Energean plc, the London and Tel Aviv-listed exploration, production, and commercialisation company, has announced a significant find in offshore Egypt and continued natgas supply in Israel, alongside a first quarter dividend.
CEO Mathios Rigas expressed satisfaction with the company’s performance: “We continue to achieve strong operational and financial results, with production, revenue, and adjusted EBITDAX all increased year-on-year.” He highlighted that operations in Israel remain unaffected by geopolitical developments, with peak gas demand expected during summer driving maximum gas output. The company also celebrated success at the Abu Qir infill drilling campaign in Egypt, discovering 270 feet of net pay, which is around two times initial expectations.
Rigas announced a Q1 2024 dividend of 30 cents a share and reiterated the company’s focus on key business drivers: paying a reliable dividend, deleveraging, growth, and commitment to Net Zero. Energean remains alert to opportunities that fit these drivers and can move quickly to take advantage when they arise.
Milestones on the Horizon
The company has several milestones across its portfolio. Cassiopea, 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, the start-up of the new well is anticipated, and in Greece, the carbon storage permit application will be submitted at the end of June. In Israel, Energean will start supplying new gas contracts signed earlier this year.
Production for Q1 2024 was 142,000 barrels of oil equivalent per day (boed), with 82% gas, representing a 49% year-on-year increase from 95,000 boed in Q1 2023. The Group’s 2024 production guidance is reiterated at 155,000 to 175,000 boed, weighted towards the second half of the year.
In Israel, floating production storage and offloading (FPSO) uptime during Q1 2024 was 98%. In April, wells were successfully tested at 720 mmscfd. Day-to-day production remains unaffected by ongoing geopolitical developments.
The new wells brought online in Egypt’s 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, approximately 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.
The well was drilled from the existing North Abu Qir PII platform, with first production expected in Q3 2024. Drilling operations continue on Cassiopea (Italy) with the second and third wells out of four. The Morocco farm-in is completed and a 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 the project schedule ahead of the Final Investment Decision.
Energean has also taken over operatorship of the Tors and Wenlock (UK) fields to manage the decommissioning work plan.
Regarding financials, revenues for Q1 2024 were $413 million, a 43% increase from Q1 2023 ($289 million), while adjusted EBITDAX was $259 million, a 60% increase from Q1 2023 ($162 million). Group cash as of March 31, 2024, was $220 million (including restricted amounts of $4 million), with total liquidity at $424 million. The Q1 2024 dividend of 30 cents a share is scheduled to be paid on June 28.
Looking ahead, peak gas demand in Israel during summer is expected to drive maximum gas output. 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 July 22, 2014. From January 1, 2024, control and management were transferred from Cyprus to the UK, migrating the company’s tax residency as well. As of March 31, 2024, the Group holds four licences to explore for gas and oil in blocks 12, 21, 23, and 31 in Israel’s economic waters. These licences were extended until January 13, 2025, with potential for further extension by one year.
In 2022, during its growth drilling programme, Energean discovered gas in block 12 offshore Israel. Its two main subsidiaries in Israel are Energean Israel Transmission Ltd. and Energean Israel Finance Ltd.
On March 24, 2021, Energean Israel Finance issued $2.5 billion of senior secured notes to prepay the Project Finance Facility. On July 11, 2023, it completed offering $750 million aggregate principal amount of senior secured notes with an annual interest rate of 8.500%. These funds were released from escrow in September 2023 and used mainly to repay Energean Israel’s $625 million notes due in March 2024.
