East Med fields drive Energean’s H1 financial results

ENERGEAN OIL & GAS

Mark Menezes, Undersecretary of the US Department of Energy, visits Energean’s oil and gas production facilities in Prinos-Kavala, September 10, 2018.

Energean has offered sales of 0.5 to 0.8 bcm/yr to Cyprus via a pipeline that could be installed by the early 2020s.


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Greece’s Energean Oil and Gas announced on September 12 its half-year results for the half-year ended June 30, noting that the independent Greek company focusing on East Mediterranean has made substantial progress in de-risking its flagship Karish and Tanin development project in Israel.

“We signed a lump-sum, turnkey EPCIC contract with TechnipFMC, simplifying project management and reducing our financial risk exposure, and secured $12 billion of future revenue by signing 12 firm Gas Sales Agreements to deliver a total of 4.2 billion cubic meters per year,” Energean CEO Mathios Rigas said. “Over the next 18 months, we aim to prove up sufficient resource to fill the 3.8 billion cubic meters per year of spare capacity in our Karish FPSO, delivering significant incremental value to our stakeholders. Our independent reserves auditor has identified 7.5 trillion cubic feet of Israeli prospective resource with a high geological probability of success, which gives us confidence that we can meet this target whilst adhering to our exploration strategy to target resource that can be quickly and economically monetised. We look forward to the results from the Karish North exploration well in the second quarter of 2019,” Rigas added.

For his part, Energean Chairman Simon Heale reminded that March 2018 marked Energean’s admittance to the Premium Listing Segment of the London Stock Exchange with subsequent entry to the FTSE 250 following June’s index review.

“We are very pleased with the response we have had from the investment community and are pursuing a secondary listing on the Tel Aviv Stock Exchange in the months ahead, further expanding the accessibility of our East Mediterranean Oil & Gas story to a wider pool of investors,” Heale said. “Whilst continuing to focus on delivering our flagship Karish and Tanin development on time and on budget, we will continue to assess both organic and inorganic growth opportunities that we believe will deliver value to all of our stakeholders,” he added.

Energean said the company continues to engage with buyers in the domestic Israeli market and believes that growing demand should result in additional gas sales opportunities that can be leveraged if more gas is discovered.

Energean said the company is also able to consider export markets for any future gas discoveries and has offered sales of 0.5 to 0.8 billion cubic meters per year to Cyprus via a pipeline that could be installed by the early 2020s.

Turning to Prinos oil and gas production facilities, Energean said working interest production from Greece averaged 3,801 barrels of oil equivalent per day, an increase of 50% versus the comparable period in 2017 (1H 2017: 2,534 boepd) and in line with expectations. The year-on-year uplift is primarily due to successful management of asphaltene precipitation and continued execution of the development drilling programme. Nine of 25 planned development wells have been drilled to date and the field currently produces from eleven wells, supported by four injectors. Energean is narrowing its Full Year 2018 production guidance to 4,000 – 4,250 bopd (from 4,000 – 4,500 bopd previously), as it has replaced previously planned Prinos infill drilling with the Epsilon Extended Reach well, which impacts the timing of production delivery, Energean said.

In the first half of 2018, Energean delivered average production costs of $19 per barrel (1H 2017: $26); the year-on-year reduction reflects increased production against a broadly fixed cost base. Energean expects production cost for the full year 2018 to average approximately $17-19 per barrel, with further reductions expected as production from the Prinos Area grows, Energean said.

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