Energean plc

welcome to the energy and half year 2025 results webinar this session is led by matthias rios ceo and panos benos cfo currently all participants are on mute there will be a q a session at the end i want to pass over to matthias ria go ahead good morning everyone and thank you for joining our call today um we have been through some uh challenging times in the first half of 2025

but our business remains resilient in strong and uh... i think this is testament to the and uh... allow us to get to record production of a hundred and seventy oh which uh... is producing at the moment at maximum capacity for the last months without uh... interruptions The only effect we had in the first half was from the forced shutdown of two weeks that the government imposed on us and then obviously we had a short period to be able to ramp back up but we were able to get back up and enjoy the strong season of the summer months with peak demand for our gas in Israel and the wider region. we are focused as always on long-term value creation number one priority is the reliability of our production the bedrock of our business is the cash flow coming out of israel egypt italy and we are totally focused on continuing to sell gas to the domestic market in israel we have signed another four billion dollars worth of gas contracts to the local market in israel bringing our total value of contracted revenue to 20 billion dollars over the next period and i think this is a unique position to be in for any independent and probably not just independent a very predictable business a very predictable cash flow from very high credit quality buyers in israel that we have an excellent relationship with We are continuing also the efforts to export gas from Catalan. Our project, which is continuing to be on budget and on time, has no export restrictions and from 27 onwards we're able, if we choose so, to export this gas to the regional markets. we see very strong demand egypt obviously is importing large quantities of lng to meet its gas demand these days so there's a very strong regional demand for our gas which we want to take advantage of we are introducing today and we will talk a little bit more about organic growth opportunities because energy and is not just about the existing business the bedrock as I mentioned earlier over cash flow coming out of Israel and Egypt we have three very exciting projects that we're working on in the portfolio one in Greece one in Egypt one in Israel that we will be maturing looking for partners in the near future to be able to take them to a drilling stage and prove additional potential in our portfolio I'll talk about that a bit later very excited about the developments of our carbon storage project we received the first tranche of grant funding from the RRF supported by the European Union both Greece government of Greece and the European Union remain committed to to assist us in the decarbonization of heavy industries in Greece and the project has now kick-started with initial drilling and well testing targeted in 2026 with a project that will be talking more about it over the coming period and calls that we will have together that is taking center stage in our transition of the prinos field from the mature oil production or the depleted oil production into the ccs project that we have been talking about we are continuously reviewing all strategic options to maximize shareholder value and to grow our business and you all know me I'm very direct and we will talk more about what we plan to do with potential M&A but I want to give a very clear message that we will be extremely disciplined because we want to maintain the three pillars that we have promised to our shareholders a dividend policy which is stable a deleveraging and a strong balance sheet and growth opportunities organic and inorganic The result of all this is very strong results of $800 million of revenue for the period, half a billion dollars of EBITDAX, $110 million of profits. Our leverage sits at 2.7 times and we are on track to the promise we made with our dividend policy. uh with the dividend we are declaring today uh paid at cumulative or will have paid a cumulative of 700 million dollars of dividends uh from the great business that we're running moving uh to the next slide and getting a bit deeper into our operations um next slide please ben I'm starting with our commitment to safety great results from our safety team and our operating team with very low numbers on all safety records and a continuously reducing carbon emission intensity I know that this is not the top priority of everyone we used to be talking only about emission intensity in the past we continue to focus on this although the focus of the world with the drill baby drill policy of the u.s has shifted we remain committed to a safe and responsible operating model moving on to production we are we did achieve 138,000 barrels of oil equivalent production the first half it is down from the previous year affected mainly by the planned shutdown that we had in the second for the second oil train which is on the FPSO and getting ready to be put on stream in the coming month and of course the unplanned shutdown following the suspension order by the Ministry of Energy and Infrastructure that we had in June due to the geopolitical tensions having said that as I mentioned earlier Group August standalone production stood at 178,000 barrels of oil equivalent a day and we do see continuing continuing strong demand a lot of what will happen for the remainder of the year and the outlook that we see and we revise our guidance to 145 to 155 000 barrels a day will depend on weather conditions in israel in the last quarter september is strong we will see what happens over the next month depending on on weather next please Israel I mentioned earlier a new contract new contract signed the first half four billion dollars we are focusing on the export option Nitzana the pipeline that will export additional gas from Israel to Egypt is progressing chevron is the operator they have the lead in the development timetable we are booking capacity in the pipeline to be able to export our gas coming from catalan and the slide shows the total revenue that we have contracted 15 billion over the next decade 20 billion to 2037 giving us the confidence that we have a very strong cash flow, a very long reserve life, average reserve life of our assets is about 19 years. So very healthy business that has a very long term plan to grow based on this fantastic business that we build in Israel. Next one, please. Catalan, our major project, remains on budget in line with the FID that we made, a $1.2 billion investment. The rig that we have secured is coming in 2026. We have two firm wells, Athena and Zeus, and two optional wells at the moment. Our intention is to exercise the first option for Israel and keep the second option for one of our very exciting Exploration prospects that we have in the portfolio in the region that I will talk about a bit later Next slide please On the rest of the portfolio very briefly in Egypt we have seen very strong performance from our location be well and we are actively talking to the government obviously to continuously manage the outstanding receivables position there is a tough situation in egypt we all know it we are committed to egypt we have been there for over 15 years and in tough times we stick with our partners and obviously try to maximize value our top priority at the moment is to merge the three concessions nanny and here to create incremental value for all our shareholders which is something which is progressing very well I've met with the Egyptian authorities very recently and there is progress that we will be able to report over the coming months Italy, the Vega West work program has been amended and submitted to the government. It contains at least 10 million barrels of additional volumes that we can produce through the existing infrastructure. and we're waiting for permits from the italian government to be able to drill the extended reach wells and increase production from the vega assets rospo following the unfortunate event that we had with the fire is planned to restart production in early q4 2025 i expect that to be in the beginning of october so that will be behind us and italy production will be back strong again all the costs have been covered by the insurance contracts that we have so we've seen deferred production obviously with no major impact on our business croatia exciting project not a huge one but one that we took fid on on the arena development with first gas expected in the first half of 27 european gas production is our business plan our focus as i said not a game changer but a very profitable one that adds a lot of value to our to our business UK decommissioning project is going extremely well with energy and as operator we have been able to reduce costs remain on time and on budget and we are looking to complete all the work of decommissioning tours and windlock over the coming months and we are actually seeing a much better performance of the uk portfolio than what we originally anticipated so total business that in the first half produced 44 000 barrels of oil equivalent today that we are focusing on to see how we can squeeze more barrels and molecules of gas out of all our assets to maximize value and push the commissioning to the right which is a key target of the team Next slide, please. I talked earlier about the prospectivity that we have in the portfolio. Organic growth that can come from four projects. First one in Israel, a project called Tzadyam. Tzadyam in Hebrew is the sea turtle, a continuation of the sea creatures of karish, shark, canine, crocodile. A very exciting block with a deep prospect that we have mapped in the Mesozoic. It's a risky prospect but one that could be a game changer for the whole East Mediterranean. We are looking to mature this. We will be looking for partners to drill this well and potentially use one of the options that we have on the drilling rig to drill that well in 26 or 27. Block 2 in Greece. The only block in the country that has real prospectivity for well in the coming period. Yesterday Chevron submitted a bid for block south of Crete in Greece. Greece is becoming a focus for the international oil and gas companies. We are there. We have a block with very significant prospectivity. We have some numbers that we report here. we are targeting over 70 cf of gas and potentially also oil if we are successful with the drilling operation this is going to be a focus for us over the coming months to mature it and potentially use again as i said earlier the option we have on the drilling rig to drill a well in block 2 in the coming 18 months Aboukir deep very exciting prospect of close to 2 TCF that we see and we map under the platforms of Aboukir an easy project to develop but one that needs obviously exploration risk and those three prospects are all prospects with very material impact on our business they are exploration prospects they carry risk we understand that very well but i wanted today to highlight the organic growth opportunities we have in the portfolio that gives us the base for the missing piece in the business plan that is growth from our existing assets over and above our efforts to look at inorganic opportunities that i will talk about later Last but not least, I want to move to the Prenos carbon storage project. As I said earlier, kickstarted the project with the first tranche of 20 million euro that came in from the resilience and recovery facility of Greece that is supporting a project. that can reach three million tons of storage capacity that will substantially help greece to decarbonize its heavy industries we are working very closely with the government and the emitters the cement factories and the refineries that will be using the prinos facility as a storage site for the co2 some very important milestones we have now certified storage volumes the equivalent of a cpr but for co2 storage from nsai that has certified 66 million tons of storage capacity the demand far exceeds the capacity of the field all the emitters in greece are very committed to decarbonize and we have very active discussions with the government about how we will be filling the storage capacity in terms of funding and i'm sure the question will come later how will you fund a project that could reach a billion we are committed and we are remain committed not to put stress on our balance sheet so for the time being the 270 million euro of grants that have been received or approved by the connecting europe facility and the rrf will be used to fund the first phase of the project until we reach the point where we are able to take fid and at that point we will have partners and funding in more detail so for now what i want everybody to remember is that this is a great project that transitions our oil mature oil asset into a ccs project without burning on our balance sheet With that, I would like to pass the floor to Panos to go through the financial review. Thank you.

Thank you, Matthias. Good morning from me as well. As you have seen from our financial results, the production disruptions in our Israeli operations in the first half of the year, specifically the unplanned two-week suspension ordered by the ministry and the planned shutdown for the second oil drain, did have an impact on our sales volumes and revenues. Having said that, however, our group gas production was largely flat compared to last year, as the increased gas sales in Italy offset the lower production in Israel, and combined with the strong PSV prices, our group gas revenues did record 540 million, an increase of 7% compared to last year. However, that was clearly not the case in the liquids part of the business, where we recorded both a drop in volumes produced due to the production disruption in Caris and Roscoe Mare, and lower realized prices compared to the same period last year. As a result, our total group revenue for the first half of the year was just over 800 million, 7% lower than the same period last year. Moving to slide 14 and other key performance indicators, you can see that all controllable cost and expenditure areas of our business were kept well under control despite the operational challenges we had, the ongoing development of Catlan and the new asset, the Cassiopeia gas field that has been added to our OPEX lines. More specifically, our production cost and G&A was flat at circa 290 million I want to mention here that the slight G&A increase that has been flagged for the first six months versus last year was due to the legal costs associated with the Carlisle deal and we expect the full year ultimately to be flat compared to last year and as we are guiding at a number of 30 to 40 million. Our capital expenditure was around 300 million, 100 million less than the same period last year With all our projects however, especially Catalan, being on time and on budget year to date. And finally our T-Com expenditure at 30 million, increased compared to last year, but much lower than the number initially budgeted for 2025. Moving to slide 15. As announced before, we will be drawing on our bank Lumi-led loan to prepay the outstanding 2026 bonds, with redemption date now confirmed to be 21st of September. Our group cost of debt, even at the current high interest rate environment, is just below 7%, and our weighted average maturity at 6 years, which makes our debt profile very competitive Our balance is resilient and most importantly allows for flexibility and optionality as we grow our business and deliver returns to our shareholders. Despite the challenging first half of the year, we have kept our net debt levels at 3 billion, only slightly higher than the 2 billion 950 recorded in June 2024, while maintaining all our projects on track and our dividend policy intact. As we have said before, deleveraging both in absolute and ratio terms is one of our key targets, but we should not ignore the fact that a 3 billion of net debt has a long 6 year maturity profile to be serviced by a business with 20 year reserve life and over 20 billion of contracted revenue only from the Israeli gas sales. Moving to final slide from me, slide 16 and our revised guidance for the full year 2025. As Matheos mentioned we adjust our production guidance to 145 to 155 thousand barrels per day to reflect the first half performance and the planned commissioning of the second oil train towards the fourth quarter of the year. Net debt slightly higher by 100 million although I am cautiously optimistic we will keep this at below the 3 billion level as we recorded in June 2025. Cost of production reduced by 40 million to below 600 million as we adjust royalties linked to production and of course we continue keeping all OPEX and expenditure well under control. gna capex and exploration unchanged to previous guidance arabics down by at least 20 million if not more driven by further deferrals of platform removal activities but most importantly true realized savings on articom activities in the uk versus initial budgets matthew back to you