Results for Half Year Ended 30 June 2023

Source Press Release
Company Energean plc 
Tags Hedging, Production/Development, Exploration, Upstream Activities, Capital Spending, Guidance, Financial & Operating Data
Date September 07, 2023

Energean plc (LSE: ENOG TASE: אנאג) is pleased to announce 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

o  Completion of commissioning under the gas sales agreements ("GSAs") achieved in April, with Practical Completion under the EPCIC with Technip achieved in June

o  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

o  Energean Power FPSO capacity increase to 8 bcm/yr on track for delivery by year-end 2023

o  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

o  Cassiopea, Italy (Energean 40%), development progressing in line with expectations: pipelaying complete and subsea installation activities progressing well

o  Final investment decision ("FID") on Katlan (Israel)[1] expected in late 2023

o  Orion 1X exploration well, Egypt, drilling expected to commence in Q4 2023

·      Guidance

o  2023 production guidance revised to 120 - 130 kboed (from 125 - 140 kboed), reflecting start-up issues that have now been substantially overcome

o  On track to deliver near-term targets of 200 kboed, $2.5 billion revenues, $1.75 billion EBITDAX and leverage  c.1.5x in H2 2024

Financial Highlights:

·      Delivered strong financial results, underpinned by the contribution of Karish and despite the softer commodity price environment

o  Revenues of $587.6 million, a 73% increase (H1 2022: $339.0 million)[2]

o  Adjusted EBITDAX of $345.2 million, a 74% increase (H1 2022: $198.2 million)

o  Cash Cost of Production of $12.1/boe, a 37% decrease (H1 2022: $19.2/boe)

o  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.

o  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

o  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

o  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."

Energean Operational Review

Production

H1 2023 average working interest production was 105.9 kboed (82% gas), up 199% year-on-year primarily due to the ramp-up of production from Karish in Israel.

In Israel, commercial sales under the GSAs began in April 2023. Slower than anticipated commissioning and ramp-up led to slightly lower than expected production from Karish in the first half of the year. 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.

Moving into 2024, production will benefit from the start-up of the Karish growth projects, which will see an increase in capacity of the infrastructure from 6.5 bcm/yr to 8.0 bcm/yr.

In Egypt, production in July averaged 26.5 kboed following the start-up of NEA#5 in July. Production from NEA#5 has performed in line with expectations at 25 mmscfd (4.3 kboed).

FY 2023 guidance is revised to 120 - 130 kboed (from 125 - 140 kboed), reflecting Karish start-up issues that have now been substantially overcome. Energean's FY 2023 guidance for Israel is second half weighted due to: (1) six months of commercial sales under the GSAs in H2 versus three months in H1 and (2) higher production uptime and efficiency versus H1.

  FY 2023 guidance Kboed  H1 2023 Kboed  H1 2022 Kboed   H1 % change 
Israel  87 - 94  70.1 
Egypt  23 - 25  24.8  24.8  0% 
Rest of portfolio  10 - 11  11.0  10.6  4% 
Total production  120 - 130  105.9  35.4  199% 

Development

Israel - Karish Growth Projects

Completion of the three projects, which will increase the FPSO's gas processing capacity to 8 bcm/yr (at 100% efficiency), remains on track for the end of the year.

1.     Second gas export riser

The second gas export riser was installed in March 2023. Pre-commissioning activities are ongoing.

2.     Karish North

On Karish North, the majority of infrastructure has been installed ahead of commissioning activities; the manifold was installed in April 2023 and the umbilical and production spool were installed in August 2023. The KN-01 production well was drilled in 2022 as part of the wider drilling campaign.   

3.     Second oil train

The module is scheduled to be installed on the FPSO in Q4 2023.

Israel - Katlan

The field development plan for Katlan, which covers the Katlan licence (formerly Block 12) and parts of the Tanin lease, was submitted to the Israeli Government in August 2023 for approval. In August 2023, Energean signed a Letter of Award on FEED with Technip UK Limited. FID continues to be expected before year-end 2023.

Egypt

The NEA/NI development reached first gas in March 2023. Two wells are currently onstream, NEA#5 and NEA#6, the former which was brought online in July 2023. NEA#5 is producing in line with pre-drill expectations of around 25 mmscfd. Of the remaining two wells, which are expected to come onstream later this year, PY#1 was completed and tested at 20 mmscfd, in line with prognosis, in August 2023, and NI#1 is expected to spud in September 2023.

At 30 June 2023, net receivables (after provision for bad and doubtful debts) in Egypt were $143.1 million (31 Dec 2022: $116.5 million), of which $107.8 million (31 Dec 2022: $40.9 million) was classified as overdue.

Rest of Portfolio

In Italy, first gas remains on track for Cassiopea for 2024. Pipelaying was completed in July and subsea installation activities are on track.

Exploration and Appraisal

The Orion-1X (Energean, 30%), located on the North East Hap'y Concession, offshore Egypt, is expected to spud in Q4 2023. Energean is finalising the farm out of 11% of its working interest (new ownership expected to be 19%).

The Izabela-9 well (Energean, 70%) located offshore Croatia, is expected to spud in Q4 2023.

In Greece, drill or drop decisions on the Ioannina licence (Energean, 100%) and Block 2 (Energean, 75%) are expected to be made in 2024.

Energean Corporate Review

ESG and Climate Change

Energean is committed to net zero emissions by 2050 and industry-leading disclosure of its energy transition intentions.

Energean's scope 1 and 2 emissions intensity in H1 2023 was estimated to be approximately 11.0 kgCO2e/boe, a 36% reduction versus H1 2022. FY 2023 emissions intensity are expected between 9.5 - 10.5 kgCO2e/boe.

Environmental, Social and Governance ("ESG") Reporting and Ratings

Energean is pleased to provide an update on its ESG ratings and recognitions:

·      Maala (Israel) - platinum rating re-iterated in July 2023

·      FTSE4Good Index Series - confirmed as a constituent of the index for the second year running following the June 2023 review

·      MSCI - AA rating re-confirmed in July 2023 (third year running as AA)

·      Sustainalytics - Outperformer rating maintained in April 2023; ranked 50 out of 299 oil and gas producers

Financing

In July 2023, Energean issued $750 million of senior secured notes, at its subsidiary Energean Israel Finance Ltd ("Energean Israel"), maturing in 2033 with a coupon rate of 8.5%[10]. This extends Energean Israel's weighted average life of debt to more than six years and increases its weighted average interest rate to 6.13% (from 5.25%).

The funds were raised to repay Energean Israel's $625 million notes due in March 2024 and pay fees and expenses associated with this refinancing, contribute towards funding the interest payment reserve account, and contribute towards the payment of the final deferred consideration to Kerogen.

2023 guidance

Production   
Israel (kboed)  87 - 94 (including 4.4 - 4.7 bcm of gas) 
Egypt (kboed)  23 - 25 
Rest of Portfolio (kboed)  10 - 11 
Total production (kboed)  120 - 130 
   
Financials   
Consolidated net debt ($ million)  2,700 - 2,900 
   
Cash Cost of Production (operating costs plus royalties)   
Israel ($ million)  275 - 300 
Egypt ($ million)  40 - 50 
Rest of Portfolio ($ million)  160 - 200 
Total Cash Cost of Production ($ million)  475 - 550 
   
Development and production capital expenditure   
Israel ($ million)  170 - 200 
Egypt ($ million)  140 - 150 
Rest of Portfolio ($ million)  270 - 290 
Total development & production capital expenditure ($ million)  580 - 640 
   
Exploration expenditure ($ million)  50 - 60 
   
Decommissioning expenditure ($ million)  20 - 30 



Energean Financial Review

Financial results summary

  H1 2023   H1 2022   Change 
Average daily working interest production (kboed)  105.9  35.4  199.2% 
Sales revenue ($m)  587.6  339.0  73.3% 
Realised weighted average liquid price ($/boe)  64.6  87.5  (26.2%) 
Realized weighted average gas price pre-hedging ($/mcf)  5.2  10.4  (50.0%) 
Cash cost of production[11] ($m)  231.1  123.3  87.4% 
Cash cost of production per barrel ($/boe)  12.1  19.2  (37.0%) 
Cash G&A[12]  17.9  15.1  18.5% 
Adjusted EBITDAX[13] ($m)  345.2  198.2  74.2% 
Profit after tax ($m)  69.8  118.7  (41.2%) 
Earnings per share (cents per share)  $0.39  $0.67  (41.8%) 
Cash flow from operating activities ($m)  233.0  146.6  58.9% 
Capital expenditure ($m)  291.5  398.3  (26.8%) 
  H1 2023   FY 2022   Change 
Total borrowings ($m)  3,073.2  3,020.9  1.7% 
Cash and cash equivalents and restricted cash ($m)  357.9          502.7  (28.8%) 
Net debt  ($m) (including restricted cash)  2,715.3[14]  2,518.2 14  7.8%  

Interim Condensed Consolidated Income Statement Six months ended 30 June 2023 

Revenue, production and commodity prices

Group working interest production averaged 105.9 kboed, an increase from the prior period as a result of commencement of production in Israel; accounting for approximately 66% of total output. The production split was 82% gas (H1 2022: 73%) and 18% liquids (H1 2022: 27%). Production in Italy and Egypt was in line with H1 2022 and H1 2023 included the re-start of production at Prinos, Greece.

H1 2023 revenue was $587.6 million, a 73.3% increase from the prior period primarily due to the sales from Israel which constitute 59% (H1 2022: 0%) of the total revenue. The lower commodity prices realised in H1 2023 contributed to the revenues achieved for the period. During H1 2023, the average Brent oil price was $79.6/bbl (H1 2022: $104.9/bbl) and the average PSV (Italian gas) price was $15.0/mcf (H1 2022: $32.4/mcf). Gas sales were $408.2 million (H1 2022: $211.2 million) with a realised weighted average price of $5.2/mcf (H1 2022: $10.4/mcf). Liquid, crude and petroleum product sales were $182.2 million (H1 2022: $145.3 million), with a realised weighted average price of $64.6/boe (H1 2022: $87.5/boe).

Adjusted EBITDAX for the period was $345.2 million (H1 2022: $198.2 million), the increase of 74.2% is predominantly a result of the higher revenue achieved due to the commencement of Israel production.

Included within the June 2023 inventory balance is 426 kbbl of liquids in Israel and 582 kbbl in Italy which were subsequently sold in July 2023 for a total of $62.4 million. In line with Energean's accounting policy all oil inventory is carried at the lower of cost and net realisable value. Therefore, the above inventory is reflected at cost in the interim financial statements.   

Underlying cash production costs

Total cash production costs for the period were $231.1 million of which 47% is related to new production in Israel, cash production costs for the rest of the Group excluding Israel amounted to $123.1 million (H1 2022: $123.3 million). The unit costs for the period were $12.1 /boe (H1 2022: $19.2 /boe), this decrease is primarily driven by the increased production, as applied to a primarily fixed cost base. As set out in note 5 of the financial statements, a significant contributor to production costs is royalties (payable in Italy and Israel). Excluding royalties, production costs would be $158.2 million (H1 2022: $111.7 million) and $8.3/boe (H1 2022: $17.4/boe).

Depreciation, impairments and write-offs

Depreciation charges on production and development assets increased to $116.0 million (H1 2022: $33.9 million), due to the commencement of production at Karish. On a per barrel of oil equivalent of production basis, this represented a 13.2% increase, to $6.0/boe (H1 2022: $5.3/boe). The increase is due to Israel production commencing. During the current period and comparative prior period no impairment of cash generating units (CGUs) was recognised. An impairment reversal of $21.9 million was recognised due to the decrease in the decommissioning provision estimate in Italy and UK (driven by the increased discount rates applied).

Other income and expenses

Other expenses of $2.2 million (H1 2022: $8.8 million) includes a $1.3 million expected credit loss adjustment on trade receivables.

Other income of $7.2 million (H1 2022: $1.6 million) relates predominantly to reversal of prior period provisions that were reassessed in the current year based on the latest facts and circumstances.

Finance income / costs

Net finance costs in H1 2023 were $106.4 million (H1 2022: $35.9 million).  Finance costs, after capitalisation of interest, comprise of $79.0 million (H1 2022: $19.8 million) of interest on borrowings and other finance costs of $34.8 million (H1 2022: $18.7 million).  Other finance costs include debt arrangement fees and unwinding of the discount on the right of use assets, decommissioning provisions, deferred consideration, convertible loan notes and contingent consideration. The increase in the net finance costs is a result of the decrease in the amount of borrowing costs capitalised as a result of production commencing in Israel ($7.7 million was capitalised in H1 2023 compared to $71.7 million in H1 2022).   Finance income was $7.3 million for the period (H1 2022: $2.7 million).

Taxation

Energean recorded a tax expense of $65.3 million in H1 2023 (H1 2022: net income tax recovery of $8.9 million). The tax expense includes corporation tax charges of $30.5 million and deferred tax charges of $34.8 million. The increase in tax expense from the prior period is a result of the increase in taxable profits and the movement in deferred tax, mainly due to the utilisation of tax losses in Israel and Italy. In H1 2022 a deferred tax asset was recognised on Italian tax losses which has partially been utilised in H1 2023. Taxation charges in the period ended 30 June 2023 included $25.8 million (H1 2022: $27.1 million) relating to taxes (non-cash in nature) being deducted at source in Egypt.

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, with a ceiling equal to 25% of the value of the net assets at end-2021. At 30 June this windfall tax is recognised as a payable in the financial statements and subsequent to period end, in July 2023, the windfall tax of $94.5 million (€87.0 million) was paid.

Profit after tax

Profit after tax was $69.8 million (H1 2022: $118.7 million). The decrease compared to the prior period is due to the increased tax expense (H1 2022 was a tax income of $8.9 million), profit before tax increased by 23.0% to $135.0 million (H1 2022: $109.8 million).

Earnings per share

Earnings per share were $0.39 (H1 2022: $0.67). The diluted earnings per share were $0.39 per share (H1 2022: $0.66 per share which consider the dilutive impact of Long Term Incentive Plans (LTIPs), the Deferred Bonus Plans (DBP) and the convertible loan notes.

Operating cash flow

In H1 2023, Energean recorded a cash inflow from operations before changes in working capital of $322.4 million (H1 2022: $159.1 million). After working capital movements and taxation paid, the cash inflow in H1 2023 was $233.0 million (H1 2022: $146.6 million). The year-on-year increase in operating cash flow has been predominantly driven by the growth in revenues delivered between the two periods.

Capital Expenditures

During the period, the Group incurred capital expenditure of $291.5 million (H1 2022: $398.3 million). Capital expenditure mainly consisted of development expenditure in relation to the Karish Main Field, Second Oil train and riser and Karish North Fields ($115.5 million) in Israel, the NEA/NI project in Egypt ($61.2 million) and the Cassiopea field in Italy ($65.9 million). The exploration and appraisal expenditure is primarily for the Olympus development in Israel ($13.3 million) and the North East Hapy and East Bir El-Nus (Block-8) development in Egypt ($2.3 million).

Net Debt

As at 30 June 2023, net debt of $2,715.3 million (FY22: $2,518.2 million) consisted of $2,500 million of Energean Israel senior secured notes, $450 million of Energean plc senior secured notes, $50 million of convertible loan notes, $11 million  of Greek Loan notes, $109 million in relation to the Greek Black Sea Trade Development Bank loan, less deferred amortised fees, the equity component of the convertible loan ($10.5 million) and cash balances of $357.9 million (including $11.5 million of restricted cash).  The debt incurred a weighted average interest rate of 5.4% for the period to 30 June 2023. The Senior Secured Notes (both at  Energean Plc and Energean Israel) have fixed interest rates.

Shareholder Distributions

In line with the Group's dividend policy, Energean returned US$0.60/share to shareholders in H1 2023, representing two-quarters of dividend payments. No dividends were declared in H1 2022.

Non-IFRS measures

The Group uses certain measures of performance that are not specifically defined under IFRS or other generally accepted accounting principles. These non-IFRS measures include adjusted EBITDAX, underlying cash cost of production and G&A, capital expenditure, net debt and gearing.

Adjusted EBITDAX

Adjusted EBITDAX is a non-IFRS measure used by the Group to measure business performance. It 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. The Group presents adjusted EBITDAX as it is used in assessing the Group's growth and operational efficiencies as it illustrates the underlying performance of the Group's business by excluding items not considered by management to reflect the underlying operations of the Group.

Adjusted EBITDAX  345.2  198.2 
Reconciliation to profit for the period:     
Depreciation and amortisation  (116.0)  (33.9) 
Share-based payment charge  (3.3)  (2.7) 
Exploration and evaluation expense  (2.1)  (4.3) 
Impairment reversal  21.9 
Other income/(expense)  5.0  (7.1) 
Finance income  7.3  2.7 
Finance cost  (113.7)  (38.6) 
Net foreign exchange loss  (9.3)  (4.5) 
Taxation (expense)/income  (65.3)  8.9 
Profit for the period  69.8[15]  118.715 

Cash Cost of Production

Cash Cost of Production is a non-IFRS measure that is used by the Group as a useful indicator of the Group's underlying cash costs to produce hydrocarbons. The Group uses the measure to compare operational performance period-to-period, to monitor cost and assess operational efficiency. Cash cost of production is calculated as cost of sales, adjusted for depreciation and hydrocarbon inventory movements and share based payment charges that are included in cost of sales.

Cost of sales  338.3  158.0 
Adjusted for:     
Depreciation  (113.4)  (32.3) 
Change in inventory  6.5  (2.4) 
Share based payment charge  (0.4) 
Cost of production  231.115  123.315 
Total production for the period (MMboe)  19,172.7  6.4 
Cost of production per boe ($/boe)  12.1  19.2 

Cash General & Administrative Expense (G&A)

Cash G&A excludes certain non-cash accounting items from the Group's reported G&A. Cash G&A is calculated as follows: Administrative and distribution expenses, excluding depletion and amortisation of assets and share-based payment charge that are included in G&A.

  H1 2023  H1 2022 
$m  $m 
Administrative expenses  23.4  19.3 
Less:     
Depreciation  (2.5)  (1.5) 
Share-based payment charge included in G&A  (2.9)  (2.7) 
Cash G&A  17.9[16]  15.116 

Energean incurred Cash G&A costs of $17.9 million in H1 2023. This represents a 18.5% increase compared to the prior period. The increase is predominantly due to the cessation of the capitalisation of payroll costs following the start of production in Israel.

Capital Expenditure

Capital Expenditure is defined as additions to property, plant and equipment and intangible exploration and evaluation assets and cash lease payments made in the period, less: lease asset additions, increases/decreases in the asset due to changes in decommissioning provision estimates, capitalised share-based payment charges, capitalised borrowing costs and certain other non-cash adjustments. Management believes that capital expenditure is a useful indicator of the Group's organic expenditure on oil and gas development assets, exploration and evaluation assets incurred during a period because it eliminates certain accounting adjustments such as capitalised borrowing costs and decommissioning asset additions.

   
  H1 2023    H1 2022 
  $m    $m 
Additions to property, plant and equipment  274.0    404.5 
Additions to intangible exploration and evaluation assets  19.0    37.0 
Less:       
Capitalised borrowing costs  3.5    60.1 
Leased assets additions and modifications  40.7    (0.2) 
Lease payments related to capital activities  (7.8)    (5.8) 
Capitalised share-based payment charge    0.1 
Capitalised depreciation    0.4 
Change in decommissioning provision  (34.9)    (11.5) 
Total capital expenditures  291.516    398.316 
Movement in working capital  (7.9)    (185.3) 
Cash capital expenditures per the cash flow statement  283.616    213.016 

Net Debt

Net debt is defined as the Group's total borrowings less cash and cash equivalents and restricted cash held for loan repayments. Management believes that net debt is a useful indicator of the Group's indebtedness, financial flexibility and capital structure because it indicates the level of borrowings after taking account of any cash and cash equivalents that could be used to reduce borrowings.

Net debt reconciliation  H1 2023 $m  FY 2022 $m 
Current borrowings  669.9  45.6 
Non-current borrowings  2,403.2  2,975.3 
Total borrowings  3,073.1  3,020.9 
Less: Cash and cash equivalents  (346.4)  (427.9) 
Restricted cash held for loan repayment  (11.5)  (74.8) 
Net Debt[17]  2,715.2[18]  2,518.218 
Net Debt Excluding Israel18  313.5  143.8  
  30 June (Unaudited) 
    2023    2022 
    $'000    $'000 
  Note       
Revenue  587,642    338,955 
Cost of Sales  5(a)  (338,318)    (158,043) 
Gross profit    249,324    180,912 
         
Administrative expenses  5(b)  (23,364)    (19,349) 
Impairment reversal  21  21,930   
Exploration and evaluation expenses  5(c)  (2,148)    (4,254) 
Other expenses  5(d)  (2,150)    (8,826) 
Other income  5(e)  7,187    1,630 
Operating profit    250,779    150,113 
Finance Income  7,316    2,701 
Finance Costs  (113,707)    (38,551) 
Net foreign exchange loss  (9,344)    (4,473) 
Profit before tax    135,044    109,790 
         
Taxation (expense)/ income  (65,286)    8,944 
Profit for the period    69,758    118,734 
         
Attributable to:         
Owners of the parent    69,758    118,734 
    69,758    118,734 
         
Basic and diluted earnings per share (cents per share) 
Basic  $0.39    $0.67 
Diluted  $0.39    $0.66 
               


Interim Condensed Consolidated Statement of Comprehensive Income Six months ended 30 June 2023 
    30 June (Unaudited)   
    2023    2022   
    $'000    $'000   
         
Profit for the period    69,758                                         118,734   
           
Other comprehensive income:           
Items that may be reclassified subsequently to profit or loss           
Cash Flow hedges           
Gain/(loss) arising in the period      (22,945)   
Income tax relating to items that may be reclassified to profit or loss      5,507   
Exchange difference on the translation of foreign operations, net of tax    489    (8,234)   
Items that will not be reclassified subsequently to profit or loss           
Remeasurement of defined benefit plan    (107)    65   
Income taxes on items that will not be reclassified to profit and loss    26    (16)   
Other comprehensive profit/ (loss) after tax    408    (25,623)   
           
Total comprehensive profit for the period    70,166    93,111   
           
Total comprehensive profit attributable to:           
Owners of the parent    70,166    93,111   
    70,166    93,111   
             

    30 June 2023 (Unaudited)      31 December 2022 
  Note  $'000      $'000 
ASSETS           
Non-current assets           
Property, plant and equipment  10  4,288,548      4,231,904 
Intangible assets  11  317,015      296,378 
Equity-accounted investments       
Other receivables  16  36,527      26,940 
Deferred tax asset  12  232,533      242,226 
Restricted cash  14  3,055      2,998 
    4,877,682      4,800,450 
Current assets           
Inventories  15  97,783      93,347 
Trade and other receivables  16  341,052      337,964 
Restricted cash  14  8,481      71,778 
Cash and cash equivalents  13  346,369      427,888 
    793,685      930,977 
Total assets    5,671,367      5,731,427 
           
EQUITY AND LIABILITIES           
Equity attributable to owners of the parent           
Share capital  17  2,393      2,380 
Share premium  17  415,388      415,388 
Merger reserve    139,903      139,903 
Other reserves    16,476      16,557 
Foreign currency translation reserve    (5,338)      (5,827) 
Share-based payment reserve    28,870      25,589 
Retained earnings    19,303      56,208 
Total equity    616,995      650,198 
Non-current liabilities           
Borrowings  19  2,403,237      2,975,346 
Deferred tax liabilities  12  76,173      56,114 
Retirement benefit liability  20  1,736      1,675 
Provisions  21  780,863      809,727 
Other payables  22  334,124      318,058 
    3,596,133      4,160,920 
Current liabilities           
Trade and other payables  22  670,922      756,874 
Current portion of borrowings  19  669,930      45,550 
Current Tax Liability    108,853      109,509 
Provisions  21  8,534      8,376 
    1,458,239      920,309 
Total liabilities    5,054,372      5,081,229 
Total equity and liabilities    5,671,367      5,731,427 

Interim Condensed Consolidated Statement of Changes in Equity Six months ended 30 June 2023 
  Share Capital  Share Premium19  Defined Benefit Pension Plan20    Equity component of convertible bonds21  Share based payment reserve 22  Translation Reserve23    Retained earnings  Merger reserve  Total 
  $'000  $'000  $'000  $'000  $'000  $'000  $'000  $'000  $'000 
At 1 January 2023  2,380  415,388  6,098  10,459  25,589  (5,827)  56,208  139,903  650,198 
Profit for the period  69,758  69,758 
Remeasurement of defined benefit pension plan, net of tax  (81)  (81) 
Exchange difference on the translation of foreign operations  489  489 
Total comprehensive income  (81)  489  69,758  70,166 
Transactions with owners of the company                   
Share based payment charges (note 23)  3,294              -             -  3,294 
Exercise of employment share options  13  (13) 
Dividends (note 18)        -    (106,663)  (106,663) 
At 30 June 2023 (Unaudited)  2,393  415,388  6,017  10,459  28,870   (5,338)  19,303  139,903  616,995 
                                 

19 The share premium account represents the total net proceeds on issue of the Company's shares in excess of their nominal value of £0.01 per share less amounts transferred to any other reserves.

20 The reserve is used to recognise remeasurement gain or loss on cash flow hedges (in 2022 only) and actuarial gain or loss from the defined retirement benefit plan. In the Statement of Financial Position this reserve is combined with the Equity component of convertible bonds' within the caption other reserves.

21 Refers to the Equity component of $50 million of convertible loan notes, which were issued in February 2021 and have a maturity date of 29 December 2023.

22 The share-based payments reserve is used to recognise the value of equity-settled share-based payments granted to parties including employees and key management personnel, as part of their remuneration.

23 The foreign currency translation reserve is used to record unrealised exchange differences arising from the translation of the financial statements of entities within the Group that have a functional currency other than US dollar.



Interim Condensed Consolidated Statement of Changes in Equity Six months ended 30 June 2022 
  Share Capital  Share Premium19  Hedge and Defined Benefit Pension Plan20  Equity component of convertible bonds21  Share based payment reserve22  Translation Reserve23    Retained earnings  Merger reserve  Total 
  $'000  $'000  $'000  $'000  $'000  $'000  $'000  $'000  $'000 
At 1 January 2022  2,374  915,388  (2,971)  10,459  19,352  (12,823)  (354,559)  139,903  717,123 
Profit for the period  118,734  118,734 
Remeasurement of defined benefit pension plan, net of tax  49  49 
Hedges, net of tax  (17,438)  (17,438) 
Exchange difference on the translation of foreign operations  (8,234)  (8,234) 
Total comprehensive income  (17,389)  (8,234)  118,734  93,111 
Transactions with owners of the company                   
Share based payment charges (note 23)  2,826              -             -  2,826 
Exercise of employment share options  (6) 
Share premium reduction24  (500,000)        -    500,000 
At 30 June 2022 (unaudited)  2,380  415,388  (20,360)  10,459  22,172   (21,057)  264,175  139,903  813,060 

24   Energean plc by special resolution reduced its share premium account, as confirmed by an Order of the High Court of Justice on the 14 June 2022.

Operating activities           
Profit before taxation    135,044    109,790   
Adjustments to reconcile profit before taxation to net cash provided by operating activities:           
Depreciation, depletion and amortisation  10, 11  115,953    33,885   
Impairment loss on intangible assets      362   
Impairment reversal  21  (21,930)     
Loss from the sale of property, plant and equipment      1,074   
Defined benefit expense/(gain)  20  72    (676)   
Movement in provisions    (2,425)    (1,581)   
ECL on trade receivables    1,281    342   
Compensation to gas buyers  16  4,928     
Utilisation of decommissioning provision  21  (3,782)     
Finance income  (7,316)    (2,701)   
Finance costs                                            113,707    38,551   
Non-cash revenues from Egypt25    (25,763)    (27,177)   
Share-based payment charge  23  3,294    2,717   
Net foreign exchange loss  9,344    4,473   
Cash flow from operations before working capital adjustments    322,407    159,059   
(Increase) /Decrease in inventories    (3,471)    2,748   
(Increase)/Decrease in trade and other receivables    (22,255)    14,309   
(Decrease) in trade and other payables    (58,749)    (17,282)   
Cash inflow from operations    237,932    158,834   
Income tax paid    (4,918)    (12,267)   
Net cash inflow from operating activities    233,014    146,567   
Investing activities           
Payment for purchase of property, plant and equipment  10  (198,355)    (194,491)   
Payment for exploration and evaluation, and other intangible assets  11  (85,255)    (18,513)   
Proceeds from disposal of property, plant and equipment      1,996   
Movement in restricted cash  14  63,297    61,320   
Amounts received from INGL related to the transfer of property, plant and equipment    56,906    17,371   
Interest received    7,777    2,911   
Net cash outflow for investing activities    (155,630)    (129,406)   
Financing activities           
Drawdown of borrowings  19  44,265    35,835   
Transaction costs related to Senior secured notes paid    (1,214)     
Dividend Paid  18  (106,663)     
Repayment of obligations under leases  19  (7,793)    (5,785)   
Finance costs paid    (89,925)    (87,341)   
Net cash outflow from financing activities    (161,330)    (57,291)   
Net decrease in cash and cash equivalents    (83,946)    (40,130)   
Cash and cash equivalents at beginning of the period    427,888    730,839   
Effect of exchange rate fluctuations on cash held    2,427    (17,001)   
Cash and cash equivalents at end of the period  13  346,369    673,708   

Segmental Reporting

The information reported to the Group's Chief Executive Officer and Chief Financial Officer (together the Chief Operating Decision Makers) for the purposes of resource allocation and assessment of segment performance is focused on four operating segments: Europe, (including Greece, Italy, UK, Croatia), Israel, Egypt and New Ventures ('other'). The Group's reportable segments under IFRS 8 Operating Segments are Europe, Israel and Egypt. Segments that do not exceed the quantitative thresholds for reporting information about operating segments and New Ventures have been included in Other. 

Segment revenues, results and reconciliation to profit before tax

The following is an analysis of the Group's revenue, results and reconciliation to profit/ (loss) before tax by reportable segment:

Six months ended 30 June 2023 (unaudited)           
Revenue from Gas sales  65,194  271,399  71,563   -     408,156 
Revenue from other liquid sales  28  81,272  14,728  96,028 
Revenue from crude oil sales  78,371   -   -     78,371 
Revenue from LPG sales  250  7,534  7,784 
Other  3,740  (4,928)   -     (1,509)  (2,697) 
Total revenue  147,583  347,743  93,825  (1,509)  587,642 
Adjusted EBITDAX26  36,186  235,303  73,047  671  345,207 
Reconciliation to profit before tax:           
Depreciation and amortisation expenses  (15,441)  (80,049)  (19,870)  (593)  (115,953) 
Share-based payment charge  (454)  (312)  (89)  (2,439)  (3,294) 
Exploration and evaluation expenses  (1,747)  (50)  (845)  494  (2,148) 
Impairment reversal  21,930   -      -      -     21,930 
Other expense  (857)   -     (657)  (636)  (2,150) 
Other income  3,221  3,120  846  7,187 
Finance income  3,136  1,044  851  2,285  7,316 
Finance costs  (20,456)  (67,569)  (498)  (25,184)  (113,707) 
Net foreign exchange (loss)/gain  (4,436)  (5,578)  (2,313)  2,983  (9,344) 
Profit/(loss) before income tax  21,082  82,789  52,746  (21,573)  135,044 
Taxation expense  (19,290)  (20,215)  (25,763)  (18)  (65,286) 
Profit/(loss) for the period  1,792  62,574  26,983  (21,591)  69,758 
Six months ended 30 June 2022 (unaudited)           
Revenue from Gas  137,717  73,511  211,228 
Revenue from crude oil sales  111,007  111,007 
Revenue from other liquid sales  1,288  19,950  21,238 
Revenue from LPG sales  13,090  13,090 
(Loss)/gain on forward transactions  (18,233)  (18,233) 
Other  4,008  (3,383)  625 
Total revenue  235,787  106,551  (3,383)  338,955 
Adjusted EBITDAX26  122,423  (5,343)  79,914  1,171  198,165 
Reconciliation to profit before tax:           
Depreciation and amortisation expenses  (11,303)  (110)  (22,258)  (214)  (33,885) 
Share-based payment charge  (2,501)  (88)  (30)  (98)  (2,717) 
Exploration and evaluation expenses  (2,499)  (1,482)  (273)  (4,254) 
Other expense  (6,263)  (1,074)  (342)  (1,147)  (8,826) 
Other income  1,391  53  552  (366)  1,630 
Finance income  1,467  4,504  521  (3,791)  2,701 
Finance costs  (10,436)  (4,671)  (453)  (22,991)  (38,551) 
Net foreign exchange gain/(loss)  20,548  (1,778)  (219)  (23,024)  (4,473) 
Profit/(loss) before income tax  112,827  (8,507)  56,203  (50,733)  109,790 
Taxation income / (expense)  33,429  2,889  (27,177)  (197)  8,944 
Profit for the period  146,256  (5,618)  29,026  (50,930)  118,734 
               

26Adjusted EBITDAX is a non-IFRS measure used by the Group to measure business performance. It 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 (including the impact of derivative financial instruments and foreign exchange), net finance costs and exploration and evaluation expenses.

The following table presents assets and liabilities information for the Group's operating segments as at 30 June 2023 and 31 December 2022, respectively:

Six months ended 30 June 2023 (unaudited)           
Oil & Gas properties  587,746  3,194,082  454,250  (16,805)  4,219,273 
Other fixed assets  32,191  16,251  21,089  (256)  69,275 
Intangible assets  61,984  232,489  22,879  (337)  317,015 
Trade and other receivables  111,335  97,381  149,552  (17,216)  341,052 
Deferred tax asset  232,533   -      -      -     232,533 
Other assets  916,331  22,030  91,614  (537,756)  492,219 
Total assets  1,942,120  3,562,233  739,384  (572,370)  5,671,367 
Trade and Other Payables  255,741  414,825  80,540  89,685  840,791 
Borrowings  106,854  2,474,910   -     491,403  3,073,167 
Decommissioning Provision  694,715  87,400   -      -     782,115 
Current Tax Payable  108,799   -      -     54  108,853 
Deferred tax liability   -     76,173   -      -     76,173 
Other Liabilities  137,662  36,001  22,536  (22,926)  173,273 
Total liabilities  1,303,771  3,089,309  103,076  558,216  5,054,372 
Other segment information           
Capital Expenditure:           
-  Property, plant and equipment  93,331  115,948  64,730  (1,529)  272,480 
-  Intangible, exploration and evaluation assets  3,043  13,306  2,260  379  18,988 
Year ended 31 December 2022           
Oil & Gas properties  536,874  3,264,364  409,732  (14,440)  4,196,530 
Other fixed assets  13,365  4,750  17,325  (65)  35,375 
Intangible assets  48,249  219,354  20,639  8,136  296,378 
Trade and other receivables  141,509  82,611  131,453  (17,609)  337,964 
Deferred tax asset  244,394  (2,168)  242,226 
Other assets  883,576  24,933  96,942  (382,497)  622,954 
Total assets  1,867,967  3,596,012  676,091  (408,643)  5,731,427 
Trade and other payables  220,706  540,459  50,563  114,505  926,233 
Borrowings  61,437  2,471,030  488,429  3,020,896 
Decommissioning provision  724,457  84,299  808,756 
Current tax payable  109,468  41  109,509 
Other liabilities  124,201  40,882  18,498  32,254  215,835 
Total liabilities  1,240,270  3,136,670  69,061  635,229  5,081,229 
Other segment information         
Capital Expenditure:           
-  Property, plant and equipment  85,840  537,527  105,792  (368)  728,791 
-  Intangible, exploration and evaluation assets  12,143  124,718  193  3,970  141,024 
                             



Segment Cash flows

Six months ended 30 June 2023 (unaudited)           
Net cash from / (used in) operating activities  56,014  172,217  19,987  (15,204)  233,014 
Net cash (used in) investing activities  (79,573)  (62,694)  (17,324)  3,961  (155,630) 
Net cash from financing activities  43,680  (68,823)  (1,465)  (134,722)  (161,330) 
Net increase/(decrease) in cash and cash equivalents, and restricted cash  20,121  40,700  1,198  (145,965)  (83,946) 
Cash and cash equivalents at beginning of the period  58,229  24,825  26,825  318,009  427,888 
Effect of exchange rate fluctuations on cash held  853  (837)  (2,238)  4,649  2,427 
Cash and cash equivalents at the end of the period  79,203  64,688  25,785  176,693  346,369 
Six months ended 30 June 2022 (unaudited)           
Net cash from / (used in) operating activities  87,922  (5,286)  64,578  (647)  146,567 
Net cash (used in) investing activities  (23,560)  (56,932)  (43,931)  (4,983)  (129,406) 
Net cash from financing activities  (85,460)  (66,819)  280  94,708  (57,291) 
Net increase/(decrease) in cash and cash equivalents  (21,098)  (129,037)  20,927  89,078  (40,130) 
At beginning of the year  71,316  349,828  19,254  290,441  730,839 
Effect of exchange rate fluctuations on cash held  (4,542)  (2,080)  (919)  (9,460)  (17,001) 
Cash and cash equivalents at end of the period  45,676  218,711  39,262  370,059  673,708 



 Revenue

Gas sales  408,156    211,228 
Other liquids sales  96,028    19,950 
Crude oil sales  78,371    111,007 
LPG sales  7,784    13,162 
Loss on forward transactions    (18,233) 
Compensation to gas buyers  (4,928)   
Other revenue  2,231    1,840 
Total revenue  587,642    338,955 
Egypt (net entitlement)  1,903    2,418 
Gas  1,646    2,116 
LPG  107    135 
Condensate  150    167 
Italy  1,598    1,678 
Oil  944    968 
Gas  654    710 
Israel  12,488   
Gas  11,322   
Hydrocarbon liquids  1,166   
UK  149    294 
Gas  15    53 
Oil  134    241 
Croatia  14    20 
Gas  14    20 
Greece  196   
Oil  196   
Total sales volumes  16,348    4,410 
         

 Operating profit before taxation

(a)  Cost of sales         
  Staff costs    28,935    27,895 
  Energy cost    11,295    5,716 
  Flux costs    18,372    17,391 
  Royalty payable    73,254    11,678 
  Other operating costs    99,575    60,661 
  Depreciation and amortisation    113,407    32,345 
  Oil stock movement    (6,286)    (5,463) 
  Stock (underlift)/overlift movement    (234)    7,820 
  Total cost of sales    338,318    158,043 
           
(b)  Administrative expenses         
  Staff costs    12,191    9,765 
  Other General & administration expenses    4,891    4,377 
  Share-based payment charge included in administrative expenses    2,940    2,717 
  Depreciation and amortisation    2,516    1,539 
  Auditor fees    826    951 
  Total administrative expenses    23,364    19,349 
           
(c)  Exploration and evaluation expenses         
  Staff costs for Exploration and evaluation activities    1,532    2,118 
  Exploration costs written off      362 
  Other exploration and evaluation expenses    616    1,774 
  Total exploration and evaluation expenses    2,148    4,254 
             
           
      30 June (unaudited) 
      2023 $'000    2022 $'000   
(d)  Other expenses           
  Restructuring costs27    202    3,481   
  Provision for litigation and claims      1,443   
  Loss from disposal of Property plant & Equipment      1,074   
  Write down of inventory      1,335   
  Expected credit losses    1,281    342   
  Other expenses    667    1,151   
      2,150    8,826   
(e)  Other income           
  Reversal of prior period accruals    4,317    1,630 
  Receipt of tax claim from Edison    666   
  Reversal of litigation claim provision    2,204   
      7,187    1,630 
                 



 . Net finance cost

           
Interest on bank borrowings    2,664    307   
Interest on Senior Secured Notes  82,326    83,630   
Interest expense on long term payables  1,554    4,734   
Less amounts included in the cost of qualifying assets  (7,592)    (68,866)   
    78,952    19,805   
Finance and arrangement fees    6,831    2,262   
Commission charges for bank guarantees  1,085    1,741   
Other finance costs and bank charges  332    593   
Unwinding of discount on right of use asset  711    694   
Unwinding of discount on long-term trade payables  2,060     
Unwinding of discount on provision for decommissioning  14,540    5,261   
Unwinding of discount on deferred consideration  5,674    7,912   
Unwinding of discount on convertible loan  2,155    1,963   
Unwinding of discount on contingent consideration  1,455    1,322   
Less amounts included in the cost of qualifying assets    (88)    (3,002)   
Total finance costs    113,707    38,551   
Interest income from time deposits  (7,316)    (2,701)   
Total finance revenue    (7,316)    (2,701)   
Foreign exchange losses    9,344    4,473   
Net financing costs    115,735    40,323 
Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd