TIDMENOG
RNS Number : 7978Z
Energean PLC
18 May 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Energean plc
("Energean" or the "Company")
Trading Statement & Operational Update
London, 18 May 2023 - Energean plc (LSE: ENOG, TASE: ) is
pleased to provide an update on recent operations and the Group's
trading performance in the 3-months to 31 March 2023.
Highlights - Financial and Corporate
-- Revenues for the period were $288.8 million, a 69% increase versus Q1 2022 ($170.7 million)
-- EBITDAX for the period was $162.2 million, a 81% increase versus Q1 2022 ($89.6 million)
-- Group cash as of 31 March 2023 was $379.6 million (including
restricted amounts of $11.5 million) and total liquidity was $943.5
million
-- Q1 2023 dividend of 30 US$ cents/share declared today, scheduled to be paid on 30 June 2023
-- Emissions intensity [1] for the period was 11.1 kgCO2e/boe, a
36% reduction versus Q1 2022 (17.2 kgCO2e/boe)
o Emissions intensity (1) in the four-months to 30 April 2023
was 10.1 kgCO2e/boe
Highlights - Operational
-- Production for the period was 94.4 kboed, a 161% increase versus Q1 2022 (36.1 kboed)
o Production in the four-months to 30 April 2023 was 100.0 kboed
(82% gas)
-- Commercial period under the gas sales agreements in Israel
commenced for gas buyers on or before 1 April 2023 [2] , with
production continuing to ramp up
-- Three hydrocarbon liquid cargoes cumulating in approximately
1 million bbls from Karish sold to Vitol year to date
-- The second gas export riser was successfully installed at
Karish in March 2023; followed by key Karish North infrastructure
in March and April 2023
-- Olympus development concept chosen to align with strategy to
optimise free cash flows and shareholder value
o Tie-back to Energean Power FPSO, with Olympus prioritised over
Tanin
o Production plateau maintained by monetising newly discovered
resources that do not incur seller royalties nor carry export
restrictions
o Focus maintained on capital discipline: Lower cost development
versus Tanin driving lower capital expenditure for the next phase
of tie-backs to the Energean Power FPSO; plus avoiding significant
capital expenditure to add capacity through FPSO expansion projects
or a new FPSO/FPU
o Production expected to underpin existing gas sales agreements
plus target international markets that can be accessed through
existing and planned third party infrastructure
Outlook
-- Full year production guidance revised to 125 - 140 kboed
(from 131 - 158 kboed) due primarily to:
o Revised gas sales forecast in Israel with full year quantities
now expected to be 4.5 - 5.0 bcm (versus 4.5 - 5.5 bcm) due to the
ramp up profile of buyer offtake and ongoing optimisation of the
operations of the Energean Power FPSO
o Higher-than-expected decline from NEA#6 in Egypt following the
positive initial flow rates. There is no expected read-across to
the PY#1 and NI#1 wells; extended flow testing is required at NEA#5
to confirm no read-across for this well. These three remaining
NEA/NI wells are expected onstream over the course of 2023; NEA#5
drilling was completed in May 2023 with results in line with
pre-drill geological expectations.
-- Karish growth projects on track for completion by end-2023
-- On track to deliver near-term targets of 200 kboed, $2.5
billion revenues, $1.75 billion EBITDAX and leverage < 1.5x in
2H 2024, and pay dividends in line with previously communicated
policy
-- Final investment decision on the Olympus Area expected in late 2023
-- Orion 1X spud expected towards the end of the year
Mathios Rigas, Chief Executive Officer of Energean,
commented:
"We are ramping up production from the Karish field and have
seen four months of solid gas and liquids production in Israel,
whilst optimising the operations of the Energean Power FPSO. Our
Israeli gas contracts have moved to commercial status and our
buyers are increasing nominations. This year, Energean expects to
supply a significant proportion of Israel's gas demand.
"This is why we are moving quickly to develop our newly
discovered Olympus Area resource, as efficiently as possible. As
there is limited incremental capex, the initial development concept
is in line with our stated commitment to remain capital
disciplined. With no seller royalty payments or export
restrictions, this strategy will create sustainable value for all
our stakeholders and allow us to maintain and grow our stated
sector-leading dividend policy.
"We continue to focus on our Net Zero stated path through
continuous reductions in our carbon intensity. We are and will
remain a responsible hydrocarbon producer. We are committed to
being the best version of Energean we can be: provide a secure and
reliable energy supply, support our communities and underwrite the
transition."
Enquiries
For capital markets: ir@energean.com
Kate Sloan, Head of IR and M&A Tel: +44 7917 608 645
For media: pblewer@energean.com
Paddy Blewer, Head of Corporate Communications
Tel: +44 7765 250 857
Energean Operational & Financial Review
Production
Average working interest production for the three months to 31
March 2023 was 94.4 kboed, increasing to 100 kboed (82% gas) for
the 4-months to 30 April 2023.
Energean's full year production guidance is significantly second
half-weighted due to the timing of its projects, and particularly
the ramp up of production from Karish. Energean is adjusting its
full year 2023 production guidance range to 125 - 140 kboed (from
131 - 158) kboed for reasons outlined in the country-specific
sections below.
In Israel:
-- Commercial sales under the gas sales agreements commenced on
or before 1 April 2023 [3] following the completion of
commissioning under the GSPAs.
-- Energean is narrowing its full year gas production guidance
to 4.5 - 5.0 bcm (from 4.5 - 5.5 bcm), reflecting the above
commencement date of commercial sales and the ramp up profile of
buyer offtake from long-term contracted gas buyers (i.e. excluding
spot sales) as they exit their obligations to other suppliers,
combined with completion of activities to optimise the operations
of the Energean Power FPSO.
-- Energean has sales contracts with aggregate Annual Contracted
Quantities (" ACQ ") of 7.4 bcm on plateau. Buyers nominate volumes
on a daily basis up to their Daily Contracted Quantities (ACQ
divided by 365 days). On an annual basis the take-or-pay averages
75% of the ACQs.
-- Oil production guidance reduced to between 13 and 16 kboed
(previously 15 - 18 kboed) reflecting the revision to the expected
management of production between the wells. There has been no
change to the estimated hydrocarbon liquids yields across the
fields.
In Egypt:
-- As previously reported, NEA#6 delivered first gas on 6 March
2023. Initial rates were in line with expectations, but
subsequently, the rate of decline has been higher than
expected.
-- NEA#5 completed drilling in May 2023, with results in line
with pre-drill expectations. The well will be flow tested ahead of
first gas later this year. The El Qaher-1 rig has now moved to
drill the PY#1 well, after which NI#1 will be drilled. These three
remaining NEA/NI wells are expected onstream over the course of
2023; there is no expected read-across to the PY#1 and NI#1 wells;
extended flow testing is required at NEA#5 to confirm no
read-across for this well.
-- Abu Qir is performing in line with expectations
-- As a result of the impact on NEA#6, Energean is revising its
2023 production guidance for Egypt to 23 - 25 kboed (from 28 - 32
kboed)
Rest of portfolio:
-- 1Q 2023 production of 10.9 kboed was towards the top end of
the guidance range following continued strong production across the
Italian portfolio. Full year guidance is narrowed to 10 - 11
kboed
Three-months Three-months Four-months
to 31 March to 31 March to 30 April
2023 2022 2023 FY 2023 guidance
Kboed Kboed % change Kboed Kboed
Israel 59.0 - - 64.5 92 - 104 kboed
(inc. 0.7 (inc. 1.1 (including
bcm of sales bcm of sales 4.5 - 5.0
gas) gas) bcm of sales
gas)
--------------- ------------- --------- --------------- -----------------
Egypt 24.6 25.2 (2%) 24.9 23 - 25
--------------- ------------- --------- --------------- -----------------
Rest of portfolio 10.9 10.9 0% 10.7 10 - 11
--------------- ------------- --------- --------------- -----------------
Total production
(including
Israel) 94.4 [4] 36.1 162% 100.0 (4) 125 - 140
--------------- ------------- --------- --------------- -----------------
Development
Israel - Karish Growth Projects
The completion of the second gas export riser, second oil train
and Karish North projects will increase the total gas processing
capacity of the Energean Power FPSO to a maximum of 8 bcm/yr (at
100% uptime). Energean has made good progress on these projects in
the year-to-date: the second gas export riser was successfully
installed in March 2023; the Karish North flowline in March 2023;
and the Karish North manifold in April 2023. Completion of this
suite of projects remains on track for the end of the year.
Israel - Olympus
The Olympus area is planned to be developed as a tie-back to the
Energean Power FPSO, prioritised over the Tanin development, which
is now expected to be deferred into the 2030s. The development
concept has been selected to align with Energean's strategy of
maximising shareholder value, which this concept achieves by
optimising the free cash flow profile of the business because:
-- Olympus resources can be developed at lower cost than those
of Tanin due to closer proximity to the FPSO, resulting in lower
capex for the next phase of tie-backs
-- Significant capital expenditure on FPSO expansion projects is avoided as well as new major infrastructure investments
-- Olympus resources carry no seller royalties: gas produced
from the Karish and Tanin reservoirs bears 7.5% / 8.25% (pre-and
post Sheshinsky levy) royalty on the value of production at the
wellhead
Energean expects to submit the final field development plan for
the Olympus Area to the Israeli Government in 3Q 2023 for approval
and take final investment decision before year-end 2023.
Olympus gas production is anticipated to be sold into the
Israeli domestic market under the existing gas sales agreements. As
there are no export restrictions on gas produced from block 12,
production in excess of domestic gas buyer nominations is expected
to target demand in Egypt (including international markets through
the LNG facilities) and Jordan, utilising existing export
infrastructure and spare capacity in the Energean Power FPSO.
Exports to Cyprus remain an option provided new pipeline
infrastructure is developed by third parties.
Egypt
The remaining three NEA/NI well developments are expected to
come onstream later in 2023, following which the project will reach
peak production.
At Abu Qir, further infill and exploration targets to support
production from the field are being studied for drilling in
2024.
Italy - Cassiopea
First gas remains on track for 2024. Offshore seabed survey
campaigns have been completed ahead of the planned pipeline
installation.
Greece
Energean has begun FEED activities on the Prinos CCS
project.
Croatia
Energean expects to take final investment decision for the Irena
gas field development in 2023. The field has 2P reserves of 13.3
Bcf (2.3 MMboe).
Exploration and Appraisal
The Orion-1X (Energean, 30%), located on the North East Hap'y
Concession, offshore Egypt, is expected to spud in late 2023.
Energean is finalising the farm out of 12% of its working interest
(new ownership is 18%).
The Izabela-9 well (Energean, 70%) located offshore Croatia, is
expected to spud in Q2/Q3 2023.
In Greece, 3D seismic interpretation on Block 2 (Energean, 75%)
and a drill or drop decision on the Ioannina licence (Energean,
100%) is expected to be completed in 2023.
On 16 May 2023, Energean submitted notice of its intention to
terminate its Montenegrin exploration licences (Blocks 26 and
30).
Corporate
Financing
Energean intends to refinance its 2024 Energean Israel Limited
bond to maintain an efficient capital structure.
ESG
The Group's Scope 1 and 2 carbon emissions intensity in Q1 2023
was estimated to be approximately 11.1 kgCO2e/boe, a 36% reduction
versus 2022 emissions levels; and a 83% reduction versus the 2019
base measurement year. Energean expects to further reduce emissions
intensity to 7.0 - 9.5 kgCO2/boe in 2023 on its path to net zero by
2050.
Financial
The table below presents Energean's key results to 31 March
2023.
Three months Three months % change
to 31 March 2023 to 31 March 2022
Revenues $ million 288.8 170.7 69%
----------- ------------------ ------------------ ---------
Cost of production $ million 116.5 62.3 87%
----------- ------------------ ------------------ ---------
Cost of production $/boe 13.7 19.2 (29%)
----------- ------------------ ------------------ ---------
Cash G&A $ million 11.7 8.2 42%
----------- ------------------ ------------------ ---------
Adjusted EBITDAX $ million 162.2 89.6 81%
----------- ------------------ ------------------ ---------
Capital expenditure $ million 92.8 74.3 25%
----------- ------------------ ------------------ ---------
Exploration expenditure $ million 14.3 5.8 147%
----------- ------------------ ------------------ ---------
Decommissioning
expenditure $ million 1.2 0.6 100%
----------- ------------------ ------------------ ---------
Cash (including
restricted amounts)
[5] $ million 379.6 812.7 (53%)
----------- ------------------ ------------------ ---------
Net debt - consolidated $ million 2,646.8 2,148.3 23%
----------- ------------------ ------------------ ---------
Net debt - plc
excluding Israel $ million 214.2 119.8 79%
----------- ------------------ ------------------ ---------
Net debt - Israel $ million 2,432.6 2,028.4 20%
----------- ------------------ ------------------ ---------
2023 Guidance
FY 2023 FY 2023
Revised Guidance Previous Guidance
Production
------------------ -------------------
Israel (kboed) 92 - 104 94 - 115
------------------ -------------------
Egypt (kboed) 23 - 25 28 - 32
------------------ -------------------
Rest of Portfolio (kboed) 10 - 11 9 - 11
------------------ -------------------
Total Production (kboed) 125 - 140 131 - 158
------------------ -------------------
Consolidated net debt
($ million) 2,700 - 2,900 2,600 - 2,800
------------------ -------------------
Cash Cost of Production
(operating costs plus royalties)
------------------ -------------------
Israel ($ million) 300 - 350 350 - 400
------------------ -------------------
Egypt ($ million) 40 - 50 50 - 60
------------------ -------------------
Rest of portfolio ($ million) 160 - 200 200 - 240
------------------ -------------------
Total Cash Cost of Production
($ million) 500 - 600 600 - 700
------------------ -------------------
Development and production
capital expenditure
------------------ -------------------
Israel ($ million) 170 - 200 140 - 160
------------------ -------------------
Egypt ($ million) 140 - 150 140 - 150
------------------ -------------------
Rest of portfolio ($ million) 270 - 290 300 - 330
------------------ -------------------
Total development & production
capital expenditure ($
million) 580 - 640 580 - 640
------------------ -------------------
Exploration expenditure
($ million) 50 - 60 40 - 60
------------------ -------------------
Decommissioning expenditure
($ million) 20 - 30 30 - 40
------------------ -------------------
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.
[1] Scope 1 and 2 emissions
[2] With the exception of one GSPA, whose commercial period
begins in November
[3] With the exception of one GSPA, whose commercial period
begins in November
[4] Total differs to the sum of the countries due to
rounding
[5] Restricted amounts of $11.5 million
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