Energean

Government pursuing Egypt carbon emissions storage plan

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The Greek government is pursuing the prospect of transporting and storing CO2 emission quantities beyond the EU, in Egypt, as part of a plan to help local industries reduce their carbon footprint through carbon capture and storage (CCS) solutions.

Athens has reached out to the European Commission for a revision of its industrial emissions management strategy that could permit storage of captured CO2 in countries outside the EU.

The Greek government supports that the geology in Europe’s south differs from that in the north, meaning that geological structures suitable for CO2 storage in Mediterranean countries are scarce.

The prospect of Greek industries utilizing carbon emissions storage infrastructure to be developed in Egypt has been extensively discussed at recent meetings between the governments of the two countries.

These talks have been constructive and established firm ground for further cooperation between Greece and Egypt in the CCS sector, amongst other fields, sources told energypress.

Greece’s carbon emissions are estimated to total 15 million tons, annually, well above the storage capacity of the prospective Prinos CCS project planned by Energean in the country’s north. This project is expected to offer a carbon storage capacity of between 3 and 4 million tons.

Energean plc: Morocco farm-in completed, rig contract signed

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London, 10 April 2024 – Energean plc (LSE: ENOG TASE: אנאג) has announced that it has completed the farm-in to Chariot Limited’s (“Chariot”, AIM:CHAR) acreage offshore Morocco, following the receipt of all remaining approvals from the Moroccan Authorities, and signed a rig contract with Stena Drilling Limited (“Stena”).

Energean has paid $10 million cash consideration upon farm-in closing. The resulting overall participation is:

  • Lixus licence: Energean (45%; operator), Chariot (30%) and ONHYM (25%)
  • Rissana licence: Energean (37.5%; operator), Chariot (37.5%) and ONHYM (25%)

A rig contract has also been signed with Stena for the use of its Stena Forth drill ship for the appraisal well, plus one optional well. Energean as operator, alongside its partners, is planning to drill the appraisal well on the Anchois field (Lixus licence) in Q3 2024. The purpose of the appraisal well is to undertake a drill stem test on the main gas-containing sands and target an additional 11 Bcm of gross unrisked prospective resource[1].

Mathios Rigas, Chief Executive Officer of Energean, commented:

“We are delighted to start working in Morocco, where we hope to repeat our previous successes in the Mediterranean: enhancing domestic production, helping to meet the country’s growing demand, with the potential for exports for any surplus supply, and facilitating both energy security and long-term coal reduction.”

[1] As per Chariot’s latest competent persons report

Energean announces strong full-year results for 2023

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London, 21 March 2024 – Energean plc (LSE: ENOG, TASE: אנאג) has announced its audited full-year results for the year ended 31 December 2023 (“FY 2023“).

Mathios Rigas, Chief Executive Officer of Energean, commented:

“2023 was another transformational year for Energean. We grew production by 200% year-on-year, reached c. 150 kboed peak production and brought NEA/NI online on time and on budget. Despite the challenging geopolitical environment, all of our operations were managed without any impact from the regional conflicts. Since the year-end, the start-up of Karish North and the second gas export riser mean we are now able to utilise the FPSO’s maximum gas capacity and our production guidance illustrates the next step towards our near-term target of 200 kboed. 

“We also had a strong year financially, generating full-year revenues of $1,420 million and adjusted EBITDAX of $931 million. As a result, we have reduced our leverage ratio by 50% to 3x. These strong results coupled with our long-term gas contracting strategy, which underpins our dividend policy, has seen us return approximately $370 million[1] (210 US$ cents/share) to shareholders since our inaugural payment in Q3 2022.

 “We are looking beyond our near-term targets and this is reflected in our new Morocco country entry project and in Italy, where we see a new era for the industry following the annulment[2] of prohibitive laws, thereby releasing previously restricted acreage. We also remain alert to opportunities that fit our key business drivers (paying a reliable dividend, deleveraging, growth, and our commitment to Net Zero[3]) and can move quickly to take advantage when they arise. 

“On sustainability, we are contributing to Israel’s transition away from coal as well as its, and the wider region’s, energy security – helping to meet the growing demand for natural gas. We further reduced our emissions intensity and have now delivered an 86% reduction from our original 2019 baseline. We are also now rated AAA by MSCI[4]. Our Prinos Carbon Storage (“CS”) project will add another pillar and help decarbonise heavy industries in Southeast Europe, in line with our commitment during COP28. 

“Our ongoing success is due to the entire global team working together during what has been a challenging period in the East Mediterranean. I am proud to lead such a diverse and dedicated team and as we continue to grow, our commitment to integrity, corporate sustainability and operational excellence will remain.” 

Operational Highlights

  • First major step-up in production achieved.
    • FY23 production of 123 kboed (83% gas), up 200% year-on-year, primarily as a result of a full-year of production from Karish (Israel).
    • Day-to-day production in Israel continues to be unimpacted by the ongoing geopolitical developments.
    • FPSO uptime (excluding planned shutdowns) was 99%[5] in Q4 2023.
  • Key growth projects complete.
    • The NEA/NI development (Egypt) was completed in December 2023.
    • Karish North and the second gas export riser were brought online in February 2024.
  • Confirmed year-end 2P reserves of 1,115 mmboe, stable year-on-year before produced 2023 volumes and demonstrating material reserves life of around 19 years[6].
  • New gas contract signed in Israel in February 2024.
    • Adds circa $2 billion of revenues over the life of the contract and is in line with the Group’s strategy to secure long-term reliable cash flows.
  • Morocco country entry through farm-in to Chariot Limited’s Lixus and Rissana licences, expected to complete imminently.

Financial Highlights

  • Strong financial performance, underpinned by a full-year of production from Karish.
    • 2023 sales and other revenues of $1,420 million, representing a 93% increase (2022: $737 million).
    • 2023 adjusted EBITDAX of $931 million, representing a 121% increase (2022: $422 million).
    • 2023 profit after tax of $185 million was a significant improvement versus the previous year (2022: $17 million). Profit after tax was negatively impacted by $100 million of deferred tax charges.
    • Group cash as of 31 December 2023 was $372 million (including restricted amounts of $26 million) and total liquidity was $607 million.
    • 50% reduction in Group leverage to 3x (FY 2022: 6x).
    • No immediate debt maturities following Energean Israel’s bond refinancing in July 2023.
  • Q4 2023 dividend of 30 US$cents/share declared on 22 February 2024 and scheduled to be paid on 29 March 2024[7].
    • A total of 210 US$cents/share (approximately $370 million), including the Q4 2023 dividend1, returned to shareholders since maiden payments began.
  • 42% year-on-year reduction in carbon emissions intensity to 9.3 kgCO2e/boe and an 86% reduction since our original baseline year[8], ahead of schedule with the Group’s stated 2019-2025 target.

Outlook

  • 2024 production guidance reiterated at 155 – 175 kboed (production to end-February was 144 kboed; 82% gas), a significant step up towards Energean’s near-term targets.

Production is second-half weighted due to:

  • Peak gas demand during the summer driving maximum gas output from the Energean Power FPSO.
  • Cassiopea (Italy) first gas expected in the summer of 2024.
  • Focused on backfilling the Energean Power FPSO and meeting growing gas demand in Israel and the region.
    • The start of the Katlan (Israel) development will extend the gas production plateau and has potential for exports.
  • New areas of development underway to grow the current business base:
    • Morocco farm-in expected to complete imminently; appraisal well planned for Q3 2024.
    • In March 2024, a court ruling annulled the PITESAI plan and its associated acts in Italy. This ruling[9] has unlocked previously restricted acreage in addition to those already identified and highlighted by Energean.
  • Quarterly dividend payments intended to be declared in line with previously communicated dividend policy.
  • Evaluating all opportunities, with continued capital discipline, that are dividend accretive, meet Energean’s deleveraging targets, achieve its growth objectives and contribute to the Group’s Net Zero target. 

Financial Summary

    FY 2023 FY 2022 % Change
Average working interest production Kboed 123 41 200%
Sales and other revenue $ million 1,420 737 93%
Cash Cost of Production $/boe 11 19 (42%)
Adjusted EBITDAX[10] $ million 931 422 121%
Profit after tax $ million 185 17 988%
Cash flow from operating activities $ million 656 272 141%
Development and production expenditure $ million 487 729 (33%)
Exploration expenditure $ million 57 140 (59%)
Decommissioning expenditure $ million 19 9 111%
31 December 2023 31 December 2022 % Change
Cash (including restricted amounts) $ million 372 503 (26%)
Net Debt $ million 2,849 2,518 13%
Leverage (Net Debt / Adjusted EBITDAX) $ million 3x 6x 50%

 [1] Amounts shown after payment of Q4 2023 dividend, scheduled for 29 March 2024, which is the date upon which payment is to be initiated by Energean.

[2] Unless successfully appealed by the Ministry.

[3] Net Zero by 2050 commitment is for scope 1 and 2 emissions.

[4] Morgan Stanley Capital International.

[5] 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.

[6] Based upon mid-point of 155-175 kboed 2024 production guidance.

[7] Payment date is stated as the date upon which payment is to be initiated by Energean.

[8] Original baseline year was 2019. In 2023, this was revised to 2022.

[9] Unless successfully appealed by the Ministry.

[10] 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.

Block 2 license, west of Corfu, granted 12-month extension

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EDEYEP, the Hellenic Hydrocarbons and Energy Resources Management Company, has granted a 12-month extension, until March, 2025, to a hydrocarbon exploration license held by Energean and Helleniq Energy, formerly Hellenic Petroleum (ELPE), for offshore Block 2, west of Corfu and reaching the marine border with Italy.

The extension was granted following a request submitted by Energean, head of the two-member consortium exploring Block 2, to allow more time for the establishment of a land-based logistics base.

Meanwhile, processing of 3D data collected at Block 2 by geophysical services company PGS on behalf of the consortium is nearing completion, energypress sources informed. Signs to date are promising, indicating that drilling at the designated marine area is highly likely.

The two consortium members are expected to decide on whether to explore the offshore plot further over the next 12 months. If not, Energean and Helleniq Energy will be required to return their license to the Greek State.

Karish North and second gas export riser online and new GSPA signed

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London, 29 February 2024 – Energean plc (LSE: ENOG TASE: אנאג) has announced:

  • Karish North and second gas export riser online, enabling utilisation of the FPSO’s maximum gas capacity
  • New Gas Sale and Purchase Agreement (“GSPA”) signed for an initial 0.6 bcm/yr[1], rising to 1 bcm/yr from 2032 onwards

Karish North and second gas export riser online

Karish North first gas was safely achieved on 22 February 2024. The Karish North production well is currently utilising the second gas export riser, the installation of which was completed in December 2023. The Energean Power FPSO now has four production wells in operation, increasing well stock redundancy and flexibility to meet the demand requirements of Energean’s gas buyers.

New GSPA signed with Eshkol Energies Generation LTD

Energean Israel has signed a new GSPA with Eshkol Energies Generation LTD, majority owned Dalia Energy Companies Ltd, for the supply of an initial 0.6 bcm/yr1, rising to 1 bcm/yr from 2032 onwards.

Energean supplies gas to all four IEC power stations that have been privatised: Ramat Hovav, Alon Tavor, East Hagit and now Eshkol. This new contract is in line with Energean’s strategy to bring competition and security of supply to the Israeli market, and to secure long-term cash flows for its shareholders via its long-term gas contracts.

The GSPA is for a term of approximately 15 years, for a total contract quantity of up to approximately 12 bcm and represents circa $2 billion in revenues over the life of the contract. The contract contains provisions regarding floor and ceiling pricing, take or pay and price indexation (not Brent-price linked). The GSPA has been signed at levels that are in line with the other large, long-term contracts within Energean’s portfolio.

Mathios Rigas, Chief Executive of Energean, commented:

“Energean has successfully delivered another milestone in bringing our fourth well, Karish North, to first production. This provides us operational flexibility and enables us to utilise the FPSO’s maximum gas capacity.

“The new contract with Eshkol is a further testament to the trust in Energean from the Israeli electricity producers, adds circa $2 billion of revenues over the life of the contract to our business, and is in line with our strategy to secure long-term reliable cash flows from long-term gas contracts.”

[1] From 3 June 2024 to 31 December 2031

Brussels set to approve state support plan for Prinos CCS

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The European Commission is set to approve Greek State funding support for Energean’s Prinos CCS project following the completion of a third round of exchange between Greece’s energy ministry and the Brussels authority on the issue, energypress sources have informed.

Pre-notification of the support scheme was announced last June, but this was followed by three rounds of consultation entailing questions which the Greek ministry was required to answer, in line with the European Commission’s CEEAG procedures concerning guidelines on State aid in the climate, environment and energy sectors.

The Prinos CCS project has been included on the sixth edition of the EU’s PCI/PMI list.

Greek gas grid operator DESFA has already received funding support worth 75 million euros through the REPowerEU program for the development of a pipeline to serve carbon capture units planned to be installed by cement producers Heracles and Titan at their respective facilities in Milaki, on the island Evia, and Kamari, in the Viotia region, slightly northwest of Athens.

DESFA’s pipeline will deliver emissions from the two production plants to a carbon dioxide liquefaction facility, which will also be built by DESFA but will not be supported by REPowerEU funding.

The liquefied emissions of the two cement plants will then be transferred for permanent storage at the Prinos CCS, an underground facility to be developed by Energean.

Talks have begun at a European level, as highlighted in a recent European Commission report, for the establishment of an extensive CO2 transport network by 2050.

According to the report, CO2 transport pipelines in the EU could reach up to 19,000 km by 2050 and will require investments of between 9.3 and 23.1 billion euros.

Greece is considered among the European countries that can potentially contribute to CO2 storage, the Prinos underground storage facility being pivotal to this potential.

Energean CEO meets with Israeli president on local role

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Energean Group CEO Mathios Rigas and the company’s Country Manager in Israel, Shaul Zemach, have held a crucial meeting with the Israeli President Isaac Herzog, for talks focused on the importance of natural gas production for Israel and the energy market of the wider eastern Mediterranean region, according to posts by Energean on its social media accounts.

Mr. Rigas stressed the importance of domestic production for both the Israeli economy and consumers, confirming that he and Energean remain fully committed to Israel’s secure energy supply.

“Strengthening gas exploration, development and production in the Mediterranean will be crucial for a just and secure energy transition in the region. We are proud to be a catalyst for regional energy development as the leading independent exploration and production company focused on natural gas, the environment, society and corporate governance,” the Energean CEO declared during the meeting.

The company, listed on the London and Israeli stock exchanges, which started from Prinos in Kavala, northern Greece, has been producing natural gas in Israel from the Karish field since 2022 with its “Energean Power” unit, the only FPSO (Floating, Production, Storage, Offloading) facility operating in the eastern Mediterranean. It covers about 50 percent of Israel’s domestic gas needs, producing at a rate of about 6 billion cubic meters per year.

Energean also expects to begin producing, in the the first quarter of this year, from the Karish North field, which the company discovered in 2019.

The Israeli government recently approved Phase 1 of the Development Plan for the Katlan gas field. Katlan, also known as the Olympus Area, was discovered in 2022 by Energean and can be used for export if Israel grants the necessary permits.

Israel’s interest in Energean’s production is obviously very high, as highlighted by the Israeli Minister of Energy and Infrastructure Eli Cohen’s recent visit to the “Energean Power” facility.

Energean: Morocco Country Entry and Farm In to Gas Development

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London, 7 December 2023 – Energean plc (LSE: ENOG, TASE: אנאג) has announce that it has farmed into Chariot Limited’s (“Chariot”, AIM:CHAR) acreage offshore Morocco, which includes the 18 Bcm (gross) Anchois gas development and significant exploration prospectivity. This new country entry is well-aligned with Energean’s strategy to become the pre-eminent independent producer in the Mediterranean, with a focus on high quality gas assets.

Highlights:

  • New country entry in Energean’s core Mediterranean region with acreage underpinned by an attractive gas development
  • Farm in to 45% of the Lixus licence, with the option to increase to 55% post drilling results, and 37.5% of the Rissana licence and assumes operatorship of both licences
  • Includes the commercial 18 Bcm (gross) Anchois development, located near to infrastructure for supply of gas to domestic and international markets
  • Up front cash consideration of $10 million
  • Appraisal well planned for 2024, targeting an additional 11 Bcm of gross unrisked prospective resource to be commercialised through the Anchois development
  • Energean to carry Chariot for its share of pre-FID costs, which are recoverable from Chariot’s future revenues
  • Significant additional near-field, near-infrastructure prospectivity that is expected to add attractive, balanced-risk growth potential

Dr Leila Benali, Minister of Energy Transition and Sustainable Development, commented:

“This agreement is pivotal for the wider acreage offshore Morocco, on its Atlantic coast, a key energy asset for the Kingdom. We welcome Energean on these licences as the important investments will contribute greatly to the monetisation of the country’s resources and to our ambitious energy strategy.”

Mrs Amina Benkhadra, General Director Office National des Hydrocarbures et des Mines, (“ONHYM”)  commented:  

“I would like to congratulate both parties on signing this agreement. The discovery and extensive work to date has set an excellent foundation on which the project can be developed and this partnership will now be instrumental in financing and taking it through the next phase. We look forward to working alongside Energean and Chariot in bringing the project to first gas.”

Mathios Rigas, Chief Executive Officer of Energean, commented:

“This is an exciting step in the next stage of our development, one that can only enhance our position as the pre-eminent independent natural gas producer listed in London. These assets are particularly attractive as we understand the core geological, commercial and political drivers of the region, we have a track record in developing material gas resources prioritised for the domestic market and they are a complementary fit with our broader portfolio, not least the potential for surplus supply to other markets. We look forward to working with our partners Chariot and ONHYM, and developing an outstanding resource for the benefit of all parties, including Morocco and its people.”

Adonis Pouroulis, Chief Executive Officer of Chariot, commented:

“In Energean, we have secured a partner with a proven track record of rapidly building and delivering this kind of offshore development. Energean also shares our view that Anchois and its surrounding acreage offers significant upside potential and we are aligned with our plans moving forward. The new partnership is a key step in bringing the development of the Anchois field to reality and we are looking forward to continuing the extensive work undertaken so far to reach Final Investment Decision.”

Assets                                                                                                             

Energean has agreed to farm into a 45% working interest in the Lixus offshore licence, which contains the Anchois gas development (Chariot 30%, ONHYM 25%), and a 37.5% working interest in the Rissana licence (Chariot 37.5%, ONHYM 25%). Energean will assume operatorship for both licences.

Farm in terms

As consideration for the interests in the licences, Energean has agreed to the following terms:

  • $10 million cash consideration on closing of the transaction
  • Energean agrees to carry Chariot for its share of pre-FID costs (which are recoverable from Chariot’s future revenues, see terms below), up to a gross expenditure cap of $85 million, covering:
    • drilling of the appraisal well; and
    • all other pre-FID costs; and
    • up to $7 million of seismic expenditure on the Rissana licence.
  • $15 million in cash, which is contingent on FID being taken on the Anchois Development.

Post appraisal well option to increase working interest from 45% to 55%

Following the drilling of the appraisal well, Energean has the option to increase its working interest in the Lixus licence (which includes the Anchois development) by 10%, to 55%. On exercise of this option, the amount payable would be:

  • Chariot’s choice between either:
    1. 5-year, $50 million of convertible loan notes with a GBP20 strike price and 0% coupon; or
    2. 3 million Energean plc shares, issued immediately upon exercise of the option but subject to a lock-up period until the earlier of first gas and 3 years post FID
  • Energean will pay to Chariot a 7% royalty for every dollar achieved on gas prices (post transportation costs) in excess of a base hurdle
  • An agreement to carry Chariot’s 20% share of development costs for the Anchois development with the following terms:
    • A net expenditure cap of $170 million
    • The carry available for development costs is reduced by costs carried in the pre-FID phase
    • All carried amounts are recoverable from 50% of Chariot’s future revenues with interest charged at SOFR + 7%

If the option is not exercised, subject to FID, the partners agree to progress the Anchois development with an ownership structure of Energean 45%, Chariot 30%, ONHYM 25%. All amounts carried by Energean on behalf of Chariot would be recoverable from Chariot’s future revenues under the same terms as above.

The completion of the transaction is subject to government approval.

Lixus licence and Anchois Development

The Lixus Offshore licence covers an area of approximately 1,794 km2 with water depths ranging from the coastline to 850 m. The area has extensive data coverage with legacy 3D seismic data covering approximately 1,425 km2 and five exploration wells have been drilled historically, including the Anchois-1 and Anchois-2 discovery wells.

Chariot’s latest competent persons report covering the Anchois Field has certified gross 2C contingent resources of 18 Bcm in the discovered gas sands and gross unrisked prospective resources of 21 Bcm in undrilled sands.

Energean and Chariot plan to drill an appraisal well in 2024, with the following objectives:

  • To undertake a drill stem test on the main gas-containing sands
  • To target an additional 5 Bcm of recoverable gas with a 61% geological chance of success through a sidetrack into the O sands in the Anchois Footwall prospect
  • To target an additional 6 Bcm of recoverable gas with a 49% geological chance of success through a deepening of the well into previously undrilled sands in the Anchois North Flank prospect

Once drilled, the well is expected to be retained as a future producer for the Anchois development.

It is anticipated that the licence contains significant additional prospectivity that could allow for further balanced-risk, near-field exploration activity.

 

REPowerEU: €75m for DESFA pipeline serving Prinos CCS

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Gas grid operator DESFA stands to receive funding support worth 75 million euros through the REPowerEU program for the development of a pipeline to serve carbon capture units planned to be installed by cement producers Heracles and Titan at their respective facilities in Milaki, on the island Evia, and Kamari, in the Viotia region, slightly northwest of Athens.

The pipeline will deliver emissions from the two production plants to a carbon dioxide liquefaction facility, which will also be built by DESFA but will not be supported by REPowerEU funding.

The liquefied emissions of the two cement plants will then be transferred for permanent storage at the Prinos CCS, to be developed by Energean.

The liquefaction facility will be located at a coastal area in the wider Athens area, one possibility being the islet Revithoussa. The choice of the location will be made once technical studies have been carried out by DESFA.

The project is planned to be developed concurrently with Energean’s Prinos CCS. The pipeline is planned for launch in 2026 following its completion late in 2025.

Energean: Further production increase and progress in Prinos CO2 storage project

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London, 16 November 2023 – Energean plc (LSE: ENOG, TASE: אנאג) has provided an update on recent operations and the Group’s trading performance in the nine months to 30 September 2023.

Mathios Rigas, Chief Executive Officer of Energean, commented:

“I am sincerely grateful to all our employees, who have shown remarkable resilience, dedication and professionalism in the face of the challenging environment. Their unwavering commitment to our business and our values has been instrumental in delivering both operational excellence and growth. We are proud of our diverse and talented team, and we will continue to invest in their development and well-being.

“The ongoing security situation has not impacted our production. The successful ramp-up of production from our flagship Karish gas field in Israel has increased Group production to above 150 kboed in recent days. We have delivered revenues of over $1 billion and adjusted EBITDAX of $623 million in the nine months to 30 September 2023, reflecting our low-cost, high-margin business model. We have also reduced our Group leverage ratio to 3.5x and continued our dividend payments, demonstrating our commitment to delivering shareholder value.

“We have made significant progress on our growth projects, which will support our near-term targets of 200 kboed, $2.5 billion revenues, $1.75 billion adjusted EBITDAX and deleveraging target of c.1.5x, the timing of which may be impacted by the delay to the second oil train installation. We have commenced drilling of the Orion 1x well in Egypt, where we have signed a farm-out agreement[1] that will reduce our net exposure and enhance our returns. This is in addition to an attractive portfolio of exploration assets that have the potential to add significant value.

“Finally, we have made a major step forward at our Prinos carbon storage project in Greece. It has been adopted by the European Commission as a Project of Common Interest, and we have been committed EUR 150 million of grants from the Greek Government to support its development. These actions set the foundation for a transition of our mature Prinos oil field to an exciting growth investment opportunity and demonstrates our commitment to our broader energy transition strategy and being the best version of Energean we can be.”

Operational Highlights

  • Production during the nine months to 30 September 2023 was 118.5 kboed (nine months 2022: 35.2 kboed); Q3 2023 production was 143 kboed
    • On track to deliver full year production in line with latest guidance of 120 – 130 kboed
    • No production impact from the ongoing security situation in Israel
  • Strong progress on our growth projects
    • Karish North and second gas export riser on track for completion by end-2023
    • Second oil train to be installed as soon as the security situation in Israel allows
    • Katlan FID on track for around year-end 2023
    • NEA/NI completion on track for year-end 2023; Cassiopea first gas on track for 2024
    • Good progress towards the delivery of near-term targets of 200 kboed, $2.5 billion revenues, $1.75 billion adjusted EBITDAX and leverage c.1.5x
  • Attractive portfolio of exploration wells targeting additional upside, including the Orion 1x exploration well in Egypt (Energean 19%, previously 30%), which commenced drilling in October 2023; farm-out agreement signed and expected to complete within the coming weeks, subject to government approvals

Financial Highlights

  • Strong financial performance for the nine months to 30 September 2023, underpinned by a quarter of steady production from Karish
    • Revenues of $1,016 million, a 85% increase (nine months 2022: $550.2 million)
    • Adjusted EBITDAX of $623 million, a 79% increase (nine months 2022: $348.5 million)
  • Strong balance sheet maintained; ongoing deleveraging
    • Group leverage[2] continued reduction to 3.5x (H1 2023: 3.9x; FY 2022: 6.0x)
    • Group cash as of 30 September 2023 was $329.0 million, including restricted amounts of $27.5 million, and total liquidity was $578.6 million
  • Energean Israel’s $750 million 2033 bond was released from escrow in September and was used to repay Energean Israel’s $625 million 2024 bond (redemption date on 30 September 2023).

Corporate Highlights

  • Q3 2023 dividend of 30 US$ cents/share declared today, in line with Energean’s dividend policy, scheduled to be paid on 29 December 2023
  • Scope 1 and 2 emissions intensity of approximately 9.7 kgCO2e/boe, a 12% reduction versus H1 2023

Strategic Highlights

  • Energy transition plan progressing well
    • Prinos Carbon and Storage (“CS”) project in Greece adopted by the European Commission as a Project of Common Interest
    • EUR 150 million of grants committed from the Greek Recovery & Resilience Facility 
 

 

 Nine months 2023

$m

 Nine months 2022

$m

 Increase / (Decrease)

%
Average working interest production (kboed) 118.5 (84% gas) 35.2 (73% gas) 236%
Sales and other revenues 1,016.3 550.2 85%
Cash Cost of Production[3] 360.7 181.4 99%
Cash Cost of Production per boe  ($/boe) 11.2 18.9 (41)%
Cash G&A 26.4 21.1 25%
Adjusted EBITDAX 623.3 348.5 79%
Development and production expenditure 423.2 494.4 (14)%
Exploration capital expenditure 24.7 71.4 (65)%
Decommissioning expenditure 3.1 3.8 (18)%
Nine months 2023

$m

 H1 2023

$m

 Increase / (Decrease)

%
Net Debt (including restricted cash) 2,926.3 2,715.3 8%
Leverage (Net Debt / annualised Adjusted EBITDAX[4]) 3.5 3.9 (10%)

 [1] Subject to government approvals

[2] Net debt / annualised adjusted EBITDAX

[3] Includes flux costs of $25.3 million in nine months 2023 and $26.8 million in nine months 2022

[4] Nine months 2023 leverage based upon nine months 2023 annualised Adjusted EBITDAX

Prinos CCS state aid talks with European Commission begin

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Prinos CCS, a carbon capture and storage project being promoted by upstream company Energean as Greece’s first CCS facility, at a depleted underwater Prinos field, south of Kavala, is approaching the stage of development.

The Greek ministry has pre-notified the European Commission on a relevant support scheme, within the framework of Climate, Energy and Environmental Aid Guidelines, allowing exceptions to an EU ban on state aid in the climate, environment and energy sectors.

The ministry’s pre-notification is expected to initiate consultation between the two sides for the formation of a support scheme that will need to be appraised and approved by Brussels.

Greek officials have also submitted a funding request for 50 million euros through the REPowerEU facility.

Prinos CCS has been included in a sixth edition of a PCI/PMI list, which was given the green light yesterday by a relevant Brussels committee but still needs to be approved by European Parliament and the European Council.

PCI/PMI status would facilitate financing for the CCS project’s development plans through the Connecting Europe Facility, the EU fund supporting infrastructure investments in transport, energy, digital and telecommunication projects. This status could also lead to favorable borrowing terms for the project.

Greek gas grid operator DESFA is supporting the effort to secure PCI/PMI status for the Prinos CCS project.

DESFA’s role in the project’s development would entail constructing a network for collecting CO2 quantities. Industries operating in the wider Athens area would be connected to this network.

CO2 amounts would be liquefied and temporarily stored at a facility near the port of Elefsina, west of Athens, then loaded onto CO2 tankers and shipped out to the Prinos CCS.

Energean holds a license for the Prinos facility, currently running until August, 2024. As a next step, the company will need to secure a social and environmental impact study. Its approval would enable Energean to take a next step and apply to EDEYEP, the Hellenic Hydrocarbons and Energy Resources Management Company, for a CO2 storage license, which would make the company its operator.

Energean plans to start operating the Prinos CCS in late 2025 or early 2026 at a first-phase level for storage of up to 1 million tons of CO2 per year.

 

Major east Mediterranean projects brought to a standstill

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The Brent crude price began trading today 5 percent up, over 88 dollars a barrel, as markets have not ruled out stricter US sanctions by the US against Iran, which supports Hamas, responsible for the weekend’s shock attack on Israel.

European and US markets are also expected to rise today, reflecting anxiety over an escalated conflict that would be brought about by an Israeli ground military operation in Gaza and the involvement of the powerful Hezbollah from the Israel’s north, with the support of Iran and Syria.

Should the US impose stricter sanctions on Iran, global oil supply would be reduced, creating an opportunity for Russia to increase its share, analysts have noted.

Washington, since late 2022, has turned a blind eye to an increase in Iranian exports circumventing US sanctions, on the basis of an informal détente with Tehran, analysts have reminded. The US has pursued such a course knowing it would hurt Russia.

Israel’s energy-related interests in the eastern Mediterranean, including talks with Cyprus and other regional players for gas exports to Europe, will now be put on hold following the Hamas attack on Israel.

Earlier today, Israel’s energy ministry ordered US oil giant Chevron to halt operations at the Tamar gas field, off the coast of Israel. The company stated it is complying with the ministry’s request.

The development of a Cypriot LNG terminal, planned to receive Israeli pipeline gas, and, even more crucially, a recent push by Israeli Prime Minister Benjamin Netanyahu for decisions promoting exports from east Mediterranean fields within the next three to six months, are now being brought to a standstill.

As for the role of Turkey, statements made yesterday by President Recep Tayyip Erdogan, who called for restraint from both sides without condemning the Hamas attack on Israel and spoke again of a Palestinian state with Jerusalem as its capital, probably reinforce Israel’s reservations against Turkey.

At a recent meeting in New York, Netanyahu and Erdogan agreed to schedule an exchange of visits aimed at restoring relations between the two countries. Erdogan, at that meeting, had proposed the transportation of Israeli gas to Europe via a subsea pipeline running alongside the Turkish coast.

Operations by Greece’s Energean Oil & Gas, listed on the London Stock Exchange, at licenses within the Israeli EEZ have not been disrupted by the conflict, company officials informed, noting the Energean Power FPSO and all other company facilities are not situated close to the battle zone.

 

 

Hamas attack on Israel raises energy security questions

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The weekend’s shock attack by Hamas on Israel, which has cast doubts over the capabilities of Israel’s secret services while also proving the country’s Iron Dome air defense system inadequate as it failed to respond to thousands of rockets launched from Gaza, has, inevitably, also spilled over into the energy sector, raising security fears about Israel’s Exclusive Economic Zone.

Israel’s defense shortcomings, combined with the likelihood of an escalation of the current situation involving other Arab organizations, raise concerns about the country’s ability to protect critical infrastructure such as platforms and gas pipelines.

Upstream companies operating within Israel’s EEZ need to feel secure about the safety of their personnel and investments in the region.

For the time being, production at facilities operated by Greece’s Energean have not been disrupted.

The developments also extend into the political sphere. Earlier this year, Israel and Lebanon reached an EEZ delimitation agreement that enabled Lebanon to begin hydrocarbon exploration on its side. Total, Eni and QatarEnergy took on the project and are expecting initial results a few weeks from now.

The agreement between Israel and Lebanon, a politically sensitive one, gives Israel a 17 percent share of revenue from the Qana gas field.

Israel has also been considering the prospect of conducting drilling efforts off Gaza in collaboration with the Palestinian Authority and Egypt.

As for Europe, which saw in the Middle East an opportunity to escape from the dangers associated with Russian natural gas, this latest escalation comes as a reminder that energy security remains a difficult equation.

 

 

Energy crisis brings fossil fuels back to the forefront

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The energy crisis has brought about a revival of the hydrocarbons sector, as highlighted by a growing number of energy companies that have decided to reactivate exploration and production projects that had been put on hold as a result of climate-target pressure. Much of this reignited upstream activity is occurring in Europe. Greece must not be left behind.

Yesterday, French oil and gas giant TotalEnergies announced it would boost fossil fuel output over the next five years, a contrast to its reduced production in recent years.

Earlier in the week, on Wednesday, the UK’s North Sea Transition Authority approved plans for production at the new Rosebank oil and gas field in the North Sea, estimated to contain approximately half a billion barrels of oil.

Norwegian upstream giant Equinor, holding the biggest stake in the Rosebank field, estimates production will begin in 2030, with initial investments seen reaching roughly 3.8 billion dollars before totaling approximately 10 billion dollars by 2051.

Two two months earlier, UK Oil & Gas Plc had announced it would recommence production at its Avington oil field, estimated to contain 60 million barrels. Production at this field had been disrupted at an embryonic stage six years ago, with output having reached just several hundred thousand barrels.

In late August, Norway, which has captured the biggest share of Russia’s lost natural gas supply to the EU, announced that a latest round of tenders for licenses at 92 locations, 78 in the Barents Sea and 14 in the Norwegian Sea’s northwest, had attracted interest from 25 companies, including majors such as Shell, ConocoPhillips, Equinor and Aker BP.

The heightened interest expressed by majors highlights a turnaround of their green-focused investment policies of recent years. Shell, for instance, has announced it will disrupt an investment cutback plan of between 1 and 2 percent, annually, until 2030, adding it will increase investments in natural gas.

The hydrocarbons sector is also making a comeback in regions closer to Greece, Italy being a prime example. Italy had stopped issuing new licenses for many years but took a turn in November, when officials announced the country will be holding tenders offering ten-year licenses that offer total production potential of 15 bcm in natural gas from deposits in the Adriatic Sea.

Quite soon, companies operating in Greece will receive results from seismic surveys conducted west and southwest of Crete (ExxonMobil – HelleniQ Energy); Gulf of Kyparissia (Helleniq Energy); Ionian Sea (HelleniQ Energy); and Northwest Ionian (Energean – HelleniQ Energy).

In addition, Energean is awaiting an environmental permit to proceed with exploratory drilling in the Zitsa area, close to Ioannina, northwestern Greece.

Given the international developments and Greece’s energy needs – 6 bcm of natural gas a year and 300 barrels of oil per day – imported at lofty prices, the Greek State must facilitate, it has become clear, the endeavors of companies seeking to move ahead with their projects.

Energean plc: Strong financial results; Karish production steady at 6 bcm/yr

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London, 7 September 2023 – Energean plc (LSE: ENOG TASE: אנאג) has announced its half-year results for the six months ended 30 June 2023 (“H1 2023”).

Operational Highlights:

  • Production for the period was 105.9 kboed, near triple that of H1 2022
  • Karish production currently steady at ~6 bcm/yr equivalent
    • Completion of commissioning under the gas sales agreements (“GSAs”) achieved in April, with Practical Completion under the EPCIC with Technip achieved in June
    • Optimisation activities on the FPSO and subsea systems have progressed well, and the Energean Power FPSO achieved 97% uptime in August. Efficiency levels have followed a similarly positive trajectory and production is currently steady, averaging around 570 mmscfd (~6 bcm/yr equivalent) over the last three weeks
  • Key growth projects on track
    • Energean Power FPSO capacity increase to 8 bcm/yr on track for delivery by year-end 2023
    • Positive results achieved at the second and third NEA/NI (Egypt) development wells, reinforcing Energean’s view that the results from NEA#6 would have no read-across to the remainder of the field; NEA#5 came onstream in July 2023 and is producing in line with pre-drill expectations, whilst PY#1 testing has delivered results in line with expectations. Remaining two wells expected onstream in 2023
    • Cassiopea, Italy (Energean 40%), development progressing in line with expectations: pipelaying complete and subsea installation activities progressing well
    • Final investment decision (“FID”) on Katlan (Israel)[1] expected in late 2023
    • Orion 1X exploration well, Egypt, drilling expected to commence in Q4 2023
  • Guidance
    • 2023 production guidance revised to 120 – 130 kboed (from 125 – 140 kboed), reflecting start-up issues that have now been substantially overcome
    • On track to deliver near-term targets of 200 kboed, $2.5 billion revenues, $1.75 billion EBITDAX and leverage 1.5x in H2 2024

Financial Highlights:

  • Delivered strong financial results, underpinned by the contribution of Karish and despite the softer commodity price environment
    • Revenues of $587.6 million, a 73% increase (H1 2022: $339.0 million)[2]
    • Adjusted EBITDAX of $345.2 million, a 74% increase (H1 2022: $198.2 million)
    • Cash Cost of Production of $12.1/boe, a 37% decrease (H1 2022: $19.2/boe)
    • Group cash as of 30 June 2023 was $357.9 million, including restricted amounts of $11.5 million, and total liquidity was $897.4 million.
    • In July 2023, Energean’s subsidiary, Energean Israel Finance Limited (“Energean Israel”), issued a $750 million bond, the primary purpose of which was to repay Energean Israel’s March 2024 bond[3]. The newly issued bond matures in 2033, and extends Energean’s weighted average debt maturity from just over five to over six years
    • Group leverage (Net debt/annualised Adjusted EBITDAX[4]) reduced to 3.9x (FY 2022: 6.0x)

Corporate Highlights:

  • Q2 2023 dividend of 30 US$ cents/share declared today, in line with Energean’s dividend policy, scheduled to be paid on 29 September 2023
    • Following this payment, cumulative dividends of $266 million (150 US$ cents/share) will have been returned to shareholders
  • Scope 1 and 2 emissions intensity of approximately 11.0 kgCO2e/boe, a 36% reduction versus H1 2022

Financial Summary

 

 

 H1 2023

$m

 H1 2022

$m

 Increase / (Decrease)

%
Average working interest production (kboed) 105.9 (82% gas) 35.4 (73% gas) 199%
Sales and other revenues 587.6 339.0 73%
Cash Cost of Production[5],[6] 231.1 123.3 87%
Cash Cost of Production per boe 6  ($/boe) 12.1 19.2 (37%)
Cash G&A6 17.9 15.1 19%
Adjusted EBITDAX6 345.2 198.2 74%
Operating cash flow 233.0 146.6 59%
Development capital expenditure 272.5 345.7 (21%)
Exploration capital expenditure 19.0 37.0 (49%)
Decommissioning expenditure 3.8 1.5 153%
H1 2023

$m

 FY 2022

$m

 Increase / (Decrease)

%
Net Debt (including restricted cash)6 2,715.3 2,518.2 8%
Leverage (Net Debt / annualised Adjusted EBITDAX6,[7]) 3.9 6.0 (35%)

Mathios Rigas, Chief Executive of Energean, commented:

“Energean is now a major energy producer in the Eastern Mediterranean, almost tripling our production in H1 2023 compared to H1 2022. We have also significantly increased our revenue and EBITDAX by 73% and 74% compared to H1 2022, successfully refinanced our 2024 Energean Israel bond, and paid four consecutive dividends to our shareholders, with the fifth declared today.

“On Karish, the Energean FPSO achieved 97% uptime in August and, although ramp-up and commissioning was slower than originally expected, Karish is now producing at around 6 bcm/yr. We are pleased with the positive demand in the market for our gas and will continue to focus on optimising production efficiency.

“On our growth projects, which target to increase production to 200 kboed by H2 2024, Karish North and the FPSO capacity increase projects (Israel), NEA/NI (Egypt) and Cassiopea (Italy) are all progressing well. We remain focused on delivering our near-term targets of 200 kboed, $2.5 billion of revenues, $1.75 billion of EBITDAX and leverage of c.1.5x.”

“We are also preparing for FID on Katlan[8] later in the year. Given the export potential from the Katlan licence[9], we plan to engage with local and international buyers to market our gas. Elsewhere, we look forward to the spudding of the Orion-1X exploration well next quarter, offshore Egypt, with our partner Eni. Finally, in line with our stated net zero policy target, our emissions intensity further reduced by 36% to 11.0 kgCO2e/boe versus H1 2022.

“We continue to be disciplined and focused on stable predictable cashflows, which underpin Energean’s goals of consistent returns to shareholders, low leverage and growth through responsibly produced energy.”

 

[1] Katlan covers gas fields on the Katlan licence (formerly Block 12) and parts of the Tanin licence

[2] Subsequent to 30 June 2023, additional cargoes were sold in Israel and Italy of revenues which totalled $62.4 million. These liquids were included in the inventory balance as at 30 June 2023.

[3] The cash is currently in escrow pending government approvals, which are expected shortly

[4] H1 2023 leverage based upon H1 2023 annualised Adjusted EBITDAX

[5] Includes flux costs of $18.4 million in H1 2023 and $17.4 million in H1 2022

[6] Cash cost of production, Adjusted EBITDAX, Capital Expenditure, Net Debt are non-IFRS measures that are defined in the Financial Review section

[7] H1 2023 leverage based upon H1 2023 annualised Adjusted EBITDAX

[8] Katlan covers gas fields on the Katlan licence (formerly Block 12) and parts of the Tanin licence

[9] Subject to the issuance of an export permit by the Petroleum Commissioner and compliance with the Export Policy, no export limitations exists for Katlan

DESFA decision on CO2 capture and transport project in 2024

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Gas grid operator DESFA expects to have completed its feasibility study for Prinos CO2, a carbon capture, transport and storage synergy with Energean by autumn ahead of an investment decision within 2024, followed by possible development of the project, energypress sources have informed.

Prinos CO2 has successfully passed a technical assessment for inclusion on the European Commission’s sixth PCI list, making the project eligible for inclusion on a preliminary list that is expected to be finalized in November.

The project is budgeted at 1.4 billion euros. DESFA’s share of the budget total is estimated at 500 million euros.

Irrespective of the possible synergy between DESFA and Energean for a single project concerning the capture, transport and storage of CO2 quantities, DESFA is also considering developing its share of the project at infrastructure other than Prinos, if Prinos CO2 does not proceed.

DESFA aspires to develop an entire CO2 transport chain to collect pollutants from the facilities of polluters and, through its own infrastructure, transport these quantities into storage.

This system is planned to cover Viotia, northwest of Athens, the wider Athens area, as well as Corinth, west of the capital. These areas host cement industries, refineries and power plants.

Motor Oil, Titan CCS grants step towards value chain

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Energy group Motor Oil and cement producer TITAN have been selected for EU Innovation Fund grants, supporting innovative low-carbon technologies, for respective carbon capture and storage (CCS) initiatives taken by the two corporate groups.

Their selections promise to create opportunities for synergies and the development of a domestic value chain in the CCS sector.

For example, an annual sum of 1.9 million tons of CO2 to be captured at TITAN’s production facility in Viotia’s Kamari area, slightly northwest of Athens, will benefit Energean’s CCS project at its depleted offshore oil fields in the northern part of the Aegean Sea.

The Prinos CCS also stands to gain from Innovation Fund selection for cement industry Holcim’s production facility in Croatia, as Prinos is the nearest CCS facility. On a larger scale, the Prinos CCS can develop into southeast Europe’s first CCS facility catering to industry.

Motor Oil’s Iris project, concerning carbon capture at the energy group’s Oil’s refinery in Corinth, west of Athens, has been selected for a 127 million-euro Innovation Fund grant, it has just been announced.

This development gives Motor Oil the opportunity to greatly reduce its carbon footprint, produce 56,000 tons of blue hydrogen annually, and prepare the groundwork for e-fuel production, through the development and operation of a new low-carbon synthetic methanol production plant.

TITAN’s Ifestos carbon capture project, also just selected for an Innovation Fund grant, will enable the group to produce approximately 3 million tons of zero-carbon cement on an annual basis.

Israeli government recognizes Energean Katlan gas discovery

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The Israeli government has officially recognized Energean plc’s discovery of a natural gas deposit at its Block 12 Katlan (Olympus) license, located between the company’s Karish and Tanin licenses.

Israel’s minister of national infrastructures, energy and water resources Israel Katz awarded Energean CEO Mathios Rigas his approval of the Katlan discovery, estimated to contain 68 bcm.

The Israeli government last recognized a natural gas deposit in 2015.

From a legal perspective, the ministry’s approval enables Energean to lodge a development plan application, which, once endorsed, will pave the way for the development of the deposit. In a few years’ time, it is expected to offer additional natural gas quantities for the Israeli market and, possibly, exports.

Energean hopes its Katlan/Olympus deposit will be developed to deliver natural gas ahead of Tanin as the new discovery can be easily connected to the neighboring Karish deposit, already producing natural gas.

.

Energean expecting 3D survey results for Block 2 within ’23

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International hydrocarbon exploration and production company Energean expects to receive the results of a 3D seismic survey conducted by PGS last November at offshore Block 2 license, west of Corfu and reaching the marine border with Italy, within 2023, probably in the second half of the year, energypress sources have informed.

Energean heads a consortium also involving Helleniq Energy, formerly Hellenic Petroleum (ELPE), for this license.

Once the PGS findings have been received, Energean, depending on the prospects, may go ahead with exploratory drilling in 2024.

Energean expects to begin drilling sooner at its onshore Ioannina block, in the country’s northwest, as this license is at a more advanced stage. The company is currently writing up its response to observations raised, during consultation, on this venture’s environmental impact.

Energean may commence drilling at the Ioannina block in 2024 if an environmental permit is issued by autumn, a best-case scenario.

Helleniq Energy CEO Andreas Siamisiis has informed that no investment decisions are expected in 2023 for the company’s other offshore licenses, off Crete and in the Ionian Sea.

Energean plc trading statement & operational update

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London, 18 May 2023 – Energean plc has announced 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 $161.2 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)
    • Emissions intensity1 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)
    • 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
    • Tie-back to Energean Power FPSO, with Olympus prioritised over Tanin
    • Production plateau maintained by monetising newly discovered resources that do not incur seller royalties nor carry export restrictions
    • 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
    • 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:
    • 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
    • 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.”

 

[1] Scope 1 and 2 emissions

[2] With the exception of one GSPA, whose commercial period begins in November

PCI listing sought for ‘South Kavala’ UGS after failed tender

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TAIPED, Greece’s privatization fund, is seeking to reignite investor interest in “South Kavala”, an almost depleted natural gas field in the Aegean Sea’s north, through inclusion in the European Commission’s project-supporting PCI list, as a prospective underground natural gas storage facility (UGS) that would now also be equipped to store hydrogen.

This move by TAIPED comes following a recently-expired tender’s failure to attract binding bids for the UGS’ development and operation over a 50-year period.

According to sources, the privatization fund submitted its PCI application to Brussels last week, in an effort to keep this UGS project alive. PCI listings promise financial support for EU projects of common interest.

TAIPED, through this latest initiative, aims to rekindle the interest of investors, especially domestic and international business groups moving to develop projects for production and transmission of hydrogen.

Industry experts believe a new “South Kavala” tender could be launched next year if the facility secures a PCI listing.

The just-ended tender, which failed to attract binding bids from two final-round qualifiers, Energean and a partnership that brought together gas grid operator DESFA and construction company GEK Terna, was launched in June, 2020 and expired last month, on March 31.

New deadline extension likely for South Kavala UGS tender

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A tender being staged by privatization fund TAIPED for the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, being offered for development and operation of a prospective underground natural gas storage facility (UGS) over a 50-year period, is in danger of ending without a result.

The tender expires tomorrow, following a four-month extension, but its final-round qualifiers do not appear likely to submit binding bids.

A fruitless tender for what is viewed as vital energy-sector infrastructure would blemish the government’s pre-election campaign, so a further deadline extension of a few months is possible for the procedure, launched in June, 2020.

If so, the tender’s two final-round qualifiers, Energean and a partnership bringing together gas grid operator DESFA and construction company GEK Terna, will have more time to evaluate the terms and conditions.

A 50 percent socialization rate set by RAE, the Regulatory Authority for Energy, concerning the project’s regulated tariffs has been deemed as unsatisfactory by the suitors and is the key factor subduing their interest.

 

Energean plc: 2022 Full-Year Results  

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London, 23 March 2023 – Energean plc (LSE: ENOG, TASE: אנאג) has announced its audited full-year results for the year ended 31 December 2022 (“FY 2022“).

Mathios Rigas, Chief Executive of Energean, commented:

“2022 was a year of transformation for Energean – where a long-held vision became an operational reality. It was a year of positive delivery. We commenced production from the only FPSO in the strategically vital Eastern Mediterranean region, paid dividends to our shareholders, and laid the foundation for our future growth through the discovery and de-risking of new natural gas resources adjacent to our infrastructure. Energean was the sole owner-operator of five deepwater wells, which drove a 20% increase in our reserve base, and marked the 15th consecutive year of reserve and resource base increases for Energean. We are proud to be on track to deliver between 4.5 and 5.5 bcm of gas into the Israeli domestic gas market this year, contributing towards the security of energy supply of the region and improving the living conditions of the Israeli public through the reduction of emissions from the displacement of coal-fired power generation.

“The first quarter of 2023 has continued the positive trend. Production from Karish is in line with our expectations, and in February we supplied the first Israeli hydrocarbon liquids export cargo to international markets. In Egypt, we achieved first gas at NEA/NI with three further wells due to come onstream during the year. In Italy, we are the third largest producer of natural gas and look forward to increasing our contribution towards the country’s energy supply. And in Greece, we are continuing our efforts to explore the untapped resources of the country.

“The remainder of 2023 will see us present the development concept for the Olympus Area, offshore Israel, and increase the capacity of the Energean Power FPSO to 8 bcm/yr. This is alongside delivery of production in line with guidance and deliver on-target returns, as promised, to our shareholder base. Through our gas contracting strategy we are in a unique position to have a very predictable and stable cashflow despite turbulence and challenges in the international financial markets.

“We are committed to investing in projects where we can create value for all stakeholders. The global energy crisis is not over – the global gas market remains dangerously tight and benefitted from a mild European winter, but thousands of industrial jobs are now at risk not just to price but also to availability. We therefore hope that governments understand the value of enhanced domestic and regional energy production, that can only be delivered through long-term investment.”

Highlights

  • Delivered first gas from Karish in October 2022
    • Production and ramp up in line with expectations
    • Energean is now sequentially notifying gas buyers that the commissioning period under the gas sales and purchase agreements (“GSPAs”) has ended and the start date for commercial obligations has commenced. It expects to have completed this process for all gas buyers by the end of March 2023
  • Initiated hydrocarbon liquid exports from Karish field to international markets
  • Delivered first production from NEA/NI, Egypt, in March 2023
  • On track to deliver 200 kboed production target in 2H 2024
  • Confirmed year-end 2P reserves of 1,161 mmboe (+20% increase versus end-2021) representing a reserve replacement ratio of 1400%
    • Including the addition of 31 bcm (approximately 206 mmboe) of 2P reserves in the Olympus Area, offshore Israel, that have now been certified by Energean’s reserve auditor, Degolyer and McNaughton (“D&M”)
  • Delivered strong financial performance, underpinned by strong commodity prices
    • 2022 revenues of $737.1 million, represented a 48.3% increase (2021: $497.0 million)
    • 2022 EBITDAX of $421.6 million, represented a 98.8% increase (2021: $212.1 million)
    • 2022 profit-after-tax of $17.3 million, was an improvement on last year’s loss (2021: $(96.2) million). Profit after tax was negatively impacted by $119.4 million of windfall taxes in Italy[1], which are expected to have been applied on a one-off basis
    • Group cash as of 31 December 2022 was $502.7 million (including restricted amounts of $74.8 million) and total liquidity was $720.0 million. In March 2023, Energean signed a $350 million term loan providing additional financial flexibility
  • Announced dividend strategy and initiated dividend payments
    • Cumulative dividends paid of 60 US$ cents with a further $30 US$ cents declared and not paid, representing an annualised yield of approximately 9%[2].
  • Carbon Disclosure Project (“CDP”) rating increased to A- (from B), outperforming the global average for E&Ps of C

Outlook

  • 2023 production guidance confirmed at 131 – 158 kboed, including 4.5 – 5.5 bcm of gas from Karish
  • Mid-term targets now considered near-term: on track to achieve production, financial targets, and leverage targets in 2H 2024[3] through execution of key development projects
    • Karish growth projects to increase the capacity of the Energean Power FPSO are on track for year-end 2023, following which Israel production is expected to be more than 140 – 155 kboed
    • Three additional wells to be brought onstream at NEA/NI by year-end 2023, following which production in Egypt is expected to be more than 40 kboed
    • Cassiopea expected to deliver first gas in 2024, following which production in Italy is expected to be approximately 20 kboed
  • Communication of development concept for the Olympus Area expected in the coming months
  • Orion X1 well, Egypt, (Energean 30%, expected to farm down to 18%) expected to spud in late 2023, slightly delayed due to rig availability
  • Declaration of quarterly dividends in line with previously communicated policy
    • $50 million per quarter initially, rising to $100 million per quarter following achievement of near-term targets
    • Cumulative dividends of at least $1 billion by end-2025
    • Post-2025 target to maintain a progressive dividend policy, underpinned by existing reserve volumes

Financial Summary

 

    FY 2022 FY 2021 % Change
Average working interest production kboed 41.2 41.0 0.5%
Sales and other revenue $ million 737.1 497.0 48.3%
Cash Cost of Production $ million 284.3 261.6 8.7%
Adjusted EBITDAX[4] $ million 421.6 212.1 98.8%
Profit/(loss) after tax $ million 17.3 (96.2) 118.0%
         
Capital expenditure $ million 728.8 403.5 80.6%
Exploration expenditure $ million 141.0 48.7 189.5%
Decommissioning expenditure $ million 8.9 2.7 229.6%
         
Cash (including restricted amounts) $ million 502.7 930.5 (46.0%)
Net debt – consolidated $ million 2,518.2 2,016.6 24.9%
Net debt – plc excluding Israel $ million 143.8 102.6 40.2%
Net debt – Israel $ million 2,374.4 1,914.0 24.1%

 [4] During 2022, Italy introduced: 1) 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 paid by Energean Italy was $29.3 million and 2) In November 2022, Italy introduced a new windfall tax that imposed a 50% one-off tax, calculated on 2022 taxable profits that are 10% higher than the average taxable profits between 2018-2021. This amount has a ceiling equal to 25% of the value of the net assets at end-2021. Based on this, Energean would be required to pay an additional one-off tax of €87 million in June 2023.

[4] Based on 21 March 2023 share price of GBp 11.00

[4] On an annualised basis

[4] 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.

Top energy sector officials taking part at Power & Gas Forum, March 22-23

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The government’s top-ranked energy sector officials as well as a host of other leading figures from political, institutional, academic and business domains will be talking part in the Power & Gas Forum on March 22 and 23 at the Wyndham Grand Athens Hotel, an event being staged by energypress for a fourth time. Conference speakers and attendees will participate in person.

Speakers at the event will include Greek energy minister Kostas Skrekas; the energy ministry’s secretary-general Alexandra Sdoukou; secretary-general of transport at the ministry of infrastructure and transport Ioannis Xifaras; RAE (Regulatory Authority for Energy) president Athanasios Dagoumas; EFET’s (European Federation of Energy Traders) Jerome Le Page; Tomás Llobet of European Energy Retailers (EER); two former Greek energy ministers, Giannis Maniatis and Giorgos Stathakis; Sokratis Famellos, a member of the main opposition leftist Syriza party; and Haris Doukas of the PASOK-KINAL socialist party.

Other conference participants will include power grid operator IPTO’s chief executive officer Manos Manousakis and his deputy Giannis Margaris; gas grid operator DESFA’s chief executive Maria Rita Galli; RES market operator DAPEEP’s president and CEO Giannis Giarentis; distribution network operator DEDDIE/HEDNO’s chief executive Anastasios Manos; EDEYEP (Hellenic Hydrocarbons and Energy Resources Management Company) president Aristofanis Stefatos; the Hellenic Energy Exchange’s newly appointed CEO Alexandros Papageorgiou; EDA THESS general manager and EDA ATTIKI CEO Leonidas Bakouras; the Greek prime minister’s special adviser for energy Nikos Tsafos; energy ministry adviser Theodoros Tsakiris; and energy markets guru Alex Papalexopoulos.

The academic community will be represented by professors Pantelis Kapros, Stavros Papathanasiou, Pantelis Biskas, Nikolaos Hatziargyriou and Antonis Metaxas.

As always, energy-sector authorities will also participate at the event. They include Loukas Dimitriou (ESAI/HAIPP – Hellenic Association of Independent Power Producers); Antonis Kontoleon (EVIKEN – Association of Industrial Energy Consumers); Giannis Mitropoulos and Miltos Aslanoglou (ESPEN – Greek Energy Suppliers Association); Irodotos Antonopoulos (ESEPIE – Hellenic Association of Electricity Trading & Supply Companies); Panagiotis Lostarakos and Panagiotis Papastamatiou (ELETAEN – Greek Wind Energy Association); Stelios Loumakis (SPEF – Hellenic Association of Photovoltaic Energy Producers); and Stelios Psomas (SEF/HELAPCO – Hellenic Association of Photovoltaic Companies).

Key sector entrpreneurs and executives who have so far confirmed their participation include: Ioannis Kalafatas (Mytilineos); Kyriakos Kofinas (PPC); Nikolaos Zahariadis (Elpedison); Anastasios Lostarakos (NRG); Dinos Nikolaou (Energean); Kostis Sifnaios (Gastrade); Nikolaos Satras (Dioryga Gas); Panos Nikou (Volterra); and Ioannis Kokkotos (ABB).

The forum’s full agenda will be finalized and announced in the coming days.

Energean plc: First gas from NEA / NI, offshore Egypt

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London, 9 March 2023 – Energean plc (LSE: ENOG, TASE: אנאג) has confirmed that first gas has been safely delivered at North El Amriya and North Idku (“NEA/NI”), offshore Egypt.

Highlights:

  • Gas is being produced from the NEA#6 well.
  • The remaining three wells are expected to be brought online over the course of 2023

The NEA/NI development, located in shallow water, offshore Egypt, contains an estimated 39 mmboe[1] of 2P reserves (88% gas) with net working interest production expected to peak at 15 – 20 kboed (88% gas) in 2024. The development leverages existing infrastructure and involves the subsea tieback of four wells to Energean’s North Abu Qir PIII platform. Energean sanctioned the project in January 2021, representing a development period from final investment decision to first gas of 2 years and 2 months.

Mathios Rigas, Chief Executive Officer of Energean, commented:

“Our successful development of first gas at NEA/NI is a good example of our commitment to Egypt and longstanding partnership with the Egyptian Ministry of Petroleum, EGPC and EGAS, creating value for all stakeholders. We are delighted to bring on new production into our East Mediterranean gas-focused portfolio, as well as meeting the needs of Egypt and Egyptians through underwriting energy security with reliable supply that has a lower carbon footprint than alternative sources of domestic energy.”

 

PM rules out new tender for hydrocarbon licenses

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Prime Minister Kyriakos Mitsotakis, fielding questions at a news conference yesterday, ruled out the possibility of any new international tender for additional licenses concerning onshore or offshore hydrocarbon exploration.

“We are not considering exploring other areas,” the Prime Minister informed, responding to a related question.

Reignited hydrocarbon exploration activity for natural gas deposits in Greece had generated rumors the government would consider staging additional tenders to grant new licenses for exploration south of Crete as well as at an offshore area between the island and the Peloponnese.

Commenting on the progress of surveys being conducted west and southwest of Crete by a consortium comprised of ExxonMobil and Helleniq Energy, formerly ELPE, the Greek Prime Minister said a clearer picture is expected towards the end of the year.

The ExxonMobil-Helleniq Energy consortium may extend the duration of its 2D seismic surveys at these blocks until the end of the first quarter to collect additional data. This could result in greater clarity and enable the consortium to skip the need for 3D surveys.

Elsewhere, Energean and Helleniq Energy are also pressing ahead with respective licenses in the Ionian Sea. Both companies have completed seismic surveys and expect to have received results towards the fourth quarter.

Energean holds a license for an offshore block northwest of Corfu and Helleniq Energy holds two licenses, Ionio and Kyparissiakos (Gulf of Kyparissia).

 

Bureaucracy, elections troubling upstream sector in Greece

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ExxonMobil, Energean and Helleniq Energy, formerly ELPE, all conducting hydrocarbon surveys at Greek licenses, have not only stuck to their schedules but even taken initiatives to speed up procedures for sooner-than-expected drilling. Even so, two factors beyond their control, namely bureaucracy and imminent elections, may hold up their plans.

Energean skipped 2D surveys at its Block 2 offshore license in the Ionian Sea’s northwest, moving straight on to 3D surveys.

Hellenic Energy moved swiftly in 2022 to complete 2D and 3D seismic surveys at two offshore licenses, Ionio and Block 10, both in the Ionian Sea.

ExxonMobil is considering to start drilling sooner than originally planned at its offshore Cretan licenses. As a result, it is staging more comprehensive 2D surveys for a clearer picture of geological details.

State bureaucracy is an obstacle for upstream companies operating in Greece. The overall procedure concerning social and environmental impact studies, which require energy ministry approval ahead of drilling, requires at least eight months to be completed.

Then, upstream companies usually require a further six months or so to make arrangements for drilling rigs, configure sites and identify a port or base area for their drilling rigs.

The uncertainty created by the upcoming Greek elections, expected within the first half of the year, is another factor troubling the efforts of upstream companies.

 

ExxonMobil drilling for gas off Crete may begin a year earlier

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ExxonMobil could begin drilling at licenses offshore Crete a year earlier than planned as the American energy giant tends to adopt a more direct approach when exploring for natural gas, sector authorities have noted.

Such was the case at Cyprus’ Block 10, for which ExxonMobil conducted seismic surveys before skipping the 3D survey stage to go straight ahead with drilling that led to the discovery of the Glafkos deposit, the officials pointed out.

A consortium comprised of ExxonMobil and Helleniq Energy, formerly ELPE, holds licenses for two offshore Crete blocks, one west of the island, the other southwest. The consortium has commissioned PGS to conduct 2D seismic surveys at both these licenses. They are in full progress and are expected to be completed towards the end of January.

According their original plan, ExxonMobil and Helleniq Energy planned to follow up with 3D surveys at the end of 2023 or early in 2024. However, if ExxonMobil, the consortium’s operator, opts to skip the 3D surveys, initial drilling offshore Crete will begin sooner, in 2024, instead of 2025.

Elsewhere, in the Ionian Sea, a consortium made up of Helleniq Energy and Energean expects to have the results of 3D surveys at three blocks, Ionio, Kyparissiakos, and Block 2, by the end of 2023 or early in 2024. It will then decide if it will continue with initial drilling.

 

Helleniq Energy set for 3D surveys at licenses in west

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Helleniq Energy, previously named Hellenic Petroleum (ELPE), is expected to begin conducting 3D seismic surveys at two offshore licenses, Ionio, in the Ionian Sea, and block 10 in the Gulf of Kyparissia, west of Peloponnese, within the next few days.

A Navtex for both endeavors has already been issued. PGS, commissioned to conduct the seismic surveys, will use its Ramform Hyperion seismic vessel. It will roll out twelve cables covering 8-km distances to scan sea beds for possible natural gas deposits.

The Ramform Hyperion seismic vessel appears to have completed work at the Ionian Sea’s block 2, adjacent to Italian territory in the Adriatic Sea, on behalf of a consortium comprising Energean and Helleniq Energy.

The vessel collected data from an area covering 2,000 square kilometers. Survey work at block 2 commenced in late October.

According to a Hellenic Hydrocarbons and Energy Sources Management Company (HEREMA) schedule, blocks 2 and 10 are expected to be ready for drilling by early 2024. Helleniq Energy conducted 2D surveys at both blocks last February.

 

 

 

New extension for South Kavala UGS tender most likely, investors hesitant

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The government appears to have reached a decision to order yet another deadline extension for the submission of binding bids in a tender staged by privatization fund TAIPED for the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, being offered for the development and operation of a prospective underground natural gas storage facility (UGS) for a 50-year period.

The current deadline expires today, but, according to sources, authorities fear the tender’s final-round qualifiers will not submit bids as they have complained pricing regulations established by RAE, the Regulatory Authority for Energy, do not make the investment viable.

Energean and a partnership bringing together gas grid operator DESFA and construction company GEK Terna have qualified for the tender’s final-round.