REG - Energean PLC - Trading Statement & Operational Update

EnergeanAnnouncement

Thu 07:00

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RNS Number : 6864J  Energean PLC  22 May 2025

 

Energean plc

("Energean" or the "Company")

 

Trading Statement & Operational Update

London, 22 May 2025 - Energean plc (LSE: ENOG, TASE: אנאג) is pleased to
provide the following update on recent operations and the Group's trading
performance in the 3-months to 31 March 2025, together with updated Group
guidance for 2025, an outlook on the Egypt, Italy and Croatia portfolio, and
confirmation of the regular ongoing quarterly dividend. 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 continue to safely operate as a diversified, gas-focused
independent E&P company in the Mediterranean, holding over a billion
barrels of oil equivalent with a 2P reserves life of 19 years. During the
quarter, we produced an average of 145 kboed, with a maximum of 180 kboed.
This is a differentiated business that has secured around $20 billion in
contracted revenues 1  from our Israeli customers alone, generating steady and
predictable cashflows that provide a solid foundation that insulates Energean
from market volatility and underpins our regular quarterly dividend of 30 US
cents/share.

 

"Our operating costs remain low at $6/boe 2 , proving the effectiveness and
efficiency of Energean as a deepwater operator. In Israel, the Energean Power
FPSO continues to perform reliably, recording 96% uptime 3  to end-April, the
second oil train project is progressing towards completion in late Q2 2025,
Katlan is on track and on budget for first gas in H1 2027, and we intend to
book capacity in the new Nitzana pipeline to secure midstream capacity for gas
exports. We also have additional opportunities within the existing portfolio
via our yet-to-be-developed Tanin and Arcadia areas to further extend the
production life.

 

"Outside of Israel, in Greece we are making good progress in the transition of
our Prinos asset into the first carbon storage project in the East
Mediterranean. In Egypt, we are working with the government to optimise the
terms of our offshore licenses whilst preparing to drill our low-cost onshore
East Bir El Nus ("EBEN") Concession, and in Italy, we are seeking
authorisation from the government for the low-risk infrastructure-led Vega
West opportunity, with the aim to increase production, optimise cash flows and
extend the asset life.

 

"Finally, we are actively assessing M&A opportunities in addition to a
number of organic growth options, with strict capital discipline, within the
broader Europe, Middle East and Africa ("EMEA") region to drive a new growth
trajectory and repeat our development and production success in the East
Mediterranean, in an expanded region"

Operational Highlights

·      Production for the period was 145 kboed (84% gas), a 2% increase
versus Q1 2024 (142 kboed), peaking at 180 kboed during periods of high demand
in Israel.

o  Production in Israel was flat year-on-year, with higher sales in January
and February relative to 2024 offset by the planned shutdown in March for
essential works prior to the commissioning of the second oil train.

o  Group production excluding Israel increased 9% year-on-year, primarily due
to Cassiopea volumes in Italy offsetting natural decline in Egypt.

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

o  Post-period end, a Letter of Award was granted to NOV Inc. for the upgrade
of the FPSO topsides related to MEG treatment, injection and storage.
Including this, all the major Katlan contracts will have now been agreed on
budget in line with the $1.2 billion Final Investment Decision announcement
made by Energean in July 2024.

o  Energean confirms its intention to book capacity in the new onshore
Nitzana export pipeline to boost sales. Volumes from the Katlan lease carry no
export restrictions 4 .

·      Prinos CO2 project advancing to create a new decarbonisation hub:

o  Three new non-binding memorandums of understanding ("MoUs") signed,
bringing the total MoUs signed to 15, totalling 6.12 million tonnes p.a. of
storage.

o  Environmental and Social Impact Assessment Public Consultation closed,
with positive approvals; storage and environmental permit expected to be
received in the coming months.

o  First instalments of the Recovery and Resilience Facility ("RRF") and
Connecting Europe Facility expected imminently.

o  Initial drilling and well testing campaign, funded by the RRF, targeted in
2026.

·      Lost Time Injury Frequency of 0.35 and Total Recordable Injury
Rate of 0.35, well below the Group's full year targets.

·      Scope 1 and 2 emissions intensity of 8.2 kgCO2e/boe, a 9%
reduction (Q1 2024: 9.0 kgCO2e/boe).

Financial Highlights

·      Revenues for the period were $407 million, a marginal decrease
versus Q1 2024 ($413 million), predominantly impacted by an underlift of
liquids in Greece and the UK, offset by an increase in gas revenues in Italy.

·      Adjusted EBITDAX for the period was $278 million, a 7% increase
versus Q1 2024 ($259 million) due to favourable inventory movements reflecting
the timing of production and sales.

·      Group cash as of 31 March 2025 was $265 million and Group
liquidity was $946 million, which includes multiple available liquidity lines.

·      Group net debt as of 31 March 2025 was $3,079 million, a 4%
increase versus 31 December 2024 due primarily to the close out of
exploration-related payables in Morocco and Egypt (North East Hap'y), the
start of corporate tax payments in Israel, and an increase of receivables in
Egypt.

Corporate and Commercial Highlights

·      Q1 2025 dividend of 30 US cents/share declared today, scheduled
to be paid on 30 June 2025 5 .

·      Continuation of ongoing quarterly dividend confirmed, subject to
quarterly Board approval:

o  Energean has paid a regular quarterly dividend of 30 US cents/share (~$55
million) since September 2022, returning $650 million(( 6 )) (360 US$
cents/share) to shareholders to date.

·      Over $4 billion of new gas sales agreed in Israel, in line with
the Group's target to sign new long-term gas contracts. This brings the total
contracted revenues over a 20-year period to around $20 billion.

·      Energean's interest in the Lixus and Rissana licences (Morocco)
transferred to Chariot Limited, removing further liabilities or obligations in
the country.

 

Egypt, Italy and Croatia Update & Outlook

·      Working interest production from the Group's Egypt, Italy and
Croatia portfolio averaged 44 kboed in Q1 2025, with all previously sanctioned
developments (NEA/NI, Location B, Cassiopea) and infill well drilling activity
(Egypt and Italy) now completed.

·      Looking ahead, Energean is focused on optimising the cost and
efficiency of its operations to maximise free cash flow. In addition, there
are a number of areas of growth identified within this portfolio, including:

o  Egypt: merger of its offshore concessions to streamline the fiscal terms
and extend the economic life of the fields. Additionally, there are potential
debottlenecking projects, and near-field infill drilling opportunities around
the low-cost operated Abu Qir hub, where Energean has over 30 mmboe of 2C
resources 7 , similar to the successful Location B well completed last year.

o  Italy: where a number of near-field and near-infrastructure investment
opportunities have been identified, including Vega West.

o  Croatia: which contains the offshore Irena development (24 Bcf 2P
reserves 8 ).

o  Energean notes that no firm investment decisions have been made on the
above and will provide an update in due course.

2025 Guidance & Outlook

Energean expects the following for the year ahead for the Group:

·      Production guidance of 155-165 kboed, refined from an indicative
guidance of 160-175 kboed, now incorporating the wider portfolio, noting that
the past months have been impacted by uncertainty around the strategic
sale 9 , and reflecting actual performance of the Group year-to-date.

·      Cost of production (including royalties) between $590-640 million
(~$10/boe) reflecting lower expected royalties.

·      Development and production capital expenditure to be between
$480-520 million:

o  Israel guidance unchanged at $380-400 million 10 .

o  $100-120 million for the rest of the portfolio, over half of which is
associated with development activities in Italy.

·      Exploration expenditure guidance unchanged including the retained
portfolio.

o  Energean has a number of exploration opportunities for future maturation.
This includes:

§ The onshore EBEN concession in Egypt for its low-cost drilling activities
(internal risked pre-drill estimates of ~90 mmbbl prospective resources).

§ Abu Qir, also in Egypt, where internal risked pre-drill estimates of ~425
Bcf 11  prospective resources have been identified.

§ The offshore Block 2 prospect in western Greece, where Energean is seeking
a farm-in partner, which contains initial risked internal pre-drill estimates
of ~700 Bcf.

·      Decommissioning expenditure of $80-100 million, $55-65 million of
which is unchanged UK guidance and the remainder is in Italy.

·      Year-end 2025 net debt is expected to be $2,800-3,000 million,
reflecting the full-year outlook on Egypt receivables collection.

·      Investment decision updates on the opportunities identified and
discussed within this Operational Update, which target to maximise free cash
flow and drive further growth.

·      Growth opportunities to be evaluated across the EMEA region with
continued capital discipline:

o  While we remain focused on our core Mediterranean area, we are also
actively assessing growth opportunities in the wider EMEA region where we see
significant potential for experienced operators like Energean to commercialise
gas assets and;

o  That are dividend accretive, meet Energean's deleveraging targets, achieve
its growth objectives and contribute to the Group's Net Zero target.

Production

                    Three-months to 31 March 2025   Three-months to 31 March 2024  Three months to 31 March 2024-25 % change

                    Kboed                           Kboed
 Israel             98                              99                             (1%)

                     (inc. 1.2 bcm of sales gas)    (inc. 1.2 bcm of sales gas)
 Rest of portfolio  47                              43                             9%
 Total production   145                             142                            2%

 

Financials

                                                           Three months to 31 March 2025   Three months to 31 March 2024   % change
 Sales and other revenue                        $ million  407                             413                             (1%)
 Cash cost of production (including royalties)  $ million  135 (includes 52 of royalties)  131 (includes 51 of royalties)  3%
 Cash cost of production (including royalties)  $/boe      10 (includes 4 of royalties)    10 (includes 4 of royalties)    0%
 Cash G&A                                       $ million  12                              10                              20%
 Adjusted EBITDAX                               $ million  278                             259                             7%

 Development and production expenditure         $ million  133                             126*                            6%
 Exploration expenditure                        $ million  (3)                             26*                             (112%)
 Decommissioning expenditure                    $ million  10                              6                               67%

                                                           31 March 2025                   31 December 2024                % change
 Cash (including restricted amounts)            $ million  265                             321                             (17%)
 Net debt - consolidated                        $ million  3,079                           2,949                           4%
 Leverage (Net Debt / Adjusted EBITDAX) 12                 2.7x                            2.5x                            8%

*Q1 2024 development and production and exploration expenditure restated to
reflect the reclassification of Location B (Egypt) expenditure from
exploration to development and production.

 

 

2025 Guidance

                                                                     FY 2025
 Production
 Israel (kboed)                                                      115 - 125
 Rest of portfolio (kboed)                                           ~40
 Total production (kboed)                                            155 - 165

 Consolidated net debt ($ million)                                   2,800 - 3,000

 Cash Cost of Production (operating costs plus royalties)
 Israel ($ million)                                                  350 - 375
 Rest of portfolio ($ million)                                       240 - 265
 Total Cash Cost of Production ($ million)                           590 - 640

 Cash G&A ($ million)                                                35 - 40

 Development and production capital expenditure
 Israel ($ million)                                                  380 - 400 13 
 Rest of portfolio ($ million)                                       100 - 120
 Total development & production capital expenditure ($ million)      480 - 520

 Exploration expenditure ($ million)                                 0 - 5

 Decommissioning expenditure ($ million)                             80 - 100

 

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  Includes revenues from the non-binding terms with Dalia Energy Companies
Ltd.

 2  Excludes royalties. Q1 2025 cost of production (including royalties) was
$10/boe.

 3  January to April 2025. Uptime is defined as a percentage of the number of
hours in a day that the Energean Power FPSO was operating and excludes planned
shutdowns.

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

 5  Payment date is stated as the date upon which payment is initiated by
Energean.

 6  Including the Q1 2025 declared dividend.

 7  As per year-end 2024 CPR report.

 8  As per year-end 2024 CPR report.

 9  Refers to the terminated sale of the Group's Egypt, Italy and Croatia
portfolio.

 10  Guidance currently excludes any potential expenditure on the Nitzana
export pipeline.

 11  Includes the unlicenced Abu Deep acreage currently under negotiation with
the Egyptian government.

(( 12 )) Based on Q1 2025 annualised adjusted EBITDAX.

 13  Guidance currently excludes any potential expenditure on the Nitzana
export pipeline.

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