Energean shares slide despite 'strong' financial performance

Energean shares were in the red on Thursday morning, despite the company describing a “strong” financial performance for 2022 in a trading update.

The FTSE 250 company said revenues were up 48% year-on-year at $736.7m, while EBITDAX jumped 97% to $418.5m.

It said it was on track to deliver mid-term annualised targets of $2.5bn of revenues and $1.75bn of EBITDAX.

Group cash on 31 December totalled $498m, including restricted amounts of $75m, while total liquidity stood at $719m.

Energean paid a third-quarter dividend of 30$cents per share on 30 December, meaning a total of 60 cents per share, representing two-quarters of dividend payments, had been returned to shareholders in 2022.

Looking ahead, Energean said it would focus on the continued ramp-up of Karish to its initial capacity of 6.5 billion cubic metres per year.

The final stages of the FPSO commissioning process were now underway, with completion expected in February.

Total gas sales in 2023 was expected to be between 4.5 billion and 5.5 billion cubic metres.

The board said the top end of that range was driven by the annual contract quantity under the gas sales agreements, while the bottom end represented the take-or-pay volumes, viewed by Energean as a “highly conservative” case.

No spot market sales were being assumed in the range.

The company said the first cargo of hydrocarbon liquids lifted under the contract with Vitol was expected in February.

Practical completion under the EPCIC contract with TechnipFMC and Technip Energies was also in the pipeline, alongside the delivery of development projects that the board said would be “key” to achieving its mid-term production target of 200,000 barrels of oil equivalent per day.

Installation of the second oil train and gas export riser, and first gas from Karish North was expected by the end of 2023, debottlenecking FPSO capacity to eight billion cubic metres per year.

First gas from NEA/NI in Egypt was expected in the first half of 2023, while first gas from Cassiopea in Italy was expected in the first half of 2024.

Looking at its Israel expansion, Energean said a development concept for the 67 billion cubic metre Olympus area would be revealed in the first half.

It said “various” commercial and technical solutions were under consideration to identify a concept that would deliver “the most value” to shareholders.

The publication of a competent persons report to certify volumes was expected in the first quarter, and would include around 30 billion cubic metres of 2P reserves and 37 billion cubic metres of volumes in nearby de-risked structures.

Quarterly dividend payments, meanwhile, would be declared in line with the firm’s previously-communicated dividend policy.

“2022 was a landmark year for Energean - we commenced production from the only FPSO in the strategically vital Eastern Mediterranean region; commenced payment of dividends to our shareholders; and we successfully discovered and de-risked new natural gas resources adjacent to our infrastructure, providing significant potential upside and export optionality,” said chief executive officer Mathios Rigas.

“We are proud to have helped to underwrite Israeli and regional energy security and promote prosperity.

“Our focus for 2023 is on continued operational growth.”

Rigas said the firm would continue to ramp-up production from Karish and finalise the development concept for the “strategically significant” 67 billion cubic metre Olympus Area.

“Production will also start from Karish North in Israel and NEA/NI in Egypt.

“2023 is the year that we will make a significant step towards delivering our medium-term production target of 200,000 barrels of oil equivalent per day.

“If we have learned anything in 2022, it is that the world needs additional secure supplies of energy, and that natural gas remains the catalyst for, and foundation of, a just energy transition and vital sustainable development.”

Energean was “committed” to investing in projects where it could create value for all relevant stakeholders, Mathios Rigas said.

“In an uncertain world, we hope governments understand the value of enhanced domestic and regional energy production, value that is unlocked through long-term investment.

“We hope that the intelligent policy we have seen in Israel and Egypt can be replicated across the region, continuing the investment that will unlock the strategic value in the subsurface.”

At 1011 GMT, shares in Energean were down 5.42% at 1,275p.