TIDMENOG
RNS Number : 6172T
Energean PLC
16 November 2023
ENERGEAN ISRAEL LIMITED
UNAUDITED INTERIM CONDENCED CONSOLIDATED FINANCIAL
STATEMENTS
30 SEPTEMBER 2023
ENERGEAN ISRAEL LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
AS OF 30 SEPTEMBER 2023
INDEX
Page
-----
Interim Condensed Consolidated Statement of Comprehensive
Income 3
Interim Condensed Consolidated Statement of Financial
Position 4
Interim Condensed Consolidated Statement of Changes
in Equity 5
Interim Condensed Consolidated Statement of Cash
Flows 6
Notes to the Interim Condensed Consolidated Financial
Statements 7-20
- - - - - - - - - - - - - - - - - - - -
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
NINE MONTHSED 30 SEPTEMBER 2023
30 September (Unaudited)
2023 2022
Notes $'000 $'000
------------------------------------ ------ ------------- ----------
Revenue 3 646,585 -
Cost of sales 4 (313,374) -
---------------------------------------- ------ ------------- ----------
Gross profit 333,211 -
Administrative expenses 4 (13,182) (7,218)
Exploration and evaluation expenses 4 (50) (1,277)
Other expenses 4 (170) (1,079)
Other income 4 2 53
---------------------------------------- ------ ------------- ----------
Operating profit/(loss) 319,811 (9,521)
Financial income 5 9,133 5,757
Financial expenses 5 (120,379) (4,931)
Foreign exchange loss, net 5 (4,872) 1,405
---------------------------------------- ------ ------------- ----------
Profit/(loss) for the period before
tax 203,693 (7,290 )
Taxation (expense)/income 6 (46,766) 2,663
---------------------------------------- ------ ------------- ----------
Net profit (loss) for the period 156,927 (4,627 )
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
AS OF 30 SEPTEMBER 2023
30 September
20 23 31 December
(Unaudited) 2022
Notes $'000 $'000
---------------------------------- ------ ------------- ------------
ASSETS:
NON-CURRENT ASSETS:
Property, plant and equipment 7 2,869,484 2,926,313
Intangible assets 8 160,410 143,554
Other receivables 10 507 108
Deferred tax asset 9 - 22,886
-------------------------------------- ------ ------------- ------------
3,030,401 3,092,861
------------------------------------- ------ ------------- ------------
CURRENT ASSETS:
Trade and other receivables 10 121,412 82,611
Inventories 11 11,856 8,313
Restricted cash 24,500 71,778
Cash and cash equivalents 239,076 24,825
-------------------------------------- ------ ------------- ------------
396,844 187,527
------------------------------------- ------ ------------- ------------
TOTAL ASSETS 3,427,245 3,280,388
-------------------------------------- ------ ------------- ------------
EQUITY AND LIABILITIES:
EQUITY:
Share capital 1,708 1,708
Share premium 212,539 212,539
Retained earnings ( losses) 86,399 (70,528)
-------------------------------------- ------ ------------- ------------
TOTAL EQUITY 300,646 143,719
-------------------------------------- ------ ------------- ------------
NON-CURRENT LIABILITIES:
Senior secured notes 12 2,587,848 2,471,030
Decommissioning provisions 73,602 84,299
Deferred tax liability 9 22,028 -
Trade and other payables 13 180,038 210,241
-------------------------------------- ------ ------------- ------------
2,863,516 2,765,570
------------------------------------- ------ ------------- ------------
CURRENT LIABILITIES:
Trade and other payables 13 263,083 371,099
-------------------------------------- ------ ------------- ------------
263,083 371,099
------------------------------------- ------ ------------- ------------
TOTAL LIABILITIES 3,126,599 3,136,669
-------------------------------------- ------ ------------- ------------
TOTAL EQUITY AND LIABILITIES 3,427,245 3,280,388
-------------------------------------- ------ ------------- ------------
15 November 2023
---------------- ---------------- ---------------
Panagiotis Benos Matthaios Rigas
Director Director
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
NINE MONTHSED 30 SEPTEMBER 2023
Retained
Share Share earnings Total
capital Premium (losses) equity
$'000 $'000 $'000 $'000
-------------------------------- --- -------- --------- --------- ---------
Balance as of 1 January
2023 1,708 212,539 (70,528) 143,719
Profit for the period - - 156,927 156,927
------------------------------------- -------- --------- --------- ---------
Balance as of 30 September
2023 (unaudited) 1,708 212,539 86,399 300,646
===================================== ======== ========= ========= =========
Balance as of 1 January
2022 1,708 572,539 (35,946) 538,301
Transactions with shareholders
Share premium reduction
(*) - (360,000) - (360,000)
Comprehensive loss
Loss for the period - - (4,627) (4,627)
------------------------------------- -------- --------- --------- ---------
Balance as of 30 September
2022 (unaudited) 1,708 212,539 (40,573) 173,674
===================================== ======== ========= ========= =========
(*) In April 2022 the Company reduced its share premium capital
by US$360 million and credited US$346 million against the
shareholder loan account plus accrued interest.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS PERIODED 30 SEPTEMBER 2023
30 September (Unaudited)
Notes 2023 2022
$'000 $'000
---------------------------------------------- ------ ----------- -----------
Operating activities
Profit (Loss) for the period before
tax 203,693 (7,290)
Adjustments to reconcile loss before
taxation to net cash provided by operating
activities:
Depreciation, depletion and amortisation 4 132,527 232
Loss from sale on equipment 4 170 1,079
Exploration and evaluation expenses 8 - 1,277
Compensation to gas buyers, payment
made in advance 3 4,929 -
Finance Income 5 (9,133) (5,757)
Finance expenses 5 120,379 4,932
Net foreign exchange loss (gains) 5 4,872 (1,405)
-------------------------------------------------- ------ ----------- -----------
Cash flow from operations before working
capital 457,437 (6,932)
-------------------------------------------------- ------ ----------- -----------
(Increase)/decrease in trade and other
receivables (56,590) 906
Increase in inventories (3,543) -
Decrease in trade and other payables (20,930) (665)
-------------------------------------------------- ------ ----------- -----------
Cash from operations 376,374 (6,691)
-------------------------------------------------- ------ ----------- -----------
Income taxes paid (397) (572)
-------------------------------------------------- ------ ----------- -----------
Net cash inflows from/(used in) operating
activities 375,977
819 (7,263)
------------------------------------------------- ------ ----------- -----------
Investing activities
Payment for exploration and evaluation,
and other intangible assets 8(B) (92,634) (18,823)
Payment for purchase of property, plant
and equipment 7(C) (164,913) (232,037)
Proceeds from disposals of property,
plant and equipment 2 188
Amounts received from INGL related to
transfer of property, plant and equipment 10 56,906 17,371
Movement in restricted cash, net 47,278 127,945
Interest received 9,921 2,863
-------------------------------------------------- ------ ----------- -----------
Net cash outflows used in investing
activities (143,440) (102,493)
-------------------------------------------------- ------ ----------- -----------
Financing activities
Senior secured notes - interest paid 12 (128,906) (128,906)
Senior secured notes issuance 12 750,000 -
Senior secured notes repayment 12 (625,000) -
Other distribution (4,386) -
Other finance cost paid (335) (2,359)
Finance costs paid for deferred licence
payments (2,496) (1,501)
Transaction cost related to senior secured
notes issuance 16 (3,690) -
Repayment of obligations under leases 13 (1,942) (683)
-------------------------------------------------- ------ ----------- -----------
Net cash outflow used in financing activities (16,755) (133,449)
-------------------------------------------------- ------ ----------- -----------
Net increase/(decrease) in cash and
cash equivalents 215,782 (243,205)
-------------------------------------------------- ------ ----------- -----------
Cash and cash equivalents at beginning
of the period 24,825 349,827
Effect of exchange differences on cash
and cash equivalents (1,531) (2,656)
-------------------------------------------------- ------ ----------- -----------
Cash and cash equivalents at end of
the period 239,076 103,966
-------------------------------------------------- ------ ----------- -----------
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
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, Strovolos, 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 its Israeli Branch.
c. As of 30 September 2023, the Company had investments in the following subsidiaries:
Name of subsidiary Country of incorporation Principal Shareholding Shareholding
/ registered office activities
At 30 September At 31 December
2022
2023 (%)
(%)
--------------------- --------------------------- -------------------- ------------------ -----------------
121, Menachem
Begin St.
Azrieli Sarona
Energean Israel Tower, POB 24, Gas transportation
Transmission Tel Aviv 67012039 license
LTD Israel holder 100 100
121, Menachem
Begin St.
Azrieli Sarona
Tower, POB 24,
Energean Israel Tel Aviv 67012039 Financing
Finance LTD Israel activities 100 100
d. The Group's core assets as of 30 September 2023 are comprised of:
Country Asset Field Working interest Field phase
-------- -------------------- ---------------------- ----------------- ------------
Israel Karish Karish Main 100% Production
Israel Karish Karish North 100% Development
Israel Tanin Tanin 100% Development
Israel Block 12, Katlan 100% Appraisal
Israel Blocks 21, 23, 31 Hercules and Hermes 100% Exploration
NOTE 2: - Accounting policies and basis of preparation
The interim financial information included in this report has
been prepared in accordance with IAS 34 "Interim Financial
Reporting" . The results for the interim period are unaudited and,
in the opinion of management, include all adjustments necessary for
a fair presentation of the results for the period ended 30
September 2023. All such adjustments are of a normal recurring
nature. 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 2022.
The financial information presented herein has been prepared in
accordance with the accounting policies expected to be used in
preparing the Group's annual consolidated financial statements for
the year ended 31 December 2023 which are the same as those used in
preparing the annual consolidated financial statements for the year
ended 31 December 2022.
The directors consider it appropriate to adopt the going concern
basis of accounting in preparing these interim financial
statements.
NOTE 3: - Revenues
30 September (Unaudited)
2023 2022
$'000 $'000
------------------------------------------- --- ----------- --- ----------
Revenue from gas sales (1) 484,238 -
Revenue from hydrocarbon liquids sales
(2) 167,275 -
Compensation to customers (3) (4,928) -
------------------------------------------- --- ----------- --- ----------
Total revenue 646,585 -
(1) Sales gas for nine months ended 30 September 2023 totaled
approximately 3.1 bcm (the Company started production on 26 October
2022).
(2) Sales from hydrocarbon liquids for nine months ended 30
September 2023 totaled approximately 2.22 mmbbl (the Company did
not sell hydrocarbon liquids during 2022).
(3) During 2021 and in accordance with the GSPAs signed with a
group of gas buyers, the Company paid compensation to these
counterparties following delays to the supply of gas from the
Karish project. The compensation is deducted from revenue, as
variable consideration, as the gas is delivered to the gas buyers,
in accordance with IFRS 15 Revenue Recognition
NOTE 4: - Operating profit (loss) before taxation
30 September (Unaudited)
2023 2022
$'000 $'000
-------------------------------------------- --- ------------ --- -----------
(a) Cost of sales
Staff costs 6,566 -
Energy cost 2,869 -
Royalty payable 117,266 -
Other operating costs 57,061 -
Depreciation and amortisation (Note 7) 131,262 -
Hydrocarbon liquids inventory movement
(Note 11) (1,650) -
------------------------------------------------- ------------ --- ---------------
Total cost of sales 313,374 -
(b) General & administration expenses (c)
Staff costs 2,544 1,115
Share-based payment charge 517 128
Depreciation and amortisation (Note 7,
8) 1,265 352
Auditor fees 135 200
Other general & administration expenses 8,721 5,423
------------------------------------------------- ------------ --- ---------------
Total administrative expenses 13,182 7,218
(c) Exploration and evaluation expenses
Other exploration and evaluation expenses 50 1,277
------------------------------------------------- ------------ --- ---------------
Total exploration and evaluation expenses 50 1,277
(d) Other expenses
Loss from disposal of inventory property,
plant and equipment 170 1,079
------------------------------------------------- ------------ --- ---------------
Total other expenses 170 1,079
(e) Other income (f)
Other income 2 53
------------------------------------------------- ------------ --- ---------------
Total other income 2 53
NOTE 5: - Net finance income/(expenses)
30 September (Unaudited)
2023 2022
$'000 $'000
-------------------------------------------------------- --- ----------- -----------
Interest on senior secured notes (1) 119,322 102,505
Interest expense on long terms payables (2) 2,485 8,716
Less amounts included in the cost of qualifying
assets (3) (11,813) (107,177)
------------------------------------------------------------- ----------- -----------
109,994 4,044
Finance and arrangement fees 1,757 3,681
Other finance costs and bank charges 497 319
Unwinding of discount on trade payable 5,407 -
Unwinding of discount on provision for decommissioning 2,513 568
Unwinding of discount on right of use asset
(1) 391 238
Less amounts included in the cost of qualifying
assets (3) (180) (3,919)
------------------------------------------------------------- ----------- -----------
10,385 887
------------------------------------------------------------ ----------- -----------
Total finance costs 120,379 4,931
------------------------------------------------------------- ----------- -----------
Interest income from time deposits (9,133) (2,543)
Interest income from loans to related parties - (3,214)
------------------------------------------------------------- ----------- -----------
Total finance income (9,133) (5,757)
Net foreign exchange (gains) losses 4,872 (1,405)
------------------------------------------------------------- ----------- -----------
Net finance expense (income) 116,118 (2,231)
------------------------------------------------------------- ----------- -----------
(1) Refer also to Note 12.
(2) Refer also to Note 13.
(3) Refer also to Note 7(A).
NOTE 6: - Taxation
1. Taxation charge:
30 September (Unaudited)
2023 2022
$'000 $'000
----------------------- --- -------------------- --------
Tax - current period (1,853) (291)
Deferred tax (44,913) 2,954
---------------------------- -------------------- --------
Total taxation income
(expense) yyyyyuuuu( (46,766) 2,663
---------------------------- -------------------- --------
NOTE 7: - Property, Plant and Equipment
a. Composition:
Furniture,
Oil and Leased fixtures
gas Assets assets and equipment Total
$'000 $'000 $'000 $'000
---------------------------------- ----------- ------- -------------- ---------
Cost:
At 1 January 2022 2,241,783 4,009 829 2,246,621
Additions (1) 514,373 731 1,165 516,269
Disposals (900) - - (900)
Capitalised borrowing cost 129,357 - - 129,357
Capitalised depreciation 632 - - 632
Change in decommissioning
provision 47,544 - - 47,544
----------------------------------- ----------- ------- -------------- ---------
Total cost at 31 December
2022 2,932,789 4,740 1,994 2,939,523
Additions (1) 175,598 12,197 311 188,106
Handover to INGL(2) (111,448) - - (111,448)
Capitalised borrowing cost 11,993 - - 11,993
Change in decommissioning
provision (13,211) - - (13,211)
----------------------------------- ----------- ------- -------------- ---------
Total cost at 30 September
2023 (unaudited) 2,995,721 16,937 2,305 3,014,963
Depreciation:
At 1 January 2022 433 693 228 1,354
Charge for the year 10,976 134 297 11,407
Capitalised to oil and gas
assets - 632 - 632
Disposals (433) - - (433)
Write down of the assets 250 - - 250
----------------------------------- ----------- ------- -------------- ---------
Total Depreciation at 31
December 2022 11,226 1,459 525 13,210
Charge for the period 130,211 1,400 659 132,270
Total Depreciation at 30
September 2023 (unaudited) 141,436 2,859 1,184 145,479
At 31 December 2022 2,921,563 3,281 1,469 2,926,313
----------------------------------- ----------- ------- -------------- ---------
At 30 September 2023 (unaudited) 2,854,285 14,078 1,121 2,869,484
----------------------------------- ----------- ------- -------------- ---------
(1) The additions to oil & gas assets in nine month period
2023 are primarily due to development costs for the FPSO, Karish
North and 2(nd) Oil Train. The additions in 2022 are primarily due
to development costs for the Karish field, incurred under the EPCIC
contract, FPSO, subsea and onshore construction.
(2) Handover to INGL took place on 22 March 2023, please refer
to note 13
NOTE 7: - Property, Plant and Equipment (Cont.)
b. Depreciation expense for the period has been recognised as follows:
30 September (Unaudited)
2023 2022
$'000 $'000
-------------------------------------- ------------- ----------
Cost of sales 131,262 -
Administration expenses 1,008 110
Capitalised depreciation in oil & gas
assets - 357
-------------------------------------- ------------- ----------
Total 132,270 467
c. Cash flow statement reconciliations:
30 September (Unaudited)
2023 2022
$'000 $'000
--------------------------------------------- ------------------------- ----------
Additions to property, plant and equipment 188,106 392,377
========================= ==========
Less:
============================================= ========================= ==========
Right-of-use asset additions 12,197 198
============================================= ========================= ==========
Capitalised depreciation - 656
============================================= ========================= ==========
Capitalised share-based payment charge - 174
============================================= ========================= ==========
Add:
============================================= ========================= ==========
Lease payments related to capital 1,942 -
activities
============================================= ========================= ==========
Capital expenditures 177,851 391,349
============================================= ========================= ==========
Movement in working capital (12,938) (159,312)
============================================= ========================= ==========
Payment for additions to property,
plant and equipment as per the cash
flow statement 164,913 232,037
============================================= ========================= ==========
NOTE 8: - Intangible Assets
a. Composition:
Exploration
and evaluation
assets Software licences Total
$'000 $'000 $'000
----------------------------------- --------------- ----------------- -------
Cost:
At 1 January 2022 20,141 255 20,396
Additions (1) 123,005 1,713 124,718
Write off of exploration and
evaluation costs (2) (1,277) - (1,277)
------------------------------------ --------------- ----------------- -------
At 31 December 2022 141,869 1,968 143,837
Additions (1) 17,113 - 17,113
At 30 September 2023 (unaudited) 158,982 1,968 160,950
Amortisation:
At 1 January 2022 - 255 255
Charge for the year - 28 28
------------------------------------ --------------- ----------------- -------
Total Amortisation at 31 December
2022 - 283 283
Charge for the period - 257 257
------------------------------------ --------------- ----------------- -------
Total Amortisation at 30 September
2023 (unaudited) - 540 540
At 31 December 2022 141,869 1,685 143,554
------------------------------------ --------------- ----------------- -------
At 30 September 2023 (unaudited) 158,982 1,428 160,410
------------------------------------ --------------- ----------------- -------
(1) Additions to exploration and evaluation assets are primarily
related to the 2022 growth drilling programme undertaken offshore
Israel.
(2) Zone D: On 27 July 2022, the Company sent a formal notice to
the Ministry of Energy notifying the relinquishment of Zone D and
discontinuation of related work. As such, the licences subsequently
expired on 27 October 2022.
b. Cash flow statement reconciliations:
30 September (Unaudited)
2023 2022
$'000 $'000
----------------------------- ----------- --------------
Additions to intangible
assets 17,113 66,219
Associated cash flows
Movement in working capital 75,521 (47,396)
=============================== =========== ==============
Payment for additions to
intangible assets 92,634 18,823
=============================== =========== ==============
NOTE 9: - Deferred taxes
The Group is subject to corporation tax on its taxable profits
in Israel at the rate of 23%. The capital gain tax rates depend on
the purchase date and the nature of the asset. The general capital
gains tax rate for a corporation is the standard corporate tax
rate.
Tax losses can be utilised for an unlimited period, and tax
losses may not be carried back.
According to Income Tax (Deductions from Income of Oil Rights
Holders) Regulations, 5716-1956, the exploration and evaluation
expenses of oil and gas assets are deductible in the year in which
they are incurred.
The Group expects that there will be sufficient taxable profits
in the following years and that deferred tax assets, recognised in
the interim condensed consolidated financial statements of the
Group, will be recovered.
NOTE 9: - Deferred taxes (Cont.)
Below are the items for which deferred taxes were
recognised:
Right of
use asset
Accrued
expenses
and other
Property, short --
plant and term liabilities
equipment Deferred and other
& intangible expenses Staff leaving long -- Decommissioning
assets IFRS 16 Tax losses for tax indemnities term liabilities provision Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-------------------------------------------- --- ------------ --------- ----------- -------- ------------- ---------------- ---------------- --------
At 1 January 2022 (12,632) (762) 4,750 11,031 94 923 8,171 11,575
Increase/(decrease)
for the year through:
Profit or loss (27,712) 8 51,665 (4,822) 73 270 (8,171) 11,311
------------------------------------------------- ------------ --------- ----------- -------- ------------- ---------------- ---------------- --------
At 1 January 2023 (40,344) (754) 56,415 6,209 167 1,193 - 22,886
------------------------------------------------- ------------ --------- ----------- -------- ------------- ---------------- ---------------- --------
Increase/(decrease)
for the period through:
Profit or loss (16,269) (2,393) (28,382) (472) 50 2,552 - (44,914)
At 30 September 2023 (56,613) (3,147) 28,033 5,737 217 3,745 - (22,028)
------------------------------------------------- ------------ --------- ----------- -------- ------------- ---------------- ---------------- --------
30 September
20 23 31 December
(Unaudited) 2022
$'000 $'000
------------------------- ------------- ------------
Deferred tax liabilities (59,760) (41,099)
Deferred tax assets 37,732 63,985
----------------------------- ------------- ------------
(22,028) 22,886
NOTE 10: - Trade and other receivables
30 September
20 23 31 December
(Unaudited) 2022
$'000 $'000
---------------------------------------------- -------------- -------------
Current
Financial items
Trade receivables
Trade receivables 112,955 37,491
Other receivables (1) 6,646 999
Refundable VAT - 37,131
Accrued interest income 101 888
-------------------------------------------------- -------------- -------------
119,702 76,509
Non-financial items
Prepayments 544 159
Deferred expenses (2) - 4,929
Prepaid expenses and other receivable 1,166 1,014
-------------------------------------------------- -------------- -------------
1,710 6,102
Total current trade and other receivables 121,412 82,611
Non-current
Financial items
Deposits and prepayments 507 108
-------------------------------------------------- -------------- -------------
507 108
------------------------------------------------- -------------- -------------
Total non-current trade and other receivables 507 108
-------------------------------------------------- -------------- -------------
(1) The increase from 2022 is due to the recognition of a
receivable from INGL, please refer to Note 13(4) for further
details.
(2) Deferred expenses relate to compensation to gas buyers
following delays to the supply of gas from the Karish project. This
compensation is treated as variable consideration under IFRS 15
Revenue Recognition and therefore, reduced from gas sales following
commencement of production, please refer also Note 3.
NOTE 11: - Inventory
30 September
20 23 31 December
(Unaudited) 2022
$'000 $'000
--------------------------- ------------- ------------
Raw materials and supplies 7,379 5,563
Hydrocarbon liquids 3,987 2,367
Natural gas 490 383
Total 11,856 8,313
NOTE 12: - Borrowings and secured notes
a. Issuance of US$2,500,000,000 senior secured notes:
On 24 March 2021 (the "Issue Date"), Energean Israel Finance Ltd
(a 100% subsidiary of the Company) issued US$2,500 million of
senior secured notes. The proceeds were primarily used to repay in
full the project finance facility.
On 11 July 2023, Energean Israel Finance Ltd. Ltd completed the
offering of US$750 million aggregate principal amount of senior
secured notes with a fixed annual interest rate of 8.500%. The
interest on the Notes will be paid semi-annually, on March 30 and
September 30 of each year, beginning on March 30, 2024. The Notes
are listed for trading on the TASE-UP of the Tel Aviv Stock
Exchange Ltd. (the "TASE"). The proceed from the Offering, was
released from escrow in September 2023 and was used to a) refinance
the $625 million notes due in 2024 (redemption date on 30 September
2023), b) pay fees and expenses associated with this refinancing,
c) contribute towards funding the interest payment reserve account,
and d) contribute towards the payment of the final deferred
consideration to Kerogen.
The Notes were issued in five tranches as follows:
30 September 20 31 December
23
(Unaudited) 2022
Series Maturity Annual fixed
Interest Carrying value
rate Carrying value $'000 $'000
------------------ --------------- ------------- --------------------- ---------------
US$ 625 million 30 March 2024 4.500% - 620,461
US$ 625 million 30 March 2026 4.875% 619,462 617,912
US$ 625 million 30 March 2028 5.375% 617,852 616,767
US$ 625 million 30 March 2031 5.875% 616,628 615,890
30 September
US$ 750 million 2031 8.500% 733,906 -
------------------ --------------- ------------- --------------------- ---------------
US$2,625 million 2,587,848 2,471,030
The interest on each series of the Notes is paid semi-annually,
on 30 March and on 30 September of each year.
The Notes are listed on the TASE-UP 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"), as amended and
supplemented, no indenture default or indenture event of default
has occurred and is continuing.
Collateral:
The Company has provided/undertakes to provide the following
collateral in favor of the Trustee:
a. 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 sale and purchase agreements ("GSPAs"),
several bank accounts, operating permits, insurance policies, the
Company's exploration licences and the INGL Agreement.
b. Floating charge over all of the present and future assets of
Energean Israel Limited and Energean Israel Finance Ltd.
c. The Energean Power FPSO.
Credit rating:
The senior secured notes have been assigned a Ba3 rating by
Moody's and a BB- rating by S&P Global.
NOTE 13: - Trade and other payables
30 September
20 23 31 December
(Unaudited) 2022
$'000 $'000
------------------------------------------- ------------- --------------
Current
Financial items
Trade accounts payable (1) 144,990 209,853
Payables to related parties 14,103 21,028
VAT payable 5,105 -
Deferred licence payments due within one
year (2) 12,852 13,345
Other creditors 21,843 6,712
Current lease liabilities 7,870 1,792
----------------------------------------------- ------------- --------------
206,763 252,730
Non-financial items
Accrued expenses (1) 39,897 29,404
Other finance costs accrued 14,147 32,227
Contract liability (4) - 56,230
Social insurance and other taxes 759 502
Income taxes 1,517 6
----------------------------------------------- ------------- --------------
56,320 118,369
Total current trade and other payables 263,083 371,099
----------------------------------------------- ------------- --------------
Non-current
financial items
Trade and other payables (3) 144,092 169,360
Deferred licence payments (2) 28,629 38,488
Long term lease liabilities 6,786 2,214
----------------------------------------------- ------------- ------------
179,507 210,062
Non-financial items
Accrued expenses to related parties 531 179
531 179
---------------------------------------------- ------------- ------------
Total non-current trade and other payables 180,038 210,241
----------------------------------------------- ------------- ------------
(1) Trade payables and accrued expenses relate primarily to
development expenditure on the Karish project, with the main
contributors being FPSO and subsea construction costs and for
drilling activities performed offshore Israel. Trade payables are
non-interest bearing.
(2) In December 2016, the Company acquired the Karish and Tanin
leases for US$40 million of upfront consideration plus contingent
consideration of US$108.5 million (paid over 10 equal instalments)
bearing interest at an annual rate of 4.6%. On 30 September 2023,
the total discounted deferred consideration was US$41 million (31
December 2022: US$52million). Refer to Note 16.
(3) This represents the amount payable to Technip in respect of
the EPCIC contract. Under this contract, US$250 million becomes
payable nine months following the practical completion date (June
18, 2023), and is payable in eight equal quarterly instalments,
bearing no interest. A discount rate of 5.831% has been applied (
being the yield rate of the senior secured loan notes, maturing in
2024, at the date of entering into the settlement agreement) . The
amounts payable to Technip up to 30 September 2024 under this
contract are presented as part of trade accounts payable -
current.
(4) The contract liability relates to the agreement with Israel
Natural Gas Lines ("INGL") for the transfer of title (the "Hand
Over") of the near shore and onshore segments of the infrastructure
that delivers gas from the Energean Power FPSO into the Israeli
national gas transmission grid. The Hand Over became effective in
March 2023. Following the Hand Over, INGL is responsible for the
operations and maintenance of this part of the infrastructure and
the related asset (refer to Note 7) and contract liability was
derecognised. The final $5million consideration is receivable
within 12 months of handover and is recognised within other
receivable (refer to Note 10).
NOTE 14: - Financial Instruments
Fair Values :
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 of the Group's finance
lease obligations is estimated using discounted cash flow analysis
based on the Group's current incremental borrowing rates for
similar types and maturities of borrowing and are consequently
categorized in level 2 of the fair value hierarchy.
There were no transfers between fair value levels during the
period.
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 at 30
September 2023 (unaudited)
Level 1 Level 2 Total
$'000 $'000 $'000
--------------------------- --------- -------- ---------
Financial assets
Short term restricted cash 24,500 - 24,500
Short term trade and other
receivables - 119,702 119,702
Cash and cash equivalents 239,076 - 239,076
------------------------------- --------- -------- ---------
Total 263,576 119,702 383,278
------------------------------- --------- -------- ---------
Financial liabilities
Senior secured notes (1) 2,439,500 - 2,439,500
Trade and other payables -
long term - 179,507 179,507
Trade and other payables -
short term - 206,763 206,763
------------------------------- --------- -------- ---------
Total 2,439,500 386,270 2,825,770
------------------------------- --------- -------- ---------
Fair value hierarchy as at 31
December 2022
Level 1 Level 2 Total
$'000 $'000 $'000
--------------------------- --------- -------- ---------
Financial assets
Short term restricted cash 71,778 - 71,778
Short term trade and other
receivables - 76,509 76,509
Cash and cash equivalents 24,825 - 24,825
------------------------------- --------- -------- ---------
Total 96,603 76,509 173,112
------------------------------- --------- -------- ---------
Financial liabilities
Senior secured notes (1) 2,298,125 - 2,298,125
Trade and other payables -
long term - 210,062 210,062
Trade and other payables -
short term - 252,730 252,730
------------------------------- --------- -------- ---------
Total 2,298,125 462,792 2,760,917
------------------------------- --------- -------- ---------
(1) The senior secured notes are measured at amortised cost in
the Group's financial statements. The notes are listed for trading
on the TACT Institutional of the Tel Aviv Stock Exchange Ltd (the
"TASE"). The carrying amount as of 30 September 2023 was US$2,588
million and as of 31 December 2022 was US$2,471 million.
NOTE 15: - Significant events and transaction during the reporting period
(a) Gas Sales Agreements - Energean signed spot gas sale and
purchase agreement with three Israeli gas buyers. The gas price
will be determined in each period, with purchased amounts
determined on a daily basis. The agreement will be valid for an
initial one-year period with an option to extend subject to
ratification by both parties.
(b) INGL Hand-Over completion - The Hand Over became effective
in March 2023. Following the Hand Over, INGL is responsible for the
operations and maintenance of this part of the infrastructure.
(c) Completion of offering of US$750,000,000 senior secured notes - see Note 12.
NOTE 1 6: - Significant events and transaction after the reporting period
(a) Interim dividend - An interim dividend of US$78 million was
declared and paid on the 18 October, as part of the process to make
the final deferred consideration to Kerogen.
(b) Israel-Hamas conflict ( Swords of Iron War ) - as of 7
October 2023, following an unprecedented attack against Israel by
Hamas, Israel has been declared in a state of war. While the
situation has not impacted the Company's production from the FPSO,
it is not possible to predict whether the conflict will have a
material adverse effect on our future earnings, cash flows and
financial conditions.
(c) Karish and Tanin purchase agreement - In November 2023,
Energean Israel reached a settlement with NewMed Energy for the
remaining deferred consideration under the original purchase
agreement of the Karish and Tanin leases of approximately $47.4
million, which includes the agreed annual interest. This will be
paid in 2024 in two instalments. This agreement is final and
unappealable.
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END
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