Energean Israel 3Q 2022 Accounts
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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
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Page |
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Interim condensed consolidated statement of financial position |
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1 |
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Interim condensed consolidated statement of comprehensive income |
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2 |
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Interim condensed consolidated statement of changes in equity |
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3 |
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Interim condensed consolidated statement of cash flows |
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4 |
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Notes to the interim condensed consolidated financial statements |
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5-16 |
- - - - - - - - - - - - - - - - - - - -
ENERGEAN ISRAEL LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in thousands US Dollars, unless otherwise stated)
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30 September 2022 |
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31 December 2021 |
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Unaudited |
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Audited |
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Note |
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ASSETS: |
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NON-CURRENT ASSETS: |
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Property, plant and equipment |
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3(A) |
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2,738,532 |
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2,245,267 |
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Intangible assets |
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3(B) |
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85,083 |
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20,141 |
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Other accounts receivable |
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6(B) |
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81 |
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6,463 |
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Loan to related party |
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6(B) |
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- |
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346,000 |
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Restricted cash |
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3(D)(2) |
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- |
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100,000 |
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Deferred expenses |
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3(C) |
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- |
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22,958 |
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Deferred tax asset |
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5 |
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14,528 |
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11,575 |
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2,838,224 |
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2,838,224 |
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CURRENT ASSETS: |
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Trade and other receivables |
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30,945 |
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22,769 |
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Deferred expenses |
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3(C) |
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22,958 |
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- |
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Restricted cash |
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3(D)(2) |
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71,784 |
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99,729 |
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Cash and cash equivalents |
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103,966 |
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349,827 |
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229,653 |
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472,325 |
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TOTAL ASSETS |
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3,067,877 |
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3,224,729 |
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EQUITY AND LIABILITIES: |
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EQUITY: |
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Share capital |
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1,708 |
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1,708 |
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Share premium |
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6(B) |
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212,539 |
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572,539 |
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Retained losses |
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(40,573) |
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(35,946) |
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TOTAL EQUITY |
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173,674 |
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538,301 |
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NON-CURRENT LIABILITIES: |
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Senior secured notes |
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3(D) |
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2,469,349 |
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2,463,524 |
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Provision for decommissioning |
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26,834 |
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35,525 |
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Trade and other payables |
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3(F) |
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149,404 |
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113,264 |
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2,645,587 |
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2,612,313 |
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CURRENT LIABILITIES: |
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Trade and other payables |
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3(F) |
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248,616 |
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74,115 |
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TOTAL LIABILITIES |
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2,894,203 |
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2,686,428 |
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TOTAL EQUITY AND LIABILITIES |
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3,067,877 |
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3,224,729 |
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December 1, 2022 |
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Panagiotis Benos Director |
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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
Nine months ended 30 September 2022
(Amounts in thousands US Dollars, unless otherwise stated)
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30 September (Unaudited) |
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2022 |
2021 |
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Note |
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Administrative expenses |
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4(A) |
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(7,218) |
(2,717) |
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Exploration and evaluation expenses |
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4(A) |
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(1,277) |
- |
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Other expenses |
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4(A) |
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(1,079) |
(28) |
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Other income |
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4(A) |
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53 |
3 |
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Operating loss |
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(9,521) |
(2,742) |
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Finance income |
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4(B) |
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5,757 |
4,524 |
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Finance expenses |
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4(B) |
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(4,931) |
(14,388) |
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Foreign exchange gain (loss) |
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4(B) |
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1,405 |
(1,140) |
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2,231 |
(11,004) |
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Loss for the period before tax |
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(7,290) |
(13,746) |
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Taxation income |
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5 |
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2,663 |
3,909 |
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Net loss for the period |
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(4,627) |
(9,837) |
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Other comprehensive income: |
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Items that may be reclassified subsequently to profit or loss: |
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Gain on cash flow hedge for the period |
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- |
2,278 |
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Reclassification adjustment for items included in loss on realisation |
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- |
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4,641 |
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Tax relating to items that may be reclassified subsequently to profit or loss |
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- |
(1,591) |
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Other comprehensive income for the period |
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- |
5,328 |
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Total comprehensive loss for the period |
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(4,627) |
(4,509) |
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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):
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Share capital |
Share premium |
Retained losses |
Total equity |
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Balance as of 1 January 2022 |
1,708 |
572,539 |
(35,946) |
538,301 |
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Changes during period: |
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Transactions with shareholders |
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Share premium reduction, see note 6(B) |
- |
(360,000) |
- |
(360,000) |
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Comprehensive loss: |
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Loss for the period |
- |
- |
(4,627) |
(4,627) |
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Balance as of 30 September 2022 |
1,708 |
212,539 |
(40,573) |
173,674 |
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For the period of nine months ended 30 September 2021 (Unaudited):
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Share capital |
Share Premium |
Other reserves |
Retained losses |
Total equity |
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Balance as of 1 January 2021 |
1,708 |
572,539 |
(5,328) |
(25,114) |
543,805 |
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Changes during period: |
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Comprehensive income (loss): |
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Loss for the period |
- |
- |
- |
(9,837) |
(9,837) |
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Other comprehensive income, net of tax |
- |
- |
5,328 |
- |
5,328 |
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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)
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30 September (Unaudited) |
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2022 |
2021 |
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Operating activities : |
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Loss for the period before tax |
(7, 290 ) |
(13,746) |
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Adjustments to reconcile loss before taxation: |
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Depreciation, depletion and amortisation |
232 |
71 |
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Loss from disposal on property, plant and equipment |
1,079 |
23 |
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Exploration and evaluation expenses |
1,277 |
- |
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Other expenses |
- |
5 |
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Other income |
- |
(3) |
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Finance income |
(5,757) |
(4,524) |
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Finance expenses |
4,932 |
14,388 |
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Net foreign exchange (gain) loss |
(1,405) |
1,140 |
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(6,932) |
(2,646) |
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Changes in working capital: |
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|
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Decrease (increase) in other receivables |
906 |
(29) |
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Decrease in trade and other payables |
(665) |
(6 6 0) |
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|
241 |
( 6 89) |
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Income taxes paid |
(572) |
(32) |
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Net cash used in operating activities |
(7,263) |
(3,3 6 7) |
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Investing activities : |
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|
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Payment for purchase of oil & gas leases |
(10,850) |
(10,850) |
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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) |
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Proceeds from disposals of property, plant and equipment |
188 |
- |
|
Payments for buyers compensation |
- |
(13,271) |
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Amounts received from INGL related to the future transfer disposals of property, plant and equipment |
17,371 |
5,673 |
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Movement in restricted cash |
127,945 |
(199,738) |
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Interest received |
2,863 |
264 |
|
Net cash used in investing activities |
(102,493) |
(475,669) |
|
Financing activities : |
|
|
|
Senior secured notes issuance |
- |
2,500,000 |
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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 |
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|
|
|
|
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, 1st 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 |
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Israel |
Tanin |
100% |
Development |
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Israel |
Blocks 12, 21, 23, 31 |
100% |
Exploration |
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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:
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Oil & gas properties |
|
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 (*) |
|
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 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 (*) |
|
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$2,500,000,000 of senior secured notes.
The Notes were issued in four equal tranches as follows:
|
|
|
|
30 September 2022 |
|
31 December 2021 |
|
Series
|
Maturity
|
Annual fixed Interest rate |
Carrying value |
|
Carrying value |
|
US$ 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 1 |
Level 2 |
Total |
|
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:
|
|
|
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 |
|
- |
|
- |
|
|
(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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