TIDMENOG
RNS Number : 3141I
Energean PLC
01 December 2022
Energean Israel Limited
Unaudited interim condensed consolidated financial statements
30 September 2022
ENERGEAN ISRAEL LIMITED
Unaudited interim condensed consolidated financial
statements
AS OF 30 SEPTEMBER 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
September 31 December
2022 2021
----------- ------------
Unaudited Audited
----------- ------------
Note
--------
ASSETS:
NON-CURRENT ASSETS:
Property, plant and equipment 3(A) 2,738,532 2,245,267
Intangible assets 3(B) 85,083 20,141
Other accounts receivable 6(B) 81 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 14,528 11,575
----------- ------------
2,838,224 2,838,224
----------- ------------
CURRENT ASSETS:
Trade and other receivables 30,945 22,769
Deferred expenses 3(C) 22,958 -
Restricted cash 3(D)(2) 71,784 99,729
Cash and cash equivalents 103,966 349,827
----------- ------------
229,653 472,325
----------- ------------
TOTAL ASSETS 3,067,877 3,224,729
=========== ============
EQUITY AND LIABILITIES:
EQUITY:
Share capital 1,708 1,708
Share premium 6(B) 212,539 572,539
Retained losses (40,573) (35,946)
----------- ------------
TOTAL EQUITY 173,674 538,301
----------- ------------
NON-CURRENT LIABILITIES:
Senior secured notes 3(D) 2,469,349 2,463,524
Provision for decommissioning 26,834 35,525
Trade and other payables 3(F) 149,404 113,264
----------- ------------
2,645,587 2,612,313
----------- ------------
CURRENT LIABILITIES:
Trade and other payables 3(F) 248,616 74,115
----------- ------------
TOTAL LIABILITIES 2,894,203 2,686,428
----------- ------------
TOTAL EQUITY AND LIABILITIES 3,067,877 3,224,729
=========== ============
December 1, 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
Nine months ended 30 September 2022
(Amounts in thousands US Dollars, unless otherwise stated)
30 September (Unaudited)
-----------------------------
2022 2021
--------------- ------------
Note
-----
Administrative expenses 4(A) (7,218) (2,717)
Exploration and evaluation expenses 4(A) (1,277) -
Other expenses 4(A) (1,079) (28)
Other income 4(A) 53 3
--------------- ------------
Operating loss (9,521) (2,742)
Finance income 4(B) 5,757 4,524
Finance expenses 4(B) (4,931) (14,388)
Foreign exchange gain (loss) 4(B) 1,405 (1,140)
--------------- ------------
2,231 (11,004)
Loss for the period before tax (7,290) (13,746)
Taxation income 5 2,663 3,909
--------------- ------------
Net loss for the period (4,627) (9,837)
--------------- ------------
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss:
Gain 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 (4,627) (4,509)
=============== ============
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
Nine months ended 30 September 2022
(Amounts in thousands US Dollars, unless otherwise stated)
For the period of nine months ended 30 September 2022
(Unaudited):
Share Share Retained 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 - - (4,627) (4,627)
--------- ---------- --------- ----------
Balance as of 30 September 2022 1,708 212,539 (40,573) 173,674
========= ========== ========= ==========
For the period of nine months ended 30 September 2021
(Unaudited):
Share Share Other Retained 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
--------- --------- ---------- --------- --------
Balance as of 30 September
2021 1,708 572,539 - (34,951) 539,296
========= ========= ========== ========= ========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Nine months ended 30 September 2022
(Amounts in thousands US Dollars, unless otherwise stated)
30 September (Unaudited)
---------------------------
2022 2021
------------ -------------
Operating activities :
Loss for the period before tax (7, 290 ) (13,746)
------------ -------------
Adjustments to reconcile loss before
taxation:
Depreciation, depletion and amortisation 232 71
Loss from disposal on property, plant
and equipment 1,079 23
Exploration and evaluation expenses 1,277 -
Other expenses - 5
Other income - (3)
Finance income (5,757) (4,524)
Finance expenses 4,932 14,388
Net foreign exchange (gain) loss (1,405) 1,140
------------ -------------
(6,932) (2,646)
Changes in working capital:
Decrease (increase) in other receivables 906 (29)
Decrease in trade and other payables (665) (6 6 0)
------------ -------------
241 ( 6 89)
Income taxes paid (572) (32)
------------ -------------
Net cash used in operating activities (7,263) (3,3 6 7)
------------ -------------
Investing activities :
Payment for purchase of oil & gas leases (10,850) (10,850)
Payment for purchase of property, plant
and equipment (221,187) (253,775)
Payment for exploration and evaluation,
and other intangible assets (18,823) (3,972)
Proceeds from disposals of property,
plant and equipment 188 -
Payments for buyers compensation - (13,271)
Amounts received from INGL related
to the future transfer disposals of
property, plant and equipment 17,371 5,673
Movement in restricted cash 127,945 (199,738)
Interest received 2,863 264
------------ -------------
Net cash used in investing activities (102,493) (475,669)
------------ -------------
Financing activities :
Senior secured notes issuance - 2,500,000
Transaction cost due to senior secured
notes issuance - (37,931)
Interest paid due to senior secured
notes (128,906) (66,600)
Drawdown of borrowings - 118,000
Repayment of borrowings - (1,268,000)
Loan to related party (*) - (346,000)
Repayment of loan from related parties - (16,000)
Finance cost paid (2,359) (43,854)
Finance costs paid for deferred license
payments (1,501) (3,494)
Repayment of obligations under leases (683) (366)
------------ -------------
Net cash generated (used) from financing
activities (133,449) 835,755
------------ -------------
Net increase (decrease) in cash and
cash equivalents (243,205) 356,719
Cash and cash equivalents at the beginning
of the period 349,827 37,421
Effect of exchange rate fluctuations
on cash held (2,656) (766)
------------ -------------
Cash and cash equivalents at the end
of the period 103,966 393,374
============ =============
(*) 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 September 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) As of 30 September 2022, the Company held an 80% interest 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 expired at the end of their term on 27 October
2022. See note 6(K).
D. The Energean Power FPSO arrived on location in Israel on 5
June 2022 and first gas from the Karish project was achieved on 26
October 2022.
NOTE 2: ACCOUNTING POLICIES AND BASIS OF PREPARATION
These unaudited interim condensed consolidated financial
statements for the nine months ended 30 September 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 (*) 390,075 198 2,104 392,377
Disposals (900) - - (900)
Capitalised borrowing cost
(**) 111,096 - - 111,096
Capitalised depreciation 656 - - 656
Change in decommissioning
provision (9,259) - - (9,259)
----------- ------- -------------- ---------
Total cost at 3 0 September
2022 2,733,451 4,207 2,933 2,740,591
----------- ------- -------------- ---------
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 - - 232 232
Disposals (433) - - (433)
Write down of the assets 250 - - 250
Capitalised to petroleum
and gas assets - 656 - 656
----------- ------- -------------- ---------
Total Depreciation at 30
September 2022 250 1,349 460 2,059
----------- ------- -------------- ---------
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 September
2022 2,733,201 2,858 2,473 2,738,532
=========== ======= ============== =========
(*) 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 September (Unaudited)
-----------------------------------
2022 2021
------------------------ ---------
Additions to property, plant and equipment 493,970 349,182
Associated cash flows
Payment for additions to property,
plant and equipment (*) (214,666) (264,625)
Non-cash movements/presented in other
cash flow lines
Capitalised borrowing costs (111,096) (154,921)
Right-of-use asset additions (198) (3,258)
Capitalised share-based payment charge (174) (156)
Capitalised depreciation (656) (197)
Change in decommissioning provision 9,259 4,034
Movement in working capital (176,439) 69,941
(*) This amount includes US$10.85 million which was paid to the
sellers of the Karish and Tanin leases during 2021 and 2022.
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 (*) 66,219 - 66,219
Write off of exploration and
evaluation costs (**) (1,277) - (1,277)
--------------- -------- -------
At 30 September 2022 85,083 255 85,338
--------------- -------- -------
Amortisation:
At 1 January 2021 - 247 247
Charge for the year - 8 8
--------------- -------- -------
Total Amortisation at 31 December
2021 - 255 255
--------------- -------- -------
Charge for the period - - -
--------------- -------- -------
Total Amortisation at 30 September
2022 - 255 255
--------------- -------- -------
Net intangible assets at 31
December 2021 20,141 - 20,141
=============== ======== =======
Net intangible assets at 30
September 2022 85,083 - 85,083
=============== ======== =======
(*) Additions to exploration and evaluation assets are primarily
due to drilling activities. See also notes 6(E), 6(F).
(**) See note 6(K).
(1)
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 September (Unaudited)
---------------------------------
2022 2021
------------------------ -------
Additions to intangible assets 66,219 5,073
Associated cash flows
Payment for additions to intangible
assets (18,823) (3,972)
Non-cash movements/presented in other
cash flow lines
Movement in working capital (47,396) (1,101)
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 was achieved on 26 October 2022.
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$2,500,000,000 of
senior secured notes.
The Notes were issued in four equal tranches as follows:
30 31 December
September 2021
2022
--------------- ---------------
Series Maturity Annual fixed
Interest
rate Carrying value Carrying value
------------------ --------------- ------------- --------------- ---------------
US$ 625 million 30 March 2024 4.500% 619,640 617,060
US$ 625 million 30 March 2026 4.875% 617,467 615,966
US$ 625 million 30 March 2028 5.375% 616,493 615,451
US$ 625 million 30 March 2031 5.875% 615,749 615,047
------------------ --------------- ---------------
US$2,500 million 2,469,349 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 starting 30 September
2021.
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 September 2022, the Company had short-term restricted
cash of US$71.8 million for the debt payment fund which will be
partly used for the March 2023 coupon payment. The remainder will
be released during 2023, upon achieving six months of production at
an annualized rate of 3.8 bcm/year.
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; with the exception of the Senior
secured notes for which the fair value is set out below.
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 2022
-----------------------------------
Unaudited
-----------------------------------
Level Level Total
1 2
----------- --------- -----------
Financial assets
Short term restricted cash 71,784 - 71,784
Short term trade and other receivables - 30,477 30,477
Cash and cash equivalents 103,966 - 103,966
----------- --------- -----------
Total 175,750 30,477 206,227
----------- --------- -----------
Financial liabilities
Senior
secured
notes
(*) 2,201,875 - 2,201,875
Trade and other payables - long
term - 149,404 149,404
Trade and other payables - short
term - 157,130 157,130
----------- --------- -----------
Total 2,201,875 306,534 2,508,409
----------- --------- -----------
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 95,645 2,579,395
-------------- ----------- -------------
(*) 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 September 2022 was
US$2,469 million and as of 31 December 2021 was US$2,463
million.
F. Trade and other payables:
30 September 31 December
2022 2021
------------ -----------
Unaudited Audited
------------ -----------
Current
Financial items
Trade accounts payable (1) 132,480 32,611
Payables to related parties 11,680 1,079
Deferred license payments (2) 12,101 -
Value added tax payable - 1,217
Current lease liabilities 869 1,011
------------ -----------
157,130 35,918
Non-Financial items
Accrued expenses (1) 35,719 5,611
Interest payable - 32,227
Sales consideration received in advance
(4) 55,468 -
Social insurance and other taxes 299 132
Income taxes - 227
------------ -----------
91,486 38,197
248,616 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 September 31 December
2022 2021
------------ -----------
Unaudited Audited
------------ -----------
Non-current
Financial items
Accrued expenses to related parties 281 294
Long term lease liabilities 2,123 2,203
Trade and other payables (3) 109,994 -
Deferred license payments (2) 37,006 57,230
------------ -----------
149,404 59,727
Non-Financial items
Contract Liability (4) - 53,537
149,404 113,264
============ ===========
(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 September
2022, the total discounted deferred consideration was US$49 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 and payment thereof was made in September
2022
(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 was achieved on 26 October 2022. 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 September (Unaudited)
------------------------------
2022 2021
------------- -------------
General & administration expenses
Staff costs 1,115 946
Share-based payment charge included in
administrative expenses 128 129
Depreciation, depletion and amortisation
(Notes 3(A) and 3(B)) 352 71
Auditor fees 200 156
Other general & administration expenses 5,423 1,415
------------- -------------
Total administrative expenses 7,218 2,717
Exploration and evaluation expenses
Exploration costs written off (Note 6(K)). 1,277 -
------------- -------------
Total exploration and evaluation expenses 1,277 -
------------- -------------
Other expenses
Reversal of prior period provision - 5
Loss from property, plant and equipment
disposal 1,079 23
------------- -------------
Total other expenses 1,079 28
------------- -------------
Other income
Gain from disposal 53 3
------------- -------------
Total other income 53 3
------------- -------------
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 September) Unaudited)
----------------------------
2022 2021
------------ ------------
Interest on bank borrowings - 76,890
Interest on senior secured notes (1) 102,505 68,047
Interest expense on long terms payables 8,716 2,267
Interest on shareholders loan - 9
Less amounts included in the cost of
qualifying assets (2) (107,177) (138,147)
------------ ------------
4,044 9,066
Finance and arrangement fees 3,681 14,383
Other finance costs and bank charges 319 53
Interest expenses from Hedging - 7,002
Unwinding of discount on decommissioning
liabilities 568 516
Interest on obligations for leases 238 142
Less amounts included in the cost of
qualifying assets (2) (3,919) (16,774)
------------ ------------
887 5,322
Total finance costs 4,931 14,388
Interest income from time deposits 2,543 965
Interest income from loans to related
parties 3,214 3,559
------------
Total finance income 5,757 4,524
Net foreign exchange gain (loss) 1,405 (1,140)
Net finance gain (loss) 2,231 (11,004)
------------ ------------
(1) See also Note 3(D)(1).
(2) See also Note 3(A).
NOTE 5: TAXATION
A. Tax income:
30 September (Unaudited)
----------------------------
2022 2021
Corporation tax - current year (290) (193)
Deferred tax income 2,953 4,102
------------ ------------
Total taxation income 2,663 3,909
============ ============
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 (12,743) (159) 22,448 (4,648) 43 11 - (1,999) 2,953
---------- ----- ------- -------- ----------- ----------- ---------- --------------- -------
At 30 September
2022 (25,375) (921) 27,198 6,383 137 934 - 6,172 14,528
========== ===== ======= ======== =========== =========== ========== =============== =======
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.
The agreement is valid for an initial one-year period starting
from first gas from Karish, and includes 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
represented 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. Drilling campaign offshore Israel:
The Company started its 2022 drilling campaign in March 2022,
which originally included three firm wells. In June 2022, the
Company exercised its contractual option to drill two further
wells. Subsequently, in October 2022 Energean exercised its option
to drill a sixth well, Hercules (located on block 23, offshore
Israel), which spudded in November 2022.
F. Athena Gas Discovery
In May 2022, a commercial discovery was made by the Athena
exploration well, located in block 12, in the A, B and C sands.
Subsequently in November 2022, Energean's reserve auditor, D&M,
certified contingent resources of 11.75 bcm in the Athena
discovery, an increase of 3.75 bcm on the Company's 8 bcm
preliminary estimate.
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 claimed that the remaining US$48 million
(US$65.1 million as of 31 May 2022) 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.
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.)
In September 2022, the Company paid the annual installment and
filed its Statement of Defence with the court. NewMed then filed a
Reply in October 2022.
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 30 April 2023.
K. 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.
NOTE 7: SIGNIFICANTS EVENTS AND TRANSACTIONS AFTER THE REPORTING PERIOD
A. Hermes Gas Discovery:
In October 2022, the Hermes exploration well, block 31, offshore
Israel, made a commercial gas discovery. Preliminary estimates
indicate that the structure contains 7-15 bcm of recoverable
natural gas resources.
B. Liquids Contract:
In October 2022, Energean signed a sale and purchase agreement
with Vitol for the marketing of a number of cargoes of Karish blend
hydrocarbon liquids. Energean expects, based on analysis of
individual well test samples, that the Karish blend will trade at a
similar price point to Asgard blend, given the similarity in their
characteristics. The realised price will be market price less
certain freight, logistics and marketing costs.
C. First gas from Karish:
On 26 October 2022, first gas was delivered at the Karish field,
offshore Israel.
D. Zeus Gas Discovery:
In November 2022, the Zeus exploration well, block 12, offshore
Israel, made a commercial discovery with preliminary estimates
indicating that the structure contains 13.3 bcm of recoverable
natural gas resources.
The results from the Zeus well and the Athena post-well analysis
provide Energean with additional confidence about the volumes and
commerciality of the Olympus area, and the Company is now
progressing its field development plan. Energean now has discovered
resource volumes of 25 bcm and a further 42 bcm has been de-risked
in the Olympus Area. Energean expects to update the market on the
total resource volumes within the Olympus area in early 2023. This
update will be based upon a Competent Persons Report that is being
undertaken by D&M.
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END
MSCFLFSSFLLLIIF
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