REG - Energean PLC - Trading Statement & Operational Update

EnergeanAnnouncement

28/11/2024 07:00

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RNS Number : 9332N  Energean PLC  28 November 2024

 

Energean plc

("Energean" or the "Company")

 

Trading Statement & Operational Update

London, 28 November 2024 - Energean plc (LSE: ENOG, TASE: אנאג) is pleased
to provide the following update on recent operations and the Group's trading
performance in the nine-months to 30 September 2024. The numbers contained
herein are unaudited and may be subject to further review and amendment.

Mathios Rigas, Chief Executive Officer of Energean,
commented:

"We are pleased to announce another strong quarter, marked by a 61%
year-on-year increase in adjusted EBIDTAX from our continuing operations 1 
(#_ftn1) . Our production in Israel remains unaffected by geopolitical events,
recording a 39% year-on-year increase, and we welcome the announcement of the
ceasefire in Lebanon.

"Our operations continue to deliver energy security to Israel and the broader
region through the optimisation of production from our FPSO, which has been
operating at 99% uptime 2  (#_ftn2) , underscoring our operational resilience.
Progress on key development projects have also been robust: the Katlan area in
Israel remains on schedule and the second oil train has been installed on the
FPSO. Upon commissioning, the second oil train will increase the liquids
production capacity, supporting enhanced operational performance.

"The targeted sale of our Egypt, Italy and Croatia portfolio (the
"Transaction") to an entity controlled by Carlyle International Energy
Partners ("Carlyle") is on track for completion by or just after year-end
2024, supporting our focus on core assets, deleveraging, and delivering
incremental shareholder returns.

"Additionally, our Prinos carbon storage project in Greece, now recognised as
an EU Project of Common Interest, has secured material funding from the Greek
Recovery and Resilience Facility ("RRF").

"Energean is committed to delivering on its strategic priorities: operational
excellence, maximising shareholder value, and broader sustainability
objectives. A key pillar of our strategy is ensuring a reliable dividend,
supported by our focus on securing long-term cash flows that are independent
of commodity price fluctuations. We are also pleased to declare today another
quarterly dividend, bringing the total distributed to shareholders since the
announcement of our policy in 2022 to $541 million."

Operational Highlights

·      Group production for the period was 156 kboed (83% gas), a 31%
increase year-on-year (nine-months 2023: 119 kboed). Production from the
continuing operations(1) for the period was 117 kboed (85% gas), a 40%
increase year-on-year (nine-months 2023: 84 kboed).

o  In Israel, FPSO uptime(2) (excluding planned shutdowns) was 99% for the
nine-months to 30 September 2024. Q3 production averaged 135 kboed.

o  Day-to-day production remains unimpacted by the ongoing geopolitical
developments.

·      Post-period end in October, the second oil train (Israel) lift
was safely and successfully performed.

o  Post-lift, installation and commissioning activities are expected to take
up to 6-months to complete, which will result in an increase in liquids
production capacity.

·      Katlan (Israel) development progressing on schedule, with first
gas expected in H1 2027 as previously announced.

o  Energean is planning the drilling campaign for 2026, which will include
the Athena and Zeus development wells plus options for further exploration and
appraisal.

·      Prinos carbon storage project (Greece) Front-End Engineering
Design activities progressing:

o  NSAI CPR confirmed an annual storage capacity of up to 3 million tonnes
and a total project-life capacity of 66 million tonnes (2C contingent) of CO2.

o  In October, the European Commission approved, under EU state aid rules,
the EUR 150 million grant from the Greek RRF to support the maturation and
development of the first phase of the project, allowing the transition of
Prinos into a new decarbonisation hub.

o  In addition EnEarth, the 100% owned subsidiary of Energean focused on
carbon storage, has applied for funding under the Connecting Europe Facility.

·      20% reduction in Tors and Wenlock (UK) total decommissioning
expenditure expected following the takeover by Energean as operator and
signing of the Petrodec UK Limited ("Petrodec") contract 3  (#_ftn3) ; UK
production has outperformed expectations year-to-date.

·      Group Scope 1 and 2 emissions intensity of 9.0 kgCO2e/boe, a 7.1%
reduction (nine-months 2023: 9.7 kgCO2e/boe). Scope 1 and 2 emissions
intensity for the continuing operations(1) was 7.2 kgCO2e/boe.

Financial and Strategic Highlights

·      Revenues for the period were $1,363 million, a 35% increase
(nine-months 2023: $1,016 million), of which $1,033 million is associated with
the continuing operations(1).

·      Adjusted EBITDAX for the period was $894 million, a 44% increase
(nine-months 2023: $623 million), of which $706 million is associated with the
continuing operations(1).

·      Group leverage 4  (#_ftn4) (net debt/annualised adjusted EBITDAX)
maintained at 2.5x versus 30 June 2024 (2.5x) and lowered versus 31 December
2023 (3x).

o  Group cash as of 30 September 2024 was $284 million, including restricted
amounts of $5 million, and total liquidity was $443 million 5  (#_ftn5) . This
includes cash for the continuing operations(1) of $272 million, including
restricted amounts of $5 million, and total liquidity of $431 million(5).

·      Strategic sale of the Egypt, Italy and Croatia portfolio to an
entity controlled by Carlyle targeted to complete by or just after year-end
2024, subject to customary regulatory and antitrust approvals, which are
currently underway with a number having already been obtained.

o  UK carve out from the Transaction perimeter has been successfully
completed.

o  Energean expects to have sufficient proceeds to redeem the $450 million
PLC Corporate Bond or to fund growth opportunities or a combination of both,
in accordance with the terms of its financing documents.

o  Energean also continues to expect to have sufficient funds to facilitate a
special dividend of up to $200 million.

·      Energean intends to refinance its 2026 Energean Israel Limited
bond and is evaluating a range of options to maintain an efficient capital
structure, freeing up liquidity for its Katlan development and growth
strategy.

·      Q3 2024 dividend of 30 US$ cents/share declared today, scheduled
to be paid on 30 December 2024 6  (#_ftn6) .

o  Including the Q3 2024 dividend, approximately $541 million will have been
returned to shareholders since payments began, over half of the Group's target
to return $1 billion to shareholders by the end of 2025.

o  The Group expects to redefine its dividend policy upon Transaction
closing, consistent with its core objectives of capital discipline and
maximising returns to shareholders.

Outlook

·      2024 Group production guidance updated to 150-155 kboed (from
155-165 kboed), of which 110-115 kboed is associated with the continuing
operations(1). This reduction is due to Israel, which reflects lower than
expected sales in November owing to weather conditions and market dynamics
and, for the lower end, an assumption of flat month-on-month sales for
December.

·      2024 Group exploration reduced to $95-120 million (from $115-150)
million, of which $60-75 million is associated with the continuing
operations(1), reflecting actual spend associated with the recent drilling
operations in Morocco.

·      2025 guidance will be provided in January 2025 when Energean
issues its next Trading Statement & Operational Update.

 

Production

                                 Nine-months to 30 September 2024  Nine-months to 30 September 2023  % change  Ten-months to 31 October 2024

                                 Kboed                             Kboed                                       Kboed
 Israel                          115                               83                                39%       112*
 Europe                          2.0                               1.6                               25%       1.9
 Total continuing operations(1)  117                               84 7  (#_ftn7)                    40%       114
 Disposal Group                  39                                34                                15%       39
 Total Group production          156                               119(7)                            31%       153

*October figure reflects the scheduled FPSO shutdown for the second oil train
lift.

 

Financials

                                                                  30 Sept '24      30 Sept '23      Increase/ (Decrease) %  30 Sept '24                30 Sept '23                Increase/ (Decrease) %

                                                                  Energean Group   Energean Group                           continuing operations(1)   continuing operations(1)
 Sales revenue ($m)                                               1,363            1,016            35%                     1,033                      682                        51%
 Cash cost of production per barrel (including royalties; $/boe)  10               11               (9)%                    9                          10                         (10)%
 Cash G&A ($m)                                                    27               26               4%                      15                         12                         25%
 Adjusted EBITDAX ($m)                                            894              623              44%                     706                        439                        61%
 Development and production expenditure ($m)                      477              423              13%                     248                        207                        20%
 Exploration expenditure ($m)                                     85               25               254%                    61                         21                         191%
 Decommissioning expenditure ($m)                                 25               3                380%                    11                         2                          450%

 

                                            30 September 2024  30 June 2024

                                            Energean Group     Energean Group
 Net debt ($m) (including restricted cash)  2,965              2,902
 Leverage(4) (net debt / adjusted EBITDAX)  2.5x               2.5x

 

Full Year 2024 guidance*

                                                                      Group                       Continuing operations(1)
 Total production (kboed)                                             150 - 155 (from 155 - 165)  110 - 115 (from 115 - 125)
 Consolidated net debt ($ million)                                    2,900 - 3,000               -
 Cash Cost of Production (operating costs plus royalties; $ million)  550 - 600                   375 - 405
 Development & production capital expenditure ($ million)             600 - 700                   320 - 380
 Exploration expenditure ($ million)                                  95 - 120 (from 115 - 150)   60 - 75 (from 80 - 105)
 Decommissioning expenditure ($ million)                              40 - 50                     15 - 20

*Unchanged unless otherwise noted.

Enquiries

 

 For capital markets: ir@energean.com (mailto:ir@energean.com)
 Kyrah McKenzie, Investor Relations Manager                         Tel: +44 (0) 7921 210 862

 For media: pblewer@energean.com (mailto:pblewer@energean.com)
 Paddy Blewer, Corporate Communications Director & Head of CSR      Tel: +44 (0) 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.

 

 

 1  (#_ftnref1) On 20 June 2024, the Group publicly announced the decision of
its Board of Directors to sell its portfolio in Egypt, Italy and Croatia
(together referred to as "Energean Capital Limited Group" or "ECL"), fully
owned and controlled by the Group. The continuing operations comprises of the
Group's remaining operations in Israel, Greece, UK and Morocco.

 2  (#_ftnref2) Uptime is defined as a percentage of the number of hours in a
day that the Energean Power FPSO was operating.

 3  (#_ftnref3) The Petrodec contract includes: the plugging and abandoning of
eight platform wells with optional scope for one E&A well, the removal of
three platforms and the cleaning of inter-field pipelines.

(( 4  (#_ftnref4) )) Nine-months 2024 leverage based upon nine-months 2024
annualised adjusted EBITDAX. Six-months 2024 leverage based upon six-months
2024 annualised adjusted EBITDAX.

 5  (#_ftnref5) Available liquidity includes amounts available under the
Revolving Credit Facilities.

 6  (#_ftnref6) Payment date is stated as the date upon which payment is
initiated by Energean.

 7  (#_ftnref7) Numbers may not sum due to rounding.

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