Energean Israel 1Q 2022 Management Accounts

RNS Number : 9010N
Energean PLC
07 June 2022
 

 

 

 

 

 

 

Energean Israel Limited

Unaudited interim condensed consolidated financial statements

3 1 M arch 20 22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

ENERGEAN ISRAEL LIMITED

 

 

Unaudited interim condensed consolidated financial statements

 

 

AS OF 31 MARCH 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)

 




31  March 2022


31 December 2021

 




Unaudited


Audited

 


Note


 

ASSETS:

 

 

 

 

 

 

NON-CURRENT ASSETS:

 

 

 

 

 

 

Property, plant and equipment

 

3(A)

 

2,333,706

 

2,245,267

Intangible assets

 

3(B)


25,314

 

20,141

Other accounts receivable

 

 


9,248

 

6,463

Loan to related party

 

 


346,000

 

346,000

Restricted cash

 

3(C)(2)


100,000

 

100,000

Deferred expenses

 

 


22,958

 

22,958

Deferred tax asset

 

5


12,902

 

11,575

 

 

 


2,850,128

 

2,752,404

 

 

 


 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Trade and other receivables

 

 

 

29,076

 

22,769

Restricted cash

 

3(C)(2)

 

35,617

 

99,729

Cash and cash equivalents

 

 


301,574

 

349,827

 

 

 


366,267

 

472,325

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

 

3,216,395

 

3,224,729

 

 

 

 

 

 

 

EQUITY AND LIABILITIES:

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

 

Share capital

 

 

 

1,708

 

1,708

Share premium

 

 

 

572,539

 

572,539

Accumulated losses

 

 

 

(37,470)

 

(35,946)

TOTAL EQUITY

 

 

 

536,777

 

538,301

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES:

 

 

 

 

 

 

Senior secured notes

 

3(C)

 

2,465,619

 

2,463,524

Provisions for decommissioning

 

 

 

35,696

 

35,525

Trade and other payables

 

3(E)

 

54,234

 

113,264

 

 

 

 

2,555,549

 

2,612,313

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Trade and other payables

 

3(E)

 

70,158

 

74,115

Sales consideration received in advance

 

3(E)(3)

 

53,911

 

-

 

 

 

 

124,069

 

74,115

TOTAL LIABILITIES

 

 

 

2,679,618

 

2,686,428

 

 

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

 

 

3,216,395

 

3,224,729

 

06 June 2022

 

 

 

 

 

 

Panagiotis Benos

Director

 

Matthaios Rigas

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

(Amounts in thousands US Dollars, unless otherwise stated)

 

 

 

 

For the period of three months ended 31 March 2022

For the period of three months ended 31 March 2021

 

 

 

 

Unaudited

Unaudited

 

 

Note

 

 

 

 

 

 

 

 

Administrative expenses

 

4(A)

 

(2,205)

(878)

Other expenses

 

4(A)

 

(824)

(23)

Other income

 

4(A)

 

53

-

 

 

 

 

 

 

Operating loss

 

 

 

(2,976)

(901)

 

 

 

 

 

 

Finance income

 

4(B)

 

3,338

23

Finance expenses

 

4(B)

 

(3,078)

(157)

Foreign exchange gain (loss)

 

4(B)

 

(68)

517

 

 

 

 

 

 

Loss for the period before tax

 

 

 

(2,784)

(518)

 

 

 

 

 

 

Tax income

 

5

 

1,260

173

 

 

 

 

 

 

Net loss for the period

 

 

 

(1,524)

(345)

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

 

Gain (loss) on cash flow hedge for the period

 

 

 

-

2,269

Tax relating to items that may be reclassified subsequently to profit or loss

 

 

 

-

 

(522)

 

 

 

 

 

 

Other comprehensive income for the period

 

 

 

-

1,747

 

 

 

 

 

 

Total comprehensive income (loss) for the period

 

 

 

(1,524)

1,402

 

 

 

 

 

 

 

 

 

 

 

 

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

(Amounts in thousands US Dollars, unless otherwise stated)

 

For the period of three months ended 31 March 2022 (Unaudited):

 

 

Share capital

Share premium

Accumulated losses

Total equity

 

 

 

 

 

Balance as of 1 January 2022

1,708

572,539

(35,946)

538,301

 

 

 

 

 

Changes during period:

 

 

 

 

Comprehensive loss:

 

 

 

 

Loss for the period

-

-

(1,524)

(1,524)

Balance as of 31 March 2022

1,708

572,539

(37,470)

536,777

 

 

 

 

 

 

 

For the period of three months ended 31 March 2021 (Unaudited):

 

 

Share capital

Share premium

Other reserves

Accumulated losses

Total 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

-

-

-

(345)

(345)

Other comprehensive loss, net of tax

-

-

1,747

-

1,747

Balance as of 31 March 2021

1,708

572,539

(3,581)

(25,459)

545,207

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.


ENERGEAN ISRAEL LIMITED

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 (Amounts in thousands US Dollars, unless otherwise stated)

 

For the period of three months ended 31 March 2022

For the period of three months ended 31 March 2021

 

Unaudited

Unaudited

Cash flows from operating activities:

 

 

Loss for the period before tax

(2,784)

(518)

Adjustments for:

 

 

Depreciation and amortisation

38

29

Loss from disposal on property, plant and equipment

824

23

Other expenses

5

-

Other income

(53)

-

Decommissioning discount unwinding

171

138

Finance Income

(3,338)

(23)

Finance expenses

2,907

19

Net foreign exchange gain

68

(517)

 

622

(331)

Changes in working capital:

 

 

Decrease (increase) in other receivables

(2)

27

Increase in trade and other payables

800

270

 

(1,364)

(552)

Income taxes paid

(330)

-

Net cash used in operating activities

(1,694)

(552)

Cash flows from investing activities:

 

 

Payment for purchase of oil & gas leases

-

(10,850)

Payment for purchase of property, plant and equipment

(44,002)

(77,956)

Payment for purchase of intangible assets

(2,231)

(2,812)

Movement in restricted cash

64,112

-

Interest received

692

59

Net cash generated (used) in investing activities

18,571

(91,559)

Cash flows from financing activities:

 

 

Transaction cost due to senior secured notes issuance

-

(1,197)

Interest paid due to senior secured notes

(64,453)

-

Notes issuance- escrow account- related party transfer

-

10,384

Drawdown of borrowings

-

118,000

Repayment of loan from related parties

-

(16,000)

Finance cost paid

(384)

(21,810)

Finance costs paid for deferred license payments

-

(3,494)

Repayment of obligations under leases

(248)

(82)

Net cash generated (used) from financing activities

(65,085)

85,801

 

 

 

Net decrease in cash and cash equivalents

(48,208)

(6,310)

Cash and cash equivalents at the beginning of the period

349,827

37,421

Effect of exchange rate fluctuations on cash held

(45)

(186)

Cash and cash equivalents at the end of the period

301,574

30,925

 

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, 1st Floor, 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 the Company's Israeli Branch.

 

C.  The Group's core assets as of 31 March 2022 are comprised 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 licenses Zone D (1)

80%

Exploration

 

(1)  The Company holds 80% interests in four licenses, blocks 55, 56, 61 and 62 (together, "Zone D") in Israel's Exclusive Economic Zone ("EEZ").

 

D.  COVID-19: Despite COVID-related challenges experienced during the period (mainly at the Admiralty Yard in Singapore, where the Karish FPSO was built), the Group has made solid progress on its flagship Karish project, offshore Israel. The FPSO sailed away from Singapore and has arrived on location in Israel at June 5, 2022. The Company expects approximately three - four months of commissioning before first gas, which expected at Q3 this year.

 

 

NOTE 2:  ACCOUNTING POLICIES AND BASIS OF PREPARATION

 

These unaudited interim condensed consolidated financial statements for the three months ended 31 March 2022, have been prepared in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the European Union (EU). 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:

 

 

 

Petroleum and Gas assets

 

Leased assets

 

Furniture, fixtures 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 (*)

 

52,268

 

108

 

1,717

 

54,093

Disposals

 

(900)

 

-

 

-

 

(900)

Capitalised borrowing cost (**)

 

35,284

 

-

 

-

 

35,284

Capitalised depreciation

 

177

 

-

 

-

 

177

Total cost at 31 March 2022

 

2,328,612

 

4,117

 

2,546

 

2,335,275

 

 

 

 

 

 

 

 

 

Depreciation:

 

 

 

 

 

 

 

 

At 1 January 2021

 

-

 

331

 

143

 

474

Charge for the year (Note 14)

 

-

 

-

 

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

 

-

 

-

 

38

 

38

Capitalised to petroleum and gas assets

 

-

 

177

 

-

 

177

Total Depreciation at 31 March 2022

 

433

 

870

 

266

 

1,569

 

 

 

 

 

 

 

 

 

Net property, plant and equipment at 31 December 2021

 

2,241,350

 

3,316

 

601

 

2,245,267

Net property, plant and equipment at 31 March 2022

 

2, 328,179

 

3,247

 

2,280

 

2,333,706

 

 

(*) The additions to Petroleum and Gas assets are mainly due to the development costs of

   Karish field which mainly relate to the EPCIC contract (FPSO, Sub Sea and On-shore construction

   cost).

 

(**) The borrowing costs capitalised are mainly due 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:

 

 

 

 

For the period of three months ended 31 March 2022

For the period of three months ended 31 March 2021

 

 

 

Unaudited

Unaudited

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

88,65 4

130,036

 

Less

 

 

 

 

Capitalised borrowing costs

 

(35,284)

(45,278)

 

Right-of-use asset additions

 

(107)

(22)

 

Capitalised share-based payment charge

 

(40)

(24)

 

Capitalised depreciation

 

(177)

(53)

 

Total

 

53,04 6

84,659

 

Movement in working capital

 

(9,044)

4,147

 

Cash capital expenditures per the cash flow statement (*)

 

44,002

88,806

 

 

 

(*) The amount includes payment of US$10.85 million which has been paid in 2021 to the  

  sellers of Karish and Tanin leases.

 

 

 

B.  Intangible Assets:

 

1)  Composition:  

 

 

 

Exploration and evaluation assets

 

Software 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

 

5,173

 

-

 

5,173

At 31 March 2022

 

25,314

 

255

 

25,569

 

 

 

 

 

 

 

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 31 March 2022

 

-

 

255

 

255

 

 

 

 

 

 

 

Net intangible assets at 31 December 2021

 

20,141

 

-

 

20,141

Net intangible assets at 31 March 2022

 

25,314

 

-

 

25,314


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:

 

 

 

For the period of three months ended 31 March 2022

For the period of nine months ended 31 March 2021

 

 

 

Unaudited

Unaudited

 

Additions to intangible assets

 

5,173

2,799

 

Less

 

 

 

 

Movement in working capital

 

(2,942)

13

 

Cash capital expenditures per the cash flow statement

 

2,231

2,812

 

 

 

C.  Senior secured Notes:

 

1)     Issuance of US$2,500,000,000 senior secured notes:

On 24 March 2021 ("Issue Date"), Energean Israel Finance Ltd (a subsidiary of the Company, held 100%) announced on closing of an offering of US$2,500,000,000 senior secured notes.

The Notes were issued in four series as follows:

 




31 

 March

2022


31  December 2021

Series

 

 

Maturity

 

 

Annual fixed Interest rate

Carrying value


Carrying value

US$ 625 million

30 March 2024

4.500%

617,942

 

617,060

US$ 625 million

30 March 2026

4.875%

616,498

 

615,966

US$ 625 million

30 March 2028

5.375%

615,842

 

615,451

US$ 625 million

30 March 2031

5.875%

615,337

 

615,047

US$2,500 million

 

 

2,465,619

 

2,463,524

 

The interest on each series of the Notes will be paid semi-annually, on 30 March and on 30 September of each year.

 

The Notes are listed for trading 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 31 March 2022 the restricted cash of the Company includes:

Long term restricted cash of US$100 million Debt Payment Fund that would be released upon achieving three quarters annualized production of 3.8 BCM/year.

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:

Moody's assigns Ba3 rating the senior secured notes, and S&P Global assigns BB- rating the senior secured notes.

 

D.  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 31 March 2022

 

Unaudited

 

Level 1

Level 2

Level 3

Total

Financial assets




 

Long term trade and other receivables

-

9,184

-

9,184

Loan to related party

-

346,000

-

346,000

Long term restricted cash

100,000

-

-

100,000

Short term restricted cash

35,617

-

-

35,617

Short term trade and other receivables

-

29,076

-

29,076

Cash and cash equivalents

301,574

-

-

301,574

Total

437,191

384,260

-

821,451

Financial liabilities




 

Senior secured notes

-

2,465,619

-

2,465,619

Trade and other payables - long term

-

54,234

-

54,234

Trade and other payables - short term

-

69,949

-

69,949

Total

-

2,589,802

-

2,589,802


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

Level 3

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

-

2,495,751

-

2,495,751

Trade and other payables - long term

-

59,727

-

59,727

Trade and other payables - short term

-

40,312

-

40,312

Total

-

2,595,790

-

2,595,790

 

E.  Trade and other payables:

 

 

 

31 March

 

31 December

 

 

2022


2021

 

 

Unaudited


Audited

Current

 

 

 

 

Financial items

 

 

 

 

Trade accounts payable (1)

 

27,649

 

32,611

Accrued expenses (1)

 

11,036

 

5,611

Payables to related parties

 

5,538

 

1,079

Deferred license payments (2)

 

24,695

 

-

Interest payable

 

-

 

32,227

Current lease liabilities

 

1,031

 

1,011

 

 

69,949

 

72,539

 

 

 

 

 

Non-Financial items

 

 

 

 

VAT payable

 

-

 

1,217

Social insurance and other taxes

 

192

 

132

Income taxes

 

17

 

227

 

 

209

 

1,576

 

 

 

 

 

 

 

70,158

 

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.)

 

 

31 March

 

31 December

 

 

2022


2021

 

 

Unaudited


Audited

Non-current

 

 

 

 

Financial items

 

 

 

 

Accrued expenses to related parties

 

152

 

294

Long term lease liabilities

 

2,134

 

2,203

Trade and other payables (4)

 

18,171

 

-

Deferred license payments (2)

 

33,777

 

57,230

 

 

54,234

 

59,727

Non-Financial items

 

 

 

 

Sales consideration received in advance (INGL) (3)

 

-

 

53,537

 

 

-

 

53,537

 

 

 

 

 

 

 

54,234

 

113,264

 

(1)  The change in Trade payables and accrued expenses represents mainly timing differences and levels of work activity in Karish project. Trade payables are non-interest bearing.

 

(2)  In December 2016, the Company acquired the Karish and Tanin offshore gas fields for US$40 million closing payment with an obligation to pay additional consideration of US$108.5 million plus interest inflated at an annual rate of 4.6% in ten equal annual payments. As at 31 March 2022 the total discounted deferred consideration was approx. US$58 million (as at 31 December 2021: approx. 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.

 

(3)  The sales consideration received in advance is related 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 expected in Q3-2022. Following Hand Over, INGL will be responsible for the operation and maintenance of this part of the infrastructure.

As of 31 March 2022, the sales consideration received in advance presented as short term liability (on 31 December 2021 was presented under long term payables).

 

(4)  In March 2022 the company signed the amendment to EPCIC contract to delay part of the payments according to agreed schedule.

 

 

ENERGEAN ISRAEL LIMITED

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (Amounts in thousands US Dollars, unless otherwise stated)

 

NOTE 4:  COMPREHENSIVE INCOME

 


 

For the period of three months ended 31 March 2022

For the period of three months ended 31 March 2021

 

 

Unaudited

Unaudited


 

General & administration expenses

 

 

 

 

 

Payroll costs

 

397

384

 

 

Share-based payment charge included in administrative expenses

 

31

21

 

 

Depreciation and amortisation (Notes 3(A) and 3(B))

 

38

29

 

 

Auditor fees

 

80

98

 

 

Other general & administration expenses

 

1,659

346

 

 

Total administrative expenses

 

2,20 5

878

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

Loss from property, plant and equipment disposal

 

824

23

 

 

Total other expenses

 

824

23

 

 

 

 

 

 

 

 

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):

 

 

For the period of three months ended 31 March 2022

For the period of three months ended 31 March 2021

 

 

Unaudited

Unaudited

 

 

 

 

 

 

Interest on bank borrowings

 

-

27,213

 

Interest on senior secured notes (1)

 

34,323

2,507

 

Interest expense on long terms payables

 

2,064

1,913

 

Interest on shareholders loan

 

-

9

 

Less amounts included in the cost of qualifying assets (2)

 

(33,744)

(31,642)

 

 

 

2,643

-

 

 

 

 

 

 

Finance and arrangement fees

 

1,459

11,374

 

Other finance costs and bank charges

 

264

19

 

Interest expenses from Hedging

 

-

2,249

 

Unwinding of discount on decommissioning liabilities

 

171

138

 

Interest on obligations for leases

 

83

13

 

Less amounts included in the cost of qualifying assets (2)

 

(1,542)

(13,636)

 

 

 

435

157

 

 

 

 

 

 

Total finance costs

 

3,078

157

 

 

 

 

 

 

Interest income from time deposits

 

557

23

 

Interest income from loans to related parties

 

2,781

-

 

Total finance income

 

3,338

23

 

 

 

 

 

 

Net foreign exchange gain (loss)

 

(68)

517

 

 

 

 

 

 

Net finance income

 

192

383

 

 

(1)  See also Note 3(C)(1).

(2)  See also Note 3(A).

 

NOTE 5:  TAXATION

 

A.  Tax income:

 

 

For the period of three months ended 31 March 2022

For the period of three months ended 31 March 2021

 

 

Unaudited

Unaudited

 

 

 

 

 

 

Corporation tax - current year

 

(67)

-

 

Deferred tax income

 

1,327

173

 

Total taxation income

 

1,260

173

 


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:

 

The deferred taxes, driven from the activity in Israel by the Israeli Branch of the Company, are computed at the 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:

 


 

Property, plant and equipment & intangible asset


Right of use asset

IFRS 16


 

Tax losses


Deferred expenses for tax


Staff leaving indemnities


Accrued expenses and other short‑term liabilities and other long‑term liabilities

 

Derivative liability

 

Provisions for 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


-


-



(1,090)


1,090


-


-


-


-

 

-

Other comprehensive income


-

-



-


-


-


-


(1,591)


-

 

(1,591)




 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2021

 

(12,632)

 

(762)

 

 

9,671

 

6,110

 

94

 

923

 

-

 

8,171

 

11,575





















Increase (decrease) for the period through :


















 

 

Profit or loss


(1,285)

(11)



2,568


-


-


16


-


39

 

1,327















 

 

 

 

 

 

At 31 March 2022

 

(13,917)

 

(773)

 

 

12,239

 

6,110

 

94

 

939

 

-

 

8,210

 

12,902

 

 

 


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.  Offshore Israel during March 2022:

The company started the drilling of three wells during March 2022. See also Note 7(D).

 

NOTE 7:  SIGNIFICANTS EVENTS AND TRANSACTIONS AFTER THE REPORTING PERIOD

 

A.  Share Premium Capital reduction:

On 8 April 2022 the Company reduced its share premium capital at the amount of 360 million USD and credited against it the loan to its shareholder at the amount of $US346 million and the accrued interest to receive as of 8 April 2022.

 

B.  Termination of contract with Gas Buyer

In May 2022, further to the claims raised by the parties in the related arbitration proceedings (including the counterclaim filed by Energean seeking a declaration that Energean is entitled to terminate the GSPA as well as damages), Dalia and the Company agreed to end all claims and disputes between them. Both sides agreed that the Dalia GSPA (which represents up to 0.8 billion cubic meter ("bcm") per year was lawfully terminated, that the arbitration proceedings are 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.

 

C.  Contract signed with new Gas Buyer

In May 2022 Company has 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.

 

D.  Athena Gas Discovery

Commercial discovery made by the Athena exploration well, Block 12, in the A, B and C sands. Preliminary analysis indicates that the Athena discovery contains recoverable gas volumes of 8 bcm on a standalone basis.

This discovery is particularly significant as it de-risks an additional 50 bcm of mean unrisked prospective resources across Energean's Olympus Area (total 58 bcm including Athena). The Olympus Area is Energean'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 7:  SIGNIFICANTS EVENTS AND TRANSACTIONS AFTER THE REPORTING PERIOD (Cont.)

 

E.  Claim submitted under the Karish-Tanin SPA

  On 31 May 2022, NewMed Energy LP (previously named Delek Drilling LP) ("NewMed") filed a lawsuit against the Company before the Tel Aviv District Court. The claim is for the amount of US$65.1 million plus interest and indexation, constituting the outstanding consideration under the SPA (see Note 3(E)(2)). 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.  

 

F.  The FPSO sailed away from Singapore and has arrived on location in Israel on 5 June 2022.

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