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 30 June 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 statements are presented in U.S. Dollars and all values are rounded to the nearest thousand dollars except where otherwise indicated.

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. The Going Concern assessment covers the period up to 31 December 2025 'the forecast period'.

Israel geopolitical environment - Looking to the second half of 2024, Energean highlights the following developments as important in relation to its principal risks. Since October 7, 2023, and the ongoing conflict in Israel, the magnitude of regional geopolitical risk remains elevated. Growing concerns of escalations in the Middle East have intensified the security risk in the region, as essential infrastructure systems (such as the Energean Power FPSO offshore Israel) may be targets for missile fire and sabotage operations. While the Karish field has continued to produce in line with guidance and with no disruption to its production since the start of the conflict, any event that impacts production from this field could have a material adverse impact on the business, results of operations, cash flows, financial condition and prospects of the Group. In the first half of 2024, Energean has ensured that all measures are in place to continue business operations, maintain the mobility of our people and make certain that the security of information is unaffected.

New and amended accounting standards and interpretations:

The following amendments became effective as at 1 January 2024:

1.     Amendments to IAS 1 - Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants;

The adoption of the above amendments to EU-adopted IAS did not result in any material changes to the Group's accounting policies and did not have any material impact on the financial position or performance of the Group.

 

NOTE 3: -     Revenues

		30 June (Unaudited)
		2024 $'000		2023 $'000
Revenue from gas sales (1)		388,459		271,399
Revenue from hydrocarbon liquids sales (2)		213,719		81,272
Compensation to customers (3)		-		(4,928)
Total revenue		602,178		347,743

⁽¹) Sales gas for six months ended 30 June 2024 totaled approximately 2.7 bcm and for six months ended 30 June 2023 totaled approximately 1.8 bcm.

⁽²⁾ Sales from hydrocarbon liquids for six months ended 30 June 2024 totaled approximately 2.67 mmbbl and for six months ended 30 June 2023 totaled approximately 1.16 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

		30 June (Unaudited)
		2024 $'000		2023 $'000
(a)   Cost of sales
Staff costs		6,702		4,071
Energy cost		1,228		2,285
Royalty payable		106,560		63,474
Depreciation (Note 7)		114,356		73,397
Other operating costs (1)		49,650		38,203
Oil stock movement		482		(3,353)
Total cost of sales		278,978		178,077
(b)   Administrative expenses
Staff costs		2,507		1,715
Share-based payment charge		518		312
Depreciation and amortisation  (Note  7, 8)		949		978
Auditor fees		139		106
Other general & administration expenses (2)		4,933		5,937
Total administrative expenses		9,046		9,048
(c)    Exploration and evaluation expenses
Other exploration and evaluation expenses		-		50
Total exploration and evaluation expenses		-		50
(d)   Other expenses
Loss from disposal of property, plant and equipment		448		-
Total other expenses		448		-
(e)   Other income	(c)		(d)
Other income		(444)		-
Total other income		(444)		-

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

⁽²⁾ Other general & administration expenses primarily consist of legal expenses, management service fees and fees for external advisors.

 

 

 

 

 

 

 

 

 

NOTE 5: -     Net finance expenses /(income)

				30 June (Unaudited)
			2024 $'000			2023 $'000
Interest on Senior Secured Notes (Note 12)			84,652			68,333
Interest expense on long terms payables (Note 13(2))			1,248			1,554
Less amounts included in the cost of qualifying assets (Note 7(A))			(4,655)			(7,592)
			81,245			62,295
Costs related to parent company guarantees			1,780			1,302
Other finance costs and bank charges			1,057			234
Unwinding of discount on trade payable (Note 13(3))			7,804			2,060
Unwinding of discount on provision for decommissioning			1,873			1,668
Unwinding of discount on right of use asset (1)			433			98
Unrealised loss on derivatives			7			-
Less amounts included in the cost of qualifying assets (Note 7(A))			(345)			(88)
			12,609			5,274
Total finance costs			93,854			67,569
Interest income from time deposits			(4,485)			(1,044)
Total finance income			(4,485)			(1,044)
Net foreign exchange losses			291			5,578
Net finance costs			89,660			72,103

NOTE 6: -     Taxation

1.      Corporate Tax rates applicable to the Company:

Israel:

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

UK:

With effect from 1st January 2024, the Company has migrated its tax residency from the Republic of Cyprus ("Cyprus") to the United Kingdom ("UK") through the transfer of its management and control to the UK. As of the same date, the Company came into the charge to UK corporation tax for the first time.

Under s.18A CTA 2009 the Company made an election for all current and future overseas branches (including its Israeli branch) to be exempt from UK corporation tax from its first accounting period commencing on 1 January 2024 and all subsequent accounting periods.

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

In 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

NOTE 6: -     Taxation (Cont.)

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. 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:

		30 June (Unaudited)
		2024 $'000	2023 $'000
Current income tax charge		(29,925)	(156)
Deferred tax relating to origination and reversal of temporary differences (Note 9)		(21,168)	(20,059)
Total taxation expense		(51,093)	(20,215)

NOTE 7: -     Property, Plant and Equipment  

a.          Composition:

		Oil and gas Assets $'000		Leased assets $'000		Furniture, fixtures and equipment $'000		Total $'000
Cost:
At 1 January 2023		2,932,789		4,740		1,994		2,939,523
Additions		135,126		12,246		396		147,768
Handover to INGL(1)		(111,448)		-		-		(111,448)
Capitalised borrowing cost		17,658		-		-		17,658
Change in decommissioning provision		4,913		-		-		4,913
Total cost at 31 December 2023		2,979,038		16,986		2,390		2,998,414
Additions		49,655		245		100		50,000
Disposals		(448)		-		-		(448)
Capitalised borrowing cost		5,000		-		-		5,000
Change in decommissioning provision		(3,250)		-		-		(3,250)
Total cost at 30 June 2024		3,029,995		17,231		2,490		3,049,716
Depreciation:
At 1 January 2023		11,226		1,459		525		13,210
Charge for the year		183,898		2,966		509		187,373
Total Depreciation at 31 December 2023		195,124		4,425		1,034		200,583
Charge for the period		112,484		2,412		200		115,096
Total Depreciation at 30 June 2024		307,608		6,837		1,234		315,679
At 31 December 2023		2,783,914		12,561		1,356		2,797,831
At 30 June 2024		2,722,387		10,394		1,256		2,734,037

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:

	30 June (Unaudited)
	2024 $'000		2023 $'000
Cost of sales	114,356		73,397
Administration expenses	740		807
Total	115,096		74,204

 

c.          Cash flow statement reconciliations:

				30 June (Unaudited)
				2024 $'000		2023 $'000
Additions and disposals to property, plant and equipment, net			51,750		21,097
Associated cash flows
Payments and receipts for additions to property, plant and equipment, net			(130,784)		(58,605)
Non-cash movements/presented in other cash flow lines
Capitalised borrowing costs			(5,000)		(7,680)
Right-of-use asset additions			(245)		(12,197)
Handover to INGL			-		111,448
Change in decommissioning provision			3,250		(1,433)
Lease payments related to capital activities			2,786		-
Movement in working capital			78,243		(52,630)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE 8: -     Intangible Assets

a.          Composition:

		Exploration and evaluation assets $'000		Software licenses $'000		Total $'000
Cost:
At 1 January 2023		141,869		1,968		143,837
Additions		24,597		362		24,959
At 31 December 2023		166,466		2,330		168,796
Additions		130,651		-		130,651
At 30 June 2024		297,117		2,330		299,447
Amortisation:
At 1 January 2023		-		283		283
Charge for the year		-		348		348
Total Amortisation at 31 December 2023		-		631		631
Charge for the period		-		209		209
Total Amortisation at 30 June 2024		-		840		840
At 31 December 2023		166,466		1,699		168,165
At 31 30 June		297,117		1,490		298,607

The additions to exploration and evaluation assets in 2024 and 2023 are mainly related to pre-FID cost for Block 12 "Katlan".

The Final Investment Decision for Katlan was made in July 2024, after the financial statements date, and the concession agreement granted the same month expires in 2054. Refer to note 17 for further details.

b.         Cash flow statement reconciliations:

			30 June (Unaudited)
				2024 $'000		2023 $'000
Additions to intangible assets				130,651		13,306
Associated cash flows
Payment for additions to intangible assets				(67,481)		(69,227)
Non-cash movements/presented in other cash flow lines
Movement in working capital				(63,170)		55,921

 

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

Right	Type of right	Valid date of the right	Group's interest as at 30 June 2024
Block 12	Exploration license	13 January 2025*	100%
Block 21	Exploration license	13 January 2025	100%
Block 23	Exploration license	13 January 2025	100%
Block 31	Exploration license	13 January 2025	100%

*In July 2024, after the financial statement date, following Final Investment decision, a concession which is valid until 2054 received.

NOTE 8: -     Intangible Assets (Cont.)

d.         Additional information regarding the Exploration and Evaluation assets:

As of 30 June 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.

 

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.