REG - Energean PLC - Energean Israel 3Q 2024 Accounts
28/11/2024 07:15
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RNS Number : 9337N Energean PLC 28 November 2024
ENERGEAN ISRAEL LIMITED
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
30 SEPTEMBER 2024
ENERGEAN ISRAEL LIMITED
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF 30 SEPTEMBER 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
NINE MONTHS ENDED 30 SEPTEMBER 2024
30 September (Unaudited)
Notes 2024 2023
$'000 $'000
Revenue 3 974,889 646,585
Cost of sales 4 (441,939) (313,374)
Gross profit 532,950 333,211
Administrative expenses 4 (12,879) (13,182)
Exploration and evaluation expenses 4 - (50)
Other expenses 4 (448) (170)
Other income 4 444 2
Operating profit 520,067 319,811
Finance income 5 7,296 9,133
Finance costs 5 (137,535) (120,379)
Net foreign exchange losses 5 (3,818) (4,872)
Profit for the period before tax 386,010 203,693
Taxation expense 6 (88,626) (46,766)
Net profit for the period 297,384 156,927
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Gain on cash flow hedge for the period 744 -
Taxes expenses on items that may be reclassified to profit and loss 9 (171) -
Other comprehensive income for the period 573 -
Total comprehensive income for the period 297,957 156,927
The accompanying notes are an integral part of the unaudited interim
consolidated financial statements.
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF 30 SEPTEMBER 2024
Notes 30 September 31 December
2023
(Unaudited)
(Audited)
$'000
$'000
ASSETS:
NON-CURRENT ASSETS:
Property, plant and equipment 7 2,933,409 2,797,831
Intangible assets 8 95,110 168,165
Other receivables 10 8,989 5,365
3,037,508 2,971,361
CURRENT ASSETS:
Trade and other receivables 10 138,905 130,135
Inventories 11 12,204 7,141
Derivative financial instruments 15 745 -
Restricted cash 12 1,726 22,482
Cash and cash equivalents 255,556 286,625
409,136 446,383
TOTAL ASSETS 3,446,644 3,417,744
EQUITY AND LIABILITIES:
EQUITY:
Share capital 1,708 1,708
Share Premium 212,539 212,539
Hedges Reserve 573 -
Retained earnings 95,665 74,781
TOTAL EQUITY 310,485 289,028
NON-CURRENT LIABILITIES:
Senior secured notes 12 2,592,994 2,588,492
Decommissioning provisions 99,968 92,613
Deferred tax liabilities 9 71,183 46,985
Trade and other payables 13 84,459 127,044
2,848,604 2,855,134
CURRENT LIABILITIES:
Trade and other payables 13 223,537 271,997
Income tax liability 6 64,018 1,585
287,555 273,582
TOTAL LIABILITIES 3,136,159 3,128,716
TOTAL EQUITY AND LIABILITIES 3,446,644 3,417,744
27 November 2024
Date of approval of the interim consolidated financial statements Panagiotis Benos Matthaios Rigas
Director Director
The accompanying notes are an integral part of the unaudited interim
consolidated financial statements.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
NINE MONTHS ENDED 30 SEPTEMBER 2024
Share capital Share Premium Hedges Accumulated losses Total equity
$'000 $'000 Reserve $'000 $'000
$'000
Balance as of 1 January 2024 (Audited) 1,708 212,539 - 74,781 289,028
Transactions with shareholders:
Dividend, see note 14 - - - (276,500) (276,500)
Comprehensive Income:
Profit for the period - - - 297,384 297,384
Other comprehensive income, net of tax 573 - 573
Total comprehensive income - - 573 297,384 297,957
Balance as of 30 September 2024 (Unaudited) 1,708 212,539 573 95,665 310,485
Balance as of 1 January 2023 (Audited) 1,708 212,539 - (70,528) 143,719
Comprehensive Income:
Profit for the period - - - 156,927 156,927
Total comprehensive income - - - 156,927 156,927
Balance as of 30 September 2023 (Unaudited) 1,708 212,539 - 86,399 300,646
The accompanying notes are an integral part of the unaudited interim
consolidated financial statements.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2024
30 September (Unaudited)
Notes 2024 2023
$'000 $'000
Operating activities
Profit for the period before tax 386,010 203,693
Adjustments to reconcile loss before taxation to net cash provided by:
operating activities:
Depreciation, depletion and amortisation ( ) 4 182,450 132,527
Loss from sale on property, plant and equipment ( ) 4 448 170
Compensation to gas buyers, payment made in advance ( ) 3 - 4,929
Finance Income ( ) 5 (7,296) (9,133)
Finance expenses ( ) 5 137,535 120,379
Net foreign exchange loss ( ) 5 3,818 4,872
Cash flow from operations before working capital 702,965 457,437
Increase in trade and other receivables (14,935) (56,590)
Increase in inventories (5,063) (3,543)
Increase/(decrease) in trade and other payables 17,475 (20,930)
Cash from operations 700,442 376,374
Income taxes paid (2,384) (397)
Net cash inflows from operating activities 698,058 375,977
Investing activities
Payment for purchase of property, plant and equipment 7(C) (227,567) (164,913)
Payment for exploration and evaluation, and other intangible assets 8(B) (70,286) (92,634)
Proceeds from disposals of property, plant and equipment 2
Amounts received from INGL related to transfer of property, plant and 7(C) 1,801 56,906
equipment
Movement in restricted cash, net 12 20,756 47,278
Interest received 8,036 9,921
Net cash outflow used in investing activities (267,260) (143,440)
Financing activities
Transaction costs in relation to senior secured notes issuance - (3,690)
Senior secured notes issuance - 750,000
Senior secured notes repayment - (625,000)
Other distribution - (4,386)
Senior secured notes - interest paid 12 (178,592) (128,906)
Dividends paid 14 (276,500) -
Other finance cost paid (891) (335)
Finance costs paid for deferred license payments 13(2) (4,000) (2,496)
Repayment of obligations under leases 13 (4,198) (1,942)
Net cash outflow used in financing activities (464,181) (16,755)
Net (decrease) / increase in cash and cash equivalents (33,383) 215,782
Cash and cash equivalents at beginning of the period 286,625 24,825
Effect of exchange differences on cash and cash equivalents 2,314 (1,531)
Cash and cash equivalents at end of period 255,556 239,076
The accompanying notes are an integral part of the unaudited 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, W1U 7AL.
b. The Company and its subsidiaries (the "Group") have 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 September 2024, the Company had investments in the following
subsidiaries:
Name of subsidiary Country of incorporation / registered office Principal activities Shareholding Shareholding
At 30 September
At 31 December 2023
(%)
2024
(%)
Energean Israel Transmission LTD 121, Menachem Begin St. Gas transportation license holder 100 100
Azrieli Sarona Tower, POB 24,
Tel Aviv 67012039 Israel
Energean Israel Finance LTD 121, Menachem Begin St. Financing activities 100 100
Azrieli Sarona Tower, POB 24,
Tel Aviv 67012039 Israel
d. The Group's core assets as of 30 September 2024 included the following:
Country Asset Working interest Field phase
Israel Karish including Karish North (*) 100% Production
Israel Tanin (*) 100% Development
Israel Katlan (Block 12) (**) 100% Development
Israel Blocks 21, 23, 31 100% Exploration
(*) The concession agreement expires in 2044.
(**) Katlan Final Investment Decision was taken in July 2024, and the
concession agreement received in the same month expires in 2054. Refer to note
16 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 September 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 fourth quarter of 2024,
Energean highlights the following developments as important in relation to its
principal risks. Since 7 October 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 and Karish North fields have continued to produce with no
disruption since the start of the conflict, any event that impacts
production from these fields could have a material adverse impact on the
business, results of operations, cash flows, financial condition and prospects
of the Group. In the first three quarters of 2024, Energean has ensured that
all measures are in place to continue business operations, maintain the
mobility of its 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 IFRS 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.
Other amendments coming into effect on 1 January 2024 are assessed to have no
impact on the Group's operations
NOTE 3: - Revenues
30 September (Unaudited)
2024 2023
$'000 $'000
Revenue from gas sales ((1)) 645,833 484,238
Revenue from hydrocarbon liquids sales ((2)) 329,056 167,276
Compensation to customers ((3)) - (4,929)
Total revenue 974,889 646,585
((1)) Sales gas for the nine months ended 30 September 2024 totaled
approximately 27.2 mmboe and for the nine months ended 30 September 2023
totaled approximately 20.2 mmboe.
((2)) Sales from hydrocarbon liquids for the nine months ended 30 September
2024 totaled approximately 4.3 mmboe and for the nine months ended 30
September 2023 totaled approximately 2.2 mmboe.
((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 was 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 September (Unaudited)
2024 2023
$'000 $'000
(a) Cost of sales
Staff costs 10,299 6,566
Energy cost 1,819 2,869
Royalty payable 172,516 117,266
Depreciation (Note 7) 180,988 131,262
Other operating costs ((1)) 75,094 57,061
Oil stock movement 1,223 (1,650)
Total cost of sales 441,939 313,374
(b) Administrative expenses
Staff costs 3,475 2,544
Share-based payment charge 867 517
Depreciation and amortisation (Note 7, 8) 1,462 1,265
Auditor fees 252 212
Other general & administration expenses ((2)) 6,823 8,644
Total administrative expenses 12,879 13,182
(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 448 170
Total other expenses 448 170
(e) Other income (c) (d)
Other income (444) (2)
Total other income (444) (2)
((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 September (Unaudited)
2024 2023
$'000 $'000
Interest on Senior Secured Notes (Note 12) 127,681 119,322
Interest expense on long terms payables (Note 13(2)) 1,248 2,485
Less amounts included in the cost of qualifying assets (Note 7(A)) (9,242) (11,813)
119,687 109,994
Costs related to parent company guarantees 2,266 1,757
Other finance costs and bank charges 1,456 497
Unwinding of discount on trade payable (Note 13(3)) 11,265 5,407
Unwinding of discount on provision for decommissioning 2,923 2,513
Unwinding of discount on right of use asset 627 391
(1)
Realised gain on derivatives (189) -
Less amounts included in the cost of qualifying assets (Note 7(A)) (500) (180)
17,848 10,385
Total finance costs 137,535 120,379
Interest income from time deposits (7,296) (9,133)
Total finance income (7,296) (9,133)
Net foreign exchange losses 3,818 4,872
Net finance costs 134,057 116,118
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 September (Unaudited)
2024 2023
$'000 $'000
Current income tax charge (64,599) (1,853)
Deferred tax relating to origination and reversal of temporary differences (24,027) (44,913)
(Note 9)
Total taxation expense (88,626) (46,766)
NOTE 7: - Property, Plant and Equipment
a. Composition:
Oil and gas Assets Leased assets Furniture, fixtures and equipment Total
$'000 $'000 $'000 $'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 97,348 1,129 190 98,667
Transfer from Intangible Assets ((2)) 205,324 - - 205,324
Disposals (448) - - (448)
Capitalised borrowing cost 9,742 - - 9,742
Change in decommissioning provision 4,432 - - 4,432
Total cost at 30 September 2024 3,295,436 18,115 2,580 3,316,131
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 178,179 3,653 307 182,139
Total Depreciation at 30 September 2024 373,303 8,078 1,341 382,722
At 31 December 2023 2,783,914 12,561 1,356 2,797,831
At 30 September 2024 2,922,133 10,037 1,239 2,933,409
NOTE 7: - Property, Plant and Equipment (Cont.)
The additions to oil & gas assets in 2024 and 2023 are primarily due to
development costs for the FPSO, Karish North, the second oil train and Katlan.
((1)) Handover to INGL took place on 22 March 2023. Refer to Note 10(1).
((2)) The Final Investment Decision for Katlan was made in July 2024, and
the concession agreement granted in the same month expires in 2054. Refer to
note 16 for further details.
b. Depreciation expense for the year has been recognised as
follows:
30 September (Unaudited)
2024 2023
$'000 $'000
Cost of sales 180,988 131,262
Administration expenses 1,151 1,008
Total 182,139 132,270
c. Cash flow statement reconciliations:
30 September (Unaudited)
2024 2023
$'000 $'000
Additions and disposals to property, plant and equipment, net 112,841 188,106
Associated cash flows
Payments for additions to property, plant and equipment, net (225,766) (164,913)
Non-cash movements/presented in other cash flow lines
Capitalised borrowing costs (9,742) -
Right-of-use asset additions (1,129) (12,197)
Change in decommissioning provision (4,432) -
Lease payments related to capital activities 4,198 1,942
Movement in working capital 124,030 (12,938)
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 Software licenses Total
$'000 $'000 $'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 132,580 - 132,580
Transfer to Property Plant and Equipment (*) (205,324) - (205,324)
At 30 September 2024 93,722 2,330 96,052
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 - 311 311
Total Amortisation at 30 September 2024 - 942 942
At 31 December 2023 166,466 1,699 168,165
At 30 September 2024 93,722 1,388 95,110
The additions to exploration and evaluation assets in 2023 are mainly related
to pre-FID costs for Block 12 "Katlan".
(*) The Final Investment Decision for Katlan was made in July 2024, and the
concession agreement granted in the same month expires in 2054. Refer to note
16 for further details.
b. Cash flow statement reconciliations:
30 September (Unaudited)
2024 2023
$'000 $'000
Additions to intangible assets 132,580 17,113
Associated cash flows
Payment for additions to intangible assets (70,286) (92,634)
Non-cash movements/presented in other cash flow lines
Movement in working capital (62,294) 75,521
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 September 2024
Block 21 Exploration license 13 January 2025 100%
Block 23 Exploration license 13 January 2025 100%
Block 31 Exploration license 13 January 2025 100%
NOTE 8: - Intangible Assets (Cont.)
d. Additional information regarding the Exploration and
Evaluation assets:
As of 30 September 2024, the Group holds three licences to explore for gas and
oil in 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 Right of use asset Tax losses Deferred expenses for tax Staff leaving indemnities Accrued expenses and other short‑term liabilities and other long‑term Trade and other payables - Derivative liability Total
liabilities
$'000 IFRS 16 $'000 $'000 $'000
$'000 $'000
$'000
$'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 (14,050) 613 (8,983) (1,309) (65) (233) - (24,027)
Other comprehensive income - - - - - - (171) (171)
At 30 September 2024 (75,100) (2,275) - 2,773 272 3,318 (171) (71,183)
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 September 2024 31 December
(Unaudited) 2023
$'000 $'000
Deferred tax liabilities (77,375) (63,938)
Deferred tax assets 6,192 16,953
(71,183) (46,985)
NOTE 10: - Trade and other receivables
30 September 2024 31 December
(Unaudited) 2023
$'000 $'000
Current
Financial items
Trade receivables
Trade receivables 129,254 114,139
Receivables from related parties 449 -
Other receivables ((1)) 4,939 6,994
Accrued interest income 163 1,015
Refundable VAT - 1,196
134,805 123,344
Non-financial items
Prepayments and prepaid expenses 4,100 6,791
4,100 6,791
Total current trade and other receivables 138,905 130,135
Non-current
Non-financial items
Prepayments and prepaid expenses 8,989 5,365
Total non-current trade and other receivables 8,989 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 approximately $5.0
million is expected to be collected in Q4 2024.
NOTE 11: - Inventories
30 September 2024 31 December
(Unaudited) 2023
$'000 $'000
Hydrocarbon liquids 523 1,685
Natural gas 493 553
Raw materials and supplies 11,188 4,903
Total 12,204 7,141
NOTE 12: - Senior secured notes
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 September 2024 31 December 2023
(Unaudited)
Carrying value $'000 Carrying value $'000
US$ 625 million 30 March 2026 4.875% 621,604 619,932
US$ 625 million 30 March 2028 5.375% 619,289 618,145
US$ 625 million 30 March 2031 5.875% 617,521 616,762
US$ 750 million 30 September 2033 8.500% 734,580 733,653
US$2,625 million 2,592,994 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 September 2024, the Company had short-term restricted cash of US$1.7
million (31 December 2023: US$22.5 million), which will be used for the March
2025 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 September 2024 31 December
(Unaudited) 2023
$'000 $'000
Current
Financial items
Trade accounts payable ((1)) 134,470 97,350
Payables to related parties 16,691 19,023
VAT payable 5,190 -
Deferred licence payments due within one year ((2)) - 46,154
Other creditors ((3)) 43,541 32,034
Short term lease liabilities 5,172 4,718
205,064 199,279
Non-financial items
Accrued expenses ((1)) 18,018 16,765
Other finance costs accrued - 55,411
Social insurance and other taxes 455 542
18,473 72,718
Total current trade and other payables 223,537 271,997
Non-current
Financial items
Trade and other payables ((4)) 77,639 117,796
Long term lease liabilities 5,967 8,880
83,606 126,676
Non-financial items
Accrued expenses to related parties 853 368
853 368
Total non-current trade and other payables 84,459 127,044
((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
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
September 2024, the full amount of the consideration has been paid.
((3) ) The amount mainly comprises of royalties payables to the Israel
government and third parties with regards to the Karish Lease, including $16.4
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.
((4) ) 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 September 2024, three installments have been paid.
NOTE 14: - Equity
Interim dividend
An interim dividend of US$276.5 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 September 2024 (Unaudited) 31 December 2023
Book Value $'000 Fair Value $'000 Book Value $'000 Fair value $'000
Senior Secured Notes (Note 12) 2,592,994 2,404,125 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 September 2024, the Group
recorded a derivative asset of $0.7 million, an other comprehensive gain of
$0.6 million, and $0.19 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.
c) 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 had 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.
NOTE 17: - Subsequent events
1. An interim dividend of US$82.5 million was declared and paid in Q4
2024.
2. Second oil train lift safely and successfully performed in October.
Post-lift, installation and commissioning activities are expected to take up
to 6 months to complete, which will result in an increase in liquids
production capacity.
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