TIDMENOG
RNS Number : 0745A
Energean PLC
18 January 2024
Energean plc
("Energean" or the "Company")
Trading Statement & Operational Update
London, 18 January 2024 - Energean plc (LSE: ENOG TASE: ) is
pleased to provide an update on recent operations and the Group's
trading performance in the 12-months to 31 December 2023 together
with guidance for 2024. This information is unaudited and subject
to further review. Energean will release its 2023 full year results
on 21 March 2024.
Mathios Rigas, Chief Executive Officer of Energean,
commented:
"2023 was the year we became the major independent gas producer
in the Mediterranean. Despite the challenging regional geopolitical
developments, we stabilised the production of the Energean Power
FPSO, which operated at 99% [1] uptime during Q4 2023, and we
produced at a maximum rate of 150 kboed from our 1 billion+ boe
pan-Mediterranean portfolio, with full year production in line with
our latest guidance.
"Energean has always focused on stable, long-term value creation
and delivery for all our stakeholders. We are making good progress
on the path to our near-term targets of 200 kboed, $1.75 billion
adjusted EBITDAX and leverage of c.1.5x. Our strong operational and
financial performance underpins our stated dividend policy.
"2024 shows significant potential; we are well advanced with our
core strategic projects across Israel, Egypt, Italy and Greece, and
have extended our footprint with a new gas development in Morocco.
As we continue to optimise our portfolio, we look forward to
enhancing our position as the leading independent gas-focused
exploration, development and production company in the region."
"I want to thank all our staff for their dedication and
commitment to Energean; it is their excellence, during a uniquely
challenging time, that has driven our success."
Operational Highlights
-- FY 2023 production of 123 kboed (83% gas) in line with latest
full year guidance of 120-130 kboed.
o Day-to-day production in Israel continues to be unimpacted by
the ongoing geopolitical developments.
o FPSO uptime (excluding planned shutdowns) was 99%(1) in Q4
2023.
-- NEA/NI (Egypt) project completed on time and on budget, with
the PY#1 and NI#1 wells brought online at the end of December 2023;
production in line with expectations.
-- New areas of development underway to expand and diversify the current business base:
o Phase 1 of the Katlan (Israel) Field Development Plan approved
by the Israeli Government[2]; Final Investment Decision ("FID")
expected upon finalisation of the Engineering, Procurement and
Construction ("EPC") terms, which are currently under
negotiation.
o New potential areas of growth in Italy following the
conclusion of the PITESAI review, which has opened up previously
frozen concessions in the Upper Adriatic and Sicilian Channel.
o Discussions initiated to merge the Abu Qir, NEA and NI (Egypt)
concessions to streamline the fiscal terms and extend the economic
life of the fields.
o Morocco farm-in expected to complete in the coming months;
appraisal well planned for 2024.
o Prinos Carbon Storage project progressing well and now
included within the European Commission's Projects of Common
Interest.
Corporate and Financial Highlights
-- Strong financial performance for the 12 months to 31 December
2023, following the first full year of production contribution from
Karish (Israel).
o Revenues of $1,419.4 million, a 93% increase (FY 2022: $737.1
million).
o Cost of Production per barrel (excluding royalties) of $6.5 ,
a 59% decrease (FY 2022: $15.9/boe).
o Adjusted EBITDAX of $925 million, a 119% increase (FY 2022:
$421.6 million).
-- Strong balance sheet maintained; ongoing deleveraging:
o 50% reduction in Group leverage to 3x (FY 2022: 6x).
o Group cash as of 31 December 2023 was $372 million, including
restricted amounts of $26 million Total liquidity was $607
million.
o No immediate debt maturities following Energean Israel's bond
refinancing in July 2023.
-- Q3 2023 dividend of 30 US$cents/share paid on 29 December 2023; total of 120 US$cents/share ($214million) returned to shareholders in 2023.
-- Scope 1 and 2 emissions intensity of approximately 9.4
kgCO2e/boe, a 41% reduction versus the 12 months ended 31 December
2022.
FY 2023 FY 2022 Increase
/ (Decrease)
%
Average working interest
production kboed 123 42 200%
----------- ------------------- ------------------ --------------
Sales and other revenues $ million 1,419 737 93%
----------- ------------------- ------------------ --------------
478 (of which 284 (of which
Cash Cost of Production $ million 185 is royalties) 46 is royalties) 68%
----------- ------------------- ------------------ --------------
10.6 (of 18.9 (of
which 4.1 which 3.0
Cash Cost of Production ($/boe) is royalties) is royalties) (44%)
----------- ------------------- ------------------ --------------
Adjusted EBITDAX[3] $ million 925 422 119%
----------- ------------------- ------------------ --------------
Development and production
expenditure $ million 566 729 (22%)
----------- ------------------- ------------------ --------------
Exploration expenditure $ million 57 140 (59%)
----------- ------------------- ------------------ --------------
Decommissioning expenditure $ million 19 9 110%
----------- ------------------- ------------------ --------------
31 December 31 December Increase
2023 2022 / (Decrease)
%
----------- ------------------- ------------------ --------------
Net Debt (including restricted
cash) $ million 2,849 2,518 13%
----------- ------------------- ------------------ --------------
Leverage (Net Debt / Adjusted
EBITDAX) 3x 6x (50%)
------------------- ------------------ --------------
Outlook
-- 2024 working interest production is expected to be between
155 - 175 kboed (weighted towards the second half of 2024), a
significant step up towards Energean's near-term targets.
o This range is primarily driven by Energean's gas demand
outlook for 2024 in Israel, which has been influenced by the coal
phase-out delays and warmer than average winter temperatures so
far.
-- Remaining growth projects expected to be brought online in 2024:
o Karish North first gas in Q1 2024; the second oil train will
be installed as soon as the security situation allows.
o Cassiopea first gas expected in the summer of 2024.
-- 2024 development and production capital expenditure expected to be $400-500 million
-- Results of the Orion-1x exploration well (Egypt).
-- Quarterly dividend payments intended to be declared in line
with previously communicated dividend policy.
Conference call
A webcast will be held today at 08:30 GMT / 10:30 Israel
Time.
Webcast: https://brrmedia.news/ENOG_JTU24
Dial-In: +44 (0) 33 0551 0200
Dial-in (Israel only): +972 (0) 3 376 1321
Confirmation code: Energean
The presentation slides will be made available on the website
shortly at www.energean.com .
Enquiries
For capital markets: ir@energean.com
Kyrah McKenzie, Investor Relations Manager Tel: +44 7921 210
862
For media: pblewer@energean.com
Paddy Blewer, Head of Corporate Communications Tel: +44 7765 250
857
Energean Operational Review
Production
In the 12 months to 31 December 2023, average working production
was 123 kboed (83% gas), within the latest guidance range of
120-130 kboed. Q4 2023 production averaged 135 kboed (83% gas).
In Israel, production averaged 485 mmscfd (5 bcm/yr equivalent)
in the fourth quarter, primarily as a result of the planned six-day
shutdown in early December to enable the hook-up of the Karish
North well and second gas export riser. The FPSO uptime during the
quarter was 99%(1) . Day-to-day production remains unimpacted as a
result of the ongoing geopolitical developments.
Portfolio-wide production in 2024 is expected to be 155-175
kboed. This range is primarily driven by Energean's gas demand
outlook for 2024 in Israel, which has been influenced by the coal
phase-out delays and warmer than average winter temperatures so
far.
Energean is actively seeking additional gas contracts, to
continue supporting the domestic demand, expanding to export in the
medium-term.
FY 2023 FY 2024 guidance
Kboed Kboed
Israel 87 115-130
(including 4.4 (including 5.7 -6.4
bcm of sales gas) bcm of sales gas)
--------------------- ---------------------
Egypt 25 (86% gas) 29-31
--------------------- ---------------------
Rest of portfolio 11 (34% gas) 11-14
--------------------- ---------------------
Total production 123 (83% gas) 155-175
--------------------- ---------------------
Development
Israel - Karish Growth Projects
Karish North is expected online in Q1 2024 and will utilise the
second gas export riser, which has been fully installed, once
onstream.
The second oil train will be will be installed as soon as the
security situation allows.
Israel - Katlan
Energean intends to develop the Katlan/Tanin area in a phased
development. Phase 1 includes the Athena, Zeus, Hera and Apollo
accumulations, for which the field development plan was approved by
the Israeli Government in December 2023. Energean expects to take
FID expected upon finalisation of EPC terms, which are currently
under negotiation.
Egypt
The NEA/NI development was completed in December 2023, with the
remaining two wells PY#1 and NI#1 brought online on 30 December
2023. Overall production from the fields is currently 72 mmscfd (13
kboed), in line with expectations.
An infill well (NAQPII#2) on the Abu Qir field began drilling in
December 2023 and was brought online in January 2024. Energean is
evaluating other infill and step-out exploration opportunities
around its Abu Qir hub.
Energean is working in partnership with the Egyptian authorities
to merge its three production concessions (Abu Qir, NEA and NI)
into a single concession. The resultant single concession is
expected to streamline the fiscal conditions and extend the
economic life of the fields.
At 31 December 2023, net receivables (after provision for bad
and doubtful debts) in Egypt were $149 million (30 September 2023:
$162 million), of which $101 million (30 September 2023: $119
million) was classified as overdue.
Italy
At Cassiopea (W.I. 40% non-operator), drilling operations began
in November 2023. First gas remains on track for the summer of
2024. Also in 2024 on the Cassiopea licence, Energean expects to
participate in two near-field drilling targets (Gemini and
Centauro) with its partner ENI (operator; 60%).
In December 2023, the Italian government introduced a new
framework to unlock previously frozen concessions as part of its
PITESAI review. Energean is subsequently focused on progressing
certain non-operated concessions in the Upper Adriatic and Sicilian
Channel, with the expectation to unlock additional reserves.
Greece
Energean's Prinos Carbon Storage ("CS") project in Greece has
been included by the European Commission as a Project of Common
Interest. Non-binding memorandum of understandings have been signed
for c.5 million tonnes per annum of storage and EUR 150 million of
grants have been committed. Energean is advancing the conversion of
its exploration licence into a storage permit.
Exploration
Egypt
Drilling operations are ongoing on the Orion-1X exploration well
(W.I. 19% subject to final government approvals expected shortly;
non-operator) located on the North East Hap'y Concession, offshore
Egypt.
Energean Corporate Review
Morocco country entry
As announced on 7 December 2023, Energean agreed to farm-in to
Chariot Limited ("Chariot", AIM:CHAR) acreage offshore Morocco,
which includes the 18 bcm (gross)[4] Anchois gas development and
significant exploration prospectivity. Approval by the Moroccan
Authorities is expected in the near-term, with closing of the
transaction expected shortly thereafter.
Energean (Operator) and Chariot plan to drill an appraisal well
on the Anchois field in 2024.
Kerogen convertible
As announced on 13 December 2023, Energean received a conversion
notice in respect of $50 million worth of convertible loan notes
from Kerogen Investments No. 38 Limited, resulting in the issuance
of 4,422,013 new ordinary shares ("New Ordinary Shares") at a
conversion price of GBP 8.3843 per New Ordinary Share. The New
Ordinary Shares were admitted for trading on the London and Tel
Aviv Stock Exchanges on 20 December 2023.
Dividend
In 2023, Energean returned a total of US$1.20/share to
shareholders (approximately $214 million), representing four
quarters of dividend payments.
In 2024, Energean intends to continue to pay quarterly dividends
to its shareholders in line with its previously communicated
dividend policy.
Net Zero progress
Energean's scope 1 and 2 emissions intensity in the 12 months to
31 December 2023 was estimated to be approximately 9.4 kgCO2e/boe,
a 41% reduction versus 31 December 2022 (16.0 kgCO2e/boe), in line
with guidance. FY 2024 emissions intensity are expected between
8.5-9.0 kgCO2e/boe.
2024 guidance
FY 2024
Production
------------
Israel (kboed) 115-130
------------
Egypt (kboed) 29-31
------------
Rest of portfolio (kboed) 11-14
------------
Total Production (kboed) 155-175
------------
Consolidated net debt ($ million) 2,800-2,900
------------
Cash Cost of Production (operating
costs plus royalties)
------------
Israel ($ million) 350-380
------------
Egypt ($ million) 30-40
------------
Rest of portfolio ($ million) 190-210
------------
Total Cash Cost of Production ($ million) 570-630
------------
Development and production capital
expenditure
------------
Israel ($ million) 150-200
------------
Egypt ($ million) 30-50
------------
Rest of portfolio ($ million) 220-250[5]
------------
Total development & production capital
expenditure ($ million) 400-500
------------
Exploration and appraisal expenditure
($ million) 130-170[6]
------------
Decommissioning expenditure ($ million) 40-50
------------
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] Uptime is defined as the number of hours that the Energean
Power FPSO was operating; the Q4 2023 figure excludes the scheduled
6-day shutdown that occurred in December.
[2] Energean intends to develop the Katlan/Tanin area in a
phased development. Phase 1 includes the Athena, Zeus, Hera and
Apollo accumulations, for which the FDP has received government
approval.
[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.
[4] As per Chariot's latest competent persons report covering
the Anchois Field that has certified gross 2C contingent resources
of 18 bcm in the discovered gas sands
[5] Includes $20-25 million of expenditure on the Prinos Carbon
Storage project in Greece, which is expected to be covered by EU
grants
[6] Includes the Anchois appraisal well in Morocco
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Energean (LSE:ENOG)
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