NOTE 2: -     Accounting policies and basis of preparation

The interim financial information included in this report has been prepared in accordance with IAS 34 "Interim Financial Reporting". The results for the interim period are unaudited and, in the opinion of management, include all adjustments necessary for a fair presentation of the results for the period ended 31 March 2024. All such adjustments are of a normal recurring nature. The unaudited interim consolidated financial statements do not include all the information and disclosures that are required for the annual financial statements and must be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 December 2023.

The financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing the Group's annual consolidated financial statements for the year ended 31 December 2024 which are the same as those used in preparing the annual consolidated financial statements for the year ended 31 December 2023.

The directors consider it appropriate to adopt the going concern basis of accounting in preparing these interim financial statements.

Israel-Hamas conflict- The Group continues to monitor the ongoing conflict between the State of Israel and Hamas. While the situation has not impacted the Company's production from the FPSO (Floating Production Storage and Offloading vessel), it is not possible to predict whether the conflict will have a material adverse effect on our future earnings, cash flows and financial conditions.

NOTE 3: -     Revenues

⁽¹) Sales gas for three months ended 31 March 2024 totaled approximately 1.2 bcm and for three months ended 31 March 2023 totaled approximately 0.72 bcm.

⁽²⁾ Sales from hydrocarbon liquids for three months ended 31 March 2024 totaled approximately 1.07 mmbbl and for three months ended 31 March 2023 totaled approximately 0.714 mmbbl.

⁽³⁾ During 2021 and in accordance with the GSPAs signed with a group of gas buyers, the Company paid compensation to these counterparties following delays to the supply of gas from the Karish project. The compensation is deducted from revenue in 2023, as variable consideration, as the gas is delivered to the gas buyers, in accordance with IFRS 15 Revenue Recognition.

NOTE 4: -     Operating profit before taxation

⁽¹⁾ Other operating costs mainly consist of insurance and planned maintenance costs.

⁽²⁾ The Other general & administration expenses mainly consist of legal expenses, management fees recharged by other Energean Group companies and external advisors fees.

NOTE 5: -     Net finance income/(expenses)

NOTE 6: -     Taxation

1.      Corporate Tax rates applicable to the Company:

Israel:

The Israeli corporate tax rate is 23% in 2024 and 2023.

Cyprus:

For its activity in Cyprus, the Company is subject to corporation tax on its taxable profits at the rate of 12.5%.

Starting from 1 January 2024, the Company's control and management was transferred from the Republic of Cyprus ("Cyprus") to the United Kingdom ("UK") and as such the Company's tax residency migrated from Cyprus to UK.

2.      The Income and Natural Resources Taxation Law, 5771-2011 - Israel- the main provisions of the law are as follows:

n April 2011, the Knesset passed the Income and Natural Resources Tax Law, 5771-2011 ("the Law"), which imposed an oil and gas profits levy at a rate set out below. The rate of the levy is calculated according to a proposed R factor mechanism, according to the ratio between the net accrued revenues from the project and the cumulative investments as defined in the Law. A minimum levy of 20% is levied at the stage where the R factor ratio reaches 1.5, and when the ratio increases, the levy will increase gradually until the maximum rate of 50% until the ratio reaches 2.3. In addition, it was determined that the rate of the levy as stated will be reduced starting in 2017 by multiplying 0.64 by the difference between the corporate tax rate prescribed in section 126 of the Income Tax Ordinance for each tax year and the tax rate of 18%. In accordance with the corporate tax rate from 2018 onwards, the maximum rate will be 46.8%.

In addition, additional provisions were prescribed regarding the levy, inter alia, the levy is recognised as an expense for the purpose of calculating income tax; the limits of the levy shall not include export facilities; the levy will be calculated and imposed for each reservoir separately (Ring Fencing); payment by the owner of an oil right calculated as a percentage of the oil produced, the recipient of the payment will be liable to pay a levy according to the amount of the payment received, and this amount will be subtracted from the amount of the levy owed by the holder of the oil right.

NOTE 6: -     Taxation (Cont.)

The Law also sets rules for the unification or separation or consolidation of oil projects for the purposes of the Law. In accordance with the provisions of the Law, the Group is not yet required to pay any payment in respect of the said levy, and therefore no liability has been recognised in the financial statements in respect of this payment.

3.      Taxation charge:

NOTE 7: -     Property, Plant and Equipment  

a.          Composition:

The additions to oil & gas assets in 2024 and 2023 are primarily due to development costs for the FPSO, Karish North and 2^nd Oil Train.

⁽¹⁾ Handover to INGL took place on 22 March 2023, please refer to Note 10(1).

NOTE 7: -     Property, Plant and Equipment  (Cont.)

b.         Depreciation expense for the year has been recognised as follows:

c.          Cash flow statement reconciliations:

d.         Details of the Group's rights in petroleum and gas assets are presented in note 1.

NOTE 8: -     Intangible Assets

a.          Composition:

Additions to exploration and evaluation assets are mainly related to pre-FID cost for Katlan.

b.         Cash flow statement reconciliations:

c.          Details on the Group's rights in the intangible assets:

NOTE 8: -     Intangible Assets (Cont.)

d.         Additional information regarding the Exploration and Evaluation assets:

As of 31 March 2024, the Group holds four licences to explore for gas and oil in Block 12, Block 21, Block 23 and Block 31, which are located in the economic waters of the State of Israel. In January 2024 the licences were extended until 13 January 2025, and they may be extended for a further one year.

In 2022, during the Company's growth drilling programme, it discovered gas in Block 12, offshore Israel. The Company expects to take FID upon the finalisation of EPC ("Engineering, Procurement and Construction") terms, which are currently under negotiation.

NOTE 9: -     Deferred taxes

The Group is subject to corporation tax on its taxable profits in Israel at the rate of 23%. The Capital Gain Tax rates depends on the purchase date and the nature of asset. The general capital tax rate for a corporation is the standard corporate tax rate.

Tax losses can be utilised for an unlimited period, and tax losses may not be carried back.

According to Income Tax (Deductions from Income of Oil Rights Holders) Regulations, 5716-1956, the exploration and evaluation expenses of oil and gas assets are deductible in the year in which they are incurred.

The Group expects that there will be sufficient taxable profit in the following years and that deferred tax assets, recognised in the consolidated financial statements of the Group, will be recovered.