RNS Number : 6629D
Energean PLC
11 September 2024
 

 

 

 

 

 

ENERGEAN ISRAEL LIMITED

 

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

 

30 JUNE 2024

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

ENERGEAN ISRAEL LIMITED

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF 30 JUNE 2024

 

 

 

INDEX

 

 

 

 

Page

 

 


Interim Consolidated Statement of Comprehensive Income


3

Interim Consolidated Statement of Financial Position


4

Interim Consolidated Statement of Changes in Equity


5

Interim Consolidated Statement of Cash Flows


6

Notes to the Interim Consolidated Financial Statements


7-20

 

 

- - - - - - - - - - - - - - - - - - - -

 

 

 


INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

SIX MONTHS ENDED 30 JUNE 2024



 


30 June (Unaudited)




Notes

 


2024

$'000

 

 

 

 


2023

$'000

 

 

 

 


Revenue


3


602,178


347,743


Cost of sales


4


(278,978)


(178,077)


Gross profit




323,200

 

169,666

 









Administrative expenses


4


(9,046)


(9,048)


Exploration and evaluation expenses


4


-


(50)


Other expenses


4


(448)


-


Other income


4


444


-


Operating profit




314,150


160,568

 









Finance income


5


4,485


1,044


Finance costs


5


(93,854)


(67,569)


Net foreign exchange losses


5


(291)


(5,578)


Profit for the period before tax

 

 

 

224,490

 

88,465

 









Taxation expense


6


(51,093)


(20,215)


Net profit for the period




173,397

 

68,250

 

 

Other comprehensive loss:








Items that may be reclassified subsequently to profit or loss:

 

 

 

 

 

 

 

Loss on cash flow hedge for the period




(406)


-


Income taxes on items that may be reclassified to profit and loss


9


93


-


Other comprehensive loss for the period

 

 

 

(313)

 

-

 

Total comprehensive income for the period

 

 

 

173,084

 

68,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the interim consolidated financial statements.


INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS OF 30 JUNE 2024

 


 


30 June 2024

(Unaudited)

$'000

 

 

 


31 December

2022

$'000

 

 


Notes

 


(Unaudited)

$'000

$'000

 

 

 


2023

$'000

$'000

 

ASSETS:







NON-CURRENT ASSETS:







Property, plant and equipment


7


2,734,037


2,797,831

Intangible assets


8


298,607


168,165

Other receivables


10


4,548


5,365

 

 

 

 

3,037,192

 

2,971,361

CURRENT ASSETS:







Trade and other receivables


10


136,025


130,135

Inventories


11


10,536


7,141

Restricted cash


12(A)


82,538


22,482

Cash and cash equivalents




210,666


286,625





439,765


446,383

TOTAL ASSETS



 

3,476,957

 

3,417,744








EQUITY AND LIABILITIES:







EQUITY:







Share capital




1,708


1,708

Share Premium




212,539


212,539

Hedges Reserve




(313)


-

Retained earnings




97,678


74,781

TOTAL EQUITY

 

 

 

311,612

 

289,028

NON-CURRENT LIABILITIES:







     Senior secured notes


12(A)


2,591,098


2,588,492

Decommissioning provisions




91,237


92,613

Deferred tax liabilities


9


68,060


46,985

Trade and other payables


13


100,411


127,044





2,850,806


2,855,134

CURRENT LIABILITIES:







Trade and other payables


13


314,133


273,582

Derivative financial instruments


15


406


-





314,539


273,582

TOTAL LIABILITIES




3,165,345


3,128,716

TOTAL EQUITY AND LIABILITIES



 

3,476,957


3,417,744

 

 

10 September 2024

 

 

 

 

Date of approval of the consolidated financial statements


Panagiotis Benos

Director


Matthaios Rigas

Director

 

The accompanying notes are an integral part of the interim consolidated financial statements.



INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

SIX MONTHS ENDED 30 JUNE 2024

 

 

 

Share capital

$'000

 

Share Premium

$'000

 

Hedges

Reserve

$'000

 

Accumulated losses

$'000

 

Total equity

$'000

Balance as of 1 January 2024 (Audited)

 

1,708

 

212,539

 

-

 

74,781

 

289,028

Transactions with shareholders:











Dividend, see note 14


-


-


-


(150,500)


(150,500)

Comprehensive Income:











Profit for the period


-


-


-


173,397


173,397

Other comprehensive loss, net of tax






(313)


-


(313)

Total comprehensive income


-


-


(313)


173,397


173,084

Balance as of 30 June 2024 (Unaudited)

 

1,708

 

212,539

 

(313)

 

97,678

 

311,612

 

 

 

 

 

 

 

 

 

 

 

Balance as of 1 January 2023 (Audited)


1,708


212,539

 

-

 

(70,528)


143,719

Comprehensive Income:


 


 

 

 

 

 


 

Profit for the period


-


-


-


68,250


68,250

Total comprehensive income


-


-


-


68,250


68,250

Balance as of 30 June 2023 (Unaudited)


1,708


212,539

 

-

 

(2,278)

 

211,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the interim consolidated financial statements.


INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS PERIOD ENDED 30 JUNE 2024



 

 

30 June (Unaudited)

 



Notes

 

2024

$'000

 

2023

$'000

 

Operating activities







 

Profit for the period before tax

 

 

 

224,490

 

88,465

 

Adjustments to reconcile loss before taxation to net cash provided by: operating activities:


 





 

Depreciation, depletion and amortisation

 

4


115,305


74,375

 

Loss from sale on property, plant and equipment

 

4


448


-

 

Compensation to gas buyers, payment made in advance

 

3


-


4,928

 

Finance Income

 

5


(4,485)


(1,044)

 

Finance expenses

 

5


93,854


67,569

 

Net foreign exchange loss

 

5


291


5,578

 

Cash flow from operations before working capital




429,903


239,871

 

Increase in trade and other receivables




(7,882)


(36,564)

 

Increase in inventories




(3,395)


(5,014)

 

Increase/(decrease) in trade and other payables




13,971


(25,707)

 

Cash from operations




432,597


172,586

 

Income taxes paid




(1,946)


(368)

 

Net cash inflows from operating activities

 

 

 

430,651

 

172,218

 

 

Investing activities







 

Payment for purchase of property, plant and equipment


7(C)


(132,585)


(115,511)

 

 

Payment for exploration and evaluation, and other intangible assets


8(B)


(67,481)


(69,227)

 

Amounts received from INGL related to transfer of property, plant and equipment


7(C)


1,801


56,906

 

Movement in restricted cash, net


12(A)


(60,056)


63,297

 

Interest received




5,012


1,841

 

Net cash outflow used in investing activities

 

 

 

(253,309)

 

(62,694)

 

Financing activities







 

Transaction costs in relation to senior secured notes issuance




-


(1,214)

 

Senior secured notes - interest paid


12(A)


(96,326)


(64,453)

 

Dividends paid


14


(150,500)


-

 

Other finance cost paid




(714)


(91)

 

Finance costs paid for deferred license payments


13(2)


(4,000)


(2,496)

 

Repayment of obligations under leases


13


(2,786)


(570)

 

Net cash outflow used in financing activities

 

 

 

(254,326)

 

(68,824)

 

 



 

 

 

 

 

Net increase (decrease) in cash and cash equivalents




(76,984)


40,700

 

Cash and cash equivalents at beginning of the period




286,625


24,825

 

Effect of exchange differences on cash and cash equivalents




1,025


(837)

 

Cash and cash equivalents at end of period




210,666


64,688

 

 

The accompanying notes are an integral part of the interim consolidated financial statements.


NOTE 1: -     GENERAL

a.     Energean Israel Limited (the "Company") was incorporated in Cyprus on 22 July 2014 as a private company with limited liability under the Companies Law, Cap. 113. As of 1 January 2024, the Company is tax resident in the UK  by virtue of having transferred its management and control from Cyprus to the UK, with its registered address being at Accurist House, 44 Baker Street, London, Q1U 7AL.

b.   The Company and its subsidiaries (the "Group") has been established with the objective of exploration, production and commercialisation of natural gas and hydrocarbon liquids. The Group's main activities are performed in Israel by its Israeli Branch.

c.   As of 30 June 2024, the Company had investments in the following subsidiaries:

Name of subsidiary

Country of incorporation / registered office

Principal activities

Shareholding
At 30 June

 2024
(%)

Shareholding
At 31 December 2023
(%)

Energean Israel Transmission LTD

121, Menachem Begin St.
Azrieli Sarona Tower, POB 24,
Tel Aviv 67012039 Israel

Gas transportation license holder

100

100

Energean Israel Finance LTD

121, Menachem Begin St.
Azrieli Sarona Tower, POB 24,
Tel Aviv 67012039 Israel

Financing activities

100

100

d.   The Group's core assets as of 30 June 2024 included the following:

 

Country

Asset

Field

Working interest

Field phase

Israel

Karish (*)

Karish Main including Karish North

100%

Production

Israel

Tanin (*)

Tanin

100%

Development

Israel

Block 12 (**)

Katlan

100%

Appraisal

Israel

Blocks 21, 23, 31

Hercules and Hermes

100%

Exploration

 

(*) The concession agreement expires in 2044.

(**) Katlan Final Investment Decision was taken in July 2024, and the concession agreement received the same month expires in 2054. Refer to note 17 for further details.

 


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 June 2024. All such adjustments are of a normal recurring nature. The unaudited interim 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 2023.

The financial statements are presented in U.S. Dollars and all values are rounded to the nearest thousand dollars except where otherwise indicated.

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 2024 which are the same as those used in preparing the annual consolidated financial statements for the year ended 31 December 2023.

The directors consider it appropriate to adopt the going concern basis of accounting in preparing these interim financial statements. The Going Concern assessment covers the period up to 31 December 2025 'the forecast period'.

Israel geopolitical environment - Looking to the second half of 2024, Energean highlights the following developments as important in relation to its principal risks. Since October 7, 2023, and the ongoing conflict in Israel, the magnitude of regional geopolitical risk remains elevated. Growing concerns of escalations in the Middle East have intensified the security risk in the region, as essential infrastructure systems (such as the Energean Power FPSO offshore Israel) may be targets for missile fire and sabotage operations. While the Karish field has continued to produce in line with guidance and with no disruption to its production since the start of the conflict, any event that impacts production from this field could have a material adverse impact on the business, results of operations, cash flows, financial condition and prospects of the Group. In the first half of 2024, Energean has ensured that all measures are in place to continue business operations, maintain the mobility of our people and make certain that the security of information is unaffected.

New and amended accounting standards and interpretations:

The following amendments became effective as at 1 January 2024:

1.     Amendments to IAS 1 - Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants;

The adoption of the above amendments to EU-adopted IAS did not result in any material changes to the Group's accounting policies and did not have any material impact on the financial position or performance of the Group.

 

NOTE 3: -     Revenues



30 June (Unaudited)



2024

$'000


2023

$'000

Revenue from gas sales (1)


388,459


271,399

Revenue from hydrocarbon liquids sales (2)


213,719


81,272

Compensation to customers (3)


-


(4,928)

Total revenue

 

602,178

 

347,743

(1) Sales gas for six months ended 30 June 2024 totaled approximately 2.7 bcm and for six months ended 30 June 2023 totaled approximately 1.8 bcm.

(2) Sales from hydrocarbon liquids for six months ended 30 June 2024 totaled approximately 2.67 mmbbl and for six months ended 30 June 2023 totaled approximately 1.16 mmbbl.

(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 in 2023, as variable consideration, as the gas is delivered to the gas buyers, in accordance with IFRS 15 Revenue Recognition.

NOTE 4: -     Operating profit before taxation



30 June (Unaudited)

 



2024

$'000


2023

$'000

 

(a)   Cost of sales





Staff costs


6,702


4,071

Energy cost


1,228


2,285

Royalty payable


106,560


63,474

Depreciation (Note 7)


114,356


73,397

Other operating costs (1)


49,650


38,203

Oil stock movement


482


(3,353)

Total cost of sales

 

278,978

 

178,077

(b)   Administrative expenses

 

 

 

 

Staff costs


2,507


1,715

Share-based payment charge


518


312

Depreciation and amortisation  (Note  7, 8)


949


978

Auditor fees


139


106

Other general & administration expenses (2)


4,933


5,937

Total administrative expenses

 

9,046

 

9,048

(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


448


-

Total other expenses

 

448

 

-

(e)   Other income

(c)   

 

(d)  

 

Other income


(444)


-

Total other income

 

(444)

 

-

 

 

 

 

 

(1) Other operating costs mainly consist of insurance and planned maintenance costs.

(2) Other general & administration expenses primarily consist of legal expenses, management service fees and fees for external advisors.

 

 

 

 

 

 

 

 

 

NOTE 5: -     Net finance expenses /(income)



30 June (Unaudited)



2024

$'000


2023

$'000

Interest on Senior Secured Notes (Note 12)


84,652


68,333

Interest expense on long terms payables (Note 13(2))


1,248


1,554

Less amounts included in the cost of qualifying assets (Note 7(A))


(4,655)


(7,592)



81,245

 

62,295

Costs related to parent company guarantees


1,780


1,302

Other finance costs and bank charges


1,057


234

Unwinding of discount on trade payable (Note 13(3))


7,804


2,060

Unwinding of discount on provision for decommissioning


1,873


1,668

Unwinding of discount on right of use asset

(1)


433


98

Unrealised loss on derivatives


7


-

Less amounts included in the cost of qualifying assets (Note 7(A))


(345)


(88)



12,609

 

5,274

Total finance costs

 

93,854

 

67,569

Interest income from time deposits


(4,485)


(1,044)

Total finance income


(4,485)


(1,044)

Net foreign exchange losses


291


5,578

Net finance costs


89,660

 

72,103

NOTE 6: -     Taxation

1.      Corporate Tax rates applicable to the Company:

Israel:

The Israeli corporate tax rate is 23% in 2024 and 2023.

UK:

With effect from 1st January 2024, the Company has migrated its tax residency from the Republic of Cyprus ("Cyprus") to the United Kingdom ("UK") through the transfer of its management and control to the UK. As of the same date, the Company came into the charge to UK corporation tax for the first time.

Under s.18A CTA 2009 the Company made an election for all current and future overseas branches (including its Israeli branch) to be exempt from UK corporation tax from its first accounting period commencing on 1 January 2024 and all subsequent accounting periods.

2.      The Income and Natural Resources Taxation Law, 5771-2011 - Israel- the main provisions of the law are as follows:

In April 2011, the Knesset passed the Income and Natural Resources Tax Law, 5771-2011 ("the Law"), which imposed an oil and gas profits levy at a rate set out below. The rate of the levy is calculated according to a proposed R factor mechanism, according to the ratio between the net accrued revenues from the project and the cumulative investments as defined in the Law. A minimum levy of 20% is levied at the stage where the R factor ratio reaches 1.5, and when the ratio increases, the levy will increase gradually until the maximum rate of 50% until the ratio reaches 2.3. In addition, it was determined that the rate of the levy as stated will be reduced starting in 2017 by multiplying 0.64 by the difference between the corporate tax rate prescribed in section 126 of the Income Tax Ordinance for each tax year and the tax rate of 18%. In accordance with the corporate tax rate from 2018 onwards, the maximum rate will be 46.8%.

In addition, additional provisions were prescribed regarding the levy, inter alia, the levy is recognised as an expense for the purpose of calculating income tax; the limits of the levy shall not include export facilities; the levy will be calculated and imposed for each reservoir separately (Ring Fencing); payment by the owner of an oil right calculated as a percentage

NOTE 6: -     Taxation (Cont.)

of the oil produced, the recipient of the payment will be liable to pay a levy according to the amount of the payment

received, and this amount will be subtracted from the amount of the levy owed by the holder of the oil right. The Law also sets rules for the unification or separation or consolidation of oil projects for the purposes of the Law. In accordance with the provisions of the Law, the Group is not yet required to pay any payment in respect of the said levy, and therefore no liability has been recognised in the financial statements in respect of this payment.

3.      Taxation charge:


30 June (Unaudited)



2024

$'000

2023

$'000

Current income tax charge


(29,925)

(156)

Deferred tax relating to origination and reversal of temporary differences (Note 9)


(21,168)

(20,059)

Total taxation expense


(51,093)

(20,215)

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 2023

 

2,932,789

 

4,740

 

1,994

 

2,939,523

 

Additions


135,126


12,246


396


147,768

 

Handover to INGL(1)


(111,448)


-


-


(111,448)

 

Capitalised borrowing cost


17,658


-


-


17,658

 

Change in decommissioning provision


4,913


-


-


4,913

 

Total cost at 31 December 2023

 

2,979,038

 

16,986

 

2,390

 

2,998,414

 

Additions


49,655


245


100


50,000

 

Disposals


(448)


-


-


(448)

 

Capitalised borrowing cost


5,000


-


-


5,000

 

Change in decommissioning provision


(3,250)


-


-


(3,250)

 

Total cost at 30 June 2024

 

3,029,995

 

17,231

 

2,490

 

3,049,716

 










 

Depreciation:









 

At 1 January 2023

 

11,226

 

1,459

 

525

 

13,210

 

Charge for the year


183,898


2,966


509


187,373

 

 

 

 

 

 

Total Depreciation at 31 December 2023

 

195,124

 

4,425

 

1,034

 

200,583

 

Charge for the period


112,484


2,412


200


115,096

 

Total Depreciation at 30 June 2024

 

307,608

 

6,837

 

1,234

 

315,679

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2023

 

2,783,914

 

12,561

 

1,356

 

2,797,831

 

At 30 June 2024

 

2,722,387

 

10,394

 

1,256

 

2,734,037

 

The additions to oil & gas assets in 2024 and 2023 are primarily due to development costs for the FPSO, Karish North and 2nd Oil Train.

(1) Handover to INGL took place on 22 March 2023, please refer to Note 10(1).

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

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


30 June (Unaudited)



2024

$'000


2023

$'000


Cost of sales

114,356


73,397


Administration expenses

740


807


Total

115,096


74,204

 

 

c.          Cash flow statement reconciliations:



30 June (Unaudited)

 

Additions and disposals to property, plant and equipment, net

 

51,750

 

21,097

Associated cash flows




Payments and receipts for additions to property, plant and equipment, net


(130,784)

(58,605)

Non-cash movements/presented in other cash flow lines




Capitalised borrowing costs


(5,000)

(7,680)

Right-of-use asset additions


(245)

(12,197)

Handover to INGL


-

111,448

Change in decommissioning provision

 

3,250

(1,433)

Lease payments related to capital activities

 

2,786

-

Movement in working capital


78,243

(52,630)

 

d.         Details of the Group's rights in petroleum and gas assets are presented in note 1.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE 8: -     Intangible Assets

a.          Composition:

 

 

Exploration and evaluation assets

$'000

 

Software licenses

$'000

 

Total

$'000

Cost:







At 1 January 2023


141,869


1,968


143,837

Additions


24,597


362


24,959

At 31 December 2023

 

166,466

 

2,330

 

168,796

Additions


130,651


-


130,651

At 30 June 2024

 

297,117

 

2,330

 

299,447

Amortisation:

 

 

 

 

 

 

At 1 January 2023


-


283


283

Charge for the year


-


348


348

Total Amortisation at 31 December 2023

 

-

 

631

 

631

Charge for the period


-


209


209

Total Amortisation at 30 June 2024

 

-

 

840

 

840

At 31 December 2023

 

166,466

 

1,699

 

168,165

At 31 30 June

 

297,117

 

1,490

 

298,607

The additions to exploration and evaluation assets in 2024 and 2023 are mainly related to pre-FID cost for Block 12 "Katlan".

The Final Investment Decision for Katlan was made in July 2024, after the financial statements date, and the concession agreement granted the same month expires in 2054. Refer to note 17 for further details.

b.         Cash flow statement reconciliations:



30 June (Unaudited)



2024

$'000


2023

$'000

 

Additions to intangible assets


130,651


13,306

 

Associated cash flows




 

 

Payment for additions to intangible assets


(67,481)


(69,227)

 

Non-cash movements/presented in other cash flow lines




 

 

Movement in working capital


(63,170)


55,921

 

 

c.          Details on the Group's rights in the intangible assets:

Right

Type of right

Valid date of the right

Group's interest as at

30 June 2024

Block 12

Exploration license

13 January 2025*

100%

Block 21

Exploration license

13 January 2025

100%

Block 23

Exploration license

13 January 2025

100%

Block 31

Exploration license

13 January 2025

100%

*In July 2024, after the financial statement date, following Final Investment decision, a concession which is valid until 2054 received.

NOTE 8: -     Intangible Assets (Cont.)

d.         Additional information regarding the Exploration and Evaluation assets:

As of 30 June 2024, the Group holds four licences to explore for gas and oil in Block 12, Block 21, Block 23 and Block 31, which are located in the economic waters of the State of Israel. In January 2024 the licences were extended until 13 January 2025, and they may be extended for a further one year.

 

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 depends on the purchase date and the nature of asset. The general capital 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.


NOTE 9: -       Deferred taxes (Cont.)

Below are the items for which deferred taxes were recognised:

                                          

 

Property, plant and equipment & intangible assets

$'000


Right of use asset

IFRS 16

$'000


 

Tax losses

$'000


Deferred expenses for tax

$'000


Staff leaving indemnities

$'000


Accrued expenses and other short‑term liabilities and other long‑term liabilities

$'000

 

 

Trade and other payables - Derivative liability

$'000

 

Total

$'000

At 1 January 2024


(61,050)


(2,888)



8,983


4,082


337


3,551



-


(46,985)

Increase/(decrease) for the year through:



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


















 

 

Profit or loss


(12,305)


531



(8,983)


(129)


(49)


(233)



-

 

(21,168)

Other comprehensive income


-


-



-


-


-


-



93

 

93

At 30 June 2024

 

(73,355)

 

(2,357)

 

 

-

 

3,953

 

288

 

3,318

 

 

93

 

(68,060)

At 1 January 2023


(40,344)


(754)



56,415


6,209


167


1,193



-


22,886

Increase/(decrease) for the year through:



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit or loss


(20,706)


(2,134)



(47,432)


(2,127)


170


2,358



-

 

(69,871)

At 31 December 2023

 

(61,050)

 

(2,888)

 

 

8,983

 

4,082

 

337

 

3,551

 

 

-

 

(46,985)

 



30 June 2024

(Unaudited)

$'000


31 December

2023

$'000

Deferred tax liabilities


(75,712)


(63,938)

Deferred tax assets


7,652


16,953

 


(68,060)

 

(46,985)

 


NOTE 10: -    Trade and other receivables



30 June 2024

(Unaudited)

$'000


31 December

2023

$'000

Current





Financial items

   Trade receivables





Trade receivables


127,051


114,139

Receivables from related parties


449


-

Other receivables (1)


4,895


6,994

Accrued interest income


399


1,015

Refundable VAT


-


1,196



132,794

 

123,344

Non-financial items





Prepayments and prepaid expenses


3,231


6,791



3,231

 

6,791

Total current trade and other receivables


136,025

 

130,135

Non-current





Non-financial items





Prepayments and prepaid expenses


4,548


5,365

Total non-current trade and other receivables


4,548

 

5,365

(1)     The balance relates to the agreement with Israel Natural Gas Lines ("INGL") for the transfer of title (the "Hand Over") of the near shore and onshore segments of the infrastructure that delivers gas from the Energean Power FPSO into the Israeli national gas transmission grid. The Hand Over became effective in March 2023 and the final amount of $5.0 million is expected to be collected in Q4 2024.

NOTE 11: -   Inventories



30 June 2024

(Unaudited)

$'000


31 December

2023

$'000

Hydrocarbon liquids


1,201


1,685

Natural gas


542


553

Raw materials and supplies


8,793


4,903

Total

 

10,536

 

7,141

 

 

 

 

 

 

 

 

NOTE 12: -   Senior secured notes

a.                Senior secured notes:

On 24 March 2021 (the "Issue Date"), Energean Israel Finance Ltd (a 100% subsidiary of the Company) issued US$2,500,000,000 of senior secured notes. The proceeds were primarily used to prepay in full the Project Finance Facility.

On 11 July 2023, Energean Israel Finance Ltd. completed the offering of US$750 million aggregate principal amount of senior secured notes with a fixed annual interest rate of 8.500%. The funds were released from escrow in September 2023 and were used mainly to repay Energean Israel's US$625 million notes that were due in March 2024.

 

The Notes were issued in four tranches as follows:

Series

Maturity

Annual fixed Interest rate

30 June 2024

(Unaudited)

Carrying value $'000


31 December 2023

 

Carrying value $'000

US$ 625 million

30 March 2026

4.875%

621,013


619,932

US$ 625 million

30 March 2028

5.375%

618,863


618,145

US$ 625 million

30 March 2031

5.875%

617,218


616,762

US$ 750 million

30 September 2033

8.500%

734,004


733,653

US$2,625 million



2,591,098

 

2,588,492

The interest on each series of the Notes is paid semi-annually, on 30 March and on 30 September of each year.

The Notes are listed on the TACT Institutional of the Tel Aviv Stock Exchange Ltd. (the "TASE").

With regards to the indenture document, signed on 24 March 2021 with HSBC BANK USA, N.A (the "Trustee"), no indenture default or indenture event of default has occurred and is continuing.

Collateral:

The Company has provided/undertakes to provide the following collateral in favor of the Trustee:

a.       First rank fixed charges over the shares of Energean Israel Limited, Energean Israel Finance Ltd and Energean Israel Transmission Ltd, the Karish & Tanin Leases, the gas sales purchase agreements ("GSPAs"), several bank accounts, operating permits, insurance policies, the Company's exploration licenses and the INGL Agreement.

b.      Floating charge over all of the present and future assets of Energean Israel Limited and Energean Israel Finance Ltd.

c.       The Energean Power FPSO.

Restricted cash:

As of 30 June 2024, the Company had short-term restricted cash of US$82.54 million (31 December 2023: US$22.48 million), which will be used for the September 2024 interest payment.

Credit rating:

The senior secured notes have been assigned a Ba3 rating by Moody's and a BB- rating by S&P Global.


NOTE 13: -   Trade and other payables



30 June 2024

(Unaudited)

$'000


31 December

2023

$'000

Current





Financial items





Trade accounts payable (1)


170,263


97,350

Payables to related parties


12,584


19,023

VAT payable


1,481


-

Deferred licence payments due within one year (2)


-


46,154

Other creditors (4)


40,128


32,034

Short term lease liabilities


4,859


4,718

 

 

229,315

 

199,279

Non-financial items





Accrued expenses (1)


13,450


16,765

Other finance costs accrued


41,133


55,411

Income taxes (Note 6)


29,598


1,585

Social insurance and other taxes


637


542

 

 

84,818

 

74,303

 Total current trade and other payables

 

314,133

 

273,582

Non-current





 

Financial items





 

Trade and other payables (3)


93,187


117,796

 

Long term lease liabilities


6,629


8,880

 



99,816

 

126,676

 

Non-financial items


 

 

 

 

Accrued expenses to related parties


595


368

 

 

 

595

 

368

 

Total non-current trade and other payables


100,411


127,044

 

(1)     Trade payables and accrued expenses relate primarily to operations, development expenditure on the Karish project, with the main contributors being the FPSO, Karish North, the second oil train and Katlan pre-FID works.

(2)     In December 2016, Energean Israel acquired the Karish and Tanin offshore gas fields for $40.0 million at closing with an obligation to pay an additional consideration of $108.5 million, plus interest inflated at an annual rate of 4.6%, in ten equal annual payments. A settlement agreement was signed in November 2023, whereby it was agreed that the final amount owed would be paid in two instalments which took place in H1 2024. As of 30 June 2024, the full amount of the consideration has been paid.

(3)     The amount represents a long-term amount payable in terms of the EPCIC contract. Following the amendment to the terms of the deferred payment agreement with Technip signed in February 2024, the remaining amount payable under the EPCIC contract has been reduced to $210 million. The amount is payable in twelve equal quarterly deferred payments starting in March 2024 and therefore has been discounted at 8.668% per annum (being the yield rate of the senior secured loan notes, maturing in 2026, at the date of agreeing the payment terms).  As of 30 June 2024, two installments have been paid.

 

 

 

 

NOTE 13: -   Trade and other payables (Cont.)

(4)     The amount mainly comprises of royalties payables to the Israel government and third parties with regards to the Karish Lease, including $15.1 million (2023: $12.1 million) of royalties payable to third parties. Contractual royalties are payable to NewMed (previously Delek Drilling) and third-party holders at a total rate of 7.5%, increasing to 8.25% after the date at which the lease in question starts to pay the oil and gas profits levy. The royalty payable to NewMed under the SPA is calculated on the value of the total amount of natural gas and condensate produced at the wellhead without any deduction (except for natural gas and Petroleum (as defined under the Petroleum Law) used in the production process). No contractual royalties under the SPA will be payable on future discoveries that were not part of the original acquisition of the Karish and Tanin leases.

 

NOTE 14: -   Equity

Interim dividend

An interim dividend of US$150.5 million was declared and paid during the 2024 reporting period.

 

NOTE 15: - Financial Instruments

Fair Values of other financial instruments

The following financial instruments are measured at amortised cost and are considered to have fair values different to their book values.


30 June 2024 (Unaudited)

31 December 2023

 

Book Value $'000

Fair Value $'000

Book Value $'000

Fair value $'000

Senior Secured Notes (Note 12)

2,591,098

2,385,250

2,588,492

2,371,125

The fair value of the Senior Secured Notes is within level 1 of the fair value hierarchy and has been estimated by discounting future cash flows by the relevant market yield curve at the balance sheet date. The fair values of other financial instruments not measured at fair value including cash and short-term deposits, trade receivables and trade and other payables equate approximately to their carrying amounts.

Cash Flow Hedging

In February 2024, the Group entered into a forward transaction to hedge against foreign currency volatility risk associated with its deferred payment to Technip. The hedge relationship was deemed effective at inception, and in accordance with the Group's accounting policy, the transaction was subject to cash flow hedge accounting. Consequently, as of 30 June 2024, the Group recorded a derivative liability of $0.4 million, an other comprehensive loss of $0.3 million, and $0.07 million in finance income related to this transaction during the reporting period.

 

NOTE 16: -   Significant events and transaction during the reporting period

a)    In February 2024, Karish North first gas was achieved and the second gas export riser was completed.

b)    New Gas Sales Purchase Agreements ("GSPAs") in the period:

1)    In February 2024, the Company signed a new GSPA with Eshkol Energies Generation LTD, majority owned Dalia Energy Companies Ltd, for the supply of an initial quantity of 0.6 bcm/year starting June 2024, rising to 1 bcm/ year from 2032 onwards. The GSPA is for a term of approximately 15 years, for a total contract quantity of up to approximately 12 bcm. 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.

2)    Energean has also signed two contracts with two peaker stations for the supply of 0.1 bcm/yr each, commencing in October 2024 and May 2025 respectively, representing around $400 million in revenues over the life of the contracts.

NOTE 17: -   Subsequent events

a)    An interim dividend of US$126 million was declared and paid in Q3 2024.

 

b)    Katlan Final Investment Decision

In July 2024, the Ministry of Energy and Infrastructure granted the Company a 30-year concession for the Katlan area including a 20-year extension option. Following this, Energean announced in July 2024 that it has taken Final Investment Decision ("FID") for the Katlan development project in Israel. The Katlan area will be developed in a phased approach through a subsea tieback to the existing Energean Power FPSO. First gas is planned for H1 2027. The EPCI (Engineering, Procurement, Construction and Installation) contract for the subsea scope was awarded to TechnipFMC and includes four-well-slot tieback capacity to a single large ~30 kilometer production line, which can be used by future Katlan area phases.

 

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IR URAURSNUKAUR