NOTE 2: -     Accounting policies and basis of preparation

These unaudited interim condensed consolidated financial statements for the six months ended 30 June 2023, 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 2022.

These unaudited interim financial statements have been prepared on a going concern basis.

 

NOTE 3: -     Revenues

						30 June (Unaudited)
				2023 $'000				2022 $'000
Revenue from gas sales (1)				271,399				-
Revenue from Hydrocarbon liquids sales (3)				81,272				-
Compensation to customers (2)				(4,928)				-
Total revenue				347,743				-

⁽¹⁾ Sales gas for six months ended 30 June 2023 totaled approximately 1.8 bcm (the Company started production on 26 October 2022).

⁽²⁾ During 2021 and in accordance with the GSPAs signed with a group of gas buyers, the Company paid compensation to these counterparties following delays to the supply of gas from the Karish project. The compensation is deducted from revenue, as variable consideration, as the gas is delivered to the gas buyers, in accordance with IFRS 15 Revenue Recognition

⁽³⁾ Sales Hydrocarbon liquids for six months ended 30 June 2023 totaled approximately 1.16 mmbbl (the Company did not sell Hydrocarbon liquids during 2022).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE 4: -     Operating profit (loss) before taxation

		30 June (Unaudited)
		2023 $'000		2022 $'000
(a)   Cost of sales
Staff costs		4,071		-
Energy cost		2,285		-
Royalty payable		63,474		-
Depreciation and amortisation (Note 7)		73,397		-
Other operating costs		38,203		-
Liquids inventory movement (Note 11)		(3,353)		-
Total cost of sales		178,077		-
(b)   General & administration expenses	(c)		(d)
Staff costs		1,715		935
Share-based payment charge		312		80
Depreciation and amortisation (Note 7, 8)		978		110
Auditor fees		106		88
Other general & administration expenses		5,937		4,240
Total administrative expenses		9,048		5,453
(c)    Exploration and evaluation expenses
Other exploration and evaluation expenses		50		-
Total exploration and evaluation expenses		50		-
(d)   Other expenses
Loss from disposal of property, plant and equipment		-		1,074
Total other expenses		-		1,074
(e)   Other income	(f)		(g)
Other income		-		53
Total other income		-		53

 

 

 

 

 

 

 

 

 

NOTE 5: -     Net finance income/(expenses)

		30 June (Unaudited)
		2023 $'000		2022 $'000
Interest on senior secured notes (1)		68,333		68,179
Interest expense on long terms payables (3)		1,554		4,731
Less amounts included in the cost of qualifying assets (2)		(7,592)		(68,866)
		62,295		4,044
Finance and arrangement fees		1,481		2,842
Other finance costs and bank charges		55		284
Unwinding of discount on trade payable		2,060		264
Unwinding of discount on provision for decommissioning		1,668		343
Unwinding of discount on right of use asset (1)		98		160
Less amounts included in the cost of qualifying assets (2)		(88)		(3,266)
		5,274		627
Total finance costs		67,569		4,671
Interest income from time deposits		(1,044)		(1,290)
Interest income from loans to related parties		-		(3,214)
Total finance income		(1,044)		(4,504)
Net foreign exchange losses		5,578		967
Net finance expense		72,103		1,134

 

(1)    See also Note 12.

(2)    See also Note 7(A).

(3)    See also Note 13.

 

NOTE 6: -     Taxation

1.      Taxation charge:

				30 June (Unaudited)
		2023 $'000			2022 $'000
Tax - current period		(156)			(180)
Deferred tax		(20,059)			2,883
Total taxation income (expense) yyyyyuuuu(		(20,215)			2,703

 

 

 

 

 

 

NOTE 7: -     Property, Plant and Equipment  

a.          Composition:

		Oil and gas Assets $'000		Leased assets $'000		Furniture, fixtures and equipment $'000		Total $'000
Cost:
At 1 January 2022		2,241,783		4,009		829		2,246,621
Additions (1)		514,373		731		1,165		516,269
Disposals		(900)		-		-		(900)
Capitalised borrowing cost (2)		129,357		-		-		129,357
Capitalised depreciation		632		-		-		632
Change in decommissioning provision		47,544		-		-		47,544
Total cost at 31 December 2022		2,932,789		4,740		1,994		2,939,523
Additions (1)		111,124		12,197		111		123,432
Handover to INGL(4)		(111,448)		-		-		(111,448)
Capitalised borrowing cost (2)		7,680		-		-		7,680
Change in decommissioning provision		1,433		-		-		1,433
Total cost at 30 June 2023 (unaudited)		2,941,578		16,937		2,105		2,960,620
Depreciation:
At 1 January 2022		433		693		228		1,354
Charge for the year (3)		10,976		134		297		11,407
Capitalised to oil and gas assets		-		632		-		632
Disposals		(433)		-		-		(433)
Write down of the assets		250		-		-		250
Total Depreciation at 31 December 2022		11,226		1,459		525		13,210
Charge for the period		73,397		618		189		74,204
Total Depreciation at 30 June 2023 (unaudited)		84,623		2,077		714		87,414
At 31 December 2022		2,921,563		3,281		1,469		2,926,313
At 30 June 2023 (unaudited)		2,856,955		14,860		1,391		2,873,206

⁽¹⁾ The additions to oil & gas assets in 2023 are primarily due to development costs for the FPSO, Karish North and 2^nd Oil Train. The additions in 2022 are primarily due to development costs for the Karish field, incurred under the EPCIC contract, FPSO, subsea and onshore construction.

⁽²⁾ Capitalised borrowing costs relate primarily to the secured senior notes.

⁽³⁾ First production from the Karish project was achieved on 26 October 2022.

⁽⁴⁾ Handover to INGL took place on 22 March 2023.

 

 

 

 

NOTE 7: -     Property, Plant and Equipment  (Cont.)

b.         Depreciation expense for the period has been recognised as follows:

		30 June (Unaudited)
	2023 $'000			2022 $'000
Cost of sales	73,397			-
Administration expenses	807			110
Capitalised depreciation in oil & gas assets	-			357
Total	74,204			467

 

c.          Cash flow statement reconciliations:

						30 June (Unaudited)
					2023 $'000			2022 $'000
Additions and disposals to property, plant and equipment, net				21,097			339,911
Associated cash flows
Payment for additions to property, plant and equipment , net				(58,605)			(130,118)
Non-cash movements/presented in other cash flow lines
Capitalised borrowing costs				(7,680)			(60,749)
Right-of-use asset additions				(12,197)			(198)
Handover to INGL				111,448			-
Capitalised share-based payment charge				-			(109)
Capitalised depreciation				-			(357)
Change in decommissioning provision				(1,433)			9,259
Movement in working capital				(52,630)			(157,639 +)

 

NOTE 8: -     Intangible Assets

a.          Composition:

		Exploration and evaluation assets $'000		Software licences $'000		Total $'000
Cost:
At 1 January 2022		20,141		255		20,396
Additions (1)		123,005		1,713		124,718
Write off of exploration and evaluation costs (2)		(1,277)		-		(1,277)
At 31 December 2022		141,869		1,968		143,837
Additions (1)		13,306		-		13,306
At 30 June 2023 (unaudited)		155,175		1,968		155,173
Amortisation:
At 1 January 2022		-		255		255
Charge for the year		-		28		28
Total Amortisation at 31 December 2022		-		283		283
Charge for the period		-		171		171
Total Amortisation at 30 June 2023 (unaudited)		-		454		454
At 31 December 2022		141,869		1,685		143,554
At 30 June 2023 (unaudited)		155,175		1,514		156,689

⁽¹⁾ Additions to exploration and evaluation assets are primarily due to the 2022 growth drilling programme undertaken offshore Israel.

⁽²⁾  Zone D: On 27 July 2022, the Company sent a formal notice to the Ministry of Energy notifying the relinquishment of Zone D and discontinuation of related work. As such, the licences subsequently expired on 27 October 2022.

 

b.         Cash flow statement reconciliations:

				30 June (Unaudited)
			2023 $'000			2022 $'000
Additions to intangible assets			13,306			34,386
Associated cash flows
Payment for additions to intangible assets			(69,227)			(10,034)
Non-cash movements/presented in other cash flow lines
Movement in working capital			55,921			24,352

 

 

 

 

NOTE 9: -     Deferred taxes

The Group is subject to corporation tax on its taxable profits in Israel at the rate of 23%. The capital gain tax rates depend on the purchase date and the nature of the asset. The general capital gains tax rate for a corporation is the standard corporate tax rate.

Tax losses can be utilised for an unlimited period, and tax losses may not be carried back.

According to Income Tax (Deductions from Income of Oil Rights Holders) Regulations, 5716-1956, the exploration and evaluation expenses of oil and gas assets are deductible in the year in which they are incurred.

The Group expects that there will be sufficient taxable profits in the following years and that deferred tax assets, recognised in the interim condensed consolidated financial statements of the Group, will be recovered.