Energean swings to profit as Karish production begins

Energean FPSO credit: Eyal Izhar

Otzma Yehudit rejoins government

Energean is notifying gas buyers that the commissioning period under the gas sales and purchase agreements has ended and the start date for commercial obligations has commenced.

Energean plc (LSE: ENOG; TASE: ENOG) has reported strong 2022 financial results after natural gas production from the Karish offshore Israel gas field began in the final quarter of the year. Revenue in 2022 was $737 million, up 48% from 2021 and net profit was $17 million after a net loss of $96 million in 2021.

Gas production from Karish began on October 22, and Energean is now notifying gas buyers that the commissioning period under the gas sales and purchase agreements has ended and the start date for commercial obligations has commenced. This process will be completed by the end of March. By the end of 2022, the company expects to complete additions to the Karish field infrastructure and begin production from the Karish North field, while will bring annual gas production from the Karish field to 8 BCM.

Energean said that Israel offshore gas reserves rose by 20% in 2022 following new discoveries.

Energean CEO Mathios Rigas said, "2022 was a year of transformation for Energean - where a long-held vision became an operational reality. It was a year of positive delivery. We commenced production from the only FPSO in the strategically vital Eastern Mediterranean region, paid dividends to our shareholders, and laid the foundation for our future growth through the discovery and de-risking of new natural gas resources adjacent to our infrastructure. Energean was the sole owner-operator of five deep-water wells, which drove a 20% increase in our reserve base, and marked the 15th consecutive year of reserve and resource base increases for Energean. We are proud to be on track to deliver between 4.5 and 5.5 bcm of gas into the Israeli domestic gas market this year, contributing towards the security of energy supply of the region and improving the living conditions of the Israeli public through the reduction of emissions from the displacement of coal-fired power generation.

"The first quarter of 2023 has continued the positive trend. Production from Karish is in line with our expectations, and in February we supplied the first Israeli hydrocarbon liquids export cargo to international markets. In Egypt, we achieved first gas at NEA/NI with three further wells due to come onstream during the year. In Italy, we are the third largest producer of natural gas and look forward to increasing our contribution towards the country’s energy supply. And in Greece, we are continuing our efforts to explore the untapped resources of the country.

"The remainder of 2023 will see us present the development concept for the Olympus Area, offshore Israel, and increase the capacity of the Energean Power FPSO to 8 bcm/yr. This is alongside delivery of production in line with guidance plus on-target returns, as promised, to our shareholder base. Through our gas contracting strategy we are in a unique position to have a very predictable and stable cash flow despite turbulence and challenges in the international financial markets."