TIDMENOG
RNS Number : 8328Y
Energean PLC
08 September 2022
Energean Israel Limited
Unaudited interim condensed consolidated financial statements
30 June 2022
ENERGEAN ISRAEL LIMITED
Unaudited interim condensed consolidated financial
statements
AS OF 30 JUNE 2022
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 5-16
- - - - - - - - - - - - - - - - - - - -
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(Amounts in thousands US Dollars, unless otherwise stated)
30
June 31 December
2022 2021
---------- ------------
Unaudited Audited
---------- ------------
Note
--------
ASSETS:
NON-CURRENT ASSETS:
Property, plant and equipment 3(A) 2,584,894 2,245,267
Intangible assets 3(B) 54.527 20,141
Other accounts receivable 6(B) 82 6,463
Loan to related party 6(B) - 346,000
Restricted cash 3(D)(2) - 100,000
Deferred expenses 3(C) - 22,958
Deferred tax asset 5 14,458 11,575
---------- ------------
2,653,961 2,752,404
---------- ------------
CURRENT ASSETS:
Trade and other receivables 32,152 22,769
Deferred expenses 3(C) 22,958 -
Restricted cash 3(D)(2) 135,610 99,729
Cash and cash equivalents 218,711 349,827
---------- ------------
409,431 472,325
---------- ------------
TOTAL ASSETS 3,063,392 3,224,729
========== ============
EQUITY AND LIABILITIES:
EQUITY:
Share capital 1,708 1,708
Share premium 6(B) 212,539 572,539
Accumulated losses (40,851) (35,946)
---------- ------------
TOTAL EQUITY 173,396 538,301
---------- ------------
NON-CURRENT LIABILITIES:
Senior secured notes 3(D) 2,467,251 2,463,524
Provisions for decommissioning 26,609 35,525
Trade and other payables 3(F) 160,587 113,264
---------- ------------
2,654,447 2,612,313
---------- ------------
CURRENT LIABILITIES:
Trade and other payables 3(F) 235,549 74,115
---------- ------------
TOTAL LIABILITIES 2,889,996 2,686,428
---------- ------------
TOTAL EQUITY AND LIABILITIES 3,063,392 3,224,729
========== ============
September 7, 2022
------------------ ----------------- ----------------
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
Six months ended 30 June 2022
(Amounts in thousands US Dollars, unless otherwise stated)
30 June (Unaudited)
-------------------------------
2022 2021
-------------------- ---------
Note
-----
Administrative expenses 4(A) (5,453) (1,735)
Other expenses 4(A) (1,074) (28)
Other income 4(A) 53 -
-------------------- ---------
Operating loss (6,474) (1,763)
Finance income 4(B) 4,504 1,808
Finance expenses 4(B) (4,671) (9,436)
Foreign exchange loss 4(B) (967) (727)
-------------------- ---------
(1,134) (8,355)
Loss for the period before tax (7,608) (10,118)
Tax income 5 2,703 2,571
-------------------- ---------
Net loss for the period (4,905) (7,547)
-------------------- ---------
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
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)
-------------------- ---------
Other comprehensive income for the
period - 5,328
-------------------- ---------
Total comprehensive loss for the period (4,905) (2,219)
==================== =========
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
Six months ended 30 June 2022
(Amounts in thousands US Dollars, unless otherwise stated)
For the period of six months ended 30 June 2022 (Unaudited):
Share Share Accumulated Total
capital premium losses equity
--------- ---------- ------------ ----------
Balance as of 1 January 2022 1,708 572,539 (35,946) 538,301
Changes during period:
Transactions with shareholders
Share premium reduction, see
note 6(B) - (360,000) - (360,000)
Comprehensive loss:
Loss for the period - - (4,905) (4,905)
--------- ---------- ------------ ----------
Balance as of 30 June 2022 1,708 212,539 (40,851) 173,396
========= ========== ============ ==========
For the period of six months ended 30 June 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 - - - (7,547) (7,547)
Other comprehensive income,
net of tax - - 5,328 - 5,328
--------- --------- ---------- ------------ --------
Balance as of 30 June 2021 1,708 572,539 - (32,661) 541,586
========= ========= ========== ============ ========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended 30 June 2022
(Amounts in thousands US Dollars, unless otherwise stated)
30 June (Unaudited)
-------------------------
2022 2021
----------- ------------
Cash flows from operating activities:
Loss for the period before tax (7,608) (10,118)
----------- ------------
Adjustments for:
Depreciation and amortisation 110 50
Loss from disposal on property, plant
and equipment 1,074 23
Decommissioning discount unwinding 343 343
Other expenses - 5
Finance income )4,504) (1,808)
Finance expenses 4,330 9,093
Net foreign exchange loss 967 727
----------- ------------
(5,288) (1,685)
Changes in working capital:
Decrease (increase) in other receivables 871 (183)
Decrease in trade and other payables (310) (932)
----------- ------------
560 (1,115)
Income taxes paid (558) -
----------- ------------
Net cash used in operating activities (5,285) (2,800)
----------- ------------
Cash flows from investing activities:
Payment for purchase of oil & gas
leases - (10,850)
Payment for purchase of property,
plant and equipment (130,118) (97,615)
Payment for purchase of intangible
assets (10,034) (3,682)
Proceeds from disposals of property,
plant and equipment 188 -
Amounts received from INGL related
to the future transfer disposals of
property, plant and equipment 17,371 -
Movement in restricted cash 64,119 (266,241)
Interest received 1,544 123
----------- ------------
Net cash used in investing activities (56,930) (378,265)
----------- ------------
Cash flows from financing activities:
Senior secured notes issuance - 2,500,000
Transaction cost due to senior secured
notes issuance - (37,218)
Interest paid due to senior secured (64,453)
notes -
Drawdown of borrowings - 118,000
Repayment of borrowings - (1,268,000)
Loan to related party (*) - (175,884)
Repayment of loan from related parties - (16,000)
Finance cost paid (1,869) (41,861)
Finance costs paid for deferred license
payments - (3,494)
Repayment of obligations under leases (499) (169)
----------- ------------
Net cash generated (used) from financing
activities (66,821) 1,075,374
----------- ------------
Net increase (decrease) in cash and
cash equivalents (129,036) 694,309
Cash and cash equivalents at the beginning
of the period 349,827 37,421
Effect of exchange rate fluctuations
on cash held (2,080) (146)
----------- ------------
Cash and cash equivalents at the end
of the period 218,711 731,584
=========== ============
(*) The loan to related party was repaid as part of the Share
Premium Capital reduction, see note 6(B).
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") was
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 June 2022 are composed 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 licences Zone D (1) 80% Exploration
(1) The Company holds 80% interests in four licences, blocks 55,
56, 61 and 62 (together, "Zone D") in Israel's Exclusive Economic
Zone ("EEZ"). Following Energean's submission of a formal notice of
relinquishment to the Ministry of Energy, the licences will expire
on 27 October 2022, at the end of their term. See note 7(A).
D. The Energean Power FPSO arrived on location in Israel on 5
June 2022 and is expected to deliver first gas within a few
weeks.
NOTE 2: ACCOUNTING POLICIES AND BASIS OF PREPARATION
These unaudited interim condensed consolidated financial
statements for the six months ended 30 June 2022 have been prepared
in accordance with the International Financial Reporting Standards
("IFRS") as adopted by United Kingdom (UK). 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 2021.
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:
Furniture,
Oil & gas Leased fixtures
properties assets and equipment Total
----------- ------- -------------- ---------
Cost:
At 1 January 2021 1,812,758 604 635 1,813,997
Additions (*) 243,346 3,405 194 246,945
Disposals (23) - - (23)
Capitalised borrowing cost
(**) 188,889 - - 188,889
Capitalised depreciation 362 - - 362
Change in decommissioning
provision (3,549) - - (3,549)
----------- ------- -------------- ---------
Total cost at 31 December
2021 2,241,783 4,009 829 2,246,621
Additions (*) 286,844 198 1,922 288,964
Disposals (900) - - (900)
Capitalised borrowing cost
(**) 60,749 - - 60,749
Capitalised depreciation 357 - - 357
Change in decommissioning
provision (9,259) - - (9,259)
----------- ------- -------------- ---------
Total cost at 3 0 June 2022 2,579,574 4,207 2,751 2,586,532
----------- ------- -------------- ---------
Depreciation:
At 1 January 2021 - 331 143 474
Charge for the year - - 85 85
Capitalised to petroleum
and gas assets - 362 - 362
Write down of the assets 433 - - 433
----------- ------- -------------- ---------
Total Depreciation at 31
December 2021 433 693 228 1,354
Expensed for the period - - 110 110
Disposals (433) - - (433)
Write down of the assets 250 - - 250
Capitalised to petroleum
and gas assets - 357 - 357
----------- ------- -------------- ---------
Total Depreciation at 30
June 2022 250 1,050 338 1,638
----------- ------- -------------- ---------
Net property, plant and
equipment at 31 December
2021 2,241,350 3,316 601 2,245,267
=========== ======= ============== =========
Net property, plant and
equipment at 30 June 2022 2,579,324 3,157 2,413 2,584,894
=========== ======= ============== =========
(*) The additions to oil & gas properties are primarily due
to development costs for the Karish field, incurred under the EPCIC
contract. Works relate primarily to the FPSO, subsea and onshore
construction.
(**) Capitalised borrowing costs relate primarily to the secured
senior notes.
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:
30 June (Unaudited)
------------------------------
2022 2021
------------------- ---------
Additions to property, plant and equipment 339,911 280,576
Associated cash flows
Payment for additions to property,
plant and equipment (*) (130,118) (108,465)
Non-cash movements/presented in other
cash flow lines
Capitalised borrowing costs (60,749) (122,175)
Right-of-use asset additions (198) (57)
Capitalised share-based payment charge (109) (65)
Capitalised depreciation (357) (106)
Change in decommissioning provision 9,259 4,034
Movement in working capital (157,639) (53,742)
(*) This amount includes US$10.85 million which was paid to the
sellers of the Karish and Tanin leases during 2021.
B. Intangible Assets:
1) Composition:
Exploration
and evaluation Software
assets license Total
--------------- -------- ------
Cost:
At 1 January 2021 13,799 255 14,054
Additions 6,342 - 6,342
--------------- -------- ------
At 31 December 2021 20,141 255 20,396
--------------- -------- ------
Additions (*) 34,386 - 34,386
--------------- -------- ------
At 31 June 2022 54,527 255 54,782
--------------- -------- ------
Amortisation:
At 1 January 2021 - 247 247
Charge for the year - 8 8
--------------- -------- ------
Total Amortisation at 31 December
2021 - 255 255
--------------- -------- ------
Expensed for the period - - -
--------------- -------- ------
Total Amortisation at 30 June
2022 - 255 255
--------------- -------- ------
Net intangible assets at 31
December 2021 20,141 - 20,141
=============== ======== ======
Net intangible assets at 30
June 2022 54,527 - 54,527
=============== ======== ======
(*) Additions to exploration and evaluation assets are primarily
due to geological surveys, seismic acquisition and processing and
drilling activities undertaken in Block 12, offshore Israel. See
also notes 6(E), 6(F).
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:
30 June (Unaudited)
-------------------------------
2022 2021
------------------- -------
Additions to intangible assets 34,386 3,738
Associated cash flows
Payment for additions to intangible
assets (10,034) (3,682)
Non-cash movements/presented in other
cash flow lines
Movement in working capital (24,352) (56)
C. Deferred expenses
Deferred expenses relate to compensation of US$22.9 million that
was accrued in 2021 following delays to the supply of gas from the
Karish project. It is presented on the balance sheet as a current
asset as it will be treated as variable consideration under IFRS
15, offsetting gas sales once gas delivery commences. First gas
from the Karish project is expected within the next few weeks.
D. Senior secured notes:
1) 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$2,500,000,000 of
senior secured notes.
The Notes were issued in four equal tranches as follows:
30 31 December
June 2021
2022
--------------- ---------------
Series Maturity Annual fixed
Interest
rate Carrying value Carrying value
------------------ --------------- ------------- --------------- ---------------
US$ 625 million 30 March 2024 4.500% 618,741 617,060
US$ 625 million 30 March 2026 4.875% 616,930 615,966
US$ 625 million 30 March 2028 5.375% 616,107 615,451
US$ 625 million 30 March 2031 5.875% 615,473 615,047
------------------ --------------- ---------------
US$2,500 million 2,467,251 2,463,524
=================================== =============== ===============
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 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.
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) Restricted cash:
As of 30 June 2022, the restricted cash of the Company
includes:
o Short term restricted cash of US$100 million debt payment fund
that will be released upon achieving three quarters of production
of 3.8 bcm/year on an annualised basis
o Short term restricted cash of US$35.6 million to cover the
interest reserve account for the accrued interest of the senior
secured notes till 30 June 2022.
3) Credit rating:
The senior secured notes have been assigned a Ba3 rating by
Moody's and a BB- rating by S&P Global.
E. 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 June 2022
-----------------------------------
Unaudited
-----------------------------------
Level Level Total
1 2
----------- --------- -----------
Financial assets
Short term restricted cash 135,610 - 135,610
Short term trade and other receivables - 31,741 31,741
Cash and cash equivalents 218,711 - 218,711
----------- --------- -----------
Total 354,321 31,741 386,062
----------- --------- -----------
Financial liabilities
Senior
secured
notes
(*) 2,189,375 - 2,189,375
Trade and other payables - long
term - 160,587 160,587
Trade and other payables - short
term - 127,907 127,907
----------- --------- -----------
Total 2,189,375 288,494 2,477,869
----------- --------- -----------
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
2021
------------------------------------------
Audited
------------------------------------------
Level 1 Level 2 Total
-------------- ----------- -------------
Financial assets
Long term trade and other
receivables - 6,402 6,402
Loan to related party - 346,000 346,000
Long term restricted cash 100,000 - 100,000
Short term restricted cash 99,729 - 99,729
Short term trade and other
receivables - 22,176 22,176
Cash and cash equivalents 349,827 - 349,827
-------------- ----------- -------------
Total 549,556 374,578 924,134
-------------- ----------- -------------
Financial liabilities
Senior secured notes (*) 2,483,750 - 2,483,750
Trade and other payables
- long term - 59,727 59,727
Trade and other payables
- short term - 35,918 35,918
-------------- ----------- -------------
Total 2,483,750 100,039 2,583,789
-------------- ----------- -------------
(*) The senior secured notes are measured at amortised cost in
the Company'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 June 2022 was
US$2,467 million and as of 31 December 2021 was US$2,463
million.
F. Trade and other payables:
30 June 31 December
2022 2021
--------- -----------
Unaudited Audited
--------- -----------
Current
Financial items
Trade accounts payable (1) 90,436 32,611
Payables to related parties 12,057 1,079
Deferred license payments (2) 24,466 -
Value added tax payable - 1,217
Current lease liabilities 948 1,011
--------- -----------
127,907 35,918
Non-Financial items
Accrued expenses (1) 20,348 5,611
Interest payable 32,227 32,227
Sales consideration received in advance
(4) 54,690 -
Social insurance and other taxes 377 132
Income taxes - 227
--------- -----------
107,642 38,197
235,549 74,115
========= ===========
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 June 31 December
2022 2021
--------- -----------
Unaudited Audited
--------- -----------
Non-current
Financial items
Accrued expenses to related parties 199 294
Long term lease liabilities 2,177 2,203
Trade and other payables (3) 122,579 -
Deferred license payments (2) 35,632 57,230
--------- -----------
160,587 59,727
Non-Financial items
Sales consideration received in advance
(4) - 53,537
160,587 113,264
========= ===========
(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. Trade
payables are non-interest bearing.
(2) In December 2016, the Company acquired the Karish and Tanin
leases for US$40 million of up front consideration plus contingent
consideration of US$108.5 million (paid over 10 equal instalments)
bearing interest at an annual rate of 4.6%. As at 30 June 2022, the
total discounted deferred consideration was US$60 million (31
December 2021: US$57million).
The Sale and 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, the deferred payment due in March 2022 was
postponed accordingly.
(3) Amount payable to Technip in respect of the EPCIC contract.
The amount is payable in eight equal instalments commencing
nine-months following practical completion of the project and
therefore has been discounted at 5.831% per annum.
(4) The sales consideration received in advance relates 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. 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 is expected in the next few weeks. Following Hand Over, INGL
will be responsible for the operation and maintenance of this part
of the infrastructure.
ENERGEAN ISRAEL LIMITED
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Amounts in thousands US Dollars, unless otherwise stated)
NOTE 4: COMPREHENSIVE INCOME
30 June (Unaudited)
-------------------------
2022 2021
----------- ----------
General & administration expenses
Payroll costs 935 665
Share-based payment charge included in
administrative expenses 80 54
Depreciation and amortisation (Notes 3(A)
and 3(B)) 110 50
Auditor fees 88 118
Other general & administration expenses 4,240 848
----------- ----------
Total administrative expenses 5,453 1,735
Other expenses
Reversal of prior period provision - 5
Loss from property, plant and equipment
disposal 1,074 23
----------- ----------
Total other expenses 824 28
----------- ----------
Other income
Gain from disposal (53) -
----------- ----------
Total other income (53) -
----------- ----------
A. Operating loss:
.
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):
30 June ) Unaudited)
------------------------
2022 2021
---------- ----------
Interest on bank borrowings - 76,890
Interest on senior secured notes (1) 68,179 33,791
Interest expense on long terms payables 4,731 458
Interest on shareholders loan - 9
Less amounts included in the cost of
qualifying assets (2) (68,866) (106,823)
---------- ----------
4,044 4,325
Finance and arrangement fees 2,842 13,074
Other finance costs and bank charges 284 29
Interest expenses from Hedging - 6,988
Unwinding of discount on decommissioning
liabilities 343 343
Interest on obligations for leases 160 29
Less amounts included in the cost of
qualifying assets (2) (3,002) (15,352)
---------- ----------
627 5,111
Total finance costs 4,671 9,436
Interest income from time deposits (1,290) (818)
Interest income from loans to related
parties (3,214) (990)
----------
Total finance income (4,504) (1,808)
Net foreign exchange loss 967 727
Net finance loss 1, 134 8,355
---------- ----------
(1) See also Note 3(D)(1).
(2) See also Note 3(A).
NOTE 5: TAXATION
A. Tax income:
30 June (Unaudited)
-----------------------
2022 2021
Corporation tax - current year (180) (30)
Deferred tax income 2,883 2,601
---------- ---------
Total taxation income 2,703 2,571
========== =========
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:
Deferred taxes, driven by the activity in Israel by the Israeli
Branch of the Company, are computed at an 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 Tax expenses leaving long--term Derivative for
asset 16 losses for tax indemnities liabilities liability decommissioning Total
---------- ----- ------- -------- ----------- ----------- ---------- --------------- -------
At 1 January 2021 (12,140) (62) 9,325 - 63 293 1,591 8,769 7,839
Increase
(decrease) for
the year through:
Profit or loss (492) (700) 1,436 5,020 31 630 - (598) 5,327
Reclassification
for the
current year - - (6,011) 6,011 - - - - -
Other
comprehensive
income - - - - - - (1,591) - (1,591)
---------- ----- ------- -------- ----------- ----------- ---------- --------------- -------
At 31 December
2021 (12,632) (762) 4,750 11,031 94 923 - 8,171 11,575
========== ===== ======= ======== =========== =========== ========== =============== =======
Increase
(decrease) for
the period
through :
Profit or loss (5,740) (159) 15,461 (4,687) 43 16 - (2,051) 2,883
---------- ----- ------- -------- ----------- ----------- ---------- --------------- -------
At 30 June 2022 (18,372) (921) 20,211 6,344 137 939 - 6,120 14,458
========== ===== ======= ======== =========== =========== ========== =============== =======
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. Gas supply agreement with the Israel Electric Company
In March 2022, Energean signed a gas supply agreement with the
Israel Electric Company.
The gas price will be determined in each period, with volumes
determined on a daily basis.
Starting upon the commencement of first gas production from
Karish, the agreement will
be valid for an initial one-year period with an option to extend
subject to ratification by
both parties
B. Share Premium Capital reduction:
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.
C. Termination of contract with Gas Buyer
In May 2022, further to the claims raised by the parties in the
related arbitration proceedings with Dalia Power Energies LTD
("Dalia") (including the counterclaim filed by the Company seeking
a declaration that Company is entitled to terminate the GSPA),
Dalia and the Company agreed to end all claims and disputes between
the parties. Both sides agreed that the Dalia GSPA (which
represents up to 0.8 bcm/year was lawfully terminated, that the
arbitration proceedings were terminated, and that neither party
owes or will be liable to the other for any payment in connection
with and due to the Dalia GSPA, the arbitration proceedings and the
facts subject thereof. This was agreed to be final and
unappealable.
D. Contract signed with East Hagit Power Plant
In May 2022, the Company signed a new GSPA, representing up to
0.8 bcm/year, to supply gas to the East Hagit Power Plant Limited
Partnership ("EH Partnership"), a partnership between the Edeltech
Group and Shikun & Binui Energy.
The GSPA is for a term of approximately 15 years, for a total
contract quantity of up to 12 bcm. The contract contains provisions
regarding floor pricing, offtake exclusivity and a price indexation
mechanism (not Brent price linked).
E. Commencement of growth drilling campaign:
The Company started its 2022 drilling campaign during March
2022, which originally included three firm wells. In June 2022, the
Company exercised its contractual option to drill two further
wells, the drilling locations for which were selected as the Hermes
and Zeus prospects.
F. Athena Gas Discovery
A commercial discovery was made by the Athena exploration well,
located in Block 12, in the A, B and C sands. Preliminary analysis
indicated that the Athena discovery contained recoverable gas
volumes of 8 bcm on a standalone basis.
The discovery de-risked an additional 50 bcm of gross mean
unrisked prospective resources across Company's Olympus Area (total
58 bcm including Athena). The Olympus Area is the Company's newly
defined area which includes Athena, plus the undrilled prospects on
Block 12 and the adjacent Tanin Lease.
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. Claim submitted under the Karish-Tanin SPA
On 31 May 2022, NewMed Energy LP (previously Delek Drilling LP)
("NewMed") filed a lawsuit against the Company before the Tel Aviv
District Court. NewMed Energy LP claimed that the remaining US$65.1
million of outstanding contingent consideration due under the SPA
for the Karish and Tanin leases (see Note 3(E)(2)) plus interest
and indexation, should be accelerated. The residual remedy
requested is US$10.85 million plus interest and indexation,
reflecting the annual payment for the year 2021. The claim is
purportedly based on a payment acceleration mechanism set in the
SPA, combined with NewMed's rejection of the Company's Force
Majeure claim. The claim is being assessed by the Company together
with its legal advisors. A statement of defense will be filed
mid-September.
H. The FPSO sailed away from Singapore and arrived on location in Israel on 5 June 2022.
J. Bank Guarantee Facility:
On 8 June, 2022 the Company's guarantee facility was extended
and amended to a total of NIS355 million instead of NIS250 million.
The facility is secured by Energean PLC parent company guarantee of
US$112 million. This facility is valid until April 30, 2023.
NOTE 7: SIGNIFICANTS EVENTS AND TRANSACTIONS AFTER THE REPORTING PERIOD
A. Zone D:
On 27 July, 2022, the Company sent a formal notice to the
Ministry of Energy notifing the relinquishment of Zone D and
discontinuation of related work. As such, the licences are expected
to expire on October 27, 2022.
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END
IR UWOVRUOUKRAR
(END) Dow Jones Newswires
September 08, 2022 11:45 ET (15:45 GMT)
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