822,664 
 

Included in the carrying amount of leased assets at 30 June 2022 are right of use assets related to oil and gas properties and other property, plant and equipment of $30.3 million and $1.6 million respectively. The depreciation charged on these classes for the six-month ending 30 June 2022 were $4.4 million and $0.2 million respectively

The additions to oil & gas properties for the period of six months ended 30 June 2022 are mainly due to development costs of Karish field related to the EPCIC contract (FPSO, Sub Sea and On-shore construction cost) at the amount of $286.8 million and NEA/NI project in Egypt at the amount of $44.2 million.

Borrowing costs capitalised for qualifying assets, included in oil & gas properties, for the six months ended 30 June 2022 amounted to $70.6 million. The average interest rates used was 5.16% for the six months ended 30 June 2022.

There were no impairment indicators identified at 30 June 2022.

11. Intangible assets

 
                              Exploration 
                             and evaluation            Other Intangible 
                                 assets      Goodwill       assets        Total 
                                 $'000        $'000         $'000         $'000 
Intangibles at Cost 
At 1 January 2021                   158,213   101,146            22,355   281,714 
Additions                            47,995         -             2,413    50,408 
Capitalized borrowing 
 costs                                2,202         -                 -     2,202 
Change in decommissioning 
 provision                            2,141                                 2,141 
Transfers to property, 
 plant and equipment                  (265)         -          (14,078)  (14,343) 
Exchange differences                (4,953)         -             (983)   (5,936) 
At 31 December 2021                 205,333   101,146             9,707   316,186 
Additions                            36,045         -               914    36,959 
Capitalized borrowing                               - 
 costs                                    -                           -         - 
Exchange differences                (8,434)         -             (138)   (8,572) 
At 30 June 2022                     232,944   101,146            10,483   344,573 
 
Accumulated amortisation 
 and impairments 
At 1 January 2021                     3,004         -             2,894     5,898 
Charge for the period                     -         -             1,946     1,946 
Impairment                           82,125         -                 -    82,125 
Exchange differences                (1,850)         -              (74)   (1,924) 
At 31 December 2021                  83,279         -             4,766    88,045 
Charge for the period                     -                          96        96 
Impairment                              362         -                 -       362 
Exchange differences                  (603)         -             (115)     (718) 
At 30 June 2022                      83,038         -             4,747    87,785 
 
Net Carrying Amount 
At 31 December 2021                 122,054   101,146             4,941   228,141 
At 30 June 2022                     149,906   101,146             5,736   256,788 
 

12. Net deferred tax (liability)/ asset

 
Deferred               Property,  Right  Decom-missioning  Prepaid      Inventory  Tax       Deferred  Retirement  Accrued       Total 
tax                    plant      of                       expenses                 losses   expenses   benefit     expenses 
(liabilities)/assets   and        use                      and other                         for        liability   and other 
                       equipment  asset                    receivables                       tax                    short--term 
                                  IFRS                                                                              liabilities 
                                  16 
                         $'000    $'000       $'000           $'000       $'000     $'000       $'000    $'000        $'000       $'000 
At 1 January 
 2021                  (123,543)  (292)             8,877      (4,651)        695   165,841         -       1,050         9,470    57,447 
Increase 
 / (decrease) 
 for the period 
 through: 
Profit or 
 loss (Note 
 8)                      9,848    (718)       50,808           890        (254)    (32,501)    5,020     (932)        6,996       39,157 
Other comprehensive 
 income                                                                                                                   1,586     1,586 
Reclassifications 
 in the current 
 period(1)              (28,442)                   33,644        2,025      (233)   (4,903)    6, 010         200       (8,301)         - 
Exchange 
 difference                1,584     20           (3,889)          165       (25)   (8,257)                  (52)         (363)    (10,817) 
At 31 December 
 2021                  (140,553)  (990)            89,440      (1,571)        183   120,180    11,030         266         9,388    87,373 
Increase 
 / (decrease) 
 for the period 
 through: 
Profit or 
 loss (Note 
 8)                      (7,216)     34               242        2,601        250    85,902   (4,687)        (61)       (1,052)    76,013 
Other comprehensive 
 income                        -      -                 -            -          -         -         -           -         5,507     5,507 
Exchange 
 difference                4,565     20           (7,148)            -       (28)  (13,510)         -        (10)       (1,142)  (17,253) 
At 30 June 
 2022 (Unaudited)      (143,204)  (936)            82,534        1,030        405   192,572     6,343         195        12,701   151,640 
                                                                                                                              31 December 
                                                                                                     30 June 2022                    2021 
                                                                                                            $'000                   $'000 
Deferred tax liabilities                                                                                 (64,542)                (67,425) 
Deferred tax assets                                                                                       216,182                 154,798 
Net deferred tax assets                                                                                   151,640                  87,373 
 
 

At 30 June 2022 the Group had gross unused tax losses of $988.2 million (as of 31 December 2021: $1,123.8 million) available to offset against future profits and other temporary differences. A deferred tax asset of $192.6 million (2021: $120.2 million) has been recognised on tax losses of $758.5 million, based on the forecasted profits. The Group did not recognise deferred tax on tax losses and other differences totalling $629.4 million.

In Greece, Italy and the UK, the net DTA for carried forward losses recognised in excess of the other net taxable temporary differences was $60.7 million, $63.0 million and $12.2 million (2021: $59.3 million, $0.19 million and $13.8 million) respectively. An additional DTA of $80.3 million (2021: $81.4 million) arose primarily in respect of deductible temporary differences related to property, plant and equipment, decommissioning provisions and accrued expenses, resulting in a total DTA of $216.2 million (2021: $154.8 million). During the period, Italy recognised a DTA of $63.0 million on tax losses of $262.7 million in accordance with its latest tax loss utilisation forecast which was revised given the high forecast PSV and Brent prices.

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 2029. In Italy, a deferred tax asset of $62.3 million is recognised on decommissioning costs scheduled to be incurred up to 2030. Finally, in the UK, decommissioning spend is expected to be tax relieved up until 2027, and the deferred tax asset recognised on UK tax losses is fully offset against deferred tax liabilities on temporary differences.

On 3 March 2021 it was announced in the UK budget that the UK non-ring fence corporation tax rate will increase from 19% to 25% with effect from 2023. The Group does not currently recognise any deferred tax assets in respect of UK non-ring fence tax losses and therefore this rate change did not impact the tax disclosures.

13. Cash and cash equivalents

 
                              30 June  31 December 
                     2022 (Unaudited)         2021 
                                $'000        $'000 
 
Cash at bank                  673,708      729,390 
Deposits in escrow                  -        1,449 
                              673,708      730,839 
 

Bank demand deposits comprise deposits and other short-term money market deposit accounts that are readily convertible into known amounts of cash. The annual effective interest rate on short--term bank deposits was 0.854% for the six months period ended 30 June 2022 (year ended 31 December 2021: 0.386% ).

14. Restricted Cash

Restricted cash comprises cash retained under the Israel Senior Secured Notes and the Greek State Loan requirement as follows:

Current

- $35.6 million -Interest Payment Account for the accrued interest (less coupons actually paid) for the period to September 2022 and

- $100 million Debt Payment Fund which will be used partly for the September 2022 coupon payment and the remainder released in June 2023, upon achieving six months production at an annualized rate of 3.8 bcm/year from the Karish asset in Israel.

Non-Current

- $2.8million- $2.1million required to be restricted in Interest Service Reserve Account ('ISRA') in relation to the Greek Loan Notes and $0.6million for Prinos Guarantee.

15. Inventories

 
                              30 June 2022 
                               (Unaudited)       31 December 
                                                        2021 
                                     $'000             $'000 
Crude oil                           35,297            32,832 
Raw materials and supplies          45,010            54,371 
Total inventories                   80,307            87,203 
 

16. Trade and other receivables

 
                                                      30 June  31 December 
                                             2022 (Unaudited)         2021 
                                                        $'000        $'000 
Trade and other receivables-Current 
Financial items: 
Trade receivables                                     166,130      178,804 
Receivables from partners under JOA                     8,534        5,138 
Other receivables(1)                                   26,749       38,683 
Government subsidies (2)                                2,946        3,212 
Receivable Vat                                         73,742       42,376 
Receivables from related parties (note 23)                  -            1 
                                                      278,101      268,214 
Non-financial items: 
Deposits and prepayments (3)                           19,392       17,139 
Deferred issuance expenses                              4,940        2,095 
Other deferred expenses(4)                             22,958            - 
Accrued interest income                                   646        1,078 
                                                       47,936       20,312 
                                                      326,037      288,526 
Trade and other receivables-Non Current 
Financial items: 
Other tax recoverable                                  14,795       16,478 
                                                       14,795       16,478 
Non-financial items: 
Deposits and prepayments                               11,398       12,337 
Other deferred expenses(4)                                  -       22,958 
Other non-current assets                                  501          866 
                                                       11,899       36,161 
                                                       26,694       52,639 
 

(1) Included in other receivables is $26 million (31 December 2021: $29.4million) cash on account in relation to the hedges in Italy

(2) Government subsidies mainly relate to grants from Greek Public Body for Employment and Social Inclusion (OAED) to financially support the Kavala Oil S.A. labour cost from manufacturing under the action plan for promoting sustainable employment in underdeveloped or deprived districts of Greece .

(3) Mainly relates to prepayments for goods and services under the GSP Engineering, Procurement, Construction and Installation Contract (EPCIC) for the Epsilon project.

(4) In accordance with the Gas Sale and Purchase Arrangements (GSPAs) signed with a group of gas buyers, the Company has agreed to pay compensation due to the fact the first gas supply date is taking place beyond the 30 June 2021. The compensation, amounting to $23million, was fully paid in H2 2021 and presented as a current asset as it will be accounted for as variable consideration in line with IFRS 15 against the first gas sale once production commences and gas is delivered to the offtakers, which is expected within the next 12 months.

17. Share capital

The below tables outline the share capital of the Company.

 
                              Equity share capital  Share capital  Share premium 
                                allotted and fully 
                                              paid 
                                            Number          $'000          $'000 
Issued and authorized 
At 1 January 2021                      177,089,406         2,36 7        915,388 
Issued during the year 
- New shares                                     -              -              - 
- Share based payment                      513,154              7              - 
At 31 December 2021                    177,602,560          2,374        915,388 
Issued during the period 
- Share based payment                      437,945              6              - 
Share Premium Reduction(1)                                             (500,000) 
At 30 June 2022 (Unaudited)            178,040,505          2,380        415,388 
 

(1) Energean plc by special resolution reduced its share premium account, as confirmed by an Order of the High Court of Justice on the 14 June 2022.

18. Borrowings

 
                                                30 June 2022               31 December 
                                                 (Unaudited) 
                                                                                  2021 
                                                       $'000                     $'000 
Non-current 
Bank borrowings - after two years but within 
 five years 
4.5% Senior Secured notes due 2024 ($625 
 million)                                            618,741                   617,060 
4.875% Senior Secured notes due 2026 ($625 
 million)                                            616,930                   615,966 
Convertible loan notes ($50 million)                  43,458                    41,495 
Bank borrowings - more than five years 
6.5% Senior Secured notes due 2027 ($450 
 million)                                            442,682                   442,107 
5.375% Senior Secured notes due 2028 ($625 
 million)                                            616,107                   615,451 
5.875% Senior Secured notes due 2031 ($625 
 million)                                            615,473                   615,047 
BSTDB Loan and Greek State Loan Notes                 33,366                         - 
Carrying value of non-current borrowings           2,986,757                 2,947,126 
 
Current 
Carrying value of current borrowings                       -                         - 
 
Carrying value of total borrowings                 2,986,757                 2,947,126 
 
 

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.

US$2,500,000,000 senior secured notes:

On 24 March 2021, the Group completed the issuance of US$2.5 billion aggregate principal amount of senior secured notes. The Notes were issued in four series as follows:

1. Notes in an aggregate principal amount of US$625 million, maturing on 30 March 2024, with a fixed annual interest rate of 4.500%.

2. Notes in an aggregate principal amount of US$625 million, maturing on 30 March 2026, with a fixed annual interest rate of 4.875%.

3. Notes in an aggregate principal amount of US$625 million, maturing on 30 March 2028, with a fixed annual interest rate of 5.375%.

4. Notes in an aggregate principal amount of US$625 million, maturing on 30 March 2031, with a fixed annual interest rate of 5.875%.

The interest on each series of the Notes is be paid semi-annually, on 30 March and on 30 September of each year.

The Notes are listed for trading on the TACT Institutional of the Tel Aviv Stock Exchange Ltd. (the "TASE").

The Company has provided the following collateral in favour of the Trustee:

1. First rank fixed charges over the shares of Energean Israel Limited, Energean Israel Finance Ltd and Energean Israel Transmission Ltd, the Karish & Tanin Leases, the gas sales purchase agreements ("GSPAs"), several bank accounts, Operating Permits (once issued), Insurance policies, the Company exploration licenses and the INGL Agreement.

2. Floating charge over all of the present and future assets of Energean Israel Limited and Energean Israel Finance Ltd.

3. Energean Power FPSO (subject to using commercially reasonable efforts, including obtaining Israel Petroleum Commissioner approval and any other applicable governmental authority).

Kerogen Convertible Loan

On 25 February 2021, the Group completed the acquisition of the remaining 30% minority interest in Energean Israel Ltd from Kerogen Investments No.38 Limited, Energean now owns 100% of Energean Israel Limited.

This resulted in a reduction of the Group's reported non-controlling interest balance to $nil at 31 December 2021.

The total consideration includes:

   --       An up-front payment of $175 million paid at completion of the transaction 

-- Deferred cash consideration amounts totalling $180 million, which are expected to be funded from future cash flows and optimisation of the group capital structure, post-first gas from the Karish project. The deferred consideration is discounted at the selected unsecured liability rate of 9.77%.

-- $50 million of convertible loan notes (the "Convertible loan notes"), which have a maturity date of 29 December 2023, a strike price of GBP9.50 and a zero-coupon rate

$450,000,000 senior secured notes:

On 18 November 2021, the Group completed the issuance of $450 million of senior secured notes, maturing on 30 April 2027 and carrying a fixed annual interest rate of 6.5%.

The interest on the notes is paid semi-annually on 30 April and 30 October of each year.

The notes are listed for trading on the Official List of the International Stock Exchange ("TISE").

The issuer is Energean plc and the Guarantors are Energean E&P Holdings, Energean Capital Ltd, Energean Egypt Ltd, and Energean Egypt Services JSC.

The company undertook to provide the following collateral in favour of the Security Trustee:

1. Share pledge of Energean Capital Ltd, Energean Egypt Ltd, Energean Italy Ltd and Energean Egypt Services JSC

2. Fixed charges over the material bank accounts of the Company and the Guarantors (other than Energean Egypt Services JSC)

3. Floating charge over the assets of Energean plc (other than the shares of Energean E&P Holdings)

Energean Oil and Gas SA ('EOGSA') loan for Epsilon/Prinos Development :

On 27 December 2021 EOGSA entered into a loan agreement with Black Sea Trade and Development Bank for EUR90.5 million to fund the development of Epsilon Oil Field. The loan is subject to an interest rate of EURIBOR plus a margin of 2% on 90% of the loan (guaranteed portion) and 4.9% margin on 10% of the loan (unguaranteed portion). The loan has a final maturity date 7 years and 11 months after first disbursement.

On 27 December 2021 EOGSA entered into an agreement with Greek State to issue EUR9.5 million of notes maturing in 8 years with fixed rate -0.31% plus margin as outlined in the table below:

 
Year          Margin 
1       3.0% 
2       3.5% 
3       3.5% 
4       4.5% 
5       4.5% 
6       4.5% 
7       5.5% 
8       6.5% 
 
 
 

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 2022 
                                    (Unaudited)   31 December 2021 
                                          $'000              $'000 
Net Debt 
Current borrowings                            -                  - 
Non-current borrowings                2,986,757          2,947,126 
Total borrowings                      2,986,757          2,947,126 
Less: Cash and cash equivalents       (673,708)          (730,839) 
Restricted cash                       (138,409)          (199,729) 
Net Debt (1)                          2,174,640          2,016,558 
Total equity (2)                        813,060            717,123 
Gearing Ratio (1/2):                    267.46%             281.2% 
 
 

Reconciliation of liabilities arising from financing activities

 
                                                                                                  Borrowing 
                                                                                                      costs 
                                                                                                  including 
                                                                                               amortisation 
                                                                                                         of      Foreign 
                 1 January       Cash       Cash                                        Lease   arrangement     exchange    30 June 
                      2022    inflows   outflows    Reclassification  Additions  modification          fees       impact       2022 
                     $'000      $'000      $'000               $'000      $'000         $'000         $'000        $'000      $'000 
2022             3,294,459     35,835   (85,970)               (365)        746         (897)       97, 229      (3,858)  3,337,179 
Secured Senior 
Notes            2,905,631          -   (77,763)                   -          -             -        82,065            -  2,909,933 
Convertible 
loan 
notes               41,495          -          -                   -          -             -         1,963            -     43,458 
Long -term 
borrowings               -     35,835    (2,422)               (365)          -             -           365         (47)     33,366 
Lease 
liabilities         44,425          -    (5,785)                   -        746         (897)           734      (3,811)     35,412 
Deferred 
licence 
payments            57,230          -          -                   -          -             -         2,868            -     60,098 
Contingent 
consideration       78,450          -          -                   -          -             -         1,322            -     79,772 
Deferred 
consideration 
for acquisition 
of 
minority           167,228          -          -                 -            -             -         7,912            -    175,140 
 
 
 
 

19. Retirement benefit liability

19.1 Provision for retirement benefits

 
                                     30 June 2022 
                                      (Unaudited)  31 December 2021 
                                            $'000             $'000 
Defined benefit obligation                  1,957             2,767 
Provision for retirement benefits 
 recognised                                 1,957             2,767 
Allocated as: 
Non-current portion                         1,957             2,767 
 

19.2 Defined benefit obligation

 
                                   30 June 2022  31 December 
                                    (Unaudited)         2021 
                                          $'000        $'000 
At 1 January                              2,767        7,839 
Change in estimate                            -      (3,463) 
Current service cost                         52          191 
Interest cost                                21           13 
 Extra payments or expenses               2,934          775 
Actuarial losses - from changes 
 in financial assumptions                  (48)          162 
Benefits paid                           (3,574)      (2,314) 
Transfer in/(out)                             -         (34) 
Exchange differences                      (195)        (402) 
At 30 June / 31 December                  1,957        2,767 
 

20. Provisions

 
                                  Decommissioning       Litigation         Total 
                                     provision      and other provisions 
                                       $'000               $'000           $'000 
At 1 January 2022                         802,098                 11,294   813,392 
New provisions                                                     1,443     1,443 
Change in estimates                      (11,469)                      -  (11,469) 
Recognised in property, plant 
 and equipment                           (11,469)                      -  (11,469) 
Recognised in Intangible 
 assets                                         -                      -         - 
Recognised in profit& loss                      -                      -         - 
Payments                                  (1,474)                          (1,474) 
Unwinding of discount                       5,261                            5,261 
Currency translation adjustment          (67,719)                (2,927)  (70,646) 
At 30 June 2022 (Unaudited)               726,697                  9,810   736,507 
Current provisions                         12,133                      -    12,133 
Non-current provisions                    714,564                  9,810   724,374 
 

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 2040, when the producing oil and gas properties are expected to cease operations.

The key assumptions underpinning the estimated decommissioning provision are as follows:

 
                     Inflation   Discount rate   Cessation of   30 June 
                    assumption      assumption     production      2022   31 December 2021 
                  30 June 2022    30 June 2022     assumption     $'000              $'000 
Greece              0.8%- 2.4%           2.87%           2034    13,610             17,058 
Italy              1.1% - 1.4%           1.23%      2022-2040   485,560            527,801 
UK                        2.5%           1.49%      2023-2031   183,878            203,246 
Israel(1)         2.0%-5.3%(1)        3.43%(1)           2041    26,609             35,525 
Croatia                   1.8%           1.25%           2022    17,040             18,467 
Total                                                           726,697            802,097 
 
 

(1) US inflation rate and US Bond rates have been used.

Litigation and other claims provisions

Litigation and other claim provision relates to litigation actions currently open in Italy with the Termoli Port Authority in respect of the fees payable under the marine concession regarding FSO Alba Marina serving the Rospo Mare field. Energean Italy Spa has appealed these cases to the Campobasso Court of Appeal. None of the other cases has yet had a decision on the substantive issue. The Group provided $7.5 million (EUR7.2 million) against an adverse outcome of these court cases.

Energean Italy SpA has currently open litigations with three municipalities in Italy related to the imposition of real estate municipality taxes (IMU/TASI), interest and related penalties concerning the periods 2016 to 2019. For the years before 2019, Edison SpA bears uncapped liability for any amount assessed according to the sale and purchase agreement (SPA) signed between the companies while Energean is liable for any tax liability related to tax year 2019. For all three cases, Energean Italy SpA (together with Edison SpA, as appropriate) filed appeals presenting strong legal and technical arguments for reducing the assessed taxes as well as cancelling the assessed penalties. Based on legal advice received, the Group strongly believes that the outcome of the court decisions will be in its favour with no material exposure expected in excess of the provision of $2.2 million (EUR2.1million) recognised.

It is not currently possible to accurately predict the timing of the settlement of these claims and therefore the expected timing of the cash flows have been disclosed as non-current based timings of the next court hearing dates.

21. Trade and other payables

 
                                         30 June 2022  31 December 
                                          (Unaudited)         2021 
                                                $'000        $'000 
 
Trade and other payables-Current 
Financial items: 
Trade accounts payable                        154,181      109,525 
Payables to partners under JOA 
 (1)                                           41,607       43,499 
Deferred licence payments due 
 within one year (2)                           24,466            - 
Deferred consideration for acquisition 
 of minority                                  175,140      167,228 
Other creditors                                19,618       12,043 
Short term lease liability                      8,394        8,253 
                                              423,406      340,548 
Non-financial items: 
Contract Liability(3)                          54,690            - 
Accrued Expenses(4)                            87,848       64,823 
Other finance costs accrued                    37,581       36,693 
Social insurance and other taxes                4,328        7,643 
                                              184,447      109,159 
                                              607,853      449,707 
Trade and other payables-Non 
 Current 
Financial items: 
Trade and other payables(5)                   122,579            - 
Deferred licence payments (2)                  35,632       57,230 
Contingent consideration (note 
 7)                                            79,772       78,450 
Long term lease liability                      27,018       36,172 
                                              265,001      171,852 
Non-financial items: 
Contract Liability(3)                               -       53,537 
Social insurance                                  663          598 
                                                  663       54,135 
                                              265,664      225,987 
 

(1) Payables related to operated Joint operations primarily in Italy

(2) In December 2016, Energean Israel acquired the Karish and Tanin offshore gas fields for a $40.0 million closing payment with an obligation to pay additional consideration of $108.5 million plus interest at an annual rate of 4.6% in ten equal annual payments. As at 30 June 2022 the total discounted deferred consideration liability remaining was $60 million (31 December 2021: $57 million). The Sale and Purchase Agreement ("SPA") includes provisions in the event of Force Majeure that prevents or delays the implementation of the development plan as approved under one lease for a period of more than ninety (90) days in any year following the final investment decision. In the event of Force Majeure, the applicable annual payment of the remaining consideration will be postponed by an equivalent period of time, and no interest will be accrued in that period of time as well. Due to the effects of the COVID-19 pandemic which constitute a Force Majeure event, the deferred payment due in March 2022 was postponed accordingly .

(3) In June 2019, Energean signed an agreement with Israel Natural Gas Lines ("INGL") for the transfer of title (the "hand over") of the nearshore and onshore part of the infrastructure that will deliver gas from the Karish and Tanin FPSO into the Israeli national gas transmission grid. As consideration, INGL will pay Energean 369 million Israeli new shekel (ILS) (c. $115 million) for the infrastructure being built by Energean which will be paid in accordance with milestones detailed in the agreement. The agreement covers the onshore section of the Karish and Tanin infrastructure and the nearshore section of pipeline extending to approximately 10km offshore. It is intended that the hand over to INGL will become effective at least 90 days after the delivery of first gas from the Karish field which expected within weeks. Following Hand Over, INGL will be responsible for the operation and maintenance of this part of the infrastructure.

(4) Included in trade payables and accrued expenses in HY22 and FY21 are mainly Karish field-related development expenditures (mainly FPSO and sub-sea construction cost) and the NEA/NI project in Egypt.

(5) The amount represents an amount payable to Technip in respect of costs incurred starting 1 April 2022 until completion, in terms of the EPCIC contract. The amount is payable in eight equal quarterly deferred payments due after practical completion date and therefore has been discounted at 5.831%. p.a.

22. Share based payments

Analysis of share-based payment charge

 
                                          30 June (Unaudited) 
                                               2022       2021 
                                              $'000      $'000 
 
 
Energean Deferred Bonus Plan (DSBP)             609        530 
Energean Long Term Incentive Plans 
 (LTIP)                                       2,217      1,944 
 
Total share-based payment charge              2,826      2,474 
Capitalised to intangible and tangible 
 assets                                         109        207 
Expensed as cost of sales                         -          5 
Expensed as administration expenses           2,717      2,247 
Expensed to exploration and evaluation 
 expenses                                         -         14 
Expensed as other expenses                        -          1 
Total share-based payment charge              2,826      2,474 
 

Energean Long Term Incentive Plan (LTIP)

Under the LTIP, Senior Management can be granted nil exercise price options, normally exercisable from three to ten years following grant provided an individual remains in employment. The size of awards depends on both annual performance measures and Total Shareholder Return (TSR) over a period of up to three years. There are no post-grant performance conditions. 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 2022 was 1.6 years, number of shares outstanding 2,103,849 and weighted average price at grant date GBP8.49.

Deferred Share Bonus Plan (DSBP)

Under the DSBP, the portion of any annual bonus above 30 per cent of the base salary of a Senior Executive nominated by the Remuneration Committee was 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 2022 was 1.3 years, number of shares outstanding 230,707 and price at grant date GBP10.05.

23. Related parties

23a. Related party relationships

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

The Directors of Energean Plc are considered to be the only key management personnel as defined by IAS 24. The following information is provided in relation to the related party transaction disclosures provided in note 23b below:

Adobelero Holdings Co Ltd . is a beneficially owned holding company controlled by Panos Benos, the CFO of the Group.

Growthy Holdings Co Ltd is a beneficially owned holding company controlled by Matthaios Rigas, the CEO of the Group.

Oil Co Investments Limited is beneficially owned and controlled by Efstathios Topouzoglou, a Non-Executive Director of the Group.

Seven Maritime Company (Seven Marine) is a related party company controlled by one the Company's shareholders Mr Efstathios Topouzoglou. Seven Marine owns the offshore supply ship Energean Wave which support the Group's operation in northern Greece.

Capital Earth: During the period ended 30 June 2022 the Group received consultancy services from Capital Earth Limited, a consulting company controlled by the spouse of one of Energean's executive directors, for the provision of Group Corporate Social Responsibility Consultancy and Project Management Services.

Prime Marine Energy Inc: Following a competitive tender process, the Group entered into an agreement to purchase a Field Support Vessel ("FSV") from Prime Marine Energy Inc., a company controlled by director and shareholder at Energean plc, for $33.3 million. The FSV is being constructed to meet the Group's specifications and will provide significant in-country capability to support the Karish project, including FPSO re-supply, crew changes, holdback operations for tanker offloading, emergency subsea intervention, drilling support and emergency response. The purchase of this multi-purpose vessel will enhance operational efficiencies and economics when compared to the leasing of multiple different vessels for the various activities.

23b. Related party transactions

Purchases of goods and services

 
                                                     30 June (Unaudited) 
                                                      2022            2021 
                                                     $'000           $'000 
                        Nature of transactions 
Other related party 
 "Seven Marine"         Vessel leasing                       1,079     993 
Other related party     Construction 
 "Prime Marine Energy    of field support 
 Inc"                    vessel                              1,556   3,300 
Other related party 
 "Capital Earth Ltd"    Consulting services                     48      46 
                                                             2,683   4,339 
 
 

23c. Related party balances

Payables

 
                                     30 June 2022  31 December 
                                      (Unaudited)         2021 
                                            $'000        $'000 
               Nature of balance 
Seven Marine   Vessel leasing                 232          417 
                                              232          417 
 

24. Commitments and contingencies

In acquiring its oil and gas interests, the Group has pledged that various work programmes will be undertaken on each permit/interest. The exploration commitments in the following table are an estimate of the net cost to the Group of performing these work programmes:

 
                                            30 June 2022   31 December 
                                             (Unaudited)          2021 
                                                   $'000         $'000 
Capital Commitments: 
Due within one year                               35,866        20,575 
Due later than one year but within two 
 years                                            38,658        51,180 
Due later two years but within five years          2,035         1,497 
                                                  76,559        73,252 
 
  Contingent liabilities: 
 
  Performance guarantees*: 
Greece                                             2,540         1,176 
Israel                                           101,100        89,683 
UK                                                83,320        99,570 
Italy                                             13,551        21,292 
Egypt                                              2,000             - 
Montenegro                                             -           566 
                                                 202,511       212,287 
 
 

* Performance guarantees are in respect of abandonment obligations, committed work programmes and certain financial obligations

Issued guarantees:

Karish and Tanin Leases ($25 million) - As part of the requirements of the Karish and Tanin Lease deeds, the Group provided the Ministry of National Infrastructures, Energy and Water with bank guarantees for each lease. The bank guarantees expire 29 June 2023.

Blocks 12, 21, 22, 23 and 31 ($21.1 million)- As part of the requirements of the exploration and appraisal licences which granted to the Group during the Israeli offshore bid in December 2017, the Group provided the Ministry of National Infrastructures, Energy and Water in January 2018 with bank guarantees for all 5 blocks mentioned above. The bank guarantees are in force until 13 January 2023. Additionally, a bank guarantee related Block 12 drilling was issued in November 2021 and is in force until 17 December 2022.

Blocks 55, 56, 61 and 62 , also known as "ZONE D" ($3.2million)- As part of the requirements of the exploration and appraisal licences which granted to the Group during the Israeli 2nd offshore bid in July 2019, the Group provided the Ministry of National Infrastructures, Energy and Water in January 2018 with bank guarantees for all 4 blocks mentioned above. The bank guarantees are in force until 28 September 2022.

Israeli Natural Gas Lines ("INGL") ($47.3million) - As part of the agreement signed with INGL on June 2019 the Group provided INGL bank guarantee in order to secure the milestone payments from INGL. These bank guarantees are in force until 30 November 2022 ($42.1million) and June 2023 ($5.2million).

Israel Other ($4.4million) - As part of ongoing operations in Israel, the Group has provided various bank guarantees to third parties in Israel.

United Kingdom: Following the Edison E&P acquisition, the Group issued letters of credit amounting to $83.3 million for United Kingdom decommissioning obligations and other obligations under the United Kingdom licenses.

Italy: Following the Edison E&P acquisition, the Group issued letters of credit amounting to $13.5 million for decommissioning obligations and other obligations under the Italian licenses.

Legal cases and contingent liabilities

The Group had no material contingent liabilities as of 30 June 2022 and 31 December 2021.

25. Subsequent events

Zone D

On 27 July 2022 the Company sent a formal notice to the Ministry of Energy asking the relinquishment of Zone D licenses and discontinue any work regarding them. The licenses will expire at the end of their term, i.e., on October 27, 2022.

26. Subsidiary undertakings

At 30 June 2022, the Group had investments in the following subsidiaries:

 
 Name of subsidiary       Country of incorporation     Principal activities    Shareholding      Shareholding 
                          / registered office 
                                                                                 At 30 June    At 31 December 
                                                                                       2022              2021 
                                                                                        (%)               (%) 
Energean E&P Holdings    22 Lefkonos Street, 
 Ltd                      2064 Nicosia, Cyprus               Holding Company            100               100 
Energean Capital         22 Lefkonos Street, 
 Ltd                      2064 Nicosia, Cyprus               Holding Company            100               100 
                                                                 Oil and gas 
                                                                exploration, 
                         44 Baker Street, London                 development 
Energean MED Limited      W1U 7AL, United Kingdom             and production            100               100 
                                                                 Oil and gas 
                         32 Kifissias Ave.                      exploration, 
Energean Oil &            151 25 Marousi Athens,                 development 
 Gas S.A.                 Greece                              and production            100               100 
                                                                 Oil and gas 
                                                                exploration, 
Energean International   22 Lefkonos Street,                     development 
 Limited                  2064 Nicosia, Cyprus                and production            100               100 
                                                                 Oil and gas 
                                                                exploration, 
Energean Israel          22 Lefkonos Street,                     development 
 Limited                  2064 Nicosia, Cyprus                and production            100               100 
                                                                 Oil and gas 
                                                                exploration, 
Energean Montenegro      22 Lefkonos Street,                     development 
 Limited                  2064 Nicosia, Cyprus                and production            100               100 
Energean Israel          560A rue de Neudorf, 
 Finance SARL             L-2220, Luxembourg            Financing activities            100               100 
Energean Israel          Andre Sakharov 9,                Gas transportation 
 Transmission LTD         Haifa, Israel                       license holder            100               100 
Energean Israel          Andre Sakharov 9, 
 Finance LTD              Haifa, Israel                 Financing activities            100               100 
                                                                 Oil and gas 
                                                                exploration, 
Energean Egypt           22 Lefkonos Street,                     development 
 Limited                  2064 Nicosia, Cyprus                and production            100               100 
                                                                 Oil and gas 
                                                                exploration, 
Energean Hellas          22 Lefkonos Street,                     development 
 Limited                  2064 Nicosia, Cyprus                and production            100               100 
                                                                 Oil and gas 
                                                                exploration, 
Energean Italy           Piazza Sigmund Freud                    development 
 S.p.a.                   1                                   and production            100               100 
  20154 Milan,Italy 
                                                                 Oil and gas 
                                                                exploration, 
Energean International   Piazza Sigmund Freud                    development 
 E&P S.p.a.               1                                   and production            100               100 
  20154 Milan,Italy 
                                                                 Oil and gas 
                                                                exploration, 
Energean Sicilia         Via Salvatore Quasimodo                 development 
 Srl                      2 - 97100 Ragusa (Ragusa)           and production            100               100 
                                                                 Oil and gas 
                                                                exploration, 
Energean Exploration     44 Baker Street, London                 development 
 Limited                  W1U 7AL, United Kingdom             and production            100               100 
                                                                 Oil and gas 
                                                                exploration, 
                         44 Baker Street, London                 development 
Energean UK Ltd           W1U 7AL, United Kingdom             and production            100               100 
                         Building 11, 273 Palestine              Oil and gas 
Energean Egypt            Street                                exploration, 
 Energy Services          New Maadi , Cairo                      development 
 JSC                      EGYPT                               and production            100               100 
 

27. Exploration, Development and production interests

 
Country  Fields                Fiscal Regime  Group's working       Field Phase  Joint Operation  Operator 
                                              interest 
Israel 
         Karish                Concession     100%                  Development  No               NA 
         Tanin                 Concession     100%                  Development  No               NA 
         Blocks 12, 21, 22,    Concession     100%                  Exploration  No               NA 
         23, 31 
         Four licenses Zone D  Concession     80%                   Exploration  Yes              Energean 
Egypt 
         Abu Qir               PSC            100%                  Production   No               NA 
         Abu Qir North         PSC            100%                  Production   No               NA 
         Abu Qir West          PSC            100%                  Production   No               NA 
         Yazzi                 PSC            100%                  Development  No               NA 
         Python                PSC            100%                  Development  No               NA 
         Field A (NI-1X)       PSC            100%                  Exploration  No               NA 
         Field B (NI-3X)       PSC            100%                  Exploration  No               NA 
         NI-2X                 PSC            100%                  Exploration  No               NA 
         North East Hap'y      PSC            30%                   Exploration  Yes              ENI 
         Viper (NI-4X)         PSC            100%                  Exploration  No               NA 
Greece 
         Prinos                Concession     100%                  Production   No               NA 
         Epsilon               Concession     100%                  Development  No               NA 
         Prinos exploration    Concession     100%                  Exploration  No               NA 
         area 
         South Kavala          Concession     100%                  Production   No               NA 
         Katakolo              Concession     100%                  Undeveloped  No               NA 
         Ioannina              Concession     40%                   Exploration  Yes              Repsol 
         West Patraikos        Concession     50%                   Exploration  Yes              HELPE 
         Block-2               Concession     75%                   Exploration  Yes              Energean 
Italy 
         Vega A                Concession     100%                  Production   Yes              Energean 
         Vega B                Concession     100%                  Production   Yes              Energean 
         Rospo Mare            Concession     100%                  Production   Yes              Energean 
         Verdicchio            Concession     100%                  Production   No               NA 
         Vongola Mare          Concession     95%                   Production   Yes              Energean 
         Gianna                Concession     49%                   Development  Yes              ENI 
         Accettura             Concession     50%                   Production   Yes              Energean 
         Anemone               Concession     19%                   Production   Yes              ENI 
         Appia                 Concession     50%                   Production   Yes              Energean 
         Argo-Cassiopea        Concession     40%                   Development  Yes              ENI 
         Azalea                Concession     16%                   Production   Yes              ENI 
         Calipso               Concession     49%                   Production   Yes              ENI 
         Candela Dolce         Concession     40%                   Production   Yes              ENI 
         Candela Povero        Concession     40%                   Production   Yes              ENI 
         Carlo                 Concession     49%                   Production   Yes              ENI 
         Cassiano              Concession     50%                   Production   Yes              Energean 
         Castellaro            Concession     50%                   Production   Yes              Energean 
         Cecilia               Concession     49%                   Production   Yes              ENI 
         Clara East            Concession     49%                   Production   Yes              ENI 
         Clara North           Concession     49%                   Production   Yes              ENI 
         Clara Northwest       Concession     49%                   Production   Yes              ENI 
         Clara West            Concession     49%                   Production   Yes              ENI 
         Comiso                Concession     100%                  Production   No               NA 
         Cozza                 Concession     85%                   Production   Yes              Energean 
         Daria                 Concession     49%                   Production   Yes              ENI 
         Didone                Concession     49%                   Production   Yes              ENI 
         Emma West             Concession     49%                   Production   Yes              ENI 
         Fauzia                Concession     40%                   Production   Yes              ENI 
         Giovanna              Concession     49%                   Production   Yes              ENI 
         Leoni                 Concession     50%                   Production   Yes              Gas Plus 
         Monte Urano-San       Concession     40%                   Production   Yes              Energean 
         Lorenzo 
         Naide                 Concession     49%                   Production   Yes              ENI 
         Portocannone          Concession     62%                   Production   Yes              Energean 
         Quarto                Concession     33%                   Production   Yes              Padana Energia 
         Ramona                Concession     49%                   Production   Yes              ENI 
         Regina                Concession     25%                   Production   Yes              ENI 
         Salacaro              Concession     50%                   Production   Yes              Energean 
         San Giorgio Mare      Concession     95%                   Production   Yes              Energean 
         San Marco             Concession     100%                  Production   No               NA 
         Santa Maria Mare      Concession     96%                   Production   Yes              Energean 
         Santo Stefano         Concession     95%                   Production   Yes              Energean 
         Sarago Mare           Concession     85%                   Production   Yes              Energean 
         Sinarca               Concession     40%                   Production   Yes              Gas Plus 
         Talamonti             Concession     50%                   Production   Yes              Energean 
         Tresauro              Concession     25%                   Production   Yes              Enimed 
UK 
         Garrow                Concession     68%                   Production   Yes              Alpha Petroleum 
         Kilmar                Concession     68%                   Production   Yes              Alpha Petroleum 
         Scott                 Concession     10%                   Production   Yes              CNOOC 
         Telford               Concession     16%                   Production   Yes              CNOOC 
         Wenlock               Concession     80%                   Production   Yes              Alpha Petroleum 
         Glengorm              Concession     25%                   Exploration  Yes              CNOOC 
         Isabella              Concession     10%                   Exploration  Yes              Total Energies E&P 
                                                                                                  North Sea UK Limited 
Montenegro 
         Block 26, 30          Concession     100%                  Exploration  No               NA 
Croatia 
         Irena                 PSC            70%                   Exploration  No               NA 
         Izabela               PSC            70%                   Production   No               NA 
Malta 
         Blocks 1, 2 and 3 of  Concession     100%                  Exploration  No               NA 
         Area 3 
 

[1] When considering H1 2022 data versus 2019 Energean standalone (pre-Edison acquisition)

[2] Adjusted H1 2022 EBITDAX includes losses on forward transactions of $18.2 million (H1 2021: $nil) reported in Revenue (Note 5 in the interim financial statements). Adjusted EBITDAX excluding these hedges would be $216.4 million

[3] Cash Cost of Production is defined in the Financial Review section. Includes $17.4 million of flux costs.

[4] Cash S ,G&A and Adjusted EBITDAX are defined in the Financial Review section

[5] After working capital movements

[6] On an equity share basis

[7] 2019 data is Energean standalone (pre-Edison acquisition)

[8] Cash cost of production is defined later in the financial review

[9] Inclusive of flux costs

[10] Cash SG&A is defined later in the financial review

[11] Adjusted EBITDAX is defined later in the financial review. Energean uses Adjusted EBITDAX as a core business KPI.

[12] Numbers may not sum due to rounding

[13] Adjusted EBITDAX includes losses on forward transactions of $18.2million (H1 2021: $0million) reported in Revenue (Note 4 in the interim financial statements). Adjusted EBITDAX excluding these hedges would be $216.4million

[14] Numbers may not sum due to rounding

[15] Numbers may not sum due to rounding

[16] Inclusive of restricted cash

[17] Numbers may not sum due to rounding

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END

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(END) Dow Jones Newswires

September 08, 2022 02:01 ET (06:01 GMT)

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