# Energean Oil & Gas On track to deliver first gas from Karish in 1H 2021

- Link: https://www.directorstalkinterviews.com/energean-oil-gas-on-track-to-deliver-first-gas-from-karish-in-1h-2021/412809232
- Published: 2020-03-19T08:07:39+00:00
- Author: Giles Arbor

**Energean Oil and Gas plc** (LON:ENOG) the oil and gas producer focused on the 
Mediterranean, today announced its audited full-year results for the year ended 
31 December 2019. Having grown its reserve base at 39% year-on-year, Energean is
now at its next transition point as we begin converting this into cash flows and
production, de-risking our investment case and moving us closer to our medium-term
ambition of paying a sustainable dividend.

> **Mathios Rigas, Chief Executive Officer, Energean Oil & Gas commented:**
> “Energean continued its strong growth trajectory in 2019, becoming firmly established
> as a leading, [FTSE 250](https://www.directorstalkinterviews.com/news/ftse-250)
> E&P independent.
> “The COVID-19 pandemic and OPEC+ price war have put us into uncertain times, but
> we are well-placed to weather the challenges. Once the Edison E&P transaction 
> is completed, around 70% of our production will be sold under long-term gas sales
> agreements that insulate our future revenues against oil price volatility. Following
> completion of the Edison E&P transaction, we will continue to own and operate 
> the majority of our asset base, and are well-funded for all of our projects. This
> will ensure that we can respond quickly and appropriately to the macro environment
> and take the right decisions to protect our business and our shareholders, as 
> demonstrated by the $155 million cut to our 2020 capex guidance. The crisis finds
> Energean well prepared with full discretion on our non-Israeli capex programme
> and a very strong balance sheet further strengthened only recently by a further
> $175 million committed funding for our Karish project, demonstrating the strength
> of our banking relationships and the commitment of our lenders to the project.
> “In the coming weeks, you will see our FPSO hull sailaway from China to Singapore,
> a key milestone in the delivery of first gas from Karish, which is on track for
> 1H 2021. During 2019 we completed the drilling of the three development wells 
> of Karish, confirmed excellent productivity rates from the wells and made a new
> discovery (Karish North) in Israel that we intend to develop in 2021. We continued
> to gain market share in Israel securing additional long-term gas contracts and
> bringing us closer to our target to maximise capacity utilisation of our FPSO.
> We expect the Edison E&P transaction to close during 2020, which, based on the
> agreed locked-box date of 1 January 2019, allows us to benefit from the robust
> results delivered by the business during 2019, including $152 million of Free 
> Cash Flow from the assets to be acquired. This, combined with the receivables 
> recovered in Egypt, exclusion of the Algerian assets from the transaction perimeter
> and our onward disposal of the North Sea assets to Neptune Energy, contributes
> to a low effective purchase price.
> “Fully committed to lead also on the ESG front, Energean became the first E&P 
> company globally to commit to net zero emissions by 2050, and we have a firm plan
> to reduce carbon intensity by 70% over the next three years.
> “I look forward to continuing to deliver positive momentum and sustainable growth
> to maximise value for all of our stakeholders”

**Highlights**

 * Karish was 72% physically complete at 31 December 2019 and remains on track to
   deliver first gas in 1H 2021. Firm gas sales of 5.0 bcm/yr with a further 0.6
   bcm/yr to be converted to a firm basis immediately on publication of a satisfactory
   Karish North CPR, expected at the end of March 2020.
 * Post-period end, two of the three Karish development wells successfully flowed
   during clean-up operations, confirming that each will be capable of delivering
   up to the design limit of 300 mmscf/d (c.3 bcm/yr). The third development well
   is currently in the clean-up phase and production performance is expected to 
   be similar, confirming that the three wells will be able to produce to the 8 
   bcm/yr capacity of the FPSO.
 * Increased 2P reserves and 2C resources to 558 MMboe, representing a 39% year-
   on-year increase, before any contribution from the Edison E&P acquisition. Energean
   is at a transition point in its history, from which it will convert this growth
   in reserves to growth in production and cash flow.
 * 2019 average Working Interest production was 3.3 kbopd from the Prinos field.
   Cost of production was approximately $21.5 /bbl.
 * 2019 full year revenue was $76 million. Adjusted EBITDAX was $36 million. Capital
   expenditure was $685 million.
 * Recognised a $71 million impairment charge on the Prinos area, reflecting a reduction
   in Energean’s oil price assumptions and a change in the Group’s Prinos field 
   production forecast.
 * Energean retains significant liquidity. At 31 December 2019, Energean had cash
   and undrawn facilities of $834 million, excluding the undrawn $600 million acquisition
   bridge facility.
 * Became the first E&P company globally to commit to net zero emissions by 2050
   and have a firm plan to reduce carbon intensity by 70% over the next three years.

Share on: