REG - Energean PLC - Morocco Country Entry

EnergeanAnnouncement

07/12/2023 07:00

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RNS Number : 9532V  Energean PLC  07 December 2023

 

 Energean plc

("Energean" or the "Company")

 

 

Morocco Country Entry and Farm In to Gas Development

London, 7 December 2023 - Energean plc (LSE: ENOG, TASE: אנאג) is pleased
to announce that it has farmed into Chariot Limited's ("Chariot", AIM:CHAR)
acreage offshore Morocco, which includes the 18 Bcm (gross) Anchois gas
development and significant exploration prospectivity. This new country entry
is well-aligned with Energean's strategy to become the pre-eminent independent
producer in the Mediterranean, with a focus on high quality gas assets.

Highlights:

·      New country entry in Energean's core Mediterranean region with
acreage underpinned by an attractive gas development

·      Farm in to 45% of the Lixus licence, with the option to increase
to 55% post drilling results, and 37.5% of the Rissana licence and assumes
operatorship of both licences

·      Includes the commercial 18 Bcm (gross) Anchois development,
located near to infrastructure for supply of gas to domestic and international
markets

·      Up front cash consideration of $10 million

·      Appraisal well planned for 2024, targeting an additional 11 Bcm
of gross unrisked prospective resource to be commercialised through the
Anchois development

·      Energean to carry Chariot for its share of pre-FID costs, which
are recoverable from Chariot's future revenues

·      Significant additional near-field, near-infrastructure
prospectivity that is expected to add attractive, balanced-risk growth
potential

Dr Leila Benali, Minister of Energy Transition and Sustainable Development,
commented:

"This agreement is pivotal for the wider acreage offshore Morocco, on its
Atlantic coast, a key energy asset for the Kingdom. We welcome Energean on
these licences as the important investments will contribute greatly to the
monetisation of the country's resources and to our ambitious energy strategy."

Mrs Amina Benkhadra, General Director Office National des Hydrocarbures et des
Mines, ("ONHYM")  commented:

"I would like to congratulate both parties on signing this agreement. The
discovery and extensive work to date has set an excellent foundation on which
the project can be developed and this partnership will now be instrumental in
financing and taking it through the next phase. We look forward to working
alongside Energean and Chariot in bringing the project to first gas."

Mathios Rigas, Chief Executive Officer of Energean, commented:

"This is an exciting step in the next stage of our development, one that can
only enhance our position as the pre-eminent independent natural gas producer
listed in London. These assets are particularly attractive as we understand
the core geological, commercial and political drivers of the region, we have a
track record in developing material gas resources prioritised for the domestic
market and they are a complementary fit with our broader portfolio, not least
the potential for surplus supply to other markets. We look forward to working
with our partners Chariot and ONHYM, and developing an outstanding resource
for the benefit of all parties, including Morocco and its people."

Adonis Pouroulis, Chief Executive Officer of Chariot, commented:

"In Energean, we have secured a partner with a proven track record of rapidly
building and delivering this kind of offshore development. Energean also
shares our view that Anchois and its surrounding acreage offers significant
upside potential and we are aligned with our plans moving forward. The new
partnership is a key step in bringing the development of the Anchois field to
reality and we are looking forward to continuing the extensive work undertaken
so far to reach Final Investment Decision."

Assets

Energean has agreed to farm into a 45% working interest in the Lixus offshore
licence, which contains the Anchois gas development (Chariot 30%, ONHYM 25%),
and a 37.5% working interest in the Rissana licence (Chariot 37.5%, ONHYM
25%). Energean will assume operatorship for both licences.

Farm in terms

As consideration for the interests in the licences, Energean has agreed to the
following terms:

·      $10 million cash consideration on closing of the transaction

·      Energean agrees to carry Chariot for its share of pre-FID costs
(which are recoverable from Chariot's future revenues, see terms below), up to
a gross expenditure cap of $85 million, covering:

o  drilling of the appraisal well; and

o  all other pre-FID costs; and

o  up to $7 million of seismic expenditure on the Rissana licence.

·      $15 million in cash, which is contingent on FID being taken on
the Anchois Development.

Post appraisal well option to increase working interest from 45% to 55%

Following the drilling of the appraisal well, Energean has the option to
increase its working interest in the Lixus licence (which includes the Anchois
development) by 10%, to 55%. On exercise of this option, the amount payable
would be:

·      Chariot's choice between either:

i.    5-year, $50 million of convertible loan notes with a GBP20 strike
price and 0% coupon; or

ii.   3 million Energean plc shares, issued immediately upon exercise of the
option but subject to a lock-up period until the earlier of first gas and 3
years post FID

·      Energean will pay to Chariot a 7% royalty for every dollar
achieved on gas prices (post transportation costs) in excess of a base hurdle

·      An agreement to carry Chariot's 20% share of development costs
for the Anchois development with the following terms:

o  A net expenditure cap of $170 million

o  The carry available for development costs is reduced by costs carried in
the pre-FID phase

o  All carried amounts are recoverable from 50% of Chariot's future revenues
with interest charged at SOFR + 7%

If the option is not exercised, subject to FID, the partners agree to progress
the Anchois development with an ownership structure of Energean 45%, Chariot
30%, ONHYM 25%. All amounts carried by Energean on behalf of Chariot would be
recoverable from Chariot's future revenues under the same terms as above.

The completion of the transaction is subject to government approval.

Lixus licence and Anchois Development

The Lixus Offshore licence covers an area of approximately 1,794 km2 with
water depths ranging from the coastline to 850 m. The area has extensive data
coverage with legacy 3D seismic data covering approximately 1,425 km2 and five
exploration wells have been drilled historically, including the Anchois-1 and
Anchois-2 discovery wells.

Chariot's latest competent persons report covering the Anchois Field has
certified gross 2C contingent resources of 18 Bcm in the discovered gas sands
and gross unrisked prospective resources of 21 Bcm in undrilled sands.

Energean and Chariot plan to drill an appraisal well in 2024, with the
following objectives:

·      To undertake a drill stem test on the main gas-containing sands

·      To target an additional 5 Bcm of recoverable gas with a 61%
geological chance of success through a sidetrack into the O sands in the
Anchois Footwall prospect

·      To target an additional 6 Bcm of recoverable gas with a 49%
geological chance of success through a deepening of the well into previously
undrilled sands in the Anchois North Flank prospect

Once drilled, the well is expected to be retained as a future producer for the
Anchois development.

It is anticipated that the licence contains significant additional
prospectivity that could allow for further balanced-risk, near-field
exploration activity.

Enquiries

 

For capital markets: ir@energean.com (mailto:ir@energean.com)

 

Kate Sloan, Head of IR and
M&A
                   Tel: +44 7917 608 645

 

For media: pblewer@energean.com (mailto:pblewer@energean.com)

 

Paddy Blewer, Head of Corporate
Communications
Tel: +44 7765 250 857

 

Forward looking statements

This announcement contains statements that are, or are deemed to be,
forward-looking statements. In some instances, forward-looking statements can
be identified by the use of terms such as "projects", "forecasts", "on track",
"anticipates", "expects", "believes", "intends", "may", "will", or "should"
or, in each case, their negative or other variations or comparable
terminology. Forward-looking statements are subject to a number of known and
unknown risks and uncertainties that may cause actual results and events to
differ materially from those expressed in or implied by such forward-looking
statements, including, but not limited to: general economic and business
conditions; demand for the Company's products and services; competitive
factors in the industries in which the Company operates; exchange rate
fluctuations; legislative, fiscal and regulatory developments; political
risks; terrorism, acts of war and pandemics; changes in law and legal
interpretations; and the impact of technological change. Forward-looking
statements speak only as of the date of such statements and, except as
required by applicable law, the Company undertakes no obligation to update or
revise publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. The information contained in this
announcement is subject to change without notice.

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