REG - Energean PLC - Trading Statement & Operational Update

EnergeanAnnouncement

23/01/2025 07:00

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RNS Number : 3683U  Energean PLC  23 January 2025

 

Energean plc

("Energean" or the "Company")

 

Trading Statement & Operational Update

London, 23 January 2025 - Energean plc (LSE: ENOG, TASE: אנאג) is pleased
to provide an update on recent operations and the Group's trading performance
in the 12-months to 31 December 2024, together with guidance for 2025. The
numbers contained herein are unaudited and may be subject to further review
and amendment. Energean will release its 2024 full year results on 20 March
2025.

Mathios Rigas, Chief Executive Officer of Energean,
commented:

"2024 marked another year of growth for Energean in both sales and
profitability with Group revenues of $1,784 million and adjusted EBITDAX of
$1,166 million up 26% and 25% year-on-year, reflecting strong performance from
our core Israel operations. I am extremely proud of and grateful to our team
who have navigated through a very challenging geopolitical environment and
have succeeded in sustaining 99% uptime of our FPSO.

"Over the past year we have agreed more than $4 billion in new long-term gas
sales agreements in Israel, including the new ~$2 billion binding terms with
Dalia Energy Companies Ltd. ("Dalia"), underscoring our proven success in
securing long-term contracts, bringing the total contract value close to $20
billion. With the region's gas demand continuing to grow from increasing
electricity demand and the phasing out of coal, we are well positioned to add
new long-term agreements, including potential export contracts 1 , to further
grow sales. This aligns with Energean's strategy to secure long-term and
reliable cash flows in Israel from high credit quality counterparties.

"We have also made significant progress on our key strategic operations,
including the Katlan development, which is progressing on schedule for first
gas in H1 2027, the commissioning of the second oil train on our FPSO, and the
Prinos Carbon Storage project, which has been formally approved within the
Recovery and Resilience Facility bringing us closer to accessing the EUR 150
million funding. In addition, we have agreed terms with Bank Leumi for the
refinancing of the Energean Israel 2026 Notes, extending our near-term debt
maturity at competitive pricing compared to the current bond market.

"Completion of the Carlyle Transaction is a key priority for this quarter.
Post-close, we will have the balance sheet strength to evaluate and execute
new opportunities across a wider geographical scope,  focusing on deep-value
transactions that fit Energean's key business drivers: paying a reliable
dividend, deleveraging, growth, and our commitment to Net Zero. Our core
Israel assets provide an excellent foundation on which to build future
growth."

Operational Highlights

·      2024 Group and continuing operations(2) production in line with
guidance:

o  Group production for the period was 153 kboed (83% gas), a 24% increase
year-on-year (FY23: 123 kboed) and in line with guidance (as at Nov 2024) of
150-155 kboed. Production from the continuing operations 2  for the period was
114 kboed (85% gas), a 28% increase year-on-year (FY23: 89 kboed) and at the
upper end of guidance (as at Nov 2024) of 110-115 kboed.

o  In Israel, FPSO uptime 3  remains high (excluding planned shutdowns) at
99% for the 12-months to 31 December 2024.

·      Katlan (Israel) development progressing on schedule, with first
gas on track for H1 2027:

·      Prinos Carbon Storage project in Greece progressing across
various workflows, including FEED, allowing the transition of Prinos into a
new decarbonisation hub:

o  In December, the Greek Government formally approved the project's
inclusion within the Recovery and Resilience Facility and confirmed the
allocation of the EUR 150 million grant. In Q4 EnEarth, the 100% owned
subsidiary of Energean focused on carbon storage, applied for funding under
the EU Connecting Europe Facility to seek support for the development of a
liquid CO(2) receiving terminal.

·      Group Scope 1 and 2 emissions intensity of 8.4 kgCO2e/boe, a 10%
reduction (FY 2023: 9.3 kgCO2e/boe). Scope 1 and 2 emissions intensity for the
continuing operations(2) was 7.0 kgCO2e/boe.

Financial and Commercial Highlights

·      Strong financial performance with year-on-year growth in sales
and profitability:

o  Revenues for the period were $1,784 million, a 26% increase (FY 2023:
$1,420 million), of which $1,316 million is associated with the continuing
operations(2).

o  Adjusted EBITDAX for the period was $1,166 million, a 25% increase (FY
2023: $931 million), of which $888 million is associated with the continuing
operations(2).

·      ~$2 billion binding term sheets signed with Dalia in January 2025
for gas sales in Israel:

o  The agreed terms are for the supply of up to 0.1 bcm/yr from April 2026,
rising to up to 0.5 bcm/yr from around January 2030 and then at least 1 bcm/yr
from June 2035 onwards, and excludes supply in the summer months 4  between
2026-2034. This represents ~$2 billion in revenues over ~18 years and up to 12
bcm in total supply.

o  The terms contain provisions regarding floor pricing, take or pay and
price indexation linked to CPI (not Brent-price linked).

o  The terms have been agreed at levels that are in line with the other
large, long-term contracts within Energean's portfolio.

·      Terms agreed for a $750 million term loan with Bank Leumi to
refinance the $625 million 2026 Energean Israel Notes, which will remove the
near-term debt maturity and increase the weighted average maturity by over 2
years to ~7 years.

·      Group leverage (net debt/adjusted EBITDAX) decreased to 2.5x (FY
2023: 3x):

o  Group cash as of 31 December 2024 was $321 million, including restricted
amounts of $85 million, and total liquidity was $447 million 5 . This includes
cash for the continuing operations(2) of $268 million, including restricted
amounts of $85 million, and total liquidity of $394 million.

·      Shareholder distributions for the period were $220 million (FY
2023: $214 million), bringing the total returns to shareholders since payments
began to $541 million, over half of the Group's target to return $1 billion to
shareholders by the end of 2025.

Carlyle Transaction Update

·      Strategic sale of the Egypt, Italy and Croatia portfolio
("Transaction") to an entity controlled by Carlyle International Energy
Partners expected to complete in Q1 2025, subject to customary regulatory
approvals:

o  In December, Carlyle received unconditional clearance from the Common
Market for Eastern and Southern Africa ("COMESA") Competition Commission,
which was the final remaining anti-trust approval.

o  Energean continues to expect 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.

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.

Financials

                                                                  FY 2024          FY 2023          Increase/ (Decrease) %      FY 2024                    FY 2023                       Increase/ (Decrease) %

                                                                  Energean Group   Energean Group                               continuing operations(2)   continuing operations(2)
 Average working interest production (kboed)                      153              123              24%                         114                        89                            28%
 Sales revenue ($m)                                               1,784            1,420            26%                         1,316                      978                           35%
 Cash cost of production per barrel (including royalties; $/boe)  10               11               (9%)                        9                          9                             0%
 Cash SG&A ($m)                                                   37               31               19%                         20                         19                            5%
 Adjusted EBITDAX ($m)                                            1,166            931              25%                         888                        667                           33%
 Development and production expenditure ($m)                      574              487              18%                         328                        184                           78%
 Exploration expenditure ($m)                                     112              57               97%                         71                         29                            145%
 Decommissioning expenditure ($m)                                 44               19               132%                        13                         9                             44%
                                                                                                                  31 December 2024                                        31 December 2023

                                                                                                                  Energean Group                                          Energean Group
 Net debt ($m) (including restricted cash)                                                                        2,949                                                   2,849
 Leverage (net debt / adjusted EBITDAX)                                                                           2.5x                                                    3x

 

Production

                                 FY 2024  FY 2023  % change

                                 Kboed    Kboed
 Israel                          112      87       29%
 Europe                          1.8      1.7      9%
 Total continuing operations(2)  114      89       28%
 Disposal Group                  40       34       18%
 Total Group production          153*     123      24%

*Numbers may not sum due to rounding

2025 Guidance & Outlook

Energean expects the following for the year ahead for its continuing
operations(2):

·      To sign a 10-year term loan agreement with Bank Leumi for up to
$750 million, which will be available to refinance the 2026 Energean Israel
Limited Notes and to provide additional liquidity for the Katlan development.
Energean expects this to be a floating rate loan with competitive pricing
versus the current bond market and a 12-month availability period.

·      To sign new long-term gas contracts to supply growing domestic
and regional demand.

·      Continued growth in Israel gas sales resulting in a 10%
year-on-year increase in working interest production based on the mid-point of
2025 guidance of 120-130 kboed,  which includes a number of planned shut-down
days.

o  This range is weighted towards H2 and is based on actual Israel sales in
2024 plus a step-up in contracted gas volumes in 2025 under Energean's
long-term Israel gas contracts.

o  The one-off planned shutdowns in Israel are for development activities,
such as the completion of the second oil train installation in H1 and FPSO
topside works for the Katlan development in H2, along with routine
maintenance.

·      2025 cost of production (including royalties) at $410-440
million, with absolute operating costs broadly flat year-on-year and the range
primarily reflecting production-linked royalties.

·      2025 development and production capital expenditure to be between
$400-430 million:

o  Of this, $380-400 million is in Israel (which includes around $50 million
of underspend carried over from 2024). The vast majority of this expenditure
is associated with the Katlan development, while the remainder is for the
completion of the second oil train and other asset integrity and maintenance
expenditure.

o  $20-30 million in Europe includes infill drilling on the Scott field in
the UK (W.I. 10%; non-operated) as well as other routine annual maintenance
costs in the UK and Greece.

·      2025 decommissioning expenditure of $55-65 million, all of which
is associated with the UK and reflecting the peak year of spend for the
decommissioning of the Tors (W.I. 68%; operated) and Wenlock (W.I. 80%;
operated fields.

·      Minimal 2025 exploration expenditure of $0-5 million as prospects
for potential 2026 drilling continue to be matured.

Full Year 2025 guidance

                                                                      Continuing operations(2)
 Total production (kboed)                                             120 - 130
 Consolidated net debt ($ million)                                    2,700 - 2,900
 Cash Cost of Production (operating costs plus royalties; $ million)  410 - 440
 Cash SG&A ($ million)                                                20 - 30
 Development & production capital expenditure ($ million)             400 - 430
 Exploration expenditure ($ million)                                  0 - 5
 Decommissioning expenditure ($ million)                              55 - 65

 

Conference call

A webcast will be held today at 08:30 GMT / 10:30 Israel Time.

Webcast:
https://sparklive.lseg.com/events/c8fafd63-39cf-4161-9e62-22e96ba0c4f9
(https://urldefense.com/v3/__https:/sparklive.lseg.com/events/c8fafd63-39cf-4161-9e62-22e96ba0c4f9__;!!GvC3Dl69FG1X3k3XzQ!Y6JoxeR8XNzXskgBcQ1xUbamvyIQfOURu8cMucshbTalMY-FGKZ4TyXZ9BGqNDh5-wvEnNd-gT1TY6ZI_E17$)

 

Conference call registration: https://registrations.events/direct/LON80742925
(https://urldefense.com/v3/__https:/registrations.events/direct/LON80742925__;!!GvC3Dl69FG1X3k3XzQ!Y6JoxeR8XNzXskgBcQ1xUbamvyIQfOURu8cMucshbTalMY-FGKZ4TyXZ9BGqNDh5-wvEnNd-gT1TY_dV0Ho4$)
(Please note, once you register for the conference call line you will receive
your unique dial-in details and passcode.)

The presentation slides will be made available on the website shortly at
www.energean.com (http://www.energean.com/) .

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  Subject to the issuance of an export permit by the Petroleum Commissioner
and compliance with any governmental export policy.

 2  On 20 June 2024, the Group publicly announced that it has entered into a
binding agreement for the sale of 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.

 3  Uptime is defined as a percentage of the number of hours in a day that the
Energean Power FPSO was operating.

 4  Summer months defined as between June to September.

 5  Available liquidity includes amounts available under the Revolving Credit
Facilities ("RCF").

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