NOTE 2: -     Accounting policies and basis of preparation

The interim financial information included in this report has been prepared in accordance with IAS 34 "Interim Financial Reporting" . The results for the interim period are unaudited and, in the opinion of management, include all adjustments necessary for a fair presentation of the results for the period ended 30 September 2023. All such adjustments are of a normal recurring nature. 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.

The financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing the Group's annual consolidated financial statements for the year ended 31 December 2023 which are the same as those used in preparing the annual consolidated financial statements for the year ended 31 December 2022.

The directors consider it appropriate to adopt the going concern basis of accounting in preparing these interim financial statements.

NOTE 3: -     Revenues

						30 September (Unaudited)
				2023 $'000				2022 $'000
Revenue from gas sales (1)				484,238				-
Revenue from hydrocarbon liquids sales (2)				167,275				-
Compensation to customers (3)				(4,928)				-
Total revenue				646,585				-

⁽¹⁾ Sales gas for nine months ended 30 September 2023 totaled approximately 3.1 bcm (the Company started production on 26 October 2022).

⁽²⁾ Sales from hydrocarbon liquids for nine months ended 30 September 2023 totaled approximately 2.22 mmbbl (the Company did not sell hydrocarbon liquids during 2022).

⁽³⁾ 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

 

 

 

 

 

 

 

 

 

 

NOTE 4: -     Operating profit (loss) before taxation

		30 September (Unaudited)
		2023 $'000		2022 $'000
(a)   Cost of sales
Staff costs		6,566		-
Energy cost		2,869		-
Royalty payable		117,266		-
Other operating costs		57,061		-
Depreciation and amortisation (Note 7)		131,262		-
Hydrocarbon liquids inventory movement (Note 11)		(1,650)		-
Total cost of sales		313,374		-
(b)   General & administration expenses			(c)
Staff costs		2,544		1,115
Share-based payment charge		517		128
Depreciation and amortisation (Note 7, 8)		1,265		352
Auditor fees		135		200
Other general & administration expenses		8,721		5,423
Total administrative expenses		13,182		7,218
(c)    Exploration and evaluation expenses
Other exploration and evaluation expenses		50		1,277
Total exploration and evaluation expenses		50		1,277
(d)   Other expenses
Loss from disposal of inventory property, plant and equipment		170		1,079
Total other expenses		170		1,079
(e)   Other income			(f)
Other income		2		53
Total other income		2		53

 

 

 

 

 

 

 

 

 

NOTE 5: -     Net finance income/(expenses)

		30 September (Unaudited)
		2023 $'000		2022 $'000
Interest on senior secured notes (1)		119,322		102,505
Interest expense on long terms payables (2)		2,485		8,716
Less amounts included in the cost of qualifying assets (3)		(11,813)		(107,177)
		109,994		4,044
Finance and arrangement fees		1,757		3,681
Other finance costs and bank charges		497		319
Unwinding of discount on trade payable		5,407		-
Unwinding of discount on provision for decommissioning		2,513		568
Unwinding of discount on right of use asset (1)		391		238
Less amounts included in the cost of qualifying assets (3)		(180)		(3,919)
		10,385		887
Total finance costs		120,379		4,931
Interest income from time deposits		(9,133)		(2,543)
Interest income from loans to related parties		-		(3,214)
Total finance income		(9,133)		(5,757)
Net foreign exchange (gains) losses		4,872		(1,405)
Net finance expense (income)		116,118		(2,231)

 

(1)    Refer also to Note 12.

(2)    Refer  also to Note 13.

(3)    Refer also to Note 7(A).

 

NOTE 6: -     Taxation

1.      Taxation charge:

				30 September (Unaudited)
		2023 $'000			2022 $'000
Tax - current period		(1,853)			(291)
Deferred tax		(44,913)			2,954
Total taxation income (expense) yyyyyuuuu(		(46,766)			2,663

 

 

 

 

 

 

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		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)		175,598		12,197		311		188,106
Handover to INGL(2)		(111,448)		-		-		(111,448)
Capitalised borrowing cost		11,993		-		-		11,993
Change in decommissioning provision		(13,211)		-		-		(13,211)
Total cost at 30 September 2023 (unaudited)		2,995,721		16,937		2,305		3,014,963
Depreciation:
At 1 January 2022		433		693		228		1,354
Charge for the year		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		130,211		1,400		659		132,270
Total Depreciation at 30 September 2023 (unaudited)		141,436		2,859		1,184		145,479
At 31 December 2022		2,921,563		3,281		1,469		2,926,313
At 30 September 2023 (unaudited)		2,854,285		14,078		1,121		2,869,484

⁽¹⁾ The additions to oil & gas assets in nine month period 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⁾ Handover to INGL took place on 22 March 2023, please refer to note 13

 

 

 

 

 

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

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

		30 September (Unaudited)
	2023 $'000			2022 $'000
Cost of sales	131,262			-
Administration expenses	1,008			110
Capitalised depreciation in oil & gas assets	-			357
Total	132,270			467

 

c.          Cash flow statement reconciliations:

 

		30 September (Unaudited)
		2023			2022
		$'000			$'000
Additions to property, plant and equipment		188,106			392,377
Less:
Right-of-use asset additions		12,197			198
Capitalised depreciation		-			656
Capitalised share-based payment charge		-			174
Add:
Lease payments related to capital activities		1,942			-
Capital expenditures		177,851			391,349
Movement in working capital		(12,938)			(159,312)
Payment for additions to property, plant and equipment as per the cash flow statement		164,913			232,037

 

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)		17,113		-		17,113
At 30 September 2023 (unaudited)		158,982		1,968		160,950
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		-		257		257
Total Amortisation at 30 September 2023 (unaudited)		-		540		540
At 31 December 2022		141,869		1,685		143,554
At 30 September 2023 (unaudited)		158,982		1,428		160,410

⁽¹⁾ Additions to exploration and evaluation assets are primarily related 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 September (Unaudited)
			2023		2022
			$'000		$'000
Additions to intangible assets			17,113		66,219
Associated cash flows
Movement in working capital			75,521		(47,396)
Payment for additions to intangible assets			92,634		18,823

 

 

 

 

 

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.