Energean plc, a prominent gas-focused independent exploration and production company operating in the Mediterranean and UK North Sea, on Thursday released an update for the nine months ending September 30, 2023, reporting strong financial and operational performance.
During this period, Energean achieved a substantial production rate of 118.5 thousand barrels of oil equivalent per day (kboed), marking significant growth compared to the previous year’s 35.2 kboed.
Notably, in the third quarter of 2023 alone, the production surged to 143 kboed. The company remains on course to meet its full-year production target, projected within the range of 120 – 130 kboed.
Despite ongoing security concerns in Israel, Energean reported no production disruptions, demonstrating resilience in its operational capabilities.
“The ongoing security situation has not impacted our production. The successful ramp-up of production from our flagship Karish gas field in Israel has increased Group production to above 150 kboed in recent days,” Mathios Rigas, Chief Executive Officer of Energean, said.
“We have delivered revenues of over $1 billion and adjusted EBITDAX of $623 million in the nine months to 30 September 2023, reflecting our low-cost, high-margin business model. We have also reduced our Group leverage ratio to 3.5x and continued our dividend payments, demonstrating our commitment to delivering shareholder value,” he added.
The company made substantial strides in its growth projects, with the Karish North and second gas export riser slated for completion by the end of 2023.
Plans for the second oil train installation are awaiting stability in the Israeli security situation.
Furthermore, significant progress was noted in other ventures such as Katlan FID, NEA/NI completion, and Cassiopea’s first gas, all set for completion by the end of 2023 and 2024.
Energean has maintained its focus on achieving near-term targets of 200 kboed, $2.5 billion in revenues, $1.75 billion adjusted EBITDAX, and leverage at approximately 1.5x.
The company has also expanded its exploration endeavours, with ongoing drilling activities in Egypt, including the Orion 1x exploration well, expected to yield additional upside. The farm-out agreement for the Orion well is anticipated to conclude shortly, subject to government approvals.
“We have made significant progress on our growth projects, which will support our near-term targets of 200 kboed, $2.5 billion revenues, $1.75 billion adjusted EBITDAX and deleveraging target of c.1.5x, the timing of which may be impacted by the delay to the second oil train installation,” Rigas said.
He continued by saying that the company has “commenced drilling of the Orion 1x well in Egypt, where we have signed a farm-out agreement1 that will reduce our net exposure and enhance our returns”.
“This is in addition to an attractive portfolio of exploration assets that have the potential to add significant value,” he added.
The financial performance for the nine months until September 30, 2023, showcased a robust increase, primarily driven by steady production from Karish. Energean reported revenues of $1.016 billion, marking an 85 per cent rise from the same period last year.
Additionally, adjusted EBITDAX soared to $623 million, exhibiting a 79 per cent increase from the previous year’s figures.
Maintaining a robust financial position, Energean witnessed a continued reduction in group leverage, reporting 3.5x compared to 3.9x in the first half of 2023 and 6.0x in FY 2022.
The group’s cash reserves stood at $329.0 million as of September 30, 2023, including restricted amounts of $27.5 million, with total liquidity amounting to $578.6 million.
Energean declared a Q3 2023 dividend of 30 US cents per share, consistent with its dividend policy and scheduled for payment on December 29, 2023.
The company continues to prioritise sustainability and energy transition plans, with significant progress observed in its Prinos Carbon and Storage project in Greece, recognised as a Project of Common Interest by the European Commission.
Additionally, €150 million in grants have been committed from the Greek Recovery & Resilience Facility to support these initiatives.
Notably, Energean has made strides in reducing its Scope 1 and 2 emissions intensity by approximately 12 per cent compared to the first half of 2023.
“We have made a major step forward at our Prinos carbon storage project in Greece. It has been adopted by the European Commission as a Project of Common Interest, and we have been committed to €150 million in grants from the Greek Government to support its development,” Rigas said.
“These actions set the foundation for a transition of our mature Prinos oil field to an exciting growth investment opportunity and demonstrate our commitment to our broader energy transition strategy and being the best version of Energean we can be,” he concluded.
It should be recalled that in November 2019, Energean outlined plans to supply Cyprus with gas from the Karish North field.
During that time, the company applied to import and deliver natural gas, outlining a pipeline route from Karish to “Energean Power” FPSO and then to Vassiliko, Cyprus. The project was valued at approximately $350 million.