Energean makes Egypt discovery, pays Q1 dividend

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Energean plc, the London and Tel Aviv-listed exploration, production and commercialisation company, announced a significant find in offshore Egypt, continued natgas supply in Israel and a first quarter dividend.

“We continue to achieve strong operational and financial results, with production, revenue and adjusted EBITDAX all increased year-on-year,” said CEO Mathios Rigas.

“In Israel, our operations remain unimpacted by the ongoing geopolitical developments, with peak gas demand expected during summer driving maximum gas output. In addition, we are pleased to announce success at our Abu Qir infill drilling campaign in Egypt, where we have discovered 270 feet of net pay, which is around two times initial expectations.”

Rigas said that Energean plc declared a Q1 2024 dividend of 30 cents a share, “and we continue to focus on our key business drivers (paying a reliable dividend, deleveraging, growth, and our commitment to Net Zero). We continue to remain alert to opportunities that fit our key business drivers and can move quickly to take advantage when they arise.”

Looking forward, the company has several milestones on the horizon across the portfolio.

Cassiopea, which is the largest gas development in Italy, is expected to come onstream this summer; the Anchois appraisal well in Morocco is planned to spud in August; in Egypt, to the start-up of the new well is anticipated; in Greece, the carbon storage permit application will be submitted at the end of June and; in Israel, it will start the supply to new gas contracts signed earlier this year.

Production for the first quarter period was 142,000 barrel of oil equivalent (boed), with 82% gas, representing a 49% year-on-year increase from 95,000 boed in Q1 2023. The Group 2024 production guidance is reiterated at 155,000 to 175,000, which is weighted towards the second half of the year.

In Israel, floating production storage and offloading (FPSO) uptime during Q1 2024 was 98%. In April, the wells were successfully tested at 720 mmscfd. Day-to-day production was and continues to be unimpacted as a result of the ongoing geopolitical developments.

The new wells brought online in Egypt in the Abu Qir, NEA and NI concessions continue to perform above expectations.

Success was recorded at the Abu Qir infill well drilling campaign in Egypt, encountering around 270 feet of net pay across the BKES-1 formation and Abu Madi formations, around two times initial expectations.

Preliminary analysis indicates gas-initially-in-place (GIIP) volumes of approximately 87-129 billion cubic feet. The well also encountered a possible liquids column of around 55 feet of net pay that requires further analysis.

First production in Q3

The well was drilled from the existing North Abu Qir PII platform and first production is expected in Q3 2024.

Drilling operations continue on Cassiopea (Italy) with the second and third well (out of four).

The Morocco farm-in is completed and rig contract signed for the Anchois appraisal well, planned for August 2024.

Long-lead items have been ordered for the Katlan development in Israel to maintain project schedule ahead of Final Investment Decision.

Energean has also taken over operatorship of the Tors and Wenlock (UK) fields to manage the decommissioning work plan.

As regards the first quarter financial report, revenues for the period were $413 mln, a 43% increase from Q1 2023 ($289 mln), while adjusted EBITDAX for the period was $259 mln, a 60% increase from Q1 2023 ($162 mln).

Group cash as at 31 March 2024 was $220 mln (including restricted amounts of $4 mln) and total liquidity was $424 mln.

The Q1 2024 dividend of 30 cents a share is scheduled to be paid on June 28, in line with the previously communicated dividend policy.

Looking ahead, peak gas demand in Israel during the summer is expected to drive maximum gas output, and a storage permit application for the Prinos Carbon Storage Project is expected to be submitted by end-June.

Energean Israel Limited was incorporated in Cyprus on 22 July 2014 and from January 1, 2024, control and management was transferred from Cyprus to the UK and as such the company’s tax residency also migrated from Cyprus to the UK.

As of 31 March 2024, the Group holds four licences to explore for gas and oil in blocks 12, 21, 23 and 31, which are located in the economic waters of the State of Israel. In January 2024 the licences were extended until 13 January 2025, and they may be extended for a further one year.

In 2022, during the company’s growth drilling programme, it discovered gas in block 12, offshore Israel.

Its two main subsidiaries in Israel are Energean Israel Transmission Ltd. and Energean Israel Finance Ltd.

On 24 March 2021, Energean Israel Finance issued $2.5 bln of senior secured notes, the proceeds of which were primarily used to prepay in full the Project Finance Facility.

On 11 July 2023, Energean Israel Finance completed the offering of $750 mln aggregate principal amount of senior secured notes with a fixed annual interest rate of 8.500%. The funds were released from escrow in September 2023 and were used mainly to repay Energean Israel’s $625 mln notes that were due in March 2024.