TIDMENOG
RNS Number : 4682K
Energean PLC
02 September 2021
Energean Israel Limited
Unaudited interim condensed consolidated financial statements
30 June 20 21
ENERGEAN ISRAEL LIMITED
Unaudited interim condensed consolidated financial
statements
AS OF 30 JUNE 2021
INDEX
Page
-----
Interim condensed consolidated statement of financial
position 1
Interim condensed consolidated statement of comprehensive
income 2
Interim condensed consolidated statement of changes
in equity 3
Interim condensed consolidated statement of cash
flows 4
Notes to the interim condensed consolidated financial
statements 5-17
- - - - - - - - - - - - - - - - - - - -
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
(Amounts in thousands US Dollars, unless otherwise stated)
31 December
30 June 2021 2020
------------- ------------
Unaudited Audited
------------- ------------
Note US Dollars in thousands
--------- ---------------------------
ASSETS:
NON-CURRENT ASSETS:
Property, plant and equipment 3(A) 2,093,951 1,813,523
Intangible assets 3(B) 17,537 13,807
Other accounts receivable 1,039 43
Loan to related party 6(B) 175,884 -
Long term restricted cash 3(C)(3) 100,000 -
Deferred tax asset 5 8,849 7,839
------------- ------------
2,397,260 1,835,212
------------- ------------
CURRENT ASSETS:
Trade and other receivables 8,652 1,304
3(C)(3),
Short term restricted cash 6(C) 166,241 -
Cash and cash equivalents 731,584 37,421
------------- ------------
906,477 38,725
------------- ------------
TOTAL ASSETS 3,303,737 1,873,937
============= ============
EQUITY AND LIABILITIES:
EQUITY:
Share capital 1,708 1,708
Share premium 572,539 572,539
Other reserves - (5,328)
Accumulated losses (32,661) (25,114)
------------- ------------
TOTAL EQUITY 541,586 543,805
------------- ------------
NON-CURRENT LIABILITIES:
Secured Senior Notes 3(C)(3) 2,459,910 -
Provisions for decommissioning 34,708 38,399
Trade and other payables 3(E) 90,430 84,360
------------- ------------
2,585,048 122,759
------------- ------------
CURRENT LIABILITIES:
Current borrowings 3(C)(1) - 1,093,965
Trade and other payables 3(E) 174,698 90,489
Loans from related parties 3(C)(2) - 16,000
Derivative financial instrument 3(D) 2,405 6,919
------------- ------------
177,103 1,207,373
------------- ------------
TOTAL LIABILITIES 2,762,151 1,330,132
------------- ------------
TOTAL EQUITY AND LIABILITIES 3,303,737 1,873,937
============= ============
01 September 2021
------------------ ----------------- ----------------
Panagiotis Benos Matthaios Rigas
Director Director
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
(Amounts in thousands US Dollars, unless otherwise stated)
For the period For the period
of six months of six months
ended 30 ended 30
June 2021 June 2020
--------------- ---------------
Unaudited Unaudited
--------------- ---------------
Note US Dollars in thousands
----- --------------------------------
Administrative expenses 4(A) (1,735) (1,887)
Other expenses 4(A) (28) (385)
--------------- ---------------
Operating loss (1,763) (2,272)
Finance income 4(B) 1,808 169
Finance costs 4(B) (9,436) (26)
Foreign exchange gain 4(B) (727) 242
--------------- ---------------
Loss for the period before taxes (10,118) (1,887)
Tax income 5 2,571 413
--------------- ---------------
Net loss for the period (7,547) (1,474)
--------------- ---------------
Other comprehensive income (loss) :
Items that may be reclassified subsequently
to profit or loss:
Gain (loss) on Cash flow hedge for the
period 2,278 (11,530)
Reclassification adjustment for items
included in loss on realisation 4,641 -
Tax relating to items that may be reclassified
subsequently to profit or loss (1,591) 2,652
--------------- ---------------
Other comprehensive income (loss) for
the period 5,328 (8,878)
--------------- ---------------
Total comprehensive income (loss) for
the period (2,219) (10,352)
=============== ===============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
(Amounts in thousands US Dollars, unless otherwise stated)
For the period of six months ended 30 June 2021 (Unaudited):
Share Share Other Accumulated Total
capital Premium reserves losses equity
--------- --------- ---------- ------------ --------
Balance as of 1 January 2021 1,708 572,539 (5,328) (25,114) 543,805
Changes during period:
Comprehensive Income (Loss):
Loss for the period - - - (7,547) (7,547)
Other comprehensive income,
net of tax - - 5,328 - 5,328
--------- --------- ---------- ------------ --------
Balance as of 30 June 2021 1,708 572,539 - (32,661) 541,586
========= ========= ========== ============ ========
For the period of six months ended 30 June 2020 (Unaudited):
Share Share Other Accumulated Total
capital Premium reserves losses equity
--------- --------- ---------- ------------ ---------
Balance as of 1 January 2020 1,676 540,071 434 (20,234) 521,947
Changes during period:
Comprehensive Loss:
Loss for the period - - - (1,474) (1,474)
Other comprehensive loss,
net of tax - - (8,878) - (8,878)
--------- --------- ---------- ------------ ---------
Total comprehensive loss - - (8,878) (1,474) (10,352)
--------- --------- ---------- ------------ ---------
Transactions with shareholders:
Shares issuance 32 32,468 - - 32,500
--------- --------- ---------- ------------ ---------
Balance as of 30 June 2020 1,708 572,539 (8,444) (21,708) 544,095
========= ========= ========== ============ =========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in thousands US Dollars, unless otherwise stated)
For the period For the period
of six months of six months
ended 30 June ended 30 June
2021 2020
--------------- ---------------
Unaudited Unaudited
--------------- ---------------
US Dollars in thousands
--------------------------------
Cash flows from operating activities
:
Loss for the period before tax (10,118) (1,887)
--------------- ---------------
Adjustments for :
Depreciation and amortization 50 149
Loss from disposal on property, plant
and equipment 23 -
Increase in provisions for decommissioning 343 -
Other expenses 5 -
Finance income (1,808) (169)
Finance expenses 9,093 26
Net foreign exchange gain (loss) 727 (242)
--------------- ---------------
(1,685) (2,123)
Changes in working capital:
Decrease (increase) in other receivables (183) 327
Increase (decrease) in trade and other
payables (932) 437
--------------- ---------------
(1,115) 764
Net cash generated used in operating
activities (2,800) (1,359)
--------------- ---------------
Cash flows from investing activities
:
Payment for purchase of oil & gas leases (10,850) (10,850)
Payment for purchase of intangible
assets (3,682) (7,971)
Payment for purchase of property, plant
and equipment (97,615) (209,090)
Movement in restricted cash (266,241) -
Interest received 123 198
--------------- ---------------
Net cash used in investing activities (378,265) (227,713)
--------------- ---------------
Cash flows from financing activities
:
Senior secured notes issuance 2,500,000 -
Transaction cost in relation to senior
secured notes issuance (37,218) -
Proceeds from shares issuance - 32,500
Drawdown of borrowings 118,000 200,000
Repayment of borrowings (1,268,000) -
Loan to related party (175,884) -
Loan repayment from related parties (16,000) -
Debt arrangement fees paid - (5,050)
Finance cost paid (41,861) (28,799)
Finance costs paid for deferred license
payments (3,494) (3,993)
Repayment of obligations under leases (169) (174)
--------------- ---------------
Net cash generated from financing activities 1,075,374 194,484
--------------- ---------------
Net decrease in cash and cash equivalents 694,309 (34,588)
Cash and cash equivalents at the beginning
of the period 37,421 110,488
Effect of exchange rate fluctuations
on cash held (146) (54)
--------------- ---------------
Cash and cash equivalents at the end
of the period 731,584 75,846
=============== ===============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 1: GENERAL
A. Energean Israel Limited (the "Company") was incorporated in
Cyprus on 22 July 2014 as a private company with limited liability
under the Companies Law, Cap. 113. Its registered office is at
Lefkonos 22, 1(st) Floor, 2064, Nicosia, Cyprus.
B. The Company and its subsidiaries (the "Group") has been
established with the objective of exploration, production and
commercialisation of crude oil and natural gas. The Group's main
activities are performed in Israel by the Company's Israeli
Branch.
C. The Group's core assets as of 30 June 2021 are comprised of:
Country Asset Working interest Field phase
-------- ---------------------------------- ----------------- ------------
Israel Karish (including Karish North) 100% Development
Israel Tanin 100% Development
Israel Blocks 12, 21, 23, 31 100% Exploration
Israel Four licenses Zone D (1) 80% Exploration
(1) The Company holds 80% interests in four licenses, blocks 55,
56, 61 and 62 (together, "Zone D") in Israel's Exclusive Economic
Zone ("EEZ").
D. COVID-19: Despite COVID-related challenges experienced during
the period (mainly at the Admiralty Yard in Singapore, where the
Karish FPSO is being completed), the Group has made solid progress
on its flagship Karish project, offshore Israel. The project
expected to deliver first gas in mid-2022. The health and safety of
its workers remains of paramount importance to the Company, and it
supports all necessary measures to prevent further transmission of
COVID-19.
NOTE 2: ACCOUNTING POLICIES AND BASIS OF PREPARATION
These unaudited interim condensed consolidated financial
statements for the six months ended 30 June 2021, have been
prepared in accordance with the International Financial Reporting
Standards ("IFRS") as adopted by the European Union (EU). The
unaudited interim condensed consolidated financial statements do
not include all the information and disclosures that are required
for the annual financial statements and must be read in conjunction
with the Group's annual consolidated financial statements for the
year ended 31 December 2020.
These unaudited interim financial statements have been prepared
on a going concern basis.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION
A. Property, Plant and Equipment:
1) Composition:
Petroleum Furniture,
and Gas Leased fixtures
Assets Assets and equipment Total
--------- ------- -------------- ---------
US Dollars in thousands
---------------------------------------------
Cost:
At 1 January 2020 1,238,724 469 337 1,239,530
Additions 404,613 365 298 405,276
Disposals (2,984) (230) - (3,214)
Capitalised borrowing cost 92,170 - - 92,170
Capitalised depreciation 288 - - 288
Change in decommissioning
provision 38,125 - - 38,125
Transfers from Exploration
and evaluation assets 41,822 - - 41,822
--------- ------- -------------- ---------
Total cost at 31 December
2020 1,812,758 604 635 1,813,997
Additions 162,282 57 13 162,352
Disposals (23) - - (23)
Capitalised borrowing cost 122,175 - - 122,175
Capitalised depreciation 106 - - 106
Change in decommissioning
provision (4,034) - - (4,034)
Total cost at 30 June 2021 2,093,264 661 648 2,094,573
--------- ------- -------------- ---------
Depreciation:
At 1 January 2020 - 185 63 248
Expensed for the year - - 80 80
Disposals - (142) - (142)
Capitalised to petroleum
and gas assets - 288 - 288
--------- ------- -------------- ---------
Total Depreciation at 31
December 2020 - 331 143 474
Expensed for the period - - 42 42
Capitalised to petroleum
and gas assets - 106 - 106
--------- ------- -------------- ---------
Total Depreciation at 30
June 2021 - 437 185 622
--------- ------- -------------- ---------
Net Property, Plant and
Equipment at 31 December
2020 1,812,758 273 492 1,813,523
========= ======= ============== =========
Net Property, Plant and
Equipment at 30 June 2021 2,093,264 224 463 2,093,951
========= ======= ============== =========
- The additions to Petroleum and Gas assets for the period of
six months ended 30 June 2021 are mainly due to the development
costs of Karish field which relate to the EPCIC contract (FPSO, Sub
Sea and On-shore construction cost) at the amount of US$112.43
million (for the year ended 31 December 2020: US$280.09
million).
- The borrowing costs capitalised for the period of six months
ended 30 June 2021 at the amount of US$122.18 million (for the year
ended 31 December 2020: US$92.17 million) are mainly due to the
Senior Facility Loan for Karish development at the amount of
US$89.96 million (for the year ended 31 December 2020: US$80.72
million) and due to the secured senior notes at the amount of
US$29.47 million for the period of six months ended 30 June 2021
(Nil for the year ended 31 December 2020). The weighted average
interest rates used for the capitalisation of the borrowing cost
was 7.33% (31 December 2020: 8.78%).
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
2) Cash flow statement reconciliations:
For the period For the year
of six months ended 31
ended 30 December
June 2021 2020
-------------- ------------
Dollars in thousands
----------------------------
Additions to property, plant and equipment 280,576 574,467
Less
capitalised borrowing costs (122,175) (92,170)
Right-of-use asset additions (57) (365)
Capitalised share-based payment charge (65) (65)
Capitalised depreciation (106) (288)
Change in decommissioning provision 4,034 (38,125)
Transfers from Intangible Assets - (41,822)
-------------- ------------
Total 162,207 401,632
Movement in working capital (53,742) (17,179)
-------------- ------------
Cash capital expenditures per the cash
flow statement (*) 108,465 384,453
(*) The amount includes payment of US$10 . 85 million which has
been paid each period in 2021 and 2020 to the sellers of Karish and
Tanin leases.
B. Intangible Assets:
1) Composition:
Exploration
and evaluation Software
assets License Total
--------------- -------- --------
US Dollars in thousands
-----------------------------------
Cost:
At 1 January 2020 49,574 160 49,734
Additions 6,539 95 6,634
Write off of exploration
and evaluation costs (492) - (492)
Transfers to property, plant
and equipment (41,822) - (41,822)
--------------- -------- --------
At 31 December 2020 13,799 255 14,054
Additions 3,738 - 3,738
At 30 June 2021 17,537 255 17,792
--------------- -------- --------
Amortisation:
At 1 January 2020 - 33 33
Expensed for the year - 214 214
Total Amortisation at 31
December 2020 - 247 247
--------------- -------- --------
Expensed for the period - 8 8
Total Amortisation at 30
June 2021 - 255 255
Net Intangible assets at
31 December 2020 13,799 8 13,807
=============== ======== ========
Net Intangible assets at
30 June 2021 17,537 - 17,537
=============== ======== ========
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
- The additions to Intangible assets for the period of six
months ended 30 June 2021 are mainly due to the surveys, seismic
and related works for the Israeli offshore exploration blocks. (for
the year ended 31 December 2020 mainly related to drilling
associated costs for Block 12 licenses and Karish North prior
classifying it to property, plant and equipment ).
2) Cash flow statement reconciliations:
For the period For the year
of six months ended 31
ended 30 December
June 2021 2020
-------------- ------------
Dollars in thousands
----------------------------
Additions to property, plant and equipment 3,738 (35,680)
Less
Transfers to Fixed Assets - 41,822
Total 3,738 6,142
Movement in working capital (56) 1,864
Cash capital expenditures per the cash
flow statement 3,682 8,006
C. Borrowings:
1) US$1.45 billion senior project facility:
On 2 March 2018, the Group entered into a senior secured project
finance for its Karish project amounting to US$1.275 billion and on
16 March 2020, the senior credit facility was increased to US$1,450
billion, providing an additional US$175 million of liquidity for
the Karish project and certain activities in Israel (the "Project
Finance Facility").
Once drawn, interest in respect of the Project Finance Facility
was charged at LIBOR + 3.75% over months 1 to 12, LIBOR + 4.00%
over months 13 to 24, LIBOR + 4.25% over months 25 to 36 and LIBOR
+ 4.75% over months 37 to 45. There was a commitment fee of 30% of
the applicable margin.
The Project Finance Facility was designated to mature in
December 2021 and had a bullet repayment on maturity. On 13 January
2021, the Company agreed with its Project Finance Facility lenders
a nine- month extension for the facility maturity date, from
December 2021 to September 2022.
As of 29 April 2021, the Group withdrew US$1,268 million from
the Project Finance Facility (31 December 2020: US$1,150 million)
and the amortised carrying value of the loan was US$1,225 million
(including short term accrued interest at the amount of US$2.02
million as part of trade and other payables).
On 29 April 2021, the Company fully repaid the Project Finance
Facility and, as such, the ultimate parent company guarantee
("PCG") granted by Energean PLC in the amount of US$90 million, in
favor of the Project Finance Facility lenders, terminated.
In addition, the Company terminated the standby letter of credit
for US$125 million in favor of the Project Finance Facility
lenders, and as such the PCG granted by the parent company Energean
E&P Limited at the same amount terminated.
2) Short term loan from ultimate parent company repayment:
On 5 January 2021, the Company paid Energean PLC the short-term
loan amounted US$16 million.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
3) Issuance of US$2,500,000,000 senior secured notes:
On 24 March 2021 ("Issue Date"), Energean Israel Finance Ltd (a
subsidiary of the Company, held 100%) announced on closing of an
offering of US$2,500,000,000 senior secured notes.
The Notes will be issued in four series as follows:
- Notes in an aggregate principal amount of US$625 million,
maturing on 30 March 2024, with a fixed annual interest rate of
4.500%.
- Notes in an aggregate principal amount of US$625 million,
maturing on 30 March 2026, with a fixed annual interest rate of
4.875%.
- Notes in an aggregate principal amount of US$625 million,
maturing on 30 March 2028, with a fixed annual interest rate of
5.375%.
- 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 will be paid
semi-annually, on 30 March and on 30 September of each year,
beginning on 30 September 2021.
a. Satisfaction of the escrow release conditions and release from escrow of proceeds of the US$2,500,000,000 senior secured notes offering:
On 29 April 2021 Energean Israel Finance Ltd has satisfied the
escrow release conditions in respect of its US$2.5 billion
aggregate principal amount of the Notes offering, completed by it
on 24 March 2021. As a result of satisfying the said escrow release
conditions, the proceeds of the Offering have been released from
escrow.
The Notes are listed for trading on the TACT Institutional of
the Tel Aviv Stock Exchange Ltd. (the "TASE").
With regards to the Indenture document, signed on 24 March 2021
with HSBC BANK USA, N.A (the "Trustee"), no Indenture default or
Indenture event of default has occurred and is continuing.
b. Collateral:
The Company had undertook to provide the following collateral in
favor 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 (Block 12, Block 21, Block 23, Block 31 and 80% of the
licenses under "Zone D") 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).
c. Reserves accounts:
On 29 April 2021, following the escrow release as stated above,
the Company funded its reserves account as follow:
1. US$163.3 million Interest Payment Account for the accrued
interest prior to practical completion, accrued interest until 30
June 2022 (less coupons actually paid) and from 30 June 2022 the
Interest Reserve Account will be funded 6 months forward.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
2. US$100 million Debt Payment Fund that would be released upon
achieving three quarters annualized production of 3.8 BCM/year.
3. Principal Reserve Fund will be funded 50% an upcoming
maturity within 12 months for the 3 year and 5 year Notes, and 75%
of an upcoming maturity within 18 months for the 7 year and 10 year
Notes.
d. Credit rating:
Moody's assigns Ba3 rating the senior secured notes, and S&P
Global assigns BB- rating the senior secured notes.
D. 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 hierarchy of financial assets and financial
liabilities that are not measured at fair value (but fair value
disclosure is required) is as follows:
Fair value hierarchy as of 30 June 2021
---------------------------------------------
Dollars in thousands
---------------------------------------------
Level 1 Level 2 Level 3 Total
Financial assets
Trade and other receivables - 7,337 - 7,337
Loan to related party - 175,884 - 175,884
Long term restricted cash 100,000 - - 100,000
Short term restricted cash 166,241 - - 166,241
Accrued interest income - 990 - 990
Cash and cash equivalents 731,584 - - 731,584
--------- ----------- --------- ----------
Total 997,825 184,211 - 1,182,036
--------- ----------- --------- ----------
Financial liabilities
Secured Senior Notes (*) - 2,494,285 - 2,494,285
Derivative liability - 2,405 - 2,405
Trade and other payables
- long term - 90,269 - 90,269
Trade and other payables
- short term - 140,319 - 140,319
Total - 2,727,278 - 2,727,278
--------- ----------- --------- ----------
(*) Include short term accrued interest for the Secured Senior
Notes in the amount of US$34,375 thousands as part of trade and
other payables.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
Fair value hierarchy as of 31 December
2020
--------------------------------------------
Dollars in thousands
--------------------------------------------
Level 1 Level 2 Level 3 Total
Financial assets
Trade and other receivables - 54 - 54
Cash and cash equivalents 37,421 - - 37,421
--------- ----------- -------- ----------
Total 37,421 54 - 37,475
--------- ----------- -------- ----------
Financial liabilities
Borrowings (*) - 1,096,046 - 1,096,046
Derivative liability - 6,919 - 6,919
Loans from related parties - 16,000 - 16,000
Trade and other payables
- long term - 84,161 - 84,161
Trade and other payables
- short term - 88,520 - 88,520
Total - 1,291,646 - 1,291,646
--------- ----------- -------- ----------
(*) Include short term accrued interest in the amount of
US$2,081 thousands as part of trade and other payables.
Fair values of derivative financial instruments :
During 2019, the Group signed a hedge contract for 50% of the
facility notional, to hedge the 3 months LIBOR component of the
facility.
The Group held financial instruments at fair value on 30 June
2021 related to interest rate 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. As of 30 June
2021, the Group recognized derivative liability at the amount of
US$2.4 million.
As of 30 June 2021, the Group's interest rate derivatives are
Level 2 (31 December 2020: Level 2). There were no transfers
between fair value levels during the year.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
E. Trade and other payables:
30 June 31 December
--------- --------------
2021 2020
--------- --------------
US Dollars in thousands
-------------------------
Current
Financial items
Trade accounts payable (1) 131,519 68,706
Accrued expenses (1) 6,141 1,628
Payables to related parties 2,344 3,381
Deferred license payments due within
one year (2) - 14,344
Interest payable (3) 34,375 2,081
Current lease liabilities 154 262
--------- --------------
174,533 90,402
Non-Financial items
Social insurance and other taxes 135 87
Income taxes 30 -
--------- --------------
165 87
174,698 90,489
========= ==============
Non-current
Financial items
Accrued Expenses to related parties 161 199
Long term lease liabilities 32 8
Sales consideration received in advance
(INGL) (4) 35,525 28,979
Deferred license payments (2) 54,712 55,174
--------- --------------
90,430 84,360
90,430 84,360
========= ==============
(1) The main balance of the Trade Payables and Accrued Expenses
as of 30 June 2021 relates to development costs for a total amount
of US$134.45 million (31 December 2020: US$68.72 million),
US$130.69 million (31 December 2020: US$67.59 million) included in
trade payable and US$3.76 million (31 December 2020: US$1.13
million) at the accrued expenses. The change in trade payables
represents mainly timing differences and levels of work activity in
Karish project. Trade payables are non-interest bearing.
(2) In December 2016, the Company acquired the Karish and Tanin
offshore gas fields for US$40.0 million closing payment with an
obligation to pay additional consideration of US$108.5 million plus
interest inflated at an annual rate of 4.6% in ten equal annual
payments. As at 30 June 2021 the total discounted deferred
consideration was US$54.71 million (as at 31 December 2020:
US$69.52 million).
The Sale 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 ("FID") date. 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.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
Due to the effects of the COVID-19 pandemic which constitute a
Force Majeure event, postponing the deferred payment due in March
2022 by the number of days that such Force Majeure event last. As
of 30 June 2021, Force Majeure event length has not been finalised
as the COVID-19 pandemic continue to affect the progress of the
project, and in such the deferred payment due in March 2022 will be
made after 1 July 2022.
(3) As at 30 June 2021 include accrued interest for the senior
secured notes in amount of US$34,375 thousands (as at 31 December
2020 short term accrued interest for the Project Senior Facility
Loan in the amount of US$2,081).
(4) The sales consideration received in advance is related to
the agreement with Israel Natural Gas Lines ("INGL") for the
transfer of title (the "hand over") of the near shore and onshore
part of the infrastructure that will deliver gas from the Enegran
Power FPSO into the Israeli national gas transmission grid. There
were no additional proceeds received during the period of six
months ended 30 June 2021. On 1 July 2021 the Company received the
fourth payment at the amount of 18.39 million ILS (approx. US$5.64
million) from INGL. It is intended that the hand over to INGL will
become effective shortly after the delivery of first gas from the
Karish field expected in mid-2022.
NOTE 4: COMPREHENSIVE INCOME
A. Operating loss:
For the period of
six months ended
30 June
--------------------------
2021 2020
------------ ------------
US Dollars in thousands
--------------------------
General & administration expenses
Payroll costs 719 474
Depreciation and amortisation (Notes
3(A) and 3(B)) 50 149
Auditor fees (*) 118 56
Other General & administration expenses 848 1,208
------------ ------------
Total administrative expenses 1,735 1,887
Other expenses
Reversal of prior period provision 5 -
Loss from property, plant and Equipment
disposal 23 -
Other expenses - 385
------------ ------------
Total other expenses 28 385
(*) In addition to the auditor fees included at the
administrative expenses, for the period of 6 months ended on 30
June 2021, the Company incurred US$250 thousands for audit of
special purpose and reporting accountant services in relation to
the issuance of the senior secured notes.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 4: COMPREHENSIVE INCOME (Cont.)
B. Net finance income (expenses):
For the period of
six months ended
30 June
--------------------------
2021 2020
------------- -----------
US Dollars in thousands
--------------------------
Interest on bank borrowings (1) 76,890 31,907
Effective interest on secured senior
notes (2) 33,791 -
Interest expense on long terms payables
(1) 458 3,345
Interest on shareholders loan 9 -
Less amounts included in the cost of
qualifying assets (3) (106,823) (35,252)
------------- -----------
4,325 -
Finance and arrangement fees 13,074 2,183
Other finance costs and bank charges 29 26
Interest expenses from Hedging 6,988 398
Unwinding of discount on decommissioning
liabilities 343 -
Interest on obligations for leases 29 34
Less amounts included in the cost of
qualifying assets (3) (15,352) (2,615)
------------- -----------
Total finance costs 9,436 26
Interest income from time deposits 818 169
Interest income from loans to related
parties (4) 990 -
Total finance income 1,808 169
Net foreign exchange gain (losses) (727) 242
Net finance income (expenses) (8,355) 385
============= ===========
(1) See also Note 3(C)(1).
(2) See also Note 3(C)(3).
(3) See also Note 3(A).
(4) See also Note 6(B).
NOTE 5: TAXATION
A. Tax income (expense):
For the period of
six months ended
30 June
--------------------------
2021 2020
-------------- ----------
US Dollars in thousands
--------------------------
Corporation tax - current year (30) -
Corporation tax - prior years - (1)
Deferred tax 2,601 414
-------------- ----------
Total taxation income (expense) 2,571 413
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 5: TAXATION (Cont.)
B. Deferred tax:
The deferred taxes, driven from the activity in Israel by the
Israeli Branch of the Company, are computed at the average tax rate
of 23%, based on the tax rates that are expected to apply upon
reversal. The deferred taxes are presented in the statement of
financial position as non-current assets. Below are the items for
which deferred taxes were recognised:
Accrued
Property, expenses
plant Right and other
and of short--term
equipment use liabilities
& asset Deffered Staff and other Provisions
intangible IFRS Derivative Tax expenses leaving long--term Derivative for
asset 16 asset losses for tax indemnities liabilities liability decommissioning Total
---------- ----- ---------- ------ ----------- ----------- ---------- --------------- -------
US Dollars in thousands
At 1 January
2020 (2,347) (65) (130) 2,301 5,647 35 178 - - 5,619
Increase
(decrease) for
the year
through:
Profit or loss (9,793) 3 - 1,014 363 28 115 - 8,769 499
Other
comprehensive
income - - 130 - - - - 1,591 - 1,721
---------- ----- ---------- ------ -------- ----------- ----------- ---------- --------------- -------
At 31 December
2020 (12,140) (62) - 3,315 6,010 63 293 1,591 8,769 7,839
========== ===== ========== ====== ======== =========== =========== ========== =============== =======
At 1 January
2021 (12,140) (62) - 3,315 6,010 63 293 1,591 8,769 7,839
Increase
(decrease) for
the period
through :
Profit or loss 46 11 - 858 1,908 22 (11) 553 (786) 2,601
Other
comprehensive
income - - - - - - - (1,591) - (1,591)
---------- ----- ---------- ------ -------- ----------- ----------- ---------- --------------- -------
At 30 June 2021 (12,094) (51) - 4,173 7,918 85 282 553 7,983 8,849
========== ===== ========== ====== ======== =========== =========== ========== =============== =======
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 6: SIGNIFICANTS EVENTS AND TRANSACTIONS DURING THE REPORTING PERIOD
A. Company's shareholders transaction completion:
On 29 December 2020, Energean E&P Holdings Limited entered
into a conditional sale and purchase agreement to acquire Kerogen
Investments No. 38 Limited's entire interest in Energean Israel
Limited, which constitutes 30% of the total issued share capital of
Energean Israel Limited, and completion took place during February
2021.
B. Loan agreement with Energean E&P Holdings Limited:
On 29 April 2021 (the "Closing Date") and in accordance with the
Notes financing documents, the Company and its parent company
Energean E&P Holdings Limited entered into a loan agreement
which establish that the Company will provide a loan facility of up
to US$ 500 million to Energean E&P Holdings Limited for a
period of 24 months from the Closing Date (the "Maturity Date").
The loan and interest will be paid at the maturity date.
Notwithstanding the above, Energean E&P Holdings Limited
may, at its discretion, repay the loan, in whole or in part, at any
time before 28 April 2023.
As of the reporting date, US$346 million was loaned to Energean
E&P Holdings Limited.
C. Letter of Credit Facility Agreement:
On April 2021, the Company signed with a banking corporation on
a 250 million NIS (approx. US$75 million) facility for issuing bank
guarantees for the Company activities and needs in Israel. The
facility term is 12 months, till 30 April 2022 and can be extended
for additional 12 months. The facility bears 1.5% interest rate per
annum and 0.8% commitment fee per annum for the undrawn amount. The
banking corporation security is a US$ 80 million PCG granted by
Energean PLC and cash collateral of US$ 2.96 million.
D. Rig Contract Signed for Drilling Campaign, Offshore Israel:
On June 2021, the Company signed on a contract with Stena
Drilling Limited for growth drilling programme offshore Israel
during 2022.
The contract is for the drilling of three wells and two optional
wells, with the first well expected to spud in the first quarter of
2022. The wells are all expected to be drilled during 2022.
E. Parent Company Guarantees (PCG):
As part of the Company gas sales purchase agreements ("GSPAs"),
in order to secure the agreement obligations to the gas buyers,
Energean E&P Holdings Limited, the Parent company, granted,
during June 2021, a PCG to certain gas buyers in the total amount
of US$38 million. The parent company guarantee will be in force
until June 2024.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 7: SIGNIFICANTS EVENTS AND TRANSACTIONS AFTER THE REPORTING PERIOD
A. Compensation to gas buyers due to late supply:
During August 2021 and in accordance with the GSPAs signed with
a group of gas buyers, the Company has agreed to pay compensation
to these counterparties due to the fact the gas supply date is
taking place beyond a certain date as defined in the GSPAs (being
30 June 2021). The compensation will be paid on a monthly basis
starting on August 2021 and is estimated at approx. US$23 million.
The compensation is accounted as variable purchase consideration
under IFRS 15 hence recognised once production commences and gas is
delivered to the offtakers.
B. Gas buyer request for arbitration:
During August 2021 a gas buyer sent a request for the
International Court of Arbitration ("ICC") asking for arbitration
on its rights of termination due to the fact the gas supply date is
taking place beyond a certain date which defined in the GSPA. If
the agreement it is terminated, the Company has identified multiple
alternative routes to monetise those gas volumes (being 0.8
Bcm/yr), including both domestic and international markets, and
hence is confident of profitably selling them.
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END
IR UAURRANUKRUR
(END) Dow Jones Newswires
September 02, 2021 02:02 ET (06:02 GMT)
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