Energean in 2021:
Our Year of Transition
The Leading Independent E&P Player
in the East Mediterranean
Disclaimer
This presentation contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business.
Whilst Energean believes the expectations reflected herein to be reasonable considering the information available to them at this time, the actual outcome may
be materially different owing to factors beyond the Group's control or within the Group's control where, for example, the Group decides on a change of plan or strategy.
The Group undertakes no obligation to revise any such forward-looking statements
to reflect any changes in the Group's expectations or any change in circumstances, events or the Group's plans and strategy. Accordingly, no reliance may be placed on the figures contained in such forward-looking statements.
2
Energean - The Largest E&P Company Listed on LSE & First in the World to Commit to Net Zero Emissions
9 Countries
Of operation
Med-focused
+200 Kboed
Medium-term
production target
Governance
Premium listing on LSE
Net Zero
Emissions
Commitment by 2050
+1 Billion Boe
2P reserves &
2C resources*
+70%
Gas-weighted
portfolio
Management
30 years
experience in gas
ESG & HSE
A rating MSCI
Gold by MAALA
* Pro forma as at 31.12.2020. Includes an additional 219 MMboe of 2P reserves to be acquired from Kerogen Capital. Reserves information is unaudited and subject to further | 3 |
review. |
2020: Strong Delivery Despite a Challenging Year
Key Milestones Achieved
Strong Delivery Against Strategic Goals Despite COVID-19 Related Challenges
80% Y-o-Y Increase in 2P reserves to 956 MMboe (2019: 341 MMboe)* | ||||||||
Strong Operational | Production 48.3 Kboepd (74% gas) | |||||||
Performance | ||||||||
Karish development 87% Complete at 31 December 2020 | ||||||||
Took FID on Karish North (Israel) and NEA / NI (Egypt) | ||||||||
Closed Edison Acquisition - Operational Footprint Expanded to 9 Countries | ||||||||
Continued | ||||||||
Agreed to Acquire Kerogen's 30% Holding in Energean Israel | ||||||||
Commercial Success | ||||||||
Increased signed GSPAs in Israel to 7.4 Bcm/yr | ||||||||
Optimised Capital | $437 Million Capex Reduction versus January 2020 guidance | |||||||
Structure & Strong | ||||||||
Financial Discipline | $1.2 Billion Cash & Undrawn Facilities at 31 December 2020** | |||||||
Advanced Net Zero | 67% Y-o-Y Reduction in Carbon Intensity to 22.8 kgCO2/boe | |||||||
Strategy | ||||||||
Roll Out of 'Green Electricity' at Prinos in Greece | ||||||||
* Pro forma as at 31.12.2020. Includes an additional 219 MMboe of 2P reserves to be acquired from Kerogen Capital. Reserves information is unaudited and subject to further | ||||||||
review. | 5 |
** Adjusted for the new $700 million term loan that was secured post-balance sheet
Our Transition into the Top Tier of European E&Ps
Moving into the top tier of E&Ps expected to enhance liquidity, valuations & investor attention
1,200 | Norwegian Peers | LSE-Listed Peers | |||||||||||
Reserves2P | (MMboe) | 1,000 | |||||||||||
800 | |||||||||||||
600 | |||||||||||||
400 | |||||||||||||
WI | 200 | ||||||||||||
0 | |||||||||||||
Energean | Peer 1 | Peer 2 | Peer 3 | Peer 4 | Peer 5 | Peer 6 | Peer 7 | Peer 8 | Peer 9 | Peer 10 | |||
250 | |||||||||||||
Production | (Kboed) | 200 | |||||||||||
150 | |||||||||||||
100 | |||||||||||||
WI | 50 | ||||||||||||
0 | |||||||||||||
Peer 1 | Peer 2 | Peer 3 | Energean | Peer 4 | Peer 5 | Peer 6 | Peer 7 | Energean | Peer 8 | Peer 9 | Peer 10 | ||
Target | Today |
Top 5 European E&Ps by scale
6
2021: Our Year of Transition
2021 Guidance and Medium-Term Targets
Substantially Improved Medium-Term Outlook
Through successfully delivering our strategic objectives in 2021 we will achieve our Medium-TermTargetswhich underpin our goal of generating sustainable Free Cash Flow and delivering a sustainable dividend
2021 Guidance
Medium-Term Targets
Production
(excludes any contribution
from Israel)
Cost of Production*
Development &
Production Capital
Expenditure
Exploration Capital
Expenditure
Decommissioning
Expenditure
Consolidated Net
Debt
35.0 - 40.0 kboed
$195 - 215 million
$510 - 590 million
$35 - 50 million
$25 - 32.5 million
$2,000 - 2,200 million
Production
Revenues
Cost of Production*
G&A
EBITDAX
Net Debt / EBITDAX
200
Kboed
(up from 160))
$2,000
Million
(up from $1,400)
$9 - 11
-
boe
Down from 10 -12
$25 - 35
Million
=
$1,400
Million
(Up from $900)
< 2.0x
* Operating Costs plus all royalties. | 8 |
SG&A costs of approximately $35 - 40 million anticipated in 2021 |
Focused on Monetising 1 Billion Barrels of Reserves to Deliver Production of more than 200 Kboed
W.I. 2P Reserves + 2C Resources 2016-20E* | ||||||
1,200 | ||||||
2016-20E CAGR 45% | ||||||
1,000 | ||||||
800 | ||||||
MMboe | 600 | |||||
400 | ||||||
200 | ||||||
0 | ||||||
2016 | 2017 | 2018 | 2019 | 2020 | ||
Israel | Egypt | Europe |
W.I. Hydrocarbon Production 2021+
250 | |||||
Medium-term Target | |||||
200 kboe/d | |||||
200 | |||||
Key growth drivers | |||||
• Karish & Karish North | |||||
150 | • | Incremental liquids | |||
Kboed | • Abu Qir infill drilling | ||||
• | NEA/NI development | ||||
100 | |||||
50 | |||||
0 | |||||
2021 | Medium-term Target | ||||
Israel | Egypt | Europe |
* Pro forma as at 31.12.2020. Includes an additional 219 MMboe of 2P reserves to be acquired from Kerogen Capital. Reserves information is unaudited and subject to further | 9 |
review. |
Revenues Forecast to Reach Over $2 Billion
Growth Underpinned by Gas Sold Under Fixed-price Contracts
Revenue Outlook 2021-25 | ||||
Medium-term Target | ||||
$2 billion | ||||
2021 | 2022 | 2023 | 2024 | 2025 |
Gas sold under fixed price contracts | Gas sold at market prices | |||
Liquids with Brent-linkage |
Revenue Outlook % 2021-25
3% | 2% | |
9% | 7% | 7% |
41% | 42% | 36% |
39% | 37% | |
53% | 56% | 56% | 56% | 56% |
2021 | 2022 | 2023 | 2024 | 2025 | ||
Gas sold under fixed price contracts | Liquids with Brent-linkage | |||||
Gas sold at market prices | ||||||
Based on a Brent price of $50/bbl in 2021, $55/bbl in 2022 and $60/bbl flat real 2023+
10
Creating a Sustainable Low-Cost Business
Secured Lower Unit Cost of Production | Further Targeted Cost Optimisation Expected | |
18 | |||||
16 | |||||
14 | |||||
12 | Medium-term Target | ||||
$9 - 11 / boe | |||||
$/boe | 10 | ||||
8 | |||||
Medium-term Target | |||||
6 | $4 - 6 / boe | ||||
4 | |||||
2 | |||||
0 | |||||
2021 | 2022 | 2023 | 2024 | 2025 | |
Unit Operating Costs | Unit Operating Costs + Royalties |
- Full, bottom-up internal review initiated
- Operating cost reductions
- Third party tariff optimisation
- Mothballing
- Production efficiencies, such as gas reinjection, to reduce power consumption
- Cost driven performance-management
- Further savings expected and not yet reflected in forecasts
- Karish, Karish North & Tanin operating costs expected to be $70 - 80 million per year
- Approximately $1/boe on plateau (excludes royalties)
- Limited variable costs
11
Disciplined Capital Allocation Remains a Priority
$ Million*
Development & Production Capex 2021-24
600 | ||||
500 | ||||
400 | ||||
300 | ||||
200 | ||||
100 | ||||
0 | ||||
2021 | 2022 | 2023 | 2024 | |
Israel | Croatia | Egypt | Italy | UK |
W.I. Capex Allocation 2021-24
100%
17% | 21% | |||||
33% | ||||||
80% | ||||||
52% | ||||||
60% | ||||||
83% | ||||||
40% | 79% | |||||
67% | ||||||
20% | 48% | |||||
0% | ||||||
2021 | 2022 | 2023 | 2024 | |||
Greenfield | Brownfield | |||||
Strong ability to reduce capital spend in a
low commodity price environment
Investing ~80% of capital expenditure in
greenfield assets in 2021
Increasing spend on brownfield assets through 2024 to optimise Edison portfolio
* Excludes exploration and appraisal expenditure
12
Capital Allocation Prioritising Total Shareholder Return
With Core Focus On Distribution Policy That Underpins Sustainable Dividend
Sustainable | 2022 | ||||
Dividend | |||||
Organic | > 20% | ||||
Growth | IRR | ||||
Capital | < 2x | ||||
Structure | |||||
Disciplined | Value | ||||
M&A | Accretive | ||||
Target for inaugural
dividend
40% IRR Karish North
Project Sanctioned
Net debt / EBITDAX target
$1.85/boe acquisition price for Kerogen's 30% holding in Energean Israel
13
Current Capital Structure
Net Debt Position*
Group net debt: $1,241 million
- $(201) million cash
- $1,442 million debt
Energean Israel net debt: $1,057 million
- $(37) million cash
- $1,094 million debt
Energean PLC excl. Israel net debt: $184 million
- $(164) million cash
- $348 million debt
Full Year 2021 Guidance
$2,000 - 2,200 million
Committed Facilities | ||||
To be refinanced in 2021 | ||||
• | $1.45bn PFF ($1.15bn drawn) | |||
Israel | • Extended maturity to September 2022 | |||
• Non-recourse to parent | ||||
PFF | ||||
• | Interest payments & other project costs covered by | |||
facility | ||||
Term | • $700 million Term Loan | |||
• | Maturity July 2022 | |||
Loan | • | Primary uses to fund Kerogen acquisition and Karish | ||
North development | ||||
• $280m RBL facility (current borrowing base $237m; | ||||
Egypt | availability expected to increase June 2021) with | |||
$75m accordion | ||||
RBL | • | LIBOR + 4.75% yrs 1-3 / LIBOR + 5.75% yrs 4-6 | ||
• 6-year term, semi-annual redeterminations | ||||
• 3-year grace period with first amortisation July 2023 | ||||
Greek | • Outstanding loans as of 31 December $127m | |||
• Scheduled principal repayments of $19m per | ||||
RBL | ||||
semester |
* Accounting net debt
14
Project Updates: Israel
Karish Project - First Gas Expected Late 2021
Project Close to 90% Complete Despite COVID-19 Related Challenges in 2020
2020 | FPSO | SUBSEA | ONSHORE | |||
Dec | ||||||
~93% | ~76% | *90-100% | ||||
31 | ||||||
complete | complete | complete | ||||
At | ||||||
KARISH
PROJECT
~87%
complete
- Main modules & pipe racks lifting campaign completed 3Q 2020
- Final lifts of module-1 & flare expected in 1Q 2021
- Sailaway to Israel expected in Sept / 4Q 2021
- 14-linemooring system & deepwater subsea production system fully installed
- 90-kmgas sales pipeline scope close to completion
- Tie-inmanifold successfully installed Oct 2020 & connected to gas sales pipeline Nov 2020
- Riser installation campaign expected to commence & complete 1Q 2021.
- Installation of production rate measurement system at Dor commenced Aug 2020
- Mechanical completion & commissioning expected 1Q 2021
- Installation of onshore pipeline commenced Jun 2020 & expected to complete 1Q 2021
- Civil works progressing well & expected to complete 2Q 2021.
First Gas Dec 2021 - 1Q 2022 depending on further ramp up of workforce in Singapore
* 90% inclusive Energean scope of work; 100% under the TechnipFMC EPCIC
16
Karish North Sanctioned - First Gas Expected 2H 2023
FID Reached 21-Months After Announcement of 32 Bcm Discovery
Low-CostHigh-Return Tieback to FPSO
2P Reserves | 241 MMboe (84% Gas) | |
Initial Capex | ~$150 Million | |
($0.6 / Boe) | ||
Well Deliverability | 300 MMscf/d | |
(per well) | ||
Operating Costs | Minimal | |
(Incremental) | ||
IRR | +40% | |
$ Million
Capex Profile (Including Riser & Oil Train)
200
150
100 | First | Second | ||||||||
Gas | Development Well | |||||||||
50 | ||||||||||
0 | ||||||||||
2021 | 2022 | 2023 | 2024 | 2025 | ||||||
Initial Capex | Riser + Oil Train | |||||||||
17
Focused on Developing & Expanding Liquids Output Through Committed Investment Programme
Material Reserves
& Production
Committed & Fully-
Funded
Infrastructure
Ample Storage
Capacity
Low Carbon
Emissions
- 100 MMbbl 2P liquids certified by DeGolyer & MacNaughton CPR:
- 17.4 MMbbl (21.4%) increase in 2P liquids (light oil) volumes
- 28 kbpd production over a 5-year plateau period
- Further growth targeted from appraisal of potential oil rim in 2022
- Project to install second oil train and riser on Energean Power FPSO sanctioned
- Oil train increases liquids production capacity to 40 kbopd (from 21 kbopd)
- Allows maximum gas output of 8 Bcm (from 6.5 Bcm)
- Approximately $100 million of capex fully funded by new term loan
- Expected to become operational in 2022
- 800,000 barrels of liquids storage capacity on FPSO
- Storage capacity not a restricting factor to liquids production
- Additional gas debottlenecking opportunities under evaluation that would allow gas production above rates of 8 Bcm/yr
- Low carbon barrels added to portfolio
- Liquids production expected to have no discernible impact on Scope 1 & 2 CO2 emissions
- Carbon intensity of 4.5 kg CO2/boe anticipated
18
Investment Synergies Targeted from Low-Cost Deepwater Tie-Back Options
Approx. Distance from FPSO | 5 km | 15-30 km | 40-55 km |
Approximate Life of Field capex/boe
Karish | Karish North | Block 12 | Tanin | |||
$6/boe | $1.5/boe | <$4/boe | $5/boe | ||||||
• | Economics of whole project | • | Low-costtie-back option | • "On the Way" to Tanin | • Capex sharing with Block 12 | ||||
underpinned by long-term | due to co-use of pipeline | ||||||||
GSPAs | • | Initial capex of approximately | • | Discovery needs T-section, | |||||
$150 million | pipeline spur and single well | • Capex deferral enhances | |||||||
• | Includes FPSO expenditure, | tie-back to be commercialised | project NPV | ||||||
which will be used for | • | Discovery just 5-kilometres | |||||||
development of all future tie- | from Energean Power FPSO | • | Enhanced returns versus | ||||||
backs | Tanin as no seller royalties | ||||||||
payable plus new Sheshinsky | |||||||||
calculation |
19
Israel - 7.4 Bcm/yr Gas Sales Agreements
Secured Revenues with 93% of Energean Power FPSO Capacity Utilised
Protection | ||||||||||||
1.8 Bcm/yr new | Take-or-Pay / | High Quality | Against | |||||||||
GSPAs Signed | Floor Pricing | Downside | ||||||||||
Exclusivity | Counterparties | |||||||||||
in 2020 | Commodity | |||||||||||
Price Risk | ||||||||||||
Bcm/yr
9 | |||||||||||||||||
8 | |||||||||||||||||
7.4 | 7.4 | 7.4 | 7.4 | 7.4 | |||||||||||||
7.2 | |||||||||||||||||
7 | 6.7 | 6.8 | |||||||||||||||
6
5
4.2*
4
3
2
1
0
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 |
Karish, Karish North & Tanin Gas Supply
Energean Power FPSO Capacity
Energean Israel Gas Supply Profile
- December 2021 - Karish first gas
- 2022-23 - Ramp up of 18 contracts signed with independent power producers (IPPs) including both recently privatised IEC stations, Alon Tavor & Ramat Hovav, and blue-chip industrial customers including ORL and ICL
- 2024 - Continued ramp up
- 2025 - Commencement of IPM contract & continued ramp up of other contracts
- 2026 - Plateau gas supply reached
* Company estimate during 12-month transition from existing suppliers | 20 |
5-Well E&A Programme Targetting 700 MMboe Prospective Resources to Commence Early 2022
Low-RiskInfrastructure-Led Exploration
KM 04 + Pilot Hole (PH)
ATHENA 01
A discovery would significantly de-risk prospects in the rest of Block 12
Approx. | Audited | ||||||
Prospect Size | |||||||
Well | Type | Cost | PoS | ||||
(Recoverable) | |||||||
$ Million | |||||||
MMboe* | |||||||
Athena-01 | Exploration | 35 | 140 | 84% | |||
KM-04 + PH | Appraisal | 45 | 176 + 64 | 94% + | |||
72% | |||||||
KN-01 ST- | Development | 50 | 151 | 100% | |||
04 | |||||||
Hermes-01 | Exploration | 40 | 200 | 56% | |||
(Optional) | |||||||
Hercules- | Exploration | 50 | Tbc | Tbc | |||
01** | (Optional) | HERMES 01 | HERCULES 01 | ||||
* Recoverable Volume": is the sum of the unrisked mean recoverable volumes with recovery factor (gas) = 0.7 and recovery factor (oil) = 0.4. This represents the total recoverable | |||||||
reserves targeted by the well bore | 21 |
** Not yet audited.
Project Updates: Egypt
NEA / NI Sanctioned - High Return Drilling
Key Project Metrics
Peak Production | 15 - 16 Kboed |
2P Reserves | 49 MMboe |
(87% Gas) | |
Capex | <$5 / Boe |
PYTHON
SUBSEA
WELL
YAZZI-NEA 6
SUBSEA
Opex | <$2 / Boe |
WELL
NAQ
PIII
IRR | +30% |
Production Profile
Kboed
2021 | 2022 | 2023 | 2024 | 2025 |
NEA | NI |
PYTHON
NORTH IDKU DLA
NORTH IDKU
SUBSEA
WELL
YAZZI-NEA 5 | 10'' |
SUBSEA | |
8 km | |
WELL | |
DLA
ABU QIR DLA
Pipeline, multiphase production
Umbilical
23
Proposed Acquisition of
Kerogen's 30% Holding in
Energean Israel Limited
Agreed to Acquire Kerogen Capital's 30% holding in Energean Israel Limited (EISL) for $380-405 Million
Compliments our gas-weighted portfolio
- Natural strategic fit that gives full control over capital structure of EISL
- Adds 219 MMboe 2P reserves (86% gas)
- Group 2P + 2C set to grow to >1 Bnboe (74% gas)
- Attractive transaction metrics
- $1.74 - $1.85 /boe
- 1x forecast Minority EBITDAX
- Payback achieved within three years
- 43% discount to EV
- Full control over EISL enables capital structure optimisation
- Low carbon intensity hydrocarbons (< 4.5 kg CO2/boe)
Group 2P+2C to reach +1 billion boe
Energean | Acquired assets | Pro-forma |
14% | 26% | |
29% | ||
71% | 74% | |
86% | ||
Gas Liquids
Group production to reach +200 kboed
250 | |
200 | |
Kboed | 150 |
100 | |
50 | |
0 |
2021 | 2022 | 2023 | 2024 | 2025 |
Energean Acquired Assets
25
Transaction Structure & Financing
$175 Million
$125-150 Million
$30 Million
$50 Million
Up-Front
Consideration
Deferred Cash
Consideration
Additional Deferred
Consideration
Convertible Loan
Notes
Payable on completion
Contingent on Practical Completion
of Karish
Payable December 2022
Conversion price £9.50 / 0% coupon rate / Maturity 31/12/2023 December 2023
Part of use of proceeds for Term Loan provided by J.P. Morgan & Morgan Stanley
To be funded by optimised capital
structure
Funded by free cash flows
Satisfied by new share issuance
$380-405 | Total | Highly accretive to plc leverage ratio | ||
Million | Consideration | |||
26
Milestones to Completion
Transaction Close Expected 1Q 2021
Timing | Milestone | ||
30 Dec 2020 | Transaction announcement | ||
Jan / Feb 2021 | Israeli Petroleum Commissioner Approval | ||
Feb 2021 | Publication of Circular | ||
Feb 2021 | EGM & shareholder votes | ||
Feb / Mar 2021 | Closing of the Proposed Transaction | ||
27
ESG & Our Path to Carbon Neutrality
Creating a Low Carbon Business with Industry-
Leading ESG Credentials
Net Zero
Carbon emissions by 2050
Rolling Three-year Emissions Target | |||||
30 | |||||
25 | Current global average | ||||
20 | +85% reductionby 2023 versus | ||||
2019 base year | |||||
2023 target = Approx. half the | |||||
15 | current global average for oil & | ||||
gas industry | |||||
10 | |||||
5 | |||||
0 | |||||
2020* | 2021 | 2022 | 2023 | 2024 | 2025 |
Carbon emissions intensity - kgCO2e/boe |
First E&P Company Globally to Commit to
Net Zero Emissions by 2050
Targeting +55% Near-Term Carbon Intensity
Reduction
Visibility on Absolute Carbon Emissions Intensity to Half the Current Global Average
+70% Gas-Weighted Portfolio (2P + 2C)
Executive compensation tied to ESG
performance targets from 2020
Committed to Transparency & Adherence to
the 17 UN SDGs
- Pro forma Energean + Edison
29
Prinos - Carbon Capture & Storage Initiatve
Multiple CC&S Opportunities Under Evaluation in Greece
Greece Sources of CO2 Emissions
Industry | Facilities # | CO2 Emitted (kt) | ||
Energy Sector | 21 | 36,463 | ||
Minerals | 6 | 13,422 | ||
Production & | ||||
Processing of | 2 | 708 | ||
Metals | ||||
Chemicals | 2 | 490 | ||
Total | 31 | 51,083 | ||
Prinos CC&S Project Under Evaluation
- Focused on meeting our carbon neutral by 2050 target and leading the Mediterranean region's energy transition
- Evaluation of Carbon Capture & Storage projects in the Prinos basin initiated in late 2020
- Prinos subsurface volumes sufficient to sequester up to 50 million tonnes of CO2
- Use of captured CO2 for enhanced oil recovery (EOR) also under investigating - to unlock additional upstream value
Possible CO2 Storage Sites in Greece
Mesohellenic | Western | Prinos | ||
Trough | Thessaloniki | Basin |
* Enhanced Oil Recovery
30
2021: The Outlook
2021-22 Outlook
Continue Strong Performance Versus Strategic Goals & Deliver Our Year of Transition
Deliver First Gas at Karish & Develop Karish North | 2021 - 2023 |
Operational | ||||||||||
Develop NEA / NI in Egypt | 2021 - 2022 | |||||||||
Performance | ||||||||||
Deliver (up to) 5-well E&A programme, offshore Israel | 2022 - 2023 | |||||||||
Kerogen Acquisition Close | 1Q 2021 | |||||||||
Commercial Success | ||||||||||
Sign GSPAs to fill remaining space in the Karish FPSO | 2021 | |||||||||
Sign offtake agreement for Karish liquids | 2021 | |||||||||
Optimised Capital | Optimise EISL capital structure through refinancing | 2021 | ||||||||
Structure & Strong | Define dividend policy | 2021 | ||||||||
Financial Discipline | ||||||||||
Bring net debt / EBITDAX below 2.0x | Mid-term | |||||||||
Align with TCFD recommendations | 2021 | |||||||||
Advanced Net Zero | ||||||||||
Roll Out of 'Green Electricity' across operated assets | Ongoing | |||||||||
Strategy | ||||||||||
Evaluating converting Prinos into Greece's first CC&S Project | Ongoing | |||||||||
32
Q&A
33
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Disclaimer
Energean Oil & Gas plc published this content on 21 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 January 2021 08:05:02 UTC