TIDMENOG
RNS Number : 0290V
Energean PLC
09 December 2021
Energean Israel Limited
Unaudited interim condensed consolidated financial statements
30 September 20 21
ENERGEAN ISRAEL LIMITED
Unaudited interim condensed consolidated financial
statements
AS OF 30 SEPTEMBER 2021
INDEX
Page
-----
Interim condensed consolidated statement of financial
position 1
Interim condensed consolidated statement of comprehensive
income 2
Interim condensed consolidated statement of changes
in equity 3
Interim condensed consolidated statement of cash
flows 4
Notes to the interim condensed consolidated financial
statements 5-17
- - - - - - - - - - - - - - - - - - - -
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
(Amounts in thousands US Dollars, unless otherwise stated)
30 September 31 December
2021 2020
------------- ------------
Unaudited Audited
------------- ------------
Note US Dollars in thousands
--------- ---------------------------
ASSETS:
NON-CURRENT ASSETS:
Property, plant and equipment 3(A) 2,162,445 1,813,523
Intangible assets 3(B) 18,872 13,807
Other accounts receivable 3,608 43
Loan to related party 6(B) 346,000 -
Restricted cash 3(C)(3) 100,000 -
Deferred expenses 6(F) 22,958 -
Deferred tax asset 5 10,350 7,839
------------- ------------
2,664,233 1,835,212
------------- ------------
CURRENT ASSETS:
Trade and other receivables 4,547 1,304
3(C)(3),
Restricted cash 6(C) 99,738 -
Cash and cash equivalents 393,374 37,421
------------- ------------
497,659 38,725
------------- ------------
TOTAL ASSETS 3,161,892 1,873,937
============= ============
EQUITY AND LIABILITIES:
EQUITY:
Share capital 1,708 1,708
Share premium 572,539 572,539
Other reserves - (5,328)
Accumulated losses (34,951) (25,114)
------------- ------------
TOTAL EQUITY 539,296 543,805
------------- ------------
NON-CURRENT LIABILITIES:
Senior secured notes 3(C)(3) 2,461,942 -
Provisions for decommissioning 34,881 38,399
Trade and other payables 3(E) 95,004 84,360
------------- ------------
2,591,827 122,759
------------- ------------
CURRENT LIABILITIES:
Current borrowings 3(C)(1) - 1,093,965
Trade and other payables 3(E) 30,769 90,489
Loans from related parties 3(C)(2) - 16,000
Derivative financial instrument 3(D) - 6,919
------------- ------------
30,769 1,207,373
------------- ------------
TOTAL LIABILITIES 2,622,596 1,330,132
------------- ------------
TOTAL EQUITY AND LIABILITIES 3,161,892 1,873,937
============= ============
08 December 2021
----------------- ----------------- ----------------
Panagiotis Benos Matthaios Rigas
Director Director
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
(Amounts in thousands US Dollars, unless otherwise stated)
For the period For the period
of nine months of nine months
ended 30 September ended 30 September
2021 2020
-------------------- --------------------
Unaudited Unaudited
-------------------- --------------------
Note US Dollars in thousands
----- ------------------------------------------
Administrative expenses 4(A) (2,717) (2,872)
Exploration and evaluation expenses 4(A) - (10)
Other expenses 4(A) (28) (392)
Other income 4(A) 3 -
-------------------- --------------------
Operating loss (2,742) (3,274)
Finance income 4(B) 4,524 185
Finance expenses 4(B) (14,388) (176)
Foreign exchange gain (loss) 4(B) (1,140) 547
-------------------- --------------------
Loss for the period before tax (13,746) (2,718)
Tax income 5 3,909 502
-------------------- --------------------
Net loss for the period (9,837) (2,216)
-------------------- --------------------
Other comprehensive income (loss) :
Items that may be reclassified subsequently
to profit or loss:
Gain (loss) on cash flow hedge for the
period 2,278 (9,625)
Reclassification adjustment for items
included in loss on realisation 4,641 -
Tax relating to items that may be reclassified
subsequently to profit or loss (1,591) 2,214
-------------------- --------------------
Other comprehensive income (loss) for
the period 5,328 (7,411)
-------------------- --------------------
Total comprehensive loss for the period (4,509) (9,627)
==================== ====================
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
(Amounts in thousands US Dollars, unless otherwise stated)
For the period of nine months ended 30 September 2021
(Unaudited):
Share Share Other Accumulated Total
capital premium reserves losses equity
--------- --------- ---------- ------------ --------
Balance as of 1 January 2021 1,708 572,539 (5,328) (25,114) 543,805
Changes during period:
Comprehensive income (loss):
Loss for the period - - - (9,837) (9,837)
Other comprehensive income,
net of tax - - 5,328 - 5,328
--------- --------- ---------- ------------ --------
Total comprehensive income
(loss) - - 5,328 (9,837) (4,509)
--------- --------- ---------- ------------ --------
Balance as of 30 September
2021 1,708 572,539 - (34,951) 539,296
========= ========= ========== ============ ========
For the period of nine months ended 30 September 2020
(Unaudited):
Share Share Other Accumulated Total
capital premium reserves losses equity
--------- --------- ---------- ------------ --------
Balance as of 1 January 2020 1,676 540,071 434 (20,234) 521,947
Changes during period:
Comprehensive loss:
Loss for the period - - - (2,216) (2,216)
Other comprehensive loss,
net of tax - - (7,411) - (7,411)
--------- --------- ---------- ------------ --------
Total comprehensive loss - - (7,411) (2,216) (9,627)
--------- --------- ---------- ------------ --------
Transactions with shareholders:
Shares issuance 32 32,468 - - 32,500
--------- --------- ---------- ------------ --------
Balance as of 30 September
2020 1,708 572,539 (6,977) (22,450) 544,820
========= ========= ========== ============ ========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in thousands US Dollars, unless otherwise stated)
For the period For the period
of nine months of nine months
ended 30 September ended 30 September
2021 2020
-------------------- --------------------
Unaudited Unaudited
-------------------- --------------------
US Dollars in thousands
------------------------------------------
Cash flows from operating activities
:
Loss for the period before tax (13,746) (2,718)
-------------------- --------------------
Adjustments for :
Depreciation and amortization 71 237
Loss from disposal on property, plant
and equipment 23 -
Increase in provisions for decommissioning 516 -
Other expenses 5 -
Other income (3) -
Finance income (4,524) (185)
Finance expenses 13,872 176
Net foreign exchange gain (loss) 1,140 (547)
-------------------- --------------------
(2,646) (3,037)
Changes in working capital:
Increase in other receivables (29) (75)
Decrease in trade and other payables (6 6 0) (120)
-------------------- --------------------
( 6 89) (195)
Income taxes paid (32) -
-------------------- --------------------
Net cash used in operating activities (3,3 6 7) (3,232)
-------------------- --------------------
Cash flows from investing activities
:
Payment for purchase of oil & gas leases (10,850) (10,850)
Payment for purchase of intangible assets (3,972) (6,835)
Payments for buyers compensation (13,271) -
Payment for purchase of property, plant
and equipment (253,775) (296,295)
Movement in restricted cash (199,738) -
Interest received 264 220
-------------------- --------------------
Net cash used in investing activities (481,342) (313,760)
-------------------- --------------------
Cash flows from financing activities
:
Senior secured notes issuance 2,500,000 -
Transaction cost in relation to senior
secured notes issuance (37,931) -
Senior secured notes - interest paid (66,600) -
Proceeds from shares issuance - 32,500
Drawdown of borrowings 118,000 320,000
Repayment of borrowings (1,268,000) -
Loan granted to related party (346,000) -
Repayment of loan from related parties (16,000) -
Debt arrangement fees paid - (5,050)
Finance cost paid (43,854) (44,601)
Finance costs paid for deferred license
payments (3,494) (3,993)
Advance payment from future sale of property,
plant and equipment (INGL) 5,673 5,470
Repayment of obligations under leases (366) (268)
-------------------- --------------------
Net cash generated from financing activities 841,428 304,058
-------------------- --------------------
Net increase (decrease) in cash and cash
equivalents 356,719 (12,934)
Cash and cash equivalents at the beginning
of the period 37,421 110,488
Effect of exchange rate fluctuations
on cash held (766) (154)
-------------------- --------------------
Cash and cash equivalents at the end
of the period 393,374 97,400
==================== ====================
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 1: GENERAL
A. Energean Israel Limited (the "Company") was incorporated in
Cyprus on 22 July 2014 as a private company with limited liability
under the Companies Law, Cap. 113. Its registered office is at
Lefkonos 22, 1(st) Floor, 2064, Nicosia, Cyprus.
B. The Company and its subsidiaries (the "Group") has been
established with the objective of exploration, production and
commercialisation of natural gas and crude oil. The Group's main
activities are performed in Israel by the Company's Israeli
Branch.
C. The Group's core assets as of 30 September 2021 are comprised of:
Country Asset Working interest Field phase
-------- ---------------------------------- ----------------- ------------
Israel Karish (including Karish North) 100% Development
Israel Tanin 100% Development
Israel Blocks 12, 21, 23, 31 100% Exploration
Israel Four licenses Zone D (1) 80% Exploration
(1) The Company holds 80% interests in four licenses, blocks 55,
56, 61 and 62 (together, "Zone D") in Israel's Exclusive Economic
Zone ("EEZ").
D. COVID-19: Despite COVID-related challenges experienced during
the period (mainly at the Admiralty Yard in Singapore, where the
Karish FPSO is being completed), the Group has made solid progress
on its flagship Karish project, offshore Israel. The project
expected to deliver first gas in mid-2022. The health and safety of
its workers remains of paramount importance to the Company, and it
supports all necessary measures to prevent further transmission of
COVID-19.
NOTE 2: ACCOUNTING POLICIES AND BASIS OF PREPARATION
These unaudited interim condensed consolidated financial
statements for the nine months ended 30 September 2021, have been
prepared in accordance with the International Financial Reporting
Standards ("IFRS") as adopted by the European Union (EU). The
unaudited interim condensed consolidated financial statements do
not include all the information and disclosures that are required
for the annual financial statements and must be read in conjunction
with the Group's annual consolidated financial statements for the
year ended 31 December 2020.
These unaudited interim financial statements have been prepared
on a going concern basis.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION
A. Property, Plant and Equipment:
1) Composition:
Petroleum Furniture,
and Gas Leased fixtures
assets assets and equipment Total
--------- ------- -------------- ---------
US Dollars in thousands
---------------------------------------------
Cost:
At 1 January 2020 1,238,724 469 337 1,239,530
Additions 404,613 365 298 405,276
Disposals (2,984) (230) - (3,214)
Capitalised borrowing cost 92,170 - - 92,170
Capitalised depreciation 288 - - 288
Change in decommissioning
provision 38,125 - - 38,125
Transfers from exploration
and evaluation assets 41,822 - - 41,822
--------- ------- -------------- ---------
Total cost at 31 December
2020 1,812,758 604 635 1,813,997
Additions 194,850 3,258 13 198,121
Disposals (23) - - (23)
Capitalised borrowing cost 154,921 - - 154,921
Capitalised depreciation 197 - - 197
Change in decommissioning
provision (4,034) - - (4,034)
--------- ------- -------------- ---------
Total cost at 30 September
2021 2,158,669 3,862 648 2,163,179
--------- ------- -------------- ---------
Depreciation:
At 1 January 2020 - 185 63 248
Expensed for the year - - 80 80
Disposals - (142) - (142)
Capitalised to petroleum
and gas assets - 288 - 288
--------- ------- -------------- ---------
Total Depreciation at 31
December 2020 - 331 143 474
Expensed for the period - - 63 63
Capitalised to petroleum
and gas assets - 197 - 197
--------- ------- -------------- ---------
Total Depreciation at 30
September 2021 - 528 206 734
--------- ------- -------------- ---------
Net property, plant and
equipment at 31 December
2020 1,812,758 273 492 1,813,523
========= ======= ============== =========
Net property, plant and
equipment at 30 September
2021 2,158,669 3,334 442 2,162,445
========= ======= ============== =========
- The additions to Petroleum and Gas assets for the period of
nine months ended 30 September 2021 are mainly due to the
development costs of Karish field which relate to the EPCIC
contract (FPSO, Sub Sea and On-shore construction cost) at the
amount of approx. US$122 million (for the year ended 31 December
2020: approx. US$280 million).
- The borrowing costs capitalised for the period of nine months
ended 30 September 2021 at the amount of approx. US$155 million
(for the year ended 31 December 2020: approx. US$92 million) are
mainly due to the Senior Facility Loan for Karish development at
the amount of approx. US$90 million (for the year ended 31 December
2020: approx. US$81 million) and due to the secured senior notes at
the amount of approx. US$59 million for the period of nine months
ended 30 September 2021 (Nil for the year ended 31 December 2020).
The weighted average interest rates used for the capitalisation of
the borrowing cost was 6.27% (31 December 2020: 8.78%).
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
2) Cash flow statement reconciliations:
For the period
of nine months For the year
ended 30 ended 31
September December
2021 2020
--------------- ------------
US Dollars in thousands
-----------------------------
Additions to property, plant and equipment 349,182 574,467
Less
capitalised borrowing costs (154,921) (92,170)
Right-of-use asset additions (3,258) (365)
Capitalised share-based payment charge (156) (65)
Capitalised depreciation (197) (288)
Change in decommissioning provision 4,034 (38,125)
Transfers from intangible assets - (41,822)
--------------- ------------
Total 194,684 401,632
Movement in working capital 69,941 (17,179)
--------------- ------------
Cash capital expenditures per the cash
flow statement (*) 264,625 384,453
(*)The amount includes payment of US$10 . 85 million which has
been paid each period in 2021 and 2020 to the sellers of Karish and
Tanin leases.
B. Intangible Assets:
1) Composition:
Exploration
and evaluation Software
assets license Total
--------------- -------- --------
US Dollars in thousands
-----------------------------------
Cost:
At 1 January 2020 49,574 160 49,734
Additions 6,539 95 6,634
Write off of exploration
and evaluation costs (492) - (492)
Transfers to property, plant
and equipment (41,822) - (41,822)
--------------- -------- --------
At 31 December 2020 13,799 255 14,054
Additions 5,073 - 5,073
--------------- -------- --------
At 30 September 2021 18,872 255 19,127
--------------- -------- --------
Amortisation:
At 1 January 2020 - 33 33
Expensed for the year - 214 214
--------------- -------- --------
Total Amortisation at 31
December 2020 - 247 247
--------------- -------- --------
Expensed for the period - 8 8
--------------- -------- --------
Total Amortisation at 30
September 2021 - 255 255
--------------- -------- --------
Net intangible assets at
31 December 2020 13,799 8 13,807
=============== ======== ========
Net intangible assets at
30 September 2021 18,872 - 18,872
=============== ======== ========
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
- The additions to Intangible assets for the period of nine
months ended 30 September 2021 are mainly due to the surveys,
seismic and related works for the Israeli offshore exploration
blocks. (for the year ended 31 December 2020 mainly related to
drilling associated costs for Block 12 licenses and Karish North
prior classifying it to property, plant and equipment ).
2) Cash flow statement reconciliations:
For the period
of nine months For the year
ended 30 ended 31
September December
2021 2020
--------------- ------------
US Dollars in thousands
-----------------------------
Additions to intangible assets 5,073 (35,680)
Less
Transfers to property, plant and equipment - 41,822
--------------- ------------
Total 5,073 6,142
Movement in working capital (1,101) 1,864
--------------- ------------
Cash capital expenditures per the cash
flow statement 3,972 8,006
C. Borrowings:
1) US$1.45 billion senior project facility:
On 2 March 2018, the Group entered into a senior secured project
finance for its Karish project amounting to US$1.275 billion and on
16 March 2020, the senior credit facility was increased to US$1,450
billion, providing an additional US$175 million of liquidity for
the Karish project and certain activities in Israel (the "Project
Finance Facility").
Once drawn, interest in respect of the Project Finance Facility
was charged at LIBOR + 3.75% over months 1 to 12, LIBOR + 4.00%
over months 13 to 24, LIBOR + 4.25% over months 25 to 36 and LIBOR
+ 4.75% over months 37 to 45. There was a commitment fee of 30% of
the applicable margin.
The Project Finance Facility was designated to mature in
December 2021 and had a bullet repayment on maturity. On 13 January
2021, the Company agreed with its Project Finance Facility lenders
a nine- month extension for the facility maturity date, from
December 2021 to September 2022.
As of 29 April 2021, the Group withdrew US$1,268 million from
the Project Finance Facility (31 December 2020: US$1,150 million)
and the amortised carrying value of the loan was US$1,225 million
(including short term accrued interest at the amount of US$2
million as part of trade and other payables).
On 29 April 2021, the Company fully repaid the Project Finance
Facility and, as such, the ultimate parent company guarantee
("PCG") granted by Energean PLC in the amount of US$90 million, in
favor of the Project Finance Facility lenders, terminated.
In addition, the Company terminated the standby letter of credit
for US$125 million in favor of the Project Finance Facility
lenders, and as such the PCG granted by the parent company Energean
E&P Limited at the same amount terminated.
2) Short term loan from ultimate parent company repayment:
On 5 January 2021, the Company paid Energean PLC the short-term
loan amounted US$16 million.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
3) Issuance of US$2,500,000,000 senior secured notes:
On 24 March 2021 ("Issue Date"), Energean Israel Finance Ltd (a
subsidiary of the Company, held 100%) announced on closing of an
offering of US$2,500,000,000 senior secured notes.
The Notes will be issued in four series as follows:
- Notes in an aggregate principal amount of US$625 million,
maturing on 30 March 2024, with a fixed annual interest rate of
4.500%.
- Notes in an aggregate principal amount of US$625 million,
maturing on 30 March 2026, with a fixed annual interest rate of
4.875%.
- Notes in an aggregate principal amount of US$625 million,
maturing on 30 March 2028, with a fixed annual interest rate of
5.375%.
- Notes in an aggregate principal amount of US$625 million,
maturing on 30 March 2031, with a fixed annual interest rate of
5.875%.
The interest on each series of the Notes will be paid
semi-annually, on 30 March and on 30 September of each year,
beginning on 30 September 2021.
a. Satisfaction of the escrow release conditions and release from escrow of proceeds of the US$2,500,000,000 senior secured notes offering:
On 29 April 2021 Energean Israel Finance Ltd has satisfied the
escrow release conditions in respect of its US$2.5 billion
aggregate principal amount of the Notes offering, completed by it
on 24 March 2021. As a result of satisfying the said escrow release
conditions, the proceeds of the Offering have been released from
escrow.
The Notes are listed for trading on the TACT Institutional of
the Tel Aviv Stock Exchange Ltd. (the "TASE").
With regards to the Indenture document, signed on 24 March 2021
with HSBC BANK USA, N.A (the "Trustee"), no Indenture default or
Indenture event of default has occurred and is continuing.
b. Collateral:
The Company had provided the following collateral in favor of
the Trustee:
1. First rank Fixed charges over the shares of Energean Israel
Limited, Energean Israel Finance Ltd and Energean Israel
Transmission Ltd, the Karish & Tanin Leases, the gas sales
purchase agreements ("GSPAs"), several bank accounts, Operating
Permits (once issued), Insurance policies, the Company exploration
licenses (Block 12, Block 21, Block 23, Block 31 and 80% of the
licenses under "Zone D") and the INGL Agreement.
2. Floating charge over all of the present and future assets of
Energean Israel Limited and Energean Israel Finance Ltd.
3. Energean Power FPSO (The company had undertaken to use
commercially reasonable efforts, including obtaining Israel
Petroleum Commissioner approval and any other applicable
governmental authority, in order to provide this).
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
c. Reserves accounts:
On 29 April 2021, following the escrow release as stated above,
the Company funded its reserves account as follow:
1. US$163.3 million Interest Payment Account for the accrued
interest Prior to practical completion, accrued interest until 30
June 2022 (less coupons actually paid) and from 30 June 2022 the
Interest Reserve Account will be funded six months forward. On 24
September 2021, the Company released US$66.6 million from its
interest reserve account due to coupons payment at amount of
US$66.6 million. As of 30 September 2021, the Interest Reserve
Account balance is US$96.8 million.
2. US$100 million Debt Payment Fund that would be released upon
achieving three quarters annualized production of 3.8 BCM/year.
3. Principal Reserve Fund will be funded 50% an upcoming
maturity within 12 months for the 3 year and 5 year Notes, and 75%
of an upcoming maturity within 18 months for the 7 year and 10 year
Notes.
d. Credit rating:
Moody's assigns Ba3 rating the senior secured notes, and S&P
Global assigns BB- rating the senior secured notes.
D. Fair value measurements:
The information set out below provides information about how the
Group determines the fair values of various financial assets and
liabilities.
The fair values of the Group's non-current liabilities measured
at amortised cost are considered to approximate their carrying
amounts at the reporting date.
The carrying value less any estimated credit adjustments for
financial assets and financial liabilities with a maturity of less
than one year are assumed to approximate their fair values due to
their short term-nature.
The fair value hierarchy of financial assets and financial
liabilities that are not measured at fair value (but fair value
disclosure is required) is as follows:
Fair value hierarchy as of 30 September
2021
---------------------------------------------
US Dollars in thousands
---------------------------------------------
Level 1 Level 2 Level 3 Total
--------- ----------- --------- ----------
Financial assets
Long term trade and other
receivables - 3,559 - 3,559
Loan to related party - 346,000 - 346,000
Long term restricted cash 100,000 - - 100,000
Short term restricted cash 99,738 - - 99,738
Short term trade and other
receivables - 742 - 742
Cash and cash equivalents 393,374 - - 393,374
--------- ----------- --------- ----------
Total 593,112 350,301 - 943,413
--------- ----------- --------- ----------
Financial liabilities
Senior secured notes - 2,461,942 - 2,461,942
Trade and other payables
- long term - 58,359 - 58,359
Trade and other payables
- short term - 30,733 - 30,733
--------- ----------- --------- ----------
Total - 2,551,034 - 2,551,034
--------- ----------- --------- ----------
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
Fair value hierarchy as of 31 December
2020
--------------------------------------------
US Dollars in thousands
--------------------------------------------
Level 1 Level 2 Level 3 Total
--------- ----------- -------- ----------
Financial assets
Short term trade and other
receivables - 54 - 54
Cash and cash equivalents 37,421 - - 37,421
--------- ----------- -------- ----------
Total 37,421 54 - 37,475
--------- ----------- -------- ----------
Financial liabilities
Trade and other payables
- long term - 55,182 - 55,182
Borrowings (*) - 1,096,046 - 1,096,046
Trade and other payables
- short term - 88,520 - 88,520
Loans from related parties - 16,000 - 16,000
Derivative liability - 6,919 - 6,919
--------- ----------- -------- ----------
Total - 1,262,667 - 1,262,667
--------- ----------- -------- ----------
(*) Include short term accrued interest in the amount of
US$2,081 thousands as part of trade and other payables.
Fair values of derivative financial instruments :
During 2019, the Group signed a hedge contract for 50% of the
facility notional, to hedge the 3 months LIBOR component of the
facility. The hedging contract was terminated during September
2021.
All derivatives recognised at fair value on the balance sheet
with valuation changes recognised immediately in the income
statement unless the derivatives have been designated as a cash
flow hedge.
There were no transfers between fair value levels during the
period.
E. Trade and other payables:
30 September 31 December
2021 2020
------------ -----------
US Dollars in thousands
-------------------------
Current
Financial items
Trade accounts payable (1) 16,582 68,706
Accrued expenses (1) 8,304 1,628
Payables to related parties 4,718 3,381
Deferred license payments (2) - 14,344
Interest payable - 2,081
Current lease liabilities 901 262
------------ -----------
30,505 90,402
Non-Financial items
Social insurance and other taxes 114 87
Income taxes 150 -
------------ -----------
264 87
30,769 90,489
============ ===========
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 3: FINANCIAL POSITION (Cont.)
30 September 31 December
2021 2020
------------ -----------
US Dollars in thousands
-------------------------
Non-current
Financial items
Accrued expenses to related parties 228 199
Long term lease liabilities 2,388 8
Deferred license payments (2) 55,971 55,174
------------ -----------
58,587 55,381
Non-Financial items
Sales consideration received in advance
(INGL) (3) 36,417 28,979
------------ -----------
36,417 28,979
95,004 84,360
============ ===========
(1) The main balance of the Trade payables and Accrued expenses
as of 30 September 2021 relates to development costs for a total
amount of approx. US$16 million (31 December 2020: approx. US$69
million), approx. US$12 million (31 December 2020: approx. US$68
million) included in trade payable and approx. US$4 million (31
December 2020: approx. US$1 million) at the accrued expenses. The
change in Trade payables represents mainly timing differences and
levels of work activity in Karish project. Trade payables are
non-interest bearing.
(2) In December 2016, the Company acquired the Karish and Tanin
offshore gas fields for US$40 million closing payment with an
obligation to pay additional consideration of US$108.5 million plus
interest inflated at an annual rate of 4.6% in ten equal annual
payments. As at 30 September 2021 the total discounted deferred
consideration was approx. US$56 million (as at 31 December 2020:
approx. US$70 million).
The Sale Purchase Agreement ("SPA") includes provisions in the
event of Force Majeure that prevents or delays the implementation
of the development plan as approved under one lease for a period of
more than ninety (90) days in any year following the final
investment decision ("FID") date. In the event of Force Majeure,
the applicable annual payment of the remaining consideration will
be postponed by an equivalent period of time, and no interest will
be accrued in that period of time as well.
Due to the effects of the COVID-19 pandemic which constitute a
Force Majeure event, postponing the deferred payment due in March
2022 by the number of days that such Force Majeure event last. As
of 30 September 2021, Force Majeure event length has not been
finalised as the COVID-19 pandemic continue to affect the progress
of the project, and as such, the deferred payment due in March 2022
will be postponed accordingly.
(3) The sales consideration received in advance is related to
the agreement with Israel Natural Gas Lines ("INGL") for the
transfer of title (the "hand over") of the near shore and onshore
part of the infrastructure that will deliver gas from the Energean
Power FPSO into the Israeli national gas transmission grid. On 1
July 2021 the Company received the amount of 18.39 million ILS
(approx. US$5.6 million) from INGL. It is intended that the hand
over to INGL will become effective at least 90 days after the
delivery of first gas from the Karish field which expected in
mid-2022.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 4: COMPREHENSIVE INCOME
A. Operating loss:
For the period of
nine months ended
30 September
-------------------------
2021 2020
------------ -----------
US Dollars in thousands
-------------------------
General & administration expenses
Payroll costs 946 646
Share-based payment charge included
in administrative expenses 129 60
Depreciation and amortisation (Notes
3(A) and 3(B)) 71 237
Auditor fees (*) 156 79
Other general & administration expenses 1,415 1,850
------------ -----------
Total administrative expenses 2,717 2,872
Exploration and evaluation expenses
Other exploration and evaluation expenses - 10
------------ -----------
Total exploration and evaluation expenses - 10
Other expenses
Reversal of prior period provision 5 -
Loss from property, plant and equipment
disposal 23 -
Other expenses - 392
------------ -----------
Total other expenses 28 392
------------ -----------
Other income
Profit from disposal of inventory 3 -
------------ -----------
Total other income 3 -
------------ -----------
(*) In addition to the auditor fees included at the
administrative expenses, for the period of nine months ended on 30
September 2021, the Company incurred US$250 thousands for audit of
special purpose and reporting accountant services in relation to
the issuance of the senior secured notes.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 4: COMPREHENSIVE INCOME (Cont.)
B. Net finance income (expenses):
For the period of
nine months ended
30 September
--------------------------
2021 2020
------------- -----------
US Dollars in thousands
--------------------------
Interest on bank borrowings (1) 76,890 54,298
Effective interest on senior secured
notes (2) 68,047 -
Interest expense on long terms payables 2,267 4,996
Interest on shareholders loan 9 -
Less amounts included in the cost of
qualifying assets (3) (138,147) (59,294)
------------- -----------
9,066 -
Finance and arrangement fees 14,383 2,941
Other finance costs and bank charges 53 39
Interest expenses from Hedging 7,002 2,382
Unwinding of discount on decommissioning
liabilities 516 137
Interest on obligations for leases 142 37
Less amounts included in the cost of
qualifying assets (3) (16,774) (5,360)
------------- -----------
5,322 176
Total finance costs 14,388 176
Interest income from time deposits 965 185
Interest income from loans to related
parties (4) 3,559 -
Total finance income 4,524 185
Net foreign exchange gain (loss) (1,140) 547
Net finance income (expenses) (11,004) 556
============= ===========
(1) See also Note 3(C)(1).
(2) See also Note 3(C)(3).
(3) See also Note 3(A).
(4) See also Note 6(B).
NOTE 5: TAXATION
A. Tax income (expense):
For the period of
nine months ended
30 September
--------------------------
2021 2020
-------------- ----------
US Dollars in thousands
--------------------------
Corporation tax - current year (193) -
Corporation tax - prior years - (1)
Deferred tax 4,102 503
-------------- ----------
Total taxation income 3,909 502
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 5: TAXATION (Cont.)
B. Deferred tax:
The deferred taxes, driven from the activity in Israel by the
Israeli Branch of the Company, are computed at the average tax rate
of 23%, based on the tax rates that are expected to apply upon
reversal. The deferred taxes are presented in the statement of
financial position as non-current assets. Below are the items for
which deferred taxes were recognised:
Accrued
expenses
Property, Right and other
plant and of short--term
equipment use liabilities
& asset Deferred Staff and other Provisions
intangible IFRS Derivative Tax expenses leaving long--term Derivative for
asset 16 asset losses for tax indemnities liabilities liability decommissioning Total
---------- ----- ---------- ------ -------- ----------- ----------- ---------- --------------- -------
US Dollars in thousands
---------------------------------------------------------------------------------------------------------------
At 1 January
2020 (2,347) (65) (130) 2,301 5,647 35 178 - - 5,619
Increase
(decrease) for
the year
through:
Profit or loss (9,793) 3 - 1,014 363 28 115 - 8,769 499
Other
comprehensive
income
(loss) - - 130 - - - - 1,591 - 1,721
---------- ----- ---------- ------ -------- ----------- ----------- ---------- --------------- -------
At 31 December
2020 (12,140) (62) - 3,315 6,010 63 293 1,591 8,769 7,839
========== ===== ========== ====== ======== =========== =========== ========== =============== =======
At 1 January
2021 (12,140) (62) - 3,315 6,010 63 293 1,591 8,769 7,839
Increase
(decrease) for
the period
through :
Profit or loss (178) (704) - 1,165 3,946 22 597 - (746) 4,102
Other
comprehensive
income
(loss) - - - - - - - (1,591) - (1,591)
---------- ----- ---------- ------ -------- ----------- ----------- ---------- --------------- -------
At 30 September
2021 (12,318) (766) - 4,480 9,956 85 890 - 8,023 10,350
========== ===== ========== ====== ======== =========== =========== ========== =============== =======
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 6: SIGNIFICANTS EVENTS AND TRANSACTIONS DURING THE REPORTING PERIOD
A. Company's shareholders transaction completion:
On 29 December 2020, Energean E&P Holdings Limited entered
into a conditional sale and purchase agreement to acquire Kerogen
Investments No. 38 Limited's entire interest in Energean Israel
Limited, which constitutes 30% of the total issued share capital of
Energean Israel Limited, and completion took place during February
2021.
B. Loan agreement with Energean E&P Holdings Limited:
On 29 April 2021 (the "Closing Date") and in accordance with the
Notes financing documents, the Company and its parent company
Energean E&P Holdings Limited entered into a loan agreement
which establish that the Company will provide a loan facility of up
to US$500 million to Energean E&P Holdings Limited for a period
of 24 months from the Closing Date (the "Maturity Date"). The loan
and interest will be paid at the maturity date.
Notwithstanding the above, Energean E&P Holdings Limited
may, at its discretion, repay the loan, in whole or in part, at any
time before 28 April 2023.
As of the reporting date, US$346 million was loaned to Energean
E&P Holdings Limited.
C. Letter of Credit Facility Agreement:
On April 2021, the Company signed with a banking corporation on
a 250 million NIS (approx. US$75 million) facility for issuing bank
guarantees for the Company activities and needs in Israel. The
facility term is 12 months, till 30 April 2022 and can be extended
for additional 12 months. The facility bears 1.5% interest rate per
annum and 0.8% commitment fee per annum for the undrawn amount. The
banking corporation security is a US$80 million PCG granted by
Energean PLC and cash collateral of US$2.96 million.
D. Rig Contract Signed for Drilling Campaign, Offshore Israel:
On June 2021, the Company signed on a contract with Stena
Drilling Limited for growth drilling programme offshore Israel
during 2022.
The contract is for the drilling of three wells and two optional
wells, with the first well expected to spud in the first quarter of
2022. The wells are all expected to be drilled during 2022.
E. Parent Company Guarantees (PCG) to gas buyers:
As part of the Company gas sales purchase agreements ("GSPAs"),
in order to secure the agreement obligations to the gas buyers,
Energean E&P Holdings Limited, the Parent company, granted,
during 2021, a PCG to certain gas buyers in the total amount of
US$38 million. The parent company guarantee will be in force until
June 2024.
F. Compensation to gas buyers due to late supply:
In accordance with the GSPAs signed with a group of gas buyers,
the Company has agreed to pay compensation to these counterparties
due to the fact the gas supply date is taking place beyond a
certain date as defined in the GSPAs (being 30 June 2021). The
compensation fully paid as of the reporting date at the amount of
approx. US$23 million. The compensation presented under long term
deferred expenses and accounted as variable purchase consideration
under IFRS 15 hence recognised once production commences and gas is
delivered to the offtakers.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 6: SIGNIFICANTS EVENTS AND TRANSACTIONS DURING THE REPORTING PERIOD (Cont.)
G. Gas buyer request for arbitration and termination notice issuance:
During August 2021 a gas buyer sent a request for the
International Court of Arbitration asking for arbitration on its
rights of termination due to the fact the gas supply date is taking
place beyond a certain date which defined in the GSPA.
On November 2021, the gas buyer served a notice upon the Company
purporting to terminate the GSPA, which the Company is disputing as
invalid and in breach of the relevant contract.
NOTE 7: SIGNIFICANTS EVENTS AND TRANSACTIONS AFTER THE REPORTING PERIOD
A. Settlement agreement with Hof HaCarmel Regional Council:
During October 2021 the Company signed a settlement agreement
with Hof HaCarmel Regional Council ("Hof HaCarmel") regarding road
construction and drainage fees. According to the settlement the
Company is required to pay to Hof HaCarmel an amount of 600
thousand NIS, instead of Hof HaCarmel's original demand of 10.28
million NIS. The settlement amount paid during October 2021.
B. Exploration Blocks License Extension:
On 19 October 2021, the Ministry of Energy in Israel extended
License "12"/407 (Block 12) by two (2) years until 14 January 2024.
A bank guarantee in the amount of 5 Million USD has been provided
to the MOE in respect of the drilling activity which is expected to
be performed within Block 12. In addition, the Ministry of Energy
in Israel extended the Licenses "21"/408, "23"/410, and "31"/411
(Blocks 21, 23 and 31) by four (4) months until 14 May 2022.
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END
MSCFLFLRFSLTIIL
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