REG - Energean PLC - Energean Israel Full Year 2024 Accounts
20/03/2025 07:15
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RNS Number : 4280B Energean PLC 20 March 2025
ENERGEAN ISRAEL LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2024
ENERGEAN ISRAEL LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2024
INDEX
Page
Independent Auditor's Report 2-4
Consolidated Statement of Comprehensive Income 5
Consolidated Statement of Financial Position 6
Consolidated Statement of Changes in Equity 7
Consolidated Statement of Cash Flows 8
Notes to the Consolidated Financial Statements 9-44
- - - - - - - - - - - - - - - - - - - -
Kost Forer Gabbay & Kasierer Tel: +972-3-6232525
144 Menachem Begin Road, Building A, ey.com
Tel-Aviv 6492102, Israel
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Energean Israel Limited
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of Energean Israel
Limited (the Company) and its subsidiaries (together, the Group), which
comprise the consolidated statement of financial position as at 31 December
2024 and 2023, and the consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash
flows for the years then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the
Group as at 31 December 2024 and 2023, and its consolidated financial
performance and its consolidated cash flows for the year ended 31 December
2024 and 2023 in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Basis for opinion
We conducted our audits in accordance with International Standards on Auditing
(ISAs). Our responsibilities under those standards are further described in
the Auditor's responsibilities for the audit of the consolidated financial
statements section of our report. We are independent of the Group in
accordance with the International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), and we have
fulfilled our other ethical responsibilities in accordance with the IESBA
Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in the audit of the financial statements of the current
period. These matters were addressed in the context of the audit of the
financial statements as a whole, and in forming the auditor's opinion thereon,
and we do not provide a separate opinion on these matters. For the matter
below, our description of how our audit addressed the matter is provided in
that context.
We have fulfilled the responsibilities described in the Auditor's
responsibilities for the audit of the financial statements section of our
report, including in relation to this matter. Accordingly, our audit included
the performance of procedures designed to respond to our assessment of the
risks of material misstatement of the financial statements. The results of our
audit procedures, including the procedures performed to address the matters
below, provide the basis for our audit opinion on the accompanying financial
statements.
Estimation of oil and gas reserves
Key audit matter description
The estimation and measurement of oil and gas reserves is considered to be a
significant risk as it impacts many material elements of the consolidated
financial statements including decommissioning, recoverability and
depreciation, depletion and amortisation (DD&A) of oil and gas assets.
Reserve estimation is complex, requiring technical input based on geological
and engineering data. Management's reserves estimates are provided by external
specialists (D&M).
The Company's reserve portfolio as at 31 December 2024 included proven and
probable reserves (2P) reserves of 864 Mmboe.
Kost Forer Gabbay & Kasierer Tel: +972-3-6232525
144 Menachem Begin Road, Building A, ey.com
Tel-Aviv 6492102, Israel
Our response to the risk
· We confirmed our understanding of the Company's oil and gas reserve
estimation process and the control environment implemented by management
including both the transfer of source data to the management's reserves
specialists and subsequently the input of reserves information from the
specialist reports into the accounting system;
· We obtained and reviewed the most recent third-party reserves and
resources reports prepared by these specialists and compared these for
consistency between other areas of the audit including the Company's reserves
models, DD&A, the calculation of the decommissioning provision and the
Directors' going concern assessment;
· We assessed the qualifications of management's specialists;
· We examined that the updated oil and gas reserve estimates were
properly included in the accounting treatment for determining the depletion
rate of oil and gas assets;
· We examined the adequacy of the calculations and the disclosures in
the Company's consolidated financial statements.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the
consolidated financial statements in accordance with IFRSs as adopted by the
European Union, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible
for assessing the Group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Group or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group's
financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional
judgement and maintain professional skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
· Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Group's internal control.
Kost Forer Gabbay & Kasierer Tel: +972-3-6232525
144 Menachem Begin Road, Building A, ey.com
Tel-Aviv 6492102, Israel
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
management.
· Conclude on the appropriateness of management's use of the going
concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention
in our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
· Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to express
an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Tel-Aviv, Israel KOST FORER GABBAY & KASIERER
19 March, 2025 A Member of Ernst & Young Global
ENERGEAN ISRAEL LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2024
Notes 2024 2023
$'000 $'000
Revenue 5 1,239,111 939,836
Cost of sales 6 (598,858) (444,054)
Gross profit 640,253 495,782
Administrative expenses 6 (16,668) (14,339)
Exploration and evaluation expenses 6 - (50)
Other expenses 6 (1,048) (190)
Other income 6 269 37
Operating profit 622,806 481,240
Finance income 8 8,894 11,319
Finance costs 8 (179,779) (169,467)
Unrealised loss on derivatives 8,23 (392) -
Net foreign exchange losses 8 (938) (8,483)
Profit for the year before tax 450,591 314,609
Taxation expense 9 (103,873) (71,800)
Net profit for the year 346,718 242,809
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss:
Loss on cash flow hedge for the year 23 (345) -
Taxes expenses on items that may be reclassified to profit and loss 23 79 -
Other comprehensive loss for the year (266) -
Total comprehensive income for the year 346,452 242,809
The accompanying notes are an integral part of the consolidated financial
statements.
ENERGEAN ISRAEL LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF 31 DECEMBER 2024
Notes 2024 2023
$'000 $'000
ASSETS:
NON-CURRENT ASSETS:
Property, plant and equipment 10 2,917,275 2,797,831
Intangible assets 11 96,103 168,165
Other receivables 13 9,848 5,365
3,023,226 2,971,361
CURRENT ASSETS:
Trade and other receivables 13 121,280 130,135
Inventories 14 16,714 7,141
Restricted cash 16(A) 82,427 22,482
Cash and cash equivalents 15 157,728 286,625
378,149 446,383
TOTAL ASSETS 3,401,375 3,417,744
EQUITY AND LIABILITIES:
EQUITY:
Share capital 19(A) 1,708 1,708
Share Premium 212,539 212,539
Hedges Reserve 23 (266) -
Retained earnings 27,499 74,781
TOTAL EQUITY 241,480 289,028
NON-CURRENT LIABILITIES:
Senior secured notes 16(A) 2,594,213 2,588,492
Decommissioning provision 17 85,357 92,613
Deferred tax liabilities 12 69,046 46,985
Trade and other payables 18 67,044 127,044
2,815,660 2,855,134
CURRENT LIABILITIES:
Trade and other payables 18 262,924 271,997
Income tax liability 9 80,966 1,585
Derivative financial instruments 23 345 -
344,235 273,582
TOTAL LIABILITIES 3,159,895 3,128,716
TOTAL EQUITY AND LIABILITIES 3,401,375 3,417,744
19 March 2025
Date of approval of the consolidated financial statements Panagiotis Benos Matthaios Rigas
Director Director
The accompanying notes are an integral part of the consolidated financial
statements.
ENERGEAN ISRAEL LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2024
Share capital Share Premium Hedges Retained earnings Total equity
$'000 $'000 Reserve $'000 $'000
$'000
Balance as of 1 January 2023 1,708 212,539 - (70,528) 143,719
Transactions with shareholders:
Dividend, see note 19(c) - - - (97,500) (97,500)
Comprehensive Income:
Profit for the year - - - 242,809 242,809
Total comprehensive income - - - 242,809 242,809
At 1 January 2024 1,708 212,539 - 74,781 289,028
Transactions with shareholders:
Dividend, see note 19(c) - - - (394,000) (394,000)
Comprehensive Income:
Profit for the year - - - 346,718 346,718
Other comprehensive loss - - (266) - (266)
Total comprehensive income - - (266) 346,718 346,452
Balance as of 31 December 2024 1,708 212,539 (266) 27,499 241,480
The accompanying notes are an integral part of the consolidated financial
statements.
ENERGEAN ISRAEL LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 31 DECEMBER 2024
Notes 2024 2023
$'000 $'000
Operating activities
Profit for the year before tax 450,591 314,609
Adjustments to reconcile profit before taxation to net cash provided by:
operating activities:
Depreciation, depletion and amortisation ( ) 6 264,206 187,721
Loss from sale on property, plant and equipment ( ) 6 448 -
Compensation to gas buyers, payment made in advance ( ) 5 - 4,929
Other expenses ( ) 6 - 190
Finance Income ( ) 8 (8,894) (11,319)
Finance expenses ( ) 8 179,779 169,467
Unrealised loss on derivatives ( ) 23 392 -
Net foreign exchange loss ( ) 8 938 8,483
Cash flow from operations before working capital 887,460 674,080
(Increase)/decrease in trade and other receivables 3,224 (67,207)
Decrease/(increase) in inventories (9,573) 1,172
(Decrease)/increase in trade and other payables 10,261 (21,079)
Cash flow from operations 891,372 586,966
Income tax paid (2,384) (397)
Net cash inflows from operating activities 888,988 586,569
Investing activities
Payment for purchase of property, plant and equipment (PP&E) 10(C) (260,013) (213,322)
Payment for exploration and evaluation, and other intangible assets 11(B) (127,407) (98,909)
Amounts received from INGL related to transfer of PP&E 13(1) 1,801 56,906
Proceeds from disposal of PP&E - 2
Movement in restricted cash, net 16(A) (59,945) 49,296
Interest received 8,750 11,194
Net cash outflow used in investing activities (436,814) (194,833)
Financing activities
Transaction costs in relation to debt issuance 24(B)/16(A) (81) (17,634)
Senior secured notes issuance 16(A) - 750,000
Senior secured notes repayment 16(A) - (625,000)
Senior secured notes - interest paid 16(A) (178,592) (128,906)
Dividends paid 19(C) (394,000) (97,500)
Other distribution - (4,383)
Other finance cost paid (1,342) (560)
Finance costs paid for deferred license payments 18(2) (4,000) (2,496)
Repayment of obligations under leases 16 (5,691) (3,321)
Net cash outflow used in financing activities (583,706) (129,800)
Net increase/ (decrease) in cash and cash equivalents (131,532) 261,936
Cash and cash equivalents at beginning of year 286,625 24,825
Effect of exchange differences on cash and cash equivalents 2,635 (136)
Cash and cash equivalents at end of year 15 157,728 286,625
The accompanying notes are an integral part of the 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") has been established
with the objective of exploration, production and commercialisation of natural
gas and crude oil. The Group's main activities are performed in Israel by its
Israeli Branch.
c. As of 31 December 2024, the Company had investments in the following
subsidiaries:
Name of subsidiary Country of incorporation / registered office Principal activities Shareholding
At 31 December 2024 and 2023
(%)
Energean Israel Transmission LTD 121, Menachem Begin St. Gas transportation license holder 100
Azrieli Sarona Tower, POB 24,
Tel Aviv 67012039 Israel
Energean Israel Finance LTD Financing activities 100
d. The Group's core assets as of 31 December 2024 were comprised of:
Country Asset Working interest Field phase
Israel Karish including Karish North (1) 100% Production
Israel Tanin (1) 100% Development
Israel Katlan (Block 12) (2) 100% Development
Israel Blocks 21, 23, 31 (3) 100% Exploration
(1) The concession agreement expires in 2044.
(2) Katlan Final Investment Decision was taken in July 2024, and the
concession agreement received in the same month expires in 2054. Refer to note
11 for further details.
(3) The licence for Block 21 expired on 13 January 2025 and was not extended.
Refer to Note 24 (C).
NOTE 2: - Basis of preparation and presentation of financial information
The following accounting policies have been applied consistently in the
consolidated financial statements for all periods presented, unless otherwise
stated.
a. Basis of presentation of the financial statements:
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union (EU).
These consolidated financial statements have not been prepared in accordance
with the requirements of the Cyprus Companies Law, Cap.113 and are not
intended for statutory filing in Cyprus.
The consolidated financial statements have been prepared on the historical
cost basis.
The consolidated financial statements have been prepared on a going concern
basis. The principal accounting policies adopted by the Group are set out
below.
b. The financial statements are presented in U.S. Dollars and all
values are rounded to the nearest thousand
dollars except where otherwise indicated.
NOTE 2: - Basis of preparation and presentation of financial
information (Cont.)
c. Going Concern:
The Group carefully manages the risk of a shortage of funds by closely
monitoring its funding position and its liquidity risk. The going concern
assessment covers the period from the date of approval of the Group Financial
Statements on 19 March 2025 to 30 June 2026 (the 'Assessment Period'). Cash
forecasts are regularly produced based on, inter alia, the Group's latest life
of field production, budgeted expenditure forecasts, price estimates based on
signed GSPAs and oil price forward curves. In addition, on a regular basis,
the Group performs sensitivity tests of its liquidity position to evaluate
adverse impacts that may result from changes to the macro economic environment
and downside scenarios to budgeted production forecasts. The Group does this
to identify risks to liquidity to formulate appropriate and timely mitigation
strategies in order to manage the risk of funds shortfalls and to ensure the
Group's ability to continue as a going concern.
On February 2025, Energean Israel Finance Ltd. (a fully owned subsidiary of
the Company) signed a 10-year, senior-secured Term Loan with Bank Leumi
Le-Israel B.M as the Facility Agent and Arranger for US$750 million ("Term
Loan"). The Term Loan will be available to refinance the 2026 Energean Israel
Finance Ltd. Notes 2026 notes series and to provide additional liquidity for
the Katlan development. It has a 12-month availability period, during which
multiple drawdowns can be made, providing flexibility to optimise finance
costs. Up to US$475 million is available in US dollars and up to US$275
million is available in New Israeli Shekels. The interest rate for the loan is
floating and has been set at competitive levels versus the current bond
market. The Term Loan is secured on the assets of the Group (including the
Company's shares), pari passu with the Group's Notes (see Note 16), and has a
bullet repayment in 2035. Refer to Note 24.
The going concern assessment is founded on a cashflow forecast prepared by
management, which is based on a number of assumptions, most notably the
Group's latest life of field production forecasts, budgeted expenditure
forecasts, estimated of future commodity prices (based on recent published
forward curves). The going concern assessment contains a 'Base Case' and a
'Reasonable Worst Case' ('RWC') scenario and Reverse stress testing.
The Base Case scenario assumes Brent at US$75/bbl in 2025 and in 2026. A
reasonable production from the Karish and Karish North fields is assumed
throughout the going concern assessment period, with prices for gas sold
assumed at contractually agreed prices. Under the Base Case, sufficient
liquidity is maintained throughout the going concern period.
The Group also routinely performs sensitivity tests of its liquidity position
to evaluate adverse impacts that may result from changes to the macro-economic
environment, such as a reduction in commodity prices. These downsides are
considered in the RWC going concern assessment scenario. The Group also looks
at the impact of changes or deferral of key projects and downside scenarios to
budgeted production forecasts in the RWC.
The three primary downside sensitivities considered in the RWC are: (i)
reduced commodity prices; (ii) reduced production; (iii) an increase to the
SOFR forward curve by 0.5% - these downsides are applied to assess the
robustness of the Group's liquidity position over the Assessment Period. The
conditions necessary for liquidity headroom to be eliminated are judged to
have a remote possibility of occurring, given the 'natural hedge' provided by
virtue of the Group's long-term gas contracts which contain floor pricing.
Under the RWC scenario, liquidity is maintained throughout the going concern
period.
Reverse stress testing was also performed to determine what commodity price or
production shortfall would need to occur for liquidity headroom to be
eliminated. The conditions necessary for liquidity headroom to be eliminated
are judged to have a remote possibility of occurring, given the 'natural
hedge' provided by virtue of the Group's fixed-price gas contracts in Israel.
In the event a remote downside scenario occurred, prudent mitigating
strategies, consistent with those described above, could also be executed in
the necessary timeframe to preserve liquidity. There is no material impact of
climate change within the Assessment Period and therefore it does not form
part of the reverse stress testing performed by management.
In forming its assessment of the Group's ability to continue as a going
concern, including its review of the forecasted cashflow of the Group over the
Forecast Period, the Board has made judgements about:
• reasonable sensitivities appropriate for the current status of the
business and the wider macro environment; and
NOTE 2: - Basis of preparation and presentation of financial
information (Cont.)
• the Group's ability to implement the mitigating actions within the Group's
control, in the event these actions were required.
After careful consideration, the Directors are satisfied that the Group has
sufficient financial resources to continue in operation for the foreseeable
future, for the Assessment Period from the date of approval of the Group
Financial Statements on 19 March 2025 to 30 June 2026. For this reason, they
continue to adopt the going concern basis in preparing these consolidated
financial statements.
Israel geopolitical environment - Energean highlights the following 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 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.
d. New and amended accounting standards and interpretations:
The following amendments became effective as at 1 January 2024 and have been
applied in the preparation of these consolidated financial statements:
· Amendments to IAS 1- Classification of Liabilities as Current or
Non-current and Non-current Liabilities with Covenants;
· Amendments to IFRS 16 Leases: Lease Liability in a Sale and
Leaseback
· Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures: Supplier Finance Arrangements
The adoption of the above standard and interpretations did not lead to any
material changes to the Group's accounting policies and did not have any other
material impact on the financial position or performance of the Group.
The following amendments and interpretations have been issued but were not
effective for the 2024 reporting period:
· Amendments to IAS 21- Lack of exchangeability;
· Annual improvements to IFRS accounting standards: Volume 11;
The adoption of the above standards and interpretations is not expected to
lead to any material changes to the Group's accounting policies or have any
material impact on the financial position or performance of the Group.
e. Basis of consolidation:
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) as
detailed in Note 1 above.
NOTE 3: - Material accounting policies
Accounting Policies:
The principal accounting policies and measurement bases used in the
preparation of the consolidated financial statements are set out below. These
policies have been consistently applied to all periods presented in the
consolidated financial statements unless otherwise stated.
a) Functional and presentation currency and foreign currency:
1. Functional and presentation currency:
Items included in the financial statements of the Group are measured using the
currency of the primary economic
environment in which the Group operates (''the functional currency'').
NOTE 3: - Material accounting policies (Cont.)
The functional currency of the Company is U.S. Dollars (US$). The U.S.
Dollar is the currency that influences future sales prices, revenue estimates
and also highly affect the Group's operations.
The presentation currency of the Group's consolidated financial statements is
U.S. Dollar.
2. Transactions and balances:
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from monetary assets and liabilities
denominated in foreign currencies are recognised in the profit or loss. Such
monetary assets and liabilities are translated using the functional currency
exchange rates at the reporting date. Non-monetary items that are measured in
terms of historical cost denominated in a foreign currency are translated at
the exchange rates prevailing at the date of the transaction and are not
subsequently remeasured.
b) Intangible assets - Exploration and evaluation expenditures:
The Group adopts the successful efforts method of accounting for exploration
and evaluation costs. Pre-licence costs are expensed in the period in which
they are incurred. All licence acquisition, exploration and evaluation costs
and directly attributable administration costs are initially capitalised as
intangible assets by field or exploration area, as appropriate. All such
capitalised costs are subject to technical, commercial and management review,
as well as review for indicators of impairment at least once a year. This is
to confirm the continued intent to develop or otherwise extract value from the
discovery. When this is no longer the case, the costs are written off through
the statement of comprehensive income (loss). When proved reserves of oil and
gas are identified and development is sanctioned by management, the relevant
capitalised expenditure is first assessed for impairment and (if required) any
impairment loss is recognised, then the remaining balance is transferred to
oil and gas properties.
c) Commercial reserves:
Commercial reserves are proven and probable oil and gas reserves, which are
defined as the estimated quantities of crude oil, natural gas and natural gas
liquids which geological, geophysical and engineering data demonstrate with a
specified degree of certainty to be recoverable in future years from known
reservoirs and which are considered commercially producible. There should be a
50 per cent statistical probability that the actual quantity of recoverable
reserves will be more than the amount estimated as proven and probable
reserves and a 50 per cent statistical probability that it will be less.
d) Oil and gas properties - assets in development:
Expenditure is transferred from 'Exploration and evaluation assets' to 'Assets
in development' which is a subcategory of 'Oil and gas properties' once the
work completed to date supports the future development of the asset and such
development receives appropriate approvals. After transfer of the exploration
and evaluation assets, all subsequent
expenditure on the construction, installation or completion of infrastructure
facilities such as platforms, pipelines and the drilling of development wells,
including unsuccessful development or delineation wells, is capitalised within
'Assets in development'.
Proceeds from any oil and gas produced while bringing an item of property,
plant and equipment to the location and condition necessary for it to be
capable of operating in the manner intended by management (such as samples
produced when testing whether the asset is functioning properly) has been
recognised in profit or loss in accordance with IFRS 15 Revenue Recognition.
The Group measures the cost of those items applying the measurement
requirements of IAS 2 Inventories. When a development project moves into the
production stage, all assets included in 'Assets in development' are then
transferred to 'Producing assets' which is also a sub-category of 'Oil and gas
properties. The capitalisation of certain construction/development costs
ceases, and costs are either regarded as part of the cost of inventory or
expensed, except for costs which qualify for capitalisation relating to 'Oil
and gas properties' asset additions, improvements or new developments.
NOTE 3: - Material accounting policies (Cont.)
e) Depletion and amortisation:
All expenditure carried within each field will be amortised from the
commencement of production on a unit of production basis, which is the ratio
of oil and gas production in the period to the estimated quantities of
commercial reserves at the end of the period plus the production in the
period, generally on a field-by-field basis or by a group of fields which are
reliant on common infrastructure. Costs included in the unit of production
calculation comprise the net book value of capitalised costs plus the
estimated future field development costs required to recover the commercial
reserves remaining. Changes in the estimates of commercial reserves or future
field development costs are dealt with prospectively.
f) Impairments of oil & gas properties:
Where there is evidence of economic interdependency between fields, such as
common infrastructure, the fields are grouped as a single CGU for impairment
purposes. A CGU's recoverable amount is the higher of its fair value less
costs of disposal and its value in use. Where the carrying amount of a CGU
exceeds its recoverable amount, the CGU is considered impaired and is written
down to its recoverable amount.
Fair value less costs of disposal is the price that would be received to sell
the asset in an orderly transaction between market participants and does not
reflect the effects of factors that may be specific to the Group and not
applicable to entities in general.
For discount of the future cash flows the Group calculates CGU-specific
discount rate. The discount rate is based on an assessment of a relevant peer
group's pre-tax Weighted Average Cost of Capital (WACC). The Group then adds
any exploration risk premium which is implicit within a peer group's WACC and
subsequently applies additional country risk premium for Israel.
g) Impairment of non-financial assets:
At each reporting date, the Group reviews the carrying amounts of its
depreciable property, plant and equipment and intangible assets to determine
whether there is any indication that those assets have suffered an impairment
loss. Impairment is assessed at the level of cash-generating units (CGUs)
which, in accordance with IAS 36 'Impairment of Assets', are identified as the
smallest identifiable group of assets that generates cash inflows, which are
largely independent of the cash inflows from other assets. This is usually at
the individual royalty, stream, oil and gas or working interest level for each
property from which cash inflows are generated.
An impairment loss is recognised for the amount by which the asset's carrying
value exceeds its recoverable amount, which is the higher of fair value less
costs of disposal (FVLCD) and value-in-use (VIU). The future cash flow
expected is derived using estimates of proven and probable reserves, a portion
of resources that is expected to be converted into reserves and information
regarding the mineral, stream and oil & gas properties, respectively, that
could affect the future recoverability of the Group's interests. Discount
factors are determined individually for each asset and reflect their
respective risk profiles.
In addition, exploration and evaluation assets are assessed for impairment
upon their reclassification to producing assets (oil and gas interest in
property, plant and equipment).
In assessing the impairment of exploration and evaluation assets, the carrying
value of the asset would be compared to the estimated recoverable amount and
any impairment loss is recognised immediately in profit or loss.
h) Leases:
The Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
The determination of whether an arrangement is, or contains, a lease is based
on the substance of the arrangement at the date of inception. The arrangement
is assessed to determine whether fulfilment is dependent on the use of a
specific asset (or assets) and the arrangement conveys a right to use the
asset (or assets), even if that asset is (or those assets
NOTE 3: - Material accounting policies (Cont.)
are) not explicitly specified in an arrangement. The Group is not a lessor
in any transactions, it is only a lessee.
The Group applies a single recognition and measurement approach for all
leases, except for short-term leases and leases of low-value assets. The Group
recognises lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
i) Right-of-use assets:
The Group recognises right-of-use assets at the commencement date of the lease
(i.e., the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the shorter
of the lease term and the estimated useful lives of the assets, as follows:
- Property leases 2 to 5 years
- Motor vehicles and other equipment 1 to 3 years
- Fiber Optic 14 years
Lease liabilities:
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating the lease, if the lease term reflects the Group
exercising the option to terminate.
In calculating the present value of lease payments, the Group uses its
incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
Other leases outside the scope of IFRS 16:
Leases to explore for or use minerals, oil, natural gas and similar
non-regenerative resources are outside the scope of IFRS 16 and are recognised
as exploration and evaluation costs or as oil and gas assets, as appropriate.
Please refer to notes c and e above.
j) Financial instruments - initial recognition and subsequent
measurement:
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
1. Financial assets:
Initial recognition and measurement:
Financial assets are classified, at initial recognition, as subsequently
measured at amortised cost, fair value through other comprehensive income
(OCI), or fair value through profit or loss.
The classification of financial assets at initial recognition depends on the
financial asset's contractual cash flow characteristics and the Group's
business model for managing them. With the exception of trade receivables that
do not contain a significant financing component or for which the Group has
applied the practical expedient, the Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs. Trade receivables that do not
contain a significant financing component or for which the Group has applied
the practical expedient are measured at the transaction price determined under
IFRS 15.
NOTE 3: - Material accounting policies (Cont.)
In order for a financial asset to be classified and measured at amortised
cost, it needs to give rise to cash flows
that are 'solely payments of principal and interest (SPPI)' on the principal
amount outstanding. This assessment is referred to as the SPPI test and is
performed at an instrument level.
The Group's business model for managing financial assets refers to how it
manages its financial assets in order
to generate cash flows. The business model determines whether cash flows will
result from collecting contractual cash flows, selling the financial assets,
or both.
Subsequent measurement-
For purposes of subsequent measurement, financial assets are classified in two
categories:
· Financial assets at amortised cost (debt instruments)
· Financial assets at fair value through profit or loss
Financial assets at amortised cost:
The Group measures financial assets at amortised cost if both of the following
conditions are met:
- The financial asset is held within a business model with
the objective to hold financial assets in order to collect contractual cash
flows; and
- The contractual terms of the financial asset give rise
on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the
effective interest (EIR) method and are subject to impairment under the
expected credit loss model. Gains and losses are recognised in profit or loss
when the asset is derecognised, modified or impaired.
The Group's financial assets at amortised cost includes trade receivables.
Financial assets at fair value through profit or loss
The Group's financial assets at fair value through profit or loss include
financial assets designated upon initial recognition at fair value through
profit or loss, or financial assets mandatorily required to be measured at
fair value.
Financial assets at fair value through profit or loss are carried in the
statement of financial position at fair value with net changes in fair value
recognised in the statement of profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is primarily derecognised (i.e.,
removed from the Group's consolidated statement of financial position) when
the rights to receive cash flows from the asset have expired or are
transferred.
Impairment of financial assets:
The Group recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss. ECLs are based
on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has
not been a significant increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
For trade receivables and contract assets, the Group applies a simplified
approach in calculating allowance for expected credit losses (ECLs).
Therefore, the Group does not track changes in credit risk, but instead
recognises
NOTE 3: - Material accounting policies (Cont.)
a loss allowance based on lifetime ECLs at each reporting date.
2. Financial liabilities:
Initial recognition and measurement:
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable
transaction costs.
The Group's financial liabilities include trade and other payables, loans and
borrowings and derivative financial instruments.
Subsequent measurement:
The measurement of financial liabilities depends on their classification, as
described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred
for the purpose of repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Group that are not
designated as hedging instruments in hedge relationships as defined by IFRS 9
Financial Instruments. Separated embedded derivatives are also classified as
held for trading unless they are designated as effective hedging instruments.
Gains or losses on financial liabilities recognised at fair value through
profit and loss are recognised in the statement of profit or loss. The Group
discloses the unwinding of the discount separately, in finance costs, from the
mark to market gain or loss.
Loans and borrowings:
After initial recognition, interest-bearing liabilities such as senior secured
notes are subsequently measured at amortised cost using the EIR method. Gains
and losses are recognised in profit or loss when the liabilities are
derecognised, modified and through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the statement of profit or loss.
Derecognition:
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the statement of profit or loss.
Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The Group uses derivative financial instruments, such as interest rate swaps
and forward commodity contracts, to hedge its interest rate risks and
commodity price risks, respectively. Such derivative financial instruments are
initially recognised at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured at fair value. Derivatives are
carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
NOTE 3: - Material accounting policies (Cont.)
For the purpose of hedge accounting, hedges are classified as:
· Fair value hedges when hedging the exposure to changes in the fair
value of a recognised asset or liability or an unrecognised firm commitment
· Cash flow hedges when hedging the exposure to variability in cash
flows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction or the
foreign currency risk in an unrecognised firm commitment
· Hedges of a net investment in a foreign operation
At the inception of a hedge relationship, the Group formally designates and
documents the hedging instrument and the hedged item to which it wishes to
apply hedge accounting and the risk management objective and strategy for
undertaking the hedge.
A hedging relationship qualifies for hedge accounting if it meets all of the
following effectiveness requirements:
· There is 'an economic relationship' between the hedged item and the
hedging instrument.
· The effect of credit risk does not 'dominate the value changes' that
result from that economic relationship.
· The hedge ratio of the hedging relationship is the same as that
resulting from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group actually uses to
hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are
accounted for, as described below:
Cash flow hedges:
The effective portion of the gain or loss on the hedging instrument is
recognised in OCI in the cash flow hedge reserve, while any ineffective
portion is recognised immediately in the statement of profit or loss. The cash
flow hedge reserve is adjusted to the lower of the cumulative gain or loss on
the hedging instrument and the cumulative change in fair value of the hedged
item attributable to the hedged risk.
From time to time, the Group may use forward commodity contracts for its
exposure to volatility in the commodity prices. The ineffective portion
relating to forward commodity contracts is recognised in revenue or cost of
sales. The Group designates only the spot element of forward contracts as a
hedging instrument. The forward element is recognised in OCI and accumulated
in a separate component of equity.
The amount accumulated in OCI is reclassified to profit or loss as a
reclassification adjustment in the same period or periods during which the
hedged cash flows affect profit or loss.
If cash flow hedge accounting is discontinued, the amount that has been
accumulated in OCI must remain in accumulated OCI if the hedged future cash
flows are still expected to occur. Otherwise, the amount will be immediately
reclassified to profit or loss as a reclassification adjustment. After
discontinuation, once the hedged cash flow occurs, any amount remaining in
accumulated OCI must be accounted for depending on the nature of the
underlying transaction.
Derivative financial instruments and hedge accounting:
Initial recognition and subsequent measurement
The Group uses derivative financial instruments, such as interest rate swaps
and forward commodity contracts, to hedge its interest rate risks and
commodity price risks, respectively. Such derivative financial instruments are
initially recognised at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured at fair value. Derivatives are
carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
For the purpose of hedge accounting, hedges are classified as:
· Fair value hedges when hedging the exposure to changes in the fair
value of a recognised asset or liability or an unrecognised firm commitment
NOTE 3: - Material accounting policies (Cont.)
· Cash flow hedges when hedging the exposure to variability in cash
flows that is either attributable to a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction or the
foreign currency risk in an unrecognised firm commitment
At the inception of a hedge relationship, the Group formally designates and
documents the hedging instrument and the hedged item to which it wishes to
apply hedge accounting and the risk management objective and strategy for
undertaking the hedge.
A hedging relationship qualifies for hedge accounting if it meets all of the
following effectiveness requirements:
· There is 'an economic relationship' between the hedged item and the
hedging instrument.
· The effect of credit risk does not 'dominate the value changes' that
result from that economic relationship.
· The hedge ratio of the hedging relationship is the same as that
resulting from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group actually uses to
hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are
accounted for, as described below:
Cash flow hedges:
The effective portion of the gain or loss on the hedging instrument is
recognised in OCI in the cash flow hedge reserve, while any ineffective
portion is recognised immediately in the statement of profit or loss. The cash
flow hedge reserve is adjusted to the lower of the cumulative gain or loss on
the hedging instrument and the cumulative change in fair value of the hedged
item attributable to the hedged risk.
From time to time, the Group may use forward commodity contracts for its
exposure to volatility in the commodity prices. The ineffective portion
relating to forward commodity contracts is recognised in revenue or cost of
sales.
The Group designates only the spot element of forward contracts as a hedging
instrument. The forward element is recognised in OCI and accumulated in a
separate component of equity.
The amount accumulated in OCI is reclassified to profit or loss as a
reclassification adjustment in the same period or periods during which the
hedged cash flows affect profit or loss.
If cash flow hedge accounting is discontinued, the amount that has been
accumulated in OCI must remain in accumulated OCI if the hedged future cash
flows are still expected to occur. Otherwise, the amount will be immediately
reclassified to profit or loss as a reclassification adjustment. After
discontinuation, once the hedged cash flow occurs, any amount remaining in
accumulated OCI must be accounted for depending on the nature of the
underlying transaction.
3. Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the net amount is
reported in the consolidated statement of financial position if there is a
currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, to realise the assets and settle the
liabilities simultaneously.
k) Equity, reserves and dividend payments:
Share capital represents the nominal (par) value of shares that have been
issued. Share premium
includes any premiums received on issue of share capital. Any transaction
costs associated with the
issuing of shares are deducted from share premium, net of any related income
tax benefits. Dividend payments
Dividend distributions payable to equity shareholders are included in other
liabilities when the dividends have been approved in a general meeting prior
to the balance sheet date.
NOTE 3: - Material accounting policies (Cont.)
l) Share-based payments:
Employees (including senior executives) of the Group receive remuneration in
the form of share-based payments, whereby employees render services as
consideration for equity instruments issued and charge upon vesting by the
Ultimate Parent Company (Energean plc).
m) Fair value measurement:
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable
inputs.
All assets and liabilities, for which fair value is measured or disclosed in
the financial statements, are categorised within the fair value hierarchy,
described as follows, based on the lowest-level input that is significant to
the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
- Level 2 - Valuation techniques for which the lowest-level input
that is significant to the fair value measurement is directly or indirectly
observable.
- Level 3 - Valuation techniques for which the lowest-level input
that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on
a recurring basis, the Group determines whether transfers have occurred
between levels in the hierarchy by reassessing categorisation (based on the
lowest-level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
n) Cash and cash equivalents and restricted cash:
Cash and cash equivalents comprise of cash in hand and time deposits, with a
maturity of three months or less, that are subject to an insignificant risk of
changes in their fair value.
Restricted cash comprises balances retained in respect of the Group's Senior
Secured Notes and cash collateral provided under a letter of credit facility
for issuing bank guarantees for Group's activities in Israel (see Note 16A).
The nature of the restrictions on these balances mean that they do not qualify
for classification as cash equivalents.
o) Inventories:
Inventories comprise hydrocarbon liquids and natural gas, consumables and
other spare parts. Inventories are stated at the lower of cost and net
realisable value. Cost is determined using the weighted average cost method.
The cost of finished goods and work in progress comprises raw materials,
direct labour, other direct costs and related production overheads. It does
not include borrowing costs. Net realisable value is the estimated selling
price in the ordinary course of business, less estimated costs of completion
and estimated costs necessary to make the sale. Spare parts consumed within a
year are carried as inventory and recognised in profit or loss when consumed.
The Group assesses the net realisable value of the inventories at the end of
each year and recognises in the consolidated statement of profit or loss the
appropriate valuation adjustment if the inventories are overstated.
p) Decommissioning provision:
Provision for decommissioning is recognised in full when the related
facilities are installed. A corresponding amount equivalent to the provision
is also recognised as part of the cost of the related property, plant and
equipment. The amount recognised is the estimated cost of decommissioning,
discounted to its net present value at a risk-free discount rate, and is
reassessed each year in accordance with relevant conditions and requirements.
Changes in the estimated timing of decommissioning or decommissioning cost
estimates are dealt with prospectively by recording an adjustment to the
provision, and a corresponding adjustment to property, plant and equipment.
The unwinding of the discount on the decommissioning provision is included as
a finance cost.
NOTE 3: - Material accounting policies (Cont.)
q) Revenue
Revenue from contracts with customers is recognised when control of the gas/
hydrocarbon liquids are transferred to the customer at an amount that reflects
the consideration to which the Group expects to be entitled in exchange for
those goods or services. The Group has concluded that it is the principal in
its revenue arrangements because it typically controls the goods or services
before transferring them to the customer.
In Israel royalties are levied by the government. The government can request
that these royalty payments be made in cash or in kind. In the current year
and in prior year the government has requested cash payments be made and
therefore the Group has not made any royalty payments in kind. As such the
Group obtains control of all the underlying reserves once extracted, sells the
production to its customers and then remits the proceeds to the royalty holder
and is therefore considered to be acting as the Principal.
Sale of natural gas and hydrocarbon liquids
Sales revenue represents the sales value, net of VAT, of actual sales volumes
to customers in the year.
The Group's accounting policy under IFRS 15 is that revenue is recognised when
the Group satisfies a performance obligation by transferring hydrocarbon
liquids or gas to its customer. The title to hydrocarbon liquids and gas
typically transfers to a customer at the same time as the customer takes
physical possession of the hydrocarbon liquids or gas. Typically, at this
point in time, the performance obligations of the Group are fully satisfied.
The revenue is recorded when the hydrocarbon liquids or gas has been
physically delivered to a vessel or pipeline.
r) Retirement benefit costs regarding the employees by the directly
owned Branch in Israel:
The Israeli Branch has defined contribution plans pursuant to section 14 to
the Severance Pay in Israel Law under which the Israeli Branch pays fixed
contributions and will have no legal or constructive obligation to pay further
contributions if the fund does not hold sufficient amounts to pay all employee
benefits relating to employee service in the current and prior periods.
Contributions to the defined contribution plan in respect of severance or
retirement pay are recognised as an expense when contributed concurrently with
performance of the employee's services.
s) Borrowing costs:
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. Investment income earned
on the temporary investment of specific borrowings pending their expenditure
on qualifying assets is deducted from the borrowing costs eligible for
capitalisation.
Excluded from the above capitalisation policy are any qualifying assets that
are inventories that are produced in large quantities on a repetitive basis.
and any Exploration and Evaluation assets which have not resulted in the
classification of commercial reserves.
Borrowing costs consist of interest and other costs that the Group incurs in
connection with the borrowing of funds.
t) Tax:
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit as reported in the financial statements because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax is recognised on temporary differences between the carrying
amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit, based on
tax rates that have been enacted or substantively enacted by the reporting
date. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable
NOTE 3: - Material accounting policies (Cont.)
profits will be available against which deductible temporary differences can
be utilised.
The Group recognises tax provision liabilities for anticipated tax issues
based on if it is probable, defined as more likely than not, that additional
taxes will be due. This assessment is based on all available evidence and,
where appropriate, in the light of external advice. Where the final tax
outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the income tax liability in the period
in which such determination is made.
Current and deferred tax assets and corresponding liabilities are offset when
there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the
same taxation authority and the Group intends to settle its tax assets and
liabilities on a net basis.
u) Levies:
Levies imposed on the Company by government entities through legislation, are
accounted for pursuant to IFRIC 21 according to which the liability for the
levy is recognized only when the activity that triggers payment occurs.
NOTE 4: - Critical accounting estimates and judgments
The preparation of these consolidated financial statements in conformity with
IFRS requires the use of accounting estimates and assumptions, and also
requires management to exercise its judgement, in the process of applying the
Group's accounting policies.
Estimates, assumptions and judgement applied are continually evaluated and are
based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
Although these estimates, assumptions and judgement are based on management's
best knowledge of current events and actions, actual results may ultimately
differ.
1. Critical judgements in applying the Group's accounting
policies:
The following are significant management judgements in applying the accounting
policies of the Group that have the most significant effect on the financial
statements:
Carrying value of intangible exploration and evaluation assets:
Amounts carried under intangible exploration and evaluation assets represent
active exploration projects. Capitalised costs will be written off to the
income statement as exploration costs unless commercial reserves are
established, or the determination process is not completed and there are no
indications of impairment in accordance with the Group's accounting policy.
The process of determining whether there is an indicator for impairment or
calculating the impairment requires critical judgement. The key areas in which
management has applied judgement are as follows: the Group's intention to
proceed with a future work programme; the likelihood of licence renewal or
extension; the assessment of whether sufficient data exists to indicate that,
although a development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be recovered in
full from successful development or by sale; and the success of a well result
or geological or geophysical survey.
Identification of cash generating units (note 10):
In considering the carrying value of property, plant and equipment the Group
has to make a critical judgement in relation to the identification of the
smallest cash generating unit to which those assets are allocated.
The Israel development is one CGU, all the production from both the Karish
Main and Karish North fields and future production from Tanin and Katlan is
processed through the FPSO and flows through one pipeline onto gas buyers and
therefor there are no separate cash inflows.
2. Estimation uncertainty:
The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities, are
discussed below:
NOTE 4: - Critical accounting estimates and judgments (Cont.)
Carrying value of property, plant and equipment (note 10):
The Group assesses impairment at each reporting date by evaluating conditions
specific to the Group that may lead to impairment of assets. Where an
indicator of impairment exists, the recoverable amount (which is the higher of
fair
value less costs to sell and value in use) of the cash-generating unit to
which the assets belong is then estimated based on the present value of future
discounted cash flows.
For oil and gas assets, the expected future cash flow estimation is based on a
number of factors, variables and assumptions, the most important of which are
estimates of reserves, future production profiles, oil prices and costs. In
most cases, the present value of future cash flows is most sensitive to
estimates of future oil and gas price, estimates of reserves, estimates of
development costs and discount rates.
A change in the assumptions could materially change the recoverable amount. In
the event that future circumstances vary from these assumptions, the
recoverable amount of the Group's development and production assets could
change materially and result in impairment losses or the reversal of previous
impairment losses.
Hydrocarbon reserve and resource estimates (Note 10, 11, 12 and 17):
The Company's oil and gas development and production properties are
depreciated on a unit of production basis at a rate calculated by reference to
developed and undeveloped proved and probable commercial reserves (2P
developed and undeveloped) which are estimated to be recoverable with existing
and future developed facilities using current operating methods, determined in
accordance with the Petroleum Resources Management System published by the
Society of Petroleum Engineers, the World Petroleum Congress and the American
Association of Petroleum Geologists.
Commercial reserves are determined using estimates of oil and gas in place,
recovery factors and future oil prices. The level of estimated commercial
reserves is also a key determinant in assessing whether the carrying value of
any of the Company's oil and gas properties has been impaired. As the economic
assumptions used may change and as additional geological information is
produced during the operation of a field, estimates of recoverable reserves
may change.
Such changes may impact the Company's reported financial position and results
which include:
• Depreciation and amortisation charges in profit or loss may
change where such charges are determined using the units of production method,
or where the useful life of the related assets change.
• Impairment charges in the income statement
• Provisions for decommissioning may change - where changes to the
reserve estimates affect expectations about when such activities will occur
and the associated cost of these activities.
• The recognition and carrying value of deferred tax assets may
change due to changes in the judgements regarding the existence of such assets
and in estimates of the likely recovery of such assets.
Decommissioning provision (Note 17):
There is uncertainty around the cost of decommissioning as cost estimates can
vary in response to many factors, including from changes to market rates for
goods and services, to the relevant legal requirements, the emergence of new
technology or experience at other assets. The expected timing, work scope,
amount of expenditure, discount and inflation rates may also require
estimation. Therefore, significant estimates and assumptions are made in
determining
the provision for decommissioning. The discount rate applied to determine the
carrying amount of provisions provides a source of estimation uncertainty as
referred to in IAS 1.
The estimated decommissioning costs are reviewed annually by management and
the results of this review are then assessed alongside estimates from
operators. Provision for environmental cleanup and remediation costs is based
on current legal and contractual requirements, technology and price levels.
Discount rate applied is reviewed regularly and adjusted following the changes
in market rates.
The Group considers the impact of climate change on environmental restoration
and decommissioning provisions, specifically the timing of future cash flows,
and has concluded that it does not currently represent a key source of
estimation uncertainty. Changes to legislation, including in relation to
climate change, are factored into the provisions when the legislation becomes
enacted.
NOTE 5: - Revenues
2024 2023
$'000 $'000
Revenue from gas sales ((1)) 838,881 679,410
Revenue from hydrocarbon liquids sales ((2)) 400,230 265,355
Compensation to customers ((3)) - (4,929)
Total revenue 1,239,111 939,836
((1) Sales gas for 2024 totaled approximately 35,399 kboe (kilo barrel of oil
equivalent) and for 2023 totaled approximately 28,416 kboe.
((2)) Sales from hydrocarbon liquids for 2024 totaled approximately 5,351 kbbl
(kilo barrel) for 2023 totaled approximately 3,492 kbbl.
((3)) During 2021 and in accordance with the GSPAs signed with a group of gas
buyers, the Company paid compensation to these counterparties following delays
to the supply of gas from the Karish project. The compensation is deducted
from revenue, as variable consideration, as the gas is delivered to the gas
buyers, in accordance with IFRS 15 Revenue Recognition.
NOTE 6: - Operating profit before taxation
2024 2023
$'000 $'000
(a) Cost of sales
Staff costs (Note 7) 16,469 9,766
Energy cost 2,109 3,652
Royalty payable 219,273 167,179
Depreciation (Note 10) 262,074 185,884
Other operating costs ((1)) 100,780 76,997
Oil stock movement (1,847) 576
Total cost of sales 598,858 444,054
(b) General & administration expenses
Staff costs (Note 7) 4,542 3,163
Share-based payment charge (note 20) 1,207 730
Depreciation and amortisation (Note 10, 11) 2,132 1,837
Auditor fees ((3)) 313 356
Other general & administration expenses ((2)) 8,474 8,253
Total administrative expenses 16,668 14,339
(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((4)) 448 190
Other expenses((5)) 600 -
Total other expenses 1,048 190
(e) Other income
Other income((4)) 269 37
Total other income 269 37
NOTE 6: - Operating profit before taxation
( )
((1)) Other operating costs comprise of insurance costs and planned
maintenance costs.
((2)) The Other general & administration expenses mainly consists of legal
expenses, intercompany management fees and external advisors fees.
((3)) In addition to the services outlined in the preceding table, the
Company's auditor also rendered services related to the refinance of US$0.06
million in 2024 and senior secured notes issuance in 2023 (US$0.2 million).
These services were capitalised as transaction costs.
((4)) During 2024, Energean Israel sold to Energean Morocco equipment (used
pipes) at its current market value at the time for approx. USD 260K. Refer to
Note 22.
((5)) Legal claim settlement.
NOTE 7: - Staff costs
The average monthly number of employees employed by the Group was:
2024 2023
$'000 $'000
Average number of employees 119 98
2024 2023
$'000 $'000
Salaries and social security costs ((1)) 21,849 14,976
Share-based payments 1,207 730
Payroll Cost capitalised in oil & gas assets and intangible assets (838) (2,047)
22,218 13,659
Total payroll cost in cost of sales 16,469 9,766
Total payroll cost in administration expenses 5,749 3,893
Total payroll cost 22,218 13,659
((1)) Including US$4.6 million of costs related to pension plans (2023: US$2.3
million).
NOTE 8: - Net finance costs
2024 2023
$'000 $'000
Interest on Senior Secured Notes (Note 16) 170,035 161,918
Interest expense on long terms payables (Note 18(2)) 1,245 7,159
Less amounts included in the cost of qualifying assets (Note 10(A)) (14,626) (17,415)
156,654 151,662
Costs related to parent company guarantees 2,898 3,855
Other finance costs and bank charges 1,768 1,403
Unwinding of discount on trade payable (Note 18(3)) 14,417 8,753
Unwinding of discount on provision for decommissioning (Note 17) 3,951 3,401
Unwinding of discount on right of use asset 813 636
(1)
Less amounts included in the cost of qualifying assets (Note 10(A)) (722) (243)
23,125 17,805
Total finance costs 179,779 169,467
Loss from valuation of hedging operations 392 -
Interest income from time deposits (8,894) (11,319)
Total finance income (8,894) (11,319)
Net foreign exchange losses 938 8,483
Net finance costs 172,215 166,631
NOTE 9: - Taxation
1. Corporate Tax rates applicable to the Company:
Israel:
The Israeli corporate tax rate is 23% in 2024 and 2023.
United Kingdom:
Starting from 1 January 2024, the company's control and management was
transferred from the Republic of Cyprus to the United Kingdom ("UK") and as
such the company's tax residency migrated from Cyprus to UK from the first day
of the accounting period. The applicable tax rate in the UK is 25%.
Under s.18A of the UK CTA 2009, the Company made an election for the branch of
Energean Israel Limited (and any other branches that may open from time to
time) to be exempt from UK corporation tax from its first accounting period
commencing on 1 January 2024 and all subsequent accounting period.
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"). The imposition of an oil and gas profits levy at a rate
to be set as set out below. The rate of the levy will be 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% will be 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 will be 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
NOTE 9: - Taxation (Cont.)
a percentage 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:
2024 2023
$'000 $'000
Current income tax charge (81,703) (1,929)
Prior years income tax (30) -
Deferred tax relating to origination and reversal of temporary differences (22,140) (69,871)
(Note 12)
Total taxation expense (103,873) (71,800)
4. Reconciliation of the total tax charge:
The reconciliation between the tax expense, assuming that all the income,
expenses, gains and losses in profit or loss were taxed at the statutory tax
rate of Israel and the taxes on income recorded in profit or loss is as
follows:
2024 2023
$'000 $'000
Profit before tax 450,591 314,609
Tax credit at the applicable tax rates of 23% ((1)) (103,636) (72,360)
Impact of different tax rates ((2)) 1 8
Temporary differences in respect of different tax recognition (12) 764
Permanent differences - non deductible ((3)) 20 (174)
Prior year tax (29) -
Other adjustments (217) (38)
Taxation income (103,873) (71,800)
Effective tax rate 23% 23%
(1) ) For the reconciliation of the effective tax rate, the statutory
tax rate of the Israeli Branch of 23% has been used.
(2) ) Energean Israel Limited is subject to corporation tax rate of
25% in the UK.
(3) ) Permanent differences consisted of non-deductible expenses with
the majority derived from the Israeli Branch and, inter alia, related to
refreshments, accommodation, donations and travelling.
NOTE 10: - 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 172,421 1,363 351 174,135
Transfer from Intangible Assets ((2)) 205,324 - - 205,324
Disposals (448) - - (448)
Capitalised borrowing cost 15,348 - - 15,348
Change in decommissioning provision (11,207) - - (11,207)
Total cost at 31 December 2024 3,360,476 18,349 2,741 3,381,566
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 year 258,328 4,962 418 263,708
Total Depreciation at 31 December 2024 453,452 9,387 1,452 464,291
At 31 December 2023 2,783,914 12,561 1,356 2,797,831
At 31 December 2024 2,907,024 8,962 1,289 2,917,275
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.
In February 2024, Karish North first gas was achieved and the second gas
export riser was completed.
Second oil train lift safely and successfully performed in Q4 2024. Post-lift,
installation and commissioning activities are expected to take place in Q2
2025, which will result in an increase in liquids' production capacity.
((1)) Handover to INGL took place on 22 March 2023, please refer to Note 13.
((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
11 for further details.
Borrowing costs capitalised for qualifying assets during the year are
calculated by applying a weighted average interest rate of 3.93% for the year
ended 31 December 2024 (for the year ended 31 December 2023: 5.29%).
NOTE 10: - Property, Plant and Equipment (Cont.)
b. Depreciation expense for the year has been recognised as follows:
2024 2023
$'000 $'000
Cost of sales 262,074 185,884
Administration expenses 1,634 1,489
Total 263,708 187,373
c. Cash flow statement reconciliations:
2024 2023
$'000 $'000
Additions and disposals to property, plant and equipment 178,276 170,339
Associated cash flows
Payments for additions to property, plant and equipment (260,013) (213,322)
Non-cash movements/presented in other cash flow lines
Capitalised borrowing costs (15,348) (17,658)
Right-of-use asset additions (1,363) (12,246)
Change in decommissioning provision 11,207 (4,913)
Lease payments related to capital activities 5,691 3,321
Movement in working capital 81,550 74,479
d. Details of the Group's rights in petroleum and gas assets are presented
in note 1.
NOTE 11: - Intangible Assets
a. Composition:
Exploration and evaluation assets Software licences Total
$'000 $'000 $'000
Cost:
At 1 January 2023 141,869 1,968 143,837
Additions 24,597 362 24,959
At 1 January 2024 166,466 2,330 168,796
Additions 133,224 536 133,760
Transfer to Property Plant and Equipment (*) (205,324) - (205,324)
At 31 December 2024 94,366 2,866 97,232
Amortisation:
At 1 January 2023 - 283 283
Charge for the year - 348 348
Total Amortisation at 31 December 2023 - 631 631
Charge for the year - 498 498
Total Amortisation at 31 December 2024 - 1,129 1,129
At 31 December 2023 166,466 1,699 168,165
At 31 December 2024 94,366 1,737 96,103
The additions to exploration and evaluation assets in 2024 and 2023 are mainly
related to pre-FID costs for Block 12 "Katlan".
(*) 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 Technip FMC and includes four-well-slot tieback
capacity to a single large ~30 kilometer production line, which can be used by
future Katlan area phases.
b. Cash flow statement reconciliations:
2024 2023
$'000 $'000
Additions to intangible assets 133,760 24,959
Associated cash flows
Payment for additions to intangible assets (127,407) (98,909)
Non-cash movements/presented in other cash flow lines
Movement in working capital (6,353) 73,950
NOTE 11: - Intangible Assets (Cont.)
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 31 December 2024
Block 21 Licence 13 January 2025 100%
Block 23 Licence 13 January 2027 100%
Block 31 Licence 13 January 2027 100%
d. Additional information regarding the Exploration and Evaluation assets:
As of 31 December 2024, the Group held 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. The licences for Blocks 23 and 31 were extended
until 13 January 2027. The licence for Block 21 was not extended and expired
after the reporting date.
NOTE 12: - 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.
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 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)
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 (12,040) 860 (8,983) (1,373) (45) (559) - (22,140)
Other comprehensive income - - - - - - 79 79
At 31 December 2024 (73,090) (2,028) - 2,709 292 2,992 79 (69,046)
NOTE 12: - Deferred taxes (Cont.)
2024 2023
$'000 $'000
Deferred tax liabilities (75,118) (63,938)
Deferred tax assets 6,072 16,953
(69,046) (46,985)
NOTE 13: - Trade and other receivables
2024 2023
$'000 $'000
Current
Financial items
Trade receivables
Trade receivables 108,085 114,139
Receivables from related parties 330 -
Other receivables ((1)) 5,038 6,994
Accrued interest income 1,048 1,015
Refundable VAT - 1,196
114,501 123,344
Non-financial items
Prepayments and prepaid expenses 6,779 6,791
6,779 6,791
Total current trade and other receivables 121,280 130,135
Non-current
Non-financial items
Prepayments and prepaid expenses 8,812 5,365
Deferred expenses in relation to debt issuance, note 24(B) 1,036 -
Total non-current trade and other receivables 9,848 5,365
((1)) The balance mainly 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 was approximately US$5
million. is expected to be received in 2025.
The table below summarises the maturity profile of the Group receivables:
31 December 2024 ($'000) Carrying amounts Contractual cash flows 3 months or less 3-12 months
Trade receivables 108,085 108,085 108,085 -
Short term other receivables 6,416 6,416 1,387 5,029
Total 114,501 114,501 109,472 5,029
NOTE 13: - Trade and other receivables (Cont.)
31 December 2023($'000) Carrying amounts Contractual cash flows 3 months or less 3-12 months
Short term trade and other receivables 114,139 114,139 114,139 -
Refundable VAT and excise 1,196 1,196 1,196 -
Short term other receivables 6,994 6,994 1,930 5,064
Total 122,329 122,329 117,265 5,064
NOTE 14: - Inventories
2024 2023
$'000 $'000
Hydrocarbon liquids 3,581 1,685
Natural gas 502 553
Raw materials and supplies 12,631 4,903
Total 16,714 7,141
NOTE 15: - Cash and cash equivalents
2024 2023
$'000 $'000
Cash and bank deposits 157,728 286,625
Total 157,728 286,625
Bank deposits comprise short-term deposit accounts that are readily
convertible into known amounts of cash. The effective interest rate on
short‑term bank deposits was 4.835% for the year ended 31 December 2024
(year ended 31 December 2023: 4.585%).
NOTE 16: - 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 million of senior secured notes
(the "Notes"). The proceeds were primarily used to prepay in full the Project
Finance Facility.
On 11 July 2023, Energean Israel Finance Ltd. 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 were used mainly to repay Energean
Israel's US$625 million notes series due in March 2024.
The Notes were issued in four equal tranches as follows:
Series Maturity Annual fixed Interest rate 31 December 2024 31 December 2023
Carrying value $'000 Carrying value $'000
US$ 625 million 30 March 2026 4.875% 622,102 619,932
US$ 625 million 30 March 2028 5.375% 619,602 618,145
US$ 625 million 30 March 2031 5.875% 617,689 616,762
US$ 750 million 30 September 2033 8.5% 734,820 733,653
US$2,625 million 2,594,213 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
NOTE 16: - Senior secured notes (Cont.)
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:
1) 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 licences and the INGL Agreement.
2) Floating charge over all of the present and future assets of
Energean Israel Limited and Energean Israel Finance Ltd (except specifically
excluded assets).
3) The Energean Power FPSO.
Restricted cash:
As of 31 December 2024, the Company had short-term restricted cash of US$82.43
million (31 December 2023: US$22.48 million), which will be used for the March
2025 interest payment.
Credit rating:
The senior secured Notes have been assigned a Ba3 rating by Moody's and a BB-
rating by S&P Global.
b. Reconciliation of liabilities arising from financing activities:
1 January Cash outflows Cash inflows Additions Borrowing costs Foreign exchange impact Reclassification 31 December
including amortisation to short term
of arrangement fee
2024 ($'000) 2,648,244 (231,683) - 1,349 172,094 (6) 14,278 2,604,276
Senior secured notes 2,588,492 (178,592) - - 170,035 - 14,278 2,594,213
Lease liabilities 13,598 (5,691) - 1,349 813 (6) - 10,063
Deferred licence payments ((1)) 46,154 (47,400) - - 1,246 - - -
2023 ($'000) 2,526,869 (788,205) 750,000 12,260 170,487 17 (23,184) 2,648,244
Senior secured notes 2,471,030 (771,539) 750,000 - 162,185 - (23,184) 2,588,492
Lease liabilities 4,006 (3,321) - 12,260 636 17 - 13,598
Deferred licence payments ((1)) 51,833 (13,345) - - 7,666 - - 46,154
((1)) Cash outflows relate to finance costs paid for deferred licence payments
of approximately US$4,000 thousand in 2024 and US$2,496 thousand in 2023 and
payment for purchase of oil & gas leases of US$43,400 thousand in 2024 and
of US$10,850 thousand in 2023, which are included in the cash flows from
financing and investing activities respectively, in the Consolidated Statement
of Cash Flows.
NOTE 17: - Decommissioning provision
2024 2023
$'000 $'000
At 1 January 92,613 84,299
New provisions - 4,913
Changes in estimates (11,207) -
Unwinding of discount 3,951 3,401
At 31 December 85,357 92,613
Current provisions - -
Non-current provisions 85,357 92,613
As of 31 December 2024, the decommissioning provision represents the present
value of decommissioning costs relating to the four wells for Karish, Karish
North and subsea infrastructure.
The decommissioning provision represents the present value of decommissioning
costs relating to oil and gas properties, which are expected to be incurred up
to 2044, when the producing oil and gas properties are expected to cease
operations. These provisions have been created based on the Group's internal
estimates. Assumptions based on the current economic environment have been
made, which management believes form a reasonable basis upon which to estimate
the future liability. These estimates are reviewed regularly to take into
account any material changes to the assumptions. However, actual
decommissioning costs will ultimately depend upon future market prices for the
necessary decommissioning works required that will reflect market conditions
at the relevant time.
Furthermore, the timing of decommissioning is likely to depend on when the
fields cease to produce at economically viable rates. This, in turn, will
depend upon future oil and gas prices, which are inherently uncertain.
The discount rate applied at 31 December 2024 is 4.86% (31 December 2023:
4.18%).
Depreciation is based on the depletion method upon commercial reserves.
NOTE 18: - Trade and other payables
2024 2023
$'000 $'000
Current
Financial items
Trade accounts payable ((1)) 140,840 97,350
Payables to related parties (Note 22) 11,021 19,023
VAT payable 4,182 -
Deferred licence payments due within one year ((2)) - 46,154
Other creditors ((3)) 35,468 32,034
Short term lease liabilities 5,296 4,718
196,807 199,279
Non-financial items
Accrued expenses ((1)) 24,480 16,765
Other finance costs accrued 41,133 55,411
Social insurance and other taxes 504 542
66,117 72,718
Total current trade and other payables 262,924 271,997
Non-current
Financial items
Trade and other payables ((4)) 61,758 117,796
Long term lease liabilities 4,767 8,880
66,525 126,676
Non-financial items
Accrued expenses to related parties 519 368
519 368
Total non-current trade and other payables 67,044 127,044
((1) ) The increase in trade payables and accrued expenses
relates primarily to Katlan works.
((2) ) In December 2016, Energean Israel acquired the Karish and
Tanin offshore gas fields for US$40.0 million at closing with an obligation to
pay an additional consideration of US$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 31
December 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 US$12.9 million (2023: US$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 US$210 million. The
amount is payable in twelve equal quarterly deferred payments starting in
March 2024 and therefore has been discounted at 8.668% per annum (being the
yield rate of the senior secured loan notes, maturing in 2026, as at the date
of agreeing the payment terms). As of 31 December 2024, 4 installments have
been paid.
NOTE 19: - Equity
a. Share capital:
31 December 2024 31 December 2023
Number of shares Number of shares
US$ US$
Authorised, issued and fully paid
Ordinary A shares of US$1 each 1,708,415 1,708,415 1,708,415 1,708,415
b. Shares rights:
An ordinary share gives the shareholder the right to vote on matters put
before all of the shareholders of the Company. One share equals one vote. An
ordinary share also provides the shareholder with the right to receive a share
of the Company's profits by way of dividends.
c. Dividends:
Dividends of US$394 million were declared and paid during 2024 and US$97.5
million were declared and paid during 2023.
NOTE 20: - Share-based payment
Analysis of share-based payment charge:
2024 2023
$'000 $'000
Energean 2018 Long Term Incentive Plan 891 548
Energean Deferred Share Bonus Plan 316 182
Total share-based payment charge 1,207 730
Expensed as administration expenses 1,207 730
Total share-based payment charge 1,207 730
Energean plc's 2018 Long Term Incentive Plan (LTIP)
Under the Energean plc's 2018 LTIP rules, senior executives may be granted
conditional awards of shares or nil cost options. Awards are subject to
performance conditions including Total Shareholder Return (TSR) normally
measured over a period of three years. Vesting of awards is generally subject
to an individual remaining in employment except in certain circumstances such
as good leaver and change of control. Awards may be subject to a holding
period following vesting. No dividends are paid over the vesting period;
however, Energean plc's Board may decide at any time prior to the issue or
transfer of the shares in respect of which an award is released that the
participant will receive an amount (in cash and/or additional Shares) equal in
value to any dividends that would have been paid on those shares on such terms
and over such as the Energean plc Board may determine. This amount may assume
the reinvestment of dividends (on such basis as the Board may determine) and
may exclude or include special dividends.
The weighted average remaining contractual life for LTIP awards outstanding at
31 December 2024 was 1.29 years, (31 December 2023: 1.32 years).
All amounts related to share-based payments are recognised as liabilities,
because Energean plc charges the Group, using the share price at grant date,
for the shares issued upon vesting.
NOTE 20: - Share-based payment (Cont.)
Deferred Share Bonus Plan (DSBP)
Under the DSBP, a portion of any annual bonus of a senior executive may be
deferred into shares.
Deferred awards are usually granted in the form of conditional share awards.
Deferred awards usually vest two years after award although may vest early on
leaving employment or on a change of control.
The weighted average remaining contractual life for DSBP awards outstanding at
31 December 2024 was 0.61 year, (31 December 2023 was 0.76 year).
All the amount related to share-based payment is recognised as liability since
Energean plc charges the Group, using the share price at grant date, for the
shares issued upon vesting.
NOTE 21: - Material engagements, commitments and contingencies
a. Material engagements:
a) 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 Company's
portfolio.
2) Energean signed two contracts with two peaker stations for the supply
of 0.1 bcm/yr each, commencing in Q2 2025 respectively.
b. Performance guarantees:
2024 2023
$'000 $'000
Performance guarantees 50,629 53,006
1. Letter of Credit Facility Agreement - As of 31 December 2024, the
Company has a letter of credit facility with a banking corporation in Israel
at the amount of US$55 million. The facility bears agreed interest and
commitment fee for undrawn amounts which paid quarterly. The banking
corporation security is a US$55 million PCG granted by Energean plc. The
letter of credit facility is in place until 30 June 2025.
2. Performance guarantees use - The main amount US$48.6 million in 31
December 2024 (31 December 2023: US$46.2 million) of the balance above is
related to performance bank guarantees the Company provided to the Ministry of
Energy in Israel due to the requirement under its oil and gas licenses and
leases. The remaining amount is due to the Company's ongoing operations in
Israel.
NOTE 22: - Related parties
a. As of 31 December 2024, the Group's ordinary shares are owned 100% by
Energean E&P Holdings Limited, incorporated in Cyprus.
b. Details of related parties:
Name Country of incorporation / registered office Principal activities Relationship as of 31 December 2024 Relationship as of 31 December 2023
Energean plc 44 Baker Street, London W1U 7AL, United Kingdom Holding company Ultimate Parent company Ultimate Parent company
Energean E&P Holdings Ltd 22 Lefkonos Street, 2064 Nicosia, Cyprus Holding Company Parent company Parent company
Energean Oil & Gas S.A. 32 Kifissias Ave. 151 25 Marousi Athens, Greece Oil and gas exploration, development and production Sister company Sister company
Energean Egypt Limited 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production Sister company Sister company
Energean International Limited 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production Sister company Sister company
Energean Italy S.p.a. 31 Foro Buonaparte, 20121 Milano, Italy Oil and gas exploration, development and production Sister company Sister company
Energean Capital Ltd 22 Lefkonos Street, 2064 Strovolos, Nicosia, Cyprus Holding of investments and management services Sister company Sister company
Energean Group Services Limited 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas exploration, development and production Sister company Sister company
Energean Morocco Limited-Morocco Branch 56 Bd Moulay Youssef, 20070, Casablanca, Morocco Oil and gas exploration, development and production Sister company N/A
Energean Israel Transmission LTD 121, Menachem Begin St. Gas transportation licence holder Subsidiary 100% Subsidiary 100%
Azrieli Sarona Tower, POB 24,
Tel Aviv 67012039 Israel
Energean Israel Finance Ltd 121, Menachem Begin St. Financing activities Subsidiary 100% Subsidiary 100%
Azrieli Sarona Tower, POB 24,
Tel Aviv 67012039 Israel
Egypt Energy Services JSC Cairo, Egypt Oil and gas exploration, development and production Sister company Sister company
NOTE 22: - Related parties (Cont.)
c. Balances with related parties:
Nature of balance 2024 2023
$'000 $'000
In current assets:
Receivable to related parties - Note 13:
Energean Morocco Limited-Morocco Branch Receivable 324 -
Energean Capital Limited Receivable 5 -
Energean International Limited Receivable 1 -
330 -
In current liabilities:
Payables to related parties - Note 18:
Energean plc Trading (4,310) (4,299)
Energean Oil & Gas S.A Trading (4,707) (6,118)
Energean International UK Trading - (33)
Energean Group Services Trading (1,645) (4,044)
Energean E&P Holdings Limited Trading (23) (1,386)
Energean International Limited Trading (168) (286)
Energean Capital Limited Trading (839) (960)
Energean Italy SPA Trading (256) (2,865)
Energean plc Share based payments (1,384) (699)
(13,332) (20,690)
In non-current liabilities:
Accrued expenses to related parties - Note 18:
Energean plc Share based payments (519) (360)
NOTE 22: - Related parties (Cont.)
d. Transactions with related parties:
2024 2023
$'000 $'000
Service received in connection with the oil and gas assets:
Related companies 2,692 3,083
Ultimate and parent company 5,931 3,197
8,623 6,280
Service received in connection with the intangible assets:
Related companies 1,436 3,957
Ultimate and parent company 179 2,585
1,615 6,542
Service received in connection with refinance / issuance senior secure notes:
Ultimate and parent company - 1,246
Related companies 963 296
963 1,542
Service received in connection with finance expenses:
Related companies - 1,262
Ultimate and parent company 3,030 2,855
3,030 4,117
Service received in connection with cost of sales:
Related companies 5,032 1,348
Ultimate and parent company 9 263
5,041 1,611
In administrative expenses:
Related companies 2,174 406
Ultimate and parent company 4,561 725
6,735 1,131
In other expenses:
Related companies 448 -
448 -
In other income:
Related companies (263) -
(263) -
e. Additional information:
1. The Group and related companies entered into an agreement for the
provision of consulting services related to administrative, technical,
finance and commercial matters. The consideration for the said services and
the respective balances presented above at Note 22 (C) and 22 (D).
2. During 2024, Energean Israel sold to Energean Morocco equipment
(used pipes) at market value at the time of the sale for approx. US$0.26
million.
NOTE 22: - Related parties (Cont.)
f. Parent Company Guarantees (PCG):
1. Under the Karish EPCIC. Energean plc provided a PCG dated 27 July
2018, guaranteeing the deferred payment obligations of the Company under the
contract which were amounted to US$210 million. Refer to Note 18(4).
2. As part of a GSPA the Company signed, Energean E&P Holdings
Limited, the parent company, granted a corporate guarantee to certain gas
buyers amounting to as of 31 December 2024 for US$7.5 million (31 December
2023 for US$38 million).
3. As part of the banking corporation security of the Letter of Credit
Facility Agreement Energean plc granted a PCG of US$55 million.
NOTE 23: - Financial Instruments
Financial risk management objectives
The Group is exposed to market price risk which comprises: foreign currency
risk, credit risk, liquidity risk and capital risk management arising from the
financial instruments it holds. The risk management policies employed by the
Group to manage these risks are discussed below:
a. Foreign exchange risk:
The Group is exposed to foreign exchange risk as it undertakes operations in
various foreign currencies. The key sources of the risk are attributed to the
fact that the Group has certain financial assets (mainly other receivables and
cash and cash equivalents) and financial liabilities (mainly trade and other
payable) with different currencies than the functional currency of the Group,
mainly Israeli Shekel (ILS) United Kingdom Pound Sterling (GBP) and Euro.
The Group's exposure to foreign currency risk at each reporting date is shown
in the table below. The amounts shown are the US$ equivalent of the foreign
currency amounts.
Liabilities Assets
2024 2023 2024 2023
$'000 $'000 $'000 $'000
Israeli New Shekel (ILS) 4,324 7,874 31,058 30,441
United Kingdom Pound (GBP) 32,371 28,252 11,829 1,532
Euro 19,700 41,224 268 2,279
Total 56,395 77,350 43,155 34,252
The following table reflects the sensitivity analysis for profit and loss
result for the year and the equity, taking into consideration for the periods
presented foreign exchange variation by +/- 10%.
ILS GBP EURO
Variation Variation Variation
10% -10% 10% -10% 10% -10%
31 December 2024 ($'000)
Profit (loss) before tax 2,673 (2,430) (2,054) 1,867 (1,943) 1,767
Equity 2,059 (1,871) (1,582) 1,438 (1,496) 1,360
31 December 2023 ($'000)
Profit (loss) before tax 2,242 (2,052) (2,672) 2,429 (3,894) 3,540
Equity 1,727 (1,580) (2,057) 1,870 (2,999) 2,726
NOTE 23: - Financial Instruments (Cont.)
b. Credit risk:
Credit risk arises when a failure by counterparties to discharge their
obligations could reduce the amount of future cash inflows from financial
assets on hand at the reporting date. The Group has policies in place to
ensure that all of its transactions giving rise to credit risk are made with
parties having an appropriate credit history and monitors on a continuous
basis the ageing profile of its receivables.
Also, the Group has policies to limit the amount of credit exposure to any
banking institution, considering among other factors the credit ratings of the
banks with which deposits are held. Credit quality information in relation to
those banks is provided below.
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the reporting date, without
taking account of any collateral obtained, was:
2024 2023
$'000 $'000
Restricted cash 82,427 22,482
Trade and other receivables 114,501 123,344
Cash and cash equivalents and bank deposits 157,728 286,625
354,656 432,451
Credit quality of cash equivalents and bank deposits:
The credit quality of the banks in which the Group keeps its deposits is
assessed by reference to the credit rating of these banks. Moody's credit
ratings of the corresponding banks in which the Group keeps its deposits are
as follows:
2024 2023
$'000 $'000
A1 30 3
A3 - 309,097
Baa1 240,115 -
Baa2 6 -
Baa3 - 7
Cash 4 -
Total 240,155 309,107
The Company has assessed the recoverability of all cash balances and believes
they are carried within the Consolidated Statement of Financial Position at
amounts not materially different to their fair value.
c. Liquidity risk:
Liquidity risk is the risk that the Group will encounter difficulty in meeting
obligations associated with financial liabilities that are settled by
delivering cash or another financial asset.
The Group has procedures with the object of minimizing this risk such as
maintaining sufficient cash and other highly liquid current assets and by
having available an adequate amount of committed credit facilities.
The following tables detail the Group's remaining contractual maturity for its
financial liabilities. The tables have been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date on which the
Group can be required to pay. The table includes both interest and principal
cash flows.
The Group manages its liquidity risk by ongoing monitoring of its cash flows.
Group management prepares budgets and regular cash flow forecasts and takes
appropriately actions to ensure available cash balances.
On 11 July 2023, Energean Israel Finance Ltd completed the offering of US$750
million aggregate principal amount of senior secured notes series and repaid
its US$625 million notes series due in March 2024.
NOTE 23: - Financial Instruments (Cont.)
On February 2025 Energean Israel Finance Ltd has signed a 10-year,
senior-secured Term Loan with Bank Leumi Le-Israel B.M. as the Facility Agent
and Arranger for US$750 million. Refer to Note 24(B).
Carrying amounts Contractual cash flows 3 months or less 3-12 months 1-2 years 2-5 years More than 5 years
31 December 2024 ($'000) 2,857,545 3,879,257 228,755 139,124 847,484 977,846 1,686,049
Senior secured notes ((1)) 2,594,213 3,600,703 82,266 82,266 774,296 976,797 1,685,079
Lease liabilities 10,063 11,018 1,453 4,358 3,188 1,049 970
Trade and other payables - long term 61,758 70,000 - - 70,000 - -
Trade and other payables - short term 191,511 197,536 145,036 52,500 - - -
31 December 2023 ($'000) 2,916,032 4,135,421 228,708 156,284 1,086,808 876,716 1,786,905
Senior secured notes ((1)) 2,588,492 3,779,469 96,500 82,266 938,828 876,328 1,785,547
Lease liabilities 13,598 15,223 1,379 4,118 7,980 388 1,358
Deferred license payments ((2) 46,154 47,400 30,000 17,400 - - -
Trade and other payables - long term 117,796 140,000 - - 140,000 - -
Trade and other payables - short term 149,992 153,329 100,829 52,500 - - -
((1)) As of 31 December 2024, include short term accrued
interest of US$41,133 (31 December 2023: US$55,411). See Note 18.
((2)) Includes commitment to Karish and Tanin sellers, for
more information see Note 18(2)).
d. Capital risk management:
Capital includes equity shares and share premium. The Group manages its
capital structure and makes adjustments to it in light of changes in economic
conditions, in order to ensure that it will be able to continue as a going
concern while maximising the return to shareholders through the optimisation
of the debt and equity balance. To maintain or adjust the capital structure,
the Group may adjust the dividend payment to shareholders, return capital to
shareholders or issue new shares. The Group's overall objectives, policies and
processes remained unchanged from last year.
e. 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.
2024 2023
Book Value $'000 Fair value $'000 Book Value $'000 Fair value $'000
Senior Secured Notes (Note 16) 2,594,213 2,485,589 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.
f. 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 EPCIC contractor. 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 31 December 2024,
the Group recorded a derivative liability of US$0.3 million, and other
comprehensive gain of US$0.3 million, and US$0.4 million in finance expenses
related to this transaction during the reporting period.
NOTE 24: - Subsequent events
a) An interim dividend of US$33 million was declared and paid in January
2025 and an additional US$34 million was declared in March 2025.
b) Term Loan Signed for US$750 Million: In February 2025 Energean
Israel Finance Ltd signed a 10-year, senior-secured Term Loan with Bank
Leumi Le-Israel B.M. as the Facility Agent and Arranger for US$750 million.
The Term Loan will be available to refinance its 2026 senior secured notes
series and to provide additional liquidity for the Katlan development. It has
a 12-month availability period, during which multiple drawdowns can be made,
providing flexibility to optimise finance costs. Up to US$475 million is
available in US dollars and up to US$275 million is available in New Israeli
Shekel. The interest rate for the loan is floating and has been set at
competitive levels versus the current bond market. The Term Loan is secured on
the assets of the Group (including the Company's shares), pari passu with the
senior secured Notes (see Note 16), non-recourse to Energean plc and has a
bullet repayment in 2035.
c) The licence for Block 21 expired on 13 January 2025 and was not
extended.
d) Approximately US$2 billion binding term sheet signed with Dalia in
January 2025 for gas sales in Israel. The agreed terms are for the supply of
up to 0.1 bcm/year from April 2026, rising to up to 0.5 bcm/year from around
January 2030 and then at least 1 bcm/year from June 2035 onwards, and excludes
supply in the summer months between 2026-2034.The terms contain provisions
regarding floor pricing, take or pay and price indexation linked to CPI (not
Brent-price linked). The terms have been agreed at levels that are in line
with the other large, long-term contracts within Energean's portfolio.
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