Winter 2024 brings 17% boost in energy production

Energean recorded new production growth in the first two months of 2024. Specifically, the company said in a statement that from 123 thousand barrels of oil equivalent (kboe) per day on average in 2023, in the two months of January-February of 2024, production rose to 144 kboe per day, with 82% of this being in natural gas.

Energean's management disclosed these figures on Thursday as part of its official update to the London and Tel Aviv stock exchanges on its final 2023 results.

According to the company, its first major step-up in production is achieved, with production for 2023 at 123 kboed (83% gas), up 200% year-on-year, primarily as a result of a full-year of production from Karish (Israel).

Day-to-day production in Israel continues to be unimpacted by the ongoing geopolitical developments, it adds, noting that FPSO uptime (excluding planned shutdowns) was 99% in Q4 2023.

Moreover, the NEA/NI development (Egypt) was completed in December 2023. According to the statement, Karish North and the second gas export riser were brought online in February 2024.

Confirmed year-end 2P reserves were at 1,115 mmboe, stable year-on-year before produced 2023 volumes and demonstrating material reserves life of around 19 years. Additionally, new gas contract was signed in Israel in February 2024. This adds circa $2 billion of revenues over the life of the contract and is in line with the Group’s strategy to secure long-term reliable cash flows.

Moreover, the company's entrance to Morocco, through farm-in to Chariot Limited’s Lixus and Rissana licences, is expected to be completed imminently.

The Group reports strong financial performance, underpinned by a full-year of production from Karish. In 2023 sales and other revenues were at $1,420 million, representing a 93% increase (2022: $737 million). Adjusted for EBITDAX, it was at $931 million, representing a 121% increase (2022: $422 million).

Profit after tax for 2023 was at $185 million, noting a significant improvement versus the previous year (2022: $17 million). Profit after tax was negatively impacted by $100 million of deferred tax charges.

For Q4 2023, dividend of 30 US$cents/share, declared on 22 February 2024, is scheduled to be paid on 29 March 2024.

A total of 210 US$cents/share (approximately $370 million), including the Q4 2023 dividend, was returned to shareholders since maiden payments began.

Additionally, a 42% year-on-year reduction in carbon emissions intensity to 9.3 kgCO2e/boe was achieved and an 86% reduction since the original baseline year, ahead of schedule with the Group’s stated 2019-2025 target.

For 2024, the outlook production guidance is reiterated at 155 – 175 kboed (production to end-February was 144 kboed; 82% gas), a significant step up towards Energean’s near-term targets.

Mathios Rigas, Chief Executive Officer of Energean, commented that 2023 was another transformational year for Energean. "We grew production by 200% year-on-year, reached c. 150 kboed peak production and brought NEA/NI online on time and on budget". He said that, despite the challenging geopolitical environment, all of the operations were managed without any impact from the regional conflicts. "Since the year-end, the start-up of Karish North and the second gas export riser mean we are now able to utilise the FPSO’s maximum gas capacity and our production guidance illustrates the next step towards our near-term target of 200 kboed", he added.

Commenting on the Group's strong financial year, he said that these strong results coupled with the company's long-term gas contracting strategy, which underpins their dividend policy, has seen them return approximately $370 million to shareholders since their inaugural payment in Q3 2022.

“We are looking beyond our near-term targets and this is reflected in our new Morocco country entry project and in Italy, where we see a new era for the industry following the annulment of prohibitive laws, thereby releasing previously restricted acreage. We also remain alert to opportunities that fit our key business drivers (paying a reliable dividend, deleveraging, growth, and our commitment to Net Zero) and can move quickly to take advantage when they arise", he said.

Moreover, he noted that concerning sustainability, "we are contributing to Israel’s transition away from coal as well as its, and the wider region’s, energy security – helping to meet the growing demand for natural gas. We further reduced our emissions intensity and have now delivered an 86% reduction from our original 2019 baseline. We are also now rated AAA by MSCI. Our Prinos Carbon Storage (“CS”) project will add another pillar and help decarbonise heavy industries in Southeast Europe, in line with our commitment during COP28".

Finally, Rigas underlined that this "ongoing success" is due to the entire global team working together during what has been a challenging period in the East Mediterranean. "I am proud to lead such a diverse and dedicated team and as we continue to grow, our commitment to integrity, corporate sustainability and operational excellence will remain", he said.