Energean Announces Results for Half Year Ended 30 June 2021

Source: www.oilegypt.com 9/2/2021, Location: Africa

Energean plc (ENOG) is pleased to announce its half-year results for the six months ended 30 June 2021 ("1H 2021").

Mathios Rigas, Chief Executive of Energean, commented:

"During 1H 2021, Energean delivered excellent operational and financial progress, reflecting the transformational nature of the acquisition of Edison E&P. Production is outperforming guidance, translating into record financial performance and, through successful execution of our gas- and returns-focused strategy, we have achieved a significant milestone in our transformation into a 200 kboed, $2 billion annual revenue generating, sustainable dividend yielding, energy company. In addition, we further strengthened and de-risked our balance sheet by raising the largest ever EMEA energy international high yield bond and remain fully-funded for all projects across our nine countries of operation.

"Despite continued COVID-19 related challenges, we have delivered solid progress on our flagship Karish gas development project, which remains firmly on track to deliver first gas in mid-2022. There are a number of potential acceleration measures under active consideration and, at 31 August 2021, the workforce on the Karish project was in excess of 1,700, an approximate 70% month-on-month increase. Further growth in Israel will be delivered through our (up to) five-well offshore growth programme, with the Stena IceMax drilling rig commencing operations in 1Q-2022. The programme targets an additional 1 billion boe, which has the potential to double our reserve base with high quality resource volumes that can be quickly, economically, and safely monetised. Globally, gas prices are strong and we are assessing several commercial opportunities to access international markets, as well as the growing Israeli domestic market, if (and when) additional gas resources become available to us.

"In the second half of the year, we look forward to continuing to deliver our key gas development projects in Egypt and Italy, which alongside commencement of the revised Epsilon project in Greece, will provide further, substantial near-term growth and value realisation in the Mediterranean region.

"The recently published Intergovernmental Panel on Climate Change report on the impacts of global warming made for stark reading and emphasized the need for immediate action. As a business, we have taken full responsibility for our own emissions profile, showcased by publication of our first Climate Change Policy, which outlines the short, medium, and long-term actions we will take as part of our commitment to become a net zero emitter by 2050. In the first half of 2021, we reduced the carbon intensity of our operations by more than 19% versus 2020 levels[2]; representing a 73% reduction versus our base year of 2019. This is a trajectory we are committed to continuing, and we are investigating all options to accelerate our net zero commitment ahead of 2050, in recognition of the need for urgent.

Highlights - Operational

- 1H 2021 average working interest production was 44.0 kboed (72% gas), ahead of full year guidance of 38 - 42 kboed (71% gas)

- Production outperformed guidance across all countries of operation

- Demonstrates Energean's ability to maximise value from the ex-Edison E&P assets and to successfully integrate Edison E&P within six-months of transaction close

- On track to deliver first gas from Karish in mid-2022

- On 31 July 2021, the project was 91.5% complete

- Core focus on optimising and accelerating the timetable with options being actively considered (and not reflected in the current timetable)

- On 31 August 2021, the workforce on the Energean Power FPSO stood at more than 1,700 workers, up approximately 70% month-on-month - Rig contract signed with Stena Drilling Limited ("Stena") for 2022-23 growth drilling programme, offshore Israel

- Targeting the de-risking of prospective recoverable resources of over 1 billion barrels of oil equivalent ("boe")

- Awarded an Engineering, Procurement, Construction and Installation ("EPCI") contract to TechnipFMC to develop the North East Almeyra ("NEA")/North Idku ("NI") project, shallow-water offshore Egypt, in February 2021

- Project remains on track to deliver first gas in 2H 2022

- Project expected to deliver IRRs in excess of 30%

- Cassiopea gas development project, Italy, 23% complete at 31 July 2021 and on track to deliver first gas in 1H 2024

- Final Investment Decision ("FID") taken on the revised 53 MMbbls 2P + 2C Epsilon satellite tieback project, offshore Greece

- First oil expected in 1H 2023 (subject to financing)

- Financing package expected to be finalised in 3Q 2021

Highlights - Corporate and ESG

- Issued $2.5 billion of senior secured notes in March 2021 at an average coupon rate of approximately 5.2%

- Significantly reducing financing risk on the Karish project, as the project finance facility had been due to mature in 2022

- Extending average life of debt for Energean plc from approximately 2.5 years at 30 June 2020 to approximately 6 years at 31 July 2021

- Completed the highly accretive acquisition of the 30% minority interest in Energean Israel Limited ("EISL") in February 2021

- Acquisition transacted at a 49% discount to CPR-derived NPV10

- Increased 2P reserves across the portfolio to nearly 1 billion boe (79% gas)

- 1H 2021 Scope 1 and 2 carbon emissions of approximately 18 kg/boe, a significant step towards Energean's target of achieving net zero emissions ahead of 2050, representing a:

- 19% reduction versus 2020 levels[5];

- 73% reduction versus 2019; and

- On track to beat previous 2021 guidance of 21 kg/boe by approximately 15%

Highlights - Financial

- Substantial year-on-year improvement in financial results, demonstrating the magnitude and significance of the acquisition of Edison E&P

- Revenues increased to $206 million (1H 2020: $2 million), primarily due to the transformational nature of the acquisition of Edison E&P

- Unit cost of production reduced by 44% to $15.4/boe (1H 2020: $27.5/boe)

- Positive EBITDAX6 of $75 million (1H 2020: negative $8.9 million)

- Positive operating cash flows of $53.1 million (1H 2020: $14.5 million outflow)

- Cash, cash equivalents and restricted cash of $1.1 billion at 30 June 2021 (restricted amounts represent $266 million)

- Providing significant financial flexibility

- Ensures all planned activities are fully-funded


- 2021 production guidance re-iterated at 38 - 42 kboed

- 2021 development and production capital expenditure guidance re-iterated as $470 - 550 million and exploration capital expenditure guidance re-iterated as $55 - 70 million

- 2021 emissions intensity guidance reduced by approximately 15% to 18 kg CO2/boe (from 21 kgCO2/boe)

- Sailaway of the Energean Power FPSO from Singapore to Israel in 1Q 2022 with first gas from Karish expected mid-2022

- Acceleration measures being considered for implementation

- Commencement of the high-impact growth drilling campaign in 1Q 2022, starting with Athena

- First drilling results anticipated during 2Q 2022, marking a catalyst-rich start to 2022

- Continued progress on key gas development projects in Egypt (NEA / NI) and Italy (Cassiopea)

- Finalisation of funding for the Epsilon project, Greece, and commencement of the development programme, expected 2H 2021

- Acceleration of the Green Prinos suite of projects

- Pre-Front-End Engineering Design ("pre-FEED") on the carbon capture and storage ("CCS") project expected to commence in 2H 2021

- Future dividend policy to be declared in due course

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