TIDMENOG
RNS Number : 6960G
Energean PLC
17 November 2022
Energean plc
("Energean" or the "Company")
Trading Statement & Operational Update
London, 17 November 2022 - Energean plc (LSE: ENOG TASE: ) is
pleased to provide an update on the Group's trading performance in
the 9-months to 30 September 2022 and recent operations.
Mathios Rigas, Chief Executive of Energean, commented:
"The period has been about meeting major milestones and
underpinning the next growth phase of Energean. We delivered first
gas, underwriting Israeli energy security and introducing
competition into the Israeli gas market. We have delivered 5
successful deepwater wells out of 5 in our growth drilling
campaign, demonstrating our deep knowledge of the East Med rocks.
Financially, we have commenced our dividend program that we are
committed to deliver on our promise of at least $1 billion until
2025.
"The year has seen increased international interest in the
Eastern Mediterranean as an energy province; the world is beginning
to understand what we have known since our inception. The East Med
is a highly prospective region. There is every chance of more big
gas discoveries to come. There is a growing regional population in
need of secure and reliable energy supply to drive sustainable
development and a growing realisation of the export potential to
European and global markets."
Highlights
-- Delivered first gas from Karish on 26 October 2022
o Commissioning and ramp-up to initial 6.5 bcm/yr capacity
ongoing
o Two wells onstream with the third expected onstream
shortly
-- Sale and purchase agreement signed with Vitol SA for the
marketing of the initial cargoes of Karish blend hydrocarbon
liquids
-- Continued exploration success in the Olympus Area, offshore
Israel, discovering 25 bcm and de-risking a further 42 bcm
o 13.3 bcm discovered by the Zeus exploration well
o Athena discovery upgraded from 8 bcm to 11.75 bcm following
post-well analysis
-- Strong financial performance for the nine months to 30 September 2022
o Revenues were $550.2 million, a 57% increase versus 2021
comparable period ($350 million)
o Adjusted EBITDAX was $348.5 million, a 147% increase versus
2021 comparable period ($141 million)
o Group cash as of 30 September 2022 was $608.1 million
(including restricted amounts of $74.6 million), and total
liquidity was $855.0 million
-- Average working interest production for the period was 35.2
kboed (73% gas), in line with full year guidance (excluding
Israel)
-- Declared Q3 dividend of 30 US$ cents/share, scheduled to be paid on 30 December 2022
-- Signed a three-year $275 million Revolving Credit Facility
("RCF") in September 2022, which, although expected to remain
undrawn [1] , provides liquidity for general corporate purposes, if
needed.
9-Months to 30 September 2022
Average working interest (kboed) 35.2 (73% gas)
production
----------- ------------------------------
Sales and other revenue $ million 550.2
----------- ------------------------------
Cash Cost of Production[2] $ million 181.4
----------- ------------------------------
Cash Cost of Production $/boe 18.9
----------- ------------------------------
Cash S,G&A $ million 21.1
----------- ------------------------------
Adjusted EBITDAX[3] $ million 348.5
----------- ------------------------------
Operating Cash Flow[4] $ million 183.4
----------- ------------------------------
Capital expenditure $ million 494.4
----------- ------------------------------
Exploration expenditure $ million 71.4
----------- ------------------------------
Decommissioning expenditure $ million 3.8
----------- ------------------------------
Cash (including restricted
amounts) $ million 608.1
----------- ------------------------------
Net debt - consolidated $ million 2,380.1
----------- ------------------------------
Net debt - plc excluding
Israel $ million 86.5
----------- ------------------------------
Net debt - Israel $ million 2,293.6
----------- ------------------------------
Outlook
-- Karish Main-03 production well onstream
o Full year production guidance updated to 44 - 47 kboed
(including Israel), reflecting the start-up of Karish on 26 October
2022
-- Results from the Hercules well before year-end
-- First gas from NEA/NI, Egypt is expected in H1 2023
-- Independent certification of the total resource volumes
within the Olympus area, expected in in early 2023
-- Development concept for the Olympus area in H1 2023
-- Commitment to a progressive quarterly dividend and to return
at least $1 billion by the end of 2025
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
Energean Operational & Financial Review
Production
In the 9-months to 30 September 2022, production averaged 35.2
kboed (73%) gas. Q3 2022 production increased by 0.3% versus Q2
2022, primarily as a result of increased production in Italy
following maintenance activities in Q2 2022.
9-Months to September FY 2022 guidance
2022 Kboed
Kboed
Israel - 10.0
(including 0.5 bcm of
gas)
---------------------- -----------------------
Egypt 24.5 (87% gas) 24.0 - 26.0
---------------------- -----------------------
Italy 9.4 (42% gas) 9.0 - 9.5
---------------------- -----------------------
Greece, Croatia and 1.3 (28% gas) 1.0 - 1.5
UK
---------------------- -----------------------
Total production (including 35.2 (73% gas) 44.0 - 47.0
Israel)
---------------------- -----------------------
Total production (excluding 35.2 (73% gas) 34.0 - 37.0
Israel)
---------------------- -----------------------
Israel
Karish
The Karish project commenced production on 26 October 2022.
Production is ramping up, with gas currently flowing from the
Karish Main-02 and Karish Main-01 wells. The Karish Main-03 well is
expected to be opened shortly.
Substantially all of Energean's gas buyers have served notice to
transition from their existing supplier to Energean. Commercial gas
sales began on 28 October 2022.
Growth Projects
First gas from Karish North, as well as the completion and
installation of the second gas sales export riser and the second
oil train, which will enable Energean to produce to the full 8
bcm/yr capacity of the FPSO, remains on track for end-2023.
Drilling campaign
Hermes discovery
In October 2022, Energean announced that the Hermes exploration
well had made a commercial gas discovery of between 7 and 15
bcm.
Detailed analysis of the data collected by the well is ongoing,
with the aim of refining volumetric estimates and potential
commerciality for both the discovery and the full area. The Hermes
discovery has helped to de-risk the nearby Poseidon and Orpheus
structures, which represent attractive potential future appraisal
targets to fully assess the potential of the area around block
31.
Zeus well
In November 2022, Energean announced that the Zeus exploration
well, block 12, offshore Israel, made a commercial discovery with
preliminary estimates indicating that the structure contains 13.3
bcm of recoverable natural gas resources (pre-drill estimate 10.8
bcm). Post-drill analysis is ongoing to assess the gas volumes
contained within the structure.
Olympus Area
Energean's reserve auditor, D&M, has certified contingent
resources of 11.75 bcm in the Athena discovery, an increase of 3.75
bcm on the Company's 8 bcm preliminary estimate. This increase
follows post well studies undertaken on data collected during the
drilling process.
The results from the Zeus well and the Athena post-well analysis
provide Energean with additional confidence about the volumes and
commerciality of the Olympus area, and the Company is now
progressing its field development plan. Energean now has discovered
resource volumes of 25 bcm and a further 42 bcm has been de-risked
in the Olympus Area. Energean expects to update the market on the
total resource volumes within the Olympus area in early 2023. This
update will be based upon a Competent Persons Report that is being
undertaken by D&M.
Hercules exploration well
The Hercules exploration well spudded in November 2022. Drilling
operations are ongoing, with results expected later this year. The
well will target gas in the Miocene horizon, which is estimated to
contain 8 - 12 bcm of prospective unrisked gas resources.
Liquids contract
In October 2022, Energean signed a sale and purchase agreement
with Vitol for the marketing of a number of cargoes of Karish blend
hydrocarbon liquids.
Energean expects, based on analysis of individual well test
samples, that Karish blend will trade at a similar price point to
Asgard blend, given the similarity in their characteristics. The
realised price will be market price less certain freight, logistics
and marketing costs.
Egypt
In the 9-months to 30 September 2022, w orking interest
production from the Abu Qir area averaged 24.5 kboed (87% gas),
within full year production guidance of 24.0-26.0 kboed. The
NAQ-PII#6 well was brought onstream in September 2022 at a rate of
26 mmscfd.
NEA/NI was 76.8% complete as of 30 September 2022, as measured
under the EPIC contract. The NEA#6 well spudded in September 2022
and is expected to complete drilling in Q1 2023. First gas from the
first well is expected in H1 2023.
At 30 September 2022, net receivables (after provision for bad
and doubtful debts) in Egypt were $112 million, of which $66
million was classified as overdue.
Italy
In the 9-months to 30 September 2022, working interest
production from Italy averaged 9.4 kboed (42% gas), within full
year production guidance of 9.0 - 9.5 kboed.
First gas from Cassiopea remains on track for H1 2024.
Rest of producing portfolio
In the nine-months to 30 September 2022, w orking interest
production from the rest of the portfolio averaged 1.3 kboed (28%
gas), within full year production guidance of 1.0 - 1.5 kboed.
Financing
On 8 September 2022, Energean signed a three-year $275 million
RCF with a consortium of four banks, led by ING Bank N.V. The RCF
provides additional liquidity for general corporate purposes, if
required. Under its current business plan, Energean expects the RCF
to remain undrawn, apart from $90 million of Letters of Credit
("LCs"), which replace the LCs that relate to certain assets in the
UK and Italy that are currently issued under the existing facility
with ING on a one-for-one basis.
9-months to 30 September 2022 performance and 2022 guidance
FY 2022
Consolidated net debt ($ million) 2,500 - 2,600
--------------------------
Cash Cost of Production (operating
costs plus royalties)
--------------------------
Israel ($ million) 50
--------------------------
Egypt ($ million) 55
--------------------------
Italy ($ million) 170 (including flux costs
of 30)
--------------------------
Greece, Croatia & UK North Sea ($ million) 55
--------------------------
Total Cash Cost of Production ($ million) 330
--------------------------
Cash S,G&A ($ million) 35 -40
--------------------------
Development and production capital
expenditure
--------------------------
Israel ($ million) 570 - 600
--------------------------
Egypt ($ million) 140
--------------------------
Italy ($ million) 60
--------------------------
Greece, Croatia & UK North Sea ($ million) 40
--------------------------
Total development & production capital
expenditure ($ million) 810 - 840
--------------------------
Exploration expenditure
--------------------------
Israel ($ million) 190 [5]
--------------------------
Egypt, Italy, Greece, Croatia & UK
North Sea ($ million) 20
--------------------------
Total exploration expenditure ($ million) 210
--------------------------
Decommissioning
--------------------------
UK North Sea 2
--------------------------
Italy 8
--------------------------
Decommissioning expenditure ($ million) 10
--------------------------
Forward looking statements
This announcement contains statements that are, or are deemed to
be, forward-looking statements. In some instances, forward-looking
statements can be identified by the use of terms such as
"projects", "forecasts", "on track", "anticipates", "expects",
"believes", "intends", "may", "will", or "should" or, in each case,
their negative or other variations or comparable terminology.
Forward-looking statements are subject to a number of known and
unknown risks and uncertainties that may cause actual results and
events to differ materially from those expressed in or implied by
such forward-looking statements, including, but not limited to:
general economic and business conditions; demand for the Company's
products and services; competitive factors in the industries in
which the Company operates; exchange rate fluctuations;
legislative, fiscal and regulatory developments; political risks;
terrorism, acts of war and pandemics; changes in law and legal
interpretations; and the impact of technological change.
Forward-looking statements speak only as of the date of such
statements and, except as required by applicable law, the Company
undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise. The information contained in this
announcement is subject to change without notice.
[1] $90 million of the $275 million is reserved for Letters of
Credit, which replace the Letters of Credit previously issued under
the previous facility with ING on a one-for-one basis
[2] Cash cost of production is calculated as cost of sales,
adjusted for depreciation and hydrocarbon inventory movements.
[3] Adjusted EBITDAX 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. Adjusted EBITDAX includes losses on forward transactions
of $39.1 million. Adjusted EBITDAX excluding these hedges would be
$387.6 million.
[4] Excluding the impact of the hedging losses, operating cash
flow would be $222.5 million.
[5] Updated to include Hercules
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