Energean PLC

Annual Report • May 20, 2022

Energean PLC 549300RVMKU0CYUZBB05 2021-12-31 549300RVMKU0CYUZBB05 2020-12-31 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 549300RVMKU0CYUZBB05 2019-12-31 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:RetainedEarningsMember 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:NoncontrollingInterestsMember 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:OtherReservesMember 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:IssuedCapitalMember 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:SharePremiumMember 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:ReserveOfSharebasedPaymentsMember 549300RVMKU0CYUZBB05 2021-01-01 2021-12-31 ifrs-full:MergerReserveMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:IssuedCapitalMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:SharePremiumMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:OtherReservesMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:ReserveOfSharebasedPaymentsMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:RetainedEarningsMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:MergerReserveMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300RVMKU0CYUZBB05 2020-01-01 2020-12-31 ifrs-full:NoncontrollingInterestsMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:IssuedCapitalMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:SharePremiumMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:OtherReservesMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:ReserveOfSharebasedPaymentsMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:RetainedEarningsMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:MergerReserveMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300RVMKU0CYUZBB05 2020-12-31 ifrs-full:NoncontrollingInterestsMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:IssuedCapitalMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:SharePremiumMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:OtherReservesMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:ReserveOfSharebasedPaymentsMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:RetainedEarningsMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:MergerReserveMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300RVMKU0CYUZBB05 2021-12-31 ifrs-full:NoncontrollingInterestsMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:IssuedCapitalMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:SharePremiumMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:OtherReservesMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:ReserveOfEquityComponentOfConvertibleInstrumentsMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:ReserveOfSharebasedPaymentsMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:RetainedEarningsMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:MergerReserveMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300RVMKU0CYUZBB05 2019-12-31 ifrs-full:NoncontrollingInterestsMember iso4217:USD iso4217:USD xbrli:shares STRATEGIC REPO RT Page 1 of 273 2021 Annual Report Energean plc www.energean.com STRATEGIC REPO RT Page 2 of 273 Key Metrics Highlights 2021 Pro forma 2020 1 2020 2 Average working in terest 2P reserves and 2C resources (MMboe) 1,154 1,140 3 920 Average working in terest producti on (Kboe/d) 41.0 48.3 3.6 Sales revenue ($ mill ion) 497 336 28 Cost of productio n ($/boe) 17.5 11.3 21.4 Adjusted EBITDAX ( $ million) 4 212 108 (8) Profit/(loss) after ta x ($ million) (96) (416) (93) Cash flow fro m operating activities ($ million ) 133 137 2 Net debt / (cash ) ($ million) 5 2,017 1,240 1,240 1 Pro forma production an d financial results are presented as if Edison E&P r esults were consolidated for the entire year; the locked box d ate of th e transaction was 1 Jan uary 2019 and therefore all economic r esults sinc e that date ac crue to En ergean. 2 Actual results consolidate fr om the closing date of the Edis on E&P tra nsaction, which o ccurred on 17 Decemb er 2020 . 3 Reserves are pro forma (includ e Edison) plus the acquisiti on of Kerogen’s 30% holding in Ene rgean Israel Limited (“EI SL”). The transaction closed on 25 Febru ary 2021. 4 The Group uses certain measures of performance that are not specifically defined under IFRS or other generally accepted accounting principles. These non-IFRS measures include adjusted EBITDAX. More informati on can be found in the Finan cial Review secti on, under the h eading ‘Non - IFRS measu res’ . 5 Net debt/(cash) is shown on a n actual basis i.e . not pro forma. STRATEGIC REPO RT Page 3 of 273 Report Highlights A record year, both financi ally and operationally 2021 average working interest production was approximately 41.0 Kboe/d (72% gas), above initial expectations a nd at the mid -point of the revi sed fu ll y ear guidance range of 40.0 - 42.0 Kboe/ d. Coupled with the all-time-high gas prices ex perience d in Italy, Energean generated a 48% 6 year- on -y ear increase in full year revenues to $497.0 mill ion and a 96% 6 increase in EBITDAX to $212.1 mi llion. We enh anced ou r position in Israel thro ugh the acqui sition of Kerogen Capital’s 30% holding in Energean Israel Li mited (“EISL”) 7 , adding 219 MMboe for a tota l consideration of less than $2/boe. Emerging from capital inv estment to sustainabl e cash -flow g eneration Despite the challenges im posed by COVID- 1 9 during 2021, Energean’s fl agship Karish development was 92.5% compl ete a t end -Decem ber 2021 and at the time of writing is gearing up for imminent sail -away from Singapore with fi rst gas on track for Q3 20 22. In 2021, the Grou p al so took Final Investment Decision (“FID”) on Karish North ( Israel), Second Oil Trai n and Gas Riser (Isra el) and NEA/NI (Egyp t). T hese projects, combined with Karish and Tani n, Epsilon (Greece) and Cassiopea (Italy), will lead to the commercialisati on of a combin ed 824 million barrels of oil equivalent (“MMboe”) of 2P reserves ( 82 % gas). This positions Energe an to achieve its me dium-term targets t o del iver worki ng interest production of more than 200 Kboe/d, which we expect to transla te into annualised adjusted EBI TDAX of more than $1.4 billion per year. 2022 marks the year where we emerge from heavyweight project investment and transition to a m aterial cashflow gen erating company underpinned by lo ng -term fixed price ga s contracts. Setting the foundations for the future via solid capital structure In 2021, we raised over $ 3 bil lion f rom the debt capital markets to refinance exist ing borro wings and increase liquidity. Th is included: (i) $2.5 billion senior secured notes, non -recou rse to t he Grou p, at the 100% subsidiary Energean Israel , (ii) €100 million Greek state backed loan, non -recourse to the Group, at Energean Greece a nd (iii) $ 450 millio n senior secured notes at Energean plc. In do ing so, we extended our weigh ted average maturity to approximately six y ears, pushed out commen cement o f majo r debt repayment obli gations to 2024 and converted floa ting interest rate s to fixed rates. We ended the year with over $1 bil lion of liquidity 8 , ensuring we a re fully funded to deliver o ur projects, removing any nea r-term debt repa yment obliga tions and eliminating exposure to in terest rate volati lity. Taking meaningful action s towards net-z ero Energean is f ocused on reducing its carbon emission s an d is worki ng towards its 2050 net -zero target . In 2021, we delivered a 8 % year- on -year reduction in carbon emissions intensity to 18.3 kgCO2e/boe, when considering 2021 con solidated data versus 2020 pro fo rma performan ce da ta on an equit y sh are basis. Actions taken in 2021 to achieve this reduction includes implementing a zero flaring policy across its o perated sites and switching to renew able -sou rced el ectricity in Italy — green electrici ty contracts were put in place for Israel and Greece in 2020. Energean is a lso pro ud t o have published its first Climate Change Policy , w hich def ines t he Gr oup's actions to deli ver upon its com mitment to beco me a net -zero emitter by 2 050. Within this, part of our short- term target is to advance our carbo n ca pture storage (“CCS”) projects — we a chieved this in 2021 by entering pre-FEE D at our Prinos CCS project in Greece. Finally, the Carbon Disclosure Projec t ( CDP) upgrad ed its Climate Change and Supp lier Enga gement rating fo r Energean to B and A- respectively (up fro m B- and B f rom th e previous year. This compares to a sector average of C for Clima te Change and C for Suppli er Engagement. 6 Versus 2020 Pro Fo rma. 7 The transacti on closed on 2 5 February 2021. 8 Including restri cted cash amo unts of $2 00 million and undr awn Greek debt facility of € 100 million. STRATEGIC REPO RT Page 4 of 273 Non-Financial Information Stat ement The following table co nstitu tes our Group Non-Financial Informa tion Statement in compliance with Sections 414CA and 414CB of the Companies Act 2006. The information listed is incorporated by cross - reference. Additional Group Non-Financi al Information is also available on our w ebsite www.energean .com . Reporting Requiremen t Group Approa ch and Policies Relevant Info rmation Relevant Pages Environment Environmenta l Policy Climate Cha nge Policy Zero-Rout ine-Flaring Policy Task Force on Cli mate Related Disclosure Environmenta l policies 65 Environmenta l targets 20 - 22 Environmenta l data 65 -66, 69- 71 Environmenta l KPIs 38 - 39 TCFD disclosure 20 -29, 31-32, 38 -39, 69-71, 81 -82, 98 - 100, 115- 116, 127- 128 Employees CSR Policy Equal Opportunities Poli cy Code Of Conduct Corporate Majo r Accident Prevention Policy HSE policies 61 - 62 HSE KPIs 39 HSE data 64 Excellence through our people 51, 56- 57 Human Right s Code of Conduct CSR approach 50 - 51 Excellence through ou r people 56 - 57 Social Matters CSR Policy Code of Conduct UN’s 17 Sustaina ble Development Goa ls CSR approach 50 - 55 Anti-Corru ption & Anti-Bribery Code of Conduct UK Bribery Act Applicable Loca l Anti-Bri bery Laws Whistleblowing Pol icy CSR approach 50 - 51 Corporate governa nce 111 - 121 Governance an d Risk Managem ent Corporate Govern ance Code Principal Risks an d Uncertainties Governance & Risk Ma nagement Risk managem ent 79 - 103 Corporate go vernance 111 - 121 Audit & Risk Commit tee 122 - 126 Business Mo del Our Business Model N/A 18 - 19 Strategy Our Strategy N/A 20 - 30 Non-Fina ncial Key Performa nce Indicators Key Performance Indica tors N/A 36 - 40 STRATEGIC REPO RT Page 5 of 273 Contents Key Metrics Highlights ................................................................................................................................................ 2 Report Highligh ts ......................................................................................................................................................... 3 Non-Fina ncial Information Statem ent ..................................................................................................................... 4 Contents ................................ ........................................................................................................................................ 5 Strategic Review About Us ........................................................................................................................................................................ 7 Performance in 2021 .................................................................................................................................................. 9 Chairman ’s Statement .............................................................................................................................................. 12 Chief Executive’s Review .......................................................................................................................................... 15 Our Business Model .................................................................................................................................................. 18 Our Strategy ................................................................................................................................................................ 20 TCFD Scenario Anal ysis ........................................................................................................................................... 31 Market Overview ........................................................................................................................................................ 34 Our Key Performa nce Indicators ............................................................................................................................ 36 Review of Operatio ns ................................................................................................................................................ 41 Corporate Socia l Responsibility .............................................................................................................................. 50 Financial Review ........................................................................................................................................................ 72 Risk Managem ent ..................................................................................................................................................... 79 Viability Sta tement ................................................................................................................................................. 104 Corporate Governance Board of Directors .................................................................................................................................................. 106 Statement of Co mpliance ..................................................................................................................................... 111 Section 172 (1) Companies Act 2006 Statem ent ............................................................................................. 118 Audit & Risk Commit tee Report ........................................................................................................................... 122 Environment, Susta inability and Social Respon sibility Comm ittee ............................................................... 127 Nomination & Govern ance Commit tee .............................................................................................................. 129 Remunerati on Report ............................................................................................................................................. 133 Remunerati on Policy .............................................................................................................................................. 137 Annual Report on Remuneration ......................................................................................................................... 141 Group Directors’ Report ......................................................................................................................................... 160 Statement of Directo rs’ Responsibiliti es ............................................................................................................ 164 Financial Statements Independent Auditor’s Repo rt to the Members of Energ ean plc ................................................................... 166 Group Income Statem ent ................................................................................................ ...................................... 178 Group Statement o f Comprehensive Inco me ................................................................................................... 179 Group Statement o f Financial Position .............................................................................................................. 180 Group Statement o f Changes in Equity ................................................................ .............................................. 181 Group Statement o f Cash Flows ................................................................................................ ......................... 183 STRATEGIC REPO RT Page 6 of 273 Company Sta tement of Financial Posit ion ........................................................................................................ 257 Company Stat ement of Changes in Equity ........................................................................................................ 258 Company Acco unting Policies ............................................................................................................................. 259 Other Information 2021 Report on Pay ments to Governm e nts ...................................................................................................... 267 Glossary .................................................................................................................................................................... 271 Company Inf ormation ............................................................................................................................................ 273 STRATEGIC REPO RT Page 7 of 273 S tr a t e g i c R e v ie w About Us Energean at a glance The leading independ ent, gas and ESG -focused E&P company in the Mediterranean Established in 200 7, Ener gea n i s a London Premium Listed FTSE 250 a nd T el A viv Listed T A -90 E&P company with operations in eight countries across t he Medit erranean and U K N orth Sea. Sin ce IP O in 2018, Energean has g rown to become th e leading independent , gas -producer in the Mediterranean. We are t argeting to grow production to over 200 Kboe/d and achieve our medi um -term revenue and EBITDAX targets of $2 billion and $1.4 billion, respectively. We also have a material reserve base, wit h approximately 965 boe of 2P reserves. We are also poised for further significant growth above and beyond th is via a high -impact drilling programme in Israel which commenced in March 2022. If Energean elects to drill all four exploration and appraisal wel ls within this campaign, it has the potential to double the Israel gas resource base. Our fl agship project is the multi -tcf deepwater Karish pro ject i n Israel , w hich is approaching first gas in Q3 2022. It will be developed via the new build fully -owned Energean Power FPSO, w hich at the t ime of writing /i s gearing u p for sail- away from Singapore]. Energean has signed lon g -term co ntracts t o supply 7.2 Bcm/yr of gas into the Israeli dom estic mark et, all of which have floor pricing, ta ke - or -pay and/or exclusivity provisions that l argely insulate revenues aga inst downside commodity pr ice risk and underpin our goal of paying a sector -leading dividend. We expect to fill the spare capacity in o ur 8 Bcm/y r FPSO through spot sales to th e Israel Electric Corporati on an d thro ugh the signing of further, lo ng -term gas sales agreements with domestic and / or international customers, building upon the MOU signed with EGAS. Energean is full y-funded for al l of our planned projects. In 2021, we t ook steps to enhance near -term liquidity a nd stre ngthen our bala nce sheet via the i ssuance of two new bond programmes, raising $2.5 billion and $450 million respectively, the former being the largest ever Euro pe, Mi ddle East and Africa (“EMEA”) energy -rela ted high -yield bond. ESG, hea lth and safety is of centra l i mportance to Energean . We aim to run safe and relia ble operations and are commit ted to achieving net-zero carbon emissions by 2050 and to reducing o ur methane emissions. We to ok mea ningful steps towards th is goal in 2021 when we implemented a zero flari ng policy across our operated sites and rolled out ‘Green Electrici ty’ in Italy ( renewable -sourced electricity applied in 2020 in Greece a nd Israel). Where we op erate Energean holds a balanced portfolio of exploration, development a nd production assets, with operations in eight countries acr oss the Mediterranean and UK North Sea. We have interests in more than 80 leases and licences, 10 of which are located of fshore Israel, one of our core co untries of operatio n. Please see pages 25 4- 25 6 for a full breakdown of all our licences. STRATEGIC REPO RT Page 8 of 273 Figure 1 . Map of Energe an’s operations Figure 2. Energean Israel L imited (EISL) leases and license s STRATEGIC REPO RT Page 9 of 273 Performance in 2021 Record operational pe rformance delivered record fi nancial results Energean co ntinued to deli ver strong performan ce agai nst it s strategi c goal s in 2021, albeit under the weight of COVID-19. We fully integrated the acquired Edison E&P portfolio within En ergean and thanks to the focus of the technical team, delivered produc tion beyond initial expectations from the Egypt and Italy assets. We further managed to reduce our total EGPC receivables posit ion in Egypt to less than $95 million from over $200 mil lion at the tim e of the Edison E&P acquisit ion. Karish, our fl agship gas pro ject offsho re Israel was 92. 5% complete a t end -December 20 21 and a t the time of writing is ready to sail -away from Singapore and gearing up for fi rst gas in Q3 2022. T he completion of this pro ject is material ly de -risked, within reach and wil l ena ble u s to deliver sub stantia l free cash flow s and sustainable sha reholder returns. T he completion of our sanctioned and fu lly funded projects will en able us to achieve our medium -term targets of over 200 Kboe/d p roduction, $2 bil lion annual revenue and $1.4 bil lion EBITDAX. F inally, the Israel dril ling campaign provides upside beyond these medium- term targets. Let us take you th rough some of our key ach ievements below. Operational highlights • Working interest producti on 41.0 Kboe/d, 72 % gas, above ini tial guidan ce 9 of 35.0 – 40.0 Kboe/d • 2P + 2C reserves and resource s of 1,154 MMboe, a 25% yea r - on -year increase versus 2020 and a 1 % year- on -year increa se versus 2020 pro fo rma 10 • Karish (Israel) developmen t 92.5% compl ete at 31 Decem ber 2021 11 • Fully integrated Ediso n E&P, fu ll business solutio ns system implemented acro ss the Group • Rig con tract sign ed with Stena Drill ing Limited ("Stena") f or 2022 -23 grow th drill ing progra mme, offshore Israel • FID taken on the Karish North project (Israel) and NEA/NI (Egypt) in Januar y 2021 and the Second Oil Train and Gas Ri ser in May 2021 • EPC contract signed with KANFA AS for the second oil train in December 2021 • EPCI contract awarded to TechnipFMC fo r NEA/NI in Februa ry 2021 and jack -up rig contra ct signed in January 2022. N EA/NI on track and 37.0% complete as of 31 December 20 2 1 11 • Cassiopea (Ita ly) development on track a nd 24.2% complete at 31 Decem ber 202 1 11 • Funding secured for th e Epsilon Developmen t in Greece Commercial highlights • Closed the acquisition o f Kerogen’s 30 % holding in Energean Israel Li mited (E ISL) for $380-405 mill ion, representing an acquisit ion price of $1.74 - $1.85/2P bo e • Israel GSPAs • MOU signed with EGAS for the sale a nd purcha se of up to 2 Bcm/y r of n atural gas on a verage for a period of 10 years signify ing access to export markets • New GS A signed wi th A2A in Italy fo r Energean’s full entitlem ent production, commenci ng 1 April 2022, which conta ins higher pricing than the previo us contract • Hedging agreement signed for a tota l of 27% of expected 202 2 Italian gas production locking in an avera ge price of € 53.30/M Wh protecting ou r 2022 cash flow Corporate highlights • In February 2021, issued $2 .5 billi on senior -secured no tes, with the fi rst tranch e matu ring in 2024, at an average cou pon rate of approximately 5.2% • In November 2021, issued $450 mil lion senior-secu red notes, maturing i n 2027, with a fixed coupo n rate of 6.5% 9 Given in January 2021. 10 When consid ering Energea n 2021 2P reserves versus 2020 pro forma 2P reserves (Energean (including Edison) plus the acquisition of Ke rogen’s 30% h olding in EISL) . 11 As meas ured under the T echnipFM C EPCIC. STRATEGIC REPO RT Page 10 of 273 • In Ja nuary 2022, sign ed € 100 million no n -recourse project funding package backed by the Greek State, for the Epsilon development project in Greece, w ith an avera ge blended inter est rate of 2% • The enhanced capi tal structure gives us a weigh ted average ma turity of 6 years, pushi ng out debt repayments to th e medium term and elim inating exposure to f loating interest rates Financial highlights • 2021 sales revenues of $49 7.0 million (48% y-o -y increase from $335.9 mi llion) • Operating cash flo ws of $133.2 million ( 3% y- o-y decrease from $137 million) • Adjusted EBITDAX of $212.1 millio n (96% y- o-y increase from $ 107.7 mi llion) • Profit / Loss after ta x of $(96) million (74% increa se from $(41 6) mill ion) • $359.3 millio n capit al expenditu re reductio n achi eved versus revised f ull y ear guida nce 12 of $415 - 485 million • $1,040 million liquidit y at 31 December 2021 • Reduced EGPC receivable s to $95 million 13 at 31 December 2021 (36% y-o -y reduction from $ 149 million) Decarbonisation and ESG h ighlights • 8% year- on -year reducti on 14 in carbon intensit y to 18.3 kgCO2e/boe on an equity share basis • Published our first Cli mate Change Pol icy and an external ly assured 2020 Sustainabi lity Report • Entered pre-FEED fo r the Prinos CCS project (Gr eece) • Zero-routi ne flaring policy in place across operated sites • Successful roll ou t of ‘Green Electricity’ a t our operated sites in Italy • Methane detectio n campaigns in place at ou r Vega platform, Italy • Achieved a B score on CDP’s Climate Change disclosure and A - on CDP’s Supplier Engagement rating and aligned with a ll recommended pillars of TCF D disclosure for th e second consecuti ve year • Continued to implement climate-based scenario ana lysis an d used internal carbon pri cing to assist with investmen t-decision mak ing • ESG ratings in top quartile, awarded ‘AA’ rating by MSCI, ‘Gold’ by Maala 15 and ranked 29 out of 258 in the oil and gas producers indu stry group by Sustaina lytics. HSE highlights • Safe and reliable operations, zero serious injuri es • Zero oil spills and zero enviro nmental damage. Awards • Awarded ‘Best ESG Energy Growt h Strategy in Europe 2021’ by CFI • For th e second consecut ive yea r, Sembco rp Mari ne’s Admiralty Yard was awarded a Safety and Health Award Recognition for Projects for Safet y Excellence for Energean's Karish Project. 12 Provid ed in the Novemb er 2021 Tr ading & Operatio ns Update. 13 Net rec eivables shown ar e after pr ovision for bad and doubtful d ebts. 14 Curren t year- on -year reduction h as been calculated based on the 2020 pro forma (includes Edison) equity share emission intensity of 19.8 K gCO2e/boe. 15 Maala is t he non-profit C SR standards-setti ng organisation in I srael. STRATEGIC REPO RT Page 11 of 273 Figure 3. Karish project SH ARP award a t the Admiralty Y ard (Singapore) STRATEGIC REPO RT Page 12 of 273 Chairman’s Statement Karen Simon, Independe nt Chairman Board Priori ties for 2022 Project Delivery Successfully deliver Kari sh in Q3 2022 and launch our exploration and appraisal drill ing campaign offsho re Israel. Continue organic growth projects incl uding Karish North (Isra el), NEA/NI (Egypt) and Cassiopea (Ita ly). Returns to Sha reholders Approve dividend poli cy, ensuring the righ t balance between providing substanti al, stable and recurring returns to shareho lders whilst maintai ning reinvestment in the busin ess at an appropriate leve rage. Delivering the Energy Transition in a Responsible and Safe Way Our aim is to contin ue to be a first -mover in the energy transition across our sector. We will c ontinu e to track key metrics on our path to net-zero and assess low carbon busin ess opportunities, inclu ding carbon sinks and ca rbon capture and sto rag e projects. At the sa me time, we are comm itted to contribut ing to global security of supply in a responsible and saf e way. Oversee Or ganisation’s Transforma tion Oversee the cohesive tran sforma tion into a 200 Kboe/d company, particularly in term s of infrastruct ure, culture an d skills to ensure the company is wel l prepared for this step chan ge. Encourage the improvement of employee awareness an d engagement, on Clim ate Change and the energy transition, to maximise value and deliver upon our strategy . Dear Shareholders, A year ago, wh en I wro te my sta tement for the 2020 An nual R eport, the world was in the mi dst of a new wave of COVID- 19 a nd trag edy and uncertain ty prevai led. Indeed, the last t wo years wi ll undou btedly go down as so me o f the m ost unprecedente d and challengin g years i n mo dern histo ry. T his year, we face new geo- political chall enges. Energean wi ll continue to be a pro vider to the world’s energy requirements by supplying energy in a responsible an d safe manner, in li ne with our gas -focused strate gy. We can lea rn a lot f rom the last co uple of years. Th e pandemic has acu tely high lighted the need to support one a nother at all levels, both through fami ly and loca l co mmunities and throu ghout the wider business world. I am extre mely pro ud of th e way th a t Energea n’s team s ha ve support ed one ot her a nd our external stakeholders th roughout this difficult period, whilst ma intaining the business’s strategic focus an d delivering u pon our goal s and target s. I truly believe th at we have emerged stronger, both as individuals and as teams, and I thank each and every one of Energean’s people and partners for their hard work, positivit y and dedication. Social and Governanc e The Board a nd I are keenl y focu sed on ensurin g that Energean is ma naged at t he high est level s of environment al, social and governance sta ndards. ESG must be at the hea rt of Energean’s operati ons. Strategic ESG considera tion has three positi ve driv ers: it ensures our li cence to opera te w ith external stakeholders, it po sitively engages our coll eagu es around the worl d and fina lly, it is good f or o ur collective societal well being. Myself and the rest of the Board recognise tha t the success of the business depends on our people. 2021 was a year of signi ficant growth for Energean and our people. With th e integrati on o f Edison E&P, we expanded our presence into Italy, Egypt, Croat ia, and the UK, and w ith it, welcomed more than 250 colleagues to the team . The Board is f ocused o n ensuri ng that ou r culture i s align ed with our purpose and values, that t hey su pport a nd promo te our diverse workfo rce and that we are prepared for the step-change. STRATEGIC REPO RT Page 13 of 273 We aim t o mai ntain a positive, open and collaborative w ork enviro nment to equip our people from all backgrounds to f ulfil their potential. In 2021, we developed u pon existing i nitiatives focusing on emplo yee health, engagement a nd trainin g. We provided sup port thro ugh pro fessional training o pportunities and education, charity, sport a nd environmental protection, which you can fi nd m ore detail on i n t he C SR section of this An nual Report. HSE The sa fety of our people wil l alway s remain the Board’s number one pri ority. Safety at Energean is underpinned by our well - structured a nd co ntinuously improving HSE Mana gement system. I’m pl eased to report we ended the year with zero serious in juries. In 2021, we have continued to oversee the reduction of our GHG emissio ns, progress low -carbon business solutions to help differen t countries decarbonise and align with TCFD and CDP recommendati ons. We have also incorporated carbon pricing into our investment decision -making process, ensuring tha t our b usiness i s transparent and r obust a gainst dif ferent cli mate change scenarios. The pandem ic also a cted as a catalyst fo r driving advancements acro ss a n umber of sect ors. Energean has been developing it s own innovat ions; our Eco -Hydrogea n concept is a unique and integrated soluti on that will co mbine hydrogen genera tion and carbo n capture and stora ge more eff iciently a nd sustainably than an average blue hydrogen project. The proc ess is designed to achieve negati ve CO2 emissions and facilitates the development of hydrogen -based industries and transportation with external partners, such as ammonia , fertiliser and agriculture indu stries. In 2021, the Nomination and ESG Committee was split in tw o, which created the Environment, Safety and Social Responsibility Committee. This is chaire d by Robert Peck (independent non- executive director) and is attended by my self, th e CEO and the HS E Direc tor, the latter who conducts th e opera tional management of any and all climate change issues. The purpose of the committ ee is to evaluate Energean’s p olici es and systems for iden tifying and mana ging ESG a nd HSE risks, wh ich includes the identification of risks, such as climate change risks, and propose mitiga tion mea sures. The Co mmittee convenes every quarter and reviews the Bo ard paper s on Energean’s c a rbon emissio ns performance and KPIs. As well as our lo ng-term pledge to the enviro nment, we are also co mmitted to en suring that we ha ve strong relation ships with our partners, the supply chai n, and the people and governm ents in countries in which we opera te. The Boa rd and I were pleased to see that the C DP increased Energea n’s Supplier Engagement Rat ing in 2021 to A - from B in 2020. Board composition During 2021, I was delighted to wel come Roy Franklin to the Board. His extensive experien ce in CEO, NED and Chai r roles has brough t significa nt value to our bo ardroom disc ussions. I look forwa rd to worki ng with Roy and the team to d eliver our strategy. In July, w e al so h eld on e of ou r 2021 Board of Directors meetings in person in Energea n’s Athen s office. This provided mysel f and th e rest of the board with an excellent opportunity to improve o ur employee engagement – an area we believe is critical for strong governance Operational delivery Last year, I wrote th at the Board’s priori ties for the yea r were to succe ssfully deliver Karish and progress our growth projects a nd exploration and appra isal campaign offsh ore Israel. I was proud that our management teams were able to d eliver all of the Karish milestones on time and on budget that were under their contro l. How ever, restrictions in the ya rd in Singapore due to COVID -19 meant tha t the FPSO was u nable to lea ve for Israel in line with the original plan ned schedu le. With the impact o f COVID- 19 somew hat under co ntrol, the proje ct is back on tra ck to deliver first gas in Q3 2022 as per the updated timelin e commu nicated to shareholders in the sum mer of 2021 . The team successfu lly delivered upon the latter two o peratio nal targets. Energean to ok FID on Karish North (Israel) and NEA /NI (Egypt) in earl y 2021 and g ood progr ess was made on these and the ot her growth projects acro ss the portfolio. F inally, a rig contract was sign ed with Stena for the Israel drilling campaign – drill ing has started on the Ath ena well in Ma rch 2022. STRATEGIC REPO RT Page 14 of 273 Our strategic direction and 2022 o utlook Ener gean’s purpo se is to be come th e leadin g, gas fo cused E&P compan y in the Mediterra nean, with th e highest of ESG and HSE standards at the heart of our operations. Our aim is to grow t he company to become a 200 Kboe/d producer and a $1.4 billi on per yea r EBIT DAX generator. We’re focused on full -cycl e o rganic growth . Step one is to bring Karish on stream, wh ich is on track fo r Q3 -2022. The next steps will be to deliver all o ur s anctioned projects to achieve our mediu m -term targets and successfully execute the Isra el growth drillin g campaign. In regards to capital allocation, in 2021 th e focus was on refinancing to create a m ore sustainable capital structure. In 2022, the f ocus is the defini tion of our dividend policy an d ho w b est to ret urn value to shareholders. Finally , the heart of our strategy is the overarch ing need to grow sustaina bly. We will achieve this by reducing our carbon intensity, as set out in o ur Climate Change Plan, and co ntinuing to operate safely and responsibly. To summarise, our priori ties for 202 2 are fourfold. (1) Ensure the successful delivery of our project s (targeting first gas at Karish in Q3 202 2 a nd NEA/NI in H2 202 2 a s wel l a s the Israel dril ling campaign). (2) Set the framework for providing sustaina ble returns to sh areholders w hile continuing to grow organically. (3) Delivering energy responsibly and safely on our path to net -zero. (4) Continue to focus on our people, cultu re and infrastructure in our transition to a 200 Kboe/d company. I thank you, our shareholders, new and existin g, for your contin ued support. We look forward to repaying your investmen t in the near future. Karen Simon Independent Chairma n STRATEGIC REPO RT Page 15 of 273 Chief Executive’s Review Mathios Rigas, Chief Execu tive Officer 2021 was another year shaped by the COVI D -19 pandemi c. I am proud to say that we tack led these challenges head on a nd delivered on all prom ises w ithin o ur control (two projects san ctioned, Israel drilling campaign rig signed, capital structure optimised, y -o-y emissions reduced and more). As vaccinations rolled out, co untries opened u p and global energy dema nd rose dramatically. There has been su stained growth in global commodit y prices, e specially Euro pean natural gas. This, alongside production outperform ance 16 , resulted in a year of f antastic financial results for Energean, as I go into detail below. Against a back -drop of working from home and travel disruption, we also successfully integrated Edison E&P, and geared ou rselves up for a ma jor year of tra nsformation in 2022, gettin g ready to deliver Karis h, the exploration campaign in Israel and our other development projects acro ss the portfolio. We’ve set the scene for a very exciting 20 22. Strength in numbers It is wit h grea t pleasure to r eport that 2021 was an out standing year for Energean , wi th recor d fi nancial results and solid operati onal perf ormances from our e xisting assets. Production from o ur a ssets in E gypt and Italy, which we acquired through the Ed ison E&P transaction, performed well as a result of intelligent asset ma nagement, enabling the g rou p to deliver full y ear produ ction above initial mark et guidance (41.0 Kboe/d (72% gas). This, complemented by the new and seemingly sustained paradigm shift of gas prices seen across Europe, resulted in a 48% and 96 % yea r - on -yea r increase in revenu e and EBIT DAX to $497.0 million and $212.1 million respecti vely. One of our goals for 2021 was to reduce our receivables position in Egypt – and we succeeded thanks to our com mitment a nd belief i n Egypt as an in vestment case. We ended the yea r at $95 million, representing a 36% y- o-y redu ction. This continues the trend o f mat erially redu cing the receivabl es balance since the economic ref erence date of the acquisition of Edison E&P (1 January 2019: $240 million). In 2021, we ra ised o ver $ 3 billio n from debt capi t al markets to refina nce o ur existing debts. In doi ng so, we extended our weighted average m aturity to approximately six years, pushed out commencem ent of major debt repa yment obligations to 2024 and co nverted floating to fixed interest rates. We en ded the year with over $1 billion of liquidity, ensuring we are fully funded to deliver our projects and are protected from inflationary pressure on rat es, a ll while reducing our target leverage and setti ng the foundati on for a sustainable divi dend. Strong progress on o ur growth projects Although COVID-19 ca used chal lenges and impacted product ivity, good progress wa s made on our flagship multi-t cf Karish gas develo pment offshore Israel, w hich wa s a pproximately 92.5% complet e a t year end 2021. At t he time of w riting , w e are gea ring up to leave t he yard in Singapore, with first gas anticipated by Q3 2022. The reafter, Karish wi ll enable us to deliver substanti al free cash flo ws, based on fixed contracts with fl oor pricing and take or pay provisions. This wi ll form the basis of a sustainable and recurring dividend going forw ard. However, Energean is not only a Karish producti on story. We have an ambitious five -well drilling programm e in I srael, (three firm and two optional ), in whi ch o ur two gas prospects boast high possibility of success rates and sit within a geologic al trend that has seen 11/11 wells hit gas. Our we lls w ill be drilled using Sten a Drilling’s Stena IceM ax ri g tha t, at the time of writing, is on route for Israel a nd will commence operations in Ma rch 2022. The ca mpaign has the potential t o doubl e the Israel gas resource base. First results from Athena are expected i n Q2 2022. A positive result wou ld be pivotal in derisking the remain ing 48 Bcm (1.7 Tcf ) 17 of prospective reso urces in the block, as well as the surrounding area . 16 Compar ed to our Janua ry 2021 gui dance. 17 As per D& M’s YE21 CPR R eport. STRATEGIC REPO RT Page 16 of 273 We are extremel y excited to see the continued grow th and develo pment of a regional gas mark et. There is ongoing and projected high demand for natural gas across the region. This drive s our operations, both new wells and nea r-term pro duction at Karish. Importantl y, this new resource will also enable Energean to cont inue its su pport of t he region al energy transition, t hrough coal - to -gas switching in th e East Mediterranea n. In 2021, we al so sa nctioned five projects in Israel, E gypt and Greece. Over the year, w e ma de stro ng progress on th ese and o n our other sanctioned projects in Italy. All projects remain on track and on budget and will deliver over 824 billion boe in total 18 ) of 2P reserves ( 82% gas), as p er our gas -focu sed strategy, and provide hi gh-retu rn opportuniti es, in line with our discipli ned capital allocation policy . Our entire portfolio will contribute to our projected transforma tion into a 200 Kboe/d producing and $1.4 billion EBITDAX genera ting company. This tran sformation accelerated with the valu e created through the acquisition of Edison E&P. Advancing a ‘just’ ene rgy transition The IPPC’s 2021 report and global pledges agreed at COP26 emphasised the need for meaningful ac tion to tackle climate change. At Energean , ultima te responsibility a nd accountability for our en vironmental and climate change policy , strategy an d targets lie w ith me. In 2021, Energe an ma de great stri des towards its commi tment to become a net-zero co mpany by 2050. I am i mmensely proud that in 2021 we published our debut climate change policy, w hich set out a clear roadmap f or reachi ng our n et-zero ta rget in th e short, medium and lo ng -term. We a lso reduced t he carbon intensity of our o perations by more t ha n 70% versu s our base y ear of 2019 19 , and w e are focused on reducing ou r methan e emissions vi a enhanced monitoring a nd planned upgrades to existing equipm ent over the coming yea r. Moreo ver, our zero-rout ine fla ring policy is now fu lly effective a cross th e en tire portfolio a nd we h ave ‘green electricity ’ agreements i n place at opera ted sites i n Israel , Greece and Italy . In addition , we co ntinued to disc lose all relevant cl imate -related data in line with TCFD an d CDP recommendat ions. At the time of w riting , we have also awarded a carbon storage service contract to Ha lliburton for our Prinos CCS pro ject. The project i s the first o f its k ind in Greece and a n invalua ble pro ject that w ill help reduce bo th o ur o wn emissions and those of nearby industry. We’re ev alu ating other low- carbon opportunities acro ss the rest of our portfolio too. For our ef forts, we received the ‘Best ESG Energy Growth Strategy Europe 2021’ award fro m CFI, reflecting tha t we’re tackli ng the transition with verifiable actions that match ou r ambitions. Health and safety remains a top priority During 2021, w e co ntinued to ensure that our all ou r staff – from ou r produ ction facil ities and yards to our offices – remained protected agai nst COVID- 19. Mo reover, we continu ed our excellent safety r ecord – a t a grou p leve l, a nd a longside our contra ctors, we achieved an LTIF 20 of 0.42 per million hou rs, dow n 33.3% from 2020 pro forma. In a ddition, w e co ntinued to support the lo cal co mmunities in which we operate throu gh donations, internship and fun di ng opportuni ties. Outlook for 2022 and dividend po licy 2022 will be our biggest yea r yet. Karish and NEA/NI wi ll be onstream an d our drilling campa ign in Israel will have commenced. As announced in our 2021 F Y Results, it is our goal to make reliable, recu rring and sector-leadin g returns to sha reholders, targetin g a first dividend to be paid no later than durin g Q4 2022, following first gas fro m Karish (Q3 2022). This is a major develo pment for Energean an d our external sta keholders. We have a positi ve hist ory. We were the most recent E&P IPO o n the London Stock Exchan ge. We h ave raised mult iple tranches o f capital o n the back o f successful o perational develo pment. We ha ve success fully complet ed and integrated the Edison acqu isition. 18 Includes K arish, Karish North, Tanin, NEA/NI, Cassiopea a nd Epsil on . 19 Based on an equity share basis, where 2019 and 2021 emi ssions intensity is 66.8 kgCO2e/boe (excludes Edis on) and 18.3 kgCO2e/bo e. 20 Lost Tim e Injuries Freque ncy: The numbe r of Lost Time I njuries per million hours w orked . STRATEGIC REPO RT Page 17 of 273 Energean is about to bec ome a major, de- risked and profitable gas production com pany. I want to thank all my collea gues who have contributed to this proce ss. This new identity cha nges both the way we interact with our shareholders and the broader external stakeholder community. W e are entirely committed to offerin g value upside and have proven ou r ability to deliver on our promises. This is w hy we look fo rward to the future w ith such confidence. In a w orld that is h ungry for energy, by this time next year, we will have demonstrated that we can go from FID to production and that we can be trusted to deliver year on year. We have a f antastic team a t Energean and I would like to th ank th em for their co ntinued dedicati on and commitmen t to delivering upon our goals a nd strategy. Mathios Rigas Chief Executive Officer STRATEGIC REPO RT Page 18 of 273 Our Business Model Our purpose Energean’s aim is to l ead the energy transition in the eastern Mediterranean through a strategic focus on gas and a chieve its net -zero a mbition in advance of 2050, whilst deli vering m eaningfu l and susta inable returns to our shareh olders. Our business model Across ea ch part o f t he hydrocarbon lifecycl e w e work to crea te va lue fo r ou r investors, host countries and people. Energean’s business model is to find and monetise hydroc arbo ns from its portfolio o f assets across the Mediterranea n. Our activi ties are focused on generating sustainable cashflow fro m product ion t hrough selective development and appraisal of the highest return growth options with a f ocus on those o pportunitie s with the low est carbon intensities. We are focu sed on organic gro wth, but will continue to evalua te inorganic opportunities th at complement and supplement ou r strategic targets an d ambitions. Underpinning our business model is a stra tegic focus on gas an d a comm itment to be a net-zero em itter 21 by 2050. Our value life cycle Find and App raise Through targeted exploration and appraisal in the Me diterranean we a im to find hydrocarbons, to build reserves and reso urces, to mon etise, or to selectively develop f or fut ure production. We ha ve a rank ed portfolio of prospect s for drilling and rem ain agile to take advantage of o pportunities t hat support ou r organic-focu sed growth strategy. Develop We focus on selective devel opment of material hydroca rbon discoveri es w e have either fou nd or acquired. We invest in low -cost, hi gh-return dril ling options that l ie in close proximit y to existing infrastructure a nd aim to deliver co st -effective, timely solutio ns to convert reserves into ca sh flows. In developing these solu tio ns, minimisin g ca rbon emissions is a t the foref ront of our minds, and we apply an internal carbon pricing system in assessing al l new projects and investmen ts. Produce Production is th e cash engine o f our busin ess an d we are i nvesting in in -f ield drilling progra mmes to maximise production across our producing a ssets in the Me diterran ean, whilst al so investing i n opportunities to reduce the ca rbon foot print of these assets, such as t he switch to sourcing elec tricity from 100% ren ewable sources through the n a tion al grid in Greece, Israel, Italy and Croati a. In additio n, 21 Scope 1 and 2 emissions. STRATEGIC REPO RT Page 19 of 273 Energean i s comm itted to eval uating ca rbon, ca pture and stora ge oppo rtunities, and th is wi ll co ntinue into 2022. Acquire Energean also seeks to grow its portf olio through highly selective and v a lue accret ive M&A that are a natural strategi c fi t, such a s the Edison acqu isition in 2020 an d the consol idation of o ur Israel position through the Kerogen a cquisition 22 in 2021. Our Strategic Pi llars 22 Energea n’s acquisitio n of Kerogen’ s 30% stake in Ene rgean Israel clo sed on 25 F ebruary 2021 . STRATEGIC REPO RT Page 20 of 273 Our Strategy 1 East Mediterra nean Energean has a long -standing history of operating in the Mediterranean , having origina ted in Greece in 2007 wit h t he pu rchase of th e Prin os a ssets for approx imately $1.5 milli on. We ha ve demonstrated our ability to deliver grow th and val ue in the Mediterra nean and expect to co ntinue t o maintain our strat egic focus and investment in th is a rea. We know the governm ents and we know the rocks in th is geographical area, and will continue to leverage this understa nding and knowl edge to grow the busin ess. 2 Gas We are committed t o f ocusing ou r product ion mix in a way that promotes th e Mediterranea n’s energy transition and cre ates long -term value for a ll or ou r stakeholders. Natu ral gas emi ts only ha lf as mu ch CO2 as coa l, yet a large per centage of electricity generated in the regi on comes fro m coal -fired power plants. R eplacing these facilities with ga s -fired units is one of the fastest, most eff icient and cost - effective ways to reduce global CO2 em issions. Israel, our core ma rket, has understood this, as the Israeli government’s d ecision to co nvert all co al powered stati ons to gas by 20 25 at tests. T he Ministry of Energy is also targeting a fu el mix of 70% gas and 30% renewa ble energy by 2030. However, the natural gas of the Mediterranean is not just an energy transition source, it is also an energ y of the future. The regio n has sufficient large -scal e natural gas resources to provi de a sustainable suppl y to meet rising regiona l energy demand. Gas is also su stainable and efficient , and its flexibility as an energy source a llows for ag ile production facilities. T his makes ga s a good partner for renewabl e energies, providing a usefu l backup source wh en there is no sunlight or wind. 3 Tackling Climat e Change Energean is f ully co mmitted to taki ng action o n climate cha nge. In a strong sh ow of leadershi p and foresight, Energea n was the first E&P co mpany in the world to announ ce a net-zero 2050 target, u sing gas a s the tra nsition medium to a low carbon future. This commitment will be delivered thro ugh the implementat ion of our Climate Change Strategy, published i n 2021, which provides a blueprint for minimisin g our greenhouse gas ("GHG”) emissio ns and strength ening our low ca rbon portfolio. Our Climate Change Strategy commits to ensurin g that all ou r assets will be operate d on a net-zero basis in respect of Scope 1 an d Scope 2 GHG emissions. As part of our commitment to a low -carbon future, in 2021 we have continued to align wit h the TCFD recommendat ions. Paris Agreement alig nment Energean is firmly committed to playing a leadership role in the energy transition process, supporting the Paris Agree ment, in particular Article 2.1(a) 23 w hich sta tes the goal of keeping t he increa se in global average temperatu res to below 2°C above pre -indu strial levels and pursuing efforts to limit the temperature increase even further to 1.5°C. To do this, as recognised in Article 4.1 24 of the Paris Agreement, we are com mitted to achievi ng n et-zero emission s by 2050. In 2022, our portfolio has been tested against Paris -aligned scena rios developed by the Interna tion a l Energy Agency (IEA). Co mmodity prices derived from supply a nd dema nd f undamentals and carbon 23 Articl e 2.1(a) of the Paris Agreement states the goal o f ‘Holding the incre ase in the global average temperatu re to w ell below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre -industrial levels, recognising tha t this would signifi cantly red uce the risks and impa cts of climate change’ . 24 Articl e 4.1 of the Paris Agreement: In order to achieve the long -term temperatur e goal set out in Article 2, parties aim to reach global peaking of greenhouse gas emissions as soon as possible, recogni sing that peaking w ill take longer for developing country parties, an d to undertake rapid reductions thereafter in accordance with best available scien ce, so as to achieve a balance between anthropogenic emissions by so urces and re movals by sinks of greenhouse gases in t he second half of this century, on the ba sis of eq uity, and in the context of sustai nable developm ent and effor ts to eradica te poverty . STRATEGIC REPO RT Page 21 of 273 prices created by th e IEA have been used in this scena rio an alysis. Energean inco rporates cl imate change-rela ted risks a nd carbon pri cing into its decision -maki ng. Please see page s 31 - 32 fo r the resu lts of this analysis. Our climate change st rategy Short-term pl an Our short - term plan t o red uce the Grou p’s absolu te scope 1 and 2 emissions, includes: increased efficiency of production installations by optimising pe rforman ce, using low or zero carbon electricity and re -focusing ou r production mix from oil to gas. Figure 4. Climate change plan 2021 progress on reaching ou r emissio n reduction targets • In 2021, we reduced our equity share carbon emissions inten sity to 18.3 kgCO2e/boe, a 8% reduction y-o-y 25 . • In 2021 , 72% of our working interest production was gas, down from 74% in 2020 ( pro forma ) 26 but up from 0% in 2019 (Energean standalo ne) • Electricity -wise, agreements were put in place for the purch ase of electrici ty from renewable sou rces at all operated sites in Italy. Energean sites in Ita ly, Israel and Greece now operate under this policy. As such , sco pe 1 and 2 absol ute emissions in operated sites were reduced by 23%. Overa ll, 100% of electricity p urchased by Energean w as generated from r enewable sou rces during 2021. • We assessed opportunities to establish Leak Detection and Repair (LDAR) procedures to monitor and reduce fu gitive em issions across all ou r operating sites. Campa igns are currently under taken at Vega, Italy 25 Curren t year- on -year reduction h as been calculated based on the 2020 pro forma (includes Edison) equity share emissi on intensity of 19.8 K gCO2e/boe. 26 2020 Pro Forma i ncludes Edison. STRATEGIC REPO RT Page 22 of 273 Figure 5. Short-term carb on emissions intens ity reductio n plan 27 Medium to lo ng-term pl an Following these initial actions, remaining emissions will be balanced with an equi valent amount sequestered or offset, o r through buying enough carbo n credits to make up the difference. Energean is currently working on various project s such as a Carbon Captu re and Storage ( “CCS”), a sma ll -sca le eco - hydrogen production unit incorporating Negative Emissions Technol ogies (NET s) using biogas, a nd opportunities to in vest in nat ural -based solution projects to create carbon removals from the atmosphere. CCS Progress At Energean, we believe there is considerable opportunity to employ efficient CCS technol ogies in the regions we operate. Energe an str ives to become a leader in CCS i n the Eastern Mediterra nean a nd is confident that we w ill be part of the solution . Besides capacity from our own assets, we believe that there will also be external in terest, e.g. from power plant s, in providing their emissi ons to be stored in our company's depleted reservoi rs. Energean i s well pl aced to rea lise such a project since we h ave over 40 years’ experience in man aging reservoirs, studyi ng the geology and market developm ents. In 2021, we began pre -FEE D at our Prin os CCS projec t in Greece. The project received support i n May 2021 from the Greek state under the EU post pan demic Recovery and Resilience Fund (“R RF”). The project’s stated objective is to captu re an initial 1 MMtpa of CO2 from sou rces within 150 km of Prin os on -shore Sigma plant. We esti mate th at in the longer term the Prinos subsu rface st rata are suff icient to sequester up t o 100 mi llion tons of CO2, with sign ificant volum es arriving in Prinos by ship. In March 2022, Halliburton was awarded a service contr a ct to assess the carbon storage potent ial of the Prinos basin. A f urther project to develo p an eco-H2 plant loca ted within the existing Sigma plant is also being evaluated. The project is expected to provide an innovative ‘Low - Ca rbon Hydrogen’ process off ering best- in -class carbon capture efficiency (99+%), high en ergy effici ency com pared t o Bl ue -H2 negligi ble wa ter use, and mi nimal land footprint. Natural gas w ill be converted into H2 a nd CO2 through an oxy - combustion process with a ca rbon capture efficie n cy of over 99%. T he resu ltant carbon dioxide will be sequestered in the Prinos CCS. Th e pro ject i s seeking suppo rt f rom the Important Projects of Co mmon European Interest (“IPCEI”). Th e use of un treated biogas, ideally w ith biomass and waste i ntegration i s also being considered. This will allow us to become a pioneer in “Bio - H2 with CCS”, enabling the whole of Energean to have a net negative ou tput of CO2 emissions. 27 2019 is pre-Edison acquisi tion inclusion. STRATEGIC REPO RT Page 23 of 273 Risks and opportunities Climate change related risk and o pportunities have been identif ied , and future scenarios that aid in developing an i ntegrated strategy approach have been ana lysed. Our stra tegy and busin ess contribute to limiting global warming a nd has been structured, and i s currently being implemented, in three dif ferent phases; short, medium and long -term, as per ou r Climate Change Policy published in 2021. Physical risks Risk Acute Chronic Description Rising sea level coupl ed with extreme flooding may cau se problems to the steady state of Energea n’s assets. This may also result in damage to infrastructure an d increase associated costs. Atmospheric or sea tem perature rises may cause fa ster degradation of the company’s in frastructure and necessitate operat ional changes to the running of the pla nts. Financial impact Increased severity of extreme weath er events may lead to reduce d revenue from decreased producti on capacity , transport diffi culties and supply chain interruption s. Early retirement of existing assets may possibl y arise, e.g. damage to property in “high - risk” asse t locations. Increased operating costs may ari se from potential ina dequate water supply for energy producin g plants due to changes in precipita tion patterns. In addition, increa sed insurance premiums may occur fo r insuring assets at high - risk locations. T ime -horizon Long-term Long-term Energean’s response (mitigation) Energean is monito ring the weather conditions nea r its assets and has built protective barriers to co mbat potential flooding. Energean has also installed an underwater ana lyser on one of its platforms in Greece to monitor seawater conditions (wave speed and direction). No extreme weather event s have occurred to date, but the th reat remains. Energean’s environm ental departmen t is monitoring the condit ions at all sites and reports this data at the asset a nd corporate level. T his data is being incorporated in to assessments of both existing and new projects. Geographies impacted Our onshore asset in Egypt i s considered at highest risk All assets in all co untries Metrics used to assess risk Air temperature an d sea-level measurements Air temperature an d sea-level measurements STRATEGIC REPO RT Page 24 of 273 Transition risks Risk Policy/Legal Technology Market Reputation Description a) EU Emissions Trading Sy stem (ETS) prices are set to increase, re sulting in higher operatio nal costs (in Greece) and possible additiona l taxes for exceeding GHG emissio ns. b) Energean’s operation s in Israel may be subject to future carbo n taxa tion due to the capacit y of the thermal units. Carbon ta xing schemes are not yet enforced outside th e EU. The development of new technologies a nd alternative energy sources may result in reduced demand for the company’s produ cts. Increased energy dem and may also accelera te the development of renew able energy production and storage. Changing custo mer behaviour, as wel l as changes in demand or supp ly may lead to unce rtainty in market signals. Pollution incident s, both through liquid spill s and GHG emissions, ma y lead to the loss of investor con fidence and subsequent loss of revenue. Financial impa ct a) Increased pricing of GHG emissions may lead to incre ased operating costs (e.g. higher com pliance costs and potential increased insura nce premiums). Assets tha t emit extensively may be subject to early retirement due to pol icy changes. Regulatory changes in the EU ETS shall gradually lea d the company to no longer receive free GHG a llowances, leading to increa sed operational costs. The company currently receiv es allowances and ha s a portfolio of allowances that may be used in future years. The num ber of free allowan ces decreases y-o- y. b) Carbon emissions ta xes may be applied in the futu re in Israel, which would increase th e operational costs. As part of our o verall approach for managin g the risks facing our business and for maximising the oppo rtunities in our portfolio, Energea n conducts compreh ensive financial model ling that includes the risks and opportunities presen ted by a transition to a low er-ca rbon economy . We regularly update our analysis to ensure o ur business is adaptable to changing mark et conditions and global trends. Please re fer to pages 31 - 32 in this report for more details. The Market risk ma y lead to reduced demand for goods and services due to a shift in consumer preference s. This may also affect th e cost of production and in crease the price of energy, wat er and waste treatmen t. As the supply of products ma y change in the f uture, a re - pricing of assets may take place due to fossil fu el reserves, land valuat ions etc. Poor reputation may adversely impact the company by decrea sing the demand for its goods and services. It may also reduce the company ’s production capacity, due to delayed planning approva ls and supply chain in terruptions. A negative reputati on may also block a ccess to finance as investors move aw ay from E&P companies and cause litigation damage fro m climate action. Time horizon Medium term Long term Long term Short, medium an d long term STRATEGIC REPO RT Page 25 of 273 Transition risks Risk Policy/Legal Technology Market Reputation Energean’s response (mitigation) a) Energean is currently evaluatin g the development of a CCS site i n the Prinos asset, which ha s been included in the Recovery & Resilience Fund (RRF) implementat ion proposal for Greece. Further to tha t, Energean's Eco - Hydrogen unit p roposal (blue- hydrogen with carbon ca pture of more than 99%) has been submitted to the I mportant Projects of Commo n European Interest (IPCEI), which woul d operate alongside the Prinos CCS site. b) Energean has imposed a shadow price to be used as a sensiti vity tool in order to assess the via bility of the project in Israel. The an nual free cash flow was not significantly affected and the project was proven not to lose valu e in the face of carbon taxati on. Energean fully incorporates climate change -related risks into its investmen t decision - making. The f indings of the recently conduct ed scenario analysis exercise, as well as stringent stress tests fo r new investments, inf orm our corporate strat egy and investment decisio n-ma king, ensuring that cli mate change- related risks are adequat ely considered in mana ging our portfolio. Energean fully incorporates climate change -related risks into investmen t decision - making. The f indings of the recently conduct ed scenario analysis exercise, as well as stringent stress-test s for new investments, inf orm our corporate strat egy and investment decisio n-ma king, ensuring that cli mate change-rela ted risks are adequately considered in managing ou r portfolio. Energean is assessin g the risks associated wit h pollution, inclu ding climate related risks, at the com pany and asset level and takes a ll necessary contro l and mitigation measu res which are reviewed the Audit & Ris k Committee on an annual basis and included in the business risk managem ent. Geographies impacted Greece (assets parti cipate in th e EU ETS) and Israel (Energea n’s largest future source of production). Greece and Italy are considered to be the most vulnerable assets rega rding oil productio n. Greece and Italy are considered to be the most vulnerable assets rega rding oil productio n. Highest risk related to oi l production assets in Greece and Italy. Metrics used to evaluate risks Annual carbo n taxes paid Realised commo dity price Cost of productio n (see pages 37 - 38 ), cost of energy & water Hydrocarbon spil ls & revenue (see pages 37, 71 ) STRATEGIC REPO RT Page 26 of 273 Opportunit ies Opportunit ies Resource efficiency Energy source Products/service s Markets Resilience Description a) The continuous development of tech nology provides new opportuni ties in the field of resource efficiency. Optimized operations are a ble now to consume less water a nd energy, increasin g the value of fixed assets and the production capa city. b) Reinjection of sou r gas in Prinos field instead of processing it and thus reducing energy consumpti on. The energy transit ion creates the opportunity for Energean to reorient its portfo lio towards gas, which is deemed to be a tra nsition fuel, and correspon dingly increase production capa city. Development and/or expansion of low emission goods and services. Energean expects the development of appropriate carbo n capture, and stora ge (CCS) technology in conjunction with blue - hydrogen to provide lo w carbon energy to th e market. We also expect to provide the opportuni ty to third parties to sequester their emissio n in parallel. Energean’s gas focused strategy is aligned with the East Med’s rising gas demand. The company ’s resilience to comm odity price fluctuation s comes hand in ha nd with the new ma rket opportunities. Transition to gas production is considered the key to Company’s enh anced resilience to clim ate change. Financial impact a) Potentially result ing in increased revenues, whi le transition to more ef ficient buildings or applica tion of more efficien t available technology may lead to reduced operating co sts through effi ciency gains and cost reductions. b) Reduces cost of processing sour gas and enhancing produ ction through sour gas rein jection to the field. The re-orient ed portfolio leads to reduced operationa l costs due to lower process needs of the fi nal product, which is mainly natural gas. The reduced exposure to GHG emissions due to th e change in the energy mix leads to le ss sensitivity to changes of carbon cost. Additiona lly, the energy shift favours the com pany as there is increased capital availabi lity with more investors to be int erested in lower emission s producers. Finally, reputationa l benefits may be resulting due to the in creased demand of low ca rbon services. The products and services that emerge from CCS and Blue-Hy drogen may increase the reven ues through deman d for products and services with lower or zero emissions. Providin g products of this kind provides better competitive posit ion to reflect shifting custo mer preferences, resultin g in increased revenues. Gas is considered to be the transit ion medium to a low - carbon future enhancing Company’s position with increased revenues. Energean’s focus on gas, which is a low er carbon fuel th an oil, combined with th e long - term gas contracts wi th floor pricing in Israel and Egypt, protects the Comp any ’s revenue stream from commodity price fluctuations. Time horizon Short to medium Short, medium an d long term Medium to long term Short term Short to medium term STRATEGIC REPO RT Page 27 of 273 Opportunit ies Opportunit ies Resource efficiency Energy source Products/service s Markets Resilience Energean’s response (strategy to realise opportunity ) a) Energean assigned the management of climate change projects to a grou p company in Egypt n amed Egypt Energy Services (EES), engaged with energy efficiency projects fro m cradle to grave and projects also related to low carbon energy generatio n and carbon sequestratio n. b) An engineering study of the re-injectio n process, modification of existing infrastructure, con struction of new equipment a nd vessels and additional pipe- laying will need to be implemented. By shifting its portf olio towards gas, Energean can reduce it s carbon emission s intensity whilst also increasin g production capacity. Ga s will make up 80% of its portfolio and Energean is investing in new gas -orientated assets included in t he Edison E&P portfolio. Energean aims to capitalise on the opportunity presented by CCS by drawing on th e company’s existin g expertise in managing reservoirs. Further to that Energean seeks the opportunity to develop Blue-Hydrogen projects in conjunction with the CCS. Shifting production fro m oil to gas has already commenced by investing in gas fields that will further expand following Company’s pol icy. Shifting producti on from oil to gas ha s already comm enced by investing in gas fields that will further expand following Company’s policy. Geographies impacted Existing assets in Greece, Italy and Egypt are initially targeted. All assets in all co untries Initially Greece and subsequently Italy by utilising depleted fiel ds. Further to tha t Energean also considers it s opportunities to develop such projects in Israel as the Company ’s future highest productio n asset. Israel and Egypt are the Compan y’s main gas producers. Israel and Egypt are the Company’s ma in gas producers. Metrics used to evaluate opportunity Total water usage an d total energy consumpti on intensity (pa ges 70 - 71 ) % of production whi ch is gas and operational costs (pages 37 - 38, 69 ) CCS and hydrogen related revenue streams Ability to attract investment Revenue (page 37 ) STRATEGIC REPO RT Page 28 of 273 For further information on how Energean manages and mitigates the abo ve risks, please refer t o the Risk Management section between pages 79 - 103 . The compan y took decisive steps t o adjust ou r business stra tegy to n ot only m itigate climate change- related risks but also to captu re o pportunities. Over th e p ast five y ears, Energe an shifted its portfolio fro m 100% oil to more tha n 70% gas, recogn ising tha t gas pla ys an i mportant role a s a bridge f uel in the transition to a lower -carbo n futu re. For example, in Isra el, ga s pro duced from our opera tions will be key in replacing high- carbon coal power plants and thus, will play a big role in lowering the country’s absolute emi ssions. Scope 3 emissions For a consecutive year, Energean has calculated i ts scope 3 emissions, including the emissions from the use of our products. This data can be found on page 70 in the CSR section – 2021 data will be disclosed in this year ’ s CD P Re port. A s a ne xt step, Energean w ill consider ta ngible actions to reduce our scope 3 emissions. Among other things, Energean will consider suppliers’ and contractor’s environment al awareness and em issions ma nagement in future procurement processes. We are also con sidering giving our customers th e opportunity to sequester thei r scop e 1 emission s in our future CCS projects. Recognitions of our climate chan ge strategy Energean contin ued its participa tion in the Clim ate Discl osure Project (“CDP”) in 2021, in w hich we promoted disclosure tra nsparency an d further developed our clim ate cha nge initiatives. The climate change rating assesses the level of detail and comprehensiven ess of the content, as well as the company's a wareness of clima te change issues, management methods and progress towards action taken on climate ch ange. The supplier engagem ent ra ting assesses performa nce on governance, ta rgets, scope 3 emissions, and value chain engagement. We were awarded an improved score o f B on climate change (up from B - in 2020) based on our strategy and set targets. We were a lso awarded an i mproved score of A - on su pplier engagement (up fro m B in 2020). Supporting climate chan ge initiatives Energean supports the goals of t he Paris Agreement, and for the second year we are reporti ng in alignment wi th the recommendations of th e TCFD. The table belo w sets ou t wh ere yo u can fin d Energean ’s T CFD disclosures t hrough out t he Com pany’s 2021 Annual Report an d Account s. Index to disclo sures aligned to recomm endations of th e Task Force on Climate -related Fi nancial Disclosure s Governance: Disclose the organisat ion’s governan ce around clima te related risks and opportu nities a) Describe the board’s ov ersight of cl imate -related risks and opportu nities Pages 115- 116, 127- 128 b) Describe managem ent’s role in assessing and managi ng climate -related risks and opportuniti es Pages 116- 117 Strategy: Disclose the actual an d potential impa cts of climate -related risks and opportunities on the organisatio n’s businesses, stra tegy, and f inancial planning where such inf ormation is material a) Describe the clim ate-rel ated risks and opportunities th e organisati on has identified over the sho rt, medium an d long term Pages 23 - 27 b) Describe the impact of climate -relat ed risks and opportuniti es on the organisation’s busin esses, strategy , and fi nancial planning Pages 23 - 27 c) Describe the resilience of the organisa tion’s strategy, taki ng into consideration different climate -related scena rios, including a 2°C or lo wer scenario Pages 31 - 33 Risk Managem ent: Disclo se how the organisa tion id entifies, as sesses, and mana ges clima te -related risks STRATEGIC REPO RT Page 29 of 273 Index to disclo sures aligned to recomm endations of th e Task Force on Climate -related Fi nancial Disclosure s a) Describe the organ isation’s processes fo r identifying and assessing clim ate - related risks Pages 79 -82 b) Describe the organisa tion’s processes for ma naging clima te -related risks Pages 98 -100 c) Describe how processes for iden tifying, assessing, and man aging climat e -related risks are integrated int o the organisat ion’s overall risk managem ent Pages 79 -82 Metrics and Ta rgets: Disclose the metrics and targets used to asse ss and man age relevant clim a te - related risks an d opportuni ties where such inf ormation is materi al a) Disclose the metrics use d by the organisa tion to assess climate -related risks and opportunities in line with its strategy and risk mana gement process Pages 38 - 39 b) Disclose Scope 1, Scope 2, and, if appro priate, Scope 3 greenho use gas (GHG) emissions, and the rela ted risks Pages 69 - 71 c) Describe the targets use d by the orga nisation to manage climate -rel ated risks and opportuniti es and performance again st targets Pages 20 - 22 4 Organic Grow th At the core of this strategic pillar is our commitment to explore, develop and learn. We explore new ways to find, produce and develop hydrocarbons. We explore new technologies and low c arbon solutions, such as ca rbon capture and stora ge a nd blue hy drogen. We at Energea n bel ieve that this m indset, combined with our strong subsurface and tech nical expertise, will ena ble us to deliver a growth strategy that is sustainable, successfu l a nd wi ll lead to th e ach ievement of our medium -term financial a nd opera tional targets. It was this approach that bore fruit in 2019 w ith the disco very o f Karish North. By activel y pursuing new exploration opportunities in core areas and m aximising output from producing fields, we aim to ensure at lea st 100% reserves replacemen t on an annua l basis. Our explora tion portfolio is spread a cross t he Me diter ranean and represents a balance d mix of new frontier areas and lo wer risk mature basins. Our Israel drilling campaign commenced in Ma rch 2022. Targets include Athena o n Block 12, which li es betw een the Karish and Tan in leases, wh ere a disco very would significantly de-risk the surrounding acreage. In 2021, we sanctioned Karish North (Israel), NEA/NI (Egypt) and Epsilon ( Greece), which w ill see th e co mmercialisa tion of a ppr oximately 294 MMboe of 2P reserves, 82% of wh ich is gas. 5 Value and ret urns-driven Disciplined ca pital alloca tion that pri oritises total shareholder returns is a top priority for Energea n. In 2021, we optim ised our ca pital stru cture via the ra ise of over $3 billion of debt, which ha s extended the average life of debt to approxim ately 6 years while en suring we move towards a net debt/EBITDAX target of less than one an d a half times. At the heart of this priority is o ur goa l to make reliabl e, recurrin g and sector-l eading ret urns to shareholders, targeting a first dividend to be paid no later t han durin g Q4 2022, f ollowing first gas from Karish (Q3 2022). Underpinning this capital allocation p olicy is a commitment to organic growth projects that meet stri ct in vestment criteria a nd generate ret urns in excess of 20% in t he ca se of greenfiel d projects. An example o f this a pproach i s the sanctioning o f the Ka rish No rth proje ct, whi ch is expecte d to generate IRRs above 40 %. M&A wi ll also play a role in growing the business; however, we will only do dea ls that are a strong strategic fit a nd valu e accreti ve. This is showcased by th e $ 1.85/boe acquisition price that we ach ieved fo r Kerogen’s 30% holding in E ISL. STRATEGIC REPO RT Page 30 of 273 Business model fou ndations These are the building bloc ks t hat every E&P busin ess need and are critical foundation s fo r w hat we do and how we do it. Safe, Reliable and Respo nsible Operat ions We value the safety of our wo rkforce above all else and f ocus on m aintaini ng a safe o perating cult ure every day. This cu lture of safety a lso improves the in tegrity and reliability of our assets. Partnerships a nd Collab oration We aim to build long -term relati onships wi th o ur k ey stakeholders, and pa rtner with leaders of i ndustry to find innovation s that can improve efficienc y a nd deliver low carbon sol utions. Talented Peop le We work to attra ct, motivate and ret ain talented people and provide our em ployee s wi th t he ri ght ski lls for the future. Our performance and ability to grow depend on it. Governance and Oversight Our boa rd has a diversity of knowl edge, e xpertise, and w ays of thinking that hel p us grow ou r business, manage risks and co ntinue to deliver long -term value. Technology and Innovation New technologies help us produce energy safely and more efficiently. We selective ly invest in areas with the potential to add greatest va lue to our business, now and in the future, incl uding lower carbon solut ions. STRATEGIC REPO RT Page 31 of 273 TCFD Scenario Analysis Portfolio resilience Since 2021, in line with the TCFD’s recommendat ions, we h ave tested th e resil ience of o ur po rtfolio against the scena rios f rom the Intern ational Energy Agency ’s (“IEA”) World Energy Outlook (“WEO”) report to address the risks and opportunities presented by a potential transition to a lower -ca rbon economy. Resilience is defined as t he abili ty to generate value in a low-price environment. We ha ve ch osen to use the IEA scenarios as it enables standardisatio n i n a pproach and compa rison between companies. The IEA’s scenario s cha nge sli ghtly each year — in the 2021 WEO repo rt, th e f our scenarios are: IEA’s 2021 WEO climate scenarios Stated Polici es Scenario (STEPS) Announced Ple dges Scenario (APS) Sustainable Development Scenario (SDS) Net -zero Emissions by 2050 Scena rio (NZE) Overview Provides a conservative view , assuming not al l climate commitmen ts will be met Assumes that all climate commitmen ts made by governments will be met in full an d on time An integrated scenario specify ing a pathway to reach three of the UN’s Sustainable Development Goal s Sets out a narrow but achievable pathway for the global energy sector to achieve n et-zero CO2 emissions by 2050 2050 temperature rise 2.0°C 1.8°C 1.7°C 1.5°C 2030 oil price $77/bbl $67/bbl $56/bbl $36/bbl 2030 EU gas price $7.7/MBtu $6.5/MBtu $4.2/MBtu $3.6/MBtu 2050 carbon price $90/tonne $200/tonne $160/tonne $250/tonne Methodology We have a pplied the IEA’s price f orecasts fo r each scenario to our po rtfolio and ha ve compared the impact on the n et present value (“NPV”) f or each country versus our base case assumptions. We h ave not included our explora tion assets in this ana lysis. The IEA provi des 2030 a nd 2050 oil and ga s prices fo r each scenario. It also provides 2 030, 2040 a nd 2050 carbo n price s for each scen ario. We have assumed a straight- line i ncrease between the price poi nts and th en assum ed flat prices from 2050 onw ards. Bec ause th e IEA provides genera l o il and European gas price s, we ha ve t aken the dif ferential between their base ca se an d th eir forecast and applied this to our 2020 base case for Brent and t he va rious regi onal gas prices to genera te co mpara ble com modity price forecasts. The impacts t o n et present value descri bed below a re based on the development of ou r 2P reserves position ‘as is’, and do not incl ude any unsancti oned steps th at we are taki ng to mitiga te th e impacts of climate change. STRATEGIC REPO RT Page 32 of 273 Results Net Prese nt Value of po rtfolio 28 STEPS APS SDS NZE Israel █ █ █ █ Egypt █ █ █ █ Italy █ █ █ █ Greece █ █ █ █ UK █ █ █ █ Croatia █ █ █ █ Impact on NPV █ >0% █ 0 to - 5% █ -6 to -15 % █ -16 to -2 5% Our portf olio continues t o create value under a ll scen arios and our gas -focused business po sitions us strongly to adapt to changing demand in a carbon - constrained wo rld. Under the NZE, t he NPV is r educed by 5% overall compared to the base case, but rema ins pos itive. Th is is because the portfo lio is 81% ga s weighted (2P res erves, end - 2021), a nd thus i s largely pro tected against falls in oil prices. In Israel, gas reven ues are pro tected agai nst fluct uations in interna tional co mmodity prices as there are fixed gas co ntracts with fl oor pricin g. Onl y under the NZE is there a minor impact o n th e NPV ( -2%) due to t he pri ce rea lised f or t he l iquids stream. Likewise in Egypt, ga s revenu es are protected with floor pricing — the chan ge to NP V seen un der the NZ E is due to l ow er liquid pri ces received c ompared to our base case forecast. Our assets in Ita ly a nd Greec e are m ore e xposed to the ef fects of lower comm odity prices u nder the scenarios considered. We are a lready taking steps to mitigate this im pact, and are looking a t longer-term, climate friendly solutions, in cluding carbon capture solutions. Energean is a nimble operator with t he ability t o deliver solutio ns that del iver maximum value for our shareholders, a nd we view scenario analysis as a key too l in continuing to deliver upon this as we move into a lower -carbon world. Finally, th e scenario analysis utilises the IEA’s carbo n pri ces. This has a po sitive impa ct on t he NPV because the IEA’s ca rbon price fo recast is lower than Energean’s internal prices used in t he bas e case run for regions in wh ich carbon taxes exist. Inclusion of climate- related risks into decision making Energean incorporates climate change -rela ted risks into its investment decision-m aking. The findings of the scenari o analysis exercise, as well as stri ngent stres s-tests f or new i nvestments, i nform o ur corpora te strategy and i nvestment decision - making, en suring th at cl imate change - related risks are adequatel y considered in managing our port folio. This i ncludes planni ng capital all ocations and maki ng business decisions based o n crit eria that are as challenging as those posed by the carbon constrain ed scenarios exami ned. The Board is ch arged with review ing investments f or climate -related risks. T he CEO and the Boa rd regularly discuss clima te change -related issues such as investmen t decisions where clim ate cha nge consideratio ns are a major driver and the carbon credit price’s impact s on Energean’s f inancial future. 28 Relative to Energean’s budg et planning Br ent oil price of $60/bbl. STRATEGIC REPO RT Page 33 of 273 Our cu rrent portfolio remains resilient under the climate scenarios tested, and w e expect to continue helping meet globa l en ergy deman d over the coming decades. We will co ntinue to make capital allocation decisions for ou r portfolio using rigorous pl anning assum ptions flow ing from the scenari o analy sis exercise, such as the eva luation of FID of Irena in Croatia. Internal carbon price forec ast Furthermore, Energean uses a n i nternal price on carbo n t o stre ss -test new pro jects, acquisitions and investments. This stress test allow s us to measure the impact of an investment decision on the company’s carbon footprint, and to determi ne whether any future investmen ts brings us clo ser to our net-zero 2050 ta rget, Ener gea n w ill not consider investing. Furtherm ore, the internal price on carbon ensures that w e include th e possibi lity of additional carbon tax ation sch emes being introduced ( within our Euro pean markets a nd beyond), which would resu lt in a reduction of our in come and valuat ion on individual assets. This impact can be seen w hen w e run our a sset impa irment tests and i n the annual Competent Person’s Report (“CPR”) (a n independent ap praisal of ou r oil and gas assets). In 2022, our interna l carbon prices are : Year 2022 ($/tCO2 ) 2022 57 2025 86 2035 176 2050 270 The above ca rbon price is ba sed upon a fo recast from the UK’s Business, Energy & Industrial Strategy department, whi ch in turn is linked to the IPCC’s foreca st. The internal carbon price h elps mitigate future po tential climate change impacts by helping us safeguard the value of future investments under different scenarios where the cos t of emitting GHG increases as a result of more stringent regulated trading schemes. In our sensitivity analysis, we have seen that climate change constitu tes a sign ificant risk (a lbeit with a low probability) in this respect. Engineering solutio ns have been incorporated in the design of future projects and in operational performance i mprovements to emissions, such a s repla cing w et sea ls wi th dry seal s in compressors in Egy pt, in additi on to consideratio ns around carbon capture a nd offsetting projects in th e medium term. We ha ve a lready pivoted our portfo lio predominantly toward gas as pa rt of an overall strat egic deci sion to more strongly position the company to meet glo bal energy needs in a carbon -constra ined world. STRATEGIC REPO RT Page 34 of 273 Market Overview Brent oil price In 2021, oil prices experienc ed signi ficant and steady recovery, buoyed by the continuous curtailm ent of the COVID-19 pandemic and stabilisation of international commodities trade. Brent averaged $70.73/bbl in 2021 – a 70 % increase from 2020 levels a nd 12% abo ve 2 017 -2 019 avera ge. Brent climbed sign ificantly from a low of $54.84/bbl in January 2021 to a hi gh of $83.70/bbl in Octo ber 2021. Our oil assets in Italy are Brent -linked as is the condensate from our gas assets in Egypt. Once Karish starts to produce we ex pect to produce over 30,000 bbl/d of liquids in th e medium term. Focus on gas Over 70% of our production is from gas fields. Gas prices from production in Ita ly, the UK and Croatia are linked to the European gas market. Our cont racts in Israel have fixed l ong-term prices. In Egypt, gas price s are linked to Brent but in clude floor pricing. European gas prices European gas prices surged in 2021, wit h the Ita lian PSV reach ing highs of €113.42/MWh in Decem ber 2021 – more th an a 500 % increase from December 2 020 at €16.6/MWh, at the ti me we acquired th e Edison portfolio. The increase in 2021 prices was driven by a combined impact of multiple facto rs, including (i) economic recovery and increased demand for natural gas and power, (ii) low pre -wi nter storage capacity levels, (iii) shutdowns o f nuclea r and coal po wer plants providing altern ative sou rces of pow er, (iv) reduce d domestic European produ ction, and (v) limited sto ckpiles of gas driven by limited gas flows from Russia and compet ition fo r LNG ca rgoes with As ian importers 29 . NBP prices in particular were impa cted by weather pattern s, with the wind speeds in the Nort h Sea amo ng the slowest in 20 years. Israel Gas 2021 was Israel’s 17th year of local natural gas production and the second in which both Leviathan (first gas in December 2019) and Tamar (2013) were onstream. In 2021, a pproximat ely 11.1 Bcm was produced by Leviathan and 8.3 Bcm by Tam ar 30 . Of this, Levia than exported 5.8 7 Bcm (3.27 Bcm to Egypt and 2.6 Bcm to Jordan). 31 Tamar exported 0.9 Bcm. Since 2018, the Ministry of Energy has focused its ef forts on transitio ning to greener sources of energy through t he increased use of ga s and renew ables, whi le phas ing out coal. Th e Israeli governm ent aim s to convert all co al powered sta tions in the cou ntry to gas by 2025 and is targeting a fuel mix o f 70% gas and 30% renewable energy by 2030. In 2021, demand for gas in Israel was approximately 11.9 Bcm 32 . Despite ne ar -term pressure on dema nd, Israel’s l ong -term gas d emand outlook remains robust, wi th dema nd fo recast t o grow to 15.7 Bcm by 2025 and approxim ately 20.1 Bc m by 2035 32 . Nat ural gas dem and in crease i s dri ven by the enduring growth in electricity demand, a s wel l as by a transit ion of fuel m ix, from coal an d oil to na tural ga s and renewables. Liquids Karish, Kari sh North a nd T anin contains total 2P li quids re serves of 101 MM boe. The Energe an P ower FPSO has onboard storage facilities that can store up to 800,000 barrels of liquid, which can be exported via tankers. In March 2022, Energean signed an exclusiv ity agreement and term sheet fo r the marketing of its Karish liquids with a major trading desk. 29 Source: Bl oomberg. 30 Delek Drilli ng’s Q3 2021 Fina ncial Report . 31 Delek Drilli ng’s Februa ry 2022 Investors Pr esentation, slid es 7 -8. 32 Israel Ministry of Energy – Interim Report for the Examinati on of Governm ent Policy on the Natural Gas Economy in Israel, July 2021 . STRATEGIC REPO RT Page 35 of 273 Egypt Egypt’s gas market has seen substantia l change over the past two deca des, owi ng to several l arge domestic discoveri es, headlined by Eni’s su per -giant Zohr field in 2015. Zoh r reached first gas i n 2017 , enabling the co untry to move from bei ng a net import er to net exporter of ga s. Egypt also start ed importing gas from Israel in January 2020, realising its ambiti ons to become a regional gas hub. However, a lack of a m ajor discovery since Zoh r, co mbined w ith rising gas demand (65.4 Bcm in 2021 rising to 76.6 Bcm in 2028) 33 will result in Egypt becom ing a net importer of gas early this decade. For this reason, in 2021, Energean signed a MOU with EGAS for the sa le and purchase of up to 2 Bcm/yr of natu ral gas on average for a period o f 10 years, commencing with in itial volumes o f up to 1 Bcm /yr. This also represents a comm ercialisation option for gas resources discovered i n the 2022/23 Israel drilling campai gn. There are existing export pipelin es from Israel to Egypt th at Energea n can utilise. LNG export opportunities i nto Europe Egypt possesses two l iquified na tural ga s (“LNG”) plants, the Eni -operated 5.0 million tonnes per annum Damietta plant and the Shell -operated 7.2 mi llion to nnes per annu m Idku (also k nown as ELNG) plant . The plants are un derutilised, only operati ng at approximately half of co mbined capacity in 2021 34 . European gas demand rec overed in 2021 towards p re -COVID levels, bu t suppl y ha s only partially rebounded yea r- on -year and has not yet recovere d to 2019 leve ls 35 . As a resul t, Eu rope is a n obvious receiver of LNG expo rts fr om Egypt. A s of end -2 020, Euro pe had just und er 40 LNG rega sificati on terminals, with a t otal st orage and sen d -out capacity of 11,158,900 liquid cu bic metres and 183.8 Mtp a respectively 36 . 33 Source: Fi tch Solutio ns Egypt Oil & Gas Report, Q4 2021. 34 The Orga nization of Arab P etroleum Exporting Countri es (OAPEC), Ja nuary 2022. 35 The Oxford I nstitute for Energy Stu dies - Supply-side fact ors in the European gas p rice rally in 2021 and outlook f or the rest of winter, Decembe r 2021. 36 GIIGNL Ann ual Report 20 20. STRATEGIC REPO RT Page 36 of 273 Our Key Performance Indicators We measure performance over a range of k ey opera tional, commerc ial, financial and non -financial metrics to ensure th e sustainable ma nagement of our long -t erm success. This keeps us focu sed on our strategic objecti ves, whilst allo wing us to remain agile and responsive to external event s. Energean com pleted the a cquisition of Edison E&P on 17 December 2 020 37 , and in doin g so, reinforced its com mitment to th e Mediterra nean region. The eco nomic reference date o f th e transa ction was 1 January 2019 and all results subsequent to this date accrue to Energean. However, for accou nting purposes, the figures for Edison E&P a re only consolidated i nto the financial statements subsequent to the completio n date; all resu lts between the eco nomic referen ce date and the co mpletion dat e are reflected through a series of co mpletion adjustmen ts and are incorporat ed in th e net co nsideration. Throughout the Key Performa nce Indi cators section, both 2020 operation al and f inancial resul ts a re presented on an actua l and pro forma ( Energean plus Edison E&P) basis. Operational We continued ou r stron g track record of grow ing reser ves and resources with a 2 5% y -o -y increase vs 2020 38 , while production performance wa s 41.0 Kboe/d (72% gas), at the mid - point of the re vised full year guidance of 40.0 - 42.0 Kboe/d and above the initi al guidance ran ge given in January 2021 of 35.0 - 40.0 Kboe/d. 1 Working I nterest Produc tion Working Inte rest Producti on 2021 Pro forma 2020 2020 2019 Kboe/d 41.0 48.3 3.6 3.3 Objective : Energean is focu sed on maximising production from its existing a sset base and, in the medium-term , delivering net productio n of at least 200 Kboe/d from its gas -weight ed portfolio . 2021 progress: • Average working in terest producti on of approximately 41.0 Kboe/d • 2021 production was lo wer tha n 2020 pro forma, mainly because of na tural decline at Abu Qir in Egypt • Karish project approximat ely 92.5% complete at 3 1 December 202 1 • Karish North, second oil train and gas riser, and N EA/NI sanctio ned. All three pro je ct s o n track for their respective start -ups, (H2 2023, H2 2023 and H2 2022) 2 2P Reserves a nd 2C Reso urces 2P Reserves 2021 Pro forma 2020 39 2020 38 2019 MMboe 965 982 762 342 2C Reserves 2021 Pro forma 202 0 39 2020 2019 MMboe 188 158 158 216 Objective : Energean aims to replace the reserves it has produced and grow it s reserve and r esource base through a combina tion of successful exploration and appraisal an d selecti ve value accretive acquisitions. 37 The gross c onsiderati on for t he t ransaction, as at the locked box date of 1 January 2019, was $284 million and the final net consideration ( net of cash a cquired), as of 17 December 2020 , was $203 million. 38 Before p ro-forma adjustm ent for Ker ogen acquisition. 39 Reserves are pro forma Energean + Edison plus the acquisiti on of Kerogen’s 30% holding in Energean Israel Limited (“EISL”). The transacti on closed on 2 5 February 2021. STRATEGIC REPO RT Page 37 of 273 2021 progress: • 25% year- on - year increase in 2P + 2C reserves a nd res ources to approxim ately 1,154 MMboe, 72% gas. Increase is versus 20 20 i.e. before pro -fo rma adjustment for Kerogen acq uisition. • 2020 pro- forma includes the a cquisition of Kerogen’s 30% holding in Energean Israel Ltd. Th e transaction closed on 25th February 2021 • In early 2021, increased equity interest in the producing Rospo Mare and Ve ga fields, offshore Italy, to 100% at zero considerat ion, adding approxima tely 12 MMboe of 2P oil reserves. Financial Energean is focused on increasing production f rom its large -scale, gas-focused portfo lio to deliver material free ca sh and maximise total shareholder return. 1 Revenues Sales Revenu es 2021 Pro forma 2020 2020 2019 $ Million 497.0 335.9 28.0 75.7 Objective : Energea n’s m edium -t erm t arget is to generate revenues in exce ss of $2 billion per annu m. Wit h approximately 965 billion boe of 2P reserves to be mo netised a n d a revenue growth profile underpinn ed by gas sold under f ixed p rice contract s, we at Energ ean believe this ta rget is both a chievable and sustainable. 2021 progress: • 2021 revenues of $497. 0 million • 2021 revenu e was higher than 2020 pro forma primarily becau se of higher comm odity prices • A total of 18 GSPAs signed i n Israel, taking to tal gas sales to 7.2 Bcm/yr on plateau, further enhancing near-term revenu es • All GSPAs contain provisions for take- or -pay and / or exclusivity , as w ell as floor pricing, ensuring that revenues are secured, predictable a nd largely insulated from downside commo dity price risk. • MOU signed with EGAS for the sale a nd purcha se of up to 3 Bcm/yr of natura l gas o n average for a pe riod of 10 years • Hedged a tota l of 28% of expected 202 2 Italian gas product ion, takin g a dvantage of the stro ng market pricin g 2 Cost of P roduction 40 Cost of Produ ction 2021 Pro forma 2020 2020 2019 $/boe 17.5 11.3 21.4 21.5 Objective : Followin g completion of the Edison E&P acquisition Energean has started to implement programmes to furth er th e redu ction of operating costs with the ai m o f creating a susta inable low - cost business. T he Gro up’s me dium -term cost of production (operat ing costs plus all roya lties) t arget i s $9 -11/boe. 2021 progress: • The increa se in 2021 cash unit product ion cost versu s pro forma was primarily driven by decreased production and addit ional planned main tenance during extended summer shut -dow ns deferred from 2020 as a result of COVID-1 9. Additionally, production c osts were a lso impacted by the strengthening of Euro against the US Dollar during the perio d. • Integrated Edison E&P, eva luating a nd initiating a full, bottom -up internal review, inclu ding • Operating co st reductions • Th ird party ta riff optimisation • Mothba lling 40 The Group uses certain measures of performance that are not specifically defined under IFRS or other generally accepted accounting principles. These non-IFRS measures include Cost of Production. More information can be found in the Financial Review secti on, under the h eading ‘ Non - IFRS measu res’ . STRATEGIC REPO RT Page 38 of 273 • Productio n ef ficiencies – e.g. higher tha n expecte d productio n in 2021 led to some efficien cy savings • Improve sales contracts – e.g. in 2021, a new G SA w as signed with A 2A for Energean’s entitlement production in Italy (effective from April 2022). Additi onal contracts are u nder evaluation. 3 Adjusted EB ITDAX 41 Adjusted EBIT DAX 2021 Pro forma 2020 2020 2019 $ Million 212.1 107.7 (8.3) 35.6 Objective : Energea n aims to ma ximise EBITDAX to mainta in the profita bility of the business. The Group expects to grow EBIT DAX t o $1.4 billion per annum in t he medium -term through the successfu l delivery of key growth pro jects. 2021 progress: • 2021 adjusted EBITDAX of $212.1 million • 2021 adjusted EBITDAX was higher th an 2020 because of higher revenue partially offset by higher operating costs fro m the enlarged group. • FID taken on the >40% IRR Ka rish North project (Israel ) in early 2021 • FID taken on the >30% IRR NEA/NI project (Egypt) in ea rly 2021 (Egypt). • € 100 milli o n funding package secured for th e Epsilon redevelo pment project (Greece) • Rig contract signed fo r three firm and two optional wells, offsho re Israel 4 Cash Flow f rom Operating Activities Cash Flow from Operat ing Activities 2021 Pro forma 2020 2020 2019 $ Million 133.2 137.0 1.5 36.3 • The decrease on a pro f orma basis was primarily driven by payments made for buyers compensation in Israel amounting to $23.0 million and cash held on account in relation to the commodity hedges in Italy of $29.4 mill ion. 5 (Loss)/Profit After Tax Profit After Tax 2021 Pro forma 2020 2020 2019 $ Million (96.2) (416.4) (92.9) (83.8) • The increase on a pro forma basis was primaril y driven by higher revenu es in 2021 Net-zero carbon emissi ons Energean’s aim is to l ead the energy transition in the eastern Mediterranean through a strategic focus on gas and achieve its net-zero ambition by 2050. 1 Carbon Intens ity Reductio n Programme Carbon Intensity on equity share 42 2021 Pro forma 2020 2020 2019 KgCO2e/boe (Scope 1 and 2) 18.3 19.8 37.9 66.8 41 The Group uses certain measures of per formance that are not specifically defined under IFRS or other generally accepted accounting principles. These non-IFRS measures include adjusted EBITDAX. More informati on can be found in the Financial Review secti on, under the h eading ‘Non - IFRS measu res’ . 42 Energea n has upd ated its emissions intensity r eporting and now reports on an equi ty share basis ve rsus the ope rated wor king interest approac h used in the 20 20 Annual Report. STRATEGIC REPO RT Page 39 of 273 Objective: In 2019, w e were the f irst E&P com pany in the world to commit to net-zero emissions by 2050. As part of this co mmitment, we pledged to redu ce by the ca rbon in tensity of o ur busin ess, by 85% by 2023, versus our 2019 base year 43 . Energean u sed intern ationally recognised sta ndards and guidance to cal culate its GHG emissions. We followed the reco mmendation s of the Green house Gas Protoco l, as well a s guidan ce from IPI ECA, the UK’s Department for E nvironment, Food and Rural Affair s (DEFRA), the International Energy Agency (IEA), the UN Int ergovernmenta l Panel on Climate Ch ange (IPCC) and the EU Emissio n Trading System. Our scope 1 emissions under th e EU ETS have been ve rified by TUV Austri a Hellas. 2021 progress: • We delivered a 8 % year - on -year reduction in the carbon i ntensity of o ur operat ions to 18.3 kgCO2e/boe on equity share basis • Successfully rolled o ut the use of ‘Green Elec tricity’ at our operated sites and offices in Italy. This adds to the ‘green el ectricity’ a greements introdu ced in Greece a nd Israel i n 2020. A s a re sult, on an operational a ccounting basis (see page s 69 - 70 for deta ils), 100% of Energean ’ s Scope 2 emissions are now covered by green electricit y, which has result ed in a 2021 scope 2 carbon e missions intensity of 0 KgCO2e/boe (ver sus 1.9 KgCO2e/bo e pro fo rma 2020) • Reduced energy use intensity at ou r operating sites by 26% by opti mi si ng efficiency HSE Energean is ful ly committed to behaving responsibl y and condu cting its business with integrity in everything it does. 1 Lost Ti me Injury Frequency R ate LTI Frequency Rate 2021 Pro forma 2020 2020 2019 No. p er milli on hours worked 44 0.33 0.63 0.65 0.28 Objective : Energean is committed to m anaging i ts opera tions in a safe an d reliable manner to preven t major a ccidents an d to provide a high level of protection t o its em ployees a nd contracto rs. Our ta rget is to keep the LTIF Rat e below 0.60. 2021 progress: • Safe and reliable opera tions, zero serious injuri es • Zero environmen tal damage and zero oil spills • Zero health dam age and occupational illnesses. Total share holder return In 2021, o ne of the priorities for the Boa rd w as to deci de how best to provide returns to sha reholders whilst ensurin g that the right l evel of reinvestm ent is maintained in the busi ness. One of th e key a nd now complet ed milestones was the optimisati on of the Group’s ca pital struct ure, in order to set the foundation for future returns to shareholders. Thro ugh the raising of over $3 billion from the debt capita l m arkets, Energean extended its w eighted average maturity to approximatel y six years, pushed o ut co mmencement of major debt repay ment obligati ons to 2024 a nd convert ed flo ating ra tes to fixed rates. Energean ended the year with over $1 billion of liquidity, ensuring the Group is fully funded to deliver our projects. The dividend policy, approved by the Board as part of the full year results sets out the followi ng key parameters: • Energean is targetin g launch of its inaugural dividend, to be paid no later than during Q4 2022, following first gas fro m Karish (Q3 2022). 43 Scope 1 and 2 emissions. 44 Refers to employees and contracto rs . STRATEGIC REPO RT Page 40 of 273 • It is the Co mpany’s go al that shareholders wi ll recei ve a sect or - leading return on their investment through divi dends and continued o rganic growt h while ma intaining a dis ciplined ca pital allocation policy. • Energean t argets pay ing di vidends of at least $1 billion by t he end of 2025. This is underpinn ed by predictable cashflows, largely insula ted from com modity price fluctua tion, th anks to long -term gas contracts wit h floor-pri ce protection and high take - or -pay provisions. • The Com pany expects to begi n with a dividen d of at least $50 mi llion, which w ill be paid per quart er. The amo unt will ra mp - up in line with Energea n’s medium - term producti on and revenue targets to at least $ 100 million per quarter, as th e Compa ny’s fully sanctioned a nd funded dev elopments come onstream during th e next 24 months. • The Board and Management will regularly revi ew i ts ca pital a llocation t o en sure t hat suffici ent liquidity remains withi n the Group, to co ntinue Energean’s o rganic gro wth strategy a nd consider the potentia l for opportuni stic M&A and/or supplement ary capital returns to shareholders. • Post first gas from Karish , the Compa ny expects a rapi d deleveraging on a Group c onsolidat ed basis to levels below 1.5x and see s this being met no la ter than 2024. Figure 6. Share price pe rformance versus pee rs since IP O 45 45 Premier Oil no w renamed as H arbour Energy foll owing the Chrysaor merger. STRATEGIC REPO RT Page 41 of 273 Review of Operations Production Group working int erest production averaged 41.0 Kboe/d in 2021 (2020 : 48.3 kbopd ), at the mid-po int of the revised full year guidance of 40.0 – 42.0 Kboe/d a nd above the initial guidance range given in January 2021 of 35.0 – 40.0 Kboe/d. 2021 production was lower than 2020 pro forma, mainly because of natural decline at Abu Qir in Egy pt. Working interest hydrocarb on production (Kboe/d) 2021 2020 pro for ma 2020 Egypt 29.1 35.4 1.4 Italy 9.9 9.1 0.3 Greece & Cro atia 1.3 2.0 1.8 UK North S ea 0.7 1.8 0.1 Total 41.0 48.3 3.6 Israel Karish Project % Completio n at 31 Decem ber 2021 46 % Completio n at 31 December 2020 46 Productio n Wells 100.0 100.0 FPSO 98.4 93.0 Subsea 83.6 76.0 Onshore 99.9 99.9 Total 92.5 87.0 The Karish Project w as approxim ately 92.5% complete at 31 Decem ber 2021, as un der the Gro up’s contract with TechnipFMC. At the time of writing, th e FPSO h as en tered dry -dock, the n ational grid has been connected in Israel and Energean is gearing up operationally f or first gas in Q3 2022. This timetable expects ap proximatel y f our – five month s fro m sail -away to first gas, includin g th e tow from Sin gapore to Israel, ho ok-up and commissioni ng. Most of the comm issioning and testing of mechanical and electrical system s is being done in the y ard before sail -aw ay with the final commission ing work to be performed offsho re upon arrival in Israeli wa ters. Energean Power FPSO Progress and Ke y Milestones The Energean Power FPSO was approximatel y 98.4% co mplete, at year end 2021. In ea rly 2021, al l th e remaining min or lifting work (flare sta ck, helicopter -deck and portside crane boom ) was complet ed. The rest of H1 2021 was spent completing the connection between the topsides and the hull and completing the mari ne systems in the h ul l. In H2 2021, the f ocus was on co mmissioning activities ahead of sail - away. In December 2021, the penultimate major technical milestone associated with the constructi on of the Energea n Pow er FPSO was succ essfully completed. This involved testing the teles co pic design of the emergency f lare stack which will allow the vessel to pass u nder th e Suez Canal Bridge, hence avoiding the n eed to eith er sail around Africa or to instal l th e syste m i n th e Medit erranean Sea . Th is h as f urther reduced the environmen tal foo tprint of the construct ion phase whilst short ening the schedule. 46 As meas ured by project m ilestones unde r the TechnipF MC EPCIC. STRATEGIC REPO RT Page 42 of 273 The remaining Q1 2022 milesto nes i nclude the drydocking of the FPSO at the yard to clea n t he m arine life off th e hull of the sh ip. This is a regulatory requirement f rom the Israeli authoriti es in o rder to enter Israeli waters to avo id species contami nation. The FPSO entered dry dock in Mid - March 2022. Subsea and Onshore Prog ress Subsea works were approximately 83.6% complete at year end 2021, w ith the risers, spools m etrology and 90-k ilometre gas sales pipeline finish ed. The exp ort pi peline w as al so succ essfully hy drotested during this period, to ensure no leaks thro ughout the length of the pipe. The outstan ding work is to hook -up the risers to the FPSO, upon its arrival in Israel this yea r. Onshore work wa s substan tially complet e at year end (99.9 % u nder the T echnip FMC EPCIC), with construction and civil works completed. T he rema ining outstandin g work is to finish the site restora tion work (e.g. replan ting cleared trees). The o nshore pipeline was connected to the n ational grid in Ma rch 2022. Gas from the Karish field will flow to the Energea n Power FPSO, located 90 k m offshore, wh ere production output wi ll be processed and separated. The treated gas will then be delivered from an underwate r pipeline to the land- based system at the Dor Stati on before entering the nat ional pipelin e on i ts way to distri bution co mpanies and end consumers. Karish No rth In Ja nuary 2021, Energe an reached FID at the 1.1 Tcf (32 Bcm ) Karish Nort h f ield, 21 -months aft er the announcem ent of the discovery. The field wil l be commercialised via a low- cost tie-back to the Energean Power FPSO, wh ich will be situa ted approximat ely 5 kilometres a way. First gas is expected i n H2 20 23. The pro duction capacity from the f irst w el l is expected to be u p t o 3 00 MM scf/d (approxima tely 3 Bcm/yr). A second well is expected to be drilled in 2026 and, combin ed wi th later life w orkovers to both wells, is expected to be suff icient to fully develo p the 744 MMboe of 2P reserve s. Second Oil Tr ain and Gas Sales Rise r In Ma y 2021, Energean took FID on two high - return growth projec ts. Th e f irst, a s econd oil train on the FPSO that will increase the liquids capacity from 18 Kboe/d to 32 Kboe/d, at m inimal i ncremental operating costs. Th e second, a second gas sales riser, will enable gas production at the full 8 Bcm/yr capacity of the FPSO. In December 2021, Ener gean signed an EPC co ntract with KANFA AS for the second oi l train. Both projects made good pr ogress in 2021 and are e xpected onstrea m in H2 2023. GSPAs Existing GSPAs Energean h as signed 18 ga s sales agreements (“Agree ments”) for th e supply of 7. 2 Bcm/y r of gas on plateau, representing almost 100% of total gas reserves volu mes o ver th e life of those Agreement s. All Agreements include provisio ns for floor pricing and t ake- or -pay and / or exclusivity , providing a high level of certainty over revenu es from the Karish, Karish No rth and Tanin projects over the next 16 years. In 2021, for on e agreement representing 0.2 Bcm/yr and co mmencing 2024, th e buy er was unable to meet its conditio ns subsequent under th e Agreement an d the parties have mut ually agreed to termina te the Agreement. Thi s termination is not related to the project schedule. In addition , in No vember 2021, f urther t o its i nitiation of a rbitra tion proceedings, Dalia sent notices to Energean purportin g to termina te its gas sal es agreement (which represen ts 0.8 Bcm/y r of cont racted gas sales), whilst al so attempting to reserve its rights by claiming that should the notices be determined to be invalid or wro ngly issued, the gas sales agreem ent would not have been termina ted. Energean believes that the n otices served by Dal ia are invalid and consti tute a material breach of contract, giving it the right to terminate the contra ct. Energean has exercised this ri ght and, as pa rt of the same arbitration proceedings, is seeking to recover damages suffered by it a s a resu lt of such termination. The amount of the da mages will depend o n the price tha t Energean is able to achieve for the ga s that would have been sold to Dalia . This is currently estimated to be between $10 5 -$407 million. STRATEGIC REPO RT Page 43 of 273 Alternative commercial isation opportunities Energean ha s identifi ed a number of incre mental buyers fo r its ga s reserves and prospecti ve resources. In Israel, the third ga s fired power plant a uctioned a s part of the IEC privatisation proce ss (Hagi t) wa s awarded. At the ti me of writing, the winni ng consortium is seeking gas supply . In December 2021, Energea n signed an MOU wi th EGAS for the sale and purcha se of up to 3 Bc m/yr of natural gas on average for a period of 10 years, commencing with initial volumes of up to 1 Bcm/yr. This represents a commerciali sation opti on for gas re sources discovere d in the 2022/23 drilling ca mpaign. Energean and EGAS ha ve ident ified existing tra nsportation routes fo r the delivery of these volumes. Moreover, it does not im pact an y of the existing GSPAs signed in Israel. Energean is confident of selling al l volumes profit ably and comm ercial discu ssions are un derway with a number of domesti c and international buyers. Exploratio n Energean’s pre paratory work ahead of th e off shore Isra el dril ling ca mpaign progressed in li ne wit h expectations du ring 2021. I n June 2021, Energean signed a rig contract with Stena Drilli ng for the Stena IceMax drillship. The con tract is for the drill ing of three firm wells an d two optional wells. Drilling commenced in March 2022 and has the potential to double the Israel gas resource base. Targets, in order of drilling sequence, in clude: • Athena (Blo ck 12) – Explorati on – Firm • Situat ed between the Karish and Tanin leases, Athena is estima ted to contain 21 Bcm (totall ing 140 MMboe) and has a 77 % possibility of success. • Success at At hena wou ld significantly de -risk the rema ining 48 Bcm (1.7 Tcf ) of pro spective resources in th e block. Any discovery in that block would be p rioritised over the develo pment of Tanin due to i) lower capital expenditure investment (as compared to Tanin); ii) the a bsence of any seller roy alties on production from the lea se and; (iii ) no export rest rictions, w hich enables it to realise competi tive export prices • Karish Main 4 – Ap praisal – Firm • Karish North – Development – Firm • Hermes (Block 31) – Explorati on – Optional • Hercules (Block 23) – Explora tion – Optiona l The topholes for the three f irm wells will be batch drilled. The first Karish No rth developmen t well is being drilled as part of th is programme to a chieve cost synergies. Well Type Audited Pros pect Size MMboe 47 Audited Possibil ity of Success (Po S) 47 Athena- 01 Exploration 140 77% Karish Mai n- 04 (inc. Pilot Ho le) Appraisal (inc. Exploration ) 176 72% 48 (PH only) KN -04 ST- 04 Development Developing 2P reserve s (86% gas) 100% Hermes- 01 49 Exploration (Option al) 197 56% Hercules- 01 50 Exploration ( Optional) 165 37% 47 Based on th e YE21 Israel D& M CPR. 48 Primary E xploration Ta rget. 49 Audited figure for Herm es not inclu ding Gas upside in Tamar D Sand (27 Bcm GIIP). 50 Audited figure for Hercul es not including Liquids upside in Mesozoic carbonates (270 MMbbl OOIP) and Gas upside in Tortonian sands (11 Bcm GIIP ). STRATEGIC REPO RT Page 44 of 273 Acquisition of Keroge n Capital’s 30% Ho lding in E ISL In February 2021, Energea n cl osed the acquisit ion of Kerogen Ca pital’s 30% holding in Energean Israel Limited ( EISL) for a total consideratio n of $380 -405 mil lion. T he acqui sition i s a na tural strategic f it tha t gives the G roup 100% ow nership of EISL’s share capi tal and structu re and a dds 2P reser ves of 219 MMboe (approximat ely 80% gas) enlarging th e Group’s reserves to a round 1 billio n boe. Egypt Production The Abu Qir ga s- condensat e f ield o ffshore Egypt is the largest produ cing asset in t he Group’s portf olio. The field delivered 29.1 Kboe/d of workin g int erest productio n i n the 12 m onths to 31 December 2021, approximately 87% of which was gas, around the mid -point of guidance (28.5 – 30.0 Kboe/d). Q4 production was impacted by scheduled work -over activities, which ultimately enhanced the year end exit rate. Productio n decline wi ll be reverse d from 2023 with t he ramp -up of production f rom NEA/NI f rom H2 2022 and the positive im pact of the Abu Qir in fill programme. Development NEA/NI subs ea tieback In January 2021, Energean sanction ed the NEA/NI project , which is in shallow -water offsho re Egypt and neighbouring the Abu Qir concessio n. An EPCI contra ct for the f o ur subsea wells and the a ssociated tie - back to the Abu Qir NAQ PIII platform and associa ted in frastructu re was a warded to TechnipFMC in February 2021. T he i ntegrated NEA/N I pro ject i s expect ed to deliver first gas from o ne w ell in H2 2022 and from the rem aining three wells in H 1 2023. The project con tains an estimated 53 MMboe of 2P reserves an d 2C resources a ccording to D&M. Peak working interest production is ant icipated to be 60 MMscf/d plus 1.7 kbopd of condensate and LPG. TechnipFMC was awarded the EP IC contract to deliver the project. As of y ear-end 2021, N EA/NI w as 37.0% complet e. The man ufacturing o f equipment h as progresse d as per the schedule and off shore work will begin in early 2022. On 9 January 2022, the rig co ntract for th e four well drillin g ca mpaign was sign ed with EDC for the El Qaher-1 jack-u p rig. The drilling campa ign is expected to begin in H2 2 022. Abu Qir infill drilling progra mme The NEA/NI drilling ca mpaign is exp ected to be integra ted with a broader Abu Qir drilling ca mpaign, providing syn ergies on ca pital expenditure. Energean expects to drill a n infill w ell in Q2 2022 to support production in the Abu Qir concession. An additional three wells, currently under technical review , are expected to be drilled follo wing the NEA/NI drill i ng progra mme. Exploration On 3 Jan uary 2022, an international consortium led by Energean Egypt (50% opera tor a nd Croatia's INA, d.d. 50%) was awarded an exploration licence f or the East Bi r El -Nus concession (Block-8), in the Western Desert of Egypt. T he a wa rd is in lin e with Energean's stra tegy to increase and div ersify its presence in Egypt and reinforces its com mitment to th e country. The work programme for the licence includes a 180 li near km 2D seism ic su rvey, a 200km2 3D seismic survey plus two explor atio n wells, which are expect ed to target estimated resources (in place) of approximately 100 MMboe. Europe Italy Energean is t he second largest oil and gas o perator in Ita ly after Eni, with interests in more than 50 licences at 31 December 2021. In 2021, Energe an signed agreements for the purchase of 100% renewable electri city for its operated assets to deli ver furth er reductions in Scope 1 and 2 emissio ns STRATEGIC REPO RT Page 45 of 273 Productio n Working interest pro duction from Ita ly avera ged 9.9 Kboe/d (41% gas ), at the top end of gu idance of 9.5-10 Kboe/d. During earl y 20 21, Energean increased its positions in the Vega and Rospo Mare f ields to 10 0% ( from 60% and 62 %, respect ively) at nil co st and w ith an economic ref erence date of 1 Ja nuary 2021. ENI reta ins its share of abando nment expenses associated with both fields. Develop ment The Cassio pea project, in whi ch Energean has a 40% no n -o perated equity sta ke, remains on t rack for H1 2024, being 24.2% complete as of 3 1 December 20 21. The f ield will deliver plateau working in terest production rates of appro ximately 60 MMsfcd from the middle of the decade, providin g mo re t han 30% of th e region's gas consu mption. U pside exists within the surrounding area f rom potential satellite tie - back options, incl uding the Gemini and Centa uro prospects. In September 2021, ENI began construct ion of the gas treatmen t plant for th e Cassiopea project (Energean, 40% non -operated interest ). In line with Ener gean 's sustainability strategy, the project will, according to ENI, have close to zero emissions and the insta llation of 1 MWp of photovolt aic solar panels will allow the project to achieve carbon neutra lity. In October 2021, Energea n (49%), alongside oper ator ENI, spu dded a sidet rack from an existing development wel l from th e Calipso pla tform. Ca lipso is a gas fiel d located in the nort hern Adriati c Sea and the well was drilled by the Key Ma nhatta n jack -up rig. T he well was brough t onstr eam in early January 2022 and is producing at ra tes of 4.6 MMscf/d. New gas suppl y agreement ("GSA") signed with A2A On 5 August 2021, Energean Italy and A2A S.p.A. entered into a new GSA for the deli very of ga s commencin g 1 April 2022 (being th e effective da te of termination of Energea n Italy's current GSA with Edison SpA), until 30 September 2023. Under the agreement, Energean will sell its full entitlement production to A2A, wh ich agrees to purch ase, take an d pay for the quantities. For each of Energ ean's concessions, gas will be delivered at the relevant entry point to the Ita lian gas network. The realised price will be the day a head, PSV (Italian hub) price net of entry costs to the Italia n gas netw ork, a nd ha s no penalties or liqui dated damages in case of over and under d eliveries. Hedging In H2 20 21, Energean took advanta ge of the stro ng ma rket pricing a nd hedged 28% of its 2022 Italian gas production, lo cking in an average PSV price of € 53.30/MWh. Greece and Croatia Productio n In th e 12 mon ths t o 31 Dec ember 2021, working interest produ ction from Greece and Croa tia averaged 1.3 Kboe/d (12% gas), slightly lower than the f ull yea r productio n guidance of 1.5 Kbo e/d due to do wntime for scheduled main tenance and union disput e on the Prino s Assets in Greece. Greece Develop ment On 27 December 2021, the € 100 million funding package, backed by the Greek State, for the Epsilon a nd Prinos area development was finalised. € 90.5 mill ion was provided by the Black Sea Trade and Development Ba n k ( "BSTDB") and € 9.5 million directly by the Greek State. The tenor is seven and ei ght years respectively with first repayment not due until 2027. The blended interest rate is 2% . This Facility is non-recou rse to the Group. Following t he signin g of the fu ndin g packa ge, Ener gean ha s recomm enced work on t he Epsilon development which in cludes the completion of the Lamda plat form, tie back to th e existing Prinos complex and completi on of three wells w hich were pre -drilled in 2 019. First oil from the Epsilon de velopment, which ha s 2P reserve s and 2C resour ces of 53 MMboe in aggrega te, is expected in H1 2023. STRATEGIC REPO RT Page 46 of 273 Exploratio n Ioannina and Aitolo akarnania Energean was awarded a 6 -mon th exten sion of the 1st Explorat ion Phase by th e Hellenic Hydro carbon Resource Manageme nt Au thority (“HHRM”) for the Ioa nnina licence on Octo ber 3 2021. In Septem ber, Repsol transferred its wo rking interest and opera torship of the li cence to Energean. The Aitoloakarn ania exploration licence in western Greece was relinqui shed in early 2021. Block 2 In Janua ry 2021, Energean com pleted the a cquisition of Total’s 50% share in Block 2, offshore western Greece. Combi ned with the 25% working interest that wa s acquired through the acquisiti on of Edison E&P, the Group now holds a 75% stake in the blo c k. Helleni c Petroleum hol ds the remaining 25%. A 3D seismic campai gn is scheduled to be carri ed out in winter 2022/23. Carbon Captu re and Stor age Projects Energean is committed to meeting its net- zero emissions t arget by 2050 and lea ding the Mediterranean region’s energy tra nsition. The Prinos CCS projec t p roposal is to provide long -ter m sto rage fo r carbo n dioxide emission s captured from both loca l and more remote emitters. Energean est imates th at the Prinos subsurface vol umes are suffi cient to sequester u p to 100 mill ion tonnes of CO2. In H1 2021, Energea n subm itted its CCS proposal to the Gr eek go vernment, with a view to inclusio n within its recovery a nd resilience pla n, projects with in which wi ll qualify to receive funding from the Recovery and Resili ence fund over the perio d 2021-26. In Jun e 2021, t he Europea n Commi ssion gran ted approval for the inclu sion of the Greek CCS project within the fu nd. In H2 2021, Energean commenced pre-F EED for the Prinos CCS project. It is expected to complete by Q2 2022. In March 2022, Halliburton was awarded a service contract to assess the carbon storage potential of the Prinos basin. Croatia Develop ment At end-December 2021, Energea n was in FEED for the developm ent of the Irena gas f ield. If pro gressed, first gas is antic ipated for Q4 2024. The fi eld has 2P reserves of 0.4 Bcm (2.3 MMb oe) 51 . Montenegro Exploratio n Technical evaluation of Blocks 26 and 30 has been completed. Energea n’s focu s is on the significant biogenic gas potential identified. The Ministry has agreed to extend the deadli ne of the first exploration period in Montenegro by four months from the original expiration date of 15 March 2022 to facilitate the obligated introdu ction of a partner. 51 YE21 D&M CPR. STRATEGIC REPO RT Page 47 of 273 UK North Sea Productio n In th e 1 2-month s to 31 December 2021, production in t he U K North Sea wa s 0.7 Kbo e/d ( 16% gas), ahead of full year guidance of 0.5 Kboe/d due to extended pro duction f rom the Wenlock field. Exploratio n and Appraisal The two- well Gl engorm appraisal programme, in w hich Energean has a 25% n on -operated interest, commenced in December 2020. Drilling o perations a t the Glengorm Sout h appra isal well were saf ely completed in April 2021. The well contained no co mmercial hydrocarbons an d the well was plugged and abando ned. The Gl engorm Central appraisal well spudded in May 2021. It contain ed no commercial hydrocarbo ns and has been plugged a nd abandoned. A com prehensiv e data analysis program i s underway. The results of the Glengorm appraisal programme wil l be evaluated t o info rm forward plans for the P.2215 licen ce. Isabella appraisa l is expected to commen ce in 2022. Commercial Energean has received interest from third parties with respect to the potentia l sa le of i ts UK assets portfolio and is consideri ng its options. STRATEGIC REPO RT Page 48 of 273 Reserves Energean’s year end 20 21 working in terest reserves 52 are 965 MMboe, a 25% increa se vs. 2020 and a 2% decrea se 53 on pro forma 202 0, the latter whi ch includes the acquisition of Kerogen’s 219 MMboe. The increase in reserves versus 2020 was primarily due to the acquisition of Kerogen Capital’s 30% holding in Energean Israel Limited (“EISL”), ad ding 219 MMboe. At 1 Janua ry 2021 54 Revisions and Discoveries Acquisiti ons/ (Disposals) Transfers from / (to) contingen t Productio n At 31 December 2021 Israel Oil MMbbls 100 1 - - - 101 Gas Bcf 3,472 65 - - - 3,537 Total MMboe 730 13 - - - 744 Greece Oil MMbbls 52 2 - (14) (0) 36 Gas Bcf 6 (0) - - - 6 Total MMboe 53 2 - (14) (0) 37 Egypt Oil MMbbls 14 1 - (0) (1) 13 Gas Bcf 567 11 - (17) (52) 508 Total MMboe 114 3 - (3) (11) 103 Italy Oil MMbbls 36 1 - - (2) 34.89 Gas Bcf 249 7 - 1 (9) 248 Total MMboe 79 2 - 0 (4) 78 United Kingdom Oil MMbbls 2 (0) - (0) (0) 1 Gas Bcf 2 2 - (3) (0) 1 Total MMboe 2 1 - (1) (0) 1 Croatia Oil MMbbls - - - - - - Gas Bcf 13 1 - - (0) 14 52 YE21 D&M and NSAI CPR. 53 When co nsidering Ene rgean 2021 2P res erves versus 2020 pro forma 2P reserves (En ergean (includi ng Edison) plus t he acquisitio n of Kerogen’s 30% holding in EISL) . 54 Pro forma Energean (in cludes Edis on) plus the acquisition of Kerogen’s 30% holding in EI SL . STRATEGIC REPO RT Page 49 of 273 At 1 Janua ry 2021 54 Revisions and Discoveries Acquisiti ons/ (Disposals) Transfers from / (to) contingen t Productio n At 31 December 2021 Total MMboe 2 0 - - (0) 2 Total Oil MMbbls 204 5 - (15) (4) 187 Gas Bcf 4,309 87 - (20) (61) 4,315 Total MMboe 981 55 21 - (18) (15) 965 Present Value of 2P R ese rves 56 ($ million) 7,040 Adjusted TopCo 57 Group Net Debt Y E21 ($ million) 103.6 55 Figure sh own differs t o the sum of the countries du e to rounding. 56 YE21 D&M CPR’s High Case ( based on forward curve) . 57 The Gro up excluding Israel a nd Greece. STRATEGIC REPO RT Page 50 of 273 Corporate Social Responsibility Our approach At Energean , we are de dicated to crea ting sustainabl e and lasting value for a ll o ur stakeholders, while adhering to the h ighest standa rds of corpora te so cial responsibi lity and maintaining the viability of our business m odel. Guided by our po licies, com mitments and international best practice, we ha ve implemented severa l initiatives to ma ke positi ve contributions to th e environment and society. Notabl y, among these: • We have pl edged to become a net-zero em itter by 2050 a nd are co mmitted to setting scien ce -ba sed targets to reduce our green house gas emi ssions. • We have al igned our reporting w ith th e Task Force on Climate -R elated Financial Disclosures (TCFD) reporting recommenda tions, th e gu idelines of the Global Reportin g Init iative ( GRI) and the Sustainability Acco unting Standards Board (SASB). • We have engaged with the Carbon Disclosure Proj ect (CDP), the Maala Index and Sustainalytics, with results placing us in th e top quartile of ESG ratin gs. • We are a signato ry of the United Na tions’ Gl obal Com pact (U NGC) and the T erra Carta, the Sust ainable Markets Initiative of His R oyal Highness the Pr ince of Wales, and w e a re a cont ributor to the United Nations Sustai nable Development Goals (SDGs). We valu e o ur em ployees as the k ey to o ur su ccess. We are commit ted to crea ting an inclu sive and attractive workplace and a dopt a proactive stance in saf egua rding the health , safety and secu rity of our people. In order to bring together a unique workforce with dif ferent cultures a nd diverse backgrounds, we frequently underta ke initiatives w here our people get to meet, bond o ver, and share t heir cultures, ideas and perspectives. In addition, we aim to build strong bonds and engage and a dd value to the commun ities in which we operate. Our dynami c CSR program is specif ically designed to support l ocal communities through a wide range of initiatives and actions, an d maintai n an open, bi -directio nal dialogue through transparent communicatio n channels. We recognise that oil a nd gas operati ons have a wide -ranging impa ct o n the environmen t and society. To miti gate this impact, we a re commi tted to a chieving net-zero emissio ns across all our operated a ssets by 2050 58 . In 2021, we have delivere d a year - on -y ear 8% reductio n to ca rbon emissions in tensity, when considering 2021 perfo rmance versus pro form a performance on an equity share accou nting approach. Our CSR policy Our CSR po licy is embedde d in our company va lues and is guided by internati onal standards an d best practices. As such , it is fundamen tal to how our business operates. Our CEO, Board of Directors and Senior Mana gement are responsible for m onitoring Energean ’s s usta inability object ives and a re supportive of our desire to l ead the Mediterranean regio n’s en ergy t ransition, through a stra tegic focus on gas. Our h igh ethical standards are applied to all aspects of o ur bu siness model, as well a s in teractions with our stakeholders. We have designed our CSR Policy in accordance with internationally recogni sed standards and industry best pract ice. Our CSR pri orities are based on our sta keholders’ needs a nd expectations, and we prioriti se th e a reas that n eed o ur greatest a tten tion. As suc h, our CSR policy is focused on four key areas: our people, hea lth & safety, the environm ent, and community relations. Energean is always seeking to improve its sustainable development agenda by collaborating with governments, the pri vate sector, and society, as well as throu gh rec eiving feedback f rom its stakeh olders, in order to ensure align ment with best practi ce techniques. Corporate Governance is a top priority Strong corporate govern ance is a top priority that acts a s a guide towards fulfilling o ur corporate an d social responsibilities, whilst ensu ring the trust of o ur stak eholders. In acc ordance w ith this and best 58 Scope 1 and 2 emissions. STRATEGIC REPO RT Page 51 of 273 practice, we a re alwa ys striving to enhance o ur bu siness productivi ty whil st maint aining an agile response ca pability when it comes to changes in the ma cro environment. Furthermore, we continue to strengthen the supervisory function to management and internal control in order to maintai n and enhance our ef ficiency and transparency . Equality and transparency Our Co de of Con duct governs the w ay we work and conveys a cl ear message to all staff and stakeholders on h ow we comm it to comply with l aws and regu lations, as well as our ethical standards. The Code of Conduct is clear on our zero tolerance for bribery , corrupti on and other forms of fi nanci al crime and thi s position is strongly reinforced by Energean’s Managem ent and Board. The Code also covers our position and co ntrols with regards to huma n rights, lobbying and a dvocacy, prevention of the facilitation of tax evasion, anti -slavery and the General Data Protection Regul ation. We require those who deliver services to us, or who act on our behalf, to abide by the Code and meet the requirements of s pecific business ethics a nd compliance clauses in their contracts. This ensures that third parties do not cause us t o breach our own Code. Prior to awarding contracts, we conduct risk -based third-party due diligence to assess risks rela ted to ow nership stru cture, anti -bribery an d corrupti on, sanctions, tra de restrictions, huma n rights an d labour conditions. Bribery and corruption It is our policy to conduct all o ur business in an honest and ethical manner, and comply with all applicable anti-bribery laws, incl uding, but not li mited to all applicable local laws where Energean op erates and the U.K. Bribery Act 2010, and t o accurat ely reflects all transactio ns on Energean’s books an d records. We take a zero-tolerance approach to bribery and corruptio n and a re committed to acting professionally, fairly and w ith integrity in all our business dealings and rel ationshi ps wherev er we operat e. We actively monitor and man age risks from bri bery or ethical misconduct, a nd we run an anti -co rruption a nd an ti- bribery complian ce programme, act ively overseen by the Bo ard. Our contribution to the 1 7 Unit ed Nations’ Sustainab le Development G oals We recogni se th at, as an energy compan y, we have an o bligation to contribute to the United Nat ions 17 Sustainable Development Goals (SDGs). For this reason, we link our main actions and initiatives to these g oals. The ta ble below show s Energean’s k ey 202 1 C SR act ivities, alongside the respective SDGs that they serve. SDGs Our commi tments and actions • “Back to Schoo l” with Energea n: we purchased and d onated school supplies, classroom equipment, and stationery to 3 socia l institutions, 1 organi sation and 3 schools, supporting over 500 stu dents a nd their f amilies in need – Kavala & the Island of Thassos, Greece. • “Back to School” w ith Energean in Italy - i n collaboration with “Caritas” (a Catholic organ isation for charity), we donated scho ol supplies and stationery, helping a Charity Center and 50 families & their children – Chieti Province, Italy. • “Back to school ” with Energean in Egypt: 400 scho ol bags were bought, delivered, and do nated by t he Energe an Team to ch ildren and young stu dents in need. Our colleagues purchased and do nated school suppli es, equi pment, and stationery to fill school bags – Mea dia villa ge, Egypt. • Energean and AQP do nated furniture to those in need. Energean donated office furniture to the Dar Al Orman Associat ion, while Energea n’s joint venture, Abu Qir Petroleu m (AQP), supported the local community of Meadia Village by donating school desks to Zainab Abdel Wahab Primary Azhari Institute - Egypt. • Packed and do nated 70 “S weet Packages” (“Mishlo ach Man ot”) to a wo men’s shelter for the holiday of Purim ahead of the 2021 Intern ational Women’s Day - Haifa, Israel. • For the second year, donated 50 food packages to elderly and lonely people on Passover Eve, i n collabora tion with th e NGO “Lev Cha sh” (“Feelin g Heart”) - Haifa, Israel. STRATEGIC REPO RT Page 52 of 273 • Offered 100 Super Ma rket Gif t Vouchers to our fe llow citizens in need, f or their festive Easter Sunda y Table, responding to the call of the R egional Unit of Kavala. T he gift vouchers were han ded -over to the H oly Diocese of Ph ilippi, Neapolis and Thassos to strengthen its important social activities in the area – Kavala, Greece. • Supported underprivi leged families durin g R amadan, by donating 200 food boxes to meet essential needs in Mea dia, the Abu Qir operations site location – Egypt. • Donated 65 packages fi lled with foo d and produ cts to families in need a nd the elderly, on the Eve o f Rosh Hash ana (the Hebrew n ew year), in colla boration with the NGO “Lev Cha sh” (“Feeling Heart ”) – Hai fa and its suburbs, Isra el. • Continued our excellent HSE performa nce with more t han 11 mill ion ma n -h ours with no Lost T ime Injuries (LTI) in the co nstruction of t he Energean Pow er FPS O in Singapore, and almost 1 million man -hours (with out LTI) in all Energean sit es. • Maintained the ISO 45001 H ealth and Safet y Management System certifica tes in al l our operated sites w here they already exist and esta blished i t in the remaining asset o f Prinos in order to be certified in 2022 . • Donated health an d medica l supplies to the nursing and supportin g per sonnel of the state owned “Komanski Most”, a f oundation that supports children, y outh and adults wit h moderate to severe men tal or developmenta l disabilities – Montenegro. • Offered paid internshi ps to 9 college studen ts in Greece. • On 5 June (World Environment Day), Energean aligned with the United Nations’ 2021 them e “ Ecosystem Restoration ”, focu sed on posit ive a ctions and increased environm ental awareness: • Greece: ▪ Organised an environmenta l webinar for our coll eagues and Middle School students & above ti tled “Our Plan et’s Ecosystem Restora tion”. • Egypt: ▪ Hosted a webinar for our collea gues titled “Biodiversity in the Mediterr anean ”. ▪ Organised beach clean -up acti vities at Meadia Beach. ▪ Hosted sessions on beach preservation and environmental aw areness. ▪ Renovated the Sports Clu b of the Villa ge of Meadia. • Israel: ▪ Supported the production of educational video s for elementary school students focusin g on environmental preserva tion. • Monten egro: ▪ Purchased and plant ed trees (Indian Li lacs) in the City of Bar. • Awarded 4 Master’s degre es Clean Energy scholarships to stu dents at the University of Haifa and the Technion to reward excellence and promote academic research on clean energy - Israel. • Hosted a webinar fo r our colleagu es on harassment and abuse, dealin g with the recovery process of harassment traum a and abuse and how o ne can face challenges in day - to -day situation s. • On Holoca ust Rem embrance Day, Energea n organi sed a live webi nar with a Holocaust survivor, in collaborat ion with the NGO “Living Room Memorial” (“Zikaron BaSal on”) - Energean’s Ha ifa offices, Israel. • Held a live awareness webin ar titled “Mediterranea n Biodiversity and Mar ine Conservation ”, by part icipating an d joi ning in the launch of “The UN Decade of Ecosystem Restoration” and reflec ting Energe an’s vision t owards a sustai nable future. • Hosted an open live discussion/webinar on Sustainability, titled: “Ou r People, Our Plan et: Energean’s ET HOS i n act ion” bet ween Energean’s CEO Mat hios Rigas and Professor David Grayson. STRATEGIC REPO RT Page 53 of 273 • > T ranslated (in collaboration with Maala) the Executive Summary of the book “All In”, in order to make it accessible to the Israel i community . The book is wr itten by Professor David Gra yson, a worl d-ren owned CSR expert and autho r. • During 2021, th e overall perce ntage of w omen at Energe an increased f or a consecutive yea r from 15% to 18%. Board representa tion decreased to 3 0% • Welcomed Katerina Sardi to Energe an as Country Ma nager and Mana ging Director of Energean Greec e. • Energean recycled 96 % of water wi thdrawals in its productio n sites. • Energean recognises the global demand and focu s on providing cleaner energy. Over 70% of our reserve base an d annual product ion mix is gas • Number of Empl oyees: 604 as a t 31 December 202 1 (versu s 620 a s at 31 December 2020) • Number of Nationalities: 24 as at 31 December 2021 (versus 19 as at 31 December 2020) • Donated equipment tha t is import ant to blind and severely visual ly impaired people in order to serve their daily needs, in collaboration with the non - governmental and non - profit “Organisati on of the Blind of Bar and Ulci nj” – Montenegro,o n White Cane Safety Day (October 15th). • Supported and ra n a longside the Muscular Dystrophy Associ ation of Greece (MDA Hell as) an d patien ts in wheelcha irs, by participating in the 38th Athens Classic Ma rathon events for 2021 (5K & 10 K races), with our CEO, Ma thios Rigas, leading ou r co mpany’s ru nnin g team. MDA Hellas is a non -profit organisation tha t supports people that suffer with n euromuscular diseases. • Donated to MDA Hellas for the operat ion of the N euromuscula r Diseases Un it of the “AHEPA” University General Hospital (“AHEPA” Hospita l) of Thessa loniki, which w ill serve abo ut 350 peo ple in t he comi ng year, children and adults - the Unit covers the geogra phical area of al l Northern Greece. • Donated, in collaboration with Dar Al Orman Association, necessary equipment (artificial/prosthet ic limbs, whe elcha irs, and hearing aids), coveri ng the needs of all underprivi leged people with disabil ities in Meadia village - Egypt. • Supported “Fresh Start ” to get back in the wa ter: a group of 15 teen agers with special needs in Isra el, who participate in empowering activities, a co mbination of sailing and educatio nal sessions, focusin g o n teamwork a nd leadership values. • Supported (donation and sponsorship) the “Athlet ic Club o f Kavala - Department of Wheelcha ir Basketball”. In li ght of the team’s first eve r participation in a European Champio nship (Euro Cup’s Preliminary Round), we covered the fixed needs and expenses o f the Department for the entire Wheelchair Baske tball Season 2021 - 22 - Kavala , Greece. • Continued to support thr ee Paralym pic sw immers in Isra el (Ilan Ha ifa Swimming Sport s Center) i n th eir journey and their su ccessful part icipation in the Tokyo 2020 Paralym pic Games via month ly financial ai d an d soci al media awareness. Special grants were also off ered to th e swim mers for exceptiona l STRATEGIC REPO RT Page 54 of 273 achievement s in global competitions. Our company has proudly su pported these world champi ons for the last three yea rs in a row. • Continued the support to “Etga rim” for the third year, an NGO dedicated to the empowerment a nd social integration of peo ple with disabiliti es through outdoor sports. This year Energean colleagu es ran 5 and 8 ki lometers in their “Spring Run” delivering a me ssage of incl usivity – Israel. • Installation of accessibility aids to ensure that visitors with disabilities enjoy touristic sites that are toured by thousands of visitors every yea r - in collaboration with Israel’s Nature and Parks’ Au thority. • Grand sponso r of th e 21st “Trof eo Del Ma re” (“T he Tr ophy o f the Sea”), the International Ma ritime Awards 2021, performed in Mari na di Ragusa – Italy. • Restored the beach and ren ovat ed the Sports Club of the Village of Meadia – Egypt. • Continued the support to th e Hof HaCa rmel Regional Council in promoting community and envi ronmental projects - Israel. • Continued the suppo rt to “Etgarim” - a Haifa Sailing Club that em powers people with disabilities and yo uth with special needs throu gh outdoor sports - Israel. • Recycled 90.5% of the waste generated durin g 2021 in producti on sites. • Maintained the ISO 14001 Environment al Management System certif icates in al l our operated sites. • Energean’s Egyptian Abu Qir Petroleum ( AQP) joint ven ture ( JV) partners received their first certificate for waste segregati on and pa per recycling in Egypt. A QP becomes the first Oil & Gas JV i n Egypt to ent irely (100%) recycle its paper, cartons and plastic waste f rom all its offices an d operatio nal sites (onshore and offshore). Energean’s Cairo bra nch has f ollowed the same approach o f waste segregation a nd recycli ng, by coo perating with “Go Clea n”, a recycling solu tions company – Egypt. • Energean is tak ing meaningful actions to fulfil its commitment to become a net-zero emitter by 2050. • Energean’s strategy to Net -Zero emissions by 2050: • Short- term plan – by 2025. • Medium -term plan – by 203 5. • Long- term plan – by 2050. • Improved our Carbon Disclo sure Pro ject sco re to a B fro m a B -, rega rding t he climate change questio nnaire. • Aligned our annu al reporting to the TCFD recomm endati ons. • Successful roll out of ‘green electricity’ in Greece, Israel, Italy , and the EDINA operative site in Cro atia. • Zero oil spills during 2021, whi le maintaining a completely clear record since the beginning of ou r operations (2008) • Joined th e environmenta l effo rt of the Ministry of Environmental Protectio n i n cleaning the Israeli co astline after a lea k from a ta nker (not a ssociated with Energean). Ener gean deplo yed a team o f professio nal clea ners to the coa st of Haifa’s suburbs for a 2 -day clea n-up activity, where 90 bags/60 0kg w ere collected. • Implemented a series of samplin g, measuremen ts, laboratory a nalyses and monitoring o f biochemical para meters of the seawater and the seabed soil - Prinos, South Kaval a, Greece. • Maintena nce of Telemetric Sta tions in surf ace wa ters of Nestos River Delta , Lakes Vistonida -Ismarida and Thassos • Island Managem ent Body – Nort heastern Greece. • Donated 200 trees i n th e occasion of Tu BiShvat, “Th e New Year of the Trees and Na ture” celebration. The donati on to the Israeli JNF (Jew ish National Fu nd) will contribu te to the re -forestation of No f-HaGa lil (the Galilee View) fo rest in Nazareth - Israel. STRATEGIC REPO RT Page 55 of 273 • Restored the beach and organised beach clean -up a ctivities at Meadia Beach – Egypt. • Continued supportin g the Israeli Nat ure a nd Pa rks Au thority in pro tecting an d conserving Israel’s natu re, l andscapes and heri tage sit es, through educat ional programs on na ture preserva tion. Our latest collaboration , the support of a project to make to uristic sites accessible to people w ith disabilities. Energean collabo rated with: • UN Global Com pact. • UN Global Workin g Group pa rticipa tion. • Maala, a non-profit, CSR standards-setting organisation in Israel, which has set a dedicated CSR index on Tel Aviv Stock Exchange. Maala’s CSR Index is an ESG rati ng sy stem used a s an a ssessment tool, bench marking Israeli companies on thei r CSR performa nce. Energean was ra ted at Gold Level, for a second year in a row , at the 2021 Maala ESG Index – Israel . • Managemen t body of the Nestos River Delta, Lakes Visto nida -Ismarida and Thassos Island – Nort heastern Greece. • The Greek Embassy – Podgori ca, Mont enegro. • “Caritas Diocesa na”, a Catholic orga nisation for charity - Chieti Province, Ital y. • “Go Clean”, a recy cling solutions com pany – Egypt. • The Jewish Na tional Fund (JNF) – Israel. • The Regiona l Unit of Kavala - Greece. • The Munici pality of Bar – City of Bar, Monten egro. • The Italian Naval League. • The American University of Cairo – Egypt. • “Etgarim”, an NGO dedicated to the empowerment a nd so cial integratio n of people with disabil ities through outdoo r sports - Haifa, Israel. • “Athletic Club of Kavala - Department of Wheelchai r Baske tball” - Kaval a, Greece. • “Organisatio n o f the Blind of Bar and Ulcinj”, a non -governmental and non-profit organisation which a ims at bringing t ogether blind and severely visua lly impaired people - Mo ntenegro. • The Nature an d Parks Authori ty – Israel. • The Holy Dioce se of Philippi, Neapolis and Th assos - Northeaste rn Greece. • Zainab Abdel Waha b Primary Azhari Institu te - Egypt. • Israeli Paraly mpic Committee. • Democritus University of T hrace (DUTH), Department of Environmental Engineering – Xant hi, Greece. • Dar Al Orman Asso ciation – Meadia village, Egypt. • “Living Ro om Memo rial” (Zikaron BaSalon), a Holocaust Rem embrance NG O - Israel. • “Together for Children”, a n association of NGOs in the f ield of child welfare - Athens, Greece. • The Universi ty of Haifa and the Techn ion - Israel. • Associatio n of Para plegics and Disa bled peo ple of the Ile ia Prefect ure, Southwestern Greec e. • “Lev Chash” (“F eeling Heart”), a loca l NGO in Haifa , Israel. • MDA Hell as (the Muscular Dystro phy A ssociatio n of Greece), a non-pro fit organisation tha t supports people that suffer with n euro muscular diseases – Greece. • “Fresh Start ” a group of teen agers with special needs, who parti cipate in empowering a ctivities, a combina tion of sai ling and educa tional sessio ns, focusing o n teamwork and leadership valu es – Israel . STRATEGIC REPO RT Page 56 of 273 Excellence t hrough our p eople Our people are critical to our success, and we are committed to fostering an inclusive and high - performance culture based on trust and colla boration, to have fulfilling roles a nd careers, and shape the Energean of the fut ure. 2021 was a y ear of significa nt gro wth for Energean and our peopl e, wi th the i ntegrati on of Edison E& P and the Karish development sharing the central stage. We e xpanded our presence in Italy, Eg ypt, Croatia, an d the UK, welcom ed more than 250 col leagues to the team a nd opened new offices in Milan for our Italian busin ess, which will also accomm odate the technical centre of excellence. This grow th fundamentally resha ped our peo ple struct ure, systems, processes. W e aimed to maintain a positive and collaborative work environment to enable ou r peopl e to fu lfil th eir potenti al, despite t he challenges tha t the ongoing COVID pandemic cont inued to pose. One of the core ch allenges af ter th e com pletion of the Edison E&P acquisitio n wa s to finalise the new organisation structu re t o enable the fu lfilment of o ur corporate growth strategy . T he new struct ure that was introduce d in December 2020 allo we d local business u nits greater a utonomy, whilst still receiving support fro m the various group fun ctions who can allocate th eir resources acc ording to the company needs. In parall el, we ran the implementati on of the SAP SuccessFactors suite, a market lead er in HR software. This has created a unified cloud -ba sed platform for employees to fac ilitate HR activi ties, such as recruitment an d o nboarding, learning an d development and performance ma nagement. Th e suite has been la unched in three stages wi th th e cent ral da tabase and rec ruiting module being launched first a t the beginning of July 2021, the learning platform in September and onboarding and performance management in December. SAP SuccessFacto rs, alo ngside th e Energean Intranet ETHOS has al lowed our people, especial ly those who joined Energean th rough the acquisit ion of Edison E&P, to develop a deeper understan ding of people, processes, and cul ture. Talent acquisition and management The new organisat ion structure created unique oppo rtunities for new and e x isting em ployees to further develop their career, as new roles were crea ted across mo st functions in 2021. We used the SA P Suc cessFacto rs suite a nd colla borated with speci alist o rganisations to drive successful talent acquisit ion. In December 2021, we als o launch ed internal an d external career sites on ou r intranet and w ebsite to im prove the overall candidate experience and facilitate a mo re transparen t ta lent acquisition pro cess. This also provided external candidates with the opportunity to understand th e company cul ture, benefits and details on the appli cation process. In parallel with the career site, we launched an onboarding platform where new emp loyees can review all HR and Co mpliance policies, receive an internal mentor an d familia rise themsel ves w it h the Energean cultu re. For ano ther yea r, we in vested in developin g the l eaders o f the future by offering academic scho larships, internships f or gradua tes and undergradu ates as well a s external professional training o pportunities for our existing staff. Performance manage ment Following the Energe an Voice Survey in 2020, an a ction pla n was set fo r 2021 to address some o f the key to pics iden tified by the engagem ent su rvey. We ca refully realigned our performance managem ent process and policy an d introduced a new co mpetencies f ramework to provide a guide to our people about the behaviou rs that are underpinned by our valu es. For the first time, we i ntroduced a con tinuous performance and feedback mecha nism to enable ou r people to get real- time feedback an d guidance to build their strengths, develo p their career a nd together shape the Energean of the future. Additionally, we i ntroduced the group ro le prof iling a nd grou p grading stru cture. T hrou gh rol e profi ling we are able to systema tically identify the skill s, qualification s, and the accountabilities of the differen t roles in the organisatio n. Role profiling allowed for the smoother integration of our new colleagues within the Energean structu re and for better u nderstanding of the impact th eir role has with in t he organisa tion. STRATEGIC REPO RT Page 57 of 273 This will further assist our people to set clear career paths from one role to another within Energean. The grading system in conjunction with performance management, skill assessments an d training allows us to make more reli able and trans parent decisions abo ut hiring, promotion, and leadersh ip development. Employee wellbeing We strive to uphol d a positive, open and honest cu lture to enable ou r peopl e to fu lfil th eir potentia l. For another year, COVID-19 lockdow ns co ntinued to chall enge us and th e wa y we work and intera ct with ea ch other. Our employees’ welfare during this chal lenging period was even mo re important. As a resul t, early in 2021 we intro duced a gl obal Employee Assistan ce Progra m offering professional support to address any personal challenges affecting their wel l -being. We sought to promote other tea mbuilding activities, including online co oking, run ning f or cha ritable causes, as well as hosting a variety of workshops and webinars. We also ensured that all our employees groupwide were covered wi th privat e medical insura nce. Employee engagement We en gage wi th ou r people through regular team meetings, messages from the CEO and through our intranet. We aim to have an open culture where peo ple can contribu te towards our success. The int egration with Edison E&P t riggered th e need to reshape not only our organisation bu t also our culture. In 2021, we designed a culture su rvey to understa nd how people perceive our cult ure and re define the way we beha ve, work, and interact wit h each ot her to meet the needs of our multi cultural group. Th e process will launch in early 2022 and the aim is to analyse the resul ts and define the new Energean cul ture of tomorrow within the year. We respect the rights of a ll employees to join a legitimate trad e uni on and barga in collectively - we have collective bargaining agreem ents in place. Robert Pec k is t he repre sentati ve of the emplo yees on the Board – as position he h as held since 2019. Diversity and inclusion Our current and future success depends on a diverse range of talented people. We aim to treat everyone fairly, equally, and without prejudice, irrespective of gender, race, nationa lity, age, disability, sexual orientation, or any other discriminatory attributes. In 2021, we continued to participa te in the D&I workgroups organ ised by the UN Compact Gl obal Network UK. During 2021, we increased t he overa ll percen tage of women at Energea n for a second consecutive year from 15% to 1 8% and we have a healthy mix of empl oyees from three differen t gen eratio n s. Board representation decreased slight ly from 33% to 30%, as a result of the increase in the number of Board members from 9 to 10 peo ple in 2021 (the nu mber of wo men stayed fla t y -o-y). In 2021, for the fi rst time, we ha ve reported the gender pay gap. Energean h as a ga p of ( 18 )% at media n hourly wa ge rates. We aim to provi de an optim al workin g environment to suit the needs of al l employees, incl uding those with disabilities. The Co mpany welco mes job applications from tho se with disabilities. We are proud to have an employee retention rate of 90.6% despite a decrease of 7.6 % compared to 2020. The retention was affected largely by ret irements, following the integration of Ed ison E&P with Energean. Headcount by seniority and gender Gender bala nce by sen iority Male Female Total Board 7 3 10 Executive Comm ittee 8 5 13 Senior Man agement 16 6 22 Middle Mana gement 35 9 44 Rest of sta ff 432 83 515 STRATEGIC REPO RT Page 58 of 273 Gender balance by seniorit y Headcount by age Category Number % vs. tota l no. of employees 2021 2020 2021 2020 Up to 30 years old 33 37 5% 6% 31 to 50 yea rs old 393 392 65% 63% Over 51 yea rs old 178 191 29% 31% 84% 80% 73% 62% 70% 16% 20% 27% 38% 30% 0% 20% 40% 60% 80% 100% Other Employees Middle Management Senior Management Executive Committee Board of Directors Male Female 33 393 178 Up to 30 years old 31 to 50 years old Over 51 years old STRATEGIC REPO RT Page 59 of 273 Headcount by seniority and age range Headcount by country At the end of 2021 our workforce decrea sed from 620 employees to 604, representi ng 24 different nationalities. The Edison a cquisition brou ght over 250 employ ees to Energean in 2020. Country No of employees 59 2021 2020 Greece 295 313 UK 27 29 Montenegro 2 2 Cyprus 5 6 Israel 41 30 Egypt 42 60 Italy 183 176 Croatia 1 4 Total 620 604 59 Excludes JV partners. 6% 67% 68% 59% 23% 10% 26% 32% 41% 77% 90% 0% 20% 40% 60% 80% 100% Other Employees Middle Management Senior Management Executive Committee Board of Directors < 30 years old 30 - 50 years old > 50 years old STRATEGIC REPO RT Page 60 of 273 Employees per country Providing a safe working environment Protecting the health and safety of all individua ls affected by our corporate a ctivities is our top priority. In 2021, we improved our safety performance compared to 20 20 via a cultural shift away from discipline - driven t o co mmitment -based com pliance. This enabled us to effectively t ackle COVI D -19 issues and manage the lo ng-term via bility of our business. Key HSE metrics LTIF 60 2021 Pro for ma 2020 2020 2019 Employees 0.98 0.00 0.00 0.00 Contractors 0.25 0.72 0.73 0.29 Personnel to tal 0.33 0.63 0.65 0.28 TRIR 61 2021 Pro forma 202 0 2020 2019 Employees 1.97 0 0 0 Contractors 0.62 1.20 1.46 0.88 Personnel to tal 0.77 1.05 1.31 0.84 FAR 62 2021 Pro forma 202 0 2020 2019 Employees 0 0 0 0 Contractors 0 0 0 0 Personnel to tal 0 0 0 0 60 LTI Fr equency: The numbe r of Lost Time Injuri es (fatalities +LTIs ) per million h ours worked. 61 TRIR: Th e number of Tot al Recordable Inju ries (fatalities + LTIs+ r estricted work cas es + medical treatm ent cases). 62 FAR: The n umber of fataliti es per 100 million hours w orked. 295 183 42 41 27 5 2 1 0 50 100 150 200 250 300 350 Greece Italy Egypt Israel UK Cyprus Montenegro Croatia STRATEGIC REPO RT Page 61 of 273 Humanising our HSE mana gement s ystem The cornersto ne of ou r zero injuries a chievement i s a w ell -structured an d continuously impro ving HSE Management system, providing the necessary framework for ensuring the safety of people, the protection of th e environment and the integrity o f the Company’ s assets. Our integrated HSE Manage ment System is aligned with the requirements and principles of international standards and European safety directives, and provides the required structure for maintaining the above principles across all Energean assets t o reach our health and safety targets. Shifting our HSE approach fro m rule -dominated requirement s t o a more interactive hu man -focu sed approach, highly con tributed to improvi ng t he effectiveness of our HSE Managem ent System. Encouraging personnel interest in sa fety and creating open dialogu es on improving workflows ha s increased staff saf ety performance and im proved the HSE Managemen t System. All o perated assets in Italy a re cert ified to I SO 45001, w hile the Prinos area asset s in Gr eece are in the process of certifica tion. Our integrated HSE Management System is structured acro ss two levels: the group level and the country level. The gro up leve l is b ased o n tri ed an d tested, internationally recognised best practices and standards, wh ile the country level i ncorporates all relevant na tional regulations. It is struct ured arou nd a classic ‘Plan - Do -Assess- Adj ust’ cycle an d comprises three disti nct tiers covering Energean ’s activities in all operated area s. Managing risks and opport unities efficiently By implementin g our HSE management sy stem, we are confi dent that we can: • Identify and effi ciently manage all emerging and identi fied risks, associated wi th our operatio ns • Prevent events escalati on that coul d potentially affect stakehol ders and Energean • Identify opportu nities for improvement. In 2021, we rea ched 2.5 milli on man -hours free of Lost Tim e Injuries (LTIs) at all Energean sites, an d 15 million man -hours free of LTIs at th e Energean Power FPSO development an d construct ion project in Asia. Corporate Major A ccident Prevention P olicy (CMAPP) Energean’s Board of Directors is committ ed to promoting, enhancing and sustaining a strong health and safety culture, as well as the implementation o f measures for mainta ining safet y, enviro nmental protection and co ntrol of major acci dent hazards as core corpora te values. Energean’s Board approved Corpo rate Major Acciden t Prevention policy (CMAPP) recognises: • The harmful potential o f major accidents in the upstream oil and gas sector a nd how prompt decisions and acti ons can preven t them from ta king place STRATEGIC REPO RT Page 62 of 273 • Its responsibility to contro l the risks associated with major accidents and conti nuously improvin g these controls • The necessity of advanced technolo gy and the implementat ion of good oilfield practices • Its commitment to achieve the highest sta ndards of HSE perform ance • The importan ce of the HSE Managemen t System and its effecti veness. During 2021, all risks were s uccessfull y identified and control led, with no major accidents recorded. Leadership and commitm ent HSE leadership and accounta bility starts with the CEO, who ensures that all necessary steps are taken to achieve the hi ghest possibl e level of HSE perform ance a cross th e busin ess. The CEO proposes to th e Board of Directors all actions and acti vities related to HSE deem ed necessary to fulfil Energean’s commitmen ts. In addition, the CEO defines the strategy and approves act ion plans suitable to cont rol and mitigate ident ified risks and takes advanta ge of new opportun ities. During 2021, more than 230 Senior Managem ent visit s and site walk -aroun ds were performed at Energean’s operated sites a nd for the FPSO project in Singapo re. Crisis Management Pla n (CMP) Energean’s Crisis Management Plan (CMP) co vers all a ssets an d o perations, and i s form ally tested to ensure it m eets al l requirement s at the strategic, incident management and response level. Early identification of a potential crisis and i mmediate a ction in the event o f a crisis, provides th e necessary management assurance for: • Protecting huma n lives • Protecting the enviro nment • Protecting tangible a nd intangible assets • Ensuring business conti nuity and sustaina ble development • Protecting the Compa ny’s reputation. During 2021, more than 275 drills and exercises were performed at operated sites and for th e construction and develo pment of the Energean Power FPSO. Legal and regulatory compl iance Compliance with all applicable HSE legi slation and regulations is a f undamental requiremen t of Energean’s HSE Ma nagemen t Syste m. Energ ean conducts its opera tions at all w orkplaces in acc ordance with the correspon ding local laws and regula tions, and European and int ernational standards. During 2021, more than 720 HSE audits were performe d on o perated sites and for the constructi on and development of the Energean Pow er FPSO. Of this, 680 a udits were in relation to the FPSO in Singapore. Competence manageme nt and training Energean m aintain s an ongoing competence and assura nce ma nagement scheme and provides an adequate level of HSE training. All Energean personn el, are sui tably train ed to meet the standards set by the Sta tutory Bodies and the Company ’s requirem ents. This ensures the o ngoing development of a competent work force which, in the long term, benef its both individuals and Energea n. During 2021, all employees partic ipated in interna l HSE training ses sions. Mo reover, dedicated tea ms participated in external certified training according to ongoing needs. More than 1,700 training hours were provided to personnel worki ng in Energean sites, while more than 4,800 training hou rs were provided to personnel work ing on the Energean Power FPSO project. Contractors’ manag ement Energean eva luates and selects contracto rs based on their ability to provide services acc ording t o the project, con tract requi rements, HSE & climate cha nge policies, as w ell as specific local requirement s. Criteria for pre-quali fication, sel ection, evaluat ion and re ‐ evalu ation of contractors are esta blished to assure suitabili ty and efficient monito ring of contractors’ performance. STRATEGIC REPO RT Page 63 of 273 During 2021, more t han 40 contractors were evaluated against this HSE criteria, both before and af ter the completion of their work, and were deemed to ha ve performed their opera tions i n a n appropriate manner. Occupational health An annual h ealth programme is provided to all emplo ye es to assure that th e highest levels of hea lth and wellbeing a re maintain ed. All employees and contracto rs h old medical fitness certificat es based on the requirements of thei r position. During 2021, all em ployees in operated sites partici pated in the annu a l hea lth progra m while zero work - related illnesses occu rred. HSE awards and records Energean continued delivering upon its exemplary HSE track record. At Energean, we believe that protecting the environment and the hea lth & safety of ou r staff and stak ehol ders, is a key factor in the overall success of o ur business and we are com mitted to co ntinuously im proving in all aspects of HSE. For the seco nd consecu tive year, Sembcorp Ma rine’s A dmiralty Yard was awarded a Safety a nd Health Award Recogn ition f or Project s for Saf ety Excellence for Energean's Kari sh Projec t. At th e end of 2021, the project completed 15 mi llion -man ho urs with no LTIs in Singapore. Our COVID-19 response Throughout 2021, the COVID-19 pandemic continued to impact countries around the worl d , spurring new lockdowns and business di sruption s. As a result o f this, Energ ean’s nu mber one priority was to protect the health an d wellbeing of its people and to ensure bus iness conti nuity. Energean has taken significant actions to miti gate the impact of COVID-19 on its bu siness, including: • Specific control measu res, social distancing, and working from home (more th an 50% of office workers worked from home in 2021) to protect its employees, in line with local regulatory obligations. • Suitable train ing to provide the necessa ry level of know ledge and self -protect ion. • Provision of perio dic COVID-19 tests • Implementati on of Business Con tinuity Plans a t al l workplace s, providin g suit able m itigation measures ensuring opera tional co ntinuity • Closely moni toring official natio nal guidance. The below gra ph refers to t he percentage o f coronavirus ( COVID -19) inf ections wit hin the Energea n employees in 2021. T he infected ca ses constitute 10% of ou r wo rkforce (up fro m 3% in 2020). All inf ected employees have f ully recovered an d returned to their du ties. 10% Infected Cases Total Em ployees STRATEGIC REPO RT Page 64 of 273 Our Health and Safety p erformance in numb ers Occupati onal safety 2021 Pro forma 2020 2020 2019 Employees ma n hours worked 1,015,866 1,130,183 650,405 708,080 Contractors ma n hours worked 8,118,433 8,362,784 5,466,939 13,594,566 Total man hours worked 9,134,309 9,492,967 6,117,344 14,302,646 Number of Employees Fatalities 0 0 0 0 Number of Contractors Fa talities 0 0 0 0 Employees Fa tal Accident Ra te (FAR) 63 0 0 0 0 Contractors Fa tal Acci dent Rate (FAR) 0 0 0 0 Total Fatal Acci dent Rate (FAR) 0 0 0 0 Employees Lo st Time Injuries (LTIs) 1 0 0 0 Contractors Lo st Time Injuries (LTIs) 2 6 4 4 Total Lost Ti me Injuries (LTIs ) 3 6 4 4 Employees LT I Frequency (LTIF) 64 0.98 0 0 0 Contractors LT I Frequency (LTIF) 0.25 0.72 0.73 0.29 Total LTI Frequency (LTIF) 0.33 0.63 0.65 0.28 Employees T otal Recordable Inju ries (TRIs) 2 0 0 0 Contractors To tal Recordable Inju ries (TRIs) 5 10 8 12 Employees a nd Contr. Total Recor dable Injuries ( TRIs) 7 10 8 12 Employees T RI Rate (TRIR) 65 1.97 0 0 0 Contractors TR I Rate (TRIR) 0.62 1.20 1.46 0.88 Employees a nd Contractors TR I Rate (TR IR) 0.77 1.05 1.31 0.84 Process sa fety 2021 Pro forma 2020 2020 2019 Process safety incidents 0 0 0 1 Loss of con tainment incidents 0 0 0 0 Safety train ing 2021 Pro forma 2020 2020 2019 Internal trai ning (hours) 950 3,366 2,743 2,273 Certified traini ng (hours) 1,401 561 183 1,631 Total trai ning (hours) 2,351 3,927 2,926 3,904 63 Per 100 m illion hours worked . 64 Per 1 million hours wor ked. 65 Per 1 million hours wor ked. STRATEGIC REPO RT Page 65 of 273 Our environme nt, our hig hest commitm ent At Energean we are committed to protectin g the natural envi ronment by identifying the potential im pact of our operations an d taking all necessary measu res to prevent th em. Adopting the hi ghest level of environmen tal standards constitut es the core of our strategy. Our environmenta l policy meets national and international standards includin g: • Monitoring em issions • Preventing and responding against oi l spills and chemical lea ks • Responsible usage of fresh wa ter and seawater • Conserving biodiversity • Managing wa ste at all facilities we operate. During the planni ng of new pro jects, environmen tal and social im pact a ssessments are carri ed out according to h igh l ocal regulations and i nternational standards. All o ur assets a re certif ied for their operations acc ording to the environment al management standard ISO 140 01. Key metrics monitored Equity sha re versus operati onal acc ounting approach In this report, we have updated our environmen tal metrics / GH G emi ssions r eporting to a lign with industry standards. As a result, we now report em issions based on an equity share accounting approach and also on the operatio nal accounting approach. All other environmen tal data is recorded based on the operational acc ounting appro ach. The h istorical data has been updated and included in this year’s report accordingl y. The definitio n of equity share is Energean’s worki ng interest acro ss both operated and non -operat ed sites. For example, th is acc ounting measure wou ld inclu de 10.47% of the to tal gr oss emissio ns from Scott, UK, which we ho ld a 10.47% non -operated wo rking interest in. In co mparison, the operational appro ach does not take into a ccount Energean’s workin g in terest — it includes the gross (i.e. 100 %) pro ject emissio ns only for assets that Energean operates. For exam ple, this a pproach does no t include any emissions from the U K, as we ho ld no ope rated po sitions, and includes 100% of emissions from Accettura, Italy, even t hough our working interest in the field is 50.33%. Environmenta l KPIs 2021 Pro forma 2020 66 2020 66 2019 Environmenta l expenditure $ million 67 1.1 4.6 0.4 1.4 Energy consu mption inten sity (MJ/boe ) 68 – operated share 383.2 516.2 1,099.8 744.2 Scope 1&2 carbo n emissio ns intensity (kgCO2e/boe) 69 – net equi ty share 18.3 19.8 37.9 66.8 Water use intensity (m 3/boe) 70 – operated share 0.2 0.1 0.4 0.9 Water volum e recycled ( %) 71 – operated share 95 92 92 89 66 Energea n has updated its reporting approach for environmental metrics . As a result, 2020 figures are different to those r eported in the 2020 Annual Report but 2019 figures ar e the same. Please see the explana tion of t he new equity share versus operational approach on pag e 65 . 67 Capital e xpenditures r elated to environm ental protecti on activities. 68 Ratio of energy (thermal & electrical) c onsumption ov er gross hyd rocarbons produ ction . 69 Ratio of di rect and indir ect (consu med electri city) carbon emissi ons over gross hydrocarb ons production. 70 Ratio of total fresh and seawater used for process es over gross hydr ocarbons production. 71 Propor tion of water used in the pro cess tha t is retu rned to the same catchm ent area or the sea, from where is was initially drawn. STRATEGIC REPO RT Page 66 of 273 Environmenta l KPIs 2021 Pro forma 2020 66 2020 66 2019 Non- hazardous waste intensity ( kg/boe) 72 – operated share 0.2 0.5 0.6 0.7 Hazardous wa ste intensity (kg/ boe) 73 – operated share 0.1 0.6 1.2 2.3 Waste recycled (%) 74 – operated share 90.5 52.1 90.4 96 Waste ener gy recovery (%) 75 – operated share 0.0 2.0 3.9 0.0 Air quality Maintaining high a ir quality through responsible an d sustainable operations is a key priority for Energean. We continuously monitor all our atmospheric emi ssions to ensure this. During 2021, the total a mount of nitrous and sul furous emission s (NOx and S O2) genera ted across th e Group increased by 33 % an d decreased by 26 % re spectively , versu s 2020 pro forma perf ormance. The increase in NOx was caused by increased fuel gas consumptio n at the F SOs i n Italy. The reduction in SO2 was due to lower quan tities of sulphu r production at Prinos, Greece. Also in 2021, we assessed opportu nities to establish Leak Detectio n an d Repair (LDAR) procedu res to monitor and reduce fugitive emissions acr oss al l our operating sites. Energy efficie ncy The Energy Managem ent Team, as a part of the verified ISO 14001 Environmen tal Management System, monitors en ergy deman ds and proposes perform ance optim isation ideas as well as work ing on en ergy efficiency projec ts. In 2021, we reduce d the i njection water volume in the Prino s re servoirs an d o ptimised our gas -l ift operations, resul ting in the reduction of seaw ater usage and consumed electri city. Biodiversity We are cont inuously looking at o pportunities to protect and conserve th e biodiversity in the a reas in w hich we operate. During 2021, we performed a number of biodiversity sur veys to identify sensitive habitats and assess th e impact of our oper ations, including: • An offshore sampling analysis at Prinos in Greece . The results of the independent laboratory showed that benthic co mmunities have not been af fected by our operatio ns in the Gulf of Kavala . • A pre- and post-dredging activities biological survey nearshore Dor Is rael. Th e results o f the two surveys do n ot i ndicate any clea r evidence o f anthropogenic negative in fluence on the study area or any signs of ecolo gical stress at the Kurkar (rock ty pe of w hich li thified sea sa nd dunes consist) ridge habitat. • Post drillin g ecologica l survey at Karish Mai n Israel. The im pact of the drilling operations on the marine environment was found to be limited. • Environmenta l baseline survey s at o ffshore Bl ocks 23, 31 and Ka rish Main 4 well area, Israel . No sensitive habita ts were identified in th e study area. 72 Ratio of municipal and industrial w aste, that according to regulatio n do not pose a severe threat to human h ealth or the environment ove r gross hydr ocarbons produc tion. 73 Ratio of municip al and industrial w aste, that according to regula tion pose a severe thre at to human health or the enviro nment over gross hyd rocarbons produ ction. 74 Propor tion o f waste that are re process ed into o ther products, materials or substanc es whether for the original use or for other purposes. 75 Propor tion of non-recyclable waste materials that are converted into usable heat, electricity or fuel through a var iety of process es. STRATEGIC REPO RT Page 67 of 273 • An i nvasive species survey and treatment at the onshore valve station area, Israel. Invasive specie s were fou nd in t he carob trees restored area. Treatment to rem ove inva sive species commen ced and is still in progress. We a lso continued suppo rting the Mana gement Body of Nest os River Delta, Lakes Visto nida -Ismarida and Tha ssos, to maintain th e biodiversity mon itoring telemet ric stat ions, in north eastern Gr eece. Additionally, Energean continued to collabora te with the Demo critus Uni versity of T hrace to host the Odyssea Platform (an innovative mon itoring marine data system) at Prinos. The oceanograph ic data retrieved by the Od yssea platform enhances the accu racy of marine simulations and fo recasts, providing relevant information about the open sea and coasta l zone areas to local fi shermen and other professio nals. Research published in early 2022 by the International Hellenic University has confirmed that the wetland of the River Nestosin Eastern Macedonia , Greece i s enti rely free of any traces of h ydrocarbons. The wetlands are adja cent to the hydrocarbo n production and processing sites at Prinos, Kavala and the onshore processing a nd st orage facilities of Nea Karvali , both of which are ma naged and opera ted by Energean. The survey was carried out by the International Hellenic Univer sity, conducted in collaboration with the Dunarea de Jos din Gala ti University of Romania, under the framework of t he European Union - funded project "MONIT OX – Com mon Bankers, Co mmon Solutions” Figure 7. Biodiversity a nalysis results in t he Gulf of Kava la G reece Water resources Fresh water m anagement is a high prio rity fo r Energean. We rec ognise the importan ce o f freshw ater availability, increased future global deman ds, high -quali ty standards requirements as well as stakeholders’ expecta tions. In 2021, 9 5% of water withdrawals were recycled. Our onshore and offshore water discharges are continuously m onitored by bo th automatic an d manual analy tical means to m eet all rel evant regulatory limits. STRATEGIC REPO RT Page 68 of 273 Total recycled water % Oil spills prevention Energean ha s esta blished a robust and well -t ested oil spill prevention managemen t system. A s a result, in 2021 we achieved another consecut ive year with zero oil spills. Oil spill emergenc y response drills and training take place on an annual basis to main tain a high l evel of equipment availability an d personnel preparedness. Furth ermore, we are associat e members of Oil Spill Respon se Limited, a n industry consortium that is a world leader oil spill response prov ider. Waste management At Energean, we maintai n a stro ng code of ethics rega rding disc harges and wa ste, by enforcing waste recycling and energy recovery activit ies. In 2021, 91% of total waste was recycled an d 9% was disposed at lo cal landfill fa cilities. 89 92 95 0 10 20 30 40 50 60 70 80 90 100 2019 2020 2021 96 90 52 91 4 2 4 6 46 9 0 10 20 30 40 50 60 70 80 90 100 2019 2020 2020** 2021 Waste Recycled (%) Waste energy recovery (%) Waste to landfill (%) STRATEGIC REPO RT Page 69 of 273 Our environmental perfor mance in numbers En ergean has updated its envi ronmental metrics / GHG em issions reporting to align with industry standards. For more in formation, plea se refer to page 65 . Environmenta l records 2021 Pro forma 202 0 2020 2019 Productio n – equity share Oil (Kboe) 4,141 4,512 798.4 1,209 Raw Gas ( Kboe) 11,489 14,308 595.1 53.8 Total oil and raw gas (Kboe) 15,629 18,820 1,395 1,263 Ratio oil/tota l (%) 26.5 24.0 57.3 95.7 Ratio gas/tot al (%) 73.5 76.0 42.7 4.3 Productio n – operated sit es Oil (Kboe) 2, 506 2, 189 722.0 1, 209 Raw Gas ( Kboe) 449.0 336.1 51.8 53.8 Total oil and raw gas (Kboe) 2,955 2,525 773.8 1,263 Ratio oil/tota l (%) 84.8 86.7 93.3 95.7 Ratio gas/tot al (%) 15.2 13.3 6.7 4.3 GHG emissio ns – equity share Total GHG emi ssions (tCO2e) 306,930 403,872 84,480 84,260 Scope 1 emi ssions (tCO2e) 285,362 367,293 52,586 47,692 Scope 2 emi ssions (tCO2e) 21,568 36,579 31,894 36,568 Scope 3 emi ssions (tCO2e) 76 N/A N/A N/A N/A Scope 1 emi ssions intensity (k gCO2e/boe) 18.3 19.5 37.7 37.8 Scope 2 emi ssions intensity (k gCO2e/boe) 0.1 0.3 0.2 29.0 Total emissio ns intensity (k gCO2e/boe) 18.3 19.8 37.9 66.8 GHG emissio ns – opera ted sites Total GHG emi ssions (tCO2e) 73,042 95,435 73,479 84,260 Scope 1 emi ssions (tCO2e) 52,259 58,975 41,660 47,692 Scope 2 emi ssions (tCO2e) 20,783 36,460 31,819 36,568 76 To be dis closed in the Q2 2022 CDP clim ate change ques tionnaire. STRATEGIC REPO RT Page 70 of 273 Environmenta l records 2021 Pro forma 202 0 2020 2019 Scope 3 emi ssions (tCO2e) 76 *** 1,488,772 1,488,772 872,615 Guarantees of Origin (tCO2e) (20,725) (31,542) (31,542) N/A I-REC (tCO 2e) (58.0) (73.0) (73.0) N/A Scope 1 emi ssions intensity (k gCO2e/boe) 17.7 37.8 53.8 37.8 Scope 2 emi ssions intensity (k gCO2e/boe) 0.0 1.9 0.3 29.0 Total emissio ns intensity (k gCO2e/boe) 17.7 39.7 54.1 66.8 UK Only – equity share Total GHG emi ssions (tCO2e) 23,707 66,905 1,725 - Scope 1 emi ssions (tCO2e) 23,707 66,905 1,725 - Scope 2 emi ssions (tCO2e) 77 - - - - Total emissio ns intensity (k gCO2e/boe) 83.4 83.4 83.4 - Energy consu mption used to calcu late above emissions (k Wh) 77,000 127,000 20,000 - Other air emi ssions – operated sites NOx (to nnes) 233.8 156.1 35.4 30.6 SO2 (ton nes) 711.8 900.2 875.1 1,437 VOC (tonnes) 9.0 11.8 11.8 16.5 Water usage – operate d sites Fresh wat er (m3) 103,784 88,556 88,501 112,045 Seawater ( m3) 17,413,502 11,173,563 8,589,344 9,234,113 Total wat er usage (m3) 17,517,286 11,262,119 8,677,846 9,346,158 Recycled water (m3) 16,944,782 10,938,482 8,354,263 8,363,527 Recycled water (%) 95.2 91.6 92.4 89.0 Dispersed oil concentrati on in discharged water (mg/L) 0.4 3.4 3.4 3.7 Water quanti ties disposal – operated sites Non-hazardou s waste (tonnes) 675.9 1,209 490.7 907.0 77 Electrici ty is purchas ed by the build ing owner and thus taken into s cope 3 emissi ons conside ration . STRATEGIC REPO RT Page 71 of 273 Environmenta l records 2021 Pro forma 202 0 2020 2019 Non-hazardou s waste intensity (k g/boe) 0.2 0.5 0.6 0.7 Hazardous wa ste (tonnes) 341.7 1,457 907.9 2,892 Hazardous wa ste intensity (k g/boe) 0.1 0.6 1.2 2.3 Total waste recycled (%) 90.5 52.1 90.4 96.0 Total waste energy recovery ( %) 0.0 2.0 3.9 0.0 Spills – ope rated sites Hydrocarbon s pills 0.0 0.0 0.0 0.0 Flaring (non -routine) – op erated sit es Total hydro carbons flared (tonn es) 412.8 726.9 536.6 640.0 Flaring intensit y (kg/boe) 0.1 0.3 0.7 0.6 Energy consu mption – operated sites Total energy consumption (kWh) 314,517,104 362,088,369 236,401,631 261,038,889 Electrical energy consumption (TJ) 200.2 276.7 211.2 208.4 Electrical energy consumption intensity (MJ/boe) 67.8 109.6 273.0 165.1 Thermal energy consumption (TJ) 932.0 1,027 639.8 731.3 Thermal energy consumption intensity (MJ/boe) 315.4 406.6 826.8 579.1 Total energy consumption intensity (MJ/boe) 383.2 516.2 1,100 744.2 STRATEGIC REPO RT Page 72 of 273 Financial Review Panos Benos, CFO Dear Shareholder, I am pleased to provide an update on the Group's fina ncial perform ance in the 12 mo nths to 31 December 2021. 2021 was the first year of our transition to become the leading independen t gas -produce r in the Mediterranean after the completion of the acquisit ion of Edison E&P on 17 December 2020. Fi nancial results have been co nsolidated from the date of c ompletio n, wi th results between the economic reference date (1 January 2019) and th e completion date being reflected through adjustments to th e f inal net consideration. Throughout this report, and in our other ex ternal materials, we have provided 2020 pro forma f igures in order to r epresent mea ningful comparative figures ha d the Edi son Acquisit ion been completed on 1 Janua ry 2020. The Edison E&P acqui sition he lped us diversify our ass et ba se and e xpanded our l ow cost production stream across th e Eastern Mediterranea n. T he Edison E&P acquisitio n added the k ey a sset of Abu Qir gas- concentra te field (“Abu Qir”) t o our portfolio. Working interest producti on from Ab u Qir averaged 29.1 kboed (87 % ga s) duri ng 2021, which accou nts for 70% of our to tal o utput for the year en ded 31 December 2021. Looking a head to 2022, th e second pha se of Energea n's transfo rmation will be completed once Karish, its multi- tcf f lagship gas pro ject offshore Israel , commences production ena bling it t o deliver material free cash flow s and fulfil its medium -term goal o f paying a meaningful an d sustainable dividend. Financial results summary 2021 Pro forma 2020 2020 Change from 2020 pro forma Average wo rking interest production (Kboepd) 41.0 48.3 3.6 (15.1%) Sales revenue ( $m) 497.0 335.9 28.0 48.0% Cash cost of production ($m) 261.6 198.9 28.5 31.5% Cost of pro duction ($/boe) 17.5 11.3 21.4 54.9% Administrative & selling e xpenses ($m) 43.0 41.4 15.3 3.8% Operating prof it/(loss) ($m) 32.1 (422.2) (124.5) 107.6% Adjusted EBIT DAX ($m) 212.1 107.7 (8.3) 96.9% Loss after ta x ($m) (96.2) (416.4) (92.9) 74.1% Cash flow fro m operating activiti es ($m) 132.5 137.0 1.5 (2.8%) Capital expen diture ($m) 407.9 565.4 429.0 (27.8%) Cash capital expenditure ($m) 452.2 550.8 419.0 (17.9%) Net debt ($m) 2,016.6 1,240.1 1,240.1 62.6% Net debt/e quity (%) 285.8 103.8 103.8 175.3% Revenue, production, a nd commodity p rices Sales revenue in creased by $469 millio n ($161.1 milli on or 48.0%, on a pro forma basis to account for the Edison E&P a cquisition) t o $497.0 mil lion prima rily as a result of h igher reali sed commodity prices and an increase i n production volumes fo r both liquids a nd gas, due to the Edison E&P a cquisition. Our STRATEGIC REPO RT Page 73 of 273 pro forma reven ue increas e was driven primari ly by comm odity price stro ng recovery . The Group’s realised oil and gas price fo r the period was $57.1/bbl a nd $5.2 $/mcf respectively. Working interest produ ction averaged 41.0 kboepd in 2021 (2020: 3. 6 k boepd or 48.3 kboepd o n a proforma basis), wit h the Abu Qir ga s -condensate field, o ffshore Egypt, accoun ting for o ver 70% of total output. The decrease in pro forma production was driven primarily by a decrease in production from Abu Qir and UK fields part ially offset by the increase o f the worki ng interest in the Vega and Rospo fields in Italy. EBITDAX am ounted to $212.1 million (2020: $(8.3) milli on o r $107.7 milli o n on a pro forma basis). Th e increase from 2020 pro forma EBITDAX was due to higher reven ue partia lly offset by higher operating costs from the enl arged group. Cash cost of productio n Cash pro duction costs f or th e period were $17.5 /boe (2020: $21.4 /boe or $11.3 /boe on a pro forma basis). T he increase in p ro f orma ca sh u nit production cost was primarily driven by decreased production and additiona l planned maintena nce during extended summer shut -dow ns deferred f rom 2020 a s a result o f C OVID-19. Additio nally, production costs were also impacted by the str engthenin g of Euro against the US Dolla r during the period. Depreciation, impairments and write -offs Depreciation charges before impairment on production and development assets increased by 303.9% to $97.5 million (2020: $24.1 million or $166.3 million on a pro forma basis) due to higher DD&A charges on acquired Edison E&P assets. Depreciatio n unit expense was $6.5/boe (2020: $18.4/boe or $9.4/boe on a pro forma basis). The Group recognised a pre-tax impairment charge o f $65.3 mill ion in 2020 fo r the Prinos CGU as a result of a redu ction i n both sh ort -term ( Brent forw ard curve) and l ong -term price assum ptions and a chan ge in t he pro duction f orecasts fo r th e Prin os field. T here were no such i mpairments for the year ended 31 December 2021 Exploration and evaluat ion expenditure and n ew ventures During the period the Grou p expen sed $87.7 mill ion (2020: $4.4 million or $164.6 milli on on a pro fo rma basis) for e xploration and new ven tures evalua tion activities. This in cludes costs ($79.8 million) associated with exploration and appra isal activit ies write -off for Glengo rm South and Glengo rm Centra l. In 2021 two appraisal wells were drilled targeting the Glen gorm South and Gl engorm Cen tral segmen ts . Both well s were unsu ccessful and did n ot find hydrocarbo ns. All wel ls have been plugged a nd abandoned. T he remai nder of t he impai rment is as a result of the in crease to the deco mmissioni ng estimate in Ital y. In addition, new ventu res evaluation expenditu re amounted to $5.6 millio n (2020: $1.5 mil lion), mainly related to pre-lice nce and time -writing costs. Selling, general and ad ministrative (SG&A) expenses Energean incurred SG&A costs o f approximatel y $43.0 millio n in 2021 (2020: $15.3 m illion o r $41.4 mi llion o n a pro f orma ba sis). Th e incre ase i s prima ry driven fro m t he a dditional staffing and administrative costs associa ted with the new acquired Edison E& P busin ess. Ca sh SG&A was $34.8 million (2020: $11.7 million or $35.5 million on a pro for ma basis). Net other income Net other income of $10.9 million in 2021 (2020: $19.1 million expenses) includes $6.8 million of income due to a decrease in esti mates of decom missioning provisions for ce rtain UK producing assets, representing the amo unt of the decreas e that wa s in excess of their book value. Unrealised loss on derivat ives The Group ha s recognised unreal ised loss on derivati ve instrument s o f $21.5 mil lion related to th e Cassiopea contingen t co nsideration . A conti ngent consideration of up to $100.0 m ill ion is payabl e an d determined on the basis of future gas price s (PSV) reco rded at the time of the commissioning of the field, which is expected in 2024. STRATEGIC REPO RT Page 74 of 273 As at 31 Decem ber 2021, the two y ear future curve of P SV prices in creased from the date of a cquisition and indica te an a verage pri ce in exce ss o f €20/Mwh. The fair val ue of the Conti ngent Consideratio n as at 31 December 2 021 was estimated to be $ 78.5 million based on a Mo nte Carlo simulation (31 December 2020: $55.2 mil lion). Net financing costs Financing costs befo re capita lisation for the perio d were $278.4 mi llion (2020: $ 102.7 millio n). including $107.0 milli on o f interest expenses incu rred on Senior Secured notes (2020: nil), $96.7 million on debt facilities (2020: $90.0 mill ion) and $4.1 mi llion (2020 : $6.7 million ) of i nterest expenses rela ting to long - term payables, representing future pay ments to the previ ous Karish & Tanin licence holders. Finance costs include mainly: unwinding of discount on deferred consideratio n, decommissioning provisions and other liabilities of $27.7 million (2020: $1.2 million); expensing of the unamortised costs under Greek and Egypt RBL of $18.1 mill ion, due to repaymen ts prior to their matu rity dates and a rrangement fees, commission s for guarantees and other ban k charges of $17.8 mill ion (2020: $4.8 mi llion). Net finance costs includes foreign ex change losses of $6.9 million (2020: $15.4 million foreign exchang e gain). Finance income amo unted to $3.0 million (2020: $0.5 milli on), including Interest income from time deposits. Taxation Energean rec orded tax charges of $5.4 mill ion i n 2021 (2020: $20.5 million tax credit), spli t between a current and prior year tax expense of $44.5 million (2020: $0.8 million), and a deferred tax credit of $39.2 million (2020: credit $21.5 m ill ion) and representing an effect ive rate of 6 % (2020 : - 18 %). Operating cash flow Cash f rom o perations bef ore tax a nd mo vements in working capital was $136.7 million (2020: ($25.5) million). After adjusting for t ax and working capital movements, cash from operations was $132.5 million (2020: $1.5 millio n or $137.0 million on a pro form a basis). The decrease on a p ro forma basis was primarily driven by pay ments made for buyers compen sation in Israel amoun ting to $23.0 millio n and cash held on acco unt in rel ation to the com modity hedges in Italy of $29.4 million. Capital Expenditures During the period, th e Group incu rred capital expenditur es of $407.9 mi llion (2020: $429 million). Ca pital expenditure mai nly con sisted of development e xpenditures in relati on to the Karish Main an d Karish North Fiel ds in Israel ($243.4 mi llion) , NEA project in Egypt ($52 milli on), Cassio pea field in Italy ($37.0 million), Scott field in UK ($11.6 million) and exploration expenditures in relation to Glengorm and Isabella in UK ($40.5 million ) and Athena, Hercul es, Hermes in Israel ($6.0 million). Net Debt As at 31 December 2021, net debt of $2,016 million (2020: $1,2 40 mi llion) consisted of $2,5 00 mil lion Israeli senior secured notes, $450 million of corporate senior secured not e s an d $50 million of convertible loan notes, less def erred a mortised fees, equity component of convertibl e loan ($10.5 millio n) a nd ca sh balances of $930.6 million. The Senior Credit Facility for the Karish -Tan in Development, the EBRD Senior Facility, the EBRD Subordina ted Fa cility and th e New Egypt RBL F acility were repaid during the year amounting to a tot al of $1,807 million. In a ccessing the bond markets, Energean h as co nverted fl oating interest ra te exposure to f ixed ra tes giving a blended a verage inte rest rate of approximat ely 5% and increased Energe an's weighted average debt maturity to approximately six years. Credit ratings Energean mainta ins corporate credit ratin gs with Standard and Poor’s ( S&P) and Fitch Rati ngs (Fitch). On 4 Novem ber 2021 Ener gean plc w as assign ed its f irst corpo rate credit rat ings fro m S&P and Fitch, following the issua nce of the $450 millio n senior secured notes which ma ture in 2027. • S&P a ssigned a B corpora te credit rati ng to Ener gean plc and B rating for the sen ior secu red notes maturing in 2027, with Posit ive Outloo k. Th e positive outlook reflects the expectation that Energean will successfully launch the Karish gas f ield i n Israe l in 2022, supporting the credit quality of the compa ny. STRATEGIC REPO RT Page 75 of 273 • Fitch assigned a B+ co rporate credit rating to Energean plc and B+ rating for the senior secured notes maturing in 2027, with a Stable Outlook . Risk manage ment Principal risks There are no signif icant changes to the headlin e principal risks fro m those disclosed in the 2021 Interim resul ts. A fu ll description of Energean’s principa l risks will be disclosed in its 2021 Annual Report & Accounts. Commodity price risk The Grou p undertak es hedgi ng activi ties as part of the ongoing fi nancial risk management to protect against co mmodity price vo la tility and to ensu re the avail ability of cash f low f or re -invest ment in capital programmes th at are driving busin ess delivery. Commodity h edge contracts entered int o in Italy ai m to mitigate the risk of changes to the cost of na tural gas and that relat in g to the sale of natural gas. Hedge posit ion 2022 2023 Gas Sales Volum e hedged (M Ws) 705,000 - Average price d hedged (€ /MWs) 55.89 - At 31 December 2021, the Grou p’s f inancial h edging programme on gas derivati ve instrum ents showed a pre-tax negative fair valu e of $12.5 million (2020: nil) i ncluded in oth er comprehensive in come, with no ineffectiveness charge to the income sta tement. Liquidity risk manage ment and going con cern The Group carefully manages the ri sk o f a sho rtage of funds by closely monitoring its f unding position and its liquidity risk. T he Going Concern assessment covers th e period up to 31 March 2023 ‘the Forecast Period’. Cash forec asts are regularly pro duced base d on, int er al ia, the Group’s la test life of field produ ction, budgeted expendit ure forecasts, mana gement’s best estim ate of future com modity prices (based on recent published forward curves) and headroom under its de bt facilit ies. The Base Case cash f low model used for th e going co ncern assessmen t conserva tive ly assu mes first gas from Karish in Octo ber 2022, Brent at $80/bbl in 2022 and $75/bbl i n 2023 and P SV (Italia n gas price) at € 55/ MWh in 2022 a nd € 40/ MWh in 2023. In addition , on a regular basis, the Group performs sensitivity tests o f its liquidity posit ion to eva luate adverse impacts that may result from changes to the macro -eco nomic environment such as a reduction in comm odity prices. The Group is n ot exposed to floating interest ra te risk. The Group also look s at the impact of changes or deferral of key projects. This is done to identify risks to liquidity to enabl e management to formulate appropria te and timely mit igation strategi es in order to manage the risk of funds shortfalls and t o en sure the Grou p’s a bility to co ntinue as a going c o ncern. Such assumptions underpin managem ent’s reasonable worst-case scenario to further assess th e robustness of the Group’s liquidity position over th e Forecast Period. Reverse stres s testing w as performed to determine what levels of prices and/o r produ c tion would need to occur for the l iquidity headroom to be eliminated, prior to any mitigating actions; the likelihood of such conditions occ urring was concluded to be remote. In the event an extreme downsid e scenario occ urred, prudent mitigating actions co uld be executed in the necessary timeframe such as a tightening o f operating co sts and reduct ions/postponem ent of other discret ionary explo ration and devel opment expenditures. There is no materia l impact of climate change within the Forecast Period theref o re it does not form part of the reverse stress testing performed by managemen t. STRATEGIC REPO RT Page 76 of 273 1 As of 31 De cember 202 1 the Group’s av ailable liquidity was approximately $ 1 billion. In ter ms of the Group’s Bor rowing Facilities, the following was conside red as part of man age ment’s asse ssment: Energean Israel Projec t Bond: In March 2021 Energean raised $2.5 billion through the issuance of bonds to (i ) refinance its $1.45 billion Israel Projec t Fina nce Fa cility, ( ii) ca ncel and repla ce the $700 million Term Loan which was draw n to fund the acquisiti on of Kerogen ’s minority int erest in Energean Israel, (iii) fund capita l and exploration expenditure in I srael, including Karish a nd Karish No rth, and ( iv) for general co rporate purposes of the Group. 2 Energean plc Corpora te Bond: In Novem ber 2021 Energea n raised a $450 mil lion Bond to (i) repa y all amoun ts outstanding under the Egypt and Greek RBLs plus sub ordinated debt, (ii) to pay fees a nd other expens es relat ed to the Bon d, and (iii) for genera l corporate purposes of the Group. There are no fin ancial maintenance covena nts associated with either of th e Bonds. 3 Greek State-Backe d Loan In December 2021 Ene rgean signed a € 100 million lo an backed by the Greek State which is to be used specifically for th e development of the Prin os Area in Greece, inclu ding the Epsilon developmen t. In forming i ts assessmen t of the Group’s ability to continue as a going concern , including its review of the forecasted cash flow of the Group over the Foreca st Period, the Board ha s made judgements abo ut: • Reasonable sen sitivities appropriate f or the current status of the business a nd the w ider macro environment ; and • The Gro up’s a bility to implement the mit igating actions within the Group’s control, i n the event this were required. After careful considera tion, th e Directo rs are satisfied tha t th e Grou p ha s suf ficient finan cial reso urces to co ntinue in opera tion fo r the f oreseeable fu ture, fo r the Forecast Period to 31 March 2023. For th is reason, they co ntinue t o adopt the goi ng co ncern basis in prepa ring the consol idated financial statements. Events since December 20 21 On 14 March 2022 - Energean signed a supply agreemen t wi th the Is ra el Electric Company, the largest Israeli buyer of natural gas. IEC w ill now have the right to purchase natu ral gas from Energean’s fields. The gas price w ill be determin ed in each peri od, with purchased amo unts determined on a daily basis. Starting upon the commencement of first gas production from Kari sh, the agreement wi ll be valid for an initial one- year period with an option to extend subject t o ratif ication by both parties. Non-IFRS measures The Group uses certa in measures of performa nce that are not specifica lly defined un der IFRS o r oth er generally accepted a ccounting princi ples. These non -IFRS m easures include Adju sted EB ITDAX, cost of production, capital expenditure, cash capital expenditure, net debt and gearing ratio and a re explained below. Cash cost of p roduction Cash cost of product ion i s a non -IFRS measure th at is used by the Gro up as a useful indicator of the Group’s underly ing cash costs to produce h ydrocarbons. T he Group uses th e measure to co mpare operational performance period to period, to moni tor costs an d to assess opera tional efficiency. Cash cost of production i s ca lculated as cost of sales, adjusted for depreciati on and hydroca rbon inventory movements. ($m) 2021 Pro forma 2020 2020 Cost of sales 345.1 364.6 48.4 Less: Depreciati on (94.6) (163.1) (22.1) STRATEGIC REPO RT Page 77 of 273 ($m) 2021 Pro forma 2020 2020 Change in inven tory 11.1 (2.6) 2.2 Cost of pro duction 261.6 198.9 28.5 Total producti on for the period (kboe) 14,963.5 17,621.0 1,331.0 Cash cost of production per boe ($/boe) 17.5 11.3 21.4 Adjusted EB ITDAX Adjusted EBIT DAX is a non -IFRS measure use d by th e Gro up to measure busines s perform ance. It is calculated a s profit or l oss for the period, adju sted for discont inued opera tions, taxation, depreciation and amorti sation, other i ncome and ex pense s (including the i mpact of derivative fina ncial instruments and foreign exchange), net f inance costs and explorati on costs. The Group present s Adjusted EBIT DAX as it is used in assessing th e Group’s growt h and op erational ef ficiencies, because i t illu strates the underlying performance of the Group’s business by excl uding i tems not considered by managem ent to reflect the underly ing operations of the Gro up. ($m) 2021 Pro forma 2020 2020 Adjusted EBIT DAX 212.1 107.7 (8.3) Reconcilia tion to profi t/(loss): Depreciatio n and amortisa tion (97.5) (166.3) (24.1) Share-bas ed payment (5.7) (3.2) (3.2) Exploration and evaluation expense (87.7) (164.6) (4.4) Impairment loss on property, plan t and equipmen t - (182.9) (65.3) Other e xpense (7.0) (35.0) (28.3) Other inco me 17.9 22.1 9.1 Finance expen ses (97.4) (16.9) (5.0) Finance inco me 3.0 1.2 0.4 Unrealised loss on derivatives (21.5) - - Net foreign exchange (6.9) 7.8 15.5 Taxation inco me/(expense) (5.4) 13.7 20.7 Loss for the y ear (96.2) (416.4) (92.9) Capital expendit ure Capital expenditure is a usef ul indicator of the Group’s organ ic expenditure on oil and gas assets a nd exploration and apprai sal assets incurred during a period. Capita l expenditure is de fined as additions to property, plant and equipm ent and in tangible explora tion and eva luation assets less decomm issioning asset additions, right- of -use asset addit ions, capitalised share -based payment charge and ca pitalised borrowing costs: STRATEGIC REPO RT Page 78 of 273 ($m) 2021 Pro forma 202 0 2020 Additions to property, plant and e quipment 521.4 659.1 550.6 Additions to intangible explorat ion and evaluatio n assets 54.8 108.1 11.8 Less: 168.2 201.8 133.4 Capitalised borro wing cost 181.0 97.7 97.7 Leased a ssets additions a nd modifi cations 8.7 17.2 2.0 Lease pay ments related to capi tal activities (10.9) (12.0) (6.6) Capitalised sha re-bas ed paymen t charge 0.2 0.1 0.1 Capitalised depreciation 0.2 0.6 0.6 Change in decommi ssioning provisio n (11.0) 98.2 39.6 Total capit al expenditures 408.0 565.4 429.0 Movement in wo rking capital 44.3 14.6 10.0 Cash capital expenditures per the cash flo w statement 452.3 550.8 419.0 Cash Capital E xpenditure ($m) 2021 2020 Payment for purch ase of property , plant and equi pment 403,503 403,986 Payment for e xploration and evalu ation, and other inta ngible assets 48,674 15,041 Total Cash Ca pital Expenditure 452,177 419,027 Net debt/(c ash) and geari ng ratio Net debt is defined as the Group’s total borrowings less cash and cash equiva lents. Management believes that net debt i s a usef ul indicator o f the Group’s indebtedness, fin ancial flexibil ity and capital structure because it indicates the level of borrowings af ter taking account of any cash and cash equivalents th at could be used to reduce borro wings. T he Group defi nes capital as total equity and calculates the geari ng ratio as net debt divide d by total equity. ($m) 2021 2020 Current borro wings - 1,113.0 Non-current borrowings 2,947.1 330.0 Total borrow ings 2,947.1 1,443.0 Less: Cash a nd cash equivalents a nd bank deposits (730.8) (202.9) Restricted ca sh (199.7) - Net Debt 2,016.6 1,240.1 Total equity 717.1 1,194.4 Gearing Ratio 281.2% 103.8% STRATEGIC REPO RT Page 79 of 273 Risk Management Successful and susta inable im plementation of o ur strategy requires strong corporat e governa nce a nd effective risk managemen t. We deliver this throu gh a comprehensive framework of business pol icies, systems and procedures th at enable us to assess and mana ge risk effecti vely. Managing risks and opportunities is essential to Energean’s long -term success and growth . All investment opport unities may expose Energean to increa sed risks, particula rly in the current risk environment , in cluding climate change rela t ed risks an d o pportunities. Energ ean m anages its exposure to such risks in acco rdance with the Bo ard’s appetite for risk. Energean’s risk managemen t fra mework provides a systematic process fo r t he identificat ion and management of the key risk s and opportun ities which may impact the delivery of its strategic objectives. KPIs are set an nually and determining the l evel of risk Energean is willing to a ccept in th e pursuit of these objectives is a funda mental component o f its risk management framew ork. The Board operates a risk managem ent framework for the Company and it s sub sidiari es (t ogether the “Group”) in order to identify , assess, control and monitor a ll current and emerging risks to th e busin ess arising from t he ach ievement of i ts strat egic object ives. The risk m anagement fram ework establishes Energean’s interna l control and risk mana gement process and inclu des the followi ng: Group risk manage ment framework Risk oversight and go vernance Overall respon sibility for risk oversight and the eff ectiveness of the Company’s risk mana gement an d internal control systems rests with the Board. Principal risks, includin g emerging risks, as well as progress against k ey performance i ndicators, are reviewed at ea ch quarterly sch eduled Bo ard meeting and deep dives on iden tified risks are u ndertaken by the Au dit and Risk Committee, when deemed appropriate. The Group’s framework for risk management promotes a bottom -up approach to risk management with top-down support and chal lenge. The risks associated wit h the delivery of the strategy and work programmes and the associated mitigation measures and action plans are maintained in a series of risk registers at Gr oup, audit and project leve l. Reporti ng of these ri sks within the organisa tion is struct ured so that risks are esca lated through the various business units and functions to Board committees and to the Board itself. Outline the strategy • S et a sustainable strategy t o achieve Ener gean's near and long-term g oals Define strategic objectives • S et clear strategic objectives supp orted by relevan t KPIs Define risk appetite • Determ ine the level of risk that the Group is w illing to accept in the pursuit of its strategic objectives Identify key risks • I dentify key r isks to the achievement of strategic ob jectives, through discussions at a Board, Senior Ma nagement Team, r egional and functional lev el A pply risk assessment process • A pply the Grou p risk assessment process to ensure the ong oing management o f key risks to our objectives Deliver strategic objectives • Delivery of strategic objectives thro ugh informed risk-based decision making STRATEGIC REPO RT Page 80 of 273 Energean’s Executive Management Team is responsible and accountable for overseeing and monitoring risks t hat fall under their i dentified rem it, while the Audit a nd R isk Committee is additionally responsibl e for continuously evaluating the eff ectiveness of the Gro up‘s system o f internal control and ri sk management methodology. Group risk governance f ramework Board of Directors The Board is re sponsible for oversee ing t he ri sk iden tification, assessment and mitigation process and undertakes regula r assessments of the risks facing the Group, inclu ding current and emerging risks that could potentially threaten o ur business integrity, strategy, ope rating model, future performance, solvency and/or liquidity . The overall tone fo r ri sk m ana gement is driven by the Board, w hich works cl osely w ith the Execu tive Management Team and Audit a nd Risk Committee to regularl y review Energean’s risk portfo lio, mon itor any emerging ri sk a nd better understand h ow risks are being managed across th e C ompany . It considers: • Executive Managemen t / Commit tee updates; • Strategic plan an d budgets; and • Risk assessments. Audit and Risk Committ ee The Boa rd delegates to the Audit and Risk Committ ee the responsibili ty for reviewing the effect iveness of the Group’s systems of internal control and risk management methodolo gy. As pa rt of this review, the Audit a nd Risk Committee considers the principa l risks facing the Group and the n a ture a nd extent o f these risks, based on asse ssments by mana gement and the Group level Executives (e.g. Group CF O), Functions (e.g. Techni cal /ICT) or Bodies (e.g. Seni or Mana gement Committee) that ma y pa rticipate in the process. T op-do w n: Oversight, accountability , monitoring and assu rance The Board A udit and Risk Committee Chaired by A nd y Bartlett, Senior Independent Non-Executive Director • Responsible for setting the di rection for risk management • Facilitates continual i mprovements of the risk management system • Monitors and review s the scope and eff ectiv eness of the Company 's systems of risk and i nternal control • Monitors and review s quarterly the R isk Heat Map of identified risks and provi des feedback on pote ntial n ext steps/ action items or other comments and suggestions. Executive Management T eam Chaired by Mathios Rigas, CEO • Performs a quarterly 'deep-div e' revi ew of the Group risk register. • Communicates wi th risk owners to ensure assessment of the risks to the busin ess  Regularly reviews and discusses with the risk owners challenging whether mi tigations are being effectively execute d within the agreed timeframe. STRATEGIC REPO RT Page 81 of 273 Financial Control An integral part of the Ene rgean in ternal cont rol system is the intern al contro l system for f inancial reporting, which is responsibl e f or t he f inancial report prepara tion process in complian ce w ith generally accepted interna tional accountin g standards. Energean’ s CFO and Head of Financia l Control, in her capacity as officer in charge of preparing financial reports, are responsible for planning, establishing and maintaining the in ternal control system for fi nancial reporting. Internal Audit Function The Intern al Audit Functi on has a central role in the Group’s ri sk mana gement and internal con trol system , through objectively and independently evaluating controls, governance and risk management processes. The Internal Audit is performed by Pric ewaterhou seCoopers Bu siness Soluti ons S.A. (“PwC”), and the Group’s Internal Audit Lead, wh o i s responsible for coordin ating the relevant assurance an d consu lting engagements, aligning the internal audit risk assessment process with the Group risk register outcomes and proposing a risk ba sed annua l audit plan to Audit & Risk Com mittee. Management Team Com mittee The Executive Mana gement Commit tee is responsible for detailed assessmen t of the risks to the business. It considers risks linked to: • Strategic objectives • Business model. Consolidation of busin ess risks To facilitate the assessme nt of the main risks facing the business, Energean und ertakes a bottom -up review of the k ey risks f aced by the business through the execution of two subpro cesses (Inherent Risk Assessment and Residual Risk Assessment) a nd the key risks in each area are identified by the business units and functions in the Group across all regions, including mitigating actions and any controls in place. These are consolidated upwards into the Group’s risk register and assessed according to their likelihood of occurring, as well as the potential consequences to Energean in terms of safety, reputational, financial, operational or orga nisational impact. From this, the Ex ecutive Management Committee ident ifies the enterprise level risks which can be l inked either to the Strategi c Objectives or to the Business Model, which, t aken toget her, are signif icant f or Energean. A m ember of the Executi ve Ma nagement T eam has ownership and acco untability for the respective enterprise level risks. Col lectively, the Executive Management Team reviews a nd discusses the enterprise level risks ch allenging whether mitigatio ns are being effectively executed within the agreed timeframe. On a q uarterly basis the enterprise level risks are discussed by the Board on a ‘Risk Heat Map’ to provide ‘top down’ challenge and suppo rt. The outcome of this review and the corresponding k ey messages, are communica ted ba ck down to the business unit s and functions t o f acilitate risk a wareness an d effective decision ma king throughout th e Group. Responding to the Changin g Risk Environme nt in 2021 As part of o ur goal to continuously improve ou r risk managemen t processes, the following ta sks were completed in 2021: • The Board complet ed a deep-dive risk worksho p which focused on further understanding poten tial cyber threats to the bu siness. The o bjective o f the wo rkshop wa s to provide the Board with f urther insight into t he growi ng threa ts from cyber risk with a focus on the chan ging risk envi ronment resulting from th e increase in homework ing. • Several act ivities were com pleted to assess our recently acquired Edison E&P business with res pect to bribery and corrupti on risks and mitigating controls in pla ce inclu ding the completion of a risk assessment conduct ed in all releva nt operati ons of Energean Italy Spa, a business acquired throu gh the Edison E&P acquisition in Ital y. The assessment covered severa l at risk activities related to bribery and co rruption risks, including co mmercial ma nagement, m anagemen t of relations with public authorities, process of purcha sing goo ds and services, person nel recru itment and managem ent, STRATEGIC REPO RT Page 82 of 273 following which, the risk analysis which was produced, form ed part of the implementatio n of the new organisational Model 231, pursuant t o the Legisla tive Decree no. 231/2001. • A contingent liabilities, liti gation an d ongoing disput es dashboard was main tained to ass ess any incidents, disputes or emerging risks that might trigger a poten tial finan cial liability impacting the Group. The dashb oard wa s presented at each Audit & Risk Com mittee meeting a nd semi -annual ly to the Group fina ncial controller and external audito rs. • To ensure awareness, unde rstanding on an d com pliance with importan t go vernance, regulatory an d security to pics, mandat ory e -learning was also impl emented acro ss the Grou p tra nslated, as appropriate, in loca l languages, which included com prehensive mo dules on bribe ry and corruptio n, preventing the faci litation of tax evasion, modern sla very and cyber security . Climate change relat ed risks and opportuniti es Climate change related risks and opportunities are ful ly integrated with Energean ’s multi -disciplinary, Group-wide risk ma nagement process, a s per the reco mmendatio ns of the TCFD. The risk management framework ensures effec tive identification, assessment, control and monitoring of risks to th e Co mpany’s business, in addition to capitali sing on potentia l o pportunities. Cli mate change - related risks are assessed against their potentia l financial, legal, physical, ma rket and rep ut ational impact, and key strategic a nd commercial deci sions are assessed by reference to their financi al importance. In focus – c limate change r isk During th e 2019 risk identifica tion a nd assessmen t pro cess, Energea n rec ognised clima te change as a rapidly emerging risk. This was reflected by the Company’s decision to announce a net -zero 2050 target, using gas as the transit ion medium to a low carbon future. To achieve this transition, climate change related risks and opportunities have been i dentified, an d future scenarios that f acilitated in developing an integrated strategy approa ch have been ana lysed 78 . Our strategy and business plan to limit global warmin g h as been structured, an d is currently being implemented, in three diff erent phases; short, medi um and long -term, as per our Climate Cha nge Po licy published in 2021. In 2021, the Nomination and ESG Committee was split in tw o, which created the Environment, Safety and Social R esponsibility Co mmittee, wh ich is chaired by Robert Peck and is attended by t he Cha ir of the Board, the CEO and t he HSE Director, the latter being responsible for the operational management of any and all climate ch ange issues. The purpose of the Commi ttee is to evaluate Energean ’s policies and systems for identifying a nd m anaging ES G risks, which in cludes the identification o f clima te chan ge risks, and to pro pose mitigation measu res. The Co mmittee convenes every quarter and reviews the Board papers on Energean’s carbo n emission s performance and KPIs. Risk appetite The Board sets En ergean’s risk appetite and acceptable risk tolerance levels for each of the eight key risk categories a nd has reviewed the strategies devise d by the Executive Managemen t Team to mitigate them. In considering Energe an’s risk appetite, the Boa rd has reviewed t he risk process, t he assessment of risks and the existing contro ls and mitigati ng actions that reduce overall risk. During this proces s, the Board articulated which risks Energean should not tolerate, whi ch should be managed to an acceptable level and whi ch should be accepted in order to deliver our busin ess strategy. 78 Please refer to “Our Strateg y - Tackling Climate Change- Our Clima te Change Stra tegy” . STRATEGIC REPO RT Page 83 of 273 Principal risks and unce rtainties Symbols used i n the follow ing pages Trend versus prior year indicates our perception of pre-mitiga tion risk Link to Business Mo del Link to Strategy ▲ Increasing / worsening A - Find and appraise ① - Eastern Mediterra nean ▼ Reducing / improving B - Develop ② - Gas ▬ Static C - Produce ③ - Tackling cli mate change N New Risk D - Acquire ④ - Organic growth Z No longer a risk E - Implementing low carbon soluti ons ⑤ - Value-driven an d return driven Internally , the Group m onitors and miti gates a more su bstantive list of risks, bu t those l isted in the following pages are the enterprise level risks which can be linked either to the Strategic Objecti ves or to the Bu siness Mo del, whi ch, taken togeth er, are sign ificant for Energe an. Our principal risks and risk reduction actions are monitored and assessed on an on going ba sis. The following t able pro vides a summary overview of the principal risks to the Group against the previou s year, while the following pages provide for each principa l risk an analysis o f th e potential impacts, the corresponding mitiga tion measures, the risk appeti te and the stra tegic objectives each of these risks m ay impact. Highlights aga inst previous year Principal risks in 2020 Principal risks in 2021 Trend versus prior year #1 Strategic I - Progre ss key development projects in Isr ael - #1 Strategic -Opera tional Delivery ▼ #2 Strategic II- Market risk in Israel #4 Strategic - Market risk in Israel ▼ #3 Strategic III - Progress key development projects #2 Strategic - Operat ional Delivery ▼ #4 Strategic IV - Deliver e xplora tion success and reserves ad dition #3 Strategic- Deli ver exploratio n success and reserves ad dition ▼ #5 Strategic V - Portfo lio Integratio n Z No longer a risk #6 Operational risk I – Production performance Z No longer a risk # 6 Organisatio nal & HR risk N New Risk #7 Operational risk II – JV misal ignment # 7 Operational risk - Misalignment with JV operators ▲ #8 Financial Risk I. Ma intaining liquidity and solvency #5 Financial Risk - Maintain ing liquidity and solven cy ▼ #9 Financial Risk II - Egypt receiva bles #8 Operational Risk - Egypt receivables ▼ #10 Financial Risk III – Decommissionin g liability #9 Operational Risk – Decommissionin g liability ▲ #11 Organisatio nal, compliance and regulatory risk I - cyber attack #10 Cyber /ICT (Inform ation Communicatio n Technologies) Security ▲ STRATEGIC REPO RT Page 84 of 273 #12 Organisatio nal, compliance and regulatory risk II - Ethics, culture a nd compliance #11 Regulatory & Compliance - Fraud, Bribery, and co rruption ▬ #13 Organisatio nal, compliance and regulatory risk III - HSE #12 Health Safety and Enviro nm ent (HSE) ▬ #13 Climate change risk I-Fa ilure to manage the risk of climate change an d to adapt to the energy transition #13 Climate change #14 Climate Change II - Physica l risks related to clima te change #14 Climate Change - Physica l risks ▬ #15 Strategic-Ge opolitical events #15 Strategic- Externa l geopoli tical, political, social risks ▬ #16 External risk II - Global pandemic #16 Pandemic ▲ Energean’s enterprise -level princi pal risks that the Board considered to have a signi ficant impact during our planning horizon are categorised under one of the eight principal risk categories, which together with the Pandemic, are ou tlined below on pages 85-10 3. Categories of principal risk s STRATEGIC REPO RT Page 85 of 273 #1 Strategic - Operati onal Delivery Principal risk : Delay to first gas at Karish Owner : Chief Executive Officer Link to strategy : ① ② ③ ④ ⑤ Link to busines s model : B C E Link to 2021 KPIs : Deliverin g our strategy, growing our busin ess and tackling cli mate change Risk appeti te Low – Suc cessfully deliveri ng Karish in Q3 2022 is cruci al in facilitating the Gro up’s transition to a susta inable cash -flow genera tor. 2021 movement ▼ Alth ough COVID-19 continued to ca use ch allenges, good progress was made on our flagship multi-tcf Karish gas development offsho re Israel , w hich was approxima tely 92.5% complete at year end 2021. At the time of writing, Energe an is targeting first gas by Q3 202 2. This timetable expects a pproxima tely four - five months from sail-away to first ga s, inclu ding th e tow from Singapo re to Israel , hook -up and co mmissioning. Following com pletion of the pre -sail-aw ay commissioni ng and testing o f mechanical and electrical systems, the final commissio ning work will be performed offshore upon arrival in Israeli waters. Impact Delayed delivery of fi rst gas from th e FPSO co uld result in a del ay in delivering fu ture cash f lows and th us delay Energea n’s abi lity to pa y a mea ningful a nd susta inable dividend to i ts shareholders. Dela ys coul d also result in increa sed capital expenditure and incrementa l G&A costs, which cou ld result in a reductio n to said cash flows. A failure to achieve certain milestones, such as first gas del ivery could result in reputational damage within t he wider market, inclu ding with Energean’s investors, banks, gas buyers and wide r stakeholders. Under its gas sale agreements ( “GSPA”s), the Group may be subject to various contractual consequences in case of a delayed start up in supplying gas in ac cordance with specific dea dlines deta iled in the rel evant GSPAs. Such contractual consequences may inclu de early termination rights th at ce rtain buyers potential ly have after applicable long -stop dates, and in t he majority of the GSPAs, monetary contractual payments or earl y shortfall after the lon g -stop dates. Mitigation Energean has actively engaged w ith its contractors early to ensu re highly effective working relationships and to incentivise contractors to ac celerate the completion of works. Energean’s contract with Technip is a lump -sum, turnkey EPCIC, which mitigates development risk a nd the potential for signi ficant cost overruns. Energean’s 2021 budget was updated to reflect th e increased cost of i nterest and potential li quidated damages arising fro m a delay in first ga s. Energean benefits fro m strong support from Go vernmen t and continued enga gement with custom ers in Israel. Energean ha s signed long -term contra cts to su pply 7.2 Bcm /yr of gas on plateau int o the Israeli domestic ma rket, all of which have floor pri cing, take - or -pay and/ or exclusivity provisions that largely insulate revenues against downside commodity price risk and underpin our goal of paying a sector- l eading dividend. Energean’s GSPAs are price d amo ngst the lowest in Isra el, suggesti ng tha t buyers (wh o have signed GSPAs which contain termination rights) will have limited incentive to term inate them due to delay in first gas. Force Majeure notices have been issued un der al l o f the GSPAs i n re latio n to COVID- 19. Subse quent updates were provided in writing to each buyer, as w ell as a ccess to data rooms and documen tatio n on relevant governmen tal restriction s. As of today, with the exception of Dalia, who sent not ices to Energea n, purporti ng to te rminate its gas sales a greement (f or which plea se refer to “ Revi ew of Operations- Israel-GSPAs- Existing GSPAs” ) , no cl aim wa s filed by such o ther buyers and no compensation is payable by Energean. STRATEGIC REPO RT Page 86 of 273 Energean’s responses to the foregoi ng a nd o ther communica t ions with buyers are aimed to mainta in the full extent of Com pany’s ri ghts for a Force Majeure rel ief under each of its GSPAs. Ongoing monito ring of KPIs by Executive Mana gement. 2022 Objective s First gas a nticipated i n Q 3 2022. Th ereafter, Karish wil l p rovide su bstantial, and importantly, stable cash flows based on f ixed contracts with fl oor pricing an d take or pay provisions. STRATEGIC REPO RT Page 87 of 273 #2 Strategic - Operati onal Deliv ery Principal risk : Delayed delivery of future developmen t projects (includin g NEA / NI in Egypt, Cassiopea in Italy and Epsilon in Greece) Owner : Chief Executive Officer Link to strategy : ① ② ④ ⑤ Link to busines s model : B C E Link to 2021 KPIs : Deliverin g our strategy and growing o ur business Risk appeti te Low – The three key new development projects are viewed as ess ential for the releva nt country portfolios, substantially benefitting the long -term production profiles of the Company, wh ilst bringing cost and i nvestment ef ficiencies and strategic benefi ts. 2021 movement ▼ This risk has decreased in 2021 as Energean co ntinued to progress its developm ent portfolio in line with expectations against its strategic goals, albeit under the weight of COVID 19. • FID taken on NEA/NI (Egypt ) in January 2021; • EPCI contract awarded to Tech nipFMC for NEA/NI in F ebruary 2021 • NEA/NI on track and 37.0% complete as of 31 December 2021 79 • Cassiopea (Ital y) development on track an d 24.2% complete at 31 Decem ber 2021 79 • Funding secured for the Epsi lon Development in Greec e. Impact A dela y to any of th ese projects cou ld resu lt in a dela y to, or reduction of, fut ure cash flows, which could impact upon Ener gean’s goal of paying a meaningful and sustainable divi dend to its shareholders. Mitigation Energean is act ively engaged with its partners, co ntract ors and all other relevant stakeholders on all develo pment projects to ensure effec tive worki ng relatio nships. For further informa tion, please refer to “ Performance in 2021 ” on page s 9- 11. Ongoing monito ring of KPIs by Executive Mana gement. 2022 Objective s Developments to progress in line with expectations, targetin g first gas from NEA/NI in H2 2022, Cassiopea in H1 2024 and Epsilon H1 202 3. Continue to monitor project progress. 79 As measured under the T echnipFMC EPCI C. STRATEGIC REPO RT Page 88 of 273 #3 Strategic- Deliv er exploration success and rese rves addition Principal risk : Lack of new commercial discoveries an d reserves replacement Owner : Group Technical Director Link to strategy : ① ② ④ ⑤ Link to busines s model : A C Link to 2021 KPIs : Deliverin g our strategy and growi ng our busin ess Risk appeti te Medium – Exposure to exploration and appra isal f ailure is in herent in accessing the significant upside potenti al of exploration projects, a nd this rem ains a core value driver for Energean. T he Group invests in data and exploits the strong experience of Energean’s te chn ical teams to mi tigate this risk. 2021 movement ▼ Th is risk has been sli ghtly decreased in 20 21. In Jan uary 2021, Energean reach ed FID at the 1.2 Tcf (33 Bcm) Ka rish North field, 21 -months a fter the announce ment of the discovery. Energean’s preparatory work a head of the offshore Israel dril ling campaign progressed in line with expectations during 2021. In Ju ne 2021, Energean sign ed a rig contract with Stena Drilling for the St ena IceMax drillship. The contract is for the drilling o f three firm wells and two optional wells. Drilling com menced in March 2022, and the ca mpaign h as the potential to dou ble the Israel gas resource base. For further in formation, please ref er to “ Performance in 2021 ” on pages 9- 11. Impact Failure to make new significant gas discoveries and replenish the exploration portfolio will reduce the Grou p’s ability to grow the busin ess and deliver its strat egy. Mitigation Energean focu ses on h igh -grading of its explora tion and appra isal progra mme an d maintains a focus on low-risk, high-rew ard prospects with clear and short-t erm routes to commercia lisation. The Group’s next major e xploration and appraisal ca mpaign, o ffshore Israel, is on track. Ongoing monito ring of KPIs by Executive Mana gement Team. 2022 Objective s Execute exploratio n and appraisal ca mpaign offshore Israel. Increase and diver sify presence in Egypt. This was achieved in early 2022, with th e award of an exploratio n licence for the East Bir El -Nus concession (Blo ck-8), in t he Western Desert of Egypt. STRATEGIC REPO RT Page 89 of 273 #4 Strategic - Market r isk in Israel Principal risk : The potenti al for Israeli gas market oversu pply may resul t in offtake being at the take - or - pay level of existing GSPAs and could result in th e failure to secure new GSPAs Owner : Commercial Director Link to strategy : ① ② ④ ⑤ Link to busines s model : B C Link to 2021 KPIs : Deliverin g our strategy, growi ng our business Risk appeti te Low – Strong co mmercial terms a nd contra ct security are a core component of Energean’s business mo del and in vestment case. Th e Group utilises its stro ng regional ties and the experience of En ergean’s commerc ial teams to mitigat e this risk. 2021 movement ▼ Thi s risk decreased in 2021 versus 2020, due to risin g gas deman d in Israel and the surrounding ma rkets as a result of the recovery from the impact of COVID - 19 on demand . In 2021, dem and f or gas in Israel w as a pproximately 11.9 Bcm. Despit e nea r -t erm pressure on demand, Israel’s long -term gas demand ou tlook rema ins robust, with demand forecast to grow to 15.7 Bcm by 2025 and approximatel y 20.1 Bcm by 2035 80 . Natural ga s demand increase is driven by the enduri ng growt h in electrici ty demand, as well as by a tra nsition of fuel mix, from coal an d oil to natural gas and renew ables. Also in 2021, Energean signed a MOU wit h EGAS fo r the sale and purchase of up to 3 Bcm/yr of natural gas on average for a period o f 10 y ears. This also represents a commercialisati on o ption for gas resources discovered in the 2022/23 Israel drilli ng campaign. There are existing expo rt pipelines from Israel to Egypt that Energea n can utilise. Impact Increased market co mpetit ion may driv e Israeli do mestic gas prices down. Lower pricing may incentivise gas buyers to make nominations that are restricted to the take - or -pay levels within th e GSPAs, rather tha n the f ull an nual co ntracted qua ntities. T his could reduce Energean’s future net revenues and ca sh flows, potentially impacting upon its ambit ion to pay a meanin gful and sustainable dividend. Mitigation All existing con tracted rese rves and reso urces are to t he dom estic market, including those of Kari sh North, fo r which it h as been indica ted tha t the norma l export quo tas under "Adiri 1 and A diri 2" will apply. The same is tru e for further discoveries. Energean is investigating a ll optio ns for the commerci alisation o f futu re exploration success, incl uding fu rther domest ic supply as w ell as supply to key regional gas markets. Ongoing monit oring of KPIs is undertaken by Ex ecutive Management Team. 2022 Objective s Energean will pro actively seek to mainta in good relati onships with its gas buy ers, whilst also eva luating potential export routes a nd other options fo r monetisation. 80 Isr ael Ministry o f Energy – Interim Report for the Examination of Government Policy on t he Natural Gas Economy in Israel, July 2021 . STRATEGIC REPO RT Page 90 of 273 #5 Financial Risk - M aintaining liquidity and solvency Principal risk : Insuffici ent liquidity and funding capaci ty Owner : Chief Financial Officer Link to strategy : ① ② ③ ④ ⑤ Link to busines s model : A B C D E Link to 2021 KPIs : Grow ing our business Risk appet ite Low – Energea n seeks to set the founda tions for th e future via a solid capi tal structure. 2021 movement ▼ This risk has decrea sed i n 2021. During the year, Energean raised over $3 billion from the debt capital mar kets to re financ e existing borro wings. Energean ended the year with over $1 b illion of liquidity. Impact Funding and liquidity risks could impact the Group ’s viability and ability to continue as a go ing concern, i ncluding a downt urn in busin ess opera tions f or u nexpected f actors, like pandemics. The Company is expo sed to commodity prices i n rel atio n to i ts sa les a nd rev enues under its crude oil and gas sales contracts, which are subject to variable market fa ctors. Interest and fo reign exchange ra te movement s could negatively affect pro fitability, cash flow and balance sheets (see Note s 27.3 and 27 .5 to t he consolidated financial statements). Erosion of balance sheet t hrough impairm ents of financial assets ma y furt her imp act the Group’s fina ncial position 81 . Mitigation In 2021, Energean ra ised over $3 bill ion from the debt capita l market s to refinance existing borrowings and incre ase liquidity. Th is included: (i) $2.5 billion senior secured notes, non - recourse to the Gr oup, at the 100% su bsidiary Energean Israel , (ii) €100 million Greek sta te ba cked loa n, non -rec ourse to th e Group, at Energean Greece a nd (iii) $450 million senior secu red notes at Energean plc. In doing so, Energean extended the weigh ted average matu rity to approximatel y six yea rs, push ed out commence ment of major debt repayment obligati ons t o 2024 and con verted f loating interest rates to fixed rates. The Group ended t he year wit h over $1 billion of liquidity 82 , ensuring it is fully f unded to deliver our projects, re moving a ny near -t erm debt repay ment obligat i ons and eliminating exposure to in terest rate volati lity. Moving forwa rd: • Financial covenants are in currence based rather th an mainten ance covenants and therefore man agement of the same is fu lly within the control of the Group. The covenants are monitored, inter ali a, in the context of setting the dividend policy, paying a dividend, ma king an acquisit ion or raising additional debt. • The Group actively monitors oil price movements and ma y hedge part of its production to prot ect the downside while ma i ntaining access to upside and to ensure availa bility of cashflows for re -investm ent and debt-servi ce. • All Karish gas contracts are ba sed on pricing formula s which include floo r prices; that ensures a min imum price for gas sales wha tever the market co ndit i ons or pricing formula s outcome. Ongoing monito ring of KPIs by Executive Mana gement. 2022 Objective s Evolve the capital allocation strategy from capi tal i nvestment to sustaina ble cash- flow generati on. 81 F or further information, please refer to Going Concern disclosure on pages 185- 18 6 an d Viability Stateme nt disclosure o n pages 104 - 105 ). 82 In cluding rest ricted cash amo unts of $2 00 million and u ndrawn Greek debt facility of € 100 million. STRATEGIC REPO RT Page 91 of 273 #6 Organisational & HR r isk Principal risk : The pot ential risk of group level ro les being overwhelmed by th e additional wo rkload associated with the Edison integratio n. Owner : HR Director Link to strategy : ④ ⑤ Link to busines s model : B, D Link to 2021 KPIs : Deliverin g our strategy, growi ng our bus iness Risk appeti te Low – The pursu it of our strategy relies on at tracting , motivating and retaining key talented people and their knowl edge an d ex pertise. Our perform ance and a bility to grow depend s on it. 2021 movement N New Risk The pandemic has changed ho w peo ple t hink about work. Prio rities have shif ted and workforce expectations have, a nd contin ue to change, i n t erms of flexible and rem ote working combin ed with the challenge of current and future wage infla tion. We celebrated one year from the successful completion of the Edison acquisition . T he organisational structure following the c lose of th is transaction continu es to evolve. Impact The i mpact of rapi d gro wth , if poorly managed, puts additional pressure on peo ple, their performance and wel lbeing and cou ld resu lt i n ta lent lo ss, part icularly among high performers. Mitigation Talented People and Responsibl e Operations are two of o ur key business model foundations. Energean has a clearly defin ed recruitment drive to increa se the headcount for Group level roles a nd has al so launched a n employ ee assistance program a nd a performance mana gement pro cess, alongside the competency framework , introduced in February 2022. Energean has active employee’s incentives plans (LTIP, DBP and MB O awards) as w ell as an internal career development process. Ongoing monito ring of KPIs by Executive Mana gement. 2022 Objective s Energean will co ntinue to foster a cu lture of incl usion and diversi ty, as well as streamlinin g the learning and knowledge sharing proce sses. Continuous Perform ance enabled via SAP SuccessFa ctors to maximise val ue. STRATEGIC REPO RT Page 92 of 273 #7 Operational risk - Misalignment wit h JV operators Principal risk( s) : Misalign ment with JV operators Owner : Technical Director Link to strategy : ① ② ④ ⑤ Link to busines s model : C Link to 2020 KPIs : Grow ing our business Risk appeti te Medium – The Group seeks to operate assets which align with the Group’s core areas of expertise, but recognises tha t a ba lanced po rtfolio will also include non -operated ventures. The Group accepts that there are risks a ssociated with a non -opera tor role and will seek t o mitigate these risks by w orking wi th partners of high in tegrity and experience and mainta ining close working rela tionships with all JV partn ers. 2021 movement ▲ – T he risk increased in 2021 as a la rge compon ent of the Italia n portfolio and the en tire UK portfolio are operated by joint ven ture partners. Impact Cost/schedule overru ns. Poor operation al performance of assets. Delay in first product ion from new projects. Negative impact o n asset value. Ability to effect cha nge towards lowering carbo n footprint. Mitigation Actively engage wi th all JV partners earl y to establish good wo rking relationships. Actively participate in operational and technical meetings to challenge, apply influence and/or support partners to establish a cohesive JV vi ew. Active engagement w ith supply chai n providers to monito r performance an d delivery. Application of the Group risk ma nagement processes an d non -operated ventures procedure. Ongoing monito ring of KPIs by Executive Mana gement. 2022 Objective s Continue to proactively engage with JV partn ers and mon itor JOA procedures. STRATEGIC REPO RT Page 93 of 273 #8 Operational Risk - Egypt receivables Principal risk : Recoverabil ity of revenues and receivables in Egypt Owner : Country Manager Egypt Link to strategy : ① ② ④ ⑤ Link to busines s model : A B C D E Link to 2021 KPIs : Grow ing our business Risk appeti te Low – Th e Gr oup utilises its strong regiona l ties and the experience of its comm ercial teams to mitiga te this risk. 2021 movement ▼ The risk has sub stantial ly decreased in 2021 as Energean reduced its to tal EGPC receivables positio n in Egypt to less tha n $95 million compa red to the balance prevailing at the economic ref erence date o f t he Edison E&P acquisit ion (1 January 2019: $240 million ) and $149 millio n as at 31 December 2020. Impa ct Loss of value. Work programme restrict ed by reduced finan cial capability . Reduced abili ty to meet debt covena nts (in currence only) and service outstanding debt. Mitigation Energean has a nu mber of co ntractual solutions with EGPC to ensu re an effective collection policy, including condensat e proceeds, lump - sum payments, Abu Qir payables off setting and local currency coll ection. Continued engagement wit h the Egypti an government and Ministry of Petroleum. Proposals for structu ring and planning of overdue r epayment, on a regular basis. Ongoing monito ring of KPIs by Executive Mana gement. 2022 Objective s Further improve receivables positio n a nd agreem ents in place to accelera te reco very of overdue receiva bles. Maintain an act ive investment programme. STRATEGIC REPO RT Page 94 of 273 #9 Operational Risk - Decommissi oning liability Principal risk : Higher than expected decommissio ning costs and accel eration of abandonmen t schedules Owner : Technical Director Link to strategy : ⑤ Link to busines s model : D Link to 2021 KPIs : Grow ing our business Risk appeti te Low – Energea n is committed to optimising its decommissio ning activities and spend. 2021 movement ▲ The risk increased in 2021 , mainly due to the in herent regulatory uncertainty related to decommissio ning acti vities; legislative co mplexities; a nd the cu rrent ab sence of specific legislati ve references at national and international level for the regu lation of decommission ing activities. Impact Uncertainty in relation t o the planning of decommissioning tim e and costs. Reduction in ca sh flow. Negative impact o n asset value. Substantial in crease in long -term liabilities on ba lance sheet. Mitigation Utilisation of the strong experience o f Energean’s techni cal team s and co mmercial partnerships. Proactive in teraction wi th local govern ment an d regula tion bodie s to joint ly design/review decomm issioni ng regulation s . Scale achievemen t through grouping of assets in adjacent areas also promoting increased negotia tion leverage in contract ing activities. Potential creation of pa rtnerships fo r deco mmissioni ng a ctivities, further increasing scale potentia l and promoting transfer of decom missioning solutions. Adoption of n ew t echnologies prom oting innovative solutions to further optimise costs and maximise operat ional excellence. Continued effort in i dentifying pot ential alternative uses for existi ng platf orms prioritising assets wi th higher cost base. Adoption of abandonment cost cap in surance. Ongoing monito ring of KPIs by Executive Mana gement. 2022 Objective s Continue to develop and refine strategy for opt imising decomm issioning spend. STRATEGIC REPO RT Page 95 of 273 #10 Cyber/ICT (Informati on Communicati on Technologies) Se curity Principal risk : Major cyber -attack or information secu rity incident Owner : Information Technology Ma nager Link to strategy : ① ② ③ ④ ⑤ Link to busines s model : A B C D Link to 2021 KPIs : Grow ing our business and ‘Best in Cl ass’ on safety Risk appeti te Low – Energean is commit ted to main taining the secu rity and integrity of its data and IT systems. 2021 movement ▲ This risk increased in 2021. Energea n continues to grow its operationa l presence in several sites a nd t he i ndustry remains a target putting the Gro up a t f urther risk of cyber-attack s or IT system failu re. Impact Loss of value. Reputational dam age. Loss of data and thef t of confidential info rmation, and personal data. Regulatory implications and financial penalties. Mitigation Digital transfo rmation of emai l and collaboration services to th e Cloud. Constant impl ementation and monitoring of the Company’s IT Security Pol icy. Control of disclosures and protectio n of any disclosed confidential information in third party contra cts. Advanced network sec urity detection an d data encryption. Vulnera bility Assessment and Penetration Testing. Annual mandatory security an d GDPR a wareness t raining. Staff susceptibility to phishing regularl y tested. Comprehensive in surance polici es in place. Ongoing monito ring of KPIs by Executive Management . 2022 Objective s Improvements and enha ncements needed in mo st aspects, curren tly pursued. STRATEGIC REPO RT Page 96 of 273 #11 Regulatory and Co mpliance - F raud, Bribery and corrupt ion Principal risk : Major breach of values, business principles an d ‘Ethos’ Owner : Chief Executive Link to strategy : ⑤ Link to busines s model : A, B, C, D, E Link to 2021 KPIs : Grow ing our business Risk appeti te Low – Energean is committed to maintain integrity and high ethical standards in all of the Gr ou p’s busines s dealings. The Group has a zero -tol erance approach to conduct that may co mpromise its reputation or integrity. 2021 movement ▬ This risk rem ained static in 2021. There were no report able instan ces of fraud, bribery or corruptio n. Impact Reputational dam age. Financial penal ties or civil claim. Criminal prosecu tion. Mitigation Strong governance and anti -corrupti on policies and procedures. Audit revi ews, use of data analytics and continuous monitoring of bribery and corru ption controls a cro ss the Group to assess compliance. Robust financial procedures in place to mitigate fraud. Annual trainin g programme in place for al l employees, availa ble also in local languages. Enhanced due diligence of business partners and customers and compliance aud iting on major cont ractors. Ongoing monito ring of KPIs by Executive Mana gement. 2022 Objective s Continued focus on empl oyee a wareness com munication an d training to al l different countries of o perations, including in person trai ning and worksho ps, as appr o priate. A bribery a nd corruptio n risk assessment will be con ducted in coun tries deem ed of a higher risk, which will supplement the grou p risk assessment al ready in place. STRATEGIC REPO RT Page 97 of 273 #12 Health Safety a nd Environment (HSE) Principal risk : Lack of adh erence to healt h, safety and environm ent policies Owner : HSE Director Link to strategy : ① ② ③ ④ ⑤ Link to busines s model : A B C Link to 2021 KPIs : ‘Best in Cl ass’ on safety Risk appeti te Low – Energean i s com mitted to ma naging its opera tions in a safe an d reliable ma nner to preven t m ajor accidents and to provide a hi gh l evel of protection to its employees and contracto rs. 2021 movement ▬ This risk remained static in 2021. The Group’s pro forma LTIF 83 for operated activity in 202 1 was 0.33 per millio n hours work ed (down from 0.88 in pro fo rma 2020) . Our TRIR 84 f or 2021 was 0.77 per millio n hours worked (down from 1.47 in pro form a 2020). The re were no spills to the environ ment. Impact Serious injury or deat h. Negative environ mental impacts. Reputational dam age. Regulatory penalties and clean -up costs. Loss or damage to Com pany’s assets and poten tial business interru ption. Loss or damage to thi rd parties and potent ial claims. Mitigation Effectively managing h ealth, safet y, security and enviro nmen tal risk exposure is a t op priority for th e Board, Senior Leadership Team a nd Management Tea m. Ongoing monito ring of KPIs by Executive Mana gement is also undertaken . Development and impleme ntation of the He alth Safety Environmenta l ( HSE) & Social Responsibility (SR) pol icy that set s out co rporate va lues, standa rds and expectations with respect to al l HSE & S R matters in rel ation to co mpany’s employees, partners, stakeholders, genera l public, envi ronment and susta inable development. Implementati on and ma intenance assurance of a n HSE Management System a nd an effective H&S fram ework, covering all Energea n's expect ations and as per international standards. Implementati on a nd maintenance assurance of suita ble and effective Cri sis Management and Emergency Response and Man agement Plans as per Energ ean's expectations and stan dards. Implementati on and mai ntenance assurance of the Corporate Majo r Ac cident Prevention policy (CMAPP), coverin g Energean's expect ations and stan dards. 2022 Objective s Establish and implem ent the already developed HS EMS on Energean Power in Israel Have in place all the required HSE permits for th e drilling campai gn in Israel Have in place all the required HSE permits for Ener gean Power in Israel Plan an intern al audit to be p erformed in 2022 to m onitor the level of countries’ compliance to the group guidance 83 Lost Time Inju ry Frequency. 84 To tal Record able Incident Ra te. STRATEGIC REPO RT Page 98 of 273 #13 Climate change Principal risk : Failure to manage the risk of climate ch ange and to adapt to the energy transition Owner : Chief Executive Officer and - HSE Director Link to strategy : ① ② ③ ④ ⑤ Link to busines s model : A B C D E Link to 2021 KPIs : Deliverin g our strategy, growi ng our business and tackl ing climate change Risk appeti te Low – The Gro up is co mmitted to ach ieving its n et-zer o em issions 85 target by 20 50 and reduci ng th e nea r-term carbo n int ensity of it s operat ions t hrough th e implementat ion of lo w carbon soluti ons and the acquisitio n o f low carbon intensity hydrocarbon s. Energea n is focused on taking near -term investm ent deci sions t hat ensure its assets rema in competitive in an environment where demand for oil and gas may be lo wer than today and will conti nue to stress test its portfolio against a range of climate change scen ari os, in line with the recom mendations of the TCFD. 2021 movement ▬ This risk remai ned sta tic in 2021. The Gro up’s significant ly increased gas production in 2021 analysed in the light of IPPC’s 202 1 report and global pledges agreed at COP 26 seem t o i mpose medium to l ong term challenges for our ada ptation and resilien ce to the energy transit ion. Impact Reputational dam age and loss of investors and provider s of capital . Reduced d emand for Comp any’s products due to technolo gy devel opments towards alternative energy sou rces. Climate- related policy changes with asso ciated in creased costs. Ability to effect cha nge towards lowering carbo n footprint. Mitigation Aligned with the T CFD recommendations across all TCF D pillars in our year - end reporting. Climate change strategy development for the reduction, sequestration and offsett ing of greenhouse gas emission s. Th is i ncludes performa nce optimi sation and carbon capture and off setting projects. Carbon shadow prices are taken into consideration in the eva luation of project s and investments viabi lity. Active commit ment to CSR goals and targets. Strengthen our low carbon portfolio and reduce our GHG emissio ns intensity by shifting producti on from oil to gas. ESG ratings in top quartil e, awarded ‘AA’ rating by MSCI, ‘Gold’ by Maa la, "Outperformer" by Sustain alytics. Executive compen sat io n tied to ESG performance targets from 2020. Fully commit ted to tra nsparency and adherence to th e 17 UN SDGs. First E&P company globa lly to com mit to net-zero emi ssions by 2050 and now investigating acc eleration of our 2050 net-zero commi tment. Roll out o f ‘Green Electricity’ across all opera ted assets. Agreements are already in place for purchasing 'Gree n Electricity' in our production sites i n Greece, Italy , Israel and in Croatia and Egypt premises. Established a new climate cha nge and sustaina ble devel opment depa rtment to manage clim ate change projects. Implemented clim ate-ba sed scena rio analysis and in ternal carbon pri cing to a ssist with investmen t-decision ma king. Ongoing monito ring of KPIs by Executive Mana gement. Established a de dicated Environment, Safety and Social Responsibi lity comm ittee chaired by Non-Executi ve Direct or R obert Peck to review climate change rela ted risks and projects. Published our first Cli mate Change Pol icy in 2021. 85 S cope 1 & 2 em issions. STRATEGIC REPO RT Page 99 of 273 2022 Objective s Evaluation of Ca rbon Capture and Storage (CC S) pro jects underway , including the maturation of the convention of Prinos into the first CCS project in the East Med. The Prinos CCS proposal has been included in the Recovery & R esilience Fund (RRF) implementat ion proposal for Greece. Small-scal e blu e hy drogen production facility at t he Sigm a plant in Kavala, Greece, also under evalu ation. We ha ve received the form al conf irmation by Important Projects of Common European Interest (IPCEI) UE Co mmittee that our Ec o -Hydrogen u nit proposal (blue-hy drogen with carbon ca pture of m ore than 99%) is in cluded in ne xt IPCEI wave named “Regional Hubs And Their Links (RHATL)”, to work coupled with the Prinos CCS site. Evaluation of use of captured CO2 at Prinos for enhanced o il recovery (EOR), to unlock additional upstream va lue. A proposal to the European Structura l and Investment Funds ( ESIF) thro ugh t he Greek Partnership Agreement for the Develo pment Framework (PA) fo r the design a nd evaluation of the feasibility and eff ect iveness of the re-injectio n of Acid Gas in Prinos reservoirs, ha s been approved for fi nancing. STRATEGIC REPO RT Page 100 of 273 #14 Climate Change - Physical ris ks Principal risk : Disruption to opera tions and/or develo pment projects due to severe weather Owner : HSE Director Link to strategy : ① ② ③ ④ ⑤ Link to busines s model : A B C D E Link to 2021 KPIs : Deliverin g our strategy, growi ng our business and tackl ing climate change Risk appeti te Low – Ma nagement recognises th at c limate change is expected to lead to rising temperatures and cha nges to rainfall patt erns in all the cou ntries where it operat es. Energean is eva luating measures to reduce the exposure and vulnerability of both its assets and its people to we ather an d climate events. 2021 movement ▬ Th is ris k rem ained stati c in 2021. Ri sing sea levels coupled with extreme floo ding could cause disrupti ons to th e operationa l performance of Energea n’s assets, especially those located in higher risk areas. This could also result in dama ge t o infrastructure and an increase in associated asset integrity and insuran ce costs. Longer term a tmospheric or sea temperature rise s cou ld result in faster degradati on of in frastructure and necessitate opera tional changes to the running of the Group’s faci lities. Impact Unexpected asset costs arising from opera tional incidents. Negative market rea ction. Loss of investor con fidence. Serious injury or deat h. Environmenta l impacts due to spills. Reputational dam age. Loss or damage to assets a nd business interru ption. Mitigation Monitoring of weather co nditions a nd sea co nditions. Energean collabo rated with the Democritus Un iversity of Thrace to install the Odyssea Platf orm (an innova tive monitoring marine da ta system) at the Prinos area assets. Use of protective barri ers to combat flooding. Comprehensive in surance polici es in place for key assets and infra structure. Established a de dicated Environment, Safety and Social Responsibil ity commi ttee chaired by Non-Executi ve Direct or R obert Peck to review climate change rela t ed risks and projects. A vulnera bility assessment on the physica l risks du e to climat e change performed i n June 2020 at t he Prinos asset concluded th at natural disasters have a minor potential impact on the asset. Management believes that s ame vulnerabilit y a ssessment provides adequate info rmation for 2021 reporting purpo ses. 2022 Objective s Continue moni toring of envi ronmental con ditions a nd r eporting at both an asset an d corporate level. STRATEGIC REPO RT Page 101 of 273 #15 Strategic- Exte rnal geopolitical, politi cal, social risks Principal risk : Political and fiscal un certainties in the Eastern Medit erranean Owner : Chief Executive Officer Link to strategy : ① ② ③ ④ ⑤ Link to busines s model : A B C D E Link to 2021 KPIs : Deliverin g our strategy and growi ng our busin ess Risk appeti te Medium – Energean ’s aim is to lead the energy transition in the eastern Mediterrane an through a strategic focus on gas and achieve its net-zero ambitio n by 2050, whi lst delivering meaningful and sustain able returns to our shareh olders. The Co mpany is willing t o invest in countries where polit ical a nd/or fiscal risks ma y occu r provided such risks can be adequately managed to mini mise the impact where possible. 2021 movement ▬ This risk remai ned static in 2021. Energean continue s to s creen new opportunit ies in the Eastern Mediterra nean and this can be in juri sdiction s deemed at high er risk of political or f iscal uncertainty. At th e same time, the Group strives for full co mpliance with regards to fisca l requirements acro ss all assets. Impact Loss of valu e; increasing costs; uncertain financial outcomes; loss of asset val ue. Mitigation Operate to the highest industry standards and moni tor co mpliance with the Group’s licen s e portfolio, product ion sharing contra cts and taxation requirements. Maintain sustain ed and positive relationships with governments and key stakeholders through robust in vestment plans and engagement in local projects. Continuous mo nitoring of th e political and regulatory environments in which we operate. Legal/regulato ry and strategic a ssessment ahea d of any commi tment. In Greece, the lo ng- la sting experience in the f ield and the “ f irst- mover’ advanta ge is a considerable opportunity for th e Group to employ efficient CCS technologies in Prinos, where we already operate. 2022 Objective s Continued mon itoring of geopolitical events and regula tory changes. Undertake risk assessmen t acti vities in relation to new projects. Integration of targets and sustainability project s (i.e. community investmen t) within the strategic plan and management incent ive program. Energean stri ves to becom e a leader in CCS in th e Ea stern Medit erranean and i s confident that we wi ll be part of the solut ion. STRATEGIC REPO RT Page 102 of 273 #16 Pandemic Principal risk : Risk related to the spread of pandemi cs and epidemics an d the continuin g impact of Covid 19, including the a ssociated deteriora tion of health response capaci ty, financial and business disruption, whi lst maintaining operability . Owner : Executive Management and HSE Direct or Link to strategy : ① ② ③ ④ ⑤ Link to busines s model : A B C D E Link to 2021 KPIs : Deliverin g our strategy, growi ng our business and ‘Best in Cla ss’ on Safety Risk appeti te Low – Throughout 2021, the pa ndemic conti nued to impact cou ntries around the world, spurri ng new lockdowns and bu siness disr uptions. Although l ockdowns continued to challenge us and the way we work and interact with each other, Energean’s number one priority is to protect the health and wellbeing of its people and to ensure business conti nuity. 2021 movement ▲ This ri sk increa sed in 20 21. As a business, and a t individua l levels, conditions w ere extremely chal lenging. From a project delivery perspect ive, delay s associated with C OVID- 19 have had a significan t impact on the constructi on work associated with the FPSO and the progress o f the Karish project. Impact Project delay s; delay in revenue in come, supply chain interru ption; HSE risk / risk to employee well being; operational restrictions e.g. ability to mobili se workforce. Mitigation Energean has ta ken significan t actions to mi tigate the impact of COVID -19 on the wellbeing of its wo rkforce, including: Specific control measures, social distancing, and w orking from home (m ore than 50% of office w orkers worked fro m h ome in 2021) to protect its emplo yees, i n l ine with lo cal regulatory obl igations. Suitable train ing to provide the necessary level of knowledge and self -protectio n. Provision of perio dic COVID-19 tests Introduced a global Emplo yee Assistance Program offerin g professional support to address any personal cha llenges affect ing their well -being. Closely moni toring official national guidance. Implementati on of B usiness Continuity Plans at all workpl aces, providing suitable mitigation measu res ensuring operatio nal continuity. Energean a lso pro moted other t eambuilding activities inclu ding o nline coo king, running fo r good causes, a nd hosti ng a variet y of wo rkshops and webin ars. We also ensured that all our empl oyees groupwide are covered with private medical insurance. 2022 Objective s Continued re-assessmen t of our co ntingency pl anning, our emergency/i ncident response plan and our busi ness contin uity management plan. Emerging risks Russia’s w ar on Uk raine seems to have created new challenges for Euro pe and is expected to lead into significantly higher prices of several comm odities includin g energy (gas, oil a nd ulti mately electri city), deteriorate trade l inks and lead to overall higher unce rtainty, af fecting both ec onomic and fina ncial sector confidence. It has al so und erlined th e dangers of Euro pe’s dependency on Russia n oi l & gas and any implications associated thereto. Current tensions have stoked fears of disruption of R ussian gas flows to EU member states leading potentia lly to energy shortages which has resu lted so far to even higher prices for European con sumers who are al ready experienci ng a severe cost - of - living crisis. Given potential continuing uncertainty over Russia's oil and gas supplies to Europe, the European Commission is trying to accelera te a ctions towards diversifyin g its supply and i ncreasing its energy STRATEGIC REPO RT Page 103 of 273 independence. A new Commissio n co mmunication published on 8 Ma rch 86 sets out a new framework for more affordable, secure and sustaina ble en ergy (REPOWER EU) and specifically call s fo r a phasin g out of fo ssil fuel s dependen ce f rom Russia before 2030: The framewo rk call s fo r a new EU gas stora ge policy, diversification of g as supplies, via high er LNG imports and pipeline import s specifically from non - Russian suppli ers, and f or hi gher levels of biometh ane and hydrogen producti on. These actions a re naturally to be com plemented wi th furth er efforts towards energy ef ficiency, in creasing the share of renewable and addressing infrastructure bottlenecks. Energean, with E& P a ssets in the east Mediterranean is well placed to contribute to these joint European eff orts towards increasing the diversi ty of energy supply and also bu ild tow a rds the a ffordability of natural gas as a transitional fuel towards decarbonisati on and a pre-curso r to clean hydrogen production. Meanwhile, rising tensions between the West and Russia will likely damage regional stabili sation efforts, particularly in the Middle East. Most importa ntly, a ll -out war between Rus sia an d Ukra ine ha s already prompted a sha rp increase in global en ergy and whea t pri ces, with a devastating human itarian impact on already fra gile countries in the are a, who se governance problems could worsen . Although not directly affected on o ur o perations as there is no immediate im pact with respect to t he safety and secu rity of our people and o perations in Ea st Mediterra nean and Nort h Sea and i n any neighbouring co untries, Energean will closely and a ctively continue to monitor the w ide -ranging challenges to al l countries in which we operat e. Main risk area s f or m anagem ent focus sho uld be the subsequent sanctions and expo rt co ntrols imposed by countries a round t he world a nd how these could have a n impact on a number of our a ctivities, including supply , trading and treasury acti vities as more sanctions an d export controls are expected. Given the evolving sit uation, th ere are m any oth er unkno wn factors and events that coul d materially impact ou r operatio ns but canno t be fully defined as a speci fic risk at present, a nd th erefore ca nnot be fully a ssessed or managed . Th ese risks and future events could impact indirectly our supply chain, commodity prices, credit, commodit y trading, treasury and legal envi ronment including any increased taxation in the countries in wh ich we operate. The tensio ns also might create hei ghtened cyber -secu rity threats to our in formation technology infrastru cture onshore or offshore. The Group ha s identified all these emerging risks a nd is a ctively assessing an d monitoring these. 86 C OMMUNICATION FR OM THE COMMISSIO N TO THE EUROPEA N PARLIAMENT, THE EUROPEA N COUNCIL, THE C OUNCIL, THE EUROPEAN ECONOMIC AN D SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS REPo werEU: Joint European Action for m ore affordable, se cure and sus tainable energy COM/2022/108 final. STRATEGIC REPO RT Page 104 of 273 Viability Statement The Directors have asse ssed the viabi lity of the Gro up over a 3 year perio d until 31 December 2024. The assessment started fro m the Year End 2021 a ct ual financial position an d considered the po tential impact of the principal risks documented in the report on its f orecasted financi al projections. Th e basis f or the forecasts is the Gro up Working Capi tal Model. The board conduct ed the review over a 3-yea r period for the fo llowing reasons: • The Group’s key strategic projects, Karish, Karish North, NEA/NI, Cassiopea and Epsilon are expected to be onstream by mi d- 2024 delivering Energean’s m edium term plan targets of $1.4 b illio n EBITDAX and 200 Kboe/d • This period covers the rem aining capital intensiv e in vestment ph ase until respective first product ion from ea ch of the stra tegic projects. These investments will materially increase the Group’s free cashflow f rom H2 2022 in particular, when th e Karish field comes onli ne. • Energean raised $2.5 b illio n of project bonds fo r its Isra el Project, the first tranche of bonds a re due for repay ment in 2024 therefore the viabi lity period ca ptures both t he coupo n payments and the fi rst principal repaym ent. Based o n t hese f acto rs, t he bo ard co nsiders that an assessment period up to 31st Decemb er 20 24 appropriately reflects the underlying poten tial and viability of the Grou p and is the period over which principal risks are review ed. In order to make an assess ment of the Group’s v i ability, the Board has carried out a detailed assessment of the Group’s principal risks, and the potential implications these risks could have o n the Gro up’s liquidity and its business model over the asse ssment period. This assessment included ( i) mon thly cash flow analysis, (ii) a n umber of sensitivity scenarios and (iii) a reason able worst -case scenari o i ncluding a combination of various sensit ivities, toget her with associat ed supporting a nalysis provided by the Group’s finance team. Sensitivity analysis focused on commodit y price downside, slower -ram p up in gas offtake in Israel, do wnward pressu re on contra cted gas -prices in Israel due to an assumed delay and other strategic projec t delays (outside of Israel). A summary of th e key a ssumpti ons, align ed to the Grou p’s principal risks, and the sensitivity scenario s considered can be foun d below. Principal Risks Base Case A ssumptions Sensitivit y Scenarios Strategic Risk: Delay to Fi rst Gas at Karish First Gas from Karish in October 2022 – conservati ve assumption given Group’s target of first gas in Q3 202 2 No further delay to first gas given conservative ba se case, however sensitivi ty applied to both gas price and offta ke ramp-up (see belo w) and increase in capex to acco u nt for potential cost incre ase due to delay Market Risk in Israel : The potential for Israeli gas ma rket oversupply may result in offtake being at the ta ke- or -pay level of existing GSPAs an d could result in the f ailure to secure new GSPAs Minimum ACQ con tracted volumes at floor prices, wi th conservative % ramp -up durin g the first 12 months Slower ramp- up and reduction in average flo or price – to reflect potential renego tiation or cancellation of contracts STRATEGIC REPO RT Page 105 of 273 Principal Risks Base Case A ssumptions Sensitivit y Scenarios Strategic Risk: Delayed d elivery of future developm ent projects (including NEA / NI in Egy pt, Cassiopea in Ital y and Epsilon in Greece) First gas from NEA and N I assumed October 2022 and July 2023 respectively, Cassiopea in H1 2024 a nd Epsilon in H1 2023. 3 month delay to NEA/NI an d Epsilon. Cassiopea ti meline in base case already ha s a conservative sta rt date, no adjustment made. Maintaining liqui dity and solvency - Fin ancial Risk: Insufficient liquidit y and funding capaci ty Oil price based on materia l discount to recent fo rward curve, at $80/bbl in 2 022, $75/bbl in 2023 and $70/ bbl in 2024. PSV gas price based on material disco unt to recent forward curve, €55/ MWh in 2022, €40/ MWh in 2023 and €30/ MWh in 2024 FX rate for costs in € of €1: $1.2 FX rate for costs in £ of £1: $1.4 The $2.5 b illio n and $450 million bonds have a fixed coupon i.e. no exposure to LIBOR Reduction of $5/bbl in oil and €5/ MWh for PSV resulting in c. 40% reduction and 50% reduction vs. forw ard curve respectively. Climate Cha nge related risks: failure to mana ge the risk of climate change and to adapt to the energy transit ion Carbon costs incl uded across the portfolio where a pplicable, e.g. in Greece. Budget expenditure f or green projects and or investmen ts included in the base case s uch as (i) €4 million for on -site projects for absolu te emissions reduction, (ii ) €0.5 million investment in ca rbon removal projects (iii) FEED studies fo r CCS project. Free allowa nces are used up until 2025 therefore ch arges are projected to be incurred outside of the Viabil ity Period Under such individual and co mbined sensitivity scenari os the Group’s cash position at the end of vi ability period remains extrem ely robust. Nevertheless the Bo ard has considere d the availabil ity and likelihood of mitigating fact ors such as the impact of he dging, additio nal funding option s, further rationalisation of our cost and asset base, inclu ding cuts to discretion ary capi tal expenditure such as exploration or shifting of expenditures under our c ontrol. Based on the results of the analy sis the Board of Direct ors has a reasona ble expectation that the Company will be a ble to contin ue i n operatio n and meet it s lia bilities a s they fall due o ver t he peri od of their assessment. CORPORATE GOVERNA NCE Page 106 of 273 C o r po r a t e G o v e rn a n c e Board of Directors Karen Simon Non-Executive Cha irman Ms. Sim on was appo inted as an indepen dent n on -exe cutive director in Septem ber 2017 a nd beca me Non- executive Cha irman in No vember 2019. Ms. Simon w as f ormerly a Vice Chairman in J.P. Morga n’s Investment Bank wi th over 35 years of cor pora te finance experience w ith the firm. Most recen tly, Ms. Simon hea ded up Director Advisory Services, a n ewly esta blished clien t service a t J.P. Morgan focused on public company dire ctors. Fro m 2004 to 2016, Ms. Simon worked wit h private equity firms in J.P. Morgan's Financial Sponsor Coverage group a nd was promoted to Head the European group in 2007 an d the Nort h Ameri can gro up in 2013. Ms. Simon held a n umber of other senior positions previously , including Co-Head of EMEA Debt Ca pital Markets and He ad o f EMEA Oil & Gas Coverage. Ms. Simon spent 20 years of her ca reer workin g in London and is a dual US/U K citizen. She cu rrently sits on the boards of Aker ASA in Osl o, an indu strial investm ent compan y, Crescent Energy, a New York Sto ck Exchange listed energ y com pany, and th e Texas Woman's Fo undation, a n on -prof it charity focused o n the needs o f underprivileged girls a nd women across Texas. Ms. Simon graduated from the University of Colorado and has Maste r’s degrees from Southern Met hodist U niversity and from the Am erican Gr aduate School of Intern ational Management. Independent: • Upon appointm ent as Chair. Committee members hip: • Nomination & Govern ance – Ch air • Remunerati on & Talent – Member. Current external appoi ntments: • Aker ASA – Indepen dent Non -Executive Director • Crescent Energy - Independent Non -Executive Director Matthaios (Mat hios) Rigas Chief Executive Officer Mr. R igas h as over 20 years of investment bankin g an d privat e e quity experience and is a foundin g shareholder of the Energean Group, serving a s CEO of the Energea n Group since 2007. Duri ng the years 2001 to 2007 Mr. Rigas set up, a nd was Managin g Partner of, Capit al Connect Venture Partners, a private equity fund in Greece with i nvestments in i nnovative enterprises in IT, hea lthcare, waste man agement and fo od indu stries. Fro m 1999 to 2001, Mr. Rigas w as in ch arge of Piraeu s Ba nk’s Shipping Division. Prior to that, fr om 1993 to 1999, he was the Vice President of Shi pping, Energy & Project Finance at Chase Manhattan Bank in London where h e arrang ed fin ancing in e xcess o f U S$5 billio n, main ly in the oil and gas sector. Mr. Rigas holds a degree in Mining and Metallurgica l Engineering from th e National Technical University of Athens and an MSc / DIC degree in Petroleum Engineerin g from Imperial Col le ge London. Independent: • N/A. Committee members hip: • N/A. Current external appoi ntments: • None. CORPORATE GOVERNA NCE Page 107 of 273 Panagiotis (Panos) Benos Chief Finan cial Officer Mr. Benos has 18 y ears inte rnational experience in t he oil and gas secto r, both i n bankin g and indu stry, with a long track rec ord of upstream finan cing in emerging m arkets. Mr. Benos joined the Energean Group in 2011 from Standard Chartered Bank, where he was a directo r in the Oil and Gas team in London delivering a number of a ward -winning projects and acqu isitio n finance dea ls in Af rica, Asia a nd the Mi ddle East. Before that he work ed fo r Conoco Phillips f rom 2002 to 2006, where he held p ositions in Europea n Treasury, Nort h Sea Economics a nd International Downstream with a focus on the North Sea, Central Europe a nd th e Mi ddle East . He co mmenced his career at R oyal Ba nk of Scotl and in Shipping Finance. He is also a Chartered Acco untant (ICAS) and ho lds an MSc in Shipp ing, Trade and Fi nance fro m Cass Business School. Independent: • N/A. Committee members hip: • N/A. Current external appoi ntments : • N/A. Andrew Bartlett Senior Independent Direct or Mr. Bartlet t was appointed as an independent non -execu tive directo r in Au gust 2017. Mr. Bart lett has over 30 yea rs’ experience in the upstrea m oil and gas i ndustry and current ly serves a s a Non -Executive director for Africa Oil Corpora tion an d Prime Oil & Gas B.V. and a s Energy Adviser to Hel ios Investment Partners LLP (a private equity partnership f ocused on Africa). Before hi s current directorships, Mr. Ba rtlett served as the chairma n and Non-Executive direc tor of Azonto Energy fro m 2013 to 2015 and Eland Oil & Gas from 2012 to 201 3. He was al so previously the Globa l Head o f Oil & Ga s M&A and Project F inance for Standard Cha rtered Ban k between 20 04 a nd 2011. Prio r to this, he worked on the Tra ding and Derivatives desk of Standard Bank in Sout h Afri ca. Before joining the invest ment banki ng industry , Mr. Bartlett w orked for Shell plc between 1981 a nd 20 01, as a petrol eum engineer and de velopment manager, where he ga ined exten sive experien ce in the upstrea m operati ons of oil and ga s fields a nd la tterly a s a founding VP of Shell Ca pital. He holds an MSc in Pet roleum Engineeri ng from Impe rial College Lo ndon. Independent: • Yes. Committee members hip: • Audit & Risk Commit tee – Ch air • Remunerati on & Talent Committee – Member. Current external appoi ntments: • Africa Oil Corpora tion - Non-Executive Director, Hea d of Audit Committee • Prime Oil and Gas B.V. - Non -Executive Director, Head of Audit Comm ittee • Adviser to Helios Investmen t Partners LLP Efstathios (Stathis) Top ouzoglou Non-Executive Director Mr. Topouzoglou was appointed as a non-executi ve director in May 2017. Mr. Topouzoglou is a founding shareholder of the Energean Group and co - founder of Prim e Ma rine Corporation (“Prime”), servin g as Prime’s ch ief executive officer and managing director. Prime, a leading worldwide product ta nker company, is a major global provider of seaborn e transportation for refined petroleum products, LPG a nd ammonia. Mr. Topouzoglou ha s more th an 39 yea rs of experience in f ounding a nd gro wing com panies in the energy transportation sector and holds a B.A. in Business Administration and Economics from the University of Athens, Greece. CORPORATE GOVERNA NCE Page 108 of 273 Independent: • No Committee members hip: • Nomination & Govern ance – Mem ber • Environment, Saf ety & Social Responsibi lity – Member. Current external appoi ntmen ts: • Chief Executive Officer a nd Managing Director of Prime Marine Corpo ration. Robert W. Peck Independent Non-E xecutive Director Former Amba ssador Robert W. Peck was appointed as an in dependent non -execu tive directo r in J uly 2017. He is a 35 -year vetera n of Canada's diplomat ic service. He wa s Ca nada’s Ambassador to the People’s D emocrati c Republi c of Algeria from 2004 to 2007 and Ambassador to Greece and High Commission er to the Republ ic of Cyprus from 2011 to 2 015. As Canada ’s represent ative to both Alge ria and Greece, Amba ssador Peck work ed closely with both the Ca nadian oil and gas and mi ning sectors. Earlier he occupied sen ior r oles at headquarters in Ottawa including as Chief of Protocol of Can ada and Press Secretary to the Mi nister of Foreign Affa irs . On lea ve from the Governmen t of Cana da f rom 2000 to 2002 Am bassador Peck was Director of Co rporate Commu nications and Investor Rel ations at CAE Inc., the global lea der in aerospace simulation techn ology. Ambassador Peck holds a B.A. in History and Journalism fro m Concordia University in Montréal. Independent: • Yes Committee members hip: • Environment, Saf ety and Social Responsibil ity - Chair. • Nomination & Govern ance – Mem ber • Remunerati on & Talent - Ex Off icio member as board's employee representa tive Current external appoi ntments: • n/a Amy Lashinsky Independent Non-E xecutive Director Ms. La shinsky was a ppointed as an i ndependent non -executive director in November 2019. Ms. Lashinsky is the Co -Founder and Chief Executive of Alaco , an international risk manag ement and business intel ligence co nsultancy . Most active i n the emerging and frontier markets, she h as over three decades’ e xperience advising multi nationals, financial insti tutions and investors on m atters su ch a s reputational risk and ESG criteria, delivering intelligence reports to support tra nsactions a round the worl d. She also works wi th globa l law firms and their clients on various conten tious m atters, fro m strategi c litigation support to a sset tracing and ju dgement en forcem ent bro ught a bout through a rbi tration or litigation. Ms. Lashin sky trained as a secu rities a nalyst on Wall Street before joining Kroll in New York i n 1985. She mo ved to L ondon in 1988 to help establish Kroll's first overseas office, where sh e became Managing Director of its business intelligence unit. In 1995, Ms. Lashinsky set up Asmara Limited, which was sold to NYSE-l isted Armor Ho ldings in 1998, before co -foun ding Alaco in 2002. Ms Lashinsky graduated f rom the University o f Michi gan with a B.A. in Political Science. In a ddition t o her duties at Energean, she is a Trustee of the Rath bones Folio Prize for Litera ture. Independent: • Yes Committee members hip: • Environment, Saf ety and Social Responsibil ity – Member • Audit & Risk – Member. CORPORATE GOVERNA NCE Page 109 of 273 Current external appoi ntments: • Alaco Limi ted – Chief Executive Office r Kimberley Wood Independent Non-E xecutive Director Ms. Wood was appointed as an independent non- executive director in July 2020. Ms. Woo d is an upstream energy l awyer based in London with over 20 years’ experience and is a fo rmer pa rtner of Vinson and Elkins LLP (2011 -2015) and No rton Ro se Fulbright LLP (2015 - 2018), where she is currently a senio r consultant. She has extensi ve experience in th e oil & gas sector, as well as e xisting independent non - executive director experien ce. Thro ughout her ca reer, she has advised a wide range of companies in the sector, from sma ll independen ts th rough to super - m ajors. She is i ncluded in the Who’s Who Legal: Energy for 2020 and Women in Business Law for 2020. She holds a Bach elor of Law from the University of Edinburgh and a Master of Law from Universi ty Coll ege London; and she is a dmitted as a solicitor i n England & Wales. She is a lso a Director of Gulf Keystone Petroleum Ltd, a company liste d on the main market of the London Sto ck Excha n ge, w here she chairs the R emuneration Committee, and is also a member of its Audit & Risk Committee, Nomination Committee a nd Safety & Sustain ability Committee. She is al so a Director of A frica Oil Corp, a company listed on the Toro nto Stock E xchange and the NASDAQ Nordic Exchan ge, and a Director of Valeura Energy Inc., a compa ny listed on the Toronto Stock Exchange and the London S tock Exchange. Independent: • Yes Committee members hip: • Remunerati on & Talent – Cha ir • Audit & Risk – Mem ber • Nomination & Govern ance – Mem ber. Current external appoi ntments: • Gulf Keystone Petro leum Ltd – Non-E xecutive Director • Africa Oil Corp – Non -Executive Directo r • Valeura Energy Inc – Non-Executive Direct or. Andreas Persianis Independent Non-E xecutive Director Mr. Persianis was a ppointed as an independent non -ex ecutive dire ctor in July 2020. Mr. Persian is is an experienced Non - Executive Director with o ver 30 yea rs’ intern ational fi nancial markets experience in central ba nking, a sset managemen t and Corporate Strategy . He i s cur rently the Managi ng Director of Fiduserve Asset Ma nagement in Cyprus, a regulated Alterna tive Investment Fu nd Ma nagement company that sets up and manages private funds f or a diverse range of private and institutional clients. Before th at he was Founder and Ma naging Director of Centau r Financial Services, a discretiona ry portfolio management company with presence in the UK a nd Cy prus. He has serv ed as a N on -Executive Director at Centra l Bank o f Cyprus ( 2014-2019) a nd on t he Bank of Cyprus Board i n 2013. He i s cu rrently serving as an Independent Non-executive Director on the board of Hellenic Bank. He has also worked as a Senior Manager at Bain & Compa ny (Lo ndon), one of the w orld’s largest strat egy co nsulting firm. He h olds an Electrical Engineering undergrad uate degree from th e Universi ty of Cambridge and a Master’ s in Business Administration (MBA, Majo r in Finance & Investment Ba nking) from th e Whart on Business School. Independent: • Yes Committee members hip: • Audit & Risk – Mem ber • Environment, Saf ety and Socia l Responsibility – Member. CORPORATE GOVERNA NCE Page 110 of 273 Current external appoi ntments: • Hellenic Bank PLC – Indepen dent Non-Executive Direct or. Roy Franklin Independent Non-E xecutive Director Mr. Ro y Franklin was appointed non -execut ive dire ctor in October 2021. Mr. Fra nklin has over 45 yea rs of experience as a senior executive in the oil and gas industry. He began his career at BP where he spent 18 yea rs, an d served as h ead o f M&A at BP Explor ation as his latest position. Af ter leaving BP, Mr. Fra nklin acted a s ma naging director of Cl yde Petr oleum, and then as CEO of Paladin Resources until its acquisition by Talisman Energy in 2005. Mr. Fra nklin has extensive experience as a non -execu tive director. He sat on the boa rds of Amec F oster Wheeler pl c (2016 -2017), Keller Group plc (2007-20 16), Equinor A/S (2015 -2019), Premier Oil PLC (20 17-202 1) a nd Santos Li mited (2006-2017). Mr. Franklin also acted as a member of th e Advisory Board of Kerogen Capit al LLC until September 30, 2021. Mr. Franklin currently a cts as Chai r of t he interna tional energy serv ices group, John Woo d Group PLC , as wel l as a non-executive Director o f K osmos Energy . Mr. Frankl in holds a Bachelo r of Sci ence in Geolo gy from the University of Sou thampton, a nd in 200 4 was awarded a n OBE in r ecognitio n of his services to the Oil & Gas industry. Independent: • Yes Committee members hip: • Nomination & Govern ance – Mem ber • Environment, Saf ety and Social Responsibil ity – Member Current external appoi ntments: • John Wood Group PLC – No n-Executive Chai rman • Kosmos Energy – No n-Exec utive Director CORPORATE GOVERNA NCE Page 111 of 273 Statement of Compliance Good corporate governa nce is essential to creati ng trust and engagement between us and our stakeholders, as well as contributing to the long-term success of our stra tegy. The Bo ard is co mmitted to the high est standards of corpora te governan ce in accorda nce with t he 2018 C orporate Go vernance Code (the “Code”), whi ch the Company is pleased to confirm it has complied with. In th is report , we describe o ur corporate governance ar rangement s an d e xplain how the Group applies the principles of th e Code. The Code is avai lable at www.frc.o rg.uk . • Board Leadership and Co mpany Purpose is set out on pa ge s 112 - 11 3 • Division of responsibi lities is set out on page s 113 -11 4 • Composition , Succession and Evaluatio n is set out on page 114 • Audit, Risk & Internal Control is set out on page 115 • Remunerati on is set out on page 115 We also set out our governa nce structu res to consider the impact o ur business h as on climate ch ange in line with th e recommendations of th e Task Force on Climat e - related Fina ncial Disclosures (“T FCD”). Attendance Type and number of meetings held during the year: Director Board (11) Audit & Risk (8) Remunerati on & Talent ( 6) Nominatio n & Governance (2) Environment, Sustainabil ity & Social Responsibil ity (2) Karen Simon 11 - 6 2 - Mathios Riga s 11 - - - - Panos Beno s 11 - - - - Andrew Bart lett 11 8 6 - - Robert Peck 11 - - 2 2 Efstathios Topouzoglou 11 - - 2 2 Amy Lashinsky 11 8 - - 2 Kimberley Wood 11 8 6 2 - Andreas Pe rsianis 11 8 - - - Roy Frankl in 87 1 - - 1 0 The Boa rd has a formal schedule of matters t hat can only be decided by the Board, and th is schedule is reviewed by the Board on a n ad -hoc basis. The key matters co nsidered by the Board in 2021 were: HSE perform ance Approving the Group 202 2 budget Acquisiti on of Kerogen’s 30% stake in Energe an Israel Limi ted and approval of S PA Group strategy in li ght of t he increased focus on ESG matters Strategic decisio ns on capital expenditure Board compositi on 87 Appo inted in October 2021, the number of possible Board meetings Mr . Franklin could have attended was 2, t he nu mber of Nomination & G overnance me etings was 1 and the number of ES SR Commit tee meeting was z ero. CORPORATE GOVERNA NCE Page 112 of 273 Appointm ents to the Board Reviewing the resul ts of the employee su rvey and agreed upon action items. Review of relat ed party transacti ons Review of risk register a nd a deep dive int o risk managem ent Company’s perf ormance in ligh t of COVID - 19 including the saf ety of employ ees Material con tracts Reviewing and appro ving the financial statements for th e 2020 year-en d and 2021 half yea r Financial reporti ng and controls Compliance w ith statutory and regulatory obligations Material lit igation Significant transactions Internal cont rols and risk mana gement Delegations of au thority Executive rem uneration Taking Final Investmen t Decision on the investment into the Prinos asset. Taking Fina l Investment Decisio n for Israel growth pro jects Reviewing of Greek and Italian assets and capital a llocation Receiving u pdates on the G roup’s activit ies in carbon capture a nd blue hydro gen Monitoring of progress agai nst environment al commitm ents Board leadership and Com pany’s purpose The Board’s primary role is to promote the long -term sustainabl e success of the Company and to ensure that value is being generated for shareholders as well as contributing to wider society. This is carried out throu gh detailed reviews by the Board o f the Com pany’s investm ent plans, funding plans, and corpora te social responsibility strategy. Details o f t he Company’s Co rporate Social Responsibility commitments and actions a re found on pages 50 - 57 . Detai ls of the Compa ny’s enga gement with sta keholders is detailed in the s ection 172 (1) sta tement o n pa ges 118 - 121 . As required by the Code , the Bo ard is required to consider and a ssess the risks the bu sinesses face, and is assisted in this pro cess by th e Audit & Risk Commit tee and the Company’s risk regi ster is set o ut on pages 83-10 3 . Durin g 2021, the Board’s composition and Commi ttee structu re wa s enhanced. The establishm ent o f the Environmenta l, Sustainability and Social Responsibil ity (ESSR) Commit tee m eans that a key pi llar of the Co mpany’s strategy (sustainability and the commitment to net -zero by 2050) is assessed in a single forum that then reports on its acti vities to the Board. For details on the ESSR Committee’ s a ctivities a re f ound on pages 127 - 128 . Th e sustai nabi lity of the Compan y’s business is co nsidered fu rther o n pa ges 18 - 30 of the Strategic Report. During the year Roy Franklin joined the Board as a Non -Executive Director, who brought significant experien ce in th e listed Oil & Gas secto r and this experience is expected to f acilitate delivery of th e Com pany’s strategy to be the leading e xploration and pro duction co mpany in th e East-Mediterranea n. As part of the Co mpany’s contribu tion to the wider s ociety, t he Board was again pl eased to see the progress that th e Compa ny has made during 2021 on its commitm ent to th e U N’s Global Compact campaign and pledge to net -zero emissions by 2050. Furtherm ore, the Remunera tion & Talent Committee again included targets to reduce emissio ns i n the sho rt -term an d long-term bonus plans. This now mea ns that the m ajority of the in centive pla ns in the Com pany ha ve targets relating to reducing emissions. Furthermo re this demonstrates the Company ’s com mitment to crea ting value through sustainable development, taking int o account the en vironmenta l aspects of its business. Fu rther deta ils of activity in rela tion to protecting minimizing im pact on the environmen t can be found on pages 20 - 29 . Following the acqu isition of the Edison portfo lio in December 2020, Energean has gr own from a compa ny that produce s 3,000 barrels of o il equivalent per day ( boep/d) in 2019 to o ver 40,0 00 boep/d at the end of 2021, also h aving gone from operations in one country to eight in the East Med and North Sea and having m ade signifi cant progress in reducing the ca rbon inten sity of its opera tions (when measured CORPORATE GOVERNA NCE Page 113 of 273 against the Kilograms of CO2 pro duced per boe) Ener gean’s reserves have also sign ificantly increased during the year. The Company is al so proud of i ts health and sa fety record, further details of which ca n be found at page 64 . In June 2019, Robert Peck was appo inted by t he Board as the work force Boa rd representa tive. Employ ees can confi dentially ema il Mr. Peck to raise any issues, t o the extent appropria te. In a ddition, emplo yees can raise concerns through the confidential whistleblowing procedure, for which the key point of contact is Andrew Bartlett, Ch airman of the Audit & Risk Committee an d Senior Independent Directo r. The Boa rd receives m onthly upda tes from the Group HR Manager on staff -related ma tters and has a direct line of comm unication i f required. The Compan y is com mitted to investin g in its wo rkforce and employees are able to submit requests f or training to en able them to pursue professional training in t heir respective area s which is f unded by t he Co mpany. Employees are also a ble to benefit f rom study leave to give them adequate time to study for these qualifications. The Company has also rolled out e -learning modules for emplo yees to furth er develop their knowl edge in key corporat e matters such as anti -bribery and corruption. Eligible e mployees also benef it from pensions contribu tions which under the new remuneratio n policy will be aligned at the same rate as senior ma nagement. Eligible em ployees are also able to benefit from a num ber of share pl ans inclu ding the Deferred Bonus Plan and the Long Term Incentive Plan . Further deta ils on empl oyee related matters are fo und on page s 56 - 64 . T he Board also monitors the Company culture and includes culture related metrics in the Company’s annual bonus pla n. During 2021 these metrics included the successfu l integration of the ex -Edison business, and t he roll out of employee manuals a nd other k ey policies. Goals rel ating to culture are also included in the 2022 bonus scorecard and the Board & R emuneration Committee will continue to monitor and track progress against these objectives. Each year the Company w elcomes sh areholders to its Annua l Ge neral Meeting (“AGM”), which provi des a unique opportunity to ask questions to the Board. Th e resu lts of the voting o n each resolu tion proposed to the meeting are published via the Regul atory News Service and through th e T el Avi v Sto ck Exchange news service. Alth ough the 2021 AGM wa s a closed m eeting, due to the pandemic, th e Company took steps to ensure th at shareho lder s were still a ble to ask questions, electron ically. During 2022 we hope that the AGM wil l return to its normal fo rmat with shareholders being able to ask question s in person. At the 2021 AG M, the Company received less t han 80% votes for the resolution no. 2 and no.3. Resolution 2 was an advisory vote on the Directors’ remuneration report and resolution 3 sought the approval of the new Directors Remunerat ion Poli cy. The Company undertook a detail ed revi ew o f feedback rec eived o n these resolution s to ensure that it fully understood shar eholders' concern s behind t hat vote. Thi s review included the Cha ir of the R emuneratio n & Talent Committee writin g to and h aving follow up meet ings with sha reholders. The Comm ittee not ed the feedback received in rel ation to the tim ing of the changes to executive remunera tion and shareh older views on th e bonus performance metrics. The Commi ttee took these views on Bo ard wh en m aking remunerat ion decisio ns in 2 022. In line with the provisio ns o f the Code, the Compa ny subsequently provi ded an upda te on i ts website on the views received from shareholders. The Boa rd and Remunerati on & Ta lent C ommittee continue to engage wi th shareh olders on issues related t o remu neratio n and looks forw ard to fu rther en gaging with shareh olders an d stakeholders bef ore the 2022 AGM. Division of responsibiliti es The Board current ly comprises: • The Chairma n (who was independent upon her appo intment) • Two Executive Directors (C hief Executive Offi cer and Chief Financia l Officer) • One Non-executive Director (Efs tathios Topouzoglo u) • Six independent Non -executive Directors. The independence of Mr. Topouzoglou was tested against the criteri a set out in Provision 10 of the Code. Whilst h e is co nsidered to be indepen dent in character and judgement, he is not deemed to be independent by reference to the criteria set out in the Code, as a result of being a signific ant shareholder, owning approximately 9.8% of t he shares of the Company ( as an individual and through his indire ct holdings in both Oilco Investments Limit ed and HIL Hydrocarbon Investm ents Limited). CORPORATE GOVERNA NCE Page 114 of 273 There is a clear division of responsibilities of the Cha irman, th e Executive Directors and the Non -executive Directors. The roles of Chairman and Chief Executive Officer are separate, and the responsibilities clearly defined. It i s the Cha irman’s responsibi lity to provide leadership of the Board and set the Boa rd agen da as w ell as to ensure t hat the Board is provided with acc urate, timely a nd cl ear informat ion in relation to the Gr oup and it s business. The Chief Executive Officer is responsible for sett ing t he overall objecti ves and strategic directio n of th e Grou p as well as having day - to -day executive res ponsibilit y for the runni ng of the Co mpany’s business. Th e Chai rman and Ch ief Ex ecutive Officer share responsibility for the representation of the Co mpany to third pa rties. As deta iled on page 11 1, the Board m e t eleven times throughou t the yea r, which is deemed to be suffi cient, given the size and compl exity of the Company’s operations. The Chairma n l eads th e Board and is respo nsible for its overall effec tiveness in directing the Compan y. The Chairman is com mitt ed to prom oting a cul ture o f openness and deba te. The Board provides ri gorous challenge to managem ent and su ch chal lenge is support ed and facilitated by the Ch airman. The Directors ha ve stro ng experi ence in the sector in wh ich the Co mpany operates (and see k s to operate) and have a broa d range of business, commerci al and governmen tal experience. The Board is supported by the Company Secreta ry who is al so Secretary to all the Board Commit tees. This ensures eff ective information flow between t he Board a nd its Committees. Ea ch Committee report s to the Board at the next Board meeting fol lowing its own meeting, so that the Bo ard is kept up to date on key matters being dealt with. The Board benefits from the use of an electro nic Board portal system to a ssist with the timely production of Boa rd pa pers a nd revi ewing key Co mpany policies throu ghout t he year. The Board has unfettered access to seni or execut ives a t th e Co mpany and is fully supported by the Com pany Secretarial team. Every month , whether or not a Board mee ting is scheduled, the Boa rd receives a compreh ensive report from ma nagement on the business’s perform ance, wh ich keep the non -executives up- to -date on all the key issues; and board mem bers are able to ask m anagement questi ons on any matter. Each Board appointm ent is for an unlimited term, subjec t to being re -elected as a Director at each Annual General Me eting. A Non -Execut ive Director or the Comp any may terminate the appo intment at any time upon three m onths’ writ ten notice. These appointm ents are subject to the provisi ons of the Articles of Association , the Code, the Com panies Ac t an d related legislati ons. T he rol e of the Senio r Inde pendent Director, Andrew Bartlett, is to provi de a sounding boa rd f or the Cha irman and to serv e as an intermediary for the o ther Directors when necessary. The Senior Indepen dent Director i s available to shareholders if they have concern s wh ich contact th rough th e no rmal chann els o f Chairman, Chief Executive Off icer or Chief Finan cial Officer has failed to resolve, or for wh ich such conta ct is inappropriate. Composition, succession a nd evaluation During the yea r the Nom ination & Govern ance Commit tee oversaw the appointm ent of a new independent non-executi ve Director, Ro y Fra nklin, which f urther strengthened the i ndependence of t he Board and added further technical skills t o t he Board skill set. Details of this appointment can be foun d in the Nomination & Governance Com mittee report on page s 129 - 132 . Roy also joined the Nomination & Governance Co mmittee and Environmen tal, Sustaina bil ity and Social Responsibi lity Committee. In the second half of the yea r, as required by the Code, the Boa rd underwent an in ternally facilitated review, furt her detail s of w hich are contained in the Nomination & Governance Committee report on pages 131 -1 32 . The results were reviewed by the Committee and discussed w ith the Board. Both the Committee an d the Board were satisfi ed that each Director co ntinues to contribut e effectively. The Board is satisfied that the Directors have the right com bination of ski lls, experience and know ledge to assist the Compa ny in achieving its long -term goals. As the Boa rd wa s on ly formally constituted just prior to the Company ’s li sting on the London Stock Exchange in March 2018, n o Independent Non-Executive Director had served more than four years by the end of 2021. During 2022, the Board will carry out a further internal review as required by the Code, bui lding on the findings of the above -mentioned intern ally facilitated review. The resu lts of that internal review will be reported on i n th e 202 2 A nnua l Repo rt & Acco unts as well as details on the plans for the externally facilitated review th at is scheduled to take place durin g 2023. CORPORATE GOVERNA NCE Page 115 of 273 Audit, risk and internal co ntrol The Boa rd established the Audit & Ri sk Comm ittee upon admiss io n to t he London Stock Exchange, which , during 2021, comprised An drew Bartlett, Amy Lashinsky, Andreas Persia nis and Kimberley Wood, a ll of whom a re Independent Non -Executi ve Directo rs. The Boa rd is satisf ied that Andrew Bartlett h as recent and relevant experien ce and that the Commi ttee as a wh ole has competence relevant to the sector in which the Company opera tes. The main roles and responsibili ties of the Committee are set out in its terms of reference, whi ch are availa ble to do wnload at www.energean.co m or available upon request from the Compa ny Secretary. As part of its responsibi lities, t he Comm ittee has fo rmal and transparen t policies in place to ensure the independence and effectiveness of t he i nternal and extern al audit functions a nd sa tisfy itself on the integrity of the Company ’s fi nancial and narrative statements. The Audit & Risk Committee considers the nature a nd extent of the principal risks facing the Group a nd the in ternal control fram ework. Fu rther information about t he Committ ee’s acti vity i s detailed on page 125 and f urther deta ils o n the Risk Management process is found on pages 79 -82 . This Annual Report includes a number of disclosures that set out th e Company’s position and prospects. The Statem ent of Directors’ Respo nsibilities confirms that th e Directors believe those disclosures to be fair, balanced an d understandable and the audit o r, Ern st & Young LLP, has given its opinion tha t the financial statem ents give a true and fair view of the Group’s affairs. Remuneration The Board established the Remunera tion & Talent Committee as part of the admission process in March 2018. During 2021 the Co mmittee members were Kimberley Wood, Karen Simon a nd Andrew Bartlett . Kimberley and Andrew are independent Non -Executive Directors and K aren was considered independent on her appointment a s the Compa ny’s Ch air. Robert Peck, as the Boa rd’s workforce representative, also attends meeti ngs of th e Remunera tion & T alent Co mmittee to ensure th eir views a re taken into consideration. The Comm ittee ha s delegated res ponsibility for dete rmining pol icy for Executive Direc tor remunera tion and setting t he remunera tion fo r the Chairman, Executive Directors an d senior managem ent. The Company ha s in place a lo ng - term incenti ve plan (“LTIP”) for the E xecutive D irectors and senio r management , which is design ed to promote the long -term success of the Co mpany by assessing performance o ver three yea rs and is lin ked to ab solute and rel ative share price perform ance agai nst a peer group of other com panies, as well as emi ssion reduct ions. Furthermore, the Compan y has in place a n ann ual bonus scheme which incentivises mana gemen t to progress with key projects such as first gas at Karish, entering into key gas contracts, as well as measures relat ed to financial liquidity an d ESG. It requires Executive Directo rs to def er one third of th e bonus into shares to be held in trust for 2 years, these shares are then subject to a further holding period. This further a ligns the Executive Directors with the long -term int erests of the shareho lders. At th e 2021 AGM shareholders approved the new Direc tors R emuneration Policy a nd th e Board and Remunerati on & Talent Committ ee spent a significa nt amount of time undertaking discussions with key stakeholders as pa rt of this a pproval. The actions taken by the Bo ard in response to shareh olders’ feedback on these ma tters is described on page 158 . The members of the Remuneration & Talent Committee are required to exercise independent judgement and discreti on wh en aut horising remun eration ou tcomes, with regard to Company and individual performance and wider circumstances. No Director is invo lved in decidin g their own outcome; and when discussing fees for the Cha irman, Ka ren Simon will excuse hersel f from these discu ssions. Further details of the role and activities of t he Remuneration & Talent Committ ee a nd th e Rem uneration Pol icy are fou nd on pages 133 -143 of th is report. Climate change Board oversig ht Energean sees climate change as a major global concern and a top pri ority for our business. This is reflected in o ur strategy, a nd we ap ply all o ur governan ce processes to climate ch ange -related issues. Responsibility f or t he governance of clim ate change issues with in Energean re sts with the Bo ard. To reflect the increasin g importance of climate change -related risks and opportunities, the Environ ment, CORPORATE GOVERNA NCE Page 116 of 273 Safety & Socia l Respon sibility Committee has taken over re sponsibility for climate change and ESS matters on beh alf of the Board of Directo rs. The Boa rd is al so charged wit h review ing investment s for climate- related risks (among other risks). The Environ ment, Safety & Soci al Responsibi lity Committee eval uates Ene rgean’s pol icies and systems for identi fying and managing ESG risks, wh ich incl udes identifi cation of emerging ri sks, such as climate change risks, and proposes mitigation measures. The Committee fu rther ensures Energean’s complia nce with rel evant regulato ry requirements and/or applicable interna tional sta ndards and gu idelines. The Committee follows political a nd regul atory discussions and devel opments on an international, EU -wide and n ational level on a va riety of ESG is sues, including energy, clima te a nd environment, and industrial trends, etc. The Committee co nvenes twice year and review s the Board papers on Energea n’s carbon emission s performance an d KPIs where possible when the Co mmittee meets befo re a Board m eeting. In addition, the Audit & Risk Commi ttee looks at climate change - related issues, to en sure the identification of multi -disciplinary risks (including climate change -rela ted risks), which ma y impact more than one part o f the Company. This Com mittee is responsible for ensuring that measures to mi tigate and adapt to the risks ident ified are effecti ve and implemented as necessary. The R emuneratio n & Talent Co mmittee has responsibility for the an nual direct ors’ bon us target s, long term incentive plans, and the overa ll Remunera tion Pol icy. Bo th the annual directors’ bo nus targets and the long-term incentive plans link executive bonu ses to the ach ievement of emission reduct ion targets. Management oversight At Energean, ultimate responsibility an d accountability fo r the Co mpany's environmen tal and climate change policy , strategy and targets related to short -, medium - and long-t erm plans, lie with the CEO. The CEO is responsible for identifying and assessing business and climate-rel ated risks, defin ing the strategy and approvi ng actio n plans suit able to control an d mitigate t he identif ied risks. Furthermore, th e CEO oversees the Company’s overall environmental performance and sets cl imate performance expectatio ns and targets. The CEO discusses a ll releva nt actio ns and activi ties related to climate change a nd the energy transitio n with the Board. The CEO a nd the Board regularly discuss climate change -relat ed issues, such as climate change policies, investment decisions where climate change consideratio ns are a major driver, and the carbon credit price’s impact on Energean’s future f inancial perform ance. The operati onal managem ent o f clima te change issues is con ducted by the H SE Di rector, who reports directly to th e CEO a nd provides updates to the Board o n a regular basis. The HSE Director ma intains and oversees the development of Energean’s Corporate HSE and Climate Change Policy, defines appropriate training programmes and drills for the entire Company to increas e sa fety, environmental and climat e change awareness, and monitors technological developments and o pportunities to h elp achieve defined, appropriate climate change targets. The HSE Director is tasked with ensuring that the Co mpany stays on track to meet it s net- zero 2 050 target. The HSE Direc tor o versees th e monito ring of Energean’s carbo n emissions throughou t all assets and defines the carbon emission factors that Energean’s financial team uses to understand the fi nancial impact of climate change on Energe an ’s portfolio. Furthermore, the HSE Director assesses the cl imate risks a nd opportunities in cooperation with Energe an’s financial, economic and technical departments. Board  meets every 2 month s (with ad-hoc meetings, as required) receives regular reports from HSE Director who attends meetings to pres ent his report. Robert Peck provides upd ates on the ESSR Committee activities. Environment, Safety an d   committee, chaired by Robert Peck (iNED), attended by Chairman of the Board, CEO, HSE Director. The Committee meets twi ce a year and receives reports from the HSE Director on climat e issues and repor ts to the Board Executive Committee  Chaired by CEO, HSE Director also a member. Meets fortnightly, the HSE Director regularly updates on the Committee on climate change issues . CORPORATE GOVERNA NCE Page 117 of 273 Board expe rtise To en sure Energea n’s Boa rd and Managem ent Tea m remain up to dat e on t he most pertinent climate change developmen ts and to furt her enhance thei r knowledge and skills in relation to climate cha nge issues, Energean invites leading industry and climate change experts to Board and Committee meetings on a regula r basis such a s Ch apter Zero. The HSE Ma nager proact ively interacts w ith Board m embers and the Managem ent Team to provide necessary info rmation and further i nsights on specif ic climate change-rela ted issues affecting the Compa ny. Company Vision and Va lues Purpose To creat e lon g-term va lue for all our stak eholders an d hel p deliver th e en ergy tran sition through a f ocus on gas. Our Vision To be the leading sustainable, gas fo cused and innovati ve independent E&P company in th e Eastern Mediterranea n. Our Values Energean seeks to ful fil its vision by a dhering to the following valu es: • Responsibility in all our actions and areas where we con duct our business • Excellence in everything we do; de ployin g best practices to a chieve profitable and sustainabl e growth • Integrity; respecting o ur s hareholders, employees and business; promotin g tran sparency and accountability; culti vating a unique corpora te sustainability culture • Commitmen t to a talented workforce ; investing in our people’s development • Caring for the envi ronment; reducing our env iro nmental footprin t • Engagement with local communit ies; meeting their expectati ons and needs. Our Principles Our values are underscored by our Corpora te Principles, which are as follows: • Being ethical a nd responsible • Being transparent a nd accountable • Creating an at tractive workplace and being an empl oyer of choi ce • Mitigating envi ronmental impacts and mini mising our footprin t • Supporting local communities. We believe that putting ou r values into pra ctice and abiding by our principles w ill help us create lon g-term benefits for shareh olders, customers, em ployees, suppliers, and the co mmuniti es we serve. CORPORATE GOVERNA NCE Page 118 of 273 Section 172 (1) Companies Act 200 6 Statement The Directors confirm that, t hroughout the year, they have acted in accordance with their responsibilities to promote th e success of the Compan y, as required by secti on 172 of the Compan ies Act 2006. This sectio n further requires the Directors to have regard to a ra nge of factors when ma king decisio ns, including the likely long-t erm co nsequences of any decision, t he interests of t he Compa ny’s employees, the need to foster the Co mpany’s business relatio nships with suppl iers and others, the impact of the Company’s o perations on the environ ment, maintaining a reputation f or high standards of business conduct, and the need to act fairly between members of the Company. The Company’s key stakeholders are its employees, local communit ies, governments in the countries in which the Company opera tes, customers, and shareholders. The specific engagement with stakeholders on a day - to -day level is delegated to the executive ma nagement tea m with the Bo ard being kept u p to dat e with the results o f this engagement and fut ure plans. Th e Chairman of th e Board and the Executive Directors routinely mee t with shareholders to discuss the strategic direction o f the Company and the feedback from t hese meetings is shared wi th the other Directors. Details of the Bo ard’s engagement with the workforce is found on pa ge 118 of this report a nd detail s of the Boa rd’s and Compa ny’s en gagement wi th lo cal communities is fou nd on page 119 of this report. Throughout the year th e Board pla ced a hi gh importance o n stakeh older considerations and con sidered these at the centre of its decision -making process. The Board also had teach -in sessions with leading fig ures in the industry in relation to ESG matt ers, underpinning the co mmitment of the Co mpany to be a net -zero emitter by 2050. Long term impact of decisi ons Energean ha s a clear ambition to be an Eastern Medit erranean focused dividend yi eld compa ny committed to sustainability a nd being a net -zero emitter by 2050. Strategic decisions are t aken at the Board with this a mbition at the forefron t and a s such req uiring t he Board to consider the long -t erm impact of any decisions, especially in relation to revie wing the investm ent deci sions in the Group’s portfoli o o f assets. Examples of this deci sion making in act ion include the taking the final investment decision on the Israel growth projects and the proposed transformation of the Prinos asset in Greece into “ Green Prinos” with plans approved for a carbon capture and sto rage project. For t he Isra el Gr owth projects the Directo rs considered the Compan y’s w ider growth plans and future ability to pay a dividend as well as ena bling Israel to use gas as a transition fuel to move away from coal. For t he “Green Prinos” the Board considered the vital role that carbon capture and storage will play in the Company ’s sustaina bility plans and vital role the facility will play in the region. Engagement with: Workforce As required by the UK Corp orate Governa nce Code, Robert Peck, an independent n on -executive director, was appoint ed by the Boa rd in 2019 t o be the “employee voi ce” in the boa rdroom. Similar t o 2020, the COVID pandemic unfortunately curtailed plans i n 2021 for on -site visits to var ious Company locations by Mr. Peck. These will be reschedul ed when circumstances permit. However, Mr. Peck met informally with mid -level ma nagers a nd staff in Ath ens at the July board meeting and was briefed by team m embers responsible for the roll -out of the Compan y's n ew on -line perfo rmance managem ent plat form. Earlier in the yea r he part icipated in a virtual forum with Energean cou ntry mana gers to discuss th e impact of the pandemic on employees and m orale. Mr. Peck a lso jo ined the Remun era tion an d Talent Comm ittee as an ex officio mem ber where he partici pates in discussions related to the Company's wo rk force. As part of the 2021 bonus KPIs, the E xecutive Direct ors were set objectives relati ng to co nduct and culture. The Executive Direct ors w ere a warded a 93.2 % pay -out on th is met ric foll owing th e succ essful completion of the ex -Edison employees integrati on into the Energe an busin ess, which incl uded the integration of IT systems, a new office for emplo yees in Milan and a roll out o f the SAP success fact ors system. Fu rthermore, significant progress was made in launching the em ployee man ual and the alignment of po licies of the two bu sinesses. All of these achievement s demonstrate the Bo ard’s focus on im proving the employee experien ce and th e Board look s forward to seein g t hese ach ievements furthered during 2022. CORPORATE GOVERNA NCE Page 119 of 273 Local com munities Energean is very active in the communities in w hich it operates (further information on this can be found on pages 51 - 55 ), and the Directors are cognisant o f thei r respon sibilities t o “give something back” by means that are a ppropriate to th e parti cular communi ties. Th e Boa rd receives informatio n on such activities being ca rried out by th e Company in mo nthly reports and at Boa rd meetings. Th e activities are tied to the Compa ny’s co mmi tment to th e ful filment of the 17 UN Sustainabl e Devel opment Goals. Examples include: • In Greece, we purch ased and donated school supplies, classro om equipment , and stationery to 3 social institutions, 1 organisati on and 3 schoo ls, supp orting over 500 students and their families in need in Kavala and the Isla nd of Thassos, Greece. • In Israel , we cont inued the support to t hree Pa ralympic swim mers in Israel in their jo urney and thei r successful pa rticipation in th e Tokyo 2020 Para lympic Gam es vi a mon thly financial aid and soci al media aw areness. Our company h as proudly supported these w orld cha mpions fo r the la st three years in a row. • In Ita ly, in coll aboration with “Caritas” (a Cat holic organi satio n f or ch arity), we donated school supplies and stationery , helping a Charity Cent er and 50 families and their chil dren in Chieti Province, Italy . • In Montenegro , we don ated h ealth a nd medical supplies to the nursing and su pporting personnel of the sta te o wned “Koma nski most”, a f oundation th at suppo rts children, youth and adults with moderate to severe men tal or developmenta l disabilities. • In Egypt, we supported underprivileged families during Ramadan , by donating 200 food boxes to meet essential needs in Meadia , the Abu Qir operatio ns site locatio n. On June 5th 2021 (World Enviro nment Day), Energean organised the follow ing activi ties aligning with the UN’s 2021 theme of “Eco system Restorat ion”: • In Greece we hosted a w ebinar on ecosyste m restoration; • In Montenegro we fu nded and planted trees; • In Egypt we hosted webi nars on biodiversi ty in the Mediterranean, orga ni sed a beach clean- up at Meadia Beach, hosted a beach preserva tion session and al so h osted en vironmenta l awareness session s; • In Israel we supported th e productio n of education videos focusin g on environ mental preservation. CORPORATE GOVERNA NCE Page 120 of 273 During 2021, Energea n collaborated with : Globally: United Nation s Global Compact & United Nati onal Global Working Gro up Participation In Greece : Management body of the Nestos River Delta , Lakes Visto nida-Ismari da and Thassos Island – North eastern Greece “Together for Ch ildren”, an associatio n of NGOs in the field of child wel fare The Holy Diocese of Philippi, Neapolis and Tha ssos - Northeastern Greece Democritus Universi ty of Thrace (DUTH), D epartmen t of Environmen tal Engineering Association of Paraplegics and Disabled people of the I leia Prefectu re, In Israel: Maala, a no n-profit, CSR standards- setting organi sation in Israel, whi ch has set a dedicated CSR index on Tel Aviv Stock Exc hange. Maa la’s CSR Index is an ESG ra ting system use d as an assessment tool, bench marking Israeli compa nies on their CSR performan ce. Energean wa s rated at Gold Level, for a secon d year in a row, at the 2021 Maala ESG Index – Israel The Jewish Nati onal Fund The Regional Unit of Kavala Etgarim, an NGO dedic ated to the em powerment and soci al integration of people with disabilities through outdo or sports - Haifa Israeli Paralym pic Comm ittee. The Nature and Park s Authority “Living Room Mem orial” (Zikaron BaSa lon), a Holocaust Remembra nce NGO The University of Haifa and the Technio n Lev Chash” (“Feel ing Heart”), a loca l NGO in Haifa In Monten egro: The Municipa lity of Bar – City of Bar In Italy: “Caritas Diocesan a”, a Catholic organ i sation for charity - Ch ieti Province The Italian Na val League In Egypt: Go Clean, a recycl ing solutions company The American U niversity of Cairo Governments The Compa ny ha s a transparent dia logue wi th all ho st go vernments in countries where it operates an d seeks to o perate. Al l these discussions are led by the Chief Executive Off icer. The Co mpany regularly engages in industry forums in these countries to further demonstrate its commitment to working closely with their govern ments. Shareholders Energean is commit ted to transparency a nd engaging with i ts shareholders, including providing all appropriate in formation to the investm ent commu nity. T he annua l report an d accounts a re a vailable from www.en ergean.com/investors/reports -presentat ions and, where elected or on request, will be CORPORATE GOVERNA NCE Page 121 of 273 mailed to shareholders an d to stakeh olders w ho have an interest in the Company’ s perform ance. The Company respon ds to all requests for information from sharehol ders and maintains a separate Investor Relations section within the existing www.energea n.com website, as a focal p oint for a ll invest o r relations matters. Moreover, there is regul ar dia logue with instit utional shareh olders via face - to -fa ce meetings, investo r roadshow s, RNS ann ouncements, regular trading updates and conferences, as well as gen eral presentations that are published on the C o mpany’s website. Furt hermore, th e Bo ard i s advised of any specific rem arks from institu tional investors, to enable i t to devel op an in -depth un derstanding o f the vi ews o f m ajor shareholders. All sha reholders have the opportunity to put forward questions t o t he Company’s AGM . At t he 2021 AGM, the Com pany received less than 80% o f votes in favour of resol ution 2 & resolut ion 3, which sought to approve the Remunera tion Policy and the Directors Remuneration R eport. The Company carried out a detailed review of feedback received on thi s resolution to ensure that it fully understood the reasons behind t he voting result an d allow i t to understa nd shareholders' co ncerns. In line wit h the provisions of the Code, the Company provided a n update on i ts w ebsite on the vi ews received from shareh olders. Maintaining a reputation for h igh standards of b usiness co nduct It is our policy to conduct all o ur business in an honest and ethical manner, and comply with all applicable anti-bribery laws, incl uding, but not li mited to a ll a pplicable loca l laws where Energea n operates and the U.K. Bribery Act 2010, and t o accurat ely reflect all transactio ns on Energean’s books and records. We take a zero-tolerance approach to bribery and corruptio n and a re committed to acting professional ly, fairly and w ith integrity in all our business dealings and rel ationships wherever we operate. We actively monitor and man age risks from bri bery or ethical misconduct, a nd we run an anti -co rruption a nd an ti- bribery complian ce program, activel y overseen by the Boa rd. During the year, the Company continued to actively monito r and man age risks from bribery or ethical misconduct an d the due diligence process wa s extended to in clude assessments for complia nce health check on all ou r new cu stomers to ensure th at th eir in ternal policies meet the high sta ndards that Energean expects from its partners. CORPORATE GOVERNA NCE Page 122 of 273 Audit & Risk Committee Report Andrew Bartlett - Chairman of the Audit & Risk Co mmitt ee I am pleased to present this Au dit & Ri sk Committee Report for the year ended 31 December 2021, which sets out the role an d work o f the Committee during the year and key areas of f ocus fo r 2022. 2021 was a bu sy year for the Committee as it a ssisted th e Board with its financial reporting obliga tions fo r th e annual report, inter im repo rt and offering memo randa related t o t he issuan ce o f two bonds. I w ould like to thank my fellow committee members for their ha rd work an d commitment throughou t the year. Membership of the Com mittee The m embers of the Au dit & Risk Comm ittee du ring t he year were myself, Andrea s Persian is, Am y Lashinsky, a nd Kimberley Wood (joined 1 Janu ary 2021). The Board remains satisfied that the Commit tee h as recen t a nd releva nt financial experience, and that the Committee as a whole h as su fficient experience of t he o il and gas sect or t o m eet t he re quirements of the Code. Furthermore, the Com mittee’s m embers are a ll Independent Non -Executive Directors, and therefo re t he composition o f t he Co mmittee complies with th e Co de. Commit tee m embers’ skill s a nd e xperience a re documented on pages 106 - 110 . Any member of the Committee, the Company’s external audit or, o r its internal audit manager may request a meet ing if he/she considers that one is n ecessary or expedient. No meetings of this nature were requested during th e f inancia l year. The Committee met with t he external auditor without management present. The Cha irman of the Board, CFO, externa l audit partner an d intern al audit manager attend meetings by standing in vitation; the Compa ny Secretary acts as Secretary to the Committee. Attendance at Meetings The Committ ee met eight times during the year, and atten dance at these meeti ngs is set out below: Director Number of meetings durin g the year No. of meetings attended: Andrew Bart lett 8 8 Kimberley Wood 8 8 Amy Lashinsky 8 8 Andreas Pe rsianis 8 8 The Audit & Risk Com mittee’s role To assist the Board wi th discharging its responsibi lities in relat ion to: • Financial reporting, including moni toring the i ntegrity of the Group’s ann ual a nd h alf year financial statements a nd any other forma l announcem ents relating to the Gro up’s fina ncial performa nce and reviewing the Grou p’s accountin g policies and significant fina ncial reporting judgements; • Reviewing the Gro up’s internal fi nancia l controls; • Reviewing and monitoring the scope of the annu al audit and the extent of the non -audit work undertaken by th e external auditors; • Advising on the a ppointment, rea ppointment and remo val of th e external auditors and review ing and monitoring the ex t ernal audito r’s independence and obje ctivity; • Reviewing reports fro m the reserves auditor; an d • Reviewing the ef fectiveness of th e int ernal audit, w histleblow ing an d frau d systems in place wi thin the Group. The Au dit & Risk Co mmittee considers ann ually ho w the Group’s int ernal audit requirements shall be satisfied and makes reco mmenda tions to the Boa rd accordingly, as well as on any area it deems needs impro vement or action. Th e Gr oup’s internal au dit m anager has a standing invitation to all comm ittee meet ings. CORPORATE GOVERNA NCE Page 123 of 273 • Assessing the effectiveness of th e Group’s risk managem ent and internal assu rance processes. T he Audit & R isk Committee reviews the Group’s capa bility to identify and manage new types of risk and keeps u nder revi ew th e Gro up’s o verall risk assessment processes that inform th e Board’s decision making. In o rder to a ssist with a chieving t his, the Committ ee regu larly liaises w ith th e Co mpany’s compliance f unction. The Comm ittee receives regular regu latory u pdates to ensu re that it remains up to date with developments in fin ancial reporting. Key matters considered in r elation to the consolidated Financial Statements The Audit & Risk Committee focu sed o n a number of key judgement s a nd reporting issues in the preparation o f the full year resu lts and t he Ann ual Report. In particular, the Com mittee considere d, discussed and where a ppropriate raised cha llenges in the areas set ou t below: • Recoverability of oil and gas assets, including estima tion of oil and gas reserve volumes. The Committee co nsidered the appr oach taken by the Compa ny on the impa irment indicat ors and where appropriate, the a pproach taken to calculate the value - in -use for producing oil and gas a ssets. Th e Committee reviewed and challenged man agement’s key assumptions for the oil and gas properti es, which incl uded reserves es timates, future oil and gas prices a nd discoun t rates. The Committee supported the view that th ere were no indicators of im pairment at the year end. The Committ ee reviewed the fina ncial statement disclosures and was satisfied they appropriately convey ed the judgements and estimat es. • The Commi ttee received reports from management i n order to a ssess the accou nting treatment of the Karish/Tan in development co sts incurred in the yea r, which were sign ificant to th e financia l statements. The Committee reviewed the capitalisation of development costs and co ncluded they were appropriate, and were satisfied that accruals were in place at the year end to reflect the costs of services provided by contractors. The Commit tee considered the a pproach taken by t he Company in relation t o revenu e rec ognition following the acquisit ion of Edison E&P. The Committee review ed the fin ancial statements and were satisfied that th e requirements of IFRS 15 were satisfied. The Commit tee also considered the approach t aken by the Company i n relation to accou nting for decommission ing and other provisions. Following the acquisition of Edison E&P the Company has taken on additional decommissioni ng li abilities. The Commit tee reviewed the accounti ng treatm ent relat ed t o a decrea se in the estimated decommissio ning costs f or certain UK pro ducing a ssets and ag reed with management ’s co nclusion that th e ca rrying va lue of t hese assets should be reduc ed co mmensuratel y. The Committee reviewed discl osures in the financial st atemen ts and were satisfied with the disclosures on decommissio ning provisions. • The viability sta tement i n the 2021 Annua l Report and the goin g con cern basis of accounting including consideratio n of evidence of the Group’s capital, liquidity and funding p osition. The Committee considered the a ssessment o f principal ri sks, assessed th e Group’s prospect s in li ght of its cu rrent position and reviewed the disclo sures on behalf of t he B oard. Th e Commi ttee supp orted the viability statement and th e management’s g oing concern conclusion. A requirem ent of the Code i s tha t th e Ann ual Report, ta ken a s a whole, is fair, balanced and understandable and provides the i nformatio n necessa ry fo r shareh olders to assess th e Company’s position and performance, business model a nd strategy . This is the Group’s fifth Annual Report and, in order to support the assessment, the Committee reviewed the principa l risks, business mo del, fina ncial review and KPIs to ensure th ese were r epresentati ve of the business and consisten t througho ut the Report and that areas requiring significant ju dgement and explanation have due promin ence. The Committee believes th at the disclosures set o ut in the Annual Report provide the informa tion necessary for sharehol ders to assess the Group’s position, pe rformance, business model and strateg ic outlook. CORPORATE GOVERNA NCE Page 124 of 273 External auditors Ernst & Young LLP (“EY” or t he “External Auditor”) were appointed as auditors in 2018 and un dertook their first audit for the year ended 31 D ecember 2017. Ener gean plc beca me a Public Int erest Entity in 2018 on admission to trading on the London Stock Exchange. The Company must comply with section 494ZA of the Companies Act 2006 and will be required to put the externa l audit contract out to ten der by 2028. The current le ad audit partner is Andrew Smyth, who has been the lead partner since 2018. In compliance with th is regulat ion, the lead audit partner w ill rot ate to Paul Wal lek during 2022. T he fees paid to EY fo r their services are detailed in note 8g to the financi al statements. The External Auditor atten ds each meeting o f the Co mmittee and reports on t heir audit work and conclusions inclu ding the appropriateness of the ju dgements and estim ates made by management a nd their complia nce with UK -adopted Interna tional Acco unting Standards. The Audit & Risk Commi ttee has responsibility for the oversight of the external audit plan. This includes monitoring the independence and objectivity of EY, the quality of the audit services and their effectiven ess, th e l evel of fees paid, approva l of non-audit services provided by EY and re-a ppointment. The Co mmittee also met with the external auditors with out management present. The Committee concluded that EY are i ndependent and objecti ve, o perate at a h igh standard and have recommended to the Boa rd th at t he External Audito r be re- a ppointed at this yea r’s AGM for th e financial year ending 31 December 2022. The Committee regularly reviews the performance of the auditor and the Chairman of the Committee regularly meet s with the Audit Partner to pa ss on any fe edback. Non-audit services In order to safeguard the External Auditor’s independence and objectivity, the Group has in place a policy setting out th e circumsta nces in which t he External Auditor ma y be engaged to pro vide services o ther than th ose covered by the Group a udit. Th e policy complies wi th the FRC’s Revi sed Ethica l Stan dard for Auditors, published i n December 201 9. The Policy sets out those ty pes of services tha t are strictly prohibited a nd tho se that are allowable in prin ciple (permissible servic es). Any service types a re considered by the Audit & Risk Committ ee Chairman on a case - by -case basis, supported by a risk assessment prepared by managemen t. This is reported by managemen t to the Committ ee who consider the services provided as par t of concl u ding on the auditors independence. The types of non -audit services provided by the auditor durin g 2021 were as follo ws: • Tax certification service s in Greece and Israel; • Reporting accou ntant servi ces i n co nnection with the circu lar related to the acquis ition of Kerogen’s 30% interest in Energean Isr ael Limited; • Reporting accou ntant services in relatio n to the $450 million bond issuance in Q4 2021; • Climate cha nge and sustainability assurance services provided by EY G reece; • Agreed upon procedures on Loan Co venants provided by EY Greece; and • Interim finan cial statements review. In all these cases, safegu ards were adopte d and reasons given as to why the se safeguards were considered to be effect ive. The Comm ittee was satisf ied that the independence of the Externa l Au ditor was not af fected by the performan ce o f a ny of th ese servi ces. The non -audit services provided we re required by law and/ or are typica lly perform ed by the au ditor. Furthermore, in each case there were business justif ications for using the Externa l Auditor for non -audit servi ces. The Ch airman of the Committee agreed w ith each justif ication before the servi ce was carried out. Further detai ls on non-audit services are outlined in note 8g to the fin ancial sta tements on page 214 . Interactions with the FRC During the year in accordance with Part 2 of the FRC Corpora te Reporting Review Operating Procedures, the FRC carried out a revie w o f the financial stat ements for the year ended 31 December 2020. In 2021 the FRC wrote to the comp any requesting furth er inform ation on several a reas. Th e Commi ttee were regularly updated on the correspondence betw een the Compan y an d the F RC an d commented on any communicatio n where appropriate. Following this enga gement wi th the FRC the co mpany u ndertook to make certai n additiona l disclosures in the fina ncial statemen ts for the y ear ended 31 D ecember 202 1. The Committ ee was satisfied that these disclo sures have be en in cluded in the fina ncial statements. CORPORATE GOVERNA NCE Page 125 of 273 The FR C’s rol e is to co nsider compliance with reporti ng standards and is not to verify the informati on provided to them. Therefo re, gi ven the scope and inheren t limitations of thei r revi ew, which does not benefit f rom a ny detailed knowledge of th e Group, it w ould not be appro priate to in fer any assurance from their review that our 2020 Annual Report a nd Account s was correct in all material respects. Internal controls and Risk Manage ment The Audit & Risk Committee is respo nsible for the oversight of the Group’s system o f in ternal contro ls, including the risk management fra mework and the work o f the internal a udit function. Detail s of t he risk management framework are provided within the ri sk managemen t section on pages 80 - 85 . The Grou p’s principal risks and uncertainties, which provide a framework for th e Committee’s focus, are discussed on pages 85 -103. Managemen t h as identifi ed the key operatio nal and fi nancial proce sses tha t exist wit hin the busin ess and has developed an intern al control framework. This is structured around a number of Group polici es and processes and includes a delegat ed authori ty framework. Durin g the yea r the committee assessed the key fin dings raised from internal aud its conducted throughou t the year and undertook a nu mber of “deep dives” includin g, inter alia, cy ber security and insura nce framework. Internal auditors Pricewaterho useCoopers Business Solution s S.A. (“PwC”), since January 2018 have been appoin ted as the Group’s internal auditor. Th e Committee is currently review ing the Company’s needs i n this area, with the main goa l o f i ncreasing the effici ency of the internal a udit function t hrough the extension of the scope of work with PwC and involvement of subject m atter experts in specif ic audit engagemen ts. The internal audit function's key objective is to provide independent and object ive assurance on risks a nd controls to the Board, t he Audit & Ri sk Committ ee and sen ior mana gement, and to assist the Board i n me eting its corporate governance respon sibilities. During the year the Co mpany appointed an internal resource to co-o rdinate i nternal audit pro jects, a lign th e interna l audit risk assessment process with the wider Boa rd risk registe r reporting and facilitate communication between i nternal audit, the Audit & Risk Committee, Seni or Management and process own ers. The Audit & Risk Comm ittee’s members meet regularl y w ith the internal audit team a nd appro ve a reas that will be assessed by w ay of in ternal au dit th ro ughout the y ear. Duri ng the year, each internal audit engagement w as sponsored by an i ndependent non -executive w ho wa s then respon sible for approving the relevant scope an d objectives and oversaw th e key aspects of the au dit process. The Audit & R isk Commi ttee is responsibl e for the revi ew and appro val of th e role an d mandate o f the internal audit function, as refl ected in the Internal Audit Cha rter, including the approva l of the annual internal audit plan, and moni toring the effectiveness of the function. Each report produced by the internal auditor is presented in dedicat ed meet ings with the Audit and Risk Comm ittee and the status of fol low - up action point s reviewed against the a greed deadlines. In it s an nual assessment of the effecti veness o f the interna l a udit function, the Audit & Risk Committee carried out the fo llowing: • Met w ith the i nternal audit team with out the presence of managem ent t o discu ss the effectiveness of the function; • Reviewed and re-a ssessed the in ternal audit work plan; and • Monitored and assessed th e role and effectiveness of the internal audit function in the overall context of the Group’s risk ma nagement poli cy. During the year PwC underto ok three ( 2020: fou r) internal audits at a cost of $71,509 (2 020: $60,906). Following Internal A udit’s reviews of the Company’s internal control systems, the Committee considered whether any ma tter required disclosure a s a significant failing or weakness in interna l controls during the year. No such ma tters were identified. Reserves committe e During th e year the reserves com mittee met to discuss the Group’s reserves auditin g process and support the Audit & Risk comm ittee in this area. Given his technical backgroun d and industry experience Roy Fra nklin joined t he reserves co mmittee i n November 2021. D uring 2022 the committee will receive reserve reports from each cou ntry of operat ion and meet with their respect ive rese rve auditors to assis t with the year -end reporting proce ss. CORPORATE GOVERNA NCE Page 126 of 273 Fair, balanced and u nderstandable assessment The Committee advised the Boa rd that in its view the 2021 Annua l Report in cluding the financial statements for the year ended 31 December 2021, t aken as a whole, is fair, balanced and understandable and provi des the information necessary fo r shareholders to assess Energean’s position and performance, busin ess mo del and strategy . In making this a ssessment the members of th e Co mmittee critically a ssessed drafts of this Ann ual Repo rt including th e finan cial statements and discussed with management the process undertaken to make sure these requi rements were m et. This included: • Confirmin g tha t th e co ntents of the ann ual report were con sistent with informatio n shared wi th the Board during 2021 to support the assessment of Energean’s position and performance; ensuring that consistent mat eriality thresho lds are applied for favo urable and unfavou rable items • Receiving reports from managem ent a t Bo ard a nd Bo ard Co mmittee meetin gs tha t th e in formation contained within the Annual Report was considered to b e fair, balan ced and understandable; an d • Considering comm ents from the external audit or. Other activities Whistleblowing p olicy The Group ha s a Whi stleblowing policy in place a nd the Committee is responsible for overseeing the arrangements and the eff ectiveness of the processes fo r th is. T he pol icy exists to ena ble em ployees to raise any concerns in confidence about wrongdoin g or impropriety within the Group. The whistleblowing policy was review ed by the Committee duri ng the year to ensure tha t it remained fit for purpose. Performance of the Com mittee The performan ce of the committee was reviewed a s part of the internal evaluatio n of t he Board’s effectiveness. In the previ ous annual report the commit tee set out its targets for 2021, nam ely, • Ensure seamless Edison integration with Energean proce sses and cont rols adopted wi thin our new subsidiaries • Further strengthen various fin ance f unctions through recruitment for the larger Group and to meet the requirement for qua rterly fina ncial reporting for the bond fina ncing which closed in March 2021 • Now we a re a much bigger company post Edison , reassess our Risk Management reporting processes through an exter nal revi ew with an ai m to be in the top quartile energy co mpanies in this respect and to adopt an ex panded set of risk report ing KPIs. I am plea sed to report that goo d progress has been m ade against these object ives w ith the successful integration of the former Edison SpA companies, the finance function has recruited senior hires to assist with the increased reporting obligations following the two bon d issues during the year. Risk management has contin ued to be a focus at the Co mmittee a nd at t he Board an d deep div es h ave been carried out into th e risk m anagement process and key risks tha t the business face. T he Comm ittee will continue to monitor progre ss in these areas and advise on whether a ny further en hancements should be made. Our priorities for 2022 • Further strengthen the Intern al Audit process by using w here appropriate sector spe cialists in rel evant topics in addition to PwC; • Further develop in -house risk m anagement report ing and awareness; and • Follow up internal audit s on acqu ired subsidiaries now tha t integration has been completed with a focus on cyber securi ty and insurance optim i sation. Approval This report in its entiret y has been approved by the Aud it & Risk Commi ttee, and signed on its behal f by: Andrew Bartlett Audit & Risk Commit tee Chairman 23 March 2022 CORPORATE GOVERNA NCE Page 127 of 273 Environment, Sustainability and Social Responsibility Committee Robert Peck, Chairman of E nvironment, Sustainability and Socia l Re sponsibil ity (“ESSR”) Co mmittee It is my pleasu re to intro duce the ESSR Co mmittee Rep ort for 2021, wh ich sets out its composit ion, role and activities duri ng the year. The ESSR Com mittee beca me effect ive on 1 January 2021, foll owing the separation o f the No mination & Environment, Soc ial and Governa nce Commi ttee into the E SSR Comm ittee and th e Nomi nation & Governance Co mmittee. Membership The mem bers of the ESSR Com mittee throu ghout 2021 were myself (as Chair), Amy Lashinsky, Efstathios Topouzoglou and Andrea s Persian is. Roy Fran klin joined th e committee f ollowing his appointment to th e Board on 13th October 2021. T he Company Secretary acts as secretary to the Commit tee. Meetings The ESSR Commi ttee met on 2 occasio ns during 2021 wi th attend ance details set out below: Director Number of possible meeting s Number of meetings attended Robert Peck 2 2 Andreas Pe rsianis 2 2 Efstathios To pouzoglou 2 2 Amy Lashinsky 2 2 Roy Frankl in 88 0 0 Role of the Committee The ESSR Committee play s a funda mental role in assisting the Board in reviewing the effect iveness o f the grou p’s polici es and system s for managin g health and sa fety risks, asses sing t he poli cies and systems within the group for ensu ring compliance with regulatory r equi rements and reviewing the Company’s enviro nmental strategy includin g KPIs. The Co mmittee also reviews the Company ’s a nnual sustainability report a nd receives updates on the Compa ny’s perf ormance w ith key ratin g agencies. Furthermore, the Commi ttee rec e i ves updates f rom th e Group’s H SE Director on Hea lth, Safety and Environmenta l m atters a nd t he Co mpany’s Head of CSR for updates on the Company ’s perf ormance against its CSR go als. The Co mmittee al so advi ses t he board on saf ety, th e environment includin g c limate change, an d Energean’s overa ll sustainability perform ance. To view the ESSR Co mmittee’s terms of reference, please visit the Company ’s website www.energean .com . Activities during 2021 Sustainabilit y reporting The Committee reviewed the progress being made on the publica tion of the Company’s annual sustainability report covering 2020. The Committee rec eived u pdates f rom the Head of CSR a nd revi ewed drafts of the report bef ore p ublication, and the Committee Ch air signed off on the publicat ion of the repo rt on behalf of the Board. 88 Jo ined the Comm ittee on 13 Oct ober 2021. CORPORATE GOVERNA NCE Page 128 of 273 Chapter Zero teach-in The Committee recei ved an inform ative t each - in from Dr. Ca rol Bell on the work carried out by “Chapter Zero ”. Th e presentation co vered key them es in the oi l & gas sector, an overview and a nalysis of targets set by other listed compa nies, as well as investo r expectat ions in relation to net -zero com mitments . Deep dive o n HSE The Co mmittee conducted a deep dive int o the work of the group HSE Depart ment a nd received a presentation from the HSE Director and the Head of HSE for Israel on this work. As part of this deep dive the Committee review ed th e policies and system s for identify ing a nd m anaging health and safe ty risks, the structure, go vernance forums, ro les & responsibilities and HSE cha llenges for the function. The Committee also received an overview on the HSE procedures in place, the audit plan for any independent audits to be carried out and emergency resp onse and re adiness. Priorities for 2022 During 2022, the Comm ittee will: • Review sustainabi lity report ing f or 2021 a nd th e pla ns f or the reporting in 2022, this will include the review of the Grou p’s Sustainabili ty Report; • Review of HSE-rela ted measures a nd safety protoco ls for the FPSO in light of the K arish & Tanin pre- start-up audit ; • Receive updates (and appro ve where a ppropriate) fro m the HSE Director on climate chan ge targets/measures for 2022, new initi atives and commi ttee teach -i n on Carbon Capture Storage (CCS); and • Carry ou t a deep dive on the planned Corporate Social responsibility ( CSR) activities fo r 2023: review of the CSR policy t o en sure it responds to current business chall enges a nd revi ew the funding levels post-Edison integrat ion taking into account key prioriti es for the Company since th e acquisition. Robert Peck ESSR Committee Ch airman 23 March 2022 CORPORATE GOVERNA NCE Page 129 of 273 Nomination & Governance Committ ee Karen Simon, Chair of No mination & Gove rnance Committee. It is my pleasu re to intro duce the Nom ination & Govern ance Commi ttee Report for 2021, which sets out its compositio n, role and activities during th e year. The Nomi nation & Governance Commit tee beca me ef fective fro m 1 Ja nuary 20 21, foll owing th e de - merger of the Nomin ation & ESG Committee. In th is report we will al so s et out the a reas of focus for the n ew No minatio n & Governa nce Committee for 2022. Membership The members of the Nomination & Go vernan ce Committee throughout 2021 were myself (as Ch airman), Kimberley Wood, Robert Pe ck, Efstathios Topouzoglou and Ro y Fra nklin (appointed on 13 October 2021). The UK Corpora te Go vernance Code (“C ode”) rec ommends that a majo rity of Nomination Committee members be Indepen dent Non-Executive D irectors and that the Cha irman of the Board ( other than where the Comm ittee is dea ling with the a ppointment of a su ccessor to the chairm anship) o r an in dependent Non-Executive Director sho uld chair the Committee. This requ irement was satisfied as I was considere d to be in dependent upon appointm ent as a Chairman, and Kim berley Wood, Robert Peck and R oy Franklin are considered to be Indepe ndent Non -Executive Direct ors. The Company Secretary acts as secretary to th e Committee . Meetings The Nomination & Governance Com mittee met on 2 occasions during 2021 w ith attendance deta ils set out below: Director Number of possible meeting s Number of meetings attended Karen Simon 2 2 Robert Peck 2 2 Stathis Topou zoglou 2 2 Kimberley Wood 2 2 Roy Frankl in 89 1 1 Role of the Committee The Nomi nation & Go vernance Co mmittee plays a fundamental role in a ssisting the Bo ard in revi ewing the structu re, size and compositio n of the Board, including provi ding advice to the Board on the reti rement and appointment of additional a nd/or replacement Direct ors. It is also responsible for revi ewing succession plan s for the Directors, i ncluding th e Chairma n and Chief Executive and other senior executives. To vi ew the Nomi nation & Go vernan ce Com mittee’s terms o f ref erence, plea se visit the Compan y’s website www.en ergean.com . Diversity The Nomination & Governa nce Committee’s key area of respon sibi lity is to ensure the compositio n of t he Board is appropriate for ove rsight o f the strategic directio n of the Grou p and th is in cludes review ing the balance of skil ls a nd knowledge. The No mination & Governa nce Commi ttee recognises the benef its of diversity in the boardroom and believes that a wide range of experience, backgrounds, perspectives, and skills generates effective decision -m aking. As at 31 December 2021, the Board included three females, representing 30% of th e Board, which i s slightly below t he 33% target set by th e Hampto n -Alexander 89 J oined the Comm ittee on 13 October 2021. CORPORATE GOVERNA NCE Page 130 of 273 review; h owever the Com pany remains a s on e of the few companies in the FTSE 350 with a female Cha irman. Senior management’s make -up at the year-en d was 38% female v 62% male. Their direct reports are 27% female v 73% male. Time commitment of the Chairman Karen Simon is al so a No n -Executive Director of Aker ASA, an Oslo Stock E xchange -listed compa ny an d Crescent Energy, a New York Stock Exchange-li sted company. The Bo ard believes that Karen has adequate time avai lable to devote to the Company. Karen was deemed to be indepen dent on appointment and was first appointed to the Board as an Independent No n -Executive Director in November 2017. She has, t herefore, o nly served four years out of a possible nine yea rs. Appointment of new I ndependent Non -Executive Directors The Nomination & Govern ance Committee was pleased to recommend to the Board that Roy Franklin be appointed as a n indepen dent Non -Executi ve Director. The appoin tment increased the percentage of independent Non-Executive Directors (excluding the indepen dent Non -Executive Chair) from 56% t o 67%. Mr. Frankl in has over 45 years' experien ce as a senio r executi ve in th e oil a nd gas industry . Mr Fra nklin has extensive experience as a non-executive director, further information on his experience can be found on page 110 . He i s also Chair o f intern ational en ergy services group, Joh n Woo d Gro up PLC, a nd a non - executive Director of Kosm os Energy. Mr. Franklin was the non-executive Chairman of Energea n Israel Limited un til February 2021. Mr. Frank lin served as a sharehol der re presentative for the 30% sh areholder, Kerogen a nd wa s not remunerated by the Co mpany for h is servic es. T he Bo ard does not beli eve that his indep endence was comprised as a result of being a Director of a subsidiary of the Group as he was not acting on behalf of the Company but on the behalf of an external sh areholder. The Boa rd i s also of the view tha t Mr. F ranklin’s character and reputation further support the conclusion of independen ce. Mr. Fra nklin ’s former role as Chairman of Energean Israel Limited m akes him u niquely place d to provi de insight to the Board of Directors on the company’s flagshi p project. The Nomination & Governance Committee did not engage an external search firm for the appointmen t of Roy Franklin, being satisfied t hat this was unnecessary, as an extensive pool of candidat es ha d been identified during previo us searches and Mr. Frank lin was one of them. . Succession The Nomination & Governance Committee keeps under review the succ ession plans for senior management and ha s met with th e CEO separatel y to discu ss these plan s furt her. There are no anticipated changes to th e make -up of senio r management in the nea r future. Induction Following the appointment of Ro y Fra nklin a number of meetings were set up for him to virtuall y m eet with seni or executives, other Board members a nd with key external advisors, ea ch of wh om was a ble to give an overview of their are a a nd details of their i nteraction s with the Boa rd. Key co rporate docu ments we re also made availa ble, as well as previous Board ma terial s. Internal Board review During the yea r my self and th e Co mpany Secretary met w ith each Direct or individually to carry out a follow up review to Board eva luation th at was carried o ut in late 202 0. The fin dings of th is revi ew were then reported back to a meet ing o f the Committee wi th all Directo rs in at tendance. The Committee an d the Board were pleased to n ote tha t significant progress had been ma de against the externa l review. CORPORATE GOVERNA NCE Page 131 of 273 Furthermore during th e ye ar, and as highlighted l ast year’s report, we co ntinued to implement th e recommendati ons from the externa lly fa cilitated board review . In the below ta ble we provi de an upda te on this. Outcome / Rev iew Proposed A ctions listed in the 2020 Annu al Report Status Updat e Procedural Strategy review – th e Board to consider adding a form al strategy day to the Board schedu le with a number of external speakers and senior managem ent present. This has been a dded to the Board schedule for 2021. Complete, during th e November Board the meet ing focused on strategi c matters and had a number of external speakers Review of the Boa rd planner – the Board to ensure suff icient time is allocated to each to pic such as strategy, risk, people, cu lture, stakeholders/ESG, invest ors, diversity, specific assets, sp ecific countries. The agenda is agreed with the Chair in advan ce of each meeting, the Boa rd has added “deep dives” into certa in areas at each Board meet ing; and the Chair ensu res that sufficient time is given to each item during the meeti ng. Complete. Review of meeti ng schedule – th e Board to consider addin g of monthly board call s and to ensure the board has suff icient time in each meeting to w ork through the board agenda. Furt hermore, consider adding private ses sions for NEDs at the end of each board meeting. Monthly informal boa rd calls have been added to the Boa rd schedule between fo rmal board meetings; and a separate session for NE Ds has been added to the end of each board meeting. Complete, the mo nthly calls and separate NED sessio ns have taken pla ce and will continue to do so. Structural Committee stru cture – Th e Board to consider looki ng to split out the NESG Committee into the Nomination & Govern ance Co mmittee an d a separate committee fo r ESG. In the NESG Commi ttee Report in the 2020 ARA we expla ined how we have am ended the committee structure. Complete. Strategic The Board to consider a plan for NED engagement wit h the business and which a reas could be allocated to part icular board members to become fa miliar with. The implement ation of this recommendati on will be carried out in the fi rst half 2021. The implement ation of this recommendati on remains ongoing and the Board continues to consider plans in this area tak ing into account Director’ s skills. In the Audit & Risk Comm ittee non-executive direc tors have responsibilities fo r certain areas and report to the Committ ee on those areas. CORPORATE GOVERNA NCE Page 132 of 273 Outcome / Rev iew Proposed A ctions listed in the 2020 Annu al Report Status Updat e The Board to agree a set of board objectives for 2021. The Board objectives f or 2021 will be reviewed in the fi rst part of the year and perfo rmance against them discussed at the end of each board meeti ng to ensure the Board is movi ng forward with its objectives. Complete, the Boa rd objectives are align ed to the Company object ives and decisions are taken with these objectives in min d. Performance aga inst these objectives is then discussed by Non-executive Directo rs at the end of each m eeting. Re -election of Direct ors In li ght o f th e a ssessment th at all Directors co ntinue to perform and provide a va luable contribut ion to the board and its Co mmittees, all Directors will be eligible to submit themselves for re -election at the 2022 AGM. Performance of the Com mittee The performance of the Nomination & Go vernance Committee was assessed a s pa rt o f th e i nternal review as mention ed earlier in this report . Our priorities for 2022 • Continue to fo cus on board compositio n and to identify candida tes with geo graphic, gender and ethnic diversity ; • Look to right size the Boa rd with an expected decrease in the overall number of Directors; and • Review Commi ttee Chairs/SID role and mak e adjustments where a ppropriate. Karen Simon Nomination & Govern ance Commit tee Chair 23 March 2022 CORPORATE GOVERNA NCE Page 133 of 273 Re muneration Report Energean Plc – Chai r letter Dear Shareholder, During 2021, Energean deli vered excellent operatio nal and financial progress, reflecting the transformational acqui sition and full integration of Edison E&P. Record finan cial results were ac hieved, with soli d performan ce from existing assets contributin g to a 50% pro -fo rma 90 year- on -y ear increase i n revenue to $497 million, and a 90% pro fo rma 91 yea r- on -year increase in Adjusted EBITDAX to $212 million. Our flagship Karish development is targ et ing First Ga s by Q3 2022, mea ning Energean is on -track to achieve >200kb oe/d in the medium term . In a ddition, in 2021, w e f urther strengthened an d de -risked our balan ce sh eet by ra ising the largest ever EMEA energy i nternational high yield bon d, and so remain fu lly-funded for a ll projects acro ss our eight countries of operation . This remarkable success mea ns th at the Boa rd has bee n able t o set a new dividend policy. I am very plea sed the market has continued to recogn ise Energea n’s strength. Since listin g in 2018, management ha s deli vered a sharehol der ret urn in excess of 125% to the end of Fe bruary 2022. This is an exception al ach ievement, and testament to the confidence i nvestors ha ve in o ur managemen t team. This contrasts with disa ppoint ing ret urns in the wider market. Fo r exam ple, the FT SE 350 Oil, Gas, Coa l index has seen an increase of less than 5% over the sa me period. Energean’s success is no t limited to comm ercial performance. Energea n was the first UK E&P company to set a net-zero carbon ta rget i n 2019 and h as a clear goal to a ccelerate this a s far as is possible. T o date, we have made great strides i n recording, repo rting, and reducing our Scope 1 and 2 carbon emissions and are well on track to reduce our carbon intensity by over 85% by 2025 vers us our base year of 2019. In 2021, carbon intensity reduced to 18 kgCO2e/boe – a 19% decrease versus 2020 levels. Th is industry leading approa ch to ESG has been reco gnised by the CFI, who la st year aw arded th e co mpany with ‘Best ESG Energy Gro wth Strategy - Europe 2021’. Our w orld-class e xecutive team is fun damental to our success. Our CEO, Mathios Rigas, has grown the company from a n effect ive ‘start - up’ into one of t he largest indepen dent E&P compa nies in Europe. Our CFO has raised the largest ever EMEA energy internatio nal high yield bond and ensured the company has remained ful ly-funded fo r all project s across our ei ght co untries of o peration. Both of our executi ve directors have demonstrated exception al leadershi p in unlock ing significant shareholder v alue th rough targeted acquisitio ns and organic grow th. Outcomes in the year Strong performance in the year has naturally fed through into the performance -rela ted pay outcomes for the executive directors. The Committee approved a vesting level under the annua l bonus of 80% for both directors. Th e Commi ttee co nsidered this vesting level appropriate, ba lancing stro ng perform ance in integrating Edison, ensuring l iquidity, developing production and progressing sustainability objectives. However the out-turn also r eflects the delay to Karish First Gas. While this delay to First Gas was outside the control of the directors, being driven by the impact of COVID-19 delaying the completion of the FPSO, this was nevertheless reflected in the scorecard, and the portio n of the bonus based on delivering Karish First Gas did not vest . Disclosure on achievem ent against the 2021 bonu s scorecard is set out on pages 146 - 151 . 2021 was a somewhat anomalou s year as two Long Te rm Incentive Awards vested during the year. This reflects that, gi ven t he timing of the IPO, there was a 3 - month dela y i n t he 20 18 award, which h as re sulted in the out- turn for this fi rst award being reporte d in this year’s single figu re rather th an last yea r’s. These are the first LTIP aw ards that h ave vested since IPO. One award com pleted at the en d of June 2021 and vested a t 77.9 % o f maximum. Anot her a ward vested at the end of December 2021 a nd vest ed a t 7 2.8% 90 Pr o forma revenue and adjusted EBITDAX are presented as if Edison E&P r esults were c onsolidated for the e ntire year; the locked bo x date of the transaction was 31 December 2018 and ther efore all ec o nomic results si nce that date accru e to Energea n. 91 As per above. CORPORATE GOVERNA NCE Page 134 of 273 of maximu m. While slightly different performance criteria applied to each award, t he level of vesting under both aw ards reflects stro ng sharehol der returns acro ss the performa nce periods. Ful l details o n both awards are set ou t on page 153 . This initial double -vesting has meant a sign ificant increase in the single figure va lue for both directors. This reflects the fact that single fi gure va lues in previ ous years did no t in clude any LTIP a wards. Given the two LTIP award vestings, the sin gle figure for 2021 is also likely to be higher than future single figure values wh ich will revert to the norma l o ne LTIP vesti ng ea ch yea r. As such, the 2021 single f igure valu e should not be seen as repre sentative of th e ongoing level of executive pay a t Energean. Policy review i n 2021 Last year, Energean introduced a new Rem uneration Policy. I was plea sed with the feedback w e heard during the preceding share holder co nsultation, and the support given by t he pro xy agencies and our institutional sha reholders at th e AGM. I would like t o thank all sha reholders who ga ve their support last year, as well as tho se who provided feedback during consul tation. Following the AGM vote we subsequently wrote again to our largest shareholders to invite their feedback and also held a number of follow up meetings. We had discussion meetings and received feedback bot h from those that supported and those that did not and details o f the feedback received are set out on page 158 . Remunerat ion in 2022 Executive Directors As disclosed l ast yea r, a s part of the Policy review, the Com mittee co mmitted to reviewing the CEO’s salary in 2022, reflecting that the CEO last year requested that he not be considered for a salary increase given the societal context and ongoing uncertainty of COVID -19. The Committee was appreciative of this gesture a nd com mitted to review ing the CEO’s salary in 2022 instead. The CEO’s sala ry ha s remai ned unchanged for the pa st f our yea rs since Energea n listed on the London Stock Exch ange in 2018. Fo r 2022, the CEO has reques ted no in crease to his base salary . T he Co mmittee has, however, recommended a base salary adjustment for 2022 to £750,000 from £675,000. This wi ll be applied ret rospectively for 2022 onl y if First Gas has been ach ieved f rom our flagship Karish project duri ng th e year. Th is i ncrease reflects an annuali sed increa se of 2.7 % of base salary since 2018 an d the u plift is aligned with the key milestone of deli very of our flagship Karish project. In 2021, we a warded a staggered compensa tion upl ift to the CFO. As dis closed last year, the uplift was contingent on co ntinued s trong perform ance t hrough 2021. Shareholders welco med the staggered nature of the uplifts given they required the CFO to evidence strong performance across a longer period. The Committee has conside red the Company’s and the CF O’s perf ormance in the la st y ear and has determined that it is a ppropriate for the second sta ge of the uplift to proceed. Evidence of th e CF O’s continued stro ng performance during the year includes the issuan ce of $450 mill ion s enior secu red notes, maturing in 2027, as well as the €100 million non -recou rse project funding package backed by the Greek Sta te for t he Epsilon project in Greece, all of w hich combined, furth er in creased Energean’s near term liquidity. As such, the secon d increase in salary to £600k and increase in bonus opportunit y to 200% of salary will apply for 2022. A competi tive, incen tivising remunera tion po licy for senior mana gement is important in del ivering ou r strategy. In tu rn, this secures the creation of sh a reh older value. As su ch, the Co mmittee believes the proposed changes to the remunerati on fra mework wil l better position both the com pany a nd shareholders for fu ture success. There will be no other ch anges to th e r emunera tion structure for the Executive Dir ect ors aside from th ose set out a bove. For 2022, we have reviewed our bonus scorecard to align this wit h priorities for the year ahead. Both Executive Directors wi ll also receive a n LTIP grant in 2022, an d the targets are in line with last year’s awa rd. Fu ll deta ils on the approach to remunera tion in 2022 are provided on page s 14 1- 143 . Chair fee The Comm ittee also revi ewed the fees paid to th e Chair in 2021. The Ch air fee has not increased since the company first listed in 2018, and Karen Sim on became Cha ir in Novem ber 2019 on the same fee level that was paid to Simon Heale, the previous Chair (£150,000). The Committee reflected on the significant growth in the compan y over the period since l isting, includin g the expanding opera tional footprint an d CORPORATE GOVERNA NCE Page 135 of 273 geograp hic com plexity of the Grou p, and determined that an upl ift to the Chai r’s fee was appro priate for 2022. The Chair’s fee wil l therefore be increa sed to £220,000. This uplif t rebalan ces the Ch air’s fee to a l evel comm ensurate w ith the market va lue and com ple xity of Energean. In review ing the ma rket positioni ng of the Chair’s fee, t he Committee w as also cognisan t that Energean is in the all -to o-rare po sition for a UK -listed com pany in having a fema le Chair, meanin g th ere is an a dded responsibility on the Co mmi ttee to ensure that Karen ’s fee leve l is compara ble with the fee levels paid in the wider ma rket. NED fees There wi ll be n o adjustm ents made to the NED ‘base fee’. Some a djustments h ave been made to the Committee Ch air fees to reflect the increa sed time co mmi tments required. Concluding remarks In formul ating th e pay pro posals for 2022, as well as approving pa y outco mes for the yea r, the Co mmittee have been mindful of the experience of the wider workforce. Energea n views its people, th e Energean family, as t he founda tion upon which our su ccess is built. The Co mmittee is therefore mindful of how pay in the boardro om compares with pay a cross the organisat ion. The bonus outcome for the Executive Directors ca scades do wn the organisatio n, ensuring consistency across the company in incentive outturns. More broadly, the Committee is also kept abrea st of workforce matters through provision of key mana gement information, inclu ding gender pay gap data. We have a dedicated workforce NED i n Robert Peck, w ho acts as t he ‘ employee voice’ at board l evel. The Committee is therefore confident that its pay decisions are appro priate in the context o f the broa der workforce experience. While the Committee recogn ises th ere continues to be a significant fo cus o n executive pay in th e wider environment , the growth and return s generated by Energea n over recent years have been substantia l. The Committee is committed to the princi ple o f pa ying for perform ance, and t herefore believe that the pay proposals for 2022 are fair and reaso nable. Looking ahead, Energean is on a co ntinued strong growth trajectory. 2022 w ill be a n exciting yea r o f further growth and change, including delivering First Gas and the intention to pay o ur inaugural dividend. The Committee believes t hese remun eration chan ges will support ou r cl ear strategy by continuing t o incentivise and rewa rd our managem ent team for market ou tperformance . Kimberley Wood Remunerati on & Talent Committee Chai r, Energean Plc CORPORATE GOVERNA NCE Page 136 of 273 CORPORATE GOVERNA NCE Page 137 of 273 Remuneration Policy Set out below is a summary of our cu rrent Remuneration Policy (Remunera tion Policy) for Executive Directors, which was approved by shareholders at the 2021 AGM. A full version of the Policy is contained in our 2020 Annual Report, avai lable on our website a t https://ww w.energean.co m/investors/report s - presentations/ Base sala ry Purpose and lin k to strategy To appropriatel y recognise skills, experience and respo nsibilities and attract a nd retain talent by ensuring salari es are market compet itive. Operation Generally revi ewed annually with any increase normally taking effect from 1 January althou gh the Remuneration Comm ittee may award incre ases at other times of the year if it considers it appropriate. The review takes in to consideration a nu mber of factors, including (but no t limited to): • The individual Director's role, experience and perform ance. • Business performa nce. • Market data fo r comparable roles in appropria te comparato r businesses. • Pay and conditio ns elsewhere in the Group. Maximum Opportunity No absolute ma ximum has been set for E xecutive Directo r base salaries. Any annual increa se in salaries is at the discretion of the Remuneratio n Committee ta king into account the fa ctors stated in this table and the following principles: • Salaries woul d typically be increased at a rate no grea ter than the average salary increase for other Group empl oyees. • Larger increases may be considered appropri ate in cert ain circumstan ces (including, but not limited to, a change in an individual's responsibilities or i n the scale of thei r role or in the size and complexity of the Group). • Larger increases may also be considered appropria te if a Directo r has been initially appo inted to the Board at a low er than typical sala ry. Performa nce Conditions No performance co nditions Pension Purpose and lin k to strategy To provide competit ive post-ret irement benefi ts or cash allowance as a framework to save for retirement. This is to support the recruit ment and retention of talent . Operation Typically paya ble as a cash allowance, ho wever executives can also choose to parti cipate in a company pen sion scheme or receive paymen ts into a personal pension or a combination thereo f. Contributions are se t as a percenta ge of base salary . Post-retirement benefits do not form pa rt of the base salary for the purposes of determinin g incentives. Maximum Opportunity Pension contribu tions will be set in line with the avera ge workforce pension contribu tion (in pe rcentage of salary term s). CORPORATE GOVERNA NCE Page 138 of 273 For 2022, this rate will be 4% of salary . This is the rate th at is currently available to the wider w orkforce (based on the rate a pplicable to the workforce in Greec e). Performa nce Conditions No performance co nditions. Benefits Purpose and lin k to strategy To provide market co mpetitive benefits. Operation Benefits are curren tly provided as a single benefits all owance (in lieu of separate paymen ts for relevant benef its). The Remun eration Committee has discretion to repla ce the benefits allowa nce by separate pay ments for relevant benefit s or to provide additional benef its in certain circumstances (for example reloca tion or tax equalisation). Executi ve Directors are entitled to rei mbursement of reasona ble expenses (including any tax thereon). Executive Director s also have th e benefit of a qualifying third- party indemni ty from the Company and directo rs' and officers' liability in surance. Maximum Opportunity For the current Execut ive Directo rs, the maximum a nnual value of benef its will be £48,000 (Mathi os Rigas) and £25,000 (Pa nos Beno s). For any future Executive Director ap pointed during the li fetime of this Remunerati on Policy, the value of thei r benefits package would not exceed £48,000. These total s exclude any expense s treated as ta xable benefits by tax authorities or tax equal isation benefi ts, should these be provided in exceptional circu mstances, or any one -off costs rel ating to recruitment, loss of office or relo cation. Performa nce Conditions No performance co nditions. Annual Bon us Purpose and lin k to strategy To link reward to key financial and operati onal targets for the forthco ming year. Additiona l alignment with shareho lders' interests through th e operation of bonus deferral. Operation The Executive Directors are participa nts in the annual bonus plan wh ich is reviewed annua lly to ensure bonus opportu nity, performance mea sures and targets are appropria te and supportive of th e business plan. Typically, no more than two-th irds of an Executive Direct or's annual bon us is delivered in cash follo wing the release of audit ed results and the remaining am ount is deferred into an awa rd over Company sha res under the Deferred Bonus Pla n (DBP). • Deferred awards are usually granted in the form of condit ional share awards or nil -cost options (or, exception ally, as cash - settled equivalent s). • Deferred awards usuall y vest two years aft er award although ma y vest early on leaving emplo yment or on a change of control (see later section s). • An additional payment or award may be made in respe ct of shares which vest under deferred a wards to refl ect the value of dividends (including special dividen ds) which wo uld have been paid on tho se shares during the vesting p eriod (this pay m ent may assume th at CORPORATE GOVERNA NCE Page 139 of 273 dividends had been rein vested in Company sha res on a cumul ative basis). Maximum Opportunity The maximum award that can be made to an Executive Director under th e annual bonus plan is 200% of salary . For 2022, both executive dir ectors will receive a maximum opportu nity of 200% of salary. Performa nce Conditions The bonus is based on perf ormance a gainst financial, strategic, operational, ESG or persona l measures a ppropriate to the in dividual Executive Director assesse d over one year. Th e precise measures and weighting of th e measures are determin ed by the Remunera tion Committee ahead of ea ch award to ensure th ey are aligned with stra tegic priorities. Where appropriate, a slidin g scale of ta rgets will be applied to a mea sure, with pay -out not exceeding 20% for threshold perfo rmance increasin g to 100% for maximum performance. In rela tion to operational, mi lestone or qualitative targets, the stru cture of the ta rget may vary based on the nature of the ta rget set and may be based on the Rem une ration Committee’s judgem ent in assessing the perform ance outtu rn. Any bonus pay - out is ultimately at the discreti on of the Remunerat ion Committee. Th e Committee will co nsider the use of discretio n when determining the act ual overall level of individual b onus paymen ts and it may adjust the f ormulaic bonus pa y- out upwards or downw ards if it considers it appropria te to do so. Long Term Incentive Plan (LT IP) Purpose and link to strategy To link reward to key strategic and business targets for the lo nger term and to align executives wi th shareholders' interests. Operation Awards are usuall y granted annua lly under the LTIP to selected senior executives. Individual awa rd levels and performan ce conditions on which vesting will be dependent are review ed ann ually by the Remun eration Committee. LTIP awards are usual ly granted as condit ional awards of sha res or nil - cost options (o r, exceptionally, as cash -settl ed equivalents). Awards granted to Execut ive Directors normall y vest or become exercisable at the en d of a period of a t least three years fo llowing grant and normally have a holding period taking the tim e horizon to no earl ier than five yea rs following grant. Awards may vest early on leavi ng employment or on a change of contro l (see later sectio ns). An additional payment or award may be made in respe ct of shares wh ich vest under LTIP awards to reflect th e value of dividends (in cluding special dividends) which wou ld have been paid on tho se shares during the vesti ng and, if relevant, ho lding period (thi s payment m ay assume that dividends had been reinvested in Com pany sha res on a cumula tive basis). Maximum Opportunity The maximum award permitted to be granted to an Executi ve Director in respect of any one y ear under the LTIP is shares with a ma rket value (a s determined by the Remu neration Com mittee) of 200% of sala ry. CORPORATE GOVERNA NCE Page 140 of 273 Performa nce Conditions All LTIP awards granted to Executive Directors must be subject to a performance co ndition. The precise measures a nd weightin g of the measures are determ in ed by the Remunera tion Committee ahead of ea ch award to ensure th ey are aligned with stra tegic priorities. Performance wi ll usually be measured over a performance perio d of at least three yea rs. For achieving a 'threshold' level of performa nce against a pe rform ance measure, no more th an 25% of the port ion of the LTIP award determi ned by that measure w ill vest. Vesting then increa ses on a sliding scale to 100% for achievi ng a maximum perfo rmance target. Any LTIP vesting is ultim ately at the discret ion of the Remunerati on Committee. Share own ership guidelin es Purpose and link to strategy To create alignm ent between the long -term in terests of Executive Directors and sharehol ders. Operation Executive Directors are requ ired to build and ma intain a hol ding of 200% of salary in Com pany shares. Until an Executive Directo r is compliant wi th this guideline, they are required to retain at lea st 50% of vested post -tax shares. Unless the Remunera tion Committee deter mines otherwise, this guidel ine will continu e to apply for two years after a n Executive Director cea ses employment with the Group. Non-execu tive Director fee s Purpose and lin k to strategy To appropriatel y recognise responsibilities, skil ls and experience by ensuring fees are mark et compet itive. Operation NED fees comprise paym ent of an annual basic fee and additiona l fees for further Board respon sibilities including but no t limited to: • Senior Independent Direct or • Audit & Risk Commit tee Chairman • Remunerati on & Talent Committee Cha irm an • Environment, Saf ety & Social Responsibi lity Committee Chairm an The Chairma n of the Board receives an all -inclusive fee. No NED participates in th e Group's incentive arra ngements or pensio n plan or receives any other bene fits other tha n where travel t o the Company's registered office is recogni sed as a taxable benefit in wh ich case a NED may receive the grossed -up costs o f travel as a benefi t. Non -Executive Directors are entitled to reim bursement of reaso nable expenses (in cluding any tax thereon). Fee s are reviewed a nnually and are pai d in cash or shares. Non-Executi ve Directors also have the benefit of a quali fying third - party indemnit y from the Company and directors' an d officers' liability in surance. CORPORATE GOVERNA NCE Page 141 of 273 Annual Report on Remuneration Unaudited infor mation Implementation of remune ration policy in 202 2 This sectio n provides an ov erview of how the Remunerati on Comm ittee is pro posing to implement our Remunerati on Policy in 2022 for the Executive Directors. Base salar y As detailed in th e Chair’ s Let ter, last yea r, the C EO re quested tha t he not be considered for a salary increase. Th e Commi ttee therefore committed t o reviewin g the CEO’s salary in 2022 inste ad. For 202 2, the CEO has requested no increase to his base salary, which has remained unchanged since 2018, when Energean listed. T he Commit tee has, how ever, recommended a base sa lary adjustment for 2022 to £750,000 from £675,000. This will be applied retrospectively for 2022 only if First G as has been achieved from our fla gship Karish project durin g the yea r. In 20 21, we aw arded a staggered compensatio n u plift to the CFO. The uplift was co ntin gent o n co ntinued strong performance through 2021. Shareholders welcomed the staggered nature of the uplifts given they required t he CFO to evid ence strong performa nce a cross a longer period. The Com mittee has considered the Company and the CFO’s strong performance in the last y ear and has determined that it is appropriate for the second sta ge o f the uplift to proceed. As such, the seco nd increase in salary t o £600,000 will apply for 2022. Pension Both Executi ve Directors are entitl ed to recei ve a pension equi valent to 4% of their base salary. This rate aligns to the rat e offered to the wi der workfo rce (based on the con tribution ava ilable to the Greek workfo rce). Benefits Mathios Rigas and Panos Benos receive a contractu al benefits package worth £48,000 p.a. and £25,000 p.a. respectively. Annual bon us As detai led in the Chair’s Letter, an uplift in the bonu s opportunit y for the CFO was al so proposed last year subject to his continued strong perfo rman ce across the year. Given the CFO’s continued strong performance, the annu al bonus pl an for 2022 will offer a maximum bonu s oppo rtuni ty o f 200% a nnual salary for both of the Executive Directors. One-third of any bonus earned will continue to be deferre d into DBP shares. As outlined i n the Rem uneration Committee Chair’s Statement , the a nnual bonus for 2022 will be determined by a restructu red bonus scorecard that is aligned with strategic priorities for the year ahea d. 92 C onditional on a chieving Firs t Gas. Salary (retro spectively from First Gas ) Salary 1 Janua ry 2022 Salary 1 Janua ry 2021 % increase Mathios Riga s (CEO) £750,000 £675,000 £675,000 11% 92 Panos Beno s (CFO) - £600,000 £525,000 14.3% CORPORATE GOVERNA NCE Page 142 of 273 The targets for these performa nce measures in relation to the financial year 2022 are deemed commercially sensitive. How ever, it is envisaged that retro spective discl osure o f the targets and performance against them will be provided in next year’s Remunera tion Report to the extent that they do not remai n commerc ially sensitive a t that time. In the event of unforeseen a cquisitions, divestm ents or investments during the yea r, the Remun eration Comm ittee would consider ho w performa nce targets should be adjusted to ensure that they rema in appropriately challenging and would explain any such adjustments in next yea r’s Remunerati on Report. The R emuneratio n Com mittee ha s discr etion, where it believes it to be a ppropria te, to override any formulaic outcome a rising from the bonus plan . Long-ter m incentive plan The Executive Directors will receive an a ward under the LTIP duri ng 2022 over shares worth 200% of annual salary applicable for year. Awards will vest th ree years after grant and be subject to an additional two-yea r holding period. T he pro posed perfo rmance measu res for the 2022 award a re consistent with the measures for th e 2021 award, and are set o ut below. Total Shareholder Return performance will be measured against the following peer group: Ak erBP, Lundin, Delek Drilling, Isram co, Tamar, R atio, Kosmos, Harbour Energy, Caprico rn Energy PLC (formerl y Cairn Energy), Tul low Oil plc, Diversified Oil & Gas plc, Jadestone, Serica, Seplat , Genel and the FTSE 350 Oil and Gas and Coal index. This is align ed with the peer group that applied for the 2021 LTIP aw ard . The Committee reflected on the t argets that would apply fo r th e 2022 LTIP award and considered that the targets that applied for the 2021 award continue to be appropriate. For th e TSR metrics, the Committee recognised that strong share price performance ov er recent months means there is a strong ‘base ef fect’ that m eans stron g ou tperformance will n eed to be ma intained to generat e a payout under the incentive. Fo r the emissions reducti on target, these ta rgets are regarded as stretching in the co ntext of the compa ny’s ESG strategy. Performa nce measure As a percentage of maximum bonu s opportunity Operation al goals (includin g goals relating to project s, productio n, cost of production a nd reserves/ resou rces) 45% Commercial goals (including goals relating to gas contracting an d portfolio rationalisation ) 15% Financial and Risk goals (includin g goals rela ting to the dividend po licy, liquidity, and risk strategy) 20% Sustainabil ity (including goals relating to climate change, HS E and Diversity an d Inclusion) 20% Performa nce measure Proportion of award determ ined by measure Threshold Performa nce Maximum Performance Relative Tot al Shareh older Return over 3 Financial Yea rs 50% Median rankin g 12.5% of award Upper quartile ranki ng 50% of award Absolute T otal Shareholder Return over 3 Financial Yea rs 30% 8% p.a. 7.5% of award 12% p.a. 30% of award Average Scop e 1 &2 CO2 emissions (kgC O2 / boe) over 3 Financial Yea rs 20% 18 0% of award 6 20% of award CORPORATE GOVERNA NCE Page 143 of 273 Vesting is ca lculated o n a straight -lin e basis for perf ormance betw een the thresho ld and maximu m performance targets. The R emunerati on & Talen t Committee ha s discretion, w here it believe s it to be appropriate, to overri de any formu l aic outcome arising from th e LTIP. Typically, this wil l only be exercised in a negative directi on. Non-Exec utive Director re muneration The table bel ow shows th e fee stru cture fo r Non - Executive Directo rs for 2022. As deta iled in th e Chair letter, Com mittee reviewed the fees paid to the Cha ir in 202 1. The Chair fee has no t in creased since the company first listed i n 2018, and Karen Simon became Chair in November 2019 on the same fee level as the previo us Ch air. T he Commi ttee ref lected o n the significant growt h in the co mpany o ver the period since listing, including the expanding opera tional footprint and geogra phic complexity of the Gr oup, as well as the in creasing co mplexity and tim e commi tment of the role, and d etermined that a n uplift to th e Chair’s fee was appropriate for 2022. There w ill be no adjustments made t o the NED ‘bas e fee’. Some adjustments will be made to the Committee Cha ir fees to reflect the increased time commit ments required. Non -Execu tive Director fees are determined by the full Boa rd except for th e fee for the Chair of the Board, which is determined by the Remunerati on Committee. Audited inf ormation The information provided in this sectio n of the Remuneration Report up until the ‘Unaudited information’ heading on page 155 is subject to audit. 2022 fees 2021 fees Chair of the Bo ard all -inclusive fee £220,000 £150,000 Basic Non -Executive Directo r fee £55,000 £55,000 Senior Indepen dent Dir ector additional fee £10,000 £10,000 Audit Commit tee Chair ad ditional fee £25,000 £5,000 Nominatio n & ESG Committee Chair additional fee £15,000 £5,000 Remunerati on Committ ee Chair additional fee £15,000 £5,000 CORPORATE GOVERNA NCE Page 144 of 273 Single total figure of rem uneration The following ta ble sets out the to tal remunera tion for Executive Directors and Non - Executive Directors for 2 021 with com parative figures for 2020. 2021 (£ ‘0 00) 2020 (£ ‘0 00) Salary and fees Pension 93 Benefits 93 Annual bonus 94 LTIP 95 Total Fixed Total Variable Total 96 Salary and fees Benefits Annual bonus Total Fixed Total Variable Total 96 Executive Direct ors Mathios Riga s 675 27 48 1,080 2,635 750 3,715 4,465 675 75 858 750 858 1,608 Panos Beno s 525 21 25 735 1,680 571 2,415 2,986 450 50 572 500 572 1,072 Non-execu tive Directors 97 Karen Simon 150 - - - - 150 - 150 150 - - 150 - 150 Andrew Bart lett 68.125 - - - - 68.125 - 68.125 63 - - 63 - 63 Robert Willi am Peck 58.75 - - - - 58.75 - 58.75 55 - - 55 - 55 Stathis Topouzoglou 53.75 - - - - 53.75 - 53.75 50 - - 50 - 50 Amy Lashinsky 53.75 - - - - 53.75 - 53.75 50 - - 50 - 50 Kimberley Wood 60 - - - - 60 - 60 26 - - 26 - 26 Andreas Pe rsianis 55 - - - - 55 - 55 24 - - 24 - 24 93 Pension/ Benefits – In 2021, Mat hios Rigas and P anos Benos re ceived a pensio n allowance wor th 4% of salary ( equivalent to t he wider wor kforce) an d a separate ben efits allowance. Thi s approach replaced a cont ractual benefi ts package paid in 2020 wor th £75,000 p.a. and £50,000 p.a. r espectively. 94 An nual bonus – bonus payments are paid two -thirds in cash and one-third in deferred shares. Deferred shares vest after t wo years. Details of the performance measures and targets are set out in the following s ection. 95 LTIP – thi s figure includes two Long Term Inc entive awards that c ompleted in 2021. One award vested in June 2021 and one award compl eted in December 2021. The first LTIP vested in June 2021 and vested at 77.9% o f maximum. For this award, £434k and £289k is rel ated to share price apprecia tion between the grant and vesting date in Se ptembe r 2021 for the CEO and CFO re spectiv ely. The second LTIP co mpleted in December 2021 and will vest at 72.8% of maximum and the value provided in t he single figure is b ase d on an estimated share price based on a Q4 (1 October – 31 December 2021) av erage (£8.9 1). For this award, a n estimated £167k and £ 100k is related to share pric e appreciation be tween the gran t date and vesting date for the C EO and CFO resp ectively . 96 To tal remuneration paid to Direc tors in respe ct of 2022 is £7,962,34 6 (2021 : £3,130,000). 97 N on-executive d irectors - Roy Fran klin joined the bo ard on 13 Oct ober 2021. CORPORATE GOVERNA NCE Page 145 of 273 Roy Frankl in 11.971 - - - - 11.971 - 11.971 - - - - - - Ohad Mara ni 98 - - - - -- - - - - - - 32 - 32 98 S tepped down on 26 July 20 20. CORPORATE GOVERNA NCE Page 146 of 273 Annual bon us The maximum annual bonus opportunity for the Executive Directors in 2021 was 200% of salary fo r th e CEO and 175% of sala ry for the CFO. Two -thirds of any bonus will be paid in cash with the rema ining third granted in shares under th e DBP which vest two years post grant . Performance measures and targets applyi ng to the 2021 annual bonu s, alon g with performance achieved, a re set ou t below. F u rther detai l on the respective a reas of performance follows the summary table. Further detail on the various performan ce areas of the annual bonus is set out below. Performa nce Measure % of maximum Performa nce achieved Operation al goals 50% 31.3% Commercial goals 10% 9.5% Financial and Risk goals 20% 19.8% ESS goals 15% 14.8% People and Cul ture goals 5% 4.7% Total 100% 80% CORPORATE GOVERNA NCE Page 147 of 273 Operational go als Operational goals accounted for 50% of the overall bonus. Principally goals set for this segment have defined thresh old, target and maximum performance levels attached, which are disclosed below. The goals for this segment related to achieving First Gas, other project progress, absol ute production and cost of production targets, adding resou rces from Gl engorm, and wider reserves growth . Performa nce measure Proportion of bonus Threshold performa nce 0% vesting Target perfo rmance 50% vesting Maximum performa nce 100% vesting Actual perform ance % of maximum bonus pa yable Operation al goals Deliver First Gas Karish 15% FPSO Sail Away FPSO in Israel Hook Up No sail away due to COVID-19 delays 0% Project Progre ss 5% Goals relatin g to operational progress, includin g NEA- NI develo pment, Karish North development, and develo pment of a second Oil Train. Progress wa s weighted bas ed on overall project co st. Committee approved an ou tcome of 70%, reflectin g hold -u ps on some projects, inclu ding the FPSO, but good overa ll progress on ot her projects. 3.5% (70% of element vesting) Productio n 11.25% 35k boep/d 37.5k boep/d 40k boep/d 41 kboep/d 11.25% (100% of element ve sting) Cost of Produ ction 11.25% $17 per barrel $15.5 per barrel $14 per barrel $14.3 per barrel 10.9% (97% of element vesting) Reserves adds from Glengorm (adju sted for UK Sale) 1.9% 33.7mmboe 63.5mmboe 70mmboe Neither well wa s successful 0% Reserves growth 5.6% 190 mmboe 210 mmboe 245 mmboe 253.3 mmboe 5.6% (100% of element ve sting) Performance wi thin the operational cat egory therefore was assessed at 31.3% out of the maximu m 50% available. For the ‘Project Progress’ sub -category , the Committee assessed constituent ta rget ranges within the overall sub -ca tegory to come to an overall result for the 5% available. A target range had been set within this sub - category in relation to develo pment of a seco nd oi l train. Given the FPSO delay , it was decided to slip t he delivery date of this module backward to al ign it with the Karish North installation, and the target range on the second oil train development was therefore revised to align with the revised overa ll project schedule. The C ommittee approved a n over all o utcome of 70% fo r the projec t progress sub -cate gory, recognising strong progress across project s, but facto ring in some discount for the dela y associated with th e FPSO hold -up. CORPORATE GOVERNA NCE Page 148 of 273 Commercial go als Commercial goals accounted for 10% of the overall bonus. 5% linked to a strategic goal of optimising the por tfolio, while the balancing 5% linked to a quantitative ratio of contract ed sales to reserves target. Performa nce measure Proportion of bonus Threshold performa nce 0% vesting Target perfo rmance 50% vesting Maximum performa nce 100% vesting Actual perfo rmance % of maximum bonus pa yable Commercial goals Successful Divestments an d Optimisa tion of Portfolio 5% The Committ ee considered this sub -category on a holistic basis. Successfu l divestmen t/ optimisation act ions included acquisition of ENI sha res in Vega/Rospo f or no consideratio n, enabling a 50% increase in oil product ion; developing a proceeda ble offer for Glengorm; creat ion of an “Adriatic package” to provide reference for Mo ntenegro DoD; and conductin g a ground- up review of the Ital ian operati on, including recommendati on for disposal. The Comm ittee approved an outcom e of 90% for this element. 4.5% (90% of element vesting) Ratio of con tracted sales to reserv es 5% 90% 95% 100% 100% 5% (100% of element vesting) Performance wi thin the commercial catego ry therefore was assessed at 9.5% out of the maximum 10% available. CORPORATE GOVERNA NCE Page 149 of 273 Financial a nd Risk goals Financial and Risk goals a ccoun ted for 20% of the overa ll bonus, split betw een quanti tative targets relating to average li fe of group debt (worth 8% o f the overall bonus) and availa ble liquidity (7%), and a discretion ary category relating to development of a risk strategy (5%). Performa nce measure Proportion of bonus Threshold performa nce 0% vesting Target perf ormance 50% vesting Maximum performa nce 100% vesting Actual perform ance % of maximum bonus pa yable Financial and Risk Weighted ave rage life of group d ebt 8% 3 years 4 years 5 years 5.4 years 8% (100% of element vesting) Available li quidity 7% $100 million $150 million $200 million $1.04 billion 7% (100% of element vesting) Develop a risk strategy 5% Successful initi atives included implementatio n of a new ERP system; updating all policy manuals develo ped in 2018 and progress on new Enterprise Risk Ma nagement sy stem. The Committ ee recognised strong progress on thi s element an d approved a vesting outcome of 95%. 4.75% (95% of element vesting) Performance within t he fina ncial and risk category was therefore assessed at 19.8% out of t he maximum 20%, principally due to a particularly strong performance in raising liquidit y, and extending the life of Grou p debt. CORPORATE GOVERNA NCE Page 150 of 273 Environme nt, safety and sustain ability Area of focus Achievement Climate Change (10%) • To reduce carbon emi ssions intensity . The Committ ee set a target range of 3% reduction at th reshold, 5% at target and 8% at maximum. • To mature the carbon ca pture/ storage project. • To develop the Energean str ategy around transit ioning to n et-zero . • To gain a strong susta inability rating relative to the peer grou p. The Committee set a threshold target of coming in the to p 50% of the peer group, a target of com ing in top 25% of peer group and max of top 15% of peer group. • To include climate ch ange requirements in com pany's suppliers' selection and eval uation policy • Strong performance on 2021 carbon emissions intensit y reduction - successfully reduced from 22.2kg/COe/boe to 18.3 gCO2e/boe, meaning a reducti on of c.18% vs. a max target range of 8%. • Prinos carbon captu re project proposal submitted to Greek govern ment. Project approved and currently progressing required milestones. • Strategy and n et-zero transitio n plan successfully develo ped and submitted to the Board. • Sustainability ra ting vs. peers – M SCI ESG rating at AA level (scor e of 5.6 well above 4.7 previous score, a nd 4.6 industry avera ge score). Energean a t top of peer group, with other 5 E+P companies rated belo w AA. In overall E+P sector, only 13% in AAA level and another 13% at AA level with Energean. • New Climate Ch ange Policy and new contractors HSE Policy has been issued, and new selection a nd evaluation rules agreed . Health and Safety (5%) • Overall HSE Performa nce against annual plan, incl uding performance against LTIF an d TRIR targets. • To align all count ries’ HSE Management Systems (MS) with the Group HSE MS includin g reporting & internal au dit by implementing a di gital solution • Well-below LTIF an d TRIR 2021 targets (includes emplo yees and contractors) – LTIF of 0.42 in 2021 (vs. <0.65 target) and TRIR of 0.97 (vs. <1.3 target). • Successfully al igned HSE management systems, includin g roll-o ut of new HSE management software. Performance within the environment, sa fety and susta inability category w as t herefore a ssessed at 14.8% out of the m aximum 15 %, r eflectin g strong perf ormance against pre -set climate change a nd healt h and safety objectives. People & c ulture Area of focus Achievement People and Culture (5%) • Edison integration – Fully completed by end of 2021, including ICT, system integration , new office in Milan, SAP Success Factors roll ou t. • Employee Manu al – Laun ch the Employee Manu al, aligning all policies with Edison by end of 2021 • Culture Survey - Proposal to run th e GRID survey close to year e nd, reflecting one yea r since Edison transact ion. • Successfully progressed Edison integration , including development of new organisat ional chart, signing of new contract s, progression on integration of (IT) systems and completed move to new offices in Milan. • Progressed on -bo arding initia tives, including developm ent of employee manual rea dy to be launched Q1 2022. CORPORATE GOVERNA NCE Page 151 of 273 • Culture survey ha s been planned and is ready to laun ch, with launch expected in Q1 2022. Overall, th e Commi ttee appr oved a vesting outcome of 4.7% out of the maximum 5% o n the People and Culture element of the bonus. This was to reflect very strong performa nce o n Edison i ntegration, with a discount appli ed to reflect the slight delay to the roll -out of the cultu re survey. Overall outc ome for the 2021 annual bon us The overall ou tcome on the annual bonus was theref ore: Total bonus pay able % of maxi mum Total bonus pay able £’000 and % of annual salary Mathios Riga s 80.0% £1,080,000 (160% of salary) Panos Beno s 80.0% £735,000 (140% of salary) The Remuneration Committee co nsidered this bonus outcome in light of the Gro up’s overall financial and operational performance during 2021 and was satisfied that it was appropriate and t hat no discretionary adjustment to the o utcome was required. LTIP awa rds vesting in the financial year 2021 was an anomalous year a s two LT IP awa rds veste d du ring t he y ear. This is related to the company ’s IPO date – as one awa rd wa s granted at th e point o f t he compan y’s IPO in mid - 2018, and a nother w as granted at the start of the 2019 performance year, two awards complet ed during 2021. This has had the effect of significantly increasing both directors’ single figure v alue. Given the in clusion of two awards in the single figu re disc losures, it means they should not be seen as representative of the likely level of executive pay going forw ard. July 2018 - June 2021 aw ard The share award granted after the compa ny listed in June 2018 was subject to perf orman ce m easured between 1 July 2018 and 30 June 2020. The valu e of this award is set out below. Number of shares awarded Value at award date Number of shares vesting 99 Value at vest 100 Mathios Riga s 252,904 £1,350,000 196,986 £1,485,274 Panos Beno s 168,602 £900,000 131,324 £990,183 99 Th e v esting figures shown in the tabl e abov e reflect the 77.89% of the t otal award that met performan ce conditions o n 30 June 2020, and that vested on 6 September 2021. The vesting shares will become exercisable after a two -year holding period on 5 September 2023. 100 The share pri ce used to value the shar es is the share price on the vest ing date of 6 September 2021 (£7.54). This compa res to a grant price of £5.34. The portion of t he award that is attributabl e to share price growth is: for Mathios Rigas: £434k and for Panos Benos: £ 289k. CORPORATE GOVERNA NCE Page 152 of 273 The performan ce conditions 101 that applied to this a ward are set out below . Weighting Threshold 25% vesting Maximum 100% vesting Performa nce achieved Pay- out level % of maxi mum Relative TSR 102 70% Median Upper quartile 1st in peer group 100% Absolute T SR 10% 12.5% p.a. 20% p.a. 17.9% p.a. 78.93% Karish-T anin First Gas 20% 30 June 2021 31 March 2021 Not reached 0% Strong T SR perf ormance meant the award vested at 77.89% of maximum . Un fortunately, the First Gas date was misse d, meaning th is portion of the award lapsed in fu ll. When co nsidering perform ance outcomes, the Commit tee look s beyo nd fo rmulaic results to en sur e th e ou tcomes align with overal l business performance. The Committee considered the holistic performance of the business and decided that the formulaic outcome was an appropriat e one, and reflective of the shareholder a nd stakeh older experience. It therefo re decided that the a ward should vest with out any further a djustment. January 2019 - December 20 21 award The share award granted at the sta rt o f t he 2019 fina ncial year was subject to performance measured between 1 January 2019 and 31 December 2021. T he v alu e of this award is set out below. Number of shares awarded Value at award date Number of shares vesti ng 103 Value at vest 104 Mathios Riga s 177,309 £1,350,000 129,063 £1,149,951 Panos Beno s 106,385 £810,000 77,437 £689,964 101 Straight-line vesting appli es for all perf ormance condi tions. 102 Companies included in the relative TSR peer group: Capricorn Energy (Cairn Energy), EnQuest, Genel Energy, Gulf Keystone Petroleum, Hurricane, Isramco Negev, Kosmos Energy, Nostrum Oil & Gas, Ophir Energy, Premier Oil (Har bour Energy), R atio, Rockhopper E xploration, S eplat Petroleum, SO CO Internati onal (Pharos Energ y), Tamar Petr oleum and Tullo w Oil. 103 The vesting figures shown in the table above reflect the 72.79% of the total award t hat met performance conditions on 31 December 2021. This award will vest on 28 March 2022. The vesting shares will becom e exercisable after a two -year holding period on 28 M arch 2024. 104 The share price used to value the shares is the 3-month average share price on 31 Decemb er 2021 (£8.91). This co mpares to a grant price of £7.61. The portion of t he award that is attributabl e to share price growth is: for Mathios Rigas: £168k and for Panos Benos: £ 101k. CORPORATE GOVERNA NCE Page 153 of 273 The performan ce conditions 105 that applied to this a ward are set out below . Weighting Threshold 25% vesting Maximum 100% vesting Performa nce achieved Pay-out level % of maxi mum Relative TSR 106 55% Median Upper Quartile 1st in peer group 100% Absolute T SR 20% 12.5% p.a. 20% p.a. 13.9% p.a. 38.94% Karish Tan in First Gas 15% 30 June 2021 31 March 2021 Not reached 0% Productio n – average over 3 years 10% 8,000 bpd 12,000 bpd 15,366 bpd 100% Strong TSR performance meant the award vested a t 72.79% of maximum. Un fortunately, since t he same First Gas target applied to the 2019 grant a s applied i n th e 2018 grant, this portion of the award la psed in full. The performance level achieved for average production over three years includes production from Edison assets. This tra nsaction completed in December 2020. The Com mittee considered the h olistic performance o f the busin ess and deci ded that the formul aic outcome w as an appro priate one, a nd reflective of the shareholder and stakeholder experience. It therefore decided that the award should vest without any fu rther adjustment. LTIP awards during the financial year An award was grant ed under the LTIP to selected senior executi ves, including the Exec utive Directors, in March 2021. This award is subject to the performance conditions described below and will vest in March 2024 with a subsequent two -y ear holdin g perio d fo r any vested sha res to Ma rch 2026. The Committee considered the share price a t the time of grant, recogni sing the need to mitigate the risk of windfall gains . 105 Straight-line vesting app lies for all performance condi tions. 106 Companies included in the peer group: Cairn Energy (Capricorn Energy), EnQuest, Genel Energy, Gulf Keystone Petroleum, Hurricane, Isram co Negev, Kosmo s Energy, Nostrum O il & Gas, Ophir Energy, Premier O il (Harbour Energy), Ra tio, Rockhoppe r Exploration, S eplat Petroleum, SOCO Internati onal (Pharos Ene rgy), Tamar Pet roleum and Tull ow Oil. 107 The maximum number of shares that could be awarded has been calculated using the share price of £8.06 (average closing share pr ice for the five dealing days prior to gran t) and excludes any additional shares that may be awarded in relation to dividends acc ruing during th e vesting and holding periods. 108 The maximum nu mber of sh ares granted to Panos Benos should have been 130,208 (200% x £52 5,000 (2021 salary) ÷ £8.064). However, due to an administra tive error, the number of shares actuall y granted in Ap ril 2021 was only 111,607. To address this, the outstanding 18,601 shares will be granted in March / April 2022 and will be su bject to the same vesting conditions as the original grant. Type of award Date of grant Maximum number of shares 107 Face value (£) Face value (% of salary) Threshold vesting End of performa nce period Mathios Rigas Conditional share award 26 April 2021 167,410 £1,350,000 200% 25% of award 31 December 2023 Panos Benos 26 April 2021 111,607 108 £1,050,000 200% CORPORATE GOVERNA NCE Page 154 of 273 Vesting of the awards is s ubject to sati sfaction of the follo wing performa nce conditions. Vesti ng is calculated on a straight -line basis for performa nce between th e threshold a nd maximum performance targets. Any LTIP vesting is at the discretion of the Remuneration Committee. They will consider the vesting level at the end o f the perf ormance period to ensure the final outcome is appropria te and reasonable, being part icularly mindfu l of win dfall gains. Loss of office pay ments/payments to fo rmer directors There have been no payments to former Directo rs or payments to Directors for loss o f o ffice during 2021. Statement of Directors’ s hareholding and s hare interests Executive D irectors are expected to achieve a holding of shares worth 200% of salary. The Remuneration Committee reviews o ngoing individual perform ance against th is shareholdin g requirement a t the end o f each financial year. Both Executive Directors currently exceed th eir m inimum guidelin e. Th e nu mber of shares held by Directors as at 31 December 20 21 is set ou t below: Number of shares as at 31 December 2021 Shares own ed outright Interests in share incentive schemes, subject to performa nce conditions Interests in share incentive schemes, subject to employment Percentage of Issue Sha re Capital (minus LTIP and DBP shares) Share ownership guidelines met? 110 Director LTIP 111 DBP 112 Mathios Rigas 19,826,292 493,025 66,322 11.16 Yes Panos Benos 3,418,999 328,684 44,215 1.93 Yes Karen Simon 198,072 0.11 n/a Andrew Bartlett 5,554 0.003 n/a 109 Total Shareholder Return performance will be measured against the following peer group: AkerBP, Lundin, Delek Dr illing, Isramco, Tamar , R atio, Kosmos, Harbour Energy, Capricorn Energy PLC (formerly Cairn Energy), Tullow Oil plc, Diversified O il & Gas plc, Jades tone, Serica, S eplat, Genel a nd the FTSE 35 0 Oil and Gas and Coal index. 110 For the purposes of determining the value of Execu tive Director shareholdings, the individual’s current annual salary and the share price as at 31 Decembe r 2021 has been used ( £8.55 per share). 111 This relates to shar es awarded und er the LTIP in Mar ch 2020 and M arch 2021. 112 This relates to shar es awarded und er the DBP in Mar ch 2020 & 2021 in relati on to the 2019 & 2020 annu al bonus . Performa nce measure Proportion of award dete rmined by measure Threshold Performa nce Maximum performa nce Relative Tot al Sharehol der Return over three-yea r performa nce period 109 50% Median rankin g 12.5% of award Upper quartile ranki ng 50% of award Absolute T otal Shareholder Return over three-yea r performa nce period 30% 8% p.a. 7.5% of award 12% p.a. 30% of award Average Scop e 1 & 2 C O2 emissions (kgC O2 / boe) over 3 Financial Yea rs 20% 18 0% of award 6 20% of award CORPORATE GOVERNA NCE Page 155 of 273 Robert William Peck 6,755 0.004 n/a Efstathios Topouzoglou 17,623,314 9.92 n/a Amy Lashinsky 1,507 0.0008 n/a Kimberley Wood 0 n/a n/a Andreas Persianis 0 n/a n/a Roy Franklin 0 n/a Between 31 December 2021 and 23 March 2022, Efstathios Topouzoglo u sold 656,234 shares held in his own name. Unaudited information The informatio n provided in this section of the Rem uneration Report is no t subject to audit. Performance graph and CEO remuneration table The chart below compares the Total Sha reholder Retu rn perf ormance of th e Company over the period from Admi ssion to 31 December 2021 to the performan ce of the FTSE 350 Oil, Ga s and Go al Produce rs Index. This index has been chosen because it is a recognised equity market index of which the Company is a member. The base point in the cha rt for the Company equa tes to the Offer Price of £4.55 per share.                                                                                         CORPORATE GOVERNA NCE Page 156 of 273 The ta ble belo w sum marises the CEO single figure for total remu neration, annual bonus pay -outs and long-term ince ntive vesting levels as a percentage of maximum opport unity over thi s period. 2021 2020 2019 2018 CEO single f igure of remunera tion £’000 £4,465k £1,608k £1,134k £1,581k Annual bonu s pay-ou t (as a % of m aximum opportu nity) 80.0% 84.8% 37.9% 82.1% LTIP vesting out -turn (as a % of ma ximum opportuni ty) 113 75.4% n/a (no award vested in 2020) n/a (no award vested in 2019) n/a (no award vested in 2018) Percentage change in remuneration of the board o f directors The cha rt below shows the percentage change in annua l salary , benefits and bonus for each Executive and Non-Executive Director co mpared with the avera ge for all Company employees between 2020 and 2021. Annual pe rcentage change table Since Energean plc only h as 36 UK employees, it is e xempt fro m the legislative re quirement to disclose a ra tio between the remun eration of the CEO and UK emplo yees. However, the Committee con tinues to monitor the approach to remunera tion that a pplies t o th e w ider workforce. Further detail on the Committee’s appro ach to the w ider workforce is set out in the w ider workforce section on page 158 . 113 The 2021 LTIP v alue i s an average based on two awards that completed in 20 21. T he 2018 LTIP award that completed in June 2021 vested at 77 .9% of maxim um. The 2019 LTIP award tha t completed in D ecember 2021 vested at 72 .8% of maximum. 114 Average employee pa y has been c alculated on a full-time equivalent basis based on all empl oyees of En ergean pl c. Salary change (2020 to 2021) Benefits change (2020 to 2021) Annual bonus change (2020 to 2021) Salary change (2019 to 2020) Benefits change (2019 to 2020) Annual bonus change (2019 to 2020) Average fo r all employees 114 8.88% 16.13% 40.6% 6.2% -8.70% 12.49% Executive Directors Mathios Riga s 0.0% -36.0% 25.9% 0%% 0% +124% Panos Beno s 16.7% -50.0% 28.5% 0% 0% +124% Non-Executi ve Directors Karen Simon 0% 0% 0% 0% 0% 0% Andrew Bart lett 0% 0% 0% 0% 0% 0% Robert Willi am Peck 0% 0% 0% 0% 0% 0% Stathis Topo uzoglou 0% 0% 0% 0% 0% 0% Amy Lashinsky 0% 0% 0% 0% 0% 0% Kimberley Wood 0% 0% 0% 0% 0% 0% Andreas Pe rsianis 0% 0% 0% 0% 0% 0% Roy Frankl in 0% 0% 0% - - - CORPORATE GOVERNA NCE Page 157 of 273 Relative importance of the spend on pay The chart below illustrates the total expenditure on remunerati on in 2020 and 2021 for all of the Company’s empl oyees compared to dividends pa yable to shareh olders. Consideration by the Dire ctors of matters relating to Directors’ r emuneration The Rem uneration Committee is chaired by Kimberley Woo d. During the year, the Remuneration Committee a lso comprised An drew Bartlet t and Karen Simo n. Details of their atten dance is set ou t on page 111 . The Remunera tion Committee met six times duri ng 2021. Other attendees present at these meet ings by invitation were the CEO, the CFO, t he He ad o f HR a nd the Company Secret ary. No individu al was in attendance wh en their own remunera tion was being determi ned. The Committee is min dful of the U K Corporate Go vernan ce Code and considers that it appropriately addresses the foll owing principles set out in the Co de: Clarity This Remunera tion Report provides open and tra nsparent discl osure of our executive remunerat ion arrangements for ou r internal an d external stakehol ders. In terms of engagement with the wider work force, Energean has appo inted Robert Peck as the employee repre sentative o n the Board. As pa rt of this role, Robert will ensure that the “em ployee voice” wi ll be heard at the Boa rd and will engage with employees to obta in their views on decision s to be taken by the Boa rd. Simplicity an d alignment to culture Variable remunera tion arrangements for our execut ives are strai ghtforward with individuals eligi ble for an annual bonus and, at more senior level s, a single long - term incentive pla n. Perfo rmance measures used in these pla ns are aligned with delivery of Group KPIs, key strategic Group object ives and long- term sustaina ble value creatio n. They are a lso aligned with our com mitment to a dopt a responsible, sustainable busi ness model. Predictabil ity Our executive remunerat ion arrangemen ts contain ma ximum opportunity levels for each compo nent of remunerati on with variable incentive ou tcomes varying depending on the level of performa nce ach ieved against specifi c measures. The charts withi n our Remuneration Policy as set out in the 2020 Annual Report a nd Accounts provide estim ates of the poten tial total reward opportuni ty for the Executive Directors under o ur current Rem uneratio n Policy. Pr oportiona lity and risk Our variable remunera tion arrangemen ts are designed to provide a fa ir and proportionat e link between Group performa nce and reward. In particular, pa rtial deferral of the an nual bonus into shares, five -year release periods for LTIP a wards and stretching shareh olding requirements that apply during and post -employ ment provide a clear link to the ongoing performan ce of the Group and therefore lo ng - term alignment with stakeholders. We are also sa tisfied that the va riable pay structures do no t encourage ina ppropriate risk -taking. Notwithstanding th is, the Remunera tion Committee retains an overriding discretion that allows it to adjust formula ic annual bonus and / or LTIP outcom es so as to guard against dispr oportionate o utturns. Malus and c lawback provisions also apply to both the annual bonus and LTIP and can be triggered in circumstan ces outlined in the Remunera tion Policy. The Remuneration Committee is responsible for determini ng the Company Chair’s fee and all aspects of Executive Dire ct or remun eration a s well as th e determin ation of other senior m anagement’s 2021 ( £m ) 2020 ( £m ) Change Total expen diture on remuneratio n 92.3 27.3 236.6% Dividends payable to shareh olders/ sha re buy backs Nil nil - CORPORATE GOVERNA NCE Page 158 of 273 remuneratio n. T he Remunerati on Committee also o versees th e operation of all share plans. Full term s of reference of th e Remuneration Com mittee are available on our website at ww w.energean.co m . During the year, the Remun eratio n Comm ittee received independent and objecti ve advice fro m Deloitte LLP principally on market practice an d incentive design for whi ch Deloitte LLP w as paid £99,083 fees (c harged on a time plus expenses ba sis). Deloitte LLP is a foundin g member o f the Rem uneratio n Consultant s Group a nd as such, volu ntarily opera tes under t he cod e of co nduct in relati on to executive remuneratio n consulting in the U K. Deloi tte LLP ha s al so pro vided ad vice to the Company in relatio n to technology consulting support, tax, direct a nd indire ct tax co mpliance servi ces, pay roll servi ces an d transaction support service s in connection with the acquisition of Edison E&P. Workforce remuneration a nd engag ement In formul ating th e pay pro posals for 2022, as well as approving pa y outco mes for the yea r, the Co mmittee have been mindful of the experience of the wider workforce. Energea n views its people, th e Energean family, as the foundation upon which our success is built. The Co mmittee i s therefore mindful of ho w pay in the boardro om compares with pay a cross the organisat ion. The bonus outcome for the Executive Directors ca scades do wn the organisatio n, ensuring consistency across the company in incentive outturns. More bro adly, the Committee is also kept a breast of workforce matters through provision of key mana gement information, inclu ding gender pay gap data. We have a dedicated workforce NED i n Robert Peck, w ho acts as t he ‘employee voice’ at board l evel. The Com mittee is therefore confident that its pay decisions are appro priate in the context o f the broa der workforce experience During 2022, Robert will contin ue to attend meeti ngs and the Committee m embers w ill take part in staff events such as town ha lls meeting s and meet wi th staff in person where possible. Shareholder voting on remuneration resolutions At the Annual Genera l Meeting held on 24 May 2021, all resolutions were passed with high levels of support. However, as a signifi cant minority of shareholders were unsupportive o f the resolutions relating to the Directors' Remunerati on Report and D irectors’ Remu neration Policy, we su bsequently wrote to our largest shareh olders to invite their feedback and also hel d a num ber of f ollow up meetin gs. We ha d discussion meetin gs and rec eived feedback both fro m those that supported and those tha t did not. Broadly the f eedback received prima rily related to i ssues around timi ng of changes to executive remuneratio n and suggestions to the Remu neration Committee about how they would like to s ee performance measures an d targets strengthened going forward. T he revise d 20 22 bonus scorecard, along with i mproved disclosure on 2021 bonus ou tcomes wi thin this report, will evidence thi s strengthening of performance measuremen t within Energean ’s variab le pay. Our in clusion of ESG measures in the LTIP continu es t o be view ed positively and ha s been ma intained for 2022. All views received during the consultation w ere carefully considered by the Committee and formed part of its decisio n mak ing relating to rem uneration implem entation in 2022. We will continue to proactively engage wit h shareholders a nd adviso ry bodies and welcome any further input from shareh olders. Votes for Votes again st Votes with held Approval of the Directors’ Remuneration Policy 2021 AGM 103,849,415 (75%) 34,092,723 (25%) 0 Approval of the Annual Report on Remuneration 2021 AGM 105,565,663 (77%) 32,376,475 (23%) 0 CORPORATE GOVERNA NCE Page 159 of 273 External Board appoi ntments Executive D irectors are not normally entitled to accept a Non- Ex ecu tive Director appointment outside the Company without the prior a pproval of the Board. Neither of the cu rrent Executive Directors currently holds any such a ppointment. By order of the Board. Kimberley Wood Chair of the Rem uneration & Talent Comm ittee 23 March 2022 CORPORATE GOVERNA NCE Page 160 of 273 Group Directors’ Report The Directors are pl eased t o present thei r report on th e af fairs of the Gro up, to gether wit h the f inancial statements for the yea r ended 31 December 2021. The Corpora te Governance Statement set out on pages 111 - 117 forms part of this repo rt. Details of signif icant events since th e bala nce sheet da te are conta ined in note 30 to the fi nancial statements on page 251. Details of financial instru ments and financia l risks are set ou t in note 27 to the financial statemen ts on page 2 39 . An indicat ion of likely futu re develo pments in the business of the Company an d its subsidiaries are included in the stra tegic report. Details of the Co mpany’s enga gement with suppliers and custo mers and other key stak eholders is covered in the section 172 (1) sta tement on pages 118- 121 . Th e principal risks are detai led on page s 84- 103. Results and divide nds The Group’s f inancia l results for the y ear en ded 31 December 2 021 are set out in th e consolida ted financial statem ents. No dividends have been paid in respect of the y ear 2021 (2020: nil); and the Directors will no t recommend to shareholders th at a dividend be paid at the 2022 AGM. Capital structure Details of the issu ed sha re capita l are shown in note 20 t o t he financial stat em ents. As at 31 December 2021, the Company’s issu ed sha re ca pital consisted of 177,6 02,560 ordinary shares of £0. 01 each . The Company has only o ne clas s of share, which carries no right to fixed income. Each share carries the right to one vote at General Me etings o f the Compa ny. No person ha s any specia l rights of contro l over the Company’s share ca pital and all issued shares are fully paid. There are no specific r estrictio ns on the size of a holding nor on the transfer of shares, wh ich are both governed by the gene ral provision s of the Company’s Articles of Associa tion (the “Articles”) and p revailing legislation. The Directors are no t aware of any a greements between holders of t he Company ’s shares tha t may resu lt in restrictions o n the transfer of securi ties or on voting rights. Details of employee share pla ns are outlined in note 3.15 to the financial statem ents on page 199 . Directors’ appointments an d powers With regard to the appointment and replacement of Directors, the Company is governed by its Article s of Association , the UK Corporate Governance Code, the Companies Act and related legislation. The powers of directors are described in t he Articles an d the Schedule o f Matters Reserved for the Board, copies of which are ava ilable on request. Directors’ a uthority over shares The au thority to issue sha res in the Co mpany may only be granted by the Company’s sharehol ders and, once granted, such authority can be ex ercised by the Directors. At the 2021 AGM, shareholders approved a resoluti on for the Company to ma ke purcha ses of its own sha res to a maximum of 10% o f its i ssued Ordinary shares. This re solution remains in force until the conclusion of the AGM in 2022. As at 23 March 2022, the Directors had not exercised this au thority. The Directo rs are propo sing to ren ew this aut hority at the 2022 AGM. There are a number of a greement s entered into by members o f the Grou p tha t take eff ect, alter or terminate upon a change of con trol of the Com pany, such as com mercial con tracts and bank loa ns and other financing agreemen ts. None of these are consider ed to b e significant in terms of their likely impact on the busin ess of the Group as a w hole. Furthermo re, th e Directors are no t aware of any agreemen ts between the Company and its Directors or employees that provide for compensation for loss of office or employment that arises in relation to a takeo ver. Directors’ details The biogra phical deta ils and appo intments o f the Directors a re set out on pages 106 -110. All o f the Directors will offer th emselves for re -election a t the AGM in May 2022. CORPORATE GOVERNA NCE Page 161 of 273 The Directors during the ye ar were: • Karen Simon (Non -Executive Chai rman) • Mathios Riga s (Chief Executive Office r) • Panos Benos (Chi ef Financial Officer) • Andrew Bartlett ( Senior Independent Non -Executive Director) • Robert Peck (Indepen dent Non -Executive Director) • Efstathios To pouzoglou (Non- Executive Director) • Andreas Persianis (Indepen dent Non -Executive Director ) • Kimberley Wood (Indep endent Non -Executive Directo r) • Amy Lashinsky (Independent Non-Executive Director) • Roy Franklin (Indepen dent Non -Executive Director) – appointed on 13 October 2021 Articles of Association The Company’s Articles may o nly be changed by special resolution at a General Meeting of shareholders. The Articles contain provisions regarding the appointment, retirement and removal of Directors. A Director may be appo inted by an ordinary resolut ion of shareholders in a General Meetin g fo llowing nomination by the Board (or member(s) entitl ed to vote at such a mee ting). The Directors may appoint a Director during any year; h owever, the individu al must sta nd for re -electio n by shareholders at the next AGM. Directors’ indemnities Under the Articl es, the Dire ctors may be indemnified out o f the assets o f the Company against ce rtain liabilities which may be incurred in relation to th e affairs of the Company or in relation to the duties, powers and offi ce of each Director. T hese indemnit y provisions for the benefi t of the Directors were implemented upon inco rporation of the Company on 8 May 2017 and rema in in force at the date of this report. Political contributions No political donations were made during the year (2020: nil) Substantial shareholdings The Company ha s been notified in accordance with Chapter 5 of the D isclosu re Guidance and Transparency Rules (or otherwise) of th e following holdings in the Co mpany’s issued share ca pital: Shareholder Number of Shares Number of Voting Rights % of Issued Share Capi tal Growthy Hol dings Co. Limited 18,948,260 18,948,260 10.67 Standard Lif e Aberdeen plc affiliated investm ent management entities 15,951,947 15,951,947 (indirect) 8.98 Oilco Investm ents Limited 16,016,734 16,016,734 9.02 Clal Insurance Company Lim ited 13,599,003 283,577 (direct) 13,315,426(indi rect) 7.66 The Phoenix Ho ldings Ltd. 8,968,710 8,968,710 5.06 Pelham Capita l Limited 7,353,314 7,353,314 (Direct) 4.14 Annual General Meeting (A GM) The Compan y’s AGM wil l be held in L ondon in May 2022. F ormal not ice of the AGM will be issue d separately fro m this Annual Report and Accoun ts. CORPORATE GOVERNA NCE Page 162 of 273 Registrars The Company’s share regist rar in respect of its ordinary shares traded on the London Stock Exchange i s Computershare Invest or Servi ces PLC, full deta ils of wh ich can be found in the Co mpany Inform ation section on page 27 3 . Greenhouse gas (GHG) emissions reporting Details of the Group’s emi ssions are contai ned in the Corporate Soci al Responsibility repo rt on page s 69 - 71 . Directors’ statement of dis closure of information to auditor Each of the Directors in office at the date o f the approval of this report has confirmed that, so far as such Director is aware, there i s no relevan t audit information (as defined in Secti on 418 of the Co mpanies Act 2006) of which the Compan y’s auditor is un aware; and such Directo r has tak en all th e steps that he/sh e ought to have taken as a Director in order t o m ake him self/herself aware of any rel evant au d it info rmation and to establish that the Company’s auditor is aware of that informatio n. This co nfirmation is given and should be interpreted in acc ordance with the prov isions of Section 418 of the Com panies Act 2006. Going concern In assessing the appro priaten ess of the going concern assumption over th e period from 23 March 2022 to 30 March 2023 ( the ‘going concern perio d’), m anagement have stre ss tested the Company’s most recent f inancial projections to inco rporate a ran ge of potential future outcomes b y consideri ng Energean’s principal risks, including furth er po tential delays on key projects and adverse cha nges in oi l and gas pri ces a s compare d to those incl uded in the c ash fl ow forec asts. The results o f man agement’s assessment were revi ewed by the Audi t and R isk Com mittee and th e Board of Dir ectors. Further details in respect of the going concern assessment is provided in note 2.1 t o the consolidated financial statements. This assessment confirmed that the Company has adeq uate cash and undraw n cred it facilities to enable it to meet its obligations as t hey fall due in order to continue its operations throughout the going concern period. Therefore, the Directors co nsider i t a ppropriate to continue to adopt the going con cern ba sis o f accounting in preparing the consol idated financial statements. Overseas branches and su bsidiaries Details of subsidiaries of th e Group are set out in note 31 on pages 25 2- 25 3 to the Financial Statements. Hedging Details of hedging are set o ut in not e 27 on pages 240- 242 to the Fin ancial Stat ements. Independent auditor Having reviewed the independence and effecti veness of the au ditor, the Audit & Risk Co mmittee has recommended to the Board that th e existing auditor, Ernst & Youn g LLP (“EY”), be reappo inted. EY has ex pressed it s willingn ess to continue in office as auditor. An ordinary resol ution to rea ppoint EY a s auditor of the Compan y will be proposed at the forthco ming AGM. CORPORATE GOVERNA NCE Page 163 of 273 Requirements of the Listin g Rules The following table provides references to where th e info rmation required by Listing Rule 9.8.4R is disclosed. Listing Rule re quirement Listing Rule Ref erence Section Capitalisa tion of interest LR 9.8.4R (1) Note 10 /page 21 5 Publication of unaudited financial information LR 9.8.4R (2) Not applicable Long-term ince ntive schemes LR 9.8.4R (4) Directors’ remunerat ion report/ pages 133 - 159 and n ote 26 , page 2 39 of the financial statements Director emo luments LR 9.8.4R (5), (6) No such waivers. Allotment of equity securities LR 9.8.4R (7), (8) No such share a llotments Listed shares of a subsidiary LR 9.8.4R (9) Not applicable Significant co ntracts with Directors and controlli ng shareholders LR 9.8.4R (10), (11) Directors’ report/ pages 160 - 161 Dividend waiver LR 9.8.4R (12), (13) Not applica ble Board stat ement in respect of relationshi p agreement with the controllin g sharehol der LR 9.8.4R (14) Not applicable This Directors’ Report was approved by the Board and signed on its behalf by the Company Secretary on 23 March 2022. By order of the Board Eleftheria Kotsana Company Secreta ry 23 March 2022 Company nu mber: 10758801, 44 Baker Street, London W1U 7AL CORPORATE GOVERNA NCE Page 164 of 273 Stat ement of Directors’ Responsibilities The directors are responsibl e fo r prepa ring th e a nnual report and th e gro up a nd parent company financial statements in accordance with appli cable United Kingdom law and regulations. Compan y law requires the directors to prepare financia l statements for each financial year. Under t hat law the directors are required to prepare the group financia l sta tements in accordan ce w ith UK -adopted Intern ationa l Accoun ting Standards (UK -a dopted IAS) and have elected to prepare the par ent company financial statements in accordance with United Kingdom Generally Accepted Accountin g Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 101 Reduced Disclosure Fra mework (“F RS 101”). Under co mpany la w the directors must not a pprove the group financial sta tements un less they are satisfied that they give a true and f air view of the state of affairs of the group and th e com pany and of the profit or loss of the group and the company f or that peri od. In preparing these finan cial statements the directo rs are required to: • Select suita ble acc ounting poli cies in accordance w ith IAS 8 Accounting Policies, Cha nges in Accounting Estima tes and Errors and then apply them consist ently; • Make judgements and account ing estimates tha t are reasonable and prudent; • Present in formation, including accounting policies, in a mann er tha t pro vides releva nt, reliable, comparable an d understandable informa tion; • Provide additio nal discl osures when compli ance wit h the speci fic requirements in UK-a dopted IAS (and in respect of the parent company f inancial statements, FRS 101 ) i s insuffici ent to ena ble u sers to understa nd the impact of particular transactions, other events and co nditions on t he grou p’s financial position an d financial performance; • In respect of the group financi al sta tements, sta te wh ether U K -adopte d IAS have been followed, subject to any ma terial departures disclosed and expl ained in the fina ncial statements; • In respect of the parent c ompany financial statem ents, sta te whether a pplicable UK Accountin g standards inclu ding FRS 10 1 have been fol lowed, subj ect to any material departures disclosed and explained in the fina ncial statements; and • Prepare the financial statements on th e going conce rn basis unles s it is a ppropriate to presume tha t the company and the group will no t continue in business. The directors are re sponsib le for k eeping adequate accou nting records th at are su ffici ent to show and explain the company’s an d grou p’s transact ions and disclose with rea sonable accuracy at any tim e the financial position of the company and th e group and enable them to ensu re that the company an d the group financial statements comply with the Companies Act 2006. They are responsible for safeguardin g the assets of the group and company and hence for taking reasonable steps to prevent and detect fraud and other irregula rities. Under applicable law a nd regulati ons, the directo rs a re a lso responsible for preparing a strategic report, directors’ report, directors’ rem un eration report and corporate governa nce statement that complies wi th that law and those regula tions. The directors are resp onsible for the ma intenance and integrity of the corporate and fi nancial information in cluded on the company’s websi te. Legislation in the UK gover ning the prepa ration and dissemination of financial sta tements may differ from legislat ion in other jurisdictions. CORPORATE GOVERNA NCE Page 165 of 273 Responsibility statement of the directors in respect o f the annual F inancial Report : The directors confi rm, to the best of their know ledge: • That th e consolidated financial sta tements, prepa red in accordance wit h the Companies Act 2006 and UK adopted Internatio nal Accounting Standards, give a tru e and fair view of the assets, liabilities, financial position an d pro fit of the parent compa ny and undertaki ngs included in th e consolidation taken as a who le; • That the annual report, including th e strategic report , includes a fa ir review of the developmen t and performance of the business a nd the p o sition of the compan y a nd underta kings inclu ded in the consolidation taken as a whole, together with a descripti on of th e prin cipal risks an d uncertainties that they face; and • That th ey consider the annual report and acc ounts, taken as a whole, is fair, b alanced and understandable and provide s the inform ation necessary for sha reholders to asses s the group’s a nd parent company ’s position and performa nce, business model and stra tegy. Mathios Rigas Panos Benos Director Director 23 March 2022 23 Ma rch 2022 FINANCIAL STAT EMENTS Page 166 of 273 F i n a n c i a l S t a t e m en ts Independent Auditor’s Report to the Me mbers of Energean plc Opinion In our opinion : • Energean plc’s group fina ncial statements and parent company financial statements ( the ’financial statements’) give a true a nd fair view of the sta te o f t he group’s and of the paren t c ompan y’s affairs as at 31 December 2021 an d of the group’s lo ss for the y ear then ended; • the group f inancial statements h ave been pro perly prepared in accordance with UK a dopted international accounting standards; • the parent company fi nancial statements h ave been pro perly prepared in accorda nce with United Kingdom Generally Accepted Accountin g Practice; and • the financi al statement s have been prepared in acc ordance wi th the requi rements of the Companies Act 2006. We have audited the financial statements o f Energean plc (the ‘parent company’) and its su bsidiaries (the ‘group’) for the y ear ended 31 December 20 21 which comprise: Group Parent company Group stat ement of financial posit ion as at 31 December 2021 Company sta tement of financial position as at 31 December 2021 Group income sta tement for the year then ended Company sta tement of changes in equity for th e year then ended Group stat ement of comprehensive in come for the year then en ded Related notes 1 to 16 to the fin ancial statemen ts including a summ ary of significant accounting pol icies Group stat ement of chan ges in equity for the year then end ed Group stat ement of cash fl ows for the yea r then ended Related notes 1 to 32 to the financi al statements, including a summ ary of signif icant accounti ng policies The financial reporting framework tha t has been applied in the preparat ion of the group financial statements is applicable law and UK ado pted internati onal accounting st andards. The financial reporting framework that has been applied in the pre paratio n of the paren t company financial sta tements is applicable law and United Kingdom Accounting Standards, including FRS 101 Reduced Disclosure Framework ( ‘United Kingdom Gener ally Accepte d Accounting Practi ce’). Basis for opinion We conduct ed o ur a udit in accordance with International Standards on Audit ing ( UK) ( ‘ISAs (UK)’) and applicable l aw. Our respo nsibilities under those standards a re further described in th e Auditor’s responsibilities for the audit of the f inancial statements secti on of o ur report. We bel ieve t hat the audit evidence we have obta ined is sufficien t and appropriate to provide a basis fo r our opinion. FINANCIAL STAT EMENTS Page 167 of 273 Independence We are independent of th e g roup and paren t i n accordance with the et hical requirements that are relevan t to our audit of the financial s tatements in th e UK, including the FRC’s Ethical Standard as applied to listed public interest ent ities, and we h ave fulfilled ou r other ethical respon sibilities in accordan ce with these requirements. The n on- audit services pro hibited by the FRC’s Ethical Standard were n ot provi ded to the group or the parent company and we remain independent o f the group and t he parent co mpany in conducting the audit. Conclusions relating to go ing concern In auditing the financial statements, we have concluded that the directors’ use of the go ing concern basis of acco unting in th e prepara tion of the fin ancial statem ents is appropria te. Our evaluation of the direct ors’ assessment of the grou p and paren t compan y’s abili ty to continue to adopt the going con cern basis o f accounting inclu ded the following procedures: • In con junction with our w alkthrough of the group’s f inancial close process, we confi rmed o ur understanding of management’s going con cern assessment process which included the preparation of a base case cash f low mo del covering the perio d 1 J anuary 2022 to 31 March 2023, a reasonabl e worst-case scena rio and two reverse stress test scen arios. • We assessed the appropriat eness of the duration of t he going concern assessment period to the end of March 2023 and consid ered wheth er there are a ny know n events o r con dit ions tha t will occur beyond the period. • We tested t he integrity of the models used to calcula te t he forecast cash flows underly ing the going concern assessment a nd, where applicabl e, assessed consisten cy with information relevan t to other areas of our a udit. • We assessed th e reasona bleness of the key assumptions incl uded in t he ba se case and rea sonable worst case cash flow models. Our evalu ation of the key assumption s within the models included comparing oil and gas price fo recasts to extern al data, veri fying reserves a nd producti on estimates to Competent Person Repo rts, assessing the progress of the Karish oil and gas development against plan, and ensuring co nsistency of forecast operating costs and capital expenditure against approved budgets. We sea rch ed for potent ially contradictory evidence that could indicate that m anagement’s assumptions were in appropriate. • We verified the sta rting cash posit ion and the availa ble f inancing fa cilities ref lected in the models to the a udit work we have performed on th ose balances, including our understanding of the k ey terms associated with the facilities, most notably the fact these facilities do not contain fi nancial covenants that the group mu st comply with acro ss the going concern assessmen t period. • We evaluated th e a ppropriateness of managem ent’s two reverse stress test scenarios and assessed the likelihood of such conditions arising durin g the going concern assessment peri od to be remote. • We reviewed th e group’s going con cern disclosures i ncluded in th e financi al statements in order to assess whether the disclosures were appropriate and accura tely ref lected the outco me of t he directors’ assessment proc ess. Our key observations • The directors’ assessment forecasts that t he group will retain suf ficient liquidity thr ougho ut t he going concern assessment peri od in both the base case and an unmit igated reasona ble worst - case scenario. • As a consequence of the refinanci ng undertaken during the year, there are no financial covenants the group must comply with over the going concern asses sment period. Based on t he work we have performed, we have not iden tified an y material uncertainties relating to events or conditions that, individually or collectively , may ca st significant doubt on the group and parent company’s a bility to continue as a goin g concern for a period thro ugh to 31 March 2 023. In relation to the group an d parent company ’s reporting on ho w they have appl ied the UK Corpora te Governance Co de, we have nothing ma terial to add or draw attenti on to in relation to the d irectors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accountin g. FINANCIAL STAT EMENTS Page 168 of 273 Our responsibili ties and the responsibiliti es of t he directors with respect to going co ncern are describe d in th e releva nt secti ons of this report. However, becau se not all future events o r condit ions ca n be predicted, this sta tement is no t a gua rantee as to the grou p or compa ny’s abilit y to conti nue as a going concern. Overview of our audit app roach Audit sco pe • We performed an a udit of the complete fin ancial information of five components an d audit procedures on specific bala nces for a further f ive components. • The componen ts where we performed fu ll or specific audit procedures accounted for 99% of To tal assets, 99 % of Revenue, and 99 % of group Loss before tax. Key audit matters • Recoverabili ty of oil and gas assets, including estim ation of oil and gas reserve volumes • Revenue recogni tion and the risk of mana gement override • Karish and Tanin developmen t project spend Materialit y • Overall group mat eriality of $25.6 million whi ch represents 0.5% of group assets, adjusted to remove the amoun t of goodwill related to the group’s investments in Energean Israel Limit ed and Edison E&P. An overview of the scop e of the group audit Tailoring the s cope Our assessment of audit risk, o ur evaluatio n of materiality and ou r allocation of performance materiality determine ou r audit scope f or ea ch compa ny with in the group. Taken together, this enables us to f orm an opin ion o n the consolidated financial statements. We take into account size, risk pro file, t he organisation of the group and effectiveness of group -wide co ntrols, changes in the business environmen t and other factors such as recent Internal audit re sults wh en assessing the level of work to be p erformed at each compa ny. In a ssessing t he ri sk o f material missta tement to the group financial stat ements, and to ensure we had adequate quantita tive coverage of significant accounts in the fina ncial statement s, of the sixteen (2020: twenty) reporting co mponents of the group, we selected ten (2020: twelve) components covering ent ities within Israel, Ita ly, Greece, Egypt, Cyprus, and the United Kingdom, wh ich represent the principal business units within the gro up. Of th e ten co mponents selected, we performed an audit of the complete financial information of five components (’full scope componen ts’) wh ich w ere selected based on their size o r risk chara cteristics. For the remainin g five components (’specifi c scop e compo nents’), we performed audit procedures on specific accounts within that co mponent that we considered ha d the potential f or the grea test impact on the signif icant accounts in the consolidated financi al statements eit her because of the size of these accounts or th eir risk profile. FINANCIAL STAT EMENTS Page 169 of 273 The table below illustrates the covera ge obtained from th e work performed by ou r audit teams: Reporting compo nents Number % of Group total assets % of Group Revenue % of Group Loss before ta x Full scope 5 92% 93% 51% Specific scope 115 5 7% 6% 48% Full and speci fic scope coverage 10 99% 99% 99% Remaining co mponents 116 6 1% 1% 1% Total reporti ng components 16 100% 100% 100% Changes from the prior yea r Two componen ts wh ich were previously design ated as specific scope have been re classifi ed as review scope f or 2021 (pres ented within the remainin g com ponents ca ption above). Furthermore, the number of review scope co mponents has fallen to six as a result of changes to the group’s internal report ing structur e. T hese changes w ere as a resul t of the ch anges to th e group’s compo sition following t he integration of th e Edison E&P acquisition and our curren t year assessment of the risks of material misstatement in the group’s significant accounts. Involvement with c omponent teams In esta blishing our overall approach to th e grou p au dit, w e determ ined the type of work that needed to be undertaken at ea ch of the components by us, as the pr imary audit engagemen t team, or by co mponent auditors from other EY global netw ork firms operating under ou r instru ction. Of the five full scope components, audit procedures were perf ormed on o ne of these directly by the prim ary audit team. For the five specific scope componen ts, where the wo rk wa s performed by compo nent audito rs, we determined the appropria te l evel of involvement to enable us to conclu de that sufficient audit evi dence had been obtained as a basis for our opini on on the group as a whole. The group audit team con tinu ed to follow a programm e of planned visits tha t has been designed to ensure that the Senio r Statutory Auditor visi ts the principal business loca tions of the group on a rotatin g basis. During th e cu rrent year’s au dit cycle, a visit was underta ken by th e primary audit tea m to the component team in It aly. This visit involved disc ussing the audit approach with the c omponent team and any issues ari sing fro m th eir wo rk an d meetin g with loca l ma nagement. Ongoing t ravel rest rictions arising from th e Covid-19 p andemic prevented fu rther physic al site visits in 202 1, but we con tinued with our programme of virtual site visits and component team oversight in the current year. The primary te am interacted regula rly with t he component teams where appropriate during vari ous stages of the audit, reviewed relevant working pa pers and were responsible for the scope and direction of the audit process. This, together wi th the additiona l procedures performed at grou p level, gave us appropria te evidence for our opinion on the group financial statements. Climate change There h as b een increasing interest from stak eholders as to how clim ate ch ange will impact Energean plc. Th e group has determined tha t the m ost sign ificant poten tial future impacts from climate change will be limited acc ess to capital, incre asing costs, and the potent ial for earl ier asset retirement, a mongst others. These are explai ned on pages 20 - 29 and 31- 33 in the required Task Fo rce f or Clim ate rela ted Financial Disclosures and on pages 79 - 103 in t he principal risks and uncertainties, which f orm part of the ’Other inform ation’, rath er than the audited financial stat ements. Our procedures o n these disclosures 115 The audit scope of t hese components may not h ave incl uded testing of all significant accoun ts of the component but will have contributed to t he coverage of significan t accounts tes ted for the group. 116 Of the remaining six (2020: seven) components, none are individually greater than 1% of the Group’s Total assets. We perf orme d other procedur es, including t he following, to respond to any potenti al risks of material missta tement to the consoli dated financial statem ents: • Analytical revie w procedures on an individual c omponent basis, • Tested consolida tion journals, i ntercompa ny elimination s and foreign cu rrency translati on calculatio ns , • Made enquiries of managemen t about unusual transaction s in these components; and • Reviewed minu tes of Board me etings held t hroughout the pe riod. FINANCIAL STAT EMENTS Page 170 of 273 therefore con sisted solely o f considering whether t hey a re materially inconsistent with the fina ncial statements or our knowl edge obta ined in the course of the audit or otherwise appear to be materi ally misstated. As explained in Note 4.2 Estimat ion uncertainty governmental and societal responses to climate change risks are still developing, and are interdependent upon each other, and consequently financial stat emen ts cannot capture all possible future outcomes as these are no t yet known. The degree of certainty of these changes may also mean that they cann ot be taken into account when determining asset and l iability valuations an d t he timing of fut ure cash flows under the requirements o f UK adopted intern ational accounting stan dards. In Note 4.2 to t he financial statements a descri ption has been provided o n how climate chan ge risks h ave been considered in the key judgements and estimates in the financial statements. Our a udit effort in considering cl imate change was focused on ensurin g th at the effects of material climate risks disclosed on pa ges 31 - 32 and the grou p’s commit ment to be Net -zero (Scope 1 and 2) by 2050 h ave been a ppropriat ely reflected in the estima tion of o il & gas reserves and the im pairment assessments for oil and gas assets. We also challenged the Directors’ considerations of climate change in their assessment of going concern and viabilit y and associated disclosures. Key audit matters Key audit matters are tho se matters that, i n o ur professional judgement, were of mo st significance in o ur audit of the financial statements of the current period and include the most significant assessed risks of material mi sstatement (whether or not due to fra ud) tha t we identified. Th ese matters included tho se which h ad the grea test effect on : the overa ll audit strategy, the allocation of resources i n the a udit; and directing the effo rts of the enga gement team. Th ese matters we re addressed in th e context of o ur a udit of the financial statemen ts as a w hole, a nd in our opinion th ereon, a nd we do not provide a separate opinion on these matt ers. Recoverabilit y of oil and gas assets, in cluding esti mation of oil and gas reserve volumes Key audit ma tter description Tan gible oil and gas assets: $3,457 million (2020 : $3, 054 million) Refer to the Audit a nd Risk Committ ee Report (pag es 122- 126 ); Acco unting policies (pages 18 5- 20 6 ); and Not es 3.6, 3.8, 3.11, 4.2, a nd 13 of the Conso lidated Financial Statem ents This refers to the risk that capital ised costs associated to ta ngible oil and gas assets may be recorded at a level th at exceeds the future recovera ble amount s. This risk affect s the production and developmen t assets in Israel, Italy, Egypt, Greece and the UK. Where indicators of im pairment exist, managemen t determines the recovera ble amount of the asset o r cash generating un it (‘CGU’) by preparing discount ed cash flow models. We have focused on this ar ea because th e models include a nu mber of management estimates and judgem ents including res erve and resource volum e estimates, futu re oil and gas prices, discount rates, pro duction f orecasts and operating and capi tal expenditures. Chan ges to one or more of th ese key inputs could lead to a poten tial impairment, change th e amount of impa irment recognised or result in a rev ersal of a previo usly recognised impairmen t. Our respon se to the risk We assessed man agement’s approach to iden tifying indicators of impa irment or reversal of a previou sly recognised impairment th rough the year. We con sidered external and interna l factors that may represent such indicators of impa irment or result in a reversa l of a previously recognised impairment. We concurred with man agement that there were no indicators of im pairment identified for any of the group’s production and developm ent assets at year -end, given improvement s to both external and intern al factors, i n particular th e price environment and internal reserves reporti ng, respectively. In the case of the Greece CGU, we concu rred with managemen t that indicators of a potential reversa l of previously recognised im pairment existed. FINANCIAL STAT EMENTS Page 171 of 273 For this CGU we tested the met hodology appli ed by management to determi ne the recoverable am ount in accordance with the requirement s of International Accounting Sta ndard 36: Impairment of Assets and validated the ma thematical accuracy of man agement’s cash flow forecasts. We tested the reason ableness of the forec ast of future cash flo ws of this CGU by considering evidence ava ilable to support assum ptions and the relia bility of past forecasts. Our audit work on the recoverable am ount assessment comprised the following key procedu res: • W ith the assistance of EY’s valua tions specialists, we evalu ated the price and discount rate assum ptions used by management (which included benchmarkin g against industry peers for the f ormer); • We obtained and reviewed the most recent th ird party reserves a nd reso urces reports and compared them with m anagement’s im pairment analysis for completeness and con sistency; • We assessed the qual ifications of ma nagement’s specialist u sed for the reserves and resources esti mates; • We performed testing to determine th e sensit ivity of the impairm ent model to changes in key assu mptions; and • We verified that all requi red disclosures in rel ation to the impairm ent assessment and related est imates are in cluded in the conso lidated financial statements. The audit procedures to address this risk were performed by ou r Greek component tea m and overseen by the prima ry team. Key observatio ns communica ted to the Audit and Risk Committ ee We reported to the Audit and Risk Committ ee that: • We consider managemen t’s key assu mptions used in t he reco verable amou nt assessment for the Greece CGU to be reason able. • Based on our audit proce dures, including releva nt sensitivities perf ormed, we concur with the conclusions reached by mana gement that no impairment reversal was required. • Management ’s di sclosures in th e financial statem ents accurately ref lect the key judgements and estim ates made in perform ing the assessment. Revenue reco gnition and the risk o f managemen t override Key audit ma tter description Total revenue: $497 million (2020: $2 8 million) Refer to the Audit a nd Risk Committ ee Report (page s 122- 126 ); Acco unting policies (pages 18 5- 20 6 ); and Not e 7 of the Consol idated Financi al Statements Revenue is recogni sed when th e group satisfies a perfo rm ance obligation by transferring oil or gas to its customer, wh ich is generally when the customer ta kes physical possession of the oil or gas. There is a risk that reven ue could be materia lly misstated as a result of delay ed or accelerated invo icing and/o r posting of inappropri ate journal entries. The acquisitio n of Edison E&P at the end of 2020 add ed materia l producing assets to the group’s port folio, mai nly in Italy (Vega, Rospo Mare, Cl ara North West, Sarago Mare f ields) and Egypt (Abu Qir f ield). A lower level of reven ue continues to be generated from the Greek pro ducing assets Prinos, Prinos North , South Kava la and Epsilon, and fro m the UK North Sea producing assets. FINANCIAL STAT EMENTS Page 172 of 273 Our respon se to the risk Our procedures to test the a ppropriateness of revenu e recognised during th e year included: • Confirmin g our understanding of the revenu e accounting process, id entifying the related risks and the co ntrols put in place to address those risks, and assessing the design effectiveness of these controls; • Utilising our da ta-driven audit to ols to perform 3 -way correlation analysis between revenue, acco unts receivable an d cash accounts for revenu e streams in each count ry, and investigating trends or data points ou tsi de ou r expectations based on our understandin g of the revenue strea ms; • Inspecting a sample of in voices and related delivery notes fo r revenue recorded in the period to ver ify the revenu es have been recorded in the correct period (with referen ce to the sale terms) as well as the o ccurrence of the transaction; • Sending trade receivable co nfirma tions to third parties and testing subsequent cash receipts; • Taking a risk -based approach to identifying, analysin g and testing any man ual entries posted to revenue a cc ounts; • Detailed analy tical procedures over revenue and cost of sales, inclu ding the cost per barrel; • Reconciling the volu me of sales with inventory registers, where appli cable; and • Confirmin g that the prices used to calcula te revenue are con sistent with t he relevant contra ctual terms. Key observatio ns communica ted to the Audit and Risk Committ ee We reported to the Audit and Risk Committ ee that: • On the basis of the procedures performed we are satisfied with the accuracy of revenue recognised by Ener gean for the yea r ended 31 December 2021 and did not note any issues with respect to fraud or man agement override. Karish and Ta nin development p roj ect spend Key audit ma tter description Karish and Tanin devel opment costs incu rred during the year ended 31 D ecember 2021 and capitalised with in Oil and Gas properties (i ncluding capit alised borrowing costs): $432 mil lion (2020: $497 milli on) Refer to Accou nting policies (pages 18 5- 20 6); a nd Notes 3.5, 3.2 3 and 13 of the Consolidated Fin ancial Statements The Karish and Tani n development atta ined Final Investment Decisio n in March 2018 and consequentl y there has been signif icant project -related expenditur e since this date. The main contract or is TechnipFMC th rough a lump sum EPCIC contract to deli ver the FPSO and related subsea infra structure. We focused on the risks of i nappropriat e capitalisation of costs in accordance with IAS 16: Property, Pla nt and E quipment and the co mpleteness of project cost accruals recorded as at 31 December 2021. FINANCIAL STAT EMENTS Page 173 of 273 Our respon se to the risk We performed audit procedures focu sed on capitalisa tion criteria and the completeness of acc ruals for the key elem ents of costs incurred for the Karish / Tanin developm ent. These procedures incl uded: • Understanding the cri teria used by management to assess whether costs should be capitali sed or expensed and testing this aga inst the requirement s of IAS 16 and industry practi ce; • Verifying that the capitalisation criteria were met for costs that we selected on a sample basis as part of our audit procedures rela ting to the project costs; • Reviewing the agreem ents with the ma jor project contractors an d confirming spend during the year with the primary sub -con tractor, Technip FMC, wh ich accounted for a pproximately 36% of the develo pment costs incurred in the year, to understa nd the nature of services to be provided and the associated m ilestones; • Obtaining a listin g of project cost accruals at 31 December 2021, validat ing a sample of costs to suppo rting documents a nd comparing to the co ntractual milestones fo r the developmen t project work; and • Performing a search for unrecorded liabiliti es through reviewing invoi ces received and cash paym ents made after the ba lance sheet date. We compared these to the project costs a ccrued by managem ent and assessed wh ether there were any material omissions. The audit procedures to address this risk were princi pally perform ed by the Israeli component tea m with oversight by the prima ry team. Key observatio ns communica ted to the Audit and Risk Committ ee We reported to the Audit and Risk Co mmittee tha t: • The capitalisati on of development costs for the Karish and Tanin project spend met the IAS 16 capi talisation criteri a; and • The accrual s recorded at year end are compl ete and appropri ately reflect the cost of services provided by the project contracto rs during 2021. In the prior year, our auditor’s report included a key audit matter in relation to acco unting for the acquisition of the Edison E&P business, which is no lo nger relevant in th e current year. Our application of materiality We apply the co ncept of materi ality in planning a nd performing th e audit, in e valua ting the eff ect of identified missta tements on the audit an d in forming our audit opini on. Materiality The m agnitude of an omission or misstatement that, i ndivi dually or i n the aggregate, could reasonably be expected to influence the economic decisions of the use rs of the financial state ments. M ateriality provides a basis for determining the nature and e xtent of our audit procedures. We determined materiali ty for the grou p to be $25.6 m illio n (2020: $20.0 mi llion), which i s 0.5% (2020: 0.5%) of group assets, adju sted to remo ve t he amount of goo dwill rel ated to the group’s investment s in Energean Israel Limited a nd Edison E &P. Thi s goodwill w as drive n by the recogni tion of a deferred t ax liability as part of th e business combination a ccounting which we did not consider to be reflective of the underlying busin ess activities. We believe that adjusted total assets provides us with a suitable basis fo r se tting materiality for development stage oil and gas exploration and production companies, providing a reliable measure to assess the size of the grou p’s operat ions. We determined ma teriality for the parent company to be $8.2 mil lion (2020: $5.6 m illion), which is 0.5% (2020: 0.5%) of tota l assets. During the course of our audit, we reasses sed initi al m ateriality and no adju stment to materi ality was made, therefore no additional testing wa s required due to an am endment in final materia lity. FINANCIAL STAT EMENTS Page 174 of 273 Performance materi ality The application of materialit y at the individual account o r balance level. It is set at an amount to reduce to an appropriately low level th e probability that the aggreg ate of uncorrected and unde tected misstatements exceeds materiality. On the ba sis of our risk a ssessments, to gether with o ur assessmen t of the group’s o verall cont rol environment , our ju dgement was that perfo rmance materi ality was 50% (2020: 50%) o f our planning materiality, na mely $12.9 million (2020: $10. 0 millio n). We h ave set perfo rmance ma teriality at th is percentage based o n o ur a ssessment of the l ikelihood of missta tements and ou r understan ding o f th e group gained through our planning proce dures. Audit work at component locatio ns for the purpose of obtaining audit coverage ove r significant financial statement accou nts is undertaken based on a percenta ge of total performance materi ality. The performance materiality set fo r each component is based on the relative scale and risk of the component to t he gro up a s a whole and our ass essment of the risk of misstatem ent at that component. In the current year, the range of performance ma teriality a llocated to compo nents was $2.6 million to $7.8 mi llion (2020: $2.0 million to $3.5 million). Reporting thres hold An amount below which ide nt ified misstate ments are conside red as being clearly trivia l. We ag reed with the Audit Com mittee that we would report to them all uncorrected audit differen ces i n excess of $1.3 millio n (2020: $1.0 million ), which is set a t 5% o f plann ing materi ality, as w e ll as differences below that thresh old that, in our view, warra nted reporting on quali tative grounds. We evaluat e any uncorrec ted misstatement s a gainst both the quantitative measures of materia lity discussed above and in ligh t of other releva nt qualitativ e con siderations in fo rming our opinion. Other information The other i nformation comprises the i nformation i ncluded in the annu al report set out on pages 6-165 and 267- 27 3 , including the Strategic Report and the Directors’ Report, other th an the fi nancial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opi nion on the f inancial sta tements does not cover the other informa tion a nd, except to the extent otherwise explici tly stated in this report, we do not express any fo rm of assurance conclusion thereon. Our respon sibility is to rea d the other i nformation and, in doing so, consider whether the other information is material ly inconsistent with th e financial statem ents or o ur knowl edge obtained in the course of th e audit or ot herwise a ppears to be materially misstated. If we identify such m aterial inco nsistencies or apparent m aterial m isstatements, we are required to determine whether this gives rise to a material misstatemen t in th e finan cial sta tements themselves. If, based on the work we have performed, we conclude that there is a m aterial misstatem ent of the o ther in formation, we a re required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, the part of the directors’ remun eration report to be audited h as been properly prepared in accordance wit h the Companies Act 2006. In our opinion , based on the work underta ken in the course of th e audit: • The informatio n gi ven in the strat egic repo rt and the directors’ repo rt f or t he financial year fo r wh ich the financial sta tements are prepared is consist ent with the financial statements; and • The strategic report and t he dire ctors’ report ha ve b een prepared in accordance w ith applica ble legal requiremen ts. FINANCIAL STAT EMENTS Page 175 of 273 Matters on which we are required to report by exception In the li ght of the knowledge and understanding of the gr oup and the parent co mpany a nd its en vironment obtained in th e course of the audit, we have not iden tified material misstatem ents in the strategic report or the directors’ report. We have n othing to report in respect of t he following matters in rel ation to wh ich the Co mpanies Act 2006 requires us to repo rt to yo u if, in our opinion : • Adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branch es not visited by us; or • The parent company financial sta tements and the pa rt o f the Directors’ Remuneration Report to be audited are not in agreement with th e accounting records and return s; or • Certain disclo sures of directors’ remu neration specif ied by law are not made; or • We have not received all the inform ation and explanations we require for ou r audit . Corporate Governance Stat ement We have reviewed the directors’ statement in relation to going concern, longer -term viability and that part of the Corpora te Governance Statemen t relating to the group and company ’s compli ance with the provisions of the UK Corporate Govern ance Code specified fo r our review by the Listi ng Rules. Based on the work undertaken as part of our audit, w e have concluded that each of th e following elements o f the Corporate Govern ance Stat ement is mat erially con sistent wi th the finan cial statemen ts or our knowl edge obtained during the au dit: • Directors’ statemen t with regards to th e appropriateness of adopting the go ing concern basis o f accounting and any material un certainties identified set ou t on page 162 ; • Directors’ explanati on as to it s assessmen t of the company ’s pro spects, t he peri od t his assessment covers and why the perio d is appropriate set out o n page s 104- 105 ; • Director’s statement on whet her i t ha s a rea sonable expectation that the group will be able to continue in operatio n and meets its liabilities set out on page s 104 - 105 ; • Directors’ statement on fair, balanced and understa ndable set out on page 115; • Board’s confirmation that it has carried ou t a robust assessment of the emerging and princi pal risks set out on pages 83 - 84 ; • The sectio n of the annu al report that describes the revi ew of effect iveness of risk management and internal control systems set out on page s 79 -82 ; and; • The section describin g the work of the au dit committee set out on page s 12 2 – 12 6. Responsibilities of D irectors As explain ed more fully in the directors’ respo nsibilities statement set out on page s 1 64- 165 , th e direct ors are responsible for the preparatio n of the fin ancial statements and for being satisfied that they give a true and fair view, and for such internal control as th e directors determi ne is n ecessary to enable the preparation of financial statements that are free from material missta tement, whether du e to fraud or error. In prepari ng the financia l statem ents, t he dire ctors are responsibl e for asses sing t he group and parent company’s ability to continue as a go ing concern , disclo sing, as applicable, m atters rela ted to going concern a nd using th e going concern basis of accoun ting unless the directors eith er intend to liquidate the group or the pa rent company or to cease operatio ns, or have no realistic a lternative but to do so. Auditor’s responsibiliti es for the audit of the financia l statements Our objecti ves are to obtain reasonable assurance about w hether the fi nancial statement s as a wh ol e are free from material misstatemen t, w hether du e to fraud or error, and to issue an au ditor’s report that includes ou r opinion . Reasonable assurance is a high level of assurance, but is not a guara ntee tha t an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from frau d or error and are considered material if, individu ally or in the aggregate, they could reasonably be ex pected to influence the economic decisions of users taken o n the basis of these fina ncial statements. FINANCIAL STAT EMENTS Page 176 of 273 Explanatio n as to what ex tent the a udit was considered c apable of d etecting irregul arities, including f raud Irregularities, including f raud, are insta nces of non - compliance with l aws and regulation s. We design procedures i n lin e with our responsibili ties, ou tlined above, to detect i rregularities, includin g frau d. The risk of not detecting a m aterial misstatem ent due to fraud i s higher than the risk of not detecting o ne resulting from error, as fraud m ay involve d elibera te concealment by, for example, fo rgery or intentional misrepresentatio ns, or through co llusion. The extent to which ou r procedures are ca pable of detect ing irregularities, in cluding fraud is detailed below. However, the prim ary responsibil ity f or the prevention and detecti on of fraud rests wit h both those charged with govern ance of the company and management. • We obtained an understanding of the legal and regulatory f rameworks that are applicable to the group and dete rmined that th e m ost sign ificant are those that relat e to the reporting framework (UK adopte d international accounting standards, Companies Act 2006, the UK Co rporate Go vernance Code and Listing Rules of the UK Listing Aut hority) and the relevant tax compliance regulations in t he jurisdictions in which the group operat es. In additi on, we concluded that th ere a re cert ain significant laws and regulations that may have an effect on the determination of the amounts and disclosures in the financial stat ements and laws and regula tions relating to health and safety, employee matters, environment al and bribery and corruption practices. We understood how the group is complying with those framework s by making enquiries of managem ent and w ith those responsible for legal and compliance procedures. Other procedures perfo rmed to a ddress th e risk of management overri de included evaluating the business rationale for significant unusual and one -o ff transactions, reviewing the minutes of the Board of Directors and Aud it and Risk Committ ee, and inclu ding a level of unpredictabili ty in our testing. • We assessed the susceptibili ty of the group’s financial statements to material misstatement, including how fra ud migh t occur, focussing on opportuniti es for management to ref l ect bia s in key accounting esti mates. We also enga ged our forensics speci alists in assisting our assessment of th e susceptibility o f the Group’s financial sta tements to fraud. • We determined t here to be a ri sk of fraud associ ated with m anagement override of t he revenu e process, speci fically f rom inappropria te invoi cing or journal entri es. We have report ed our f indings in our key audit ma tters section o f our repo rt. Our pro cedures incorpo rated data analyt ics and m anual journal entry testing into our audit a pproach . • Based on this understan ding we designed our audit procedures to ident ify non -compliance with laws and regulatio ns that could give rise to a ma terial misstatem ent in the fi nancial statements; thi s included the provi sion of specif ic instructi ons to compon ent teams. Our pro cedures focu sed on enquires of group mana gement and a review of Board m inutes, Audit an d R isk Co mmittee papers, Internal Audit repo rts and correspondence received fro m regul atory bodies. A f urther description of our responsibilities for the audit o f the financial statements is located on the Financial R eporting Co uncil’s website at https://www.frc.org.u k/auditorsrespo nsibilities . This description forms part of our a udito r’s report. Other matters we are required to a ddress • Following the recommendati on from t he Audit a nd Risk Committee, we were appointed by the company on 3 September 2020 to audit the fin ancial statement s for the year en ding 31 Decemb er 2021 and subsequent f inancia l periods. • The period of total uninterrupted engagement including previous renew als and reappointments is five years, covering the y ears ending 31 December 2017 to 31 Decem ber 2021 inclusive. • The audit opinion is co nsistent with the additio nal rep ort to the Au dit and Risk Commi ttee. Use of our report This report is made so lely to the com pany’s mem bers, a s a body, in acco rdance with Chapter 3 of Part 16 of the Com panies Act 2006. Our au dit work ha s been u ndertaken so that we m ight state to the compa ny’s m embers those matters we are requi red to state to them in an audit or’s repo rt and for no other purpose. To the full est extent permitted by law, we do not accept or assu me responsibility to anyone other th an the company and the company’s members as a b ody, for ou r au dit work, for th is report , or for the opini ons we have formed. FINANCIAL STAT EMENTS Page 177 of 273 Andrew Smyth (Senior Stat utory Audito r) for and on behalf of Ernst & Young LLP, Statuto ry Auditor London 24 March 2022 FINANCIAL STAT EMENTS Page 178 of 273 Group Income Statement Year ended 31 Decem ber 2021 ($'000) Notes 2021 2020 Revenue 7 496,985 28,014 Cost of sales 8a (345,112) (48,416) Gross profit/( loss) 151,873 (20,402) Administrative a nd selling expenses 8b/c (42,973) (15,283) Exploration and eval uation expenses 8d (87,678) (4,424) Impairment of pro perty, plant and equipment 13 - (65,299) Other expenses 8e (7,019) (28,329) Other income 8f 17,884 9,186 Operating prof it/ (loss) 32,087 (124,551) Finance income 10 2,950 493 Finance costs 10 (97,380) (4,986) Unrealised loss on deriva tives 27 (21,477) - Net foreign exchange gai n/(losses) 10 (6,922) 15,445 Loss before ta x (90,742) (113,599) Taxation income / (expense ) 11 (5,412) 20,741 Loss for the y ear (96,154) (92,858) Attributable to : Owners of the parent (96,046) (91,414) Non-controlli ng interests (108) (1,444) (96,154) (92,858) Basic and dil uted loss per sh are (cents per share) Basic 12 ($0.54) ($0.52) Diluted 12 ($0.54) ($0.52) FINANCIAL STAT EMENTS Page 179 of 273 Group Statement of Comprehensive Income Year ended 31 Decem ber 2021 ($’000) 2021 2020 Loss for the y ear (96,154) (92,858) Other comprehensiv e profit/(loss): Items that may be reclassified subsequently to profit or loss Cash Flow hedges Gain/(lo ss) arising in the period (6,182) (7,483) Income tax relatin g to items that may be reclassified to profit or loss 1,546 1,721 Exchange difference on th e translation of foreign o perations, net of tax (12,781) 19,222 (17,417) 13,460 Items that will no t be reclassified subsequently to prof it or loss Remeasuremen t of defined benefit pensio n plan (165) (49) Income taxes on item s that will not be recl assified to profit or loss 40 12 (125) (37) Other com prehensive pro fit/(loss) after ta x (17,542) 13,423 Total compreh ensive loss for the y ear (113,696) (79,435) Total compreh ensive loss attributable to : Owners of the parent (113,590) (76,262) Non-controlli ng interests (106) (3,173) (113,696) (79,435) FINANCIAL STAT EMENTS Page 180 of 273 Group Statement of Financial Po sition Year ended 31 Decem ber 2021 ($’000) Notes 2021 2020 Assets Non-current assets Property, plant an d equipment 13 3,499,473 3,107,272 Intangible assets 14 228,141 275,816 Equity-acco unted investments 4 4 Other receivables 19 52,639 31,568 Deferred tax asset 15 154,798 126,056 Restricted cash 17 100,000 - 4,035,055 3,540,716 Current asset s Inventories 18 87,203 73,019 Trade and other receivables 19 288,526 318,339 Restricted cash 17 99,729 - Cash and cash equiva lents 16 730,839 202,939 1,206,297 594,297 Total assets 5,241,352 4,135,013 Equity and Lia bilities Equity attri butable to owners of the parent Share capital 20 2,374 2,367 Share premium 20 915,388 915,388 Merger reserve 20 139,903 139,903 Other reserves 7,488 1,792 Foreign currency translation reserve (12,823) (42) Share-based paymen t reserve 19,352 13,419 Retained earn ings (354,559) (144,734) Equity attri butable to equity holders of the paren t 717,123 928,093 Non-controlli ng interests 21 - 266,299 Total equity 717,123 1,194,392 Non-current liabilities Borrowings 22 2,947,126 330,092 Deferred tax liabil ities 15 67,425 68,609 Retirement benef it liability 23 2,767 7,839 Provisions 24 801,026 881,535 Other payables 25 225,987 177,193 4,044,331 1,465,268 Current liabil ities Trade and other pay ables 25 454,986 355,454 Current portion of borrowings 22 - 1,112,984 Derivative finan cial instruments 27 12,546 6,915 Provisions 24 12,366 - 479,898 1,475,353 Total liabiliti es 4,524,229 2,940,621 Total equity and liabilities 5,241,352 4,135,013 Approved by the Board on t he 23 March 2022 Matthaios Rigas Panos Benos Chief Executive Officer Chief Financial Officer FINANCIAL STAT EMENTS Page 181 of 273 Group Statement of Changes in Equity Year ended 31 Decem ber 2021 ($'000) Share capital Share premium 117 Other reserve 118 Equity component of convertible bonds 119 Share based payment reserve 120 Translati on reserve 121 Retained earnings Merger reserves Total Non- controllin g interests Total At 1 Janua ry 2020 2,367 915,388 5,862 - 10,094 (19,264) (53,320) 139,903 1,001,030 259,722 1,260,752 Loss for the period - - - - - - (91,414) - (91,414) (1,444) (92,858) Remeasuremen t of defined benef it pension plan (37) - (37) (37) Hedges net of tax - - (4,033) - - - - - (4,033) (1,729) (5,762) Exchange dif ference on the translatio n of foreign operations - - - - - 19,222 - - 19,222 - 19,222 Total compreh ensive income - - (4,070) - - 19,222 (91,414) - (76,262) (3,173) (79,435) Transactio ns with owners of the comp any Share capi tal increase in subsidiary - - - - - - - - - 9,750 9,750 Employee sh are schemes (note 26) - - - - 3,325 - - - 3,325 - 3,325 117 The share premium ac count repre sents the to tal net proceeds on is sue of the Company’s shares in exc ess of their nominal value of £0.01 per sh are less amou nts transferred to an y other reserve s. 118 Other reserves are used to recog nise remeasur ement gain or l oss on cash fl ow hedges and actuarial gai n or loss from the defin ed benefit pensi on plan. 119 Refer to note 21. 120 The share-bas ed payments reserv e is used to recognis e the value o f equity-settled share-based payments gr anted to parties includin g employees and key management personnel, as part of their remunerati on. 121 The foreign currency translation reserve is used to record unrealised excha nge differences arising from the t ranslation of the financial statem ents of entities within the Group that have a functional currency oth er than US doll ar. FINANCIAL STAT EMENTS Page 182 of 273 ($'000) Share capital Share premium 117 Other reserve 118 Equity component of convertible bonds 119 Share based payment reserve 120 Translati on reserve 121 Retained earnings Merger reserves Total Non- controllin g interests Total At 1 Janua ry 2021 2,367 915,388 1,792 - 13,419 (42) (144,734) 139,903 928,093 266,299 1,194,392 Loss for the perio d (96,046) (96,046) (108) (96,154) Remeasuremen t of defined benef it pension plan (125) (125) (125) Hedges, net of tax (4,638) (4,638) 2 (4,636) Exchange dif ference on the translatio n of foreign operations (12,781) (12,781) (12,781) Total compreh ensive income - - (4,763) - - (12,781) (96,046) - (113,590) (106) (113,696) Transactio ns with owners of the comp any Share based payment cha rges (note 26) 5,940 5940 5,940 Exercise of Emplo yee Share Option s 7 (7) - - Acquisiti on of non- controllin g Interests 122 - - - 10,459 - - (113,779) - (103,320) (266,193) (369,513) At 31 Decembe r 2021 2,374 915,388 (2,971) 10,459 19,352 (12,823) (354,559) 139,903 717,123 - 717,123 122 Represents the a cquisition of t he remaining 30 % minority in terest in E nergean Israel Lim ited from Ker ogen Investm ents No.38 Limited, fo r more details plea se refer to n ote 21. FINANCIAL STAT EMENTS Page 183 of 273 Group Statement of Cash Flows Year ended 31 Decem ber 2021 ($’000) Note 2021 2020 (Restated) Operating activit ies Loss before ta xation (90,742) (113,599) Adjustments to reconci le loss before ta xation to net cash provided by operating act ivities: Depreciation, depletio n and a mortisation 13, 14 97,451 24,125 Impairment loss on property, plant and equipm ent 13 - 65,299 Loss from the sale of property, plant an d equipment 13 36 7,568 Impairment loss on intangible assets 14 82,125 2,936 Defined benefit (gai n)/ expense 23 (4,062) 104 Movement in provi sions 24 (4,465) (204) Payments for buy ers’ compensatio n 123 (22,958) Change in decomm issioning provision esti mates 24 (10,198) - Finance income 10 (2,950) (493) Finance costs 10 97,380 4,986 Unrealised loss on deriva tives 21,477 - Non-cash revenu es from Egypt 124 (39,100) - Other liabiliti es derecognised 8(f) - (4,094) Share-based paymen t charge 26 5,732 3,325 Net foreign exchange lo ss/ (gain) 10 6,922 (15,445) Cash flow (u sed in)/from o perations before wo rking capital adjustments 136,648 (25,492) (Increase)/Decrease in in ventori es (16,484) 1,944 Decrease in trade and other receivables 46,351 24,936 (Decrease)/Increase in tra de and other pa yables (34,726) 136 Cash flow fro m operations 131,789 1,524 Income tax received/(pa id) 715 (55) Net cash in flow from operati ng activities 132,504 1,469 123 During Au gust 2021 and in accordance w ith the GSPAs signed with a group of gas buyers, the Group has agreed to pay compensati on to these counterpar ties due to the fact t he gas supply date is taking place beyond a certain date as defined . in the GSPAs (being 30 June 2021). The c ompensati on is accounted as var iable purchase consideration under IFRS 15 hence recognised on ce productio n commences and gas is deliver ed to the of ftakers . 124 Non-cash revenues from Egypt arise due to taxes being deducted at source from invoices as such r evenue and tax charges are grossed up to reflect thi s deduction bu t no cash inflo w or outflo w results. FINANCIAL STAT EMENTS Page 184 of 273 ($’000) Note 2021 2020 (Restated) Investing activiti es Payment for purch ase of property, plant a nd equi pment 13 (403,503) (403,968) Payment for explora tion and evaluation, a nd other intangible assets 14 (48,674) (15,041) Acquisition of a subsidiary, net of cash acqui red 21/6 841 (203,204) Movement in restrict ed cash (199,729) - Proceeds from disposal of property , plant and equipment - 1,879 Amounts received fro m INGL related to the fut ure transfer of property, plant & equipment 125 25 5,673 22,229 Interest received 2,609 542 Net cash used in investing act ivities (642,783) (597,563) Financing activit ies Drawdown of borrow ings 22 175,000 557,000 Repayment of borrowings 22 (1,807,140) (38,040) Senior secured notes Issu ance 22 3,068,000 - Proceeds from capita l increases by non - controlling in terests 21 - 9,750 Acquisition of -non-controlling interests 21 (175,000) - Transaction costs rel ated to acquisitio n of non -cont rolling interest (1,677) - Repayment of obligations under leases (10,852) (6,645) Debt arrangement fees pai d (48,377) (11,563) Finance co st paid for deferred license pay ments (3,494) (3,993) Finance costs pai d (136,695) (70,463) Net cash in flow from fina ncing activities 1,059,765 436,046 Net (decrea se) / increase in cash and cash e quivalent s 549,486 (160,048) Cash and cash equi valents at beginn ing of the period 202,939 354,419 Effect of exchange ra te fluctuations on cash hel d (21,586) 8,568 Cash and ca sh equivalents at en d of the period 16 730,839 202,939 125 Comparative amounts have been rest ated to reclassify the amounts received fr om INGL from financing activities to investing activities. Refe r to Note 3.26. FINANCIAL STAT EMENTS Page 185 of 273 1 Corporate Inf ormation Energean plc (the 'Company') was incorpo rated in England & Wales on 8 May 2017 as a public company with limited lia bility, un der the Companies Act 2006. It s regi stered office is at 44 Baker Street, Londo n W1U 7AL, U nited Kingdom. The Compan y a nd a ll su bsidiaries co ntrolled by the Company, are together referred to as “the Grou p”. The Group has been esta blished with the objective of explorati on, production and com mercialisation of crude oil and natu ral gas in Greece, Israel, North Africa , UK and the wider Easte rn Mediterra nean . The Group’s core assets a nd subsidiaries as of 31 December 2021 are pre sented in not e 32. 2 Significant a ccounting p olicies 2.1 Basis of pr eparation The consolida ted financial sta tements have been prep ared on the histori cal cost basis, except for the revaluation of certa in financial instrument s that are measu red a t reva lued amounts or fair valu es at th e end of each reportin g period, as explained in th e accounting policies belo w. The consolidated financial statements have been prepared in accordance with UK-adopted Internationa l Accounting Standards (UK-adopte d IAS). The consolidated financia l sta tements have also been prepared in a ccordance with International Financial Reporting Standards as issued by the Inte rnatio nal Acco unting Standards Board (IASB) as appli ed to financial periods beginni ng on or after 1 Janu ary 2021. The co nsolidated financial inf ormation is present ed in U S Dollars and all values are ro unded to the nearest thousa nd dollars except where otherw ise indicated. The consolidated fi nanci al statemen ts have been prepared on a go ing concern ba sis. The principa l accounting polici es adopted by the Group are set ou t below. Going concern The Group carefully manages the ri sk o f a sho rtage of funds by closely monitorin g its funding position and its liquidity risk. T he Going Concern a ssessment covers the period u p to 31 March 2023 ‘t he Forecast Period’. Cash forec asts are regularly pro duced base d on, int er al ia, the Group’s la test life of field production, budgeted expendit ure forecasts, mana gemen t’s best estima te of future comm odity prices (based on recent published forward curves) and headroom under its de bt facilit ies. The Base Case cash f low model used for th e going co ncern assessmen t conserva tively assumes first gas f rom Karish in October 2022 , Brent at $80/bbl in 2022 and $75/bbl i n 2023 and P SV (Italia n gas price) at €55/ MWh i n 2022 and €40/ MWh in 2023. In addition , on a regular basis, the Group performs sensitivity tests o f its liquidit y position to eva luate adverse impacts that may result f rom changes to the macro-eco nomic environment such as a reduction in comm odity prices. The Group is n ot exposed to floating interest ra te risk. The Group also look s at the impact of changes or deferra l of key projects. This is done to identify risks to liquidity to enable management to formulate appropria te and timely mit igation strategi es in order to manage the risk of funds shortfalls and t o en sure the Grou p’s a bility to co ntinue as a going concern. Such a ssumptions underpin managem ent’s reasonable worst-case scenario to further assess th e robustness of the Group’s liquidity position over th e Forecast Period. Reverse stres s testing w as performed to determine what levels of prices and/o r produ ction w ould need to occur for the l iquidity headroom to be elimin ated, prior to any mitigating actions; the likelihood of such conditions occ urring was concluded to be remote. In the event an extreme downsid e scenario occ urred, prudent mitigating actions could be executed in the necessary timeframe suc h as a tightening of operating co sts and reduct ions/postponem ent of other discret ionary explo ration and devel opment expenditures. There is no materia l impact of climate change within the Forecast Period theref ore it does not form part of the reverse stress testing performed by managemen t. FINANCIAL STAT EMENTS Page 186 of 273 As of 31 December 2021 the Group’s available liquidity was approximately $1 billion. In terms of the Group’s Borrowi ng Facilities, the following was co nsidered as part of mana gement’s assessment: 1 Energean Israel Project Bo nd: In Ma rch 2021 Energ ean raised $2.5bil lion through the issuance of bon ds to (i) refinance its $1.45bn Israel Project Finance Facility, ( ii) ca ncel a nd replace the $700 mill ion Term Loan which was drawn to fund the acquisiti on of Kerogen ’s minority int erest in Energean Israel, (i ii) fund capita l and exploration expenditure in Isra el, incl uding Kari sh and Karish No rth, a nd (iv) for general corpora te purpo ses of the Group. 2 Energean plc Corporate Bond: In Novem ber 2021 Energea n raised a $450 mil lion Bond to (i) repa y all amounts outstanding under the Egypt and Greek RBLs plus subordinated debt, (ii) t o pay fees a nd other expens es rela ted to the Bo nd, and (iii) for genera l corporate purposes of the Group. There are no fin ancial maintenance covena nts associated with either of the Bonds. 3 Greek State -Backed L oan In December 2021 Energea n signed a €100 mill ion loan ba cked by the Greek State which is to be used specifically for th e development of the Prin os Area in Greece, inclu ding the Epsilon developmen t. In forming i ts asse ssment of the Group’s abili ty to continue as a going con cern, including its review of the forecasted cash flow of the Group over the Foreca st Period, the Board ha s made judgements abo ut: • Reasonable sen sitivities appropriate f or the current status of the bu siness a nd the w ider macro environment ; and • the Group’s ability to impl ement the m itigating actions within the Group’s control, in the event t his were required. After careful considera tion, th e Directo rs are satisfied tha t th e Grou p ha s suf ficient finan ci al resource s to co ntinue in opera tion fo r the f oreseeable future, for t he Forec ast Peri od to 31 March 2023. For this reason, they co ntinue t o adopt the goi ng co ncern basis in prepa ring the consol idated financial statements. 2.2 New and amend ed account ing standards and i nterpretation s Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, I FRS 7, I FRS 4 a nd IFRS 16 The amendments provide temporary reliefs which address the financial reporting effect s when an interbank offered ra te (IBO R) i s replaced with an alternat ive nea rly ri sk -free interest rat e (RF R). Th e amendments incl ude the following pract ical expedients: • A practical expedient to re quire contract ual cha nges, or ch anges to cash flows t hat are directl y required by the refo rm, to be treated as chan ges to a flo ating interest rat e, equivalent to a movemen t in a market rate o f interest • Permit changes requi red by IBOR reform to be made to hedge designations and hedge documentat ion without the hedging rela tionship being discontinu ed • Provide temporary reli ef to entities from ha ving to meet the separately iden tifiable requirement when an RFR instrum ent is designated as a hedge of a risk c omponent. These amendment s had no impact on th e consolidated financial statements of the Group. Covid- 19 -related rent c onc essions beyond 30 Jun e 2021 (Amendme nt to IFRS 16) – 1 April 2021 On 28 May 2020, the IASB i ssued Covid - 19 -Related Re nt Concessio ns - amen dment to IFRS 16 Leases. The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting f or rent co ncessions a rising as a direct cons equence o f the Co vid -19 pandem ic. As a practical expedient, a lessee may elect not to assess whet her a Covi d -19 rela ted rent concession fro m a lessor is a lease mo dification. A lessee tha t makes th is election accounts for a ny change in lease pa yments FINANCIAL STAT EMENTS Page 187 of 273 resulting from the Covid-19 related rent concession the same way it would account for the change under IFRS 16, if the chan ge were not a lea se modification. These amendment s had no impact on th e consolidated financial statements of the Group. New and amended standar ds and interpretations in issue but not yet ef fective for the 2021 yea r end New standards and interpre tation s that are in issue but not yet effective are listed belo w: • Annual impro vements to IFRS 2018- 2020 - 1 January 2022 • Property, Pla nt and Equipment: Pro ceeds bef ore intended use (Amen dments to IAS 16) – 1 January 2022 • Onerous Contract s – Cost o f Fulfilling a Con tract (Amendments to IAS 37) – 1 January 2022 • Reference to the Co nceptual Framewo rk (Amendments to IFRS 3) – 1 Ja nuary 2022 • IFRS 17 Insurance Con tracts - 1 Jan 2023 • Amendments to IFRS 17 Insurance contracts: Initial App lication of IFRS 17 and IFRS 9 – Comparative Information - 1 January 2023 • Disclosure of Accounting Policies (Am endments to IAS 1 a nd IFRS Practice Statem ent 2) – 1 January 2023 • Definition of Accou nting Estimates (Amendment s to IAS 8) - 1 Janua ry 2023 • Deferred Ta x related to Ass ets an d Liabilit ies arisin g from a Single Transacti on (Am endments to IAS 12) – 1 January 2023 • Classifica tion of Liabilities as Current or Non -current (Amendmen ts to IAS 1) an d Deferral of Effective Date of Amendment - 1 January 2024 The adopti on of the a bove standa rd and i nterpretation s is not expected to lead to a ny m aterial changes to the Group’s accounting policies or have any other material impact on the financial position or performance of the Group. 2.3 Basis of co nsolidation The consolidated financial statements incorporate the financial statements of the Company and enti ties controlled by the Company (i ts subsidiaries) as detailed in No te 31. Con trol is achie ved when the Group is exposed, or has ri ghts, to variable ret urns from i ts involvement w ith the investee an d has th e ability to affect tho se returns thro ugh its power over the investe e. Specifica lly, the Group control s an investee i f and only if the Gro up has: • Power over the investee • Exposure, or rights, to va riable returns fro m its involvemen t with the investee, a nd • The ability to use its power o ver the investee to a ffect the amount of the investor’s returns The results of subsidiaries acquired or disposed of during the year are in cluded in the consolidated financial statements from the eff ective date of acquisition or up t o the effective dat e of disposal, as appropriate. Profit or loss and each component of other comprehensive income ( OCI) are attributed to own ers of the Group a nd to the non-controlling interests, even if this results in the non -cont rolling int erests having a deficit bala nce. Where necessary , adjustment s are made to the fina ncial stat ements of subsidiaries to bring their acc ounting policies into line with tho se used by oth er mem bers of the Group. Al l intragroup transactions, bala nces, income and expenses are eli minated in ful l on consolidation. Non-controlli ng interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non -controlling interests consist of the amo unt of those in terests at the date o f the original business combinat ion and the non-controlling int erests' share of chan ges in equity since the date of the combin ation. Transactions wi th no n-controlli ng interest s t hat do not resu lt in loss of control of a subsidiary, a re accounted for as transactions w ith the owners (i.e. a s equity transa ctions). The difference between the fair va lue of any considera tion and the resul ting cha nge in the non -controlling interests' sha re of the net assets of the subsidiary , is recorded in equity . FINANCIAL STAT EMENTS Page 188 of 273 3 Summary of s ignificant a ccounting polic ies The principal accounting policies and measuremen t bases u sed in the prepa ration of the consolidated financial sta tements are set out below . These polici es have been consisten tly applied to a ll periods presented in the consoli dated financial sta tements unless otherwise stat ed. 3.1 Functional a nd presentation c urrency and f oreign currenc y translatio n Functional and presenta tion currency Items included in the consolidat ed financial statem ents of the Compa ny and its subsidi aries entities are measured usin g the cu rrency of the prim ary economic envi ronment in which ea ch entity operates (''th e functional curren cy''). The functional cu rrency o f the Compan y is US Dolla rs (US$). The US Dolla r is the curren cy that mainly influences sales prices, revenue estim ates and has a signif icant ef fect on its operations. The functional currencies o f the Group's ma in subsidia ries are Euro for Energean Ita ly S pa, Energe an Intern ational E&P Spa, Energean Oil & Gas S.A., and US$ for Energean Israel Li mited, Energean Egypt Li mited, Energean International Li mited and Energean Capital Lim ited. Transactions and balanc es Foreign currency transactions are transla ted i nto the f unctional currency using the exchange rates prevailing at the dates of the transact ions. Foreign ex change gains and losse s resulting from the retranslation of monetary assets and li abilities den ominated in foreign cu rrencies are recogni sed in the profit or loss. Such monetary a ssets a nd li abilities are tra nslated at y ear end foreign exchange rates. No n - monetary items denom inated in a foreign currency are translated at the exchange rates preva iling at the date of the transa ction and are not subseque ntl y remeasured. Translation to presentation currency For the purpose of presenting consolidated financial statements information, the assets and liabilities of the Group are expres sed in US$. The Compa ny and its su bsidiaries’ assets and liabilities are tra nslated using exchange rates pre vaili ng on the reporti ng dat e. Inco me a nd expense items are translat ed at the average exchange ra tes fo r the period, unless excha nge rates h ave fl uctuated significantly during that period, in which case the exchange rates at the dates of the transaction s are used. Exchange differences arising are recogni sed in other comprehensive income and accumu lated in the Group's transla tion reserve. Such tran slation dif ferences are reclassified to pro fit or lo ss in the perio d in which the f oreign operation is disposed of . 3.2 Business comb inations a nd goodwil l Acquisitions o f subsidiari es and businesses are acc ounted fo r using th e acquisiti on method. Th e consideratio n transferred in a business combination is measured at fair value, whi ch is calculated as the sum of the acquisit ion -date fa ir valu es of th e assets tr ansferred by the Group, l iabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. F or each business combination the a cquirer measures the non -control ling interest in the a cquiree either a t fair value or a t the proporti onate sh are of the a cquiree’s identifiabl e net assets. Ac quisition -related costs a re recognised in the consolidated statement of profit or loss as incurred. Where appropriate, t he cost of acquisition includes any a sset or liability resul ting fro m a contingent consideratio n arrangement, measured at its acquisition -date fair value. Subsequent changes in such fair values are a djusted against the cost o f a cquisition where they qualify as measurement period adjustments. All oth er subsequent changes in the f air va lue of contingent con sideration classified are accounted for in profit or loss. Contingent considera tion classifi ed as equity is not remea sured. The acquiree’s identifiable assets, li abilities and contingent liabilities that meet th e co nditions for recognition under IFRS 3 Business Combinations are recognised at their fair value at the acquisition date, except that: FINANCIAL STAT EMENTS Page 189 of 273 • Deferred tax assets or liabilities, and assets or li abilities related to employee benefit arrangements are recognised and mea sured in accordance with IAS 12, ‘In come Taxes’ a nd IAS 19, ‘Employee Benefits’ respecti vely; • Liabilities or equity in struments related to share -based paym ent arrangements of the acquiree or share-based payment arrangement s of the Group entered i nto to repl ace share -based payment arrangements of the acqu iree are measured in acc ordance with IFRS 2 Share -based payment at the acquisitio n date; and • Non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which are measured at fair value less costs to sell. If the initial a ccounting for a bu siness combination is incomplete by the end of the report ing year in which the co mbination occurs, the Group reports provision al amo unts for the items for whi ch t he a ccounting is in complete. Those provision al amounts are a djusted duri ng th e mea sur ement peri od (see below ), or additional assets or liabilities are recognised, to reflect new information obta ined about facts and circumstan ces that existed as a t the acqui sition date that, if known, wo uld have affect ed the amou nts recognised as at that da te. The measurement period is the time from the date of acquisition to the date the Group receives complete information a bout facts and circu mstances that existed as at the a cquisition date and is subject to a maximum of on e year. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non - controlling interests in the acqui ree, a nd th e f air value of the acqui rer's previo usly held equity interest in the acquiree (if any) over th e net of the acquisition -date amounts o f the identif iable assets acquired and the liabilities assum ed. If, after reassessment, the net of th e acquisition -date amou nts of the identifiable assets acquired and liabilit ies assumed ex ceeds the sum of the co nsideration transferred, the amount of any non-controlling interests in the acquiree and t he fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a barga in purchase gain. 3.3 Joint arrang ements A joint arrangement is one in wh ich two o r more parties have joint control. Joint control i s the contractually a greed sha ring of control o f an arrangem ent, whi ch exists only w hen decisio ns about the relevant activi ties require the unanimo us consent of the parties sharing con t rol. Investments in Asso ciates and Joint Ve ntures An Asso ciate is an entity over which the Group has sign ificant influ ence. Significant influence is the power to partici pate in the finan cial and operating policy deci sions of the i nvestee but is n ot cont r ol or joint control over th ose policies. A Joint Venture is a type of joint arrangement whereby the parties that have joint control of the arrangement ha ve rights to the net assets of the joint venture. The considera tions ma de in determ ining signif icant influence or joint contro l are simila r to tho se necessary to determine control over subsidiaries. The Gro up’s i nvestment in its Associa te and Joint Venture are acco unted for using the equit y method. Under the equity method, th e investmen t in an associ ate or a joint venture is initial ly recogni sed at cost. The carrying amount of t he i nvestment is adjusted to reco gni s e changes in t he Group’s share of n et assets of the associa te or jo int venture since the acqu isition da te. Goodwi ll relating to t he Associ ate o r Joint Venture is i ncluded in th e carrying amount of t he investment and is not tested fo r impairment separately. The statement of profit or loss reflects the Grou p’s share of the results of operations of t he Associate or Joint Vent ure . Any cha nge in OCI of th ose investees is presented as pa rt of the Gr oup’s OCI. In addition, when there has been a ch ange rec ogni sed directly in the equity of the Associate or Joi nt Venture, th e Group recognises its share of an y changes, when applica ble, i n th e sta tement of changes in equity. Unrealised gains and losses resul ting f rom transactions bet ween the Group a nd th e Asso ciate or Joint Venture are elimi nated to the extent of the interest in the associate or joi nt venture. FINANCIAL STAT EMENTS Page 190 of 273 The aggregate of th e Group’s share of profit or loss of an Associ ate and a Joint Venture i s shown on the face of the stat ement of profit or loss outside operati ng profit an d represents profit or loss after ta x and non-cont rolling interests in the subsidiar ies of th e Associate o r Joint Venture . The financial statements of the Associate or Joint Venture are prepared for the same reporting period as the Group. When necessa ry, adjustments are made to b ring the account ing policies i n line with t hose of the Group. After appli cation of the equ ity meth od, the Group determ ines whet her it is necessary to recogni se a n impairment loss on its investm ent i n its Associ ate or Joint Venture. At ea ch report ing date, the Grou p determines wh ether there is objective evidenc e th at the investm ent in the Associate or Joint Venture is impaired. If th ere i s such evidence, the Group ca lculates th e a mount of impairment as th e dif ference between the reco verable amount of the Associate or Join t Venture and its ca rrying val ue, and the n recognis es the lo ss within ‘Sh are of profit of an Associ ate and a Joi nt Venture’ i n the sta tement of profi t or loss. Upon l oss of significant influence over the Associate or joint co ntrol over the Joint Venture, the Gro up measures and recogni ses any reta ined investmen t a t i ts fair val ue. Any difference between the carryi ng amount of the Associate or Joint Venture upon loss o f significant influence or joint contro l and the fair value of the reta ined investment and proceeds from disposal is recogn i sed in prof it or loss. Joint operations A joint operation is a type of joint arrangement whereby the parties that have joint control of th e arrangement have the right to the assets a nd obligations for the liabilities, relating to the arrangement. In relation to its in terests in joint operation s, the Group recognises its share o f: • Assets, including its share o f any assets held joi ntly. • Liabilities, inclu ding its share of any liabilities in curred jointly. • Revenue from th e sale of its share of the outpu t arising from th e joint operation. • Share of the revenu e from the sale of the output by the joint operat ion. • Expenses, including its sha re of any expenses incurred j ointly. The Group is engaged in o il and gas explora tion, devel opment an d production t hrough unincorpora te d joint arrangements particularly in Ita ly and the UK. These are classified as joint operation s in accordance with IFRS 11. The Group a ccoun ts f or i ts sh are of the results a nd a ssets and l iabilities of these jo int operations. In addition, where Ener gean ac ts as operator to the joint operatio n, th e gross liabilities and receivables (including amounts due to or from non-operatin g partners) of the joint operation are included in the Group’s bala nce sheet. Where another party acts as operator, the Group’s share of the lia bilities of those no n- opera ted fields is recognised within trade and ot her pay ables. A list of the Group’s joint operations an d its working interest in each is disclo sed in note 32. 3.4 Exploration a nd evaluatio n expenditures The Group adopts the successful efforts method of accounting for exploration and evaluation costs. Pre - licence costs are expensed in th e perio d in which they are incurred. All licence a cquisition, exploration and evalua tion costs and directly attributable administratio n cos ts are initially capitali sed as intangible assets by field or exploration a rea, as appropriate. All such ca pitalised costs are subject to tec hnical, commercial and management review, as well as review for indicators of impairment at least once a year. This is to confirm the co ntinued intent to develo p or o therwise extract value fro m the discovery. When this is no longer the ca se, the costs are written off th rough the statement of prof it or loss. When proved reserves of oi l and ga s are identi fied and develop m ent is sanct ioned by m anagement , the relevant capitalised expenditure is first assessed for im pairment an d (if requi red) any i mpairment lo ss is recognised, then the rema ining balance is transferred to oil a nd gas properties. Farm-outs — in the exploration and evaluation phase The Group does not record any expenditu re m ade by the farmee on its account. It also does not recognise any gain or loss on it s e xplora tion and evalu ation farm -out arran gements, but redesignates any costs previously capitalised in relati on to the whole interest as relating to the partial interest retained. Any cash FINANCIAL STAT EMENTS Page 191 of 273 consideratio n recei ved direc tly from the fa rmee is credit ed aga inst costs previously capitalised in relat ion to the whole in terest with any excess accounted for by the Grou p as a gain on disposal . 3.5 Oil and gas pr operties – assets in d evelopm ent Expenditure is transferred fr om ’Exploration and evaluation assets’ to ‘Assets in devel opment’ which is a subcategory of ‘Oil and gas pro perties’ once the work completed to date su ppo rts th e future development of the asset and such develo pment receives appropria te approva ls. After transfer o f the explorat ion and evaluation a ssets, all subsequent expen diture on the constructi on, installation or compl etion of infrastructure facilities su ch as pl atforms, pipelines and the drilling of develo pment wells, including unsuccessful development or delineation wells, is ca pitalised within ‘Assets in development’. Development expenditure is net of proceeds f rom the sale of oi l or gas produced duri ng the devel opment phase to the extent that it is con sidered int egral to the developmen t of th e asset. An y costs i ncurred in testing the assets to determine whether th ey are functioning a s intended, are capita lised, net o f any proceeds received f rom sel lin g any product produced while testing. Where these proceeds e xceed th e cost of testing, a ny excess is recognised in th e stateme nt o f profit or lo ss. When a development project moves into t he production sta ge, all assets included in ‘Assets in developm ent’ are then tra nsferred to ‘Producing assets’ which is al so a sub - ca tegory o f ‘Oi l and ga s properti es’. T he ca pitalisation of certain construction/develo pment costs ceases, a nd costs are either regarde d as part o f th e co st o f in ventory or expensed, e xcept for costs which qua lify for ca pitalisation relating to ‘Oil and gas pro perties’ asset additions, improvem ents or new developmen ts. 3.6 Commercial reserves Commercial reserves are proven an d proba ble o il and gas reserves, which a re def ined a s th e est imated qu antiti es of crude oil, natural gas and natural gas liquids which geological, geophysical and engineering data demon strate wit h a s pecified degree of certai nty to be recoverable in future y ears from known reservoirs an d w hich a re considered commerci ally produ cible. Th ere shou ld be a 50% statisti cal probability t hat the actual quantity o f recoverable reserves will be more than the amo unt estimated as proven and probable reserv es and a 50% statisti cal probability that it will be less. 3.7 Depletion and amortisation All expenditure carried within each field is amortised from the commencement of productio n on a unit of production basis, whi ch is the rat io of oil and gas production in the perio d to th e estimated qua ntities of commercial reserves at the end of t he peri od plus t he product ion in th e period, ge nerally o n a field - by - field basis or by a group of f ields wh ich are reliant on co mmon infra structure. Costs included i n the unit of production calculation comprise the net book value of capitalised costs plus th e estimated future field development costs required to recover the commercial reserves remaini ng. Changes in the estimates of commercial reserves or future field develo pment costs are dealt wi th prospectively . 3.8 Impairment s of oil & gas properties The group assesse s assets o r gro ups of assets, called ca sh -genera ting units (CGUs), for impairment whenever events or changes in circumsta nces indicate t hat the carrying amount of an asset or CGU may not be rec overable; f or exam ple, chan ges in th e group’ s assumptions about commodity prices, lo w fiel d utilisation , significant downward revisio ns of estima ted reserves or increases i n estimated fut ure development expenditure or decomm issioning costs. If any such indication of impairment exists, the group makes an estimate of the asset’s or CGU’s reco verable a mount. Where th ere is evidence of econom ic interdependency between fields, such as commo n i nfrastructure, the fields are grou ped as a single CGU for i mpairment purposes. A CGU’s recoverable amount is the hi gher o f it s fa ir va lue less co sts o f dispo sal and it s val ue i n u se. Where the carryi ng am ount of a CGU exceeds its recovera ble amo unt, the CGU is co nsidered impaired a nd is w ritten down to its recoverable am ount. FINANCIAL STAT EMENTS Page 192 of 273 Fair value l ess costs of disposal is the pr ice tha t would be received to sell th e asset in an o rderly transaction between market participa nts and does not reflect the effects of factors tha t may be specific to the group and not a pplicable to entities in genera l. In order to discount the f uture cash fl ows t he Gr oup calculates CGU -specific discount rates. Th e discou nt rates are based on an assessmen t of a relevant peer group’s Weighted Average Co st of Capital (WACC). The Grou p then adds any e xploration risk premium which is impl icit wit hin a peer grou p’s WACC and subsequently applies additio nal country risk premium for CGUs. Where conditi ons giving rise to impairment subsequen tly reverse, the effect of the im pairment cha rge is also revers ed as a credit to the income statem ent, net of any amortisa tion t hat would have been charged since th e impairm ent. The reversal is limited such that the carrying am ount o f the asset exceed s n either its recovera ble a mount, nor the carrying amount that w ould have been determined, net of depreciation, had no impa irment los s been recognised for the ass et in prior years. 3.9 Other proper ty, plant and equi pment Other property, plant a nd equipment comprise of plant machinery and installation, furniture and fixtures. Initial recognition The initial cost of an asset compri ses its purcha se price or constru ction cost, any costs directly attributable to bringing the asset into operation and borrowing costs. The purchase price or construction cost is the aggregate amount pai d and the fair value of any other consideration given to a cqu ire t he a sset. Depreciation Depreciation of o ther pro perty, plant and equi pment is calculated on t he straigh t- line m ethod so as to write-off the cost amount of each asset to its residual value, over its estima ted useful life. The useful life of each cla ss is estimated as follo ws: Years Property lea ses and leasehold impro vements 3 - 10 Motor vehicles a nd other equipm ent 2 - 5 Plant and mach inery 7 - 15 Furniture, fi xtures and equipment 5 - 7 Depreciation of the assets in the course of construction commences when the assets are ready for their intended use, on the same b asis as other assets o f the sam e class. An item of property, plant and equipment and any sign ificant part initially rec ognise d is derec ognised upon disposal or when no future economic ben efits are expected from its use o r disposa l. Any gai n o r loss arisin g on dereco gnition of the asset (ca lculated as the difference between the net disposal pro ceeds and the carrying a mount of the asset) is included in th e statemen t of profit or los s when the as set is derecognised. The assets' residual values and useful lives a re reviewed, an d adjusted if appropriate, at ea ch reporting date. Repairs, maintenance, and renovations Expenditure for routine repairs and maintenance of pro perty, plant and equipment is charged to the profit or loss in the year in which it is incurred. Th e cost of m ajor improvemen ts and renovations and other subsequent expenditure are included in the carrying amount of the asset when the recognition criteria of IAS 16 ‘Property, Plant and Equipment’ are met. Major improvem ents and renovatio ns ca pitalised are depreciated over the rema ining useful li fe of the related asset. FINANCIAL STAT EMENTS Page 193 of 273 3.10 Other intangibl e assets Computer software Co sts that are directly associated with identifiable and unique computer software products controlled by the Gro up an d that will pro bably generate economic benefits exceeding costs bey ond on e yea r are recognised as intangible assets. Subsequentl y compu ter so ftware i s carried at cost less a ny accumulated amo rtisation and any accum ulated impairment losses. Costs a ssociated with maintena nce of com puter sof tware progra ms are recogn ised as an expense when incurred. Computer so ftware co sts are am ortised usin g the straight- line met hod over thei r useful l ive, of betw een three and five yea rs, which comm ences when the computer sof tware is avail able for use. 3.11 Impairment o f non -financial a ssets At each reporting dat e, the Group reviews th e carryi ng amounts of i ts depreciable property, plant and equipment a nd intan gible a ssets to determi ne wheth er th ere is any indica tion t hat those assets have suffered an impairment loss. Impairment is assessed at the level of cash-generating units (CGUs) which, in accordance with IAS 36 ‘Impairment of Assets’, are ident ified as the smallest identi fiable group of assets that generates cash inflows, which are largely independent of the cash inflows from other assets. This is usually at the individual royalty, stream, oil and gas or working interest level for each property from which cash in flows are generated. An impa irment loss i s reco gnised for the amou nt by which the asset’s carryin g value exceeds its recoverable a mount, which is th e higher of fair value less costs of disposal (FVLCD) and value - in -u se (VIU). The future cash flow expected is derived using estimates of proven a nd probable reserves and information regarding the mineral, stream a nd o il & ga s propert ies, r espec tively, tha t could af fect the future recovera bility of the Co mpany’s in terests. Discount facto rs are determined individua lly for each asset and reflect thei r respective risk prof iles. Assets are subsequen tly reassessed for indicatio ns that a n impai rment l o ss previously recognised may no longer exist. An impairment charge is reversed if the conditions that gave rise to the recognition of an impairment loss are subsequently reversed and the a sset’s recoverable a mount exceeds its ca rrying amount. Impairment l osses can be reversed only to th e extent that the recoverable amount does not exceed th e carryi ng valu e tha t woul d have been determ ined ha d no impa irment been recognised previously . Exploration and eval uation assets are tested for impairmen t when there is an indica tion that a particu lar exploration and evalua tion project m ay be i mpaired. Examples o f indica tors of impairment include a significant price decli ne o ver a n extended peri od, t he deci sion to delay o r no lon ger pursue the explo ration and eva luatio n p roject, or an ex piration of rights to explore an a rea. In a ddition, exploration and evaluation assets are assessed f or im pairment upon th eir reclassifica tion to pro ducing assets (oil and gas interest in property, plant a nd equipment). In assessing the im pa irm ent of exploration and evaluation assets, the carrying value of the asset would be co mpared to the estimated recoverable amount and any im pairment loss is recognised immediat ely in profit or lo ss. Goodwill is tested for impairment annually as at 31 Decem ber and when circumstances indicate that the carrying valu e may be impaired. Impairment is determined for goodwi ll by asses sing the recovera ble a mount of each CGU (o r group of CGUs) to wh ich the goodwi ll relat es. When the recoverable amoun t of the CGU i s less than its carrying amount, an impairment loss is recognised. Impai rment losses relatin g to goodwill cann ot be reversed in future periods. 3.12 Convertible b onds Convertible bonds are separated into liability a nd equity components based on the terms of the contract. The fair value of the liability component on initial recognition is calculated by disc ounti ng the contractual FINANCIAL STAT EMENTS Page 194 of 273 cash flows using a market interest rate for an equivalent non -convertible instrument. The differen ce between the fair value of t he liabi lity componen t and the proceeds received on issue is recorded as equity. Transaction costs are a pportioned bet ween the liability an d the e quity components of th e instrum ent based on the amounts init ially recognised. The liabil ity co mponent is clas sified as a financial liabi lity measured at amortised cost (net o f transa ction costs) u ntil it is extinguished on conversion or settlem ent. The equity compo nent is not remeasured. 3.13 Leases The Group assesses at co ntract inception wh ether a co ntract is , o r co ntains, a lease. That is, if t he contract convey s the right to control th e use of an iden tified asset for a peri od of t ime in exchange for consideratio n. The determin ation o f whether a n arran gement is, or co ntai ns, a lea se is based on the substance of t he arrangement at the date of inceptio n. The arrangemen t i s assessed to determ ine wheth er fulfilment is dependent on the use of a s pecific asset ( or assets) and th e a rrangement conveys a righ t to use the asset (or assets), even if t hat asset is (or those assets are) not explicitly specified in an arrangement. The Group is not a lessor in any transactions, it is only a lessee. Group as a lessee The Group applies a single recogniti on and mea surement approach f or a ll lea ses, except for sho rt -t erm leases, lea ses of lo w-va lue assets and leases to explore fo r or use minerals, o il, natural gas and similar non-regenera tive resources. The Gro up recognises lease lia bilities to make lease paymen ts and right - of - use assets representi ng the right to use the un derlyi ng assets. i) Right- of - use assets The Grou p recognises ri ght- of -use assets at the commencement date of the lease (i.e., the date the underlying asset is ava ilable for use). The right- of -use asset is measu red at cost, less a ny accumula ted depreci ation and impa irment losses, and a djusted f or a ny remeasurement of lea se lia bilities. Cost co mprises the initia l amou nt o f th e lea se liability and any lease pay ments made at or before the co mmencement dat e, plus any initial direct costs incurred and an estimate of c osts required to remove or restore the un derlying asset, less any lease incentives received. Right - of -use a ssets are deprecia ted on a stra ight -line ba sis over the shorter o f the lease term and the estim ated useful lives of the assets, as fo llows: • Property leases 1 to 10 y ears • Motor vehicles a nd other equipment 1 to 12 years If ownershi p of th e leased asset tra nsfers to the Group at the end of th e lease t erm or th e cost ref lects the exercise of a purcha se option, depreci ation is calculated using the esti mate d useful life o f the asset. The right- of -u se assets are also subject to impairment. ii) Lease li abilities At t he co mmencemen t date of the lease, the Group recognises lease liabilities measured at the present value of lea se pay ments to be made over the leas e ter m. T he lea se pay ments i nclude fixed payments (including in substance fixed pa yments) less any lease in centives recei vable, variable lea se paymen ts that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease paym ents also include t he exercise price of a purchase opti on reasonably certain to be exercised by the Group and pa yments of pena lties f or term inating t he lea se, if the lease te rm reflects t he Grou p exercising the option to terminate. In calcu lating the present valu e of lease payment s, the Group uses its incremental borrowing ra te at the lease comm encement da te if t he interest rate implicit i n the l ease is not readil y det erminable. After the commencemen t da te, t he amount of lea se li abil ities is i ncreased to reflect the a ccretion of interest an d reduced for the lea se payments made. In additio n, the carrying amount of lease liabilities is remeasu red if t here is a mo dification, a ch ange in the lea se term, a ch ange in the lea se payments (e.g ., changes to FINANCIAL STAT EMENTS Page 195 of 273 future pa yments resultin g from a change in an index or rate used to determi ne such lea se paymen ts) or a change in the a ssessment of an optio n to purchase the underly ing asset. The Group’s lease li abilities are inclu ded in Interest -bearing loa ns and borrowi ngs (see Note 21). iii) Short-te rm leases a nd leases of low -value asse ts The Group applies the short -term lease recognition exemption to its short -term leases of machinery and equipment (i.e., those lea ses that have a lease term of 12 months or less from the commencement dat e and do no t co ntain a purchase opti on). It also applies th e lease of low -value assets recogn ition exemption to leases of office equipmen t that are considere d to be low value. Lease pa yments on short -term lea ses and leases of low value assets are reco gnised as expense on a straight - line basis over the lea se term. iv) Other le ases outside the scope of IFRS 16 Leases to explore for or use minerals, oil, natural gas and similar non -regenerati ve resources are outside the scope of IFRS 16 and are recognised as exploration and evaluation costs or as oil and gas assets, as appropriate. Please ref er to notes 3.4 and 3.5. Accounting for leases in joi nt operations Where the Group enters into lease agreem ents as opera tor of a joint o per ation and is sole signato ry to a lease contract, i t recognises its obligations under the lea se in full t o reflect the legal position of the Group as the contracting counterparty for such leases. W here the obligations of the non -operato r parties under the join t o perating agreem ent give rise to a sub -lease, the rel ated proporti on of the right - of -use asset is derecognised and a finance lease recei vable recorde d t o reflect the proportio n of the lea se liabil ity recoverable from the non -operator parties to the jo int operatin g agreement. 3.14 Financial ins truments - initia l recognitio n and subsequ ent measurem ent A finan cial i nstrument is any contra ct that gives rise to a financi al asset of one entity and a financial liability or equity in strument of another entity. i) Financial assets Initial recognition and measurement Financial assets are classif ied, at in itial recognition, as subsequent ly measured at amorti sed cost, fair value throu gh other comprehensive in come (OCI), or fair va lue through pro fit or loss. The cl a ssifica tion of financial assets at ini tial recognition depen ds o n the finan cial asset’ s contra ctual cash flow characteristics and the Group’s business model for managing them. With th e e xception of trade receivables that do no t co ntain a significant financ ing componen t or for which th e Gro up h as applied the practical expedient, the Group initially measures a financial asset at its f air value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a sign ificant financi ng compo nent or for which t he Grou p has a pplied the practical expedient are measured at the transact ion price determined under IFRS 15. In order for a financial asset to be classified and measured at amortised cos t or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstandin g. This a ssessment is referred to as the SPPI te st and is perf ormed at an instrument level. The G roup’s busin ess model for ma naging financial assets refers to ho w it manages its fin ancial assets in order to generate cash flows. The business mo del determines whether cash fl ows will resu lt from collecting contract ual cash flows, selling the fi nancial as sets, or both. Subsequent measure ment For purposes of subsequen t measurement , financial assets are classifi ed in two categories: • Financial assets at amortised cost (debt instrum ents) • Financial assets at fair value through profit o r loss Financial assets at a mortised cost FINANCIAL STAT EMENTS Page 196 of 273 Financial assets at amortised cost are subsequently measured usin g the effective interest (EIR) meth od and are subject to impai rment under the expected credit loss mo del. Gains and losses are reco gnised in profit or loss when the asset is dereco gnised, modified or impaired. The Group’s fina ncial assets at amorti sed cost incl ude trade receivables. Financial assets at fair value through profit o r loss Financial assets at fai r value through profi t or loss include financial assets hel d for tra ding, financial assets designated upon initial reco gnition a t fair value through pro fit or loss, o r financial assets mandatorily required to be measured at fa ir value. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated a s eff ective hedgin g i nstruments. Financial assets with cash flows tha t are not solely payments of principal and i nterest are classif ied and m easured at fair valu e through prof it or loss, irrespective of the busin ess mo del . Notwithstan ding the criteria for debt in struments to be classified at amortised co st or at fair value t hrough OCI, as described above, debt instrumen ts may be designated at fair valu e through pro fit or lo ss on initia l recognitio n if doing so elim inates, or sign ifica ntly reduces, an accounting misma tch. Financial assets at fair value through profit or loss are carried in the statement of fin ancial position at fair value with net changes in fair value reco gnised in the statemen t of profit or loss. This category includes derivat ive i nstruments and listed e qui ty investments which the Group had not irrevocably el ected to classif y at fair va lue throu gh OCI. Dividends on listed equity i nvestments are recognised as o ther inco me in th e statemen t of profit or loss when t he right of payment has been established. Derecognitio n A financial asset (or, wh ere appli cable, a pa rt of a f inancial asset or part of a group of similar fina ncial assets) is primarily derecognised (i.e., removed fro m t he Group’s consolidated statemen t of financial position) when the rights to receive ca sh flows from the asset have expired or are tr ansferred. Impairment of financial asse ts The Group recognises an a llowance for expected cre dit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on t he dif ference between th e contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approxima tion of th e origina l ef fective i nterest rate. Th e ex pected ca sh flows will i nclude cash flows from the sale of collateral held or other credit enh ancements tha t are integral to the contractual terms. ECLs are recognised in two sta ges. Fo r credit exposures for which th ere h as no t been a significant increase in credit risk since initial recogniti on, ECLs are provided for credit losses that result from default events that a re possibl e w ithin the next 12 -months (a 12-m onth ECL). Fo r th ose credit exposures f or which there has been a significant increa se in credit risk sin ce initial recognition, a loss allowa nce is required f or cre dit l osses expected over the remaining life o f the exposure, irrespective of the timing of the default (a lifetime ECL). For trade rec eivables an d cont ract assets, the Group applies a simplified a pproach i n calcu lating E CLs. Therefore, the Group does not track chan ges in credit risk, but instead reco gnises a loss a llowance based on lifetime ECLs at each rep orting date. The Group co nsiders a fin ancia l asset in def ault wh en co ntractual pa yments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external inf ormation i ndicates that th e Group is unlik ely to recei ve the outstandin g contract ual amounts in full before takin g into account any credit enha ncements held by the Group. A fina ncial asset is written off when there i s no reasonable expectation o f recovering the contractu al cash flows. ii) Financial liabilities Initial recog nition and measu rement Financial liabilities are cla ssified, at initial recognition, as financial liabiliti es at fair value throu gh profit or loss, loans and borrowings, payables, or as derivatives d esignated as hed ging instrumen ts in an effective hedge, as appropriate. FINANCIAL STAT EMENTS Page 197 of 273 All finan cial liabilities are recogni sed initially a t f air value and, in the case of l oans and borro wings and payables, net of direct ly attributable transact ion costs. The Grou p’s finan cial liabilities inclu de trade a nd other payables, lo ans and borro wings an d derivative financial instrumen ts. Subsequent measure ment The measuremen t of financial liabilities depends on th eir classifica tion, as described below: Financial liab ilities at fair value through p rofit or loss Financial liabilities a t fair value through profit o r loss include financi al liabilities he l d for trading a nd financial liabilities designated upo n initial reco gnition as at fair value through profit or loss. Financial l iabilities are cla ssified as held for t rading if they are in curred for the purpose of repurcha sing in t he n ear t erm. This cate gory also includes derivative f inancial in struments entered int o by the Grou p that are not designa ted as hedgin g instrum ents in h edge relation ships as def ined by IFRS 9. Separa ted embedded derivatives are also classified as held for trading unless they are de signated as effective hedging instrumen ts. Gains or losses on fi nancial liabilities recognised at fair value through prof it a nd l oss are recognised in the statement o f profit or loss. The Gro up discloses th e unwin ding of the discount separately , in fin ance costs, from the ma rk to market gain or loss. Loans and bor rowings This is the ca tegory most rel evant to the Gr oup. After initia l recognition, interest -bearing loan s a nd borrowings are subsequently m easured at a mortised cost using the EIR method. Gain s and losses are recognised in p rofit or loss when the liabiliti es a re derecognised, modified and through the EIR amortisation proce ss. Amortised co st is ca lculated by tak ing into account any disc ount o r premium on acquisition and fees or costs that are a n integral part of the EIR. T he EIR amortisation is included as fina nce costs in the statement of pro fit or loss. This category generally applies to interest - bearing loans and borrowin gs. Derecognitio n A financi al liability is der ecognised when the o bli gation under the liabili ty is discharged or cancel led or expires. When an e xisting fi nanci al liability is replace d by another from the same lender on substanti ally different terms, or the terms of an existing liability a re substa ntially modified, su ch an e xchange or modification is treated as t he derecogniti on of the original liability and the reco gnition of a new liability. The difference in the respective carryin g amounts is recognised in the stat ement of profit or loss. iii) Offsetting of financial i nst ruments Financial assets and financial liabilities are offset an d the net a mount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recogni sed amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously . Derivative financial instrum ents and hedge accounting Initial recog nition and s ubsequent meas urement The Group uses deriva tive financial instruments, such as interest rate swa ps and forw ard commodity contracts, to hedge its interest rate risks and commodit y price risks, respectively. Such derivative financial instruments are ini tially rec ognised a t fa ir v alue on th e date on which a derivative contract is entered in to a nd are subsequently rem easured at fair va lue. Deriva tives a re ca rried as f inancial assets when the fair va lue is positive and as finan cial liabilities when the fair va lue is negative. For the purpose of hedge accou nting, hedges are classif ied as: • Fair valu e hedges when h edging the exposure to ch anges in th e fair val ue of a rec ognised asset or liability or an unrec ognised firm commitmen t FINANCIAL STAT EMENTS Page 198 of 273 • Cash flo w hedges when hedging the exposure to variabil ity in cash flows that is either a ttributable to a particular risk associated with a recognised asset or liability o r a h ighly probable forecast transaction or the f oreign currency risk in an un recognised firm commitm ent • Hedges of a net investment in a fo reign o peration At th e i nception of a hedge relati onship, the Group formally design ates and do cuments the hedging instrument and the hedged item to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaki ng th e hedge. A h edging relationsh ip qualif ies for h edge a ccounting if it meets all of the following effectiveness requirements: • There is ‘an econo mic relationship’ between th e hedged item and the h edging instrument . • The effect of credit risk does not ‘domin ate the value changes’ tha t result from that economic relationship. • The hedge rati o o f the hed ging relationship is th e sa me as t hat resulting from t he quantity of the hedged item th at the Group actually h edges and the qua ntity of the hedging instrument th at the Group actually uses to hedge tha t quantity of hedged item. Hedges that meet all th e qualifying cri teria for hedge accounti ng are accounted for, as described below: Cash flow hedges The eff ective porti on of the gai n or l oss on the hed ging instrume nt is recogn ised in OCI in the cash fl ow hedge reserv e, while any ineffective port ion is recogn ised immedia tely in the sta tement of profit or loss. The cash flow hedge reserve is adjusted to the l ower of the cu mulative ga in or l oss on th e hedging instrumen t and the cumulative change in fair value of the hedged item attributable to the hedged risk. From tim e to tim e, the Gro up may use forward co mmodity co ntracts for i ts exposure to vola tility in the commodity prices. The in effective port ion relating to forw ard commodity contracts is recognised in revenue or cost of sal es. The Group designates on ly the spot elemen t of forward con tracts as a hedging instru ment. The fo rward element is recognised in OC I and accumula ted in a separate com ponent of equity . The a mount accumulated in OCI is reclassifi ed to profit or loss as a reclassification a djustment in the same period or periods du ring which the hedged ca sh flows affec t profit or loss. If ca sh f low hedge a ccountin g is discontin ued, t he a mount that has been a ccu mu lated in OCI must remain in accu mulated OCI if the hedged future cash f lows are stil l expected to occur. Oth erwise, the amount will be immediately rec lassified to profit o r loss as a rec lassificat ion adjustment. After discontinuation , once the hedged ca sh flow occurs, any amo unt remaini ng in accumula ted OCI must be accounted for depen ding on the nature o f the underlyin g transaction. Equity instruments Equity instrument s issued by the Group a re recorded at the proc eeds received, net o f direct issue costs . Ordinary sh ares Ordinary shares are classified as equity and measured at their nominal value. Any p remiums received on issue of share capital above its no minal va lue, are reco gnised as sha re prem ium wit hin equity . Associa ted issue costs are deduct ed from share premium . 3.15 Share-based pay ment Equity-settled transactions Awards to n on-emplo yees: The f air va lue of the equity sett led aw ards ha s been det ermined at the date the go ods o r services a re received with a correspo nding increase in equity ( share-based paymen t reserve). FINANCIAL STAT EMENTS Page 199 of 273 Awards to emp loyees: Employees (includin g seni or ex ecutives) of the Group recei ve rem uneration in the f orm of sh are -based payments, whereby employees render services as considerat ion for equity instruments (equity - settled transact ions). The fair value of the equity settled awards has been determined at the date of grant of the award allowing for the effect of any market -based performance con ditions. That cost is recogni sed in employee benefi ts expense, t ogether with a corresp onding increase in equity (share-based payment res erve), over the period in w hich th e service and, where appli cable, the performance conditions a re fulfilled (t he vesting period). Th e cumul ative expense re cogni sed for equi ty- settled transa ctions a t each re port ing date until t he vesting date refl ects the extent t o which the vesting period has expired and the Group’s best estimate of the number of equity instrumen ts that will ultimately vest. Th e e xpense or cr edit in the statement of profit or loss fo r a peri od represe nts the mo vement in cumulative expense recogni sed as at the beginnin g and end of that period. Service and non-m arket perfo rmance co nditions are not taken into account wh en determining the grant date fair value of awards, but the likelihood of t h e conditions being met is assessed as pa rt of the Group’s best estimate of the n umber of equity instrumen ts tha t will ultimately vest. Market perfo rmance conditions are reflected wi thin the gra nt date f air value. Any other co nditions attached to a n awa rd, but without an associat ed service requirement, are consid ered to be non -vesting con ditions. Non -vesting conditions a re reflected in the fair valu e of an awa rd and lead to an immediate expensin g of an a ward unless there are also service and/or performa nce c ondition s. No ex pense is recogn ise d for a wards th at do not u ltimately vest because non -m arket performance and/or service conditions have n ot been m et. Where awards include a market or non -vesting condition , the transactions are treated as vested irrespect ive of whether the market or non-vest ing condition is satisfied, provided that all other performance and/or service conditio ns are satisfied. 3.16 Fair value meas urement Fair valu e is the price th at w ould be received to sell a n asset or paid t o transfer a liability in an orderly transaction between m arket participants at the measurement da te. The fair value m easurement is based on the presumption that the tra nsaction to sell th e asset or t ransfer th e liability ta kes place eith er: in th e principal market for the asset or liability or in the absence of a principal market, in th e m ost a dvantageou s market for the a sset or liability. The fair value of an asset or a liability is mea sured using th e assumptio ns th at market participants would use when pricing the as set or liabil ity, assu ming tha t market participants act in their econ omic best interest. A fair value mea surement of a non -financia l a sset takes into accou nt a market participant's ability to gen erate econ omic benefit s by usin g the asset in its highest a nd best use or by selling it to another ma rket participant that woul d use the asset in its highest and best use. The Grou p uses val uation techniques tha t are a ppropriate in the circu mstances and for wh ich sufficien t data are ava ilable to mea sure fai r val ue, maximising the u se of releva nt observable inputs and m inimising the use of unobserva ble inputs. All assets and lia bilities, for wh ich fair value is measured or disclo sed in the consolidated fina ncial statements, are ca tegorised within the f air valu e hierar chy, described as follow s, based on th e low est - level input that is significant to the fair valu e measurement as a whol e: • Level 1 — Quoted (u nadjusted) market prices in a ctive ma rkets for identica l assets or liabilities • Level 2 — Valuat ion techniques for wh ich the lo west-level input that is signifi cant to the fair va lue measurement is direct ly or indirectly observable • Level 3 — Valuat ion techniques for which the lo west -level input that is signifi cant to the fair va lue measurement is un observable For assets a nd liabilities th at are recogni sed in the consolidated fin ancial sta tements on a recurring basis, the Group determ ines whether transfers have occurred between l evels in the h ierarchy by reassessin g FINANCIAL STAT EMENTS Page 200 of 273 categorisati on (based on the lowest -level input that is si gnificant to the f air value measu rement as a whole) at the end of each reporting perio d. 3.17 Cash and ca sh equivalen ts Cash and cash equiva lents comprise of cash at bank, deman d deposits and also ca sh reserves retain ed as a bank security pl edge in respec t of ba nk guaran tees (Note 2 8), with a matu rity of th ree months o r less that are subject to an insignifica nt risk of changes in their fair va lue. The cash reserve s retained as a bank security pledge in respect of ba nk guarantees are defi ned as deposits in escrow and held in designated ba nk deposits a ccounts to be relea sed when the Group m eet the specified expenditure m ilestones. Restricted cash comprises balances retained in respect of the Group’s Senior Secured Notes and ca sh collateral provided u nder a l etter of credit facility for issuing bank guarantees f or Group's activities in Israel ( see No te 17). The natu re of th e restrict ions on these balances mean that they do not qual ify for classification as cash equivalents. 3.18 Over/underli ft Lifting o r offta ke arran gements for oil and ga s produced in certain o f the Gr oup’s join tly own ed operatio ns are such that each participant may not receive and sell its precise share of the over all production in e ach period. The resulting imbalance between cumula tive entit lement and cumulative production less stock is underlift or overlift. Underlift and overlift are valued at market value an d included within receiva bles a nd payables respect ively. Movements during an accounting period are adju sted throu gh co st of sales such that gross profit is recogn ised on an entitlem ents basis. In respect of redetermina tions, any adjustments to th e Gr oup’s net entitlement of future production are accounted for prospectively in the period in which the make - up oi l i s produce d. Where the mak e-up period extends beyond the expecte d life of a fiel d an accrual is recognised for the expecte d short fall. 3.19 Inventories Inventories comprise cru de oil a nd by-pro duct (Sulphur), consumables and other spare parts. Inven tories are stated at the l ower o f cost and net reali sable value. Cost i s determined u sing the monthly wei ghted average cost method. Th e co st o f f inished goods and work in progress comprise s r aw materi als, direct labour, other direct co sts and related production overheads. It does not inc l ude bo rrowing costs. Net realisable value is th e estimated sel ling price in the ordinary course of business, l ess estimated costs of completion and estimated costs necessary to make t he sal e. Spare parts co nsum ed with in a yea r are carried as inventory and reco gnised in profit or loss when consumed. The Group assesses the net realisable va lue of the inventories a t the end of each year and recogni ses in the consoli dated sta tement of prof it o r loss the a ppropriate valuation adjustm ent if the invent ories are overstated. When the circumsta nces that previously caused impairment no longer exist or when there is clear eviden ce of an increase i n the inventories’ net realisa ble value du e to a change in the economic circumstan ces, the amount thereof is reversed. 3.20 Provisions Provisions are recognised wh en the Grou p has a pres ent legal or constructi ve obligation as a resul t of past events, it is probable t hat an outflow of resources w ill be required to set tle the obligation , and a reliable estimate of t he amount can be made. Wh ere the Group expects a provision to be reimbursed, for example under an insu rance contract, the rei mbursem ent is recognised a s a sep arate asset but onl y when the reimbursemen t is virtu ally certain. The amount recognised as a provision is the best estimate of the consideratio n required to settle the present obligation at the end of the reporti ng period, taking into account the risk a nd un certainties surrounding the o bligation. Th e expense relating to a provision i s presented in profi t or loss net of any rei mbursemen t. If the effec t of the time val ue of mo ney is material , FINANCIAL STAT EMENTS Page 201 of 273 provisions a re discounted using a current pre - tax rat e th at reflect s, when a ppropriate, th e risks specif ic to the liability. When discounting is used, the increase in the provision due to th e passage of tim e is recognised as a finan ce cost. Decommissioning costs Provision for decommissionin g is recogni sed in f ull when t he rela ted fa cilities a re in stalled. A corresponding amount equivalent to the provision is also reco gni sed as part of the cost of the related property, plant an d equipment. The amount recogni sed is t he esti mated cost of deco mmi ssioning, discounted to i ts net pre sent value at a risk -free discount rate, and is reassessed each year in accordan ce with l ocal conditions and requirements. Changes in the estima ted t iming of decommissioning or decommissioning cost estimates are dea lt with prospect ively by recordin g a n a djustment to the provision, a nd a co rresponding adjustment to propert y, pla nt and equipment. Th e unwindin g of t he disc ount on the decommissioning provision is included as a fina nce cost. 3.21 Revenue Revenue from contracts with custo mers is recogni sed when contro l of the goods or services are transferred to the custom er at an amo unt tha t ref lects th e co nsideration to whi ch the Grou p expects to be entitled in exchange for those goods or services. The Group has concluded that it is the principal in its revenue arrangements because it typically controls the g oods or services before transferring them to the customer. Sale of gas, crude oil and b y products Sales reve nue represents th e sales value, net of VAT, o f actua l sa les vo lumes to customers in the year together with th e gain/loss on reali sation of cash flow hedges. The Group’s a ccounting policy u nder IFRS 15 is that rev enu e is recognised wh en the Grou p satisfies a performance obligation by transferring oil or gas to its customer. The title to o il and gas typica lly transfers to a customer at the same time as the customer takes physical possession of the oil or gas. Typica lly, at this point in ti me, the perf ormance obligations of the Group are fully satisfied. The revenue is reco rded when the oil or ga s has been physically delivered to a vessel or pipeline. Rendering of services The Group reco gnises reve nue fro m technical adviso ry services, using an i nput metho d to measure progress towards co mplete sa tisfaction of the service, beca use the custo mer simul taneously receives and consumes the benefit s provi ded by t he Group. The Group recognises revenue from advisory services on th e basis of the l abour hours expended rela tive to the total expected l abour hou rs to complete the service. 3.22 Retirement b enefit cos ts State managed retirement benefit scheme Payments made to state managed retirement benefit schemes (e.g. Government So cia l Insurance Fund) are dealt with as payment s to defined contribu tion plans w here the Group's obliga tions under the plans are equivalent to those arising in a defined contribution plan. The Gro up's contributions are expensed as incurred and are included in staff costs. The Group has no legal or constructive oblig ations to pay further contributions if th e govern ment scheme does not ho ld sufficient assets to pay a ll em ployees benefits relating to emplo yee service in the current and prior perio ds. Defined benefit plan The Group operates an unfun ded defin ed benefit plan in which a lu mp sum amount is specif ied a nd is payable at the termination of employees’ services based on such f actors as the le ngth of the employees’ service an d their salary . The lia bility re cognised f or the defined ben efit pl an is the present value of the defined benefit obli gation at the reporting date. FINANCIAL STAT EMENTS Page 202 of 273 The cost of pro viding benefits is determin ed using the Projected U nit Credit Metho d, with actuarial valuations being carried out at each rep ort ing date. These assum ptions used in the actuari al val uations are developed by managem ent wit h the assistance of independent actuaries. Service co sts on the define d benef it plan a re in cluded in staf f costs. Interest expense on the defined benefit liability is i ncluded in finance costs. Gains and losses resulting from other remeasurements of the defined benefi t liability are included in o ther compreh ensive income and are not reclassified to profit or loss in subsequent periods. 3.23 Borrowing co sts Borrowing costs directly attributable to the acquisition, co nstruction or production of qualifying assets, which a re assets that nec essarily take a substan tial period of time to get ready f or t heir int ended use o r sale, are added to the cost of those assets, un t il such time as the assets are substa ntially ready fo r their intended use or sale. Investment income earned on the tempora ry investment of speci fic borrowings pending thei r expenditure on qualifyin g assets is deducted from the borrowing costs el igible fo r capitalisation. Excluded from the above ca pitalisation policy are any qualifyi ng a ssets th at are inven tories that are produced in large quantit ies on a repetitive basis. Borrowing costs consist of interest and other costs that the Group incurs in connecti on with the borrowing of fu nds. 3.24 Tax Income tax expense repre sents the sum of current and deferred ta x. The tax current ly payable is ba sed on taxable profit for t he y ear. Taxable profit differs from profit as reported in t he consol idated fina ncial st atements because it e xcludes items of income or expense th at are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Grou p's liability for current tax is ca lculated using tax rat es that have been ena cted or substantively enacted by the reportin g date. Deferred tax is reco gnised on temporary differences betw een the carry ing amounts of assets and liabilities in the consolida ted financial statemen ts and t he corresponding tax bases used in the computation of taxable profit, based o n tax rates that have been enacted or substantivel y enacted by the reporting date. Deferred tax li abilities are generally recognised for all taxabl e tem porary differen ces a nd deferred tax assets are recognised t o the extent th at it is probable tha t taxable profits w ill be available against which deductible tempo rary differences can be utilised. No def erred tax is recognised i f t he temporary difference arises from goodwill or fro m t he initial recognition (other than in a business combination) of assets a nd lia bilities in a transaction that affec ts neither the taxable profit n or the accounting profit. Current an d deferred tax asset s and corres ponding liabilities are o ffset when there i s a legally enforceable right to set off current t ax assets against current tax lia bilities a nd wh en they relate to incom e ta xes levied by the same t axation authority and the Group intends to settle its tax assets and liabilities on a net basis. 3.25 Equity, reserve s and dividend pay ments Share capital represents t he nomina l (par) value of shares that have been i ssued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deduc ted from sha re premium, net of a ny rela t ed income tax benefits. Other component s of equity include the foll owing: • Remeasuremen t o f n et defined benefit liability – comprises th e a ctuarial losses from changes in demographic and fi nancial assumptions an d the return on plan assets (see Note 3. 18) • Translation reserve – comp rises foreign curren cy transl ation diff erences arising fro m the translat ion of financial statemen ts of the Group’s foreign enti ties (see Note 3.1) FINANCIAL STAT EMENTS Page 203 of 273 • Merger reserves - On 30 June 2017, the Compa ny became the paren t company of the Grou p through the acquisition of the full share capital of Energea n E&P Holdings Limited. From that point, in the consolidated financial statements, the share capita l beca me tha t of Energean plc. The previ ously recognised share capital and share premium of Ene rgean E&P Ho ldings Limi ted was eliminated with a corresponding positi ve merger reserve. Share-based paym ent reserve: The sha re- based payments reserve is used to recogn ise the valu e o f equity-settled share-based paym ents granted to parties in cluding employees and key man agement personnel, as part of th eir remunerati on. Retained earni ngs includes all curren t and prior period retained prof its. All transactions wit h owners of the parent are reco rded separately within equity. Dividend dist ributions payable to equity shareh olders are incl uded i n o ther liabilities when the dividen ds have been approved in a ge neral meeti ng prior to the balan ce sheet date. 3.26 Restatement of comparative s in Conso lidated Cas h Flow Statem ent Following a revi ew of the Grou p’s 2020 A nnual Report by th e Directors subsequen t to correspo ndence with the Financia l Reporting Co uncil (‘FR C’), the Group h as changed the classif ication of the amoun ts received from INGL from fina ncing activities to investing activit ies. These cash inflows repres ent the contribution received fro m INGL in rela tion to the onsh ore section of the Kari sh and Tanin infrastruct ure and the near shore section o f pipeline extending to approximately 10km off shore. For further information on the INGL transact ion refer to note 25. The Group previously presented the contributions from INGL a s financi ng activities as this was reflective of the len gth o f t ime between their rec eipt from INGL an d when Energean is expected to compl ete the construction of this i nfrastructure. Followin g the review performed, the Grou p has rec onsidered th e treatment and considers th at t he ca sh inflows from INGL shou ld be cl assified as investin g act ivities in accordance with IAS 7 as t hey do not m eet the definition of a f inancing act ivity, which is ‘act iv ities th at result in changes in the size a nd contribution of the contributed equity a nd borrowings of the entity’. Comparative f igures for the 2020 financia l year have been restated as fol lows. ($’000) As previously stated Reclassifica tion of prepaymen ts from INGL Restated Amounts receive d from INGL related to the future transf er of property, plant & equipment - 22,229 22,229 Net Cash u sed in Investing activities (619,792) 22,229 (597,563) Advance pay ment from fu ture sale of property, pla nt and equi pment (INGL) 22,229 (22,229) - Net cash in flow from fina ncing Activities 458,275 (22,229) 436,046 The FRC has confirmed that the ma tter is now closed. T he FRC’s question was o riginally co ntained in a letter issued in respect of our 2020 Annu al Report & Acco unts. The FRC’s ro le is to con sider compliance with reporting standards an d is not to verify the information provided to them. T herefo re, given the scope and inherent limitations of their review, which does not benefit from any detailed know ledge of the Group, it would not be appropria te to i nfer any assurance from thei r review that our 2020 Annua l Re port and Accounts was correc t in all material respects. FINANCIAL STAT EMENTS Page 204 of 273 4 Critical acc ounting estim ates and judg ements The prepara tion of these co nsolida ted financial statements in conform ity wit h IFRS re quires the use of accounting estimates and assumptions, and also requi res management to exercise its judgement, in the process of applying th e Group's accounti ng policies. Estimates, assumptions and judgement a pplied are cont inually evaluated and are based on historical experience and other factors, including expectati on s of future events that are believed to be reaso nable under t he ci rcumstances. Although these esti mates, assumptions and judgement are base d o n management 's best knowledge of curren t events and act ions, actual results ma y ultimately differ. 4.1 Critical ju dgeme nts in applying the Group’s ac counting p olicies The followin g are managemen t judgements in a pplying the acco unting policies o f t he Group tha t have the most signifi cant effect on the consolida ted financial statement s: Determining whether an ac quisitio n constitutes a Business Combination (not e 6) Determination of w hether a set of ass ets acquired and liabilities assumed constitu te a bu siness may require the Grou p to make certain judgement s. A business is a n integrated set of activiti es and assets that is capable of being conduct ed an d ma naged f or th e purpo se of p roviding goo ds or service s to customers, generating investment income (such a s dividends or interest) or generatin g ot her income from ordinary activities. A business consists of inputs and process es a pplied to those inputs that have the ability to contribute to the crea tion of output s. Classification of an acquisition as a bu siness combination or an a sset a cquisition depends on wh ether the assets acquired constitu te a bu siness. Whether an acqui sition is classified as a busin ess co mbination or asset acquisition can have a significa nt impact on the ent ries made on or after a cquisition. On 17 December 2020, the Gro up completed it s a cquisit ion of Edison Explora tion & Production S.p.A. ("Edison E&P") from Edison S.p.A. ( "Edison"). The gross consideration f or the transaction, as at the lo cked box date of 1 Janua ry 2019, is $284 milli on and the final net consideration, as of 17 December 2020, is $270 million . Prior to 1 July 2018 Ediso n E&P did not op erate as a consoli dated group, instead the releva nt component entities formed part of a broader exploration and production business unit. On 1 July 2018 a new legal su b group of Edi son E&P was established. As part of the acquisitio n managem ent identified relevant input s, processes and outputs that met the definition of a business under I FRS 3. Following 17 December 2020, Edison E&P Group ha s been consolidated into the Group. The busin ess combination is su bject to the appli cation of a cquisition accountin g as requ i red by IFRS 3 Business Combinations. Carrying value of intangible exploration and evaluation assets (note 14) Amounts ca rried under intangible exploration and evaluation assets represent active exploration projects. Capitali sed costs w ill be written off to the income statement as exploration co sts unless comm ercial reserves are established or the determi nation process is not completed and th ere a re no in dications of impairment in accordance with the Group’s accounting po licy. The process of determining wh ether there is an indicator for impairment or impairment reversal and quantifying the amount requires critical judgement. The key areas in which management has applied judgement as follows: the Group’s intention to proceed with a future work pro gramme; the likelihood of license renewal or extension; the assessment of whether sufficient data exists to indicate tha t, a lthough a develo pment in the specifi c a rea is likely to proceed, th e carry ing a mount of the explora tion and evaluation asset i s unlikely to be rec overed in full from successful developm ent or by sa le; a nd the success of a well res ult or geologica l o r geophysical survey. Identification of cash g enerating units In considering th e carrying valu e of property, plan t and equipm ent the Grou p has to make a critical judgement in relat ion to the identif ication of the smallest ca sh genera ting u nits to which those assets are allocated. In all countries except for Italy the cash generating unit is considered to be at the concession level. In Ital y th e ga s f iel d concessions are con nected via a shared pipeline with differen t points of entry, which allows production to be changed fro m one co ncession t o a nother. In view of t his FINANCIAL STAT EMENTS Page 205 of 273 shared infrastruct ure that exists in Ital y and the ability to move sal es between assets as well as the management of spare parts an d t he organisat ional structure o f the Italian busin ess the Group ha s determined that the relat ed cash inflows are interdepen dent and therefore identif ied cash generating units in Italy to be at the country and com m odity l evel (being Italy gas a nd Ita ly oil) w hich is consist ent with how the Gro up monitors the business. 4.2 Estimation u ncertainty The estima tes and assumptions that have a significant risk of ca using a material adju stment to the carrying amo unts of assets an d liabilities within the next financial year, are discussed below : Impairment of property, plant and equipment The Group assesses at each reporting date whether there is an indicatio n that an asset (or CGU) may be impaired. The Grou p assesses impairment at each reporting date by evaluating condition s specific to the Group tha t may l ead to impairment of assets. Where i ndicators of impairmen ts or impairm ent reversal s are present and an impairment or impairment reversal test is required, the calculation of the recoverable amount requires esti mation o f future cash flows within complex impairmen t models. The recoverable amount (wh ich is the high er o f fair value less costs to sell and value in u se) of the cash -genera ting unit to which t he assets belong is then estimated based on the present value of future disc ounted cash flows. Key assum ptions and estimates used in both the impairmen t mo dels and i n the calculation o f the fair value of property, plant and equipmen t ac quired as part of busin ess combinat ion relate to: co mmodity prices assumptions, production profile, the future impact risks associated with climate change and other factors, post -tax discount ra tes and commerc ial reserves and the rel ated cost p rofiles. Proven a nd probable reserves are est imates of the amo unt of oil a nd gas that can be eco nomically extracted from the Group’s oil an d gas assets. The Group estimates it s reserves u sing standa rd recogni sed evaluat ion techniques. The estimate is reviewed at least twice annually by managem ent and is regularly reviewed by independent consul tants. Proven and proba ble reserves are determi ned using estim ates of oil and gas in place, recovery factors and fu ture co mmodity prices, the la tter ha ving a n im pact on t he tot al a mount of rec overable rese rves and the proportion of th e gross reserves which are attri butable to host governments under the terms of the Production Sha ring Contracts. Future developmen t costs are estimated taking into account the level of development required to produ ce the reserves by referen ce to operators, where applicable, and internal engineers. Management has considered h ow th e Grou p’s identified climate risks and cl imate related goals (as discussed in th e Strategic R eport) may im pact the estimatio n of the recoverable va lue o f cash-genera ting units in the im pairment assessments. T he a nticipated extent and nature of the future impa ct of climate on th e Grou p’s operations and fut ure investment , and t herefore estimation of recoverable value, is not uniform a cross al l cash -generati ng uni ts. In particular, this is i mpacted by the activity of the cash - generating unit, current technologies and production processes employed and the current level of emissions and energy efficiency. The Grou p is in the process of i dentifying a range of a ctions a nd initiatives to progress towards th e Group’s com mitment to become a net -zero emitter by 2050. In certain cases the costs of such actions have been quantified a nd are i ncluded in the Group’s foreca sts which are used to esti mate reco verable value f or th e Group’s cash -generating units, most sign ificantly carbon costs in Prino s. There is a range of inherent uncertainties in the extent that responses to climate change may impact t he recoverable va lue of the Gro up’s cash -generating unit s, with many of these being ou tside the Group’s control. These include the impact of future changes in government policies, legislati on a nd regula tion, societal responses to climate cha nge, t he future availability of new tec hnologies and cha nges i n su pply and demand dynam ics. Further details about the carryi ng value of property, plant and equipment are shown in Note 13 of th e consolidated fi nancial statements. Measurement of Conting ent consideration (note 2 7.2) The a cquisition of Edison Explorati on & Production S.p.A comp leted i n 2020 i ncluded a co ntingent consideratio n of up to $100.0 million for which the fair value has been est imated at $78.5 milli on at FINANCIAL STAT EMENTS Page 206 of 273 31 December 20 21, base d on pricing sim ulations. The final considerat ion amount will be determi ned on the basis of futu re gas prices (PSV) recorded at th e time of the commissio ning of the Cassiopea field, which is expected in 2024. Hydrocarbon reserve and r esource estimates The Grou p’s oil and gas dev elopment and produ ction pr operties are depreciated on a unit of product i on basis at a rate calcula ted by reference to developed an d undeveloped prove d an d probable commerc ial reserves (2P developed and undeveloped) w hich are est imated to be recoverable w ith existing and future developed facili ties usin g current operating metho ds, determi ned in accordan ce wit h the Petroleum Resources Ma nagement System publi shed by th e Society of Petr oleum Engi neers, the World Petroleu m Congress and the America n Association of Petroleum Geologists. Commercial reserves are determined using estimat es of oil and gas in place, recovery factors and future prices. T he l evel o f est imated commercia l reserves is also a key determinant in assessing w hether the carrying va lue of any of the Group’s oil and gas properties ha s been impa ired. As the econo mic assumptions used may ch ange and as addition al geolo gical in formation i s produced durin g the operation of a field, estimates of recoverable reserves ma y change. Suc h ch anges may i mpact th e Grou p’s repo rted financial position an d results which include: • Depreciation and amortisation charges in profi t or loss m ay ch ange where such charges are determined using the units of production method, or where th e useful life of th e related assets change • Impairment cha rges in profit or loss • Provisions fo r decommissioni ng may change where changes to th e reserve estimates a ffect expectations abou t when such acti vities will occur and the associa ted cost of these activities • The recognition an d carrying value of deferre d tax assets may cha nge due to cha nges in the judgements regardin g the existen ce of such assets a nd in estimates of the lik ely recovery of such assets. The impact upo n co mmercial reserves ( if any ) and the a ggregate depletion charge fo r th e y ear of a fluctuation of the forward Brent oil price a ssumption as well as th e Group’s carry ing a mount of oil and gas properties for the current a nd prior period a re presented in no te 13. Management m onitors the impact on the co mmercial reserves and the deple tion charge on a Group level. Decommissioning liabil ities (note 23): The re is uncerta inty a round the cost of deco mmissionin g as cost estimates can vary in res ponse to many factors, including from chan ges to market rates for goods and services, to the relevant legal requirements, t he emerg ence of new technolo gy or expe rience at other assets. The expected timing, work scope, amount of expenditure, discount and inflation rates may also change. Therefore significant estimates and assum ptions are made in determinin g the provision for deco mmissionin g. The estimated decommission ing costs are reviewed annual ly by an internal expert and the results of this review are then assessed alongside estimates from operators. Provision for environmental clean -up and remediation co sts is based on current legal and contra ctual requirements, techn olo gy and price level s. 5 Segmental re porting The informa tion reported to th e Group’s Chi ef Executive Officer and Chief Financi al Officer (to gether the Chief Operating Decision Mak ers) fo r th e purpo ses of resource alloca tion a nd a ssessment of segment performance is focused on four operating segments: Europe, (inclu ding Greece, Italy, UK, Croatia), Israel, Egypt and New Ventu res (Mont enegro and Malta ). The Group’s repo rtable segments under IFRS 8 Operatin g Segments are Euro pe, Israel and Egypt. Segments tha t d o not exceed th e quanti tative thresholds for reporting information about o perating segments have been included in Other. Before th e a cquisition of Edison E&P on 17 Decem ber 2 020, t he Group had no activities in Egypt and the Europe segme nt comprised only Gr eece (including t he Prinos and Epsilon pro duction asset, Kata kolo non -producing assets and Ioannin a and Aitoloakarnan ia exploration assets). FINANCIAL STAT EMENTS Page 207 of 273 Segment revenues, results and reconciliation to pro fit before tax The follow ing is an analysis of the Group’s reve nue, resu lts and rec onciliation to profit/(loss) before tax by reportable segment: ($'000) Europe Israel Egypt Other & inter- segment transactio ns Total Year ended 31 December 20 21 Revenue from Oil 165,496 - - 144 165,640 Revenue from Ga s 137,468 - 133,503 (2) 270,969 Other 13,156 - 55,446 (8,226) 60,376 Total revenue 316,120 - 188,949 (8,084) 496,985 Adjusted EBIT DAX 126 88,288 (4,969) 130,634 (1,881) 212,072 Reconciliation to profit b efore tax: Depreciation and amortisation expenses (55,001) (93) (41,626) (731) (97,451) Share-based paymen t charge (967) (231) - (4,523) (5,721) Exploration and eval uation expenses (86,490) (50) - (1,138) (87,678) Other expense (2,150) (461) (1,543) (2,865) (7,019) Other income 16,065 19 1,851 (51) 17,884 Finance income 13,450 7,849 985 (19,334) 2,950 Finance costs (28,318) (18,526) (9,059) (41,477) (97,380) Unrealised loss on deriva tives (21,477) - - - (21,477) Net foreign exchange gai n/(loss) 31,000 520 479 (38,921) (6,922) Profit/(loss) befo re income tax (45,600) (15,942) 81,721 (110,921) (90,742) Taxation income / (expense ) 29,026 5,017 (39,100) (355) (5,412) Profit/(loss) fro m continuin g operations (16,574) (10,925) 42,621 (111,276) (96,154) Year ended 31 Decemb er 2020 Revenue from oi l 17,987 - 1,580 - 19,567 Revenue from Ga s 2,250 - 5,097 - 7,347 Petroleum products sal es 326 - - - 326 Rendering of services 6,800 - 92 (6,118) 774 Total revenue 27,363 - 6,769 (6,118) 28,014 Adjusted EBITDAX 126 (4,874) (3,574) 4,143 (4,030) (8,335) Reconciliation to profit b efore tax: Depreciation and amortisation expenses (21,399) (294) (1,989) (443) (24,125) 126 Adjusted EBITDAX is a non-IFRS measure used by the Group to measure business performance. It is calculated as profit or loss for the pe riod, adjusted for discontinued operations, taxation, deprecia tion and amortisation, share -based payment charge, impairment of property, plant and equipment, othe r income and ex penses (including the impact of derivative finan cial instruments and foreign exchange ), net finan ce costs and explor ation and evalu ation expens es. FINANCIAL STAT EMENTS Page 208 of 273 ($'000) Europe Israel Egypt Other & inter- segment transactio ns Total Share-based paymen t charge (471) (42) - (2,712) (3,225) Exploration and eval uation expenses (2,942) (502) - (980) (4,424) Impairment loss on property, plant and equipment (65,299) - - - (65,299) Other expense (1,137) (2,700) - (24,492) (28,329) Other income 4,154 - 689 4,343 9,186 Finance income 224 201 64 4 493 Finance costs (3,619) (326) 175 (1,216) (4,986) Net foreign exchange gai n/(loss) 10,769 1,862 (967) 3,781 15,445 Profit before inco me tax (84,594) (5,375) 2,115 (25,745) (113,599) Taxation income / (expense ) 21,009 495 (1,081) 318 20,741 Profit from con tinuing operation s (63,585) (4,880) 1,034 (25,427) (92,858) The following table presents assets and liabilit ies info rmation fo r th e Group’s operating segments as at 31 December 2021 and 31 December 2020, respectively : Year ended 31 December 20 21 ($'000) Europe Israel Egypt Other & inter- segment transactio ns Total Oil & Gas properties 537,600 2,584,828 342,528 (9,694) 3,455,262 Other fixed assets 16,578 3,917 24,076 (360) 44,211 Intangible assets 74,868 95,941 20,484 36,848 228,141 Trade and other receiva bles 164,131 22,769 102,605 (979) 288,526 Deferred tax asset 154,798 - - - 154,798 Other assets 674,157 379,248 98,720 (81,711) 1,070,414 Total assets 1,622,132 3,086,703 588,413 (55,896) 5,241,352 Trade and other pay ables 202,797 74,115 25,511 152,563 454,986 Borrowings - 2,463,524 - 483,602 2,947,126 Decommissionin g provision 766,573 35,525 - 802,098 Other current liabi lities (20,395) - - 32,941 12,546 Other non-cu rrent liabilities 134,203 180,689 24,663 (32,082) 307,473 Total liabiliti es 1,083,178 2,753,853 50,174 637,024 4,524,229 Other segm ent informatio n Capital Expenditure: Property, plant an d equipment 72,782 247,463 52,085 (14,330) 358,000 Intangible, explorati on and evaluati on assets 40,523 6,342 215 3,329 50,409 FINANCIAL STAT EMENTS Page 209 of 273 Year ended 31 December 20 20 ($'000) Europe Israel Egypt Other & inter- segment transactio ns Total Oil & Gas properties 572,834 2,156,236 326,366 (1,728) 3,053,708 Other fixed assets 21,727 765 27,588 3,484 53,564 Intangible assets 139,267 89,607 39,219 7,723 275,816 Trade and other receiva bles 154,469 1,304 162,222 344 318,339 Deferred tax asset 103,200 - 22,856 - 126,056 Other assets 251,240 37,464 247,028 (228,202) 307,530 Total assets 1,242,737 2,285,376 825,279 (218,379) 4,135,013 Trade and other pay ables 187,117 76,146 57,959 34,232 355,454 Borrowings 121,264 1,093,965 - 227,847 1,443,076 Decommissionin g provision 826,729 38,399 - - 865,128 Other current liabi lities 140,629 6,914 54,652 (195,280) 6,915 Other non-cu rrent liabilities 25,291 193,920 32,284 18,553 270,048 Total liabiliti es 1,301,030 1,409,344 144,895 85,352 2,940,621 Other segm ent informatio n Capital Expenditure: Property, plant and equip ment 14,117 405,279 860 (197) 420,059 Intangible, explorati on and evaluati on assets 1,219 6,625 - 1,147 8,991 Segment cash flows Year ended 31 December 20 21 ($’000) Europe Israel Egypt Other & inter- segment transactio ns Total Net cash from / (used in ) operating act ivities 43,394 (28,764) 128,659 (10,785) 132,504 Net cash (used in) i nvesting act ivities (99,040) (490,381) (53,553) 191 (642,783) Net cash from fin ancing activities 120,446 831,677 (132,414) 240,056 1,059,765 Net increa se/(decrease) in cash and cash equiva lents 64,800 312,532 (57,308) 229,462 549,486 Cash and cash equi valents at beginning of the perio d 13,609 37,421 76,240 75,669 202,939 Effect of exchange ra te fluctuations on cash held (7,093) (125) 322 (14,690) (21,586) Cash and ca sh equivalents at en d of the period 71,316 349,828 19,254 290,441 730,839 FINANCIAL STAT EMENTS Page 210 of 273 Year ended 31 December 20 20 (Restated) ($’000) Net cash from / (used in ) operating act ivities (5,442) (2,469) 22,808 (13,428) 1,469 Net cash (used in) investi ng act ivities (18,626) (370,007) (925) (208,005) (597,563) Net cash from f inancing activities 19,164 297,987 (174) 119,069 436,046 Net increa se/(decrease) in cash and cash equiva lents (4,904) (74,489) 21,709 (102,364) (160,048) At beginning of the yea r 6,084 110,488 - 237,847 354,419 Cash acquired from business Acquisition 7,234 - 55,650 (62,884) - Effect of exchange ra te fluctuations on cash held 5,195 1,422 (1,119) 3,070 8,568 Cash and ca sh equivalents at en d of the period 13,609 37,421 76,240 75,669 202,939 6 Business comb ination Acquisition of Edison E &P On 17 December 2020, t he Group acquired 100% of t he issued share ca pital and o btained control of Edison Exploration & Production S.p.A (“Edison E&P”). Edison E&P conta ins a portfolio of assets in cluding producing assets in E gypt, Italy, the UK North Sea and Croati a with development assets in Egypt and Italy and balanced -risk exploration opportu nities across the portfol io. The acquisition of Edison E&P qualifi ed as a business combina tion as defined in IFRS 3. The f inal fair values of the iden tifiable a ssets and liabilities of Edison E&P are unchanged from the provisionally estim ated amounts as at the dat e of acquisitio n. ($’000) Fair value reco gnised on acqui sition Assets: Property, plant an d equipment 689,188 Identifiable intangibl e assets 133,786 Inventory 68,977 Trade and other receiva bles 127 336,081 Cash and cash equiva lents 62,884 Deferred tax assets 70,832 1,361,748 Liabilities Trade and other pay ables (199,399) Retirement benef it liability (3,021) Other long-term liabilities (51,059) Decommissionin g liabilities (808,994) 127 Trade receivables incl ude mainly balances from EGPC, the Egyp tian governmental body that are significantly aged. Consideration has been given to whether the carrying amount appropria tely reflects their rec overable amount and a loss allowance recog nised. As su ch it has been c oncluded tha t book value equates to fair val ues. FINANCIAL STAT EMENTS Page 211 of 273 ($’000) Fair value reco gnised on acqui sition (1,062,473) Total identi fiable assets acqui red and liabil ities assumed 299,275 Goodwill ari sing on acquisition 25,346 Fair value of purchase co nsidera tion transferred 324,621 Satisfied by: Cash paid 266,088 Amount paya ble 3,311 Contingent co nsideration arrangement 55,222 Total considera tion transferre d 324,621 Net cash outflo w arising on acquisitio n: Cash considerat ion (266,088) Less: cash and cash equiva lent balan ces acquired 62,884 Net consol idated cash outf low (203,204) The base considerat ion payable of $398.6 milli on, which excludes contingent con sideration, was agreed as of a locked box date of 1 January 2019 with the i mpact of economic performance, capital expenditure and worki ng capita l movem ents from this date t o com pl etion o f 17 December 2020 adjusted within the final consideration payable of $269.9 million from which amoun t of $266.6 million wa s paid in December 2020 and amount $3.3 mill ion paid in Janu ary 2021. The contingent consideration arrangement will vary de pending on future Italian gas prices at the point in time at which first gas production is delivered from the Cassiopea field in Italy which is expected in 2024. The potential undiscounted amo unt of all future payments tha t th e Gr oup could be required to m ake under the contingen t consideration arra ngement is between $0 and $100 milli on. The fair value o f the contingent consideratio n a rrangement o f $55.2 mill ion wa s estimated by applying forward gas price curves against the expected date of first gas as at acquisit ion date. This resulted in an aggregate fair va lue o f $299.3 million being allocated to the identifiable assets an d liabi lities acquired, prior to the recognit ion of a deferred tax liabilit y of $22.9 million as further described below. Goodwill of $25.3 milli on was recognised upon acquisition. An amou nt of $22.9 m illion was due to the requirement o f IAS 12 to recognise deferred ta x asse ts and li abilities for the difference betw een the assigned f air va lues a nd tax bases of a ssets acqui red and lia bil ities assumed. The assessment of fair value of such licences is therefore based on cash flows after ta x. Hence, goodwill arises a s a direct resul t of the recognition of th is deferred tax adjustment (“technica l goodwill”). None of the goodwill recognised wi ll be deductible for inco me tax purposes. FINANCIAL STAT EMENTS Page 212 of 273 7 Revenue ($’000) 2021 2020 Revenue from cru de oil sales 165,924 17,987 Revenue from gas sal es 270,969 7,347 Revenue from LPG sal es 20,945 538 Revenue from co ndensate sales 34,126 1,042 Gain/(Lo ss) on forward transactio ns (285) - Petroleum products sal es 4,618 326 Rendering of services 688 774 Total revenue 496,985 28,014 100% of the gas produce d at Abu Qir ( Egypt) is so ld to EGPC un der a Brent -l inked ga s price. At Bren t prices o f bet ween $40/b bl and $72/bbl the gas price is $3.5/mmBTU, limi ting volatili ty and exposure t o commodity price flu ctuations. F or Brent pri ces abo ve $72/bbl th e gas price i ncreases until it rea ches a cap of $5.88/mmBTU at Brent prices in excess of $100/ bbl. For Brent prices below $40/bbl the ga s price decreases until it reach es a gas price floor of US$1.29/mmBTU at a Brent price of $0/bbl. Sales for th e year ended 31 December (Kboe) 2021 2020 Greece Oil 403 639 Egypt (net ent itlement) Gas 6,351 425 LPG 394 32 Condensate 553 64 Italy Oil 2,083 62 Gas 1,474 65 UK Gas 40 5 Oil 271 17 Croatia Gas 57 3 Total 11,626 1,312 FINANCIAL STAT EMENTS Page 213 of 273 8 Operating pr ofit/(loss) ($’000) 2021 2020 (a) Cost of sales Staff costs (no te 9) 64,564 14,562 Energy cost 11,578 5,310 Flux Cost 11,561 Royalty paya ble 24,759 430 Other operating costs 128 149,133 8,227 Depreciation and am ortisation (note 13) 94,647 22,052 Stock overlift/u nderlift movement (11,130) (2,165) Total cost of s ales 345,112 48,416 (b) Administratio n expenses Staff costs ( note 9) 16,759 5,745 Other General & Administra tion expenses 15,444 4,584 Share-based paymen t charge inclu ded in administrati ve expenses 5,714 2,776 Depreciation and am orti sation (note 13, 14) 2,480 780 Auditor fees (no te 8g) 2,273 1,251 42,670 15,136 (c) Selling and distr ibution expense Staff costs ( note 9) 80 29 Other selling and distribut ion expenses 223 118 303 147 (d) Exploratio n and evaluatio n expenses Staff costs fo r Exploration and evaluat ion activities (Note 9) 3,695 1,175 Exploration costs writ ten off (Note 14) 82,125 2,936 Other exploration an d evaluation expenses 1,858 313 87,678 4,424 (e) Other expense s Transaction costs in relation to Edison E&P acquisiti on 129 2,052 17,914 Intra-group merger costs 605 2,188 Loss from disposal of Property plant & Equipment 36 7,568 Other indemnities - 210 Write-down of inven tory 581 101 Provision for li tigation and claims 520 Write down of pro perty, plant and equipm ent costs 779 128 Other operating costs compris e of insurance costs, gas transportation an d treatmen t fees concession fees and planned maintenance c osts. 129 Direct costs incur red in 2020 and 2021 relating to t he acquisitio n of Edison’s E&P business . FINANCIAL STAT EMENTS Page 214 of 273 ($’000) 2021 2020 Other expenses 2,446 348 7,019 28,329 (f) Other inco me Income from acc ounts payable written off 130 - 4,094 Reversal of expected credi t loss allo wance 1,853 2 Change in estima tes of deco mmissioni ng provisions 131 7,836 Change in estima te of defined benefit obliga tion 3,463 Reversal of provisio n for litigation and claims 4,494 Proceeds from termina tion of agreement wit h Neptune Energy 132 - 5,000 Other income 238 (94) 17,884 9,002 (g) Fees to the Company’s a uditor for: The audit of th e Company’s annua l accounts 748 710 The audit of th e Company’s subsidiaries pursu ant to legisla tion 783 333 Total audit services 1,531 1,043 Audit-relat ed assurance servi ces – half-y ear review 242 175 Reporting accou ntant services 1,008 264 Other services 75 73 2,856 1,555 9 Staff costs The a verage mo nthly number of employees (including Executive Directors) em ployed by t he Grou p worldwide was: Number 2021 2020 Administration 167 99 Technical 437 307 604 406 In a ddition, the Gro up. consolidate the perso nnel costs o f i ts Operating Company, Abu Qir Petroleum Company (‘AQP’), owned at 100%. The table below detai ls the a verage number of employ ees rela ted to AQP employees: Number 2021 2020 AQP employee (excluding Energean employees) 640 25 640 25 130 Related to derecognition of spec ific accounts payables balan ces in the Greek subsidiary following waiver agreements with creditors. 131 There was a change in the assumptions underpinning the decommissioni ng provision that resulted in an overall decrease to the provisions r ecognised. 132 Related to termina tion fees paid by Neptune Energy foll owing the ter mination of the ag reement for Nep tune Energy to acq uire Edison E&P’s UK and Norwegian s ubsidiaries fr om the Group. FINANCIAL STAT EMENTS Page 215 of 273 ($’000) 2021 2020 Salaries 94,624 30,095 Social security costs 11,995 5,965 Share-based paymen ts (note 25) 5,933 3,325 112,552 39,385 Payroll cost ca pitalised in oil & gas assets and exploration & evaluation costs (20,218) (12,109) Payroll cost expensed 92,334 27,276 Included in: Cost of sales (no te 8a) 64,564 14,562 Administration expenses (n ote 8b) 22,473 8,521 Exploration & evalua tion expenses (note 8d) 3,695 1,175 Selling and distributio n expenses (note 8c) 80 29 Intra-group merger co sts (note 8e) 605 756 Other 917 2,233 92,334 27,276 Details of Directors’ remunera tion, Directors’ tran sactions and Directors’ int erests a re set ou t i n th e pa rt of the Direct ors’ Remunera tion Report described as h aving been audited, w hich form s part of th ese Consolidated Fin ancial Statements. 10 N et finance cost ($’000) Notes 2021 2020 Interest on bank borro wings 22 96,678 90,008 Interest on Senior Secure N otes 22 106,993 Interest expense on lo ng term paya bles 25 4,101 6,716 Interest expense on sho rt term lia bilities 55 Less amounts incl uded in the cost of quali fying assets 13,14 (174,153) (93,581) 33,674 3,143 Finance and arra ngement fees 12,420 4,042 Commission charges for bank guarant ees 2,404 - Unamorti sed financing costs related to Greek RBL and Egypt RBL 133 18,108 - Other finance co sts and bank charges 2,972 744 Loss on interest rate hedge s 7,002 - Unwinding of discount on right of use asset 1,316 919 133 On 18 November 2021 t he Group fully repaid the Prinos Project Finance (Greek RBLs) before the maturity date of 31 Decemb er 2024 and, as su ch, the unamor tised financi ng costs have b een expensed in the period. FINANCIAL STAT EMENTS Page 216 of 273 ($’000) Notes 2021 2020 Unwinding of discount on provision for deco mmissioning 8,722 247 Unwinding of discount on deferred considerati on 12,854 - Unwinding of discount on co nvertible loa n 3,159 - Mark- to -ma rket on contingent considerati on 1,626 - Less amounts incl uded in the cost of quali fying assets (6,877) (4,109) Total finance co sts 97,380 4,986 Interest income fro m time deposits (2,950) (493) Total fi nance income (2,950) (493) Foreign exchange (ga in)/losses 6,922 (15,445) Net financin g (income)/costs 101,352 (10,952) 11 Taxa tion (a) Taxation charge ($’000) 2021 2020 Corporation tax - curren t year (44,922) (1,171) Corporation tax - prior y ears 353 404 Deferred ta x (Note 15) 39,157 21,508 Total taxati on (expense)/income (5,412) 20,741 (b) Reconciliation of the tot al tax charge The Group calcula tes its i ncome tax expense by applying a weigh ted average t ax rate calcul ated based on the statutory tax rates of each co untry weighted according to th e profit or loss bef ore tax ea rned by the Group in each jurisdiction where deferred tax is recognised or ma terial current ta x charge arises. The effective ta x rate for the period is 6% (31 Decem ber 2020: ( 18 ) %). FINANCIAL STAT EMENTS Page 217 of 273 The tax (cha rge)/credit of the period can be reco nciled to the loss per the consolidated income statement as follows: ($’000) 2021 2020 Loss before ta x (90,742) (113,599) Tax calcula ted at 32.8% weighted average rate ( 2020: 24.9%) 134 29,721 28,232 Impact of differen t tax rates (5,176) 326 Utilisation of unrecogn ised deferred tax/ (Non recogniti on of deferred tax) 2,953 (2,544) Permanent differen ces 135 (34,470) (5,251) Foreign taxes (244) (1,081) Tax effect of non -taxable income & allo wances 1,348 649 Other adjustments 103 6 Prior year tax 353 404 Taxation (expens e)/income (5,412) 20,741 12 Loss p er share Basic earnings per ordin ary share amounts are calculated by dividing net income for the year attributable to ordinary equit y holders of the paren t by the weighted a verage number of ordinary shares out standing during the year. Diluted inco me per ordina ry share amount s is calcu lated by dividing net inco me for the year at tributable to ordinary equity ho lders of the pa rent by the weighted a verage number of ordinary shares outstandin g duri ng the year plus the weigh ted average nu mber o f ordinary shares that would be issued if dilutive employee share options were converted into ordinary shares. Given the reported loss for the year, the eff ect of such outstandin g shares is not dilutive. ($’000) 2021 2020 Total loss attribu table to equity shareholders (96,046) (91,414) Effect of diluti ve potential ordinary shares - - (96,046) (91,414) 2021 2020 Basic weighted avera ge number of sha res 177,278,840 177,089,406 Dilutive potential ordin ary shares - - Diluted weigh ted average nu mber of sha res 177,278,840 177,089,406 Basic (loss)/ earnings per share $(0.54)/share $(0.52)/share Diluted (lo ss)/earnings per sha re $(0.54)/share $(0.52)/share 134 For the r econciliation o f the tax rate, the weighted average rate of the statutory tax rates in Greece (25%), Israel (23%), I taly (24%), Cyp rus (12 .5%), United Kingdom (40%) and Egypt (40.55%) was used weighted according to the profit or loss before tax earned by the Group in each j urisdiction, excludi ng fair value uplif ts profits. 135 Permanent differences mainly consisted o f non-deductible expenses, consolidation differences, intercompany dividends and foreign exchang e differences. FINANCIAL STAT EMENTS Page 218 of 273 13 Prop erty, plant & equipmen t Property, Pla nt & Equipment at Cost ($’000) Oil and gas assets 136 Leased assets 137 Other property , plant and equipment Total At 1 Janua ry 2020 2,147,163 9,117 56,699 2,212,979 Additions 411,932 1,951 1,581 415,464 Acquisition of subsidiary 646,507 40,549 2,132 689,188 Lease modifica tion - (1,519) - (1,519) Disposal of assets (4,795) - (5,328) (10,123) Capitali sed borrowing cost 94,929 - - 94,929 Capitalised deprecia tion 576 - - 576 Change in decommission ing provision 39,620 - - 39,620 Transfer from Intangible assets 41,822 - - 41,822 Foreign exchange impa ct 52,575 743 5,153 58,471 At 31 Decembe r 2020 3,430,329 50,841 60,237 3,541,407 Additions 345,180 6,428 1,623 353,231 Lease modifica tion - 2,261 - 2,261 Disposal of assets (23) - (34) (57) Capitali sed borrowing cost 178,891 - - 178,891 Capitalised deprecia tion 227 - - 227 Change in decommission ing provision (13,174) - - (13,174) Transfer from Intangible assets 14,317 - 26 14,343 Foreign exchange impa ct (57,960) (2,285) (2,806) (63,051) At 31 Decembe r 2021 3,897,787 57,245 59,046 4,014,078 Accumulat ed Depreciation At 1 Janua ry 2020 263,512 3,448 43,748 310,708 Charge for the perio d Expensed 18,105 3,073 2,149 23,327 Impairments 64,727 - 572 65,299 Foreign exchange impa ct 30,299 458 4,044 34,801 At 31 Decembe r 2020 376,643 6,979 50,513 434,135 Charge for the perio d Expensed 81,234 12,274 1,998 95,506 136 Included w ithin the carrying amount of Oil & Gas assets are development costs of the Karish field related to the Sub Sea and On - shore constructi on. In line with the agreement with Israel Natural Gas Lines (“INGL”), s hortly after del ivery of first ga s th ere will be a transfe r of title (“hand over”) of thes e assets t o INGL. For furt her details refe r to note 25 . 137 Included in the carrying amount of leased assets at 31 December 2021 is right of use assets related to Oil and gas properties and Other property, plant and equipment o f $25.1 million and $2.9 million respectively. The depreciation charged on these classes for t he year ending 31 D ecember 2021 was $11.7 millio n and $0.6 m illion respectively. FINANCIAL STAT EMENTS Page 219 of 273 Property, Pla nt & Equipment at Cost ($’000) Oil and gas assets 136 Leased assets 137 Other property , plant and equipment Total Impairment 774 774 Disposal of assets - - 21 21 Foreign exchange impa ct (16,129) (151) 449 (15,831) At 31 Decembe r 2021 442,522 19,102 52,981 514,605 Net carrying amo unt At 31 Decembe r 2020 3,053,686 43,862 9,724 3,107,272 At 31 Decembe r 2021 3,455,265 38,143 6,065 3,499,473 Borrowing costs capitalised f or qua lifying assets during the year are ca lculated by apply ing a weighted average interest rate of 5.49% for t he y ear ended 31 Dec ember 20 21 ( for the year ended 31 December 2020: 8.72%). The additions to Oil & Ga s properti es for the year ended 31 December 2021 is mai nly due to development costs of Karish field related to the EPCIC contract (FPSO, Sub Sea and On -shore construction cost) at the amount of $247 million, development cost for Cassiopea project in Italy at the amount of $38 million and NEA/NI project in Egypt at t he amou nt of $52 million. Management assessed the CGUs in Egypt, Italy, Israel and the UK for indicators of impairment and none were identified. In Gr eece ma nagement has perfo rmed a value in use (VIU) as sessment of the Prinos cash genera ting un it (CGU) followin g identification of t riggers fo r impairm ent reversal . Mana gement’s assessment no ted that Epsilon is currently in the development pha se, and alth ough robust tec hnical analysis suppo rts product ion a t the 2P level, given that the pro duction of the fi rst 3 w ells ha s not commenced, there is still signif icant uncerta inty that the releva nt product ion levels wil l be ach ieved; EU Emissions Trading System (ETS) prices are set to increase, resulting in high er opera tional costs in Greece and possible additio nal taxes for exceedin g GHG emis sio ns. These fa ctors together with sen sitivity analysis performed resulted in ma nagement concluding that no impairm ent reversal was required. Management will reassess the positio n once the Epsilon field starts produci ng. During the yea r 2020 the Group executed an impairment test f or the Prino s CGU (Prinos and Epsilo n fields). In that peri od, indica tors o f impa irment were noted for the Prino s CGU, bei ng a reduct ion in both short-term (Dated Brent fo rward cu rve) a nd l ong -term price assumptions and a c hange i n t he Grou p’s Prinos field production forecast, which resulted in an impairment of $65.3 million in the carrying value of the Prinos CGU. FINANCIAL STAT EMENTS Page 220 of 273 Depreciation and am ortisation for the year ha s been recognised as foll ows: ($'000) 2021 2020 Cost of sales (n ote 8a) 94,647 22,052 Administration expenses (n ote 8b) 2,480 780 Other operating (i ncome)/expenses 97 1,293 Capitali sed depreciation in oil & gas properties 227 576 Total 97,451 24,701 Cash flow statement recon ciliations: Payment for additions to property , plant and e quipment ($’0 00) 2021 2020 Additions to property, plant and equipment 521,435 550,589 Associated cash flows Payment for additions to property, plant and equipment (403,503) (403,968) Non-cash moveme nts/presented in other cas h flow lines Borrowing cost capitalised (178,891) (94,929) Right- of -use asset additions/modifications (8,689) (1,951) Lease payments related to capital activities 10,852 6,645 Capitalised share-based pay ment charge (200) (99) Capitalised depreciation (227) (576) Change in decommissioning pr ovision 13,174 (39,620) Movement in working capital 46,049 (16,091) 14 In tangible assets ($’000) Exploration and evaluatio n assets Goodwill Other Intangible assets Total Intangibles at Cost At 1 Janua ry 2020 71,601 75,800 1,941 149,342 Additions 8,379 - 612 8,991 Acquisition of subsidiary 115,438 25,346 18,348 159,132 Capitali sed borrowing costs 2,761 - - 2,761 Transfers to pro perty, plant and equipment (41,822) - - (41,822) Exchange differences 1,856 - 1,454 3,310 31 December 2020 158,213 101,146 22,355 281,714 Additions 47,995 - 2,413 50,408 Capitali sed borrowing costs 2,202 - - 2,202 Change in decommission ing provision 2,141 2,141 FINANCIAL STAT EMENTS Page 221 of 273 ($’000) Exploration and evaluatio n assets Goodwill Other Intangible assets Total Transfers to property , plant and equipment (265) - (14,078) (14,343) Exchange differences (4,953) - (983) (5,936) At 31 Decembe r 2021 205,333 101,146 9,707 316,186 Accumulat ed amortisation and impairmen ts At 1 Janua ry 2020 261 - 1,405 1,666 Charge for the perio d - - 1,375 1,375 Impairment 2,936 - - 2,936 Exchange differences (193) - 114 (79) 31 December 2020 3,004 - 2,894 5,898 Charge for the perio d - 1,946 1,946 Impairment 82,125 - - 82,125 Exchange differences (1,850) - (74) (1,924) 31 December 2021 83,279 - 4,766 88,045 Net carrying amo unt At 31 Decembe r 2020 155,209 101,146 19,461 275,816 At 31 Decembe r 2021 122,054 101,146 4,941 228,141 Cash flow statement r econciliations: Payment for a dditions to intangible ass ets ($’000) 2021 2020 Additions to intangible assets 54,750 11,753 Associated cash flows Payment for additions to intangible assets (48,674) (15,041) Non-cash moveme nts/presented in other cas h flow lines Borrowing cost capitalised (2,141) (2,761) Change in decommissioning pr ovision (2,202) - Movement in working capital (1,733) 6,049 Borrowing costs capital ised for quali fying a ssets for the year ended 31 Decembe r 2021 amounted to $2.1 mi llion (31 December 2020: $2.8 million). The interest rates used was 5.49% for the year ended 31 December 2021 (31 December 2020: 8.72 %). Goodwill arises principally because of the requirement to recognise deferred tax asset s and liabilities for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed in a business combina tion. In 2021 two appraisal wells were drilled targeting Gl engorm South and Glengo rm Cen tral. Both wells were unsuccessful an d did not find hy drocarbons. All wel ls have been plugged a nd abandon ed. Therefore the related costs of th e unsuccessful wells and th e associat ed fa ir value u plift recognised a s part o f the Edison E&P acquisitio n (as discussed in note 6) wer e impa ired ($79.8 million). FINANCIAL STAT EMENTS Page 222 of 273 15 Net de ferred tax (liabi lity)/asset Deferred ta x (liabilities)/assets ($’000 ) Property, plant and equipment Right of use asset IFRS 16 Decom- missioning Prepaid expenses and other receivables Inventory Tax losses Deferred expenses for tax Retirement benefit liability Accrued expenses an d other short-term liabilities Total At 1 Janua ry 2020 (137,998) (1,078) - (971) 733 90,412 - 913 7,646 (40,343) Acquisition of subsidiary (Note 6) 10,080 60,752 70,832 Increase / (decrease) for the period through: Profit or loss (No te 11) 8,381 819 8,877 (3,474) (98) 7,384 53 (434) 21,508 Other comprehensive income - - - 130 - - - 1,603 1,733 Exchange difference (4,006) (33) - (336) 60 7,293 - 84 655 3,717 31 December 2020 (123,543) (292) 8,877 (4,651) 695 165,841 - 1,050 9,470 57,447 Increase / (decrease) for the period through: Profit or loss (Not e 11) 9,848 (718) 50,808 890 (254) (32,501) 5,020 ( 932) 6,996 39,157 Other comprehensive income 1,586 1,586 Reclassificatio ns in the current period 138 (28,442) 33,644 2,025 (233) (4,903) 6, 010 200 (8,301) - Exchange difference 1,584 20 (3,889) 165 (25) (8,257) (52) (363) (10,817) 31 December 2021 (140,553) (990) 89,440 (1,571) 183 120,180 11,030 266 9,388 87,373 138 These reclassif ications p rimarily relate to the as sets and liabilities acq uired in the Ed ison E&P acquisi tion which completed in De cember 20 20 and reflect updated information on the all ocation of the deferred ta xes across the r elevant categ ories. FINANCIAL STAT EMENTS Page 223 of 273 ($'000) 2021 2020 Deferred tax liabil ities (67,425) (68,609) Deferred tax assets 154,798 126,056 87,373 57,447 At 31 December 2021 the Group had gro ss unused tax losses o f $ 1,123.8 million ( as of 31 December 2020: $783.6 milli on) avai lable to offset against futu re profits and other tem porary dif ferences. A deferred tax asset of $120.2 m illion (2020: $165.8 milli on) has been reco gnised on tax lo sses of $449.0 m illion, based on the forecasted pr ofit models as updated wit h the 31 December 2021 proved and probable reserve profi les. Th e Grou p did not reco gnise def erred tax on tax lo sses and other difference s of total amount of $1,090.4 milli on. In Greece, Italy and the UK, the net deferre d ta x asset for carried fo rward losses recogni sed in excess of the other net taxable temporary differences was $59.3 million, $0.19 million and $13.8 m illion (2020: $58.7 mil lion, $20.6 million and $4.2 million) res pectively. An additional deferred ta x asset of $81.4 millio n (2020: $42.6 million) arose primaril y i n respect of deduct ible t emporary differences related to property, plant and equipmen t, decommission ing provi sions a nd acc rued expenses, result ing in a tota l deferred tax asset of $154.9 mill ion (2020: $126.1 milli on). Greek tax losses (Prinos are a) can be ca rried forwa rd without lim itation up until the relevant concessio n agreement expires (by 2039), wherea s, the ta x losses in Is rael, Ita ly an d the Un ited Kingdo m can be carried forward in definitely. Based on the Prinos area fo recasts ( including the Epsilo n development), the deferred tax asset is fully utilised by 2029. In Italy, deferred tax asset of $67.9 mil lion recognised on de commissio ning co sts schedu led up to 2030 wh en th e Ital ian a ssets expect to enter into a declin ing phase. Finally, in the UK, decommissio ning lo sses is expect ed to be tax relieved u p until 2027, whereas, deferred tax asset recognised on UK tax losses is ful ly offset aga inst def erred t ax l iabilities on temporary differences. On 3 March 2021 it was an nounced in the UK budget tha t the UK non - ring fence corporation tax rate wil l increase fro m 19% to 25% with ef fect from 2023. The Group does not cu rrently re cogni se any deferred tax assets in respect of UK non -ring fen ce tax lo sses and therefore t his rate change did no t impact the tax disclosures. 16 Cash a nd cash eq uivalents ($'000) 2021 2020 Cash at bank 729,390 197,514 Deposits in escrow 1,449 5,425 730,839 202,939 Bank demand deposits comprise deposits a nd other short -t erm money market deposit accounts that a re readily converti ble into known amounts of cash. The effecti ve i nterest rat e o n sh ort -term bank deposits was 0.386% for the yea r ended 31 Dec ember 2021 (yea r ended 31 December 2020: 1.07%). Deposits i n escro w comprise mainly cash ret ained as a bank securi ty pledge for the Gro up’s perf ormance guarantees in it s exploration blocks. These deposits can be used for fundin g the exploration activities of the respective blocks. FINANCIAL STAT EMENTS Page 224 of 273 17 R estricted cash Restricted cash co mprises m ainly ca sh retained u nder th e Israel Senior Secure d Notes requi rement as follows: • Short term - $96.76 million Interest Payment Account for th e accrued interest peri od un til 31 December 2022 ( less coupons actually paid) and f rom 31 D ecember 2022 the Interest Reserv e Account will be funded 6 m onths forwa rd • Long term - $100 millio n D ebt Pa yment Fund that wo uld be released upon achievi ng th ree quarters annualised product ion of 3.8 BCM/yea r from Karish as set in Israel. The remai ning amount of $2.96 mill ion incl uded in restri cted cash is related to cash co llateral pro vided under a letter of credit facility f or issuing bank guarantees for Gr oup’s activities in Is rael up to $75 million. 18 Inv entories ($’000) 2021 2020 Crude oil 32,832 16,946 Raw materials and suppli es 54,371 56,073 Total inven tories 87,203 73,019 The Group’s ra w materials and supplies consu mption for the year ended 31 December 2021 was $6.5 million (year e nded 31 December 2020: $1.3 million) . The Group recorded impai rment an d write -off cha rges on inventory of $0.6 million for the yea r ended 31 December 2021 (y ear ended 31 December 202 0: $0.1 mill ion) related to materials writt en off (note 8e) . FINANCIAL STAT EMENTS Page 225 of 273 19 Trad e and other r eceivables ($’000) 2021 2020 Trade and ot her receivables - Curren t Financial items: Trade receivables 139 178,804 226,118 Receivables from partners under JOA 5,138 Other receivables 140 38,683 Government subsidi es 141 3,212 3,481 Refundable VAT 42,376 49,414 Receivables from related parties (not e 28) 1 22 268,214 279,035 Non-financial item s: Deposits and prepay ments 142 17,139 38,756 Deferred insurance expen ses 2,095 507 Accrued interest inco me 1,078 41 20,312 39,304 288,526 318,339 Trade and ot her receivables - Non -Current Financial items: Other tax recoverable 16,478 16,686 16,478 16,686 Non-financial item s: Deposits and prepay ments 12,337 13,409 Other deferred expen ses 143 22,958 - Other non-cu rrent assets 866 1,473 36,161 14,882 52,639 31,568 139 Included within t his balance is an amount of $21.2 million receivable from INGL as a result o f the relevant milestones being achieved, in line with the agreem ent. Refer to note 25 fo r further d etails on the agreement wi th INGL. 140 Included in othe r receivables is $29 .4 million cash on ac count in rela tion to the hedges in Italy. 141 Government subsidies ma inly relate t o grant s fr om G reek Publi c Body for Employment and Social Incl usion ( OAED) to financially support the Kaval a Oil S.A. labou r cost f rom manufacturing under the ac tion plan for promoting sustainable employment in und erdeveloped or deprived districts of Gre ece, such a s the area of Kavala. 142 Included in deposi ts an d prepayments, are mainly prepaym ents for goods and service s under the GSP Engi neering, Procurement, Construction and Installatio n Contract (EP CIC) for Epsilon project. 143 In accordance with the GSPAs signed with a group of gas buyers, the Company has agreed to pay compensati on to these counterparties due to the fact the gas supply date is taking place bey ond a certain d ate as d efined in the GSPAs ( being 30 J une 2021). Th e compe nsation, amounting to $23 million) has b een f ully pai d as of the reporting date. The compensati on presen ted as a non-current asset (under the c aption deferr ed expenses) and will be accounted for as variable consideration in line with IFRS 15 onc e production comm ences and gas is delivered to th e offtakers. FINANCIAL STAT EMENTS Page 226 of 273 The table below summari ses the maturity profile of the Group receivables: 31 December 20 21 ($’000) Carrying amounts Contractua l cash flows 3 months or less 3-12 months 1-2 years 2- 5 years Trade receivables 178,804 178,804 2,832 175,972 - - Government subsidies 3,212 3,212 3,212 - - Refundable VAT 42,376 42,376 1,774 40,602 - - Receivables from partners under JOA 5,138 5,138 5,138 - - - Other receivables 38,683 38,683 36,105 2,578 - - Other tax recoverable 16,478 16,478 - - - 16,478 Total 284,691 284,691 45,849 222,364 - 16,478 31 December 2020 ($’000) Carrying amounts Contractua l cash flows 3 months or less 3-12 months 1-2 years 2- 5 years Trade receivables 226,118 226,118 92,194 133,924 - - Government subsidies 3,481 3,481 - 3,481 - - Refundable VAT 49,414 49,414 34,618 14,796 - - Other tax recoverable 16,686 16,686 - - - 16,686 Total 295,699 295,699 126,812 152,201 - 16,686 20 Shar e capital On 30 June 2017, the Company became the parent company of the Group through the acquisition of the full share capital of Energean E&P Holdings Limited, in exchange for 65,643,120 £0.01 ($0.013) shares in the Company issued to the previous shareholders. As of t his date, the Company’s share capital increased from £50 thousa nd ($65k) to £706 thousa nd ($917k). Fro m that po int, in th e consolidated financi al statements, th e share capi tal became tha t of Energean plc. The previ ously reco gnised sh are capital of $14. 9 million and share premium of $125.8 million was eliminated with a corresponding positive merger reserve recognised of $139. 9 million. T he below tables outli ne the share capital of the Company. Issued and a uthorised Equity share capital allotted and fully paid Share capi tal ($’000) Share premiu m ($’000) At 1 Janua ry 2020 and at 31 Dec ember 2020 177,089,406 2,367 915,388 Issued during the year - New shares - - - - Share based pay ment 513,154 7 - At 31 Decembe r 2021 177,602,560 2,374 915,388 FINANCIAL STAT EMENTS Page 227 of 273 21 N on-controlling i nterests Voting right s (%) Share of lo ss ($’000) Accumulat ed balance ($’000) Name of subsidiary Year ended 31 December 2021 Year ended 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2020 Energean Israel Ltd - 30.00 (106) (3,173) - 266,299 Total - 30.00 (106) (3,173) - 266,299 Material partly-ow ned subsidiaries Energean Israel Limited On 25 February 2021, the Group completed the acquisit ion of the remaining 30% minority interest in Energean Israel Limit ed fr om Kerogen Investments No.38 Lim ited, Ener gean now own s 100% of Energean Israel Limited. This resulted in a reduction of the Group ’s reported non -co ntrolling interest balance to $ni l a s at tha t da te. The Total Co nsideration includes: • An u p- front paym ent of $175 m illion (the “Up - Front Co nsideration ”) pai d at completi on of the transact ion • Deferred cash considera tion am ounts tot alling $180 million, which a re expected to be funded from future cash flows an d optimi sation of the group capital structu re, post -first gas from the Kari sh project. The deferred consid eration is discounted at the selected unsecured lia bility rate of 9.77%. • $50 mi llion of convertible loan notes (the “Convertible Loan Notes”), which have a maturity date of 29 December 2023, a stri ke price of £9.50 a nd a zero-co upon ra te Following is a schedule o f additional interest acqu ired in Energean Israel Limi ted: $'000 Cash considerat ion paid to non -controlling shareho lders at completion 175,000 Deferred cash considerati on 154,499 Convertible Loa n Notes - Liabili ty Component 38,337 Convertible Loa n Notes - Equ ity Instrumen t Component 10,459 Cost related to the transaction 1,677 Carrying valu e of the 30% minority interest (266,193) Difference reco gnised in reta ined earnings 113,779 The Acquisit ion of the remaining 30% m inority interest in Energea n Isra el added 2P reserves of 29.5 bill ion cubic metres ("Bcm" ) of gas and 30 million barrels of liquids, representing appro ximately 219 million barrels of oil equiva lent ("MMboe") in tota l, to the Group. The summarised financial information of Energean Israel Limited for the year ended 31 December 2020, is provided below. This in formatio n is based on amounts before int er -com pany eliminations. FINANCIAL STAT EMENTS Page 228 of 273 Summarise d statement of financial posit ion as at 31 Decembe r 2020: ($’000) 2020 Current assets 38,725 Non current assets 2,178,689 Current liabil ities (1,207,374) Non-current liabilities (122,759) Total equity 887,281 Summarise d statement of profit or loss for 2020 : ($’000) 2020 Administration expenses (3,909) Exploration and eval uation expenses (502) Other expenses (2,701) Operating loss (7,112) Finance income 2,063 Finance costs (326) Loss for the y ear before tax (5,375) Tax income 495 Net loss for th e period (4,880) Other comprehensiv e loss: Items that may be reclassified subsequently to profit or loss: Cash Flow h edge, net of tax (7,483) Tax relating to item s that may be reclassified subseque ntly to profit or loss 1,721 Other compreh ensive (loss)/inco me (5,762) Total compreh ensive income/(lo ss) for the perio d (10,642) FINANCIAL STAT EMENTS Page 229 of 273 22 B orrowings ($’000) 2021 2020 Non-current Bank borrowings - afte r two years but within five years 4.5% Senior Secured notes due 2024 ($625 mil lion) 617,060 - 4.875% Senior Secure d notes due 2026 ($625 mill ion) 615,966 - Senior Credit faci lity ($237 million) - 227,848 EBRD Senior Faci lity Loan ($180 million) - 84,420 EBRD Subordinated Fa cility Loan ($20 mil lion) - 17,824 Convertible loa n notes ($50 million) – (note 19) 41,495 - Bank borrowings - m ore than five years 6.5% Senior Secured notes due 2027 ($450 million) 442,107 - 5.375% Senior Secure d notes due 2028 ($625 mill ion) 615,451 - 5.875% Senior Secure d notes due 2031 ($625 mill ion) 615,047 - Carrying valu e of non -current borrowings 2,947,126 330,092 Current 6.83% EBRD Senior Fa cility Loan due 2024 ($97,6 million) - 19,020 Senior Credit Facil ity for the Karish-T anin Development ($1,450 million) - 1,093,964 Carrying valu e of current borrow ings - 1,112,984 Carrying valu e of total borrowings 2,947,126 1,443,076 The Group has provided security in respect of certain borrowings in the form of share pledges, as well as fixed and floating ch arges over certain assets o f the Group. $2,500,000,000 se nior secured notes: On 24 March 2021, the Group completed th e issua nce of $2.5 billio n aggregate principal amount of senior secured notes. The Notes have been issu ed in four series as fo llows: • Notes in an aggregate principal amount of $625 million, ma turing o n 30 March 2024, w ith a fixed annual interest rat e of 4.500%. • Notes in an aggregat e prin cipal amount of $625 million, ma turing on 30 March 2026, wi th a fixed annual interest rat e of 4.875%. • Notes in an aggregate principal amount of $625 million, ma turing o n 30 March 2028, w ith a fixed annual interest rat e of 5.375%. • Notes in an aggregat e prin cipal amount of $625 million, ma turing on 30 March 2031, wi th a fixed annual interest rat e of 5.875%. The interest on ea ch series o f the Notes is payable sem i -annual ly, on 30 March and on 30 September of each year, beginn ing on 30 September 2 021. FINANCIAL STAT EMENTS Page 230 of 273 On 29 April 2021 the Group satisfied t he escrow release conditions in respect of its $2.5 bi llion aggregate principal a mount of the Notes off ering. As a result o f sa tisfying the said escrow release co nditions, the proceeds of the Offering we re release d from escrow . The Notes are listed for trading on the TACT Institutional of t he T el Avi v Sto ck Exchange Ltd. (the “ TASE ” ). The use of proceeds from the Offerin g is as follows: • To repay outstanding Senior Credit Facility for the Karish -T anin Development facility and outstanding amount un der a $700 million term loan; • To replace the existing undra wn amounts avai lable under those facil ities; • To fund certain reserve accounts; and • For transacti on expenses and the Group's genera l corpora te purposes. The Company had underta ken to provide the follow ing collateral in favour of the Trustee: • First rank Fixed cha rges over the sh ares of Energean Israel Limited, Energean Israe l Fi nance Lt d and Energean Israel Tra nsmission Ltd, the Karish & T anin L eases, the gas sales pur chase agreements (“GSPAs”), several bank a ccounts, Operating Permi ts (once issu ed), Insurance policies, the Com pany exploration licenses (Block 12, Blo ck 21, Blo ck 23, Block 31 and 80% of the licenses under “Zone D”) and the INGL Agreement. • Floating cha rge o ver all of the presen t and future ass ets of Energean Israel Limited and Energea n Israel Finance Ltd. • Energean Power FPSO (subject to using comm ercially reasonable ef forts, including obta ining Israel Petroleum Comm issioner approval and an y other applicabl e governmental au thority). Senior Credit Facility for th e Karish -Tanin Develop ment: On 29 Apri l 2021, follow ing th e release of the senior secured notes proceeds of $ 2.5bn, the Company repaid its existing outstan ding facility. $450,000,000 senio r secured notes: On 18th No vember 2021, the Group completed th e i ssuance of $450 million o f senior secured notes, maturing on 30 April 2027 a nd carrying a fi xed annual interest rate of 6.5%. The interest on the notes is paid semi -annu ally on 30 April and 30 October of each year, beginning on 30 April 2022. The notes are liste d for trading on the Offi cial List of the Internatio nal Stock Exchange (“TISE”). The use of proceeds from the Offerin g is as follows: • To repay a ll amount s ou tstanding under, and cancel all commitme nts made available pursu ant to certain of its existing debt fa cilities, being the Egypt reserve-ba sed lending fa cility and th e Greek reserve-based len ding facility plus subordin ated debt; • To pay fees and other expenses relat ed to the Offering; a nd • For general corpo rate purposes of the Gro up The issuer is Energean plc and the Guarantors are Energean E&P Holdin gs, Energean Capital Ltd, Energean Egypt Ltd, an d Energean Egypt S ervices JSC. The company undertook to provide the fol lowing collateral in favou r of the Security Trustee: • Share pledge of Energean Ca pital Lt d, Energean Egypt Ltd, Ener gean Italy Ltd a nd Energean Egypt Services JSC • Fixed charges o ver the ma terial bank accounts of the Compan y an d the Guara ntors ( other than Energean Egypt Services JS C) • Floating charge over th e assets of Energean plc (ot her than the shares of Energean E&P Holdings) FINANCIAL STAT EMENTS Page 231 of 273 EBRD Senior Facility, EBRD Subordinated Fac ility, New Egypt RBL Facility: On 18 No vember 2021, follow ing the rel ease o f t he se nior secured notes proceed s of $450 m illion, the Company repaid its e xisting de bt fa cilities, being t he New Egypt reserv e based l ending facilit y an d the Greek reserve based lendin g facil ity plus subordinated debt. Energean Oil and Gas SA (‘ EOGSA') loa n for Epsilon/P rinos Developmen t: On 27 December 2021 EOGSA entered into a loa n agreement with Black Sea Tra de and Development Bank for €90.5 million to fund the development of Ep silon Oil Fie ld. The loan is subject to an interest rate of 3,45 % plu s EURIB OR, in additi on to fees and comm ission a nd ha s f inal maturity dat e 7 years an d 11 months after th e First Disbursement Date. On 27 December 2021 EOG SA entered into an agreem ent with Greek Sta te to issue €9.5 million of note s maturing in 8 yea rs with fix rate 0,31% plus margi n as the f ollowing table: Year Margin 1 3.0% 2 3.5% 3 3.5% 4 4.5% 5 4.5% 6 4.5% 7 5.5% 8 6.5% Capital management The Group defines capital as the tota l equi ty and n et debt of the Group. Capital is mana ged in order to provide returns for shareholders and benefi ts to stakeholders and to safeguard the Group’s ability to continue as a goi ng concern. Energean is not subject to any externally imposed capital requirements. To maintain or adjust the capital structure, the Group may put in place new debt facilities, issue new shares fo r ca sh, repay debt, engage in active po rtfolio mana gement, adjust the dividend pa yment to sh areholders, o r undertake other such restructuring act ivities as appropriate. ($’000) 2021 2020 Net Debt Current borrowin gs - 1,112,984 Non-current borrowings 2,947,126 330,092 Total borrowings 2,947,126 1,443,076 Less: Cash and cash equivalent s (730,839) (202,939) Restricted cash (199,729) - Net Debt ( 1) 2,016,558 1,240,137 Total equity (2) 717,123 1,194,392 Gearing Ratio (1)/(2): 281.2% 103.8% FINANCIAL STAT EMENTS Page 232 of 273 Reconciliation of liabiliti es arising from financing acti vities ($'000) 1 January Cash inflows Cash outflows Reclass- ification Acquisition of subsidiary Additions Lease modification Borrowing costs including amortisation of arrangement fees Derivatives de- designated as cash flow hedges during the period Foreign exchange impact Fair value changes 31 December 2021 1,622,354 3,243,000 (2,006,761) (35,373) - 187,778 2,261 251,471 4,641 8,691 28,843 3,307,005 Senior Secured Notes - 2,950,000 (115,717) (35,640) - - - 106,988 - - 2,905,631 Convertible loa n notes (note 19) - - - - - 38,337 - 3,158 41,495 Long -term borr owings 330,092 175,000 (537,873) (1,713) - - - 35,277 (783) - - Current borr owings 1,112,984 118,000 (1,320,989) 2,080 - - - 87,460 465 - - Lease liabiliti es 47,623 - (10,852) - - 6,304 2,261 1,316 (2,227) 44,425 Deferred licen ce payments 69,518 - (14,344) - - - - 2,056 - - 57,230 Contingent Con sideration 55,222 23,228 78,450 Deferred consid eration of acquisition of m inority - - - - - 143,137 - 12,855 11,236 - 167,228 Derivatives n ot designated as hedging instrume nts 6,915 - (6,986) - - - - 2,361 4,641 - 5,615 12,546 2020 999,551 557,000 (140,621) (1,130) 43,347 57,173 (1,519) 100,522 434 7,597 1,622,354 Long -term borr owings 877,931 237.000 (53,033) (740,579) - - - 8,669 104 - 1,112,984 Current borr owings 38,052 320,000 (61,437) 735,649 80,720 330,092 Lease liabiliti es 6,111 - (6,644) 3,800 43,347 1,951 (1,519) 247 330 47,623 Deferred licen ce payments 78,139 - (14,843) 6,222 69,518 Contingent con sideration 55,222 - 55,522 Derivatives n ot designated as hedging instrume nts (682) (4,664) 4,664 7,597 6,915 FINANCIAL STAT EMENTS Page 233 of 273 23 R etirement bene fit liabilit y The Group operates defi ned benefit pension plans in Greece and Italy . Under Itali an law , Energean Ita ly Spa is required to oper ate a Target Reti rement Fun d “TFR” f or its lo cal employees. This is technically a defined benefit scheme, tho ugh has no pension assets, with the liability measured by independent a ctua ries. In accordan ce with the provisions of Greek labour law, emplo yees are entitled to compensat ion in case of dismissal or retirement. T he amount of compensation varies depending on salary, years of service and the manner of termination (dismissal or retirement). Employees who resign are not entitled to compensatio n. The compensation payable in case of retirement is equal to 40% of the compensation which wou ld be payable in case of unjusti fied dismis sal. These plans are not funded and are defined benef it plans in accordance with IAS 19. The Group charges the accrued ben efits in ea ch perio d with a co rrespondin g increase in t he rela tive actua rial liability. T he payments ma de to retirees i n every period a re charged agai nst this liability. The liabilities of the Gro up arising from the obligation to pay term ination indemniti es are determined through actu arial stu dies, conducted by independent actua ries. 23.1 Provision f or retirement b enefits ($’000) 2021 2020 Defined benefit obliga tion 2,767 7,839 Provision for reti rement benef its recognise d 2,767 7,839 Allocated as: Non-current portion 2,767 7,839 2,767 7,839 23.2 Defined benefi t obligati on ($’000) 2021 2020 At 1 January 7,839 4,265 Change in estima te 144 (3,463) Acquisition of subsidiary - 3,021 Current service cost 191 364 Interest cost 13 39 Extra payments or expense s 775 557 Actuarial losses - fro m changes in financi al assumptions 162 49 Benefits paid (2,314) (866) Transfer in/( out) (34) Exchange differences (402) 410 At 31 Decembe r 2,767 7,839 144 During the year there was a change in the defined benefit estimate in Gre ece, specific ally in relation t o the periods of servic e to which an en tity attributes ben efit. FINANCIAL STAT EMENTS Page 234 of 273 23.3 Actuarial assu mptions an d risks The most rec ent actua rial valuation w as carried ou t as of 31 December 202 1 and i t was based on the following key assumption s: 2021 2020 Greece Discount rate 2.00% 1.70% Expected rate of sala ry increases 3.84% 3.54% Average life expectancy over retirement age 19.4 years 19.4 years Inflation rate 2.00% 1.84% Italy Discount rate 0.94% - Expected rate of sa lary increases N/A - Average life expectancy over retirement age 20.9 - Inflation rate 2.00% - Sensitivity analysis The sensitivity anal ysis below shows the impact on th e defi ned benefit obligati on of cha nging each assumption wh ile not changing all other assumption s. This analy sis may not be representati ve of the actual change in the defined benefit obli gation as it is unlikely that the change in the assumptions would occur in isola tion of one another as some of the assum ptions may be co rrela ted. 2021 2020 Greece Percentage Effe ct on defined benefit obligatio n Change + 0.5% in Discoun t rate - 3% - 9% Change – 0.5% in Discou nt rate 3% 9% Change +0.5% in Expect ed rate of sal ary increases 3% 8% Change -0.5% in Expecte d rate of salary increases - 3% - 8% Italy Percentage Effe ct on defined benefit obligatio n Change + 0.5% in Discoun t rate - 1% - Change – 0.5% in Discou nt rate 1% - 2021 2 020 Greece Percentage Effe ct on current service cost Change + 0.5% in Disco unt rate - 4% - 12% Change – 0.5% in Discou nt rate 4% 12% Change +0.5% in Expect ed rate of sal ary increases 5% 12% Change -0.5% in Expecte d rate of salary increases - 5% - 12% FINANCIAL STAT EMENTS Page 235 of 273 The amoun ts presented reflect t he impact from the percentage increase / (de crease) in the given assumption by +/- 0.5% on the defined benefit obligatio n and current service cost, while holding all other assumptions con stant. The pla n exposes t he Grou p to actuarial risks such as interest rate risk, longevity changes and inflation risk. Interest rate risk The present value of the def ined benefit liability is cal culated using a discount rate determined by reference to ma rket yields of high-quality corporate bonds. The estimated term of th e bon ds is consistent with the estimated term of the defin ed benefi t obli gation and it is denomina ted in Euro. A decrease in market yield on high quality corporate bonds will increase the Group’s defined bene fit liability. Longevity of members Any increase in th e life expectancy of the members w ill increase the defi ned benefit liabil ity. Inflation risk A significant proportion of the defined benefit li ability is link ed to inflation. An increase in the inflation rate will increase th e Group’s defined benefi t liability. FINANCIAL STAT EMENTS Page 236 of 273 24 Prov isions ($ '000) Decommissio ning Provision for litigation and other claims Total At 1 Janua ry 2020 13,145 133 13,278 New provisions 38,125 - 38,125 Change in estima tes 1,496 - 1,496 Refunds - (145) (145) Acquisition of subsidiary 808,994 16,375 825,369 Unwinding of discount 919 - 919 Currency tran slation adjustment 2,448 45 2,493 At 31 Decembe r 2020 865,127 16,408 881,535 Current provi sions - - - Non-current provisions 865,127 16,408 881,535 At 1 Janua ry 2021 New provisions 520 520 Change in estima tes (18,808) (4,494) (23,302) Recognised in pro perty, plant and equipm ent (13,174) Recognised in Intangi ble assets 2,202 Recognised in pro fit& loss (7,836) Payments (2,653) - (2,653) Unwinding of discount 8,722 - 8,722 Currency tran slation adjustment (50,290) (1,140) (51,430) At 31 Decembe r 2021 802,098 11,294 813,392 Current provi sions 12,366 - 12,366 Non-current provisions 789,732 11,294 801,026 Decommissioning p rovision The decommi ssioning provi sion represents the presen t value o f decommissio ning costs rel ating to o il and gas properties, which are expected to be incurre d up to 2040, when the produci ng oi l and gas properties are expected t o c ease operat ions. Th e fut ure costs are based on a com binat ion of est imates from a n externa l study completed at th e end of 2019 and in ternal estimates. T hese estim ates are reviewed regu larly to ta ke into acco unt any material ch anges to the assumption s. How ever, actu al decommissio ning costs will ultimately depend upon fut ure market prices for the necessary decommission ing works required that will reflect market condit ions at the relevant time. Furthermore, the timing of decommi ssioning i s li kely to depend on when th e f ields ce ase to produce at econ omically viable rates. This, in turn, wi ll depend upo n f uture oil and gas prices and the impact of en ergy transition and the pace at which it progresses which are in herently uncerta in. The decommi ssioning provisio n represents the present value of decommi ssioning costs relatin g to assets in Italy, Greec e, UK, Israel and Croa tia. No provision is recogni sed for Egypt as there is no legal or constructive o bligation as at 31 December 2021. FINANCIAL STAT EMENTS Page 237 of 273 Inflation assumption Discount ra te assumption Cessatio n of production assumption 2021 ($ '000) 2020 ($'000 ) Greece 1.2%- 1.6% 0.89% 2034 17,058 16,082 Italy 1.07%- 1.37% 1.23% 2022 -2040 527,801 551,464 UK 2.5% 1.49% 2023 -2031 203,246 239,708 Israel 2.2% 1.95% 2041 35,525 38,399 Croatia 1.8% 1.25% 2022 18,467 19,474 Total 802,097 865,127 Litigation and other claims provisions Litigation and oth er cla im pro vision relates t o lit igation actio ns curren tly open in Italy with the Termoli Port Au thority in respect of the fees payable under th e marine concession regarding FSO Alba Ma rina serving the R ospo Mare field in Italy. Energe an Ita ly Spa h as appeal ed these cases to the Campo basso Court of Appeal. No ne of the other cases has yet had a decisio n on the substantive issue. The Gro up provided €5.6 milli on (c$6.3 million) against an adverse outcome of thes e court cas es. Energean Italy Spa has curr ently open litigations with three municipali ties i n Ita ly related to the i mposition of real estate munici pality taxes (IMU/T ASI), interest a nd rel ated penalties concern ing t he periods 2 016 to 2019. For th e years before 2019, Ediso n SpA bears uncapped l iability for any a mount assessed according to the sale and pu rchase agreement (SPA) si gned between the companies whi le Energe an is liable fo r any tax liabili ty related to tax year 2019. For a ll three cases, Energean Italy SpA (togeth er with Edison SpA, as a ppropriate) filed a ppeals presentin g strong lega l and tec hnical arguments for reducing the assessed t axes to th e lowest possibl e level as well as ca ncelling entirely the im posed penalties. T he Group strongly believes based on legal advice received tha t the outcome of the court decisions will be in its favour wit h no material exposure expected in e xcess of th e provision of $2.3 million recognised. Other provisions incl ude non -income ta x provisions and a potential cl aim in Egypt. It is not currently possible to accurately predict the timing of the settlem ent of these claims and theref ore the expected timing of the c ash flow s. 25 Trad e and other payab les ($’000) 2021 2020 Trade and ot her payables -Current Financial items: Trade account s payable 109,525 193,987 Payables to partn ers under JOA 145 43,499 64,752 Deferred licence paymen ts due withi n one year - 14,344 Deferred consideration for acquisitio n of minority 167,228 - Other creditors 12,043 12,502 Short term lease lia bility 8,253 10,561 340,548 296,146 145 Payables related t o operated Join t operatio ns primarily in Italy. FINANCIAL STAT EMENTS Page 238 of 273 ($’000) 2021 2020 Non-financial item s: Accrued expenses 146 64,823 49,812 Other finance co sts accrued (note 10) 36,693 2,630 Social insura nce and other taxes 7,643 5,695 Income taxes 5,279 1,171 114,438 59,308 454,986 355,454 Trade and ot her payables -Non-Cu rrent Financial items: Deferred licence paymen ts 147 57,230 55,174 Contingent co nsideration (note 27) 78,450 55,222 Long term lease lia bility 36,172 37,062 Other payables 171,852 147,458 Non-financial item s: Contract Lia bility 148 53,537 29,105 Social insura nce 598 630 54,135 29,735 225,987 177,193 Trade and ot her payables are non -interest beari ng except f or finan ce leases and deferred licence paym ents. 146 Included in trade payabl es and accrued expe nses in FY21 and FY20, are mainly Karish field relat ed development exp enditures (mainly FPSO and Sub Sea constructio n cost), development e xpenditure for Cassiopea project in Italy and NEA/NI project in Egypt. 147 In Decembe r 20 16, Energean Israel acquired the Karish an d Tanin off shore gas fields for $4 0.0 million closing payment w ith an obligation to pay additional consid eration of $108.5 million plus interest inflated at an annual rate o f 4.6% in t en equal annual payments. As at 31 December 2021 the total discounted d eferred co nsideration was $57.23 million (as a t 31 Decembe r 2020: $69.52 million). The Sale and Purchase Agreement (“SPA”) includes provisions in the event of Force Majeure that pre vents or delays the impleme ntation of the devel opment plan as appr oved under one lease fo r a period of more than ninety ( 90) days in any year following the final investment decision (“FID”) date. In the event of Force Majeure the applicable an nual payment of the remaining c onsideration will be postpon ed by an equivalen t period of time, and no intere st will be accrued in that period of time as well. Due to the effects of the COVID-19 pandemic which constit ute a Force Majeure event, the deferred payme nt due in March 2022 would b e postp oned by t he number of days t hat such Force M ajeure event last. As of 31 December 2021 Force Majeure event leng th has not bee n finalised as the COV ID -19 pandemi c continues to affec t the progress of the project, and as such the defer red payment due in March 2022 will be postp oned accordingl y. 148 In June 2019, Energean signed a Detailed Agreement with Israel N atural Gas Lines (“INGL”) for the transfer of title (the “han d over”) of the nearshore and onshore part of the infrastruc ture t hat will deliver gas from t he Karish and Tanin FPSO into the Israeli national gas transmissi on grid. As consideration, INGL will pay Energean 369 million Israeli new shekel (ILS), c$115 million for the infrastructure being built by Ener gean which will be p aid in accordance with miles tones detailed in the agreem ent. The agreemen t covers t he onshore section of t he Karish and Tanin infrastruc ture and the near shore section of pipeline extending to approxima tely 10km offshore. It is intended that t he hand over to INGL will become effective at leas t 90 d ays aft er the delivery of f irst gas from t he Karish field which expec ted in Q3 202 2. FINANCIAL STAT EMENTS Page 239 of 273 26 E mployee share sc hemes Analysis of share-bas ed payment charge ($’000) 2021 2020 Energean DSBP Pla n 1,215 693 Energean Long Term Incent ive Plan 4,718 2,632 Total share -based pay ment charge 5,933 3,325 Capitalised to in tangible and tangible assets 200 99 Expensed as cost of sales 5 Expensed as administra tion expenses 5,712 2,776 Expensed to explorat ion and evaluatio n expenses 14 442 Expensed as other expense s 2 8 Total share -based pay ment charge 5,933 3,325 Energean Long Term Incentive Plan (LT IP) Under the LTIP, Senior Management can be granted nil ex ercise price options, normally exercisable fr om three to ten years following gra nt provided an individual remains in employment. The size of awards depends on both annua l performan ce measures and Total Sha reholder Return (TSR) over a period of up to three years. There are no post -gra nt performa nce condit ions. No dividends are pai d over the vesting period; h owever, Energean’s Bo ard may decide at any time prio r to th e i ssue o r tra nsfer of th e sha res i n respect of which a n award is released that the participant will receive an amo unt (in cash and/or additional Shares) equa l in value to any dividends tha t would h ave been paid o n those shares on such terms and over such perio d (e nding no later tha n the Relea se Date) as the Board may determ ine. This amount may assum e the reinvestment of dividends (on such basis as the Boa rd may determi ne) and may exclude or inclu de special dividen ds. The weighted average remaining contractual li fe for LTIP awards outstanding at 31 December 2021 was 1.3 years (31 December 2020: 1.4 years), number of shares outstanding 2,036,982 and wei ghted average price at grant date £5.99. There are furth er details of the LTIP in the Remu neration Report on pages 13 3- 159 . Deferred Share Bonus Plan (DSBP) Under the DSBP, the port ion of any a nnual bonus above 30% of the ba se salary of a Senior Executive nominated by the Remunerati on Committee was deferred in to shares. Deferred awards are usually granted in the form of c onditional share awards or nil -cost optio ns ( or, exceptionally , as cash-settled equivalents). Deferred awards usually vest two years after award although may vest early o n leaving employment or on a change of control. The weighted avera ge remaining con tra ctual life for DSB P aw ards ou tstanding at 31 December 2021 was 0.8 years, number of sha res outsta nding 234,902 and weigh ted price at grant date £6.75. 27 Fina ncial instr uments The Gro up is exposed to a variet y of risks in cluding commodit y price risk, i n terest rate risk, credit risk, foreign currency risk an d liquidity risk. The use of derivative financial instruments i s governed by the Group’s po licies approved by the Board o f Directors. Compliance with po licies and exposu re lim its are monitored and rev iewed internally on a regular basis. T he Group does not enter into or trade f inancial instruments, in cluding derivatives, for specula tive purposes. FINANCIAL STAT EMENTS Page 240 of 273 27.1 Fair values of financial as sets and liabili ties The info rmation set out below provides inf ormation abo ut h ow the Group determi nes th e fair values of various financial assets a nd liabilities. The fair va lues of the Gro up's non -current lia bilities measu red at amorti sed co st are co nsidered to approximate thei r carrying amounts a t the reporting date. The carrying value less any esti mated credit adjustments for financial assets and fi nancial liabilities with a ma turity of less than one yea r are assumed to appro ximate their fa ir va lues due to their sh ort term - nature. Th e fa ir va lue of the group’s fi nance lease ob ligations i s estimated using discounted ca sh flow analysis based on the gro up’s current i ncremental borrowing rates f or similar types an d maturi ties of borrowing and are co nsequently catego ri sed in level 2 of the fair va lue hierarchy. Contingent conside ration The share pu rchase agreement (the “SPA”) dated 4 July 2019 between Energea n and Edison SpA provides for a co ntingent co nsideration of u p to $10 0.0 mi llion subject to th e co mmissionin g of th e Cassiopea devel opment gas project in Ita ly. The con sideratio n was determin ed to be conti ngent on the basis of future gas prices (PSV) recorded at the time of the commissioning of the field, which i s expected in 2024. No payment will be due if the arithmetic average of the year one (i.e., the first year after first gas production) and year two (i.e., the seco nd year after first gas production) Italian PSV Natural Gas Futures prices is less than €10/Mwh when first gas production is delivered from the field. $ 100 million is payable if that avera ge price exceeds €20/Mwh . The cont ingent considerat ion to be pa yable in 2024 w as estima ted at a cquisition date to amount to $61.7 million , which discounted a t the selected cost of debt resulted in a present value of $55.2 mi llion as at the acquisiti on date. As at 31 December 2021, th e two -year futu re curve of PSV pri ces increased fro m the date of acquisition and indicate an avera ge price i n excess of €20/Mwh. We estim ate the fair value of the Conti ngent Consideratio n as a t 31 December 2021 to be $ 78.5 mill ion based on a Mo nte Ca rlo sim ulation (31 December 2020: $55.2 mi llion). The fair valu e of the consideration payable has been re cogni sed at level 3 in the fair val ue hierarchy . Contingent conside ration reconciliation Contingent co nsideration 2021 1 Janua ry 55,174 Unwinding of discount 1,799 Mark to Market 21,477 31 December 78,450 The fair value of the Contingent Consideration is estimated by reference to the terms of the SPA and the simulated PSV pricing by re ference to the forecasted PSV pricing, histo rical volatility and a lo g normal distribution, discounted at a cost of debt. Noting the natura l gas fu ture prices for PSV are currently in excess of the €20/MWh (t he threshold for pay ment of €100 milli on), we estima te the fair value of the Contingent Considera tion as at 31 December 20 21 to be $ 78.5 mil lion based on a Mo nte Ca rlo simulation. Fair values of derivative fin ancial instruments The Group held f inancial i nstruments at fair val ue at 31 Decembe r 2021 rela ted to in terest rate and commodity deriv atives. All derivatives are recognised at f air value on the ba lance sheet with valu ation changes reco gnised immed iately in th e incom e statement, unless the derivatives ha ve been de signated as a ca sh flow hedge. Fair value is the a mount for which the asset or liabil ity could be exchanged in an arm’s length transaction at the releva nt date. Where a vailable, fair values are determined using quo ted prices i n a ctive markets. To the extent that ma rket prices are no t a vailable, fa ir va lues a re e stimated by reference to market -based tra nsactions, or using sta ndard valuati on techniques for the applicabl e FINANCIAL STAT EMENTS Page 241 of 273 instruments a nd commodit ies i nvolved. Values recorde d are as at the ba lance she et date, a nd will not necessarily be reali sed. The Grou p undertak es hedgi ng activi ties as part of th e ongoin g finan cial risk management to protect against co mmodity price vol atility a nd to en sure the avai lability o f cash flow for re -investm ent in capital programmes th at are driving busin ess delivery. Commodity h edge contracts entered int o i n Italy a im to mitigate the risk of changes to the cost of na tural gas and that relat ing to the sale of natura l gas. Hedged Qua ntity (bbls) Contract Mon th Cargo Mo nth Cargo Size Fixed Price $ 54800 March 2022 March 2022 250 000 77.00 Hedged Qua ntity (MWs) Contract Mon th Cargo Mo nth Gas Sales Size Fixed Price € 40,000 December 2021 December 2021 125,634 76.00 85,000 January 2022 January 2022 204,576 75.88 85,000 February 2022 February 2022 205,528 75.88 85,000 March 2022 March 2022 181,954 75.88 50,000 April 2022 April 2022 226,013 75.88 50,000 May 2022 May 2022 226,806 44.06 50,000 June 2022 June 2022 223,084 42.26 50,000 July 2022 July 2022 222,110 40.46 50,000 August 2022 August 2022 222,679 39.13 50,000 September 2022 September 2022 216,103 39.13 50,000 October 2022 October 2022 215,290 40.07 50,000 November 2022 November 2022 200,205 40.07 50,000 December 2022 December 2022 206,640 40.07 As at 31 D ecember 2021, the interest rate derivatives were settled foll owing the repayment of the related loan. The comm odity hedges are Level 2. Th ere were no tra nsfers between fair val ue levels during the year. The fair value hierarchy of financial assets and financia l liabilities that are not measured at fair value (but fair value disclo sure is required) is as follow s: Fair value hiera rchy as at 31 December 2021 Level 1 $'000 Level 2 $'000 Level 3 $'000 Total $'000 Financial assets Trade and other receiva bles (note 19) - 284,692 - 284,692 Cash and cash equiva lents and bank deposits (note 16) 730,839 - - 730,839 Restricted Cash 199,729 199,729 Total 930,568 284,692 - 1,215,260 Financial lia bilities Financial liabilities held at a mortised cost : Trade and other payables – current - 173,319 - 173,319 FINANCIAL STAT EMENTS Page 242 of 273 Fair value hiera rchy as at 31 December 2021 Level 1 $'000 Level 2 $'000 Level 3 $'000 Total $'000 Borrowings (no te 22) - 2,947,126 - 2,947,126 Deferred consideration for acquisitio n of minority - 167,228 - 167,228 Net obligation s under finance leases (note 25) - 44,425 - 44,425 Convertible loa n notes (note 22) - 41,495 - 41,495 Deferred licence paymen ts (note 25) - 57,230 - 57,230 Financial liabilities at FVTPL Interest rate derivatives - 12,546 - 12,546 Contingent Co nsideration (note 6) - 78,450 78,450 Total - 3,443,369 78,450 3,521,819 Fair value hiera rchy as at 31 December 2020 ($’000) Level 1 Level 2 Level 3 Total Financial assets Trade and other receiva bles (note 17) - 246,307 - 246,307 Cash and cash equiva lents and bank deposits (note 14) 202,939 - - 202,939 Total 202,939 246,307 - 449,246 Financial lia bilities Financial liabilities held at a mortised cost: Borrowings (no te 20) - 1,443,076 - 1,443,076 Net obligation s under finance leases (note 23) - 47,623 - 47,623 Deferred licence paymen ts (note 22) - 69,518 - 69,518 Financial liabilities held at FVTPL: Interest rate derivatives - 6,915 - 6,915 Contingent co nsideration (note 4) - - 55,222 55,222 Total - 1,567,132 55,222 1,622,354 FINANCIAL STAT EMENTS Page 243 of 273 27.2 Commodity pr ice risk The Grou p undertak es hedgi ng activi ties as part of the ongoing fi nancial risk management to protect against co mmodity price vol atility a nd to en sure the avai lability o f cash flow for re -investm ent in capital programmes th at are driving busin ess delivery. Commodity h edge contracts entered int o in Italy ai m to mitigate the risk of changes to the cost of na tural gas and that relat ing to the sale of natura l gas. Hedge posit ion 2022 2023 Gas Volume hedged (M Ws) 705,000 - Average priced hedged (€/MWs) 55.89 - At 31 December 2021, our financial hedging program me on gas derivative instrumen ts showed a pre -tax negative fair value of $12.5 million (2020: nil) included in derivative financial instrument s, with no ineffectiveness charge to the income sta tement. There are no hedgin g contracts entered int o with regards to oil price. 27.3 Interest rate risk The Grou p’s policy is to minimi se interest rate ca sh flow risk ex posures on long -term f inancing. Lon ger- term borrowi ngs are th erefore usu ally a t fixed rates. At 31 December 2021, the Group has no exposure to interest ra te risks as all borrowin gs are at fixed interest ra tes. The exposure to interest rat es for the Group’s money market funds is considered i mmateri al. ($'000) 2021 2020 Variable rate instru ments Borrowings - 1,443,076 1,443,076 27.4 Credit risk Credit risk arises when a failure by cou nterparties to discharge their obligations could re duce the amount of future ca sh i nflows from financial assets on h and a t t he reporting date. The Gro up h as po licies in place to ensure that all of its transactions giving rise to credit risk are made with parties having an appropriate credit history an d monitors on a continuous basis th e ageing profile o f its receivables. Also, the Group has policies to limit the amount of credit exposure to any banking institution, considering among other factors the credit ra tings o f th e ban ks with which deposits are held. Credit quality information in relati on to those banks is provided below. With regard t o the risk of potential losses ca used by t he failure of a ny o f the counterparties the Company interacts with to honour the co mmitment s th ey have undertak en, t he Group has implemented for some time procedures and tools t o eva luate and select cou nterparties base d on their credit ra ting, constantly monitor its exposure to th e va rious counterparties and implement appropria te mi tigating actions, primarily aimed at reco vering o r tran sferring receivables. For the period en ded 31 December 2021 the Group has also consid ered the impact of COVID-19 in relat ion to the recoverability of its tra de receivables and expected credit loss all owances recogni sed at period end. FINANCIAL STAT EMENTS Page 244 of 273 Presented below is a brea kdown of trade receivabl es by past due bracket: ($’000) 31 December 2021 31 December 2020 Trade receivables 215,776 257,779 Allowance for impa irment (31,834) (31,661) Total 183,942 226,118 Trade receivables include balances from EGPC, the Egyptian governmental body that are significantly aged. 31 December 2021 31 December 2020 ($’000) Trade receivables Allowance Trade receivables Allowance Not yet due 44,602 (1,461) 133,144 (2,127) Past due by less tha n one month 12,187 (399) 16,511 (424) Past due by one to three m onths 12,212 (400) 14,269 (298) Past due by three to si x months 12,959 (425) 53,055 (1,850) Past due by more than six months 41,646 (25,786) 40,800 (26,962) Total 123,606 (28,471) 257,779 (31,661) Trade Receivables by geography ($’000) 31 December 2021 31 December 2020 Italy 41,757 62,622 United Kingdom 5,428 1,931 Egypt 123,850 184,940 Greece 2,893 5,617 Croatia 212 301 Israel 21,275 - Other Countries 2,215 2,368 Total 197,630 257,779 FINANCIAL STAT EMENTS Page 245 of 273 Credit quality of bank d eposits The credit quality of the banks i n which th e Group keeps it s deposits is assessed by reference to t he credit rating of these banks. Moody’s credit ratings of the corresponding banks in which the Group keeps its deposits is as follow s: ($'000) 2021 2020 Aa3 - 51,502 A1 288,953 63,244 A2 549,494 1 A3 10,139 697 BBB 64,760 73,950 BB 16,590 - B3 634 12,364 Caa1 - 775 Caa2 - 406 930,570 202,939 The Company has assessed the recoverability of all cash balances and considers they are carried within the consolidat ed statement of financial position at amounts not materially differen t to their fair value. The credit ratings of the Group’s trade receiva bles are as fo llows: ($’000) 2021 2020 Non-rated 178,804 226,139 Total 178,804 226,139 FINANCIAL STAT EMENTS Page 246 of 273 27.5 Foreign exc hange risk The Group is exposed to foreign excha nge risk as it undertak es operations in various foreign cu rrencies. The key sou rces of the risk are attribu ted to the fact th at the Grou p has certai n subsidia ries with Euro functional currencies i n which a nu mber of loa n agreemen ts den ominated in US$ a nd sa les o f crude oil are additionally deno minated in US$. The Group’s exposure to foreign currency risk, as a result of financial instruments, at each reporting dat e is shown in the t able below. T he amounts shown a re the US$ equivalent of the fo reign currency amounts. Liabilities Assets ($’000) 2021 2020 2021 2020 Dollars (US$) 759,232 130,161 265,166 19,710 United Kingdom Pounds ( £) 236,115 358,083 107,336 373,462 Euro 588,952 1,072,146 724,116 1,559,366 CAD - 15 - - NOK 4,403 259 18 50,723 ILS 1,501 32,593 22,442 23,103 SGD 276 161 238 91 EGP - 41 - 1 Total 1,590,479 1,593,459 1,119,316 2,026,456 FINANCIAL STAT EMENTS Page 247 of 273 The following ta ble reflect s the sensitivity analysis for profit and loss resu lts for the year and equi ty, taking into co nsideration for the periods presen ted f oreign exchange variati on by +/- 10%. 31 December 2021 USD GBP Euro ILS NOK SGD EGP Variation Variation Variation Variation Variation Variation Variation 10% -10% 10% -10% 10% -10% 10% -10% 10% -10% 10% -10% 10% -10% Profit or loss (befo re tax) (24,122) 29,629 (10,249) 12,275 5,324 (6,755) - - 2,094 (1,904) (439) 399 (4) 5 Other comprehensiv e income - - - - - - - - - - Equity (24,122) 29,629 (10,249) 12,275 5,324 (6,755) - - 2,094 (1,904) (439) 399 (4) 5 31 December 2020 USD GBP Euro ILS NOK SGD EGP Variation Variation Variation Variation Variation Variation Variation 10% -10% 10% -10% 10% -10% 10% -10% 10% -10% 10% -10% 10% -10% Profit or loss (befo re tax) 12,542 (15,329) 1,503 (1,746) 14,191 (17,220) 5,570 (5,063) 4,637 (5,659) 25 (23) (4) 5 Other comprehensiv e income 15,245 (3,706) Equity 27,787 (19,035) 1,503 (1,746) 14,191 (17,220) 5,570 (5,063) 4,637 (5,659) 25 (23) (4) 5 The above calcu lations assume that interest rates remain the sa me as at the reporting dat e. FINANCIAL STAT EMENTS Page 248 of 273 27.6 Liquidity risk Liquidity ri sk is the risk that the Group will enco unter difficulty in meeting obligations a ssociated with financial liabilities tha t are settled by delivering ca sh or anot her financial asset. The Group monitors its risk to a short age of funds by mo nitori ng its debt ra ting and t he matu rity dates of existing debt and other payables. As at 31 December 2021, the Group had avail able c$113 millio n (2020: $1,040 milli on) of undrawn comm itted borrowing facili ties. The undrawn fa cilities are in relation to the Greek State- Back ed Loan of €100 million whi ch is to be used specifically for th e development of the Prin os Area in Greece, inclu ding the Epsilon developmen t. The following tables detail the Gro up’s remaining contractua l matu rity fo r it s financial liabilities . The tables have been drawn up based on the undiscou nted cash flows of financial liabilities based on the earliest date o n which the Gro up can be requi red to p ay. Th e table incl udes both interest an d principal cash flows. The Gro up man ages its liqui dity r i sk by ongoing monito ring of its cash f lows. Group m anagement prepares budgets and regular cash flow forecasts an d takes a ppropriate actions to ensu re available cash deposits and credit lines wit h the banks are ava ilable to meet the Group’s li abilities as they fall due. The table bel ow summa rises the m aturity pro file of the Group fi nancial lia bilities ba sed on contra ctual undiscounted pay ments: 31 December 2021 Carrying amounts Contractua l cash flows 3 months or less 3-12 months 1-2 years 2-5 years More th an 5 years ($'000) Bank loans 2,950,701 3,936,296 64,095 93,004 208,562 1,640,222 1,930,412 Lease liabilities 44,425 21,953 1,919 4,937 6,216 7,130 1,744 Trade and other payables 467,986 552,689 139,467 208,120 26,704 137,047 11,350 Total 3,463,112 4,510,938 205,481 306,061 241,482 1,784,399 1,943,506 31 December 2020 Carrying amounts Contractua l cash flows 3 months or less 3-12 months 1-2 years 2-5 years More tha n 5 years ($'000) Bank loans 1,443,076 1,652,004 13,541 1,226,014 98,718 273,231 40,500 Lease liabilities 47,623 48,199 3,539 7,372 5,978 10,082 21,228 Trade and other payables 395,980 412,544 218,910 63,735 26,155 92,394 11,350 Total 1,866,679 2,112,747 235,990 1,297,121 130,851 375,707 73,078 FINANCIAL STAT EMENTS Page 249 of 273 28 R elated parties 28.1 Related party r elationship s Balances and tra nsactions between the Com pany and its subsidiaries, w hich are rel ated parties, have been eliminat ed on consolidation an d are not disclosed in this note. The Directors o f Energean plc are considered to be the only k ey management personnel as defined by IAS 24. The follow ing informatio n is pro vided in relation t o the related party transactio n disclosures provided in note 27.2 belo w: Adobelero Holdings Co Ltd . is a beneficially owned ho lding company controlled by Pan os Benos, the CFO of the Group. Growthy Holdings Co Ltd is a beneficially owned holding co mpany controlled by Matthaios Ri gas, the CEO of the Group. Oil Co Invest ments Limited is benef icially owned a nd co ntrolled by Efst athios To pouzoglou, a No n - Executive Director of the Group. The nat ure of the Group’s tran sactions with the a bove related pa rties is mainly financing act ivities. Kerogen Ca pital is an independent private equity fund man ager specialisin g in the international oil and gas sector, which until February 2021 held th e 30% of Energean Israel ordinary shares not hel d by the Group (please refer to note 21). Seven Maritime Compa ny (Seven Ma rine) is a related party compa ny controlled by on e th e Com pany’s shareholders Mr Efstathios Topouzoglou . Seven Marin e owns the offshore supply ships Valia nt Energy and Energean Wave wh ich support the Gro up’s investment progra m in northern Greec e. Capital Earth Ltd : During the year en ded 31 December 2021 the Group received consultancy services from Capital Earth Limited, a consulting company con trolled by the spouse of one of Energean ’s executive director, for the p rovision of Group Corporate Social Respo nsibility Consulta ncy and Project Management Services. 28.2 Related party transactions Purchases of goods and se rvices ($’000) Nature of tran sactions 2021 2020 Other related party "Seven Marine" Vessel leasing and servi ces 2,000 1,473 Other related party "Prim e Marine Energy Inc" Constructio n of field support vessel 10,273 19,950 Other related party "Ca pital Earth Ltd" Consulting services 35 129 12,308 21,552 Following a com petitive tender process, the Group ha s entered into an agreement to purch ase a Field Support Vessel ( “FSV”) from Prime Marine Energy Inc., a company controlled by director and shareholder at Energean plc, for $33.3 mil lion. The FSV is being constructed to meet the Group’s specif ications and will provide significant in-country capability to support the Karish project, including FPSO re- supply, crew changes, holdba ck operations for tanker offloading, emergency subsea intervention, drillin g supp ort and emergency response. The purchase of thi s mu lti -purpose vessel w ill enhance operational efficiencies and economics wh en compared to the leasing of multiple different vessels fo r the various acti vities. FINANCIAL STAT EMENTS Page 250 of 273 28.3 Related party ba lances Payables ($’000) Na ture of bal ance 2021 2020 Seven Marine Vessel leasing and servi ces 417 407 417 407 28.4 Key managem ent compensati on The Directors of Energean plc a re considered to be the only k ey management personnel as defined by IAS 24 Related Party Disclosu res. 31 December 2021 ($’000) Salary and fees Benefits Annual bonu s Total Executive Directors 1,650 100 1,664 3,414 Non-Executive Directors 703 - - 703 Total 2,353 100 1,664 4,117 31 December 2020 ($’000) Salary and fees Benefits Annual bonu s Total Executive Directors 1,436 160 1,215 2,811 Non-Executive Directors 574 - - 574 Total 2,010 160 1,215 3,385 29 Co mmitments an d contin gencies In acqui ring its oil and gas in terests, th e Group has pledged that various work programmes will be undertaken on each permit/interest. The exploration commitments in the following table are an estimate of the net cost to th e Group of performi ng these work program mes: ($’000) 2021 2020 Capital Com mitments 149 Due within one yea r 20,575 102,255 Due later than on e year but withi n two years 51,180 84,855 Due later than tw o years but within five y ears 1,497 200,895 73,252 388,005 Performa nce guarantees 150 Greece 1,176 6,743 Israel 89,683 62,101 UK 99,570 96,655 Italy 21,292 15,361 Montenegro 566 614 212,287 181,474 149 Amount of $7.7 million is towards to Government and amount of $6 5.6 million refers to capital commitments to part ners based on future w ork programm es. 150 Performance guar antees are in r espect of abandonment obligations, committed work programmes and certain financial obliga tions. FINANCIAL STAT EMENTS Page 251 of 273 Issued guarantees: Karish and Tanin Leases - As pa rt of th e requi rements of the Karish a nd T anin Lease deeds, t he Gro up provided the Mini stry of Nat ional Inf rastructures, Energy and Water with bank guar a ntees in the amount of $10 mi llion fo r each lea se (total $20 m illion). T he ba nk guarant ees were i n force unt il 29 Dec ember 2019, and were renewed in March 2021 until 31 March 2022. Blocks 12, 21, 22, 2 3 and 31 in Isra el - As part of the requirements of th e explora tion an d appraisal licences which granted to the Group during th e Israel i o ffshore BID in December 20 17, the Gro up pro vided the Ministry of Nati onal Infrastructures, Energy and Water in J anuary 2018 wi th bank guarantees in the amount of $6 million for all 5 blocks mentioned above. The bank guarantees are in force until 13 January 2023. In addition, $5 million bank guara ntee related Block 12 drilli ng w as i ssued in November 2021 and is in force until 17 Decembe r 2022 Blocks 55, 56, 61 and 6 2 , also kn own as "ZONE D" - As part of the requirements of t he e xploration an d appraisal licences which granted to the Group during the Israeli 2nd offshore BID in July 2019, the Group provided the Ministry of National Infra structures, E nergy and Water i n Janua ry 20 18 with ba nk guarantees in the am ount of $3.2 million for al l 4 blocks ment ioned above. The bank guarantees are in force until 28 September 20 22. Israeli Natural Gas Li nes ("INGL" ) - As part o f the agree ment signed with INGL on J une 2019 the Group provided INGL bank gu arantee at the amou nt of 116 mi llion ILS (a pprox. $54 m illion) in o rder to secu re the first milestone payment from INGL. The first bank g uarant ee at the amount of 92 million ILS (approx. $30 million ) in force u ntil 21 November 2022. D uring June 2021 and November 2021 additional two bank guarantees were i ssued to secure INGL’s ad ditional mi lestone pay ments in tot al of 18 mi llion ILS (appro x. $6 millio n) and 56 million ILS (approx. $ 18 milli on), acco rdingly, t hese bank guarantees a re in f orce unt il 30 June 2022 and 30 Nove mber 2022, respec tively. Israel Other - As part of the ongoin g operations i n Israel, the Group pro vided variou s bank guarantees to third parti es in Israel w hich amoun ted approx. $ 2 mill ion. T he main bank guarantees are in force t ill end of first quarter of 2022, the remaini ng bank guarantees are in f orce till end of third quart er of 2022. United Kingdom : Fo llowing Edison E&P a cquisition the Group issu ed letters of credit amoun t $99.6 mill ion for United Kingdom decom missioning obl i gations and obligations under the Un ited Kingdom licenses Italy : Fo llowing Edison E&P acquisit ion the Group issued letters of credit a mount $21.3 milli on for decommission ing obligations and obligatio ns under the Italian licenses Legal cases and conting ent liabilities The Group had no ma terial contingent liabilities as of 31 December 2021. 30 Sub sequent ev ents On th e 14 March 2022 - Energean signed a supply agreem ent with the Israel Electric Com pany, the largest Israeli buyer of natural gas. IEC w ill now have the right to purchase natu ral gas from Energean’s fields. The gas price w ill be determin ed in each peri o d, with purchased a mounts determined o n a daily basis. Starting upon the co mmencement of first ga s production from Karish, th e agreement will be val id for an initial one- year period with an option to extend subject t o ratif ication by both parties. FINANCIAL STAT EMENTS Page 252 of 273 31 Subsid iary undertak ings At 31 December 2021, the Grou p had investments in the f ollowing subsidiaries: Name of su bsidiary Country of in corporation / registe red office Principal acti vities Shareholdin g At 31 Decembe r 2021 (%) Shareholdin g At 31 Decembe r 2020 (%) Energean E&P Holdings Ltd 22 Lefkonos Street, 2064 Ni cosia, Cy prus Holding Compan y 100 100 Energean Capital Ltd 22 Lefkonos Street, 2064 Ni cosia, Cy prus Holding Compan y 100 100 Energean MED Limited 44 Baker Street, London W1U 7AL, Unit ed Kingdom Oil and gas explorat ion, development and production 100 100 Energean Oil & Gas S.A. 32 Kifissias Ave. 151 25 Ma rousi Ath ens, Greece Oil and gas explorat ion, development and production 100 100 Energean Interna tional Limited 22 Lefkonos Street, 2064 Ni cosia, Cy prus Oil and gas explorat ion, development and production 100 100 Energean Israel Limited ( Note 6) 22 Lefkonos Street, 2064 Ni cosia, Cy prus Oil and gas explorat ion, development and production 100 70 Energean Montenegro Limited 22 Lefkonos Street, 2064 Ni cosia, Cy prus Oil and gas explorat ion, development and production 100 100 Energean Israel Finan ce SARL 560A rue de Neudorf, L -2220, Luxembo urg Financing activit ies 100 70 Energean Israel Tra nsmission LTD Andre Sakharov 9, Hai fa, Israel Gas transporta tion license holder 100 70 Energean Isreal Finan ce LTD Andre Sakharov 9, Hai fa, Israel Financing activit ies 100 70 Energean Egypt Limited 22 Lefkonos Street, 206 4 Nicosia , Cyprus Oil and gas explorat ion, development and production 100 100 FINANCIAL STAT EMENTS Page 253 of 273 Name of su bsidiary Country of in corporation / registe red office Principal acti vities Shareholdin g At 31 Decembe r 2021 (%) Shareholdin g At 31 Decembe r 2020 (%) Energean Hellas Lim ited 22 Lefkonos Street, 2064 Ni cosia, Cy prus Oil and gas explorat ion, development and production 100 100 Energean Italy S.p.a. 31 Foro Buonapa rte, 20121 Milano , Italy Oil and gas explorat ion, development and production 100 100 Energean Internati onal E&P S.p.a. 31 Foro Buonapart e, 20121 Milano, Italy Oil and gas explorat ion, development and production 100 100 Energean Sicilia Srl Via Salvatore Qua simodo 2 - 97100 Ra gusa (Ragusa) Oil and gas explorat ion, development and production 100 100 Energean Explorati on Limited 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas explorat ion, development and production 100 100 Edison E&P UK Ltd 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas explorat ion, development and production 100 100 Edison Egypt Energy Servic es JSC Cairo, Egypt Oil and gas explorat ion, development and production 100 100 FINANCIAL STAT EMENTS Page 254 of 273 32 E xploration, devel opment and produc tion interests Country Fields Fiscal Regime Group’s working interest Field Phase Joint Operation Operator Israel Karish Concession 100% Development No NA Tanin Concession 100% Development No NA Blocks 12, 21, 22, 23, 31 Concession 100% Exploration No NA Four licenses Zone D Concession 80% Exploration Yes Energean Egypt Abu Qir PSC 100% Production No NA Abu Qir North PSC 100% Production No NA Abu Qir West PSC 100% Production No NA Yazzi PSC 100% Development No NA Python PSC 100% Development No NA Field A (NI-1X) PSC 100% Exploration No NA Field B (NI-3X) PSC 100% Exploration No NA NI - 2X PSC 100% Exploration No NA North East Hap'y PSC 30% Exploration Yes ENI Viper (NI-4X) PSC 100% Exploration No NA Greece Prinos Concession 100% Production No NA Epsilon Concession 100% Development No NA Prinos exploration area Concession 100% Exploration No NA South Kavala Concession 100% Production No NA Katakolo Concession 100% Undeveloped No NA Ioannina Concession 40% Exploration Yes Repsol West Patraikos Concession 50% Exploration Yes HELPE Block-2 Concession 75% Exploration Yes Energean Italy Vega A Concession 100% Production Yes Energean Vega B Concession 100% Production Yes Energean Rospo Mare Concession 100% Production Yes Energean Verdicchio Concession 100% Production No NA Vongola Mare Concession 95% Production Yes Energean FINANCIAL STAT EMENTS Page 255 of 273 Country Fields Fiscal Regime Group’s working interest Field Phase Joint Operation Operator Gianna Concession 49% Development Yes ENI Accettura Concession 50% Production Yes Energean Anemone Concession 19% Production Yes ENI Appia Concession 50% Production Yes Energean Argo-Cassiopea Concession 40% Development Yes ENI Azalea Concession 16% Production Yes ENI Calipso Concession 49% Production Yes ENI Candela Dolce Concession 40% Production Yes ENI Candela Povero Concession 40% Production Yes ENI Carlo Concession 49% Production Yes ENI Cassiano Concession 50% Production Yes Energean Castellaro Concession 50% Production Yes Energean Cecilia Concession 49% Production Yes ENI Clara East Concession 49% Production Yes ENI Clara North Concession 49% Production Yes ENI Clara Northw est Concession 49% Production Yes ENI Clara West Concession 49% Production Yes ENI Comiso Concession 100% Production No NA Cozza Concession 85% Production Yes Energean Daria Concession 49% Production Yes ENI Didone Concession 49% Production Yes ENI Emma West Concession 49% Production Yes ENI Fauzia Concession 40% Production Yes ENI Giovanna Concession 49% Production Yes ENI Leoni Concession 50% Production Yes Gas Plus Monte Urano - San Lorenzo Concession 40% Production Yes Energean Naide Concession 49% Production Yes ENI Portocannone Concession 62% Production Yes Energean Quarto Concession 33% Production Yes Padana Energia Ramona Concession 49% Production Yes ENI Regina Concession 25% Production Yes ENI Salacaro Concession 50% Production Yes Energean San Giorgio Mare Concession 95% Production Yes Energean FINANCIAL STAT EMENTS Page 256 of 273 Country Fields Fiscal Regime Group’s working interest Field Phase Joint Operation Operator San Marco Concession 100% Production No NA Santa Maria Mare Concession 96% Production Yes Energean Santo Stefano Concession 95% Production Yes Energean Sarago Mare Concession 85% Production Yes Energean Sinarca Concession 40% Production Yes Gas Plus Talamonti Concession 50% Production Yes Energean Tresauro Concession 25% Production Yes Enimed UK Garrow Concession 68% Production Yes Alpha Petroleum Kilmar Concession 68% Production Yes Alpha Petroleum Scott Concession 10% Production Yes CNOOC Telford Concession 16% Production Yes CNOOC Wenlock Concession 80% Production Yes Alpha Petroleum Glengorm Concession 25% Exploration Yes CNOOC Isabella Concession 10% Exploration Yes Total Energies E&P North Sea UK Limited Montenegro Block 26, 30 Concession 100% Exploration No NA Croatia Irena PSC 70% Exploration No NA Izabela PSC 70% Production No NA Malta Blocks 1, 2 and 3 of Area 3 Concession 100% Exploration No NA FINANCIAL STAT EMENTS Page 257 of 273 Company Statement of Financial Position As at 31 December 2021 ($’000) Notes 2021 2020 Assets Non-current assets Investment in subsidiari es 3 1,154,387 1,031,991 Property plant and equipm ent 59 71 Loans and other in tercompany receivables 5 336,150 2,183 1,490,596 1,034,245 Current asset s Trade and other receiva bles 6 131,677 25,745 Cash and cash equiva lents 18,910 67,187 150,587 92,932 Total assets 1,641,183 1,127,177 Liabilities Current liabil ities Trade and other pay ables 8 12,105 10,532 12,105 10,532 Non-current liabilities Other payables 551 153 Borrowings 9 483,441 - 483,992 153 Total liabiliti es 496,097 10,685 Capital and res erves Share capital 10 2,374 2,367 Share premium 10 915,388 915,388 Other reserves 10,459 - Share based payment reser ve 12 19,374 13,419 Retained earni ngs 197,491 185,318 Total equity 1,145,086 1,116,492 Total equity and liabilities 1,641,183 1,127,177 During the year the Co mpany made a prof it of $12.2 million (31 December 2020: los s of $1.7 million). Approved by the Board and auth orised for isssuance o n 23 March 2022. Matthaios Rigas Panagiotis Benos Chief Executive Officer Chi ef Financial Officer FINANCIAL STAT EMENTS Page 258 of 273 Company Statement of Changes in Equity For the year ended 31 Dece mber 2021 ($’000) Share Capital Share Premium Share based payment reserve Equity component of convertible bonds Retained earnings Total equity At 1 Janua ry 2020 2,367 915,388 10,094 - 186,993 1,114,842 Profit/(loss) for the yea r - - - - (1,675) (1,675) Transactions with owners of the compan y Employee share schemes - - 3,325 - - 3,325 At 31 Decembe r 2020 2,367 915,388 13,419 - 185,318 1,116,492 Profit/(loss) for the yea r - - - 12,173 12,173 Transactions with owners of the compan y Share based payment ch arges 5,962 5,962 Exercise of Employee Share options 7 (7) - Convertible bond issue (note 9) 10,459 10,459 At 31 Decembe r 2021 2,374 915,388 19,374 10,459 197,491 1,145,086 FINANCIAL STAT EMENTS Page 259 of 273 Company Accounting Policies For the year ended 31 Dece mber 2021 1 General infor mation Energean plc (‘the Co mpany') was incorpora ted in England & Wales on 8 May 2017 as a public co mpany with limited li ability, u nder th e Compa nies Ac t 2006. Its registered office is a t 44 Baker Street, London W1U 7AL, U nited Kingdom. T he Financial Stat ements are presented in US dollars and all values are rounded to the nearest U S$ th ousands ($‘000), excep t where o therwise stated. Energean plc is the ultimate Parent of th e Energean Group. 2 Basis of pr eparation The Company meets the definition of a qualifying entity under Financial Reporting Standard 100 (FRS 100) issue d by th e Fin ancial Reporting Co uncil. The par ent compa ny Financial Statements have therefore been prepared in acco rdance with U nited Kingdom Genera lly Accepted Acco unting Practice (U nited Kingdom Accou nting Sta ndards and appli cable la w), including Financial Repo rting Sta ndard 101 ( FRS 101) “Reduced Disclosure Framework” as issued by the Financial Reporting Council. As permitted by FRS 101, the Company ha s taken advanta ge of the following disclosure exempti ons under FRS 101: • The requirement s of IFRS 7 Financial Instru ments: Disclosures; • The requirement s of paragraphs 91 -99 of IFRS 13 Fair Va lue Measuremen t; • The requirem ent in pa ragraph 38 of IAS 1 ‘Presen tation of Financial Statem ents’ to presen t comparative in formation in respect of: (i) paragraph 79( a) (iv) of IAS 1 and (ii) para graph 73(e) of IAS 16 Property Plant and E quipment; • The requirem ents of paragraphs 10( d), 16, 3 8A to 38D, 111 and 134 to 136 o f IAS 1 Presenta tion of Financial Statem ents; • The requirement s of IAS 7 Statemen t of Cash Flows; • The requirement s of paragraphs 45(b) and 4 6-52 of IFRS 2 share-base d payments • The requirement s of paragraph 17 of IAS 24 Rela ted Party Disclo sures; • The requirem ents in IAS 24 Related Part y Disclosures to disclose related party tra nsactions entered into between two or more members of a gro up, pro vided th at a ny subsidi ary whi ch is a party to the transaction is who lly owned by such a member; and • The requirements of paragraphs 30 an d 31 of IAS 8 Acco unting Policies, Changes in Acco unting Estimates and Errors Where relevant, equival ent disclosu res have been given i n the Group accou nts. The Com pany has applied the exempti on from the requirement to publish a sepa rate income statement for the parent com pany set out in section 408 of th e Companies Act 2006. 2.1 Going concer n The Directors have performed an assessment and concl uded that the preparation of the financial statements on a go ing co ncern basis is appropriate. In makin g thi s assessmen t a number of factors w ere considered, refer to no te 2.1. of the consolidated f inancial statem ents. Accordingly , the Direct ors have a reasonable expectation that th e Company h as adequate resou rces to co ntinue in operationa l existence for the foreseeable fut ure a nd co nsider it appropri ate to adopt the goin g concern basis i n pre paring the financial statem ents FINANCIAL STAT EMENTS Page 260 of 273 2.2 Foreign curr encies The US dol lar is t he f unctional currency of the Company. Transactions in foreign currencies are t ranslated at th e rates of exchange ru ling at the transaction date. Monetary assets and liabilities denom inated in foreign currencies a re translated into US dollars at the rates of exchange ruling at the balance sheet date, with a correspondin g charge or credit to the in come statemen t. 2.3 Investment s Fixed asset investm ents, r epresenting investments in subsidiaries, are stated at cost and reviewed for impairment if there are indica tions that the carrying val ue may not be recoverable. 2.4 Trade and other receivabl es Receivables represent the G roup’s right to an amount of considerat ion that is unconditiona l (i.e. only the passage of time is requi red before pay m ent of the co nsideration i s due). The Company is required to assess the carrying val ues of ea ch of the amounts due f rom subsidiary un dertakings, co nsidering the requirements established by IFRS 9 Financial Instrum ents. The IFRS 9 i mpairment model requires the recognition o f ‘expected credit losses’. If the subsidiary ha s sufficien t liquid assets to repay the loan if demanded at the repo rting da te, the expected credit loss is l ikely to be immaterial. Ho wever, if the subsidiary could not demonstrate the ability to repay the loan, if dema nded a t the reporting date, the Company ca lculated an expected credit loss. 2.5 Trade and other payables Trade and other payables are carried at a mortised cost. They represent li abilities for goods and services provided to t he Company pri or to the end of the fina ncial year that are u npaid a nd ari se w hen t he Company becomes obligated to make future payments in respect of th e purchase of those goo ds and services. 2.6 Loans and b orrowings After ini tial recogniti on, interest -bea ring loa ns and bo rrowings a re subsequen tly mea sured at amortised cost using the EIR method. Gains an d losses are rec ognised in profit or loss w hen the liabilities a re derecognised, modified and t hrough the EIR amortisat ion process. Am ortised cost is ca lcula ted by taki ng into acco unt any discoun t or premium on acquisit ion and f ees or costs that are an in tegral part o f the EIR. The EIR amort isation is included as fina nce costs in the stat ement of profit or loss. 2.7 Convertible b onds Convertible bonds are separated into liability and equity componen ts based on the terms of the contract . The fair value of the liability component on initial recognition is calculated by disc ounti ng the contractual cash flows using a market interest rate for an equivalent non -convertible instrument. The differen ce between the fair value of the l iability component and the proceeds received on issue is recorded as equit y. Transaction costs are a pportioned bet ween the liability an d the e quity components of th e instrum ent based on the amou nts initially recognised. The li ability component is classified as a fina ncial liability measured at amortised cost (net o f transa ction costs) u ntil it is extinguished on conversion or settlem ent. The equity compo nent is not remeasured. 2.8 Share issue expenses Costs of share issues are w ritten of f against share premiu m arising upon the issuance of share capita l. FINANCIAL STAT EMENTS Page 261 of 273 2.9 Capital manag ement The Com pany defines capital as the total equi ty of the Compa ny. Ca pital is mana ged in order to provide returns for s hareho lders and benefits to stakeholders and to sa feguard the Compa ny’s ability to continue as a going concern. The Compan y is not subject to any externally imposed capita l requirements. To maintain or adjust th e capital structure, th e Company may adju st t he dividend payment to shareholders, return capital , issue new shares for ca sh, repay debt, a nd put in place new debt fac iliti es. 2.10 Share-based pay ments The Compa ny ha s share -based awards t hat are equity settl ed as defin ed by IFRS 2. The cost of equity - settled transactions is determined by the fair value at the date when the gran t is made using a n appropriate valuation model. That cost is recognised in employee remuneration expense together with a corresponding increase in equity ( share-based pa yment re serve), over the period in wh ich th e servi ce and, wh ere applica ble, the perfo rmance conditions a re fulfilled (the vesting period). The cumulati ve expense recognised fo r equi ty -settled transactions a t each report ing date until th e vest ing date ref lects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that w ill ultimately vest. The expense o r credit in t he statem ent of profit or loss for a period represents the movemen t in cumulat ive expense reco gnised as at th e beginning and end of that period. Service and non-m arket perfo rmance co nditions are not taken into account wh en determining the grant date fair value of awards, but the likelihood of t he conditions being met is assessed a s part of the Group’s best estimate of the n umber of equity instrumen ts tha t will ultimately vest. Market perfo rmance conditions are reflected wi thin the gra nt date f air value. Any other co nditions attached to a n awa rd, but without an associat ed service requirement, ar e con sidered to be non -vestin g conditions. Non -vesting conditions a re reflected in the fair valu e of an awa rd and lead to an immediate expensin g of an a ward unless there are also service and/or performa nce condition s. No ex pense is recogn ised for awards t hat do n ot ultima tely vest beca use no n - market performance and/or service conditions have n ot been m et. Where awards include a market or non -vesting condition , the transactions are treated as vested irrespective of whether the market or non -vest ing conditio n is satisfied, provided that all other performance and/or service conditio ns are satisfied. When the term s of a n equity-set tled award are modified, the minimum expense recognised i s the gran t date fai r value of t he unmodified a ward, provi ded the origina l vesting terms of t he award a re met. An additional expense, measured as at the da te of modification, is recognised for any m odification tha t increases the tota l fa ir va lue of the share -based pay ment t ransaction , or is o therwise benefi cial to the employee. Where an awa rd is cancelled by the entity or by the coun terparty, a ny remaining el ement of the fair valu e of the award is expensed immediately through profit or loss. 2.11 Cash and ca sh equivalen ts Cash and cash equiva lents com prise cash a t bank, dem and and time deposits and o ther short -term highly li quid investments with a maturity of less than 3 mont hs that a re readily convertible to a known amount of cash an d are subject to an insigni ficant risk of changes in valu e. 2.12 Critical acc ounting judgements and ke y sources of estimat ion uncertai nty There are n o crit ical acco unting judgem ents and key sources of estimation un certainty in the current year. FINANCIAL STAT EMENTS Page 262 of 273 3 Investment s in subsidiari es The following ta ble shows the movement in the investment in subsidi ari es during the year ($’000) At 31 Decembe r 2020 1,031,991 Additions 122,396 At 31 Decembe r 2021 1,154,387 During 2021, the Co mpany i ncreased its investment s in subsidi ary undertaki ngs by $122.4 million (31 December 2020: $154.8 million). These additions relate partly to further injections of cash, for the issuance of shares, in existing subsidiaries ($72.4 million) and partly due to the transaction with Kerogen to acquire the mi nority interest in Energean Israel Limit ed ($50 million). A complete list of Energean plc G roup companies at 31 Dec ember 2021, an d the Gro up’s percenta ge of share ca pital are set out in the n ote 31 of the Grou p financial statements. The principal activity of the majority of these compani es relates to oil and gas exploratio n, development and production . All of these subsidiaries have been co nsolidated in the Gro up’s financial sta tements. 4 Dividends No div idends w ere paid or declared during th e peri od. No div idend i s propo sed in respect of th e year ended 31 December 2 021 (2020: $ni l). 5 Loans and ot her interco mpany receivabl es ($’000) 2021 2020 Loans to subsidiari es 334,073 1,638 Receivables from share-ba sed plan to subsidiary underta kings 2,077 545 At 31 Decembe r 336,150 2,183 The loans to subsidiaries consist of three l oans, two of w hich were issued in the current year and th e loan to Energean Internation al Limi ted (‘EIL’). Lo ans were is sued to Energean Ca pital Li mited ( ‘ECL’) ($22 1.2 million) and Energean Oil and Ga s S.A. ( ‘EOGSA’) ($110.9 million) during the yea r. The ECL lo an incurs a fixed rate of i nterest at 5. 5% pe r annum a nd matures on 18 May 2027. The EOGS A loan i ncurs a fi xed rate of interest at 6.7% and matures on 18 November 2029. The loan to EIL incurs a fixed rate of interest at 3% per annum a nd has ma turity date on 20 December 2023. At 31 Decem ber 2021 no expected credit loss allowances (2020: $nil) were hel d i n respect of the recoverability of amounts due from subsidiary undertakings. FINANCIAL STAT EMENTS Page 263 of 273 6 Trade and other receivabl es ($’000) 2021 2020 Financial i tems Receivables from shareholders - 22 Due from subsidiary un dertakings 129,840 23,417 129,840 23,439 Non-fina ncial items Deposits and prepay ments 1,069 1,894 Refundable VAT 768 412 1,837 2,306 Total trade an d other receivables 131,677 25,745 At 31 Decem ber 2021 no expected credit loss allowances (2020: $nil) were hel d i n respect of the recoverability of a mounts du e from subsidiary un dertaki ngs. The i ncrease in the current year rela tes to amounts receivable from Energean E&P Holdings th at are cu rrently held i n ti me depo sits, expiring in 2022 ($120 million). $80 million of the receivable incurs interest at a fixed rate of 0.82% per annum and the remaining $40 million at a fi xed inte rest rate of 0.73% per annum. Th e amou nts due from su bsidiary undertakings include the current portion of the loans issued to Energean Capi tal Lim ited, Energean Oil and Ga s S.A. a nd Energean Intern ational which incur a fixed rate of interest as set out above in not e 5 of the fi nancial st a tements. T he remaining am ounts due from subsidiaries a ccrue no interest and rela te to i ntragroup recha rges for subsidi aries’ emplo yees share - based payments a nd management services provided by the Company to its subsidiaries under a “Master Intercompany Se rvices Agreemen t”. 7 Financial risk manageme nt objectives The Company fo llows t he Group’s policies for ma naging all its financial risks. Refer to note 27 in the Group Financial Sta tements. 8 Trade and other payables ($’000) 2021 2020 Staff costs acc rued 2,291 1,922 Trade payables 2,790 939 Due to subsidiary underta kings 1,097 385 Finance costs acc rued 3,575 - Accrued expenses 2,040 7,031 Taxes and social securi ty costs payable 261 250 Other creditors 51 5 Total trade an d other payables 12,105 10,532 The amoun ts are unsecured and are usually paid within 30 days of recogniti on. FINANCIAL STAT EMENTS Page 264 of 273 9 Borrowings On 25 February 2021, the Group completed the acquisit ion of the remaining 30% minority interest in Energean Israel Li mited fr om Kerogen Investmen ts No .38 Limi ted, Ener gean now owns 100% of Energean Israel Limi ted. T he transa ction resu lted i n $50 million of convertible l oan notes (the “Convertible Loan Notes”) being issued, which have a maturity date o f 29 December 202 3, a stri ke price of £9.5 0 and a zero-coupo n rate. For further details on th e tran saction ref er to note 21 in the c onsoli dated financial statements. On 18 November 2021, the Company completed th e issuance of $450 million aggregate principal amount of senior s ecured notes maturi ng in 2027 at a fixed interest ra te of 6.5%. For further details o n th e transaction refer to note 22 in the consolida ted financial statements. ($'000) 2021 2020 Non-current Convertible loa n notes 41,496 - 6.5% Senior Secured notes 441,945 - Carrying valu e of non -current borrowings 483,441 10 Shar e capital Equity share ca pital allotted and fu lly paid Share capi tal ($’000) Share premiu m ($’000) Authorised At 31 Decembe r 2019 177,089,406 2,367 915,388 At 31 Decembe r 2020 177,089,406 2,367 915,388 Issued during the year - Employee share schem es 513,154 7 - At 31 Decembe r 2021 177,602,560 2,374 915,388 As at 31 December 2021, th e Com pany’s i ssued share capital consisted of 177,602, 560 ordina ry shares of £0.01 ea ch. The Compan y h as o nly one class of sha re, w hich carries no right to fi xed i ncome. Each share carries the righ t to one vote at Genera l Meetings of th e Company. 11 Sta ff costs ($'000) 2021 2020 Wages and salari es 2,117 2,770 Directors' remunerati on 3,136 2,032 Social insura nce costs and other funds 1,913 974 Share-based paymen ts 3,933 2,362 Pension contribu tion & insurance 458 67 Total Staff Cost 11,557 8,205 FINANCIAL STAT EMENTS Page 265 of 273 12 Shar e-based payme nt Energean Long Term I ncentive Plan (LTIP) Under the LTIP, Senior Management can be granted nil ex ercise price options, normally exercisable fr om three to ten years following gra nt provided an individual remains in employment. The size of awards depends on both annua l performance measures an d Total Shareholder Retu rn (TSR) over a period of up to three years. Th ere are no other post -gran t performance conditio ns. No dividends are paid over t he ves ting pe riod; how ever, Energea n’s Bo ard may decide at any time prior to th e issue or t ransfer of the shares i n respect of which an a ward is released that the part icipant wi ll receive an amount (in cash and/or additi onal Shares) equal in valu e to an y dividen ds that woul d have been pa id on those shares on such terms and over suc h period (ending no la ter t han the Rel ease Date) as the Board may determin e. This amount may assume the reinvestment of dividends (on such basis as the Board may determ ine) and may excl ude or incl ude special divi dends. The weighted average remaining contractual li fe for LTI P awards outstanding at 31 December 2021 was 1.3 years (31 December 2020: 1.4 years), number of shares outstanding 2,036,982 and wei ghted average price at grant date £5.9 9. There are further details of t he LTIP in the Remuneration Committee Report section of the An nual Report and note 26 in the consol idated financial sta tements. Deferred Share Bonus Plan (DSBP) Under the DSBP, the port ion of any a nnual bonus above 30% of the base salary of a Senior Executive nominated by the Remu neration Com mittee is deferred into shares. Deferred awards are usually granted in the form of condit ional share awards or n il -cost opti ons ( or, exceptionally , as cash-settled equivalents). Deferred awards usually vest two years after award although may vest early o n leaving employment or on a change of control. The weighted avera ge remaining cont ractual life for DSBP awards outstandin g at 31 Decem ber 2 021 wa s 0.8 yea rs ( 31 December 2020: 0.8 y ears), num ber o f sh ares outsta nding 234,902 a nd wei ghted average price at grant date £6.75. There are furth er details refer to not e 26 in the consolidated fi nancial statemen ts. 13 Related party tra nsactions The Company’s subsidiari es at 31 December 2021 a nd t he Gro up’s percentage of share capit al are set out are in no te 31 of the consol idated fin ancial statements. T he fol lowing table provides the Co mpany’s balances which are outstanding with subsidiary companies at the bala nce sheet date: ($'000) 2021 2020 Loans to subsidiari es 334,073 1,638 Receivables from share-ba sed plan to subsidiary underta kings 2,077 545 Trade and other receiva bles 129,840 23,417 Total amount s receivable from sub sidiary underta kings 465,990 25,600 Amounts paya ble to subsi diary undertak ings 1,097 385 464,893 25,215 The amoun ts outstanding are unsecured and will be settled in cash. FINANCIAL STAT EMENTS Page 266 of 273 The following table provi des the Company’s transactions only with part ially owned subsidiary companies (minority interest exists) record ed in the income sta tement: ($'000) 2021 2020 Amounts invoi ced to partially owned subsidiaries unde r a “Master Interc ompany Services Agreement ” 151 786 5,354 786 5,354 Transactio n with other related party ($’000) 2021 2020 Consulting service s by Ca pital Earth Lim ited 35 129 35 129 Capital Ea rth Limi ted is a consult ing compan y controlled by the s pouse o f one of Energean’s e xecutive directors. Refer to no te 28 in the consolidat ed financial statements fo r further details. 14 Direct ors’ remunera tion Directors’ remuneratio n h as been provided in t he rem unera tion report within the Annu al Report. Please refer to pages 133- 159 of the Ann ual Report. 15 Aud itor’s remunera tion Auditors’ remuneration has been provided in the group finan cial statem ents. Please refer to note 8 of the group financial sta tements for details of the rem uneration of the company’s a uditor on a group basis. 16 E vents after reporti ng period Please refer to note 30 of th e consolidated fin ancial statements. 151 The amounts invoiced in 2021 relate to the period prior to 25 February 2021, before Energean Israel became a wholly owned subsidiary. As a t 31 December 202 1 there are n o partially o wned subsidiarie s. OTHER INFORMA TION Page 267 of 273 O th e r I n f o r m a t i o n 2021 Report on Payments to Governments Basis of preparation This Report pro vides a co nsol idated overview o f the p ayments to governments m ade by Energean plc and its subsidiary undertakings (“Energean”) for t he full year 2021 as required u nder the Report o n Payments to Governments Regulations 2014 (2014/3209), as amended in December 2015 (2015/1928), (the “Regu lations”) and DTR 4.3A o f the Fi nanci al Conduct Au thority's Disclosure and Transparency Rules. This Report is ava ilable for downloa d from www.energean.co m . Activities Payments m ade to governmen ts that relate to Energean’s act ivities involving the explora tion, development, and production of o il a nd ga s reserve s ( “Extractive Activities”) are in cluded in thi s disclosure. Paym ents made to governments th at relate t o activiti es other tha n Extractive Acti vities are not included in thi s report as they are not withi n the scope of th e Regu lations. Government Under t he R egulations, a government is defin ed as any na tional, regional or local authority of a country and includes a department, agency or undertaking that is a subsidiary undertak ing controlled by such an authority. All of the payments i ncluded in th is disclosure have been made to nationa l governments, either directly or through a ministry or department of the national government, with the exception of Greek payments in respect of production ro yalties and licence f ees, which a re paid to Hellen ic Hydro carbon Resources Managem ent SA. Project Payments are reported a t project level wit h the exception that pay ments that are not attributable to a specific project are reported a t th e ent ity level. A “Projec t” is defined as operational acti vities whi ch are governed by a sin gle contract, lice nce, lease, concession or similar legal a greement, a nd f orm the basis for payment liabilities w ith a govern ment. If such a greements are substantia lly i nterconnected, those agreements are to be trea te d as a single project. “Substantial ly interconnec ted” means forming a set of operationally and geo graphically integrated contracts, l icences, leases or concessions or related agreements wi th substantially similar terms that a re signed with a government giving rise to payment liabilities. Suc h agreements can be govern ed by a single contract, joint venture, product ion sharing agreement, or other overarch ing l egal agreement. Indicators of integration include, bu t are not limited to, geographic proxim ity, the u se of sh ared infra structure and common opera tional management. Payments The informatio n is reported under the foll owing payment types. Productio n entitlements Under producti on- sha ring agreements (“PSAs”), producti on is shared between the host government an d the other parties to the PSA. The host govern ment typically receives its share or entitlement in kind rather than being paid in cash . Taxes Taxes are paid by Energean on its income, profits or production and are reported net of refunds. Consumption taxes, personal income taxes, sales taxes, property and environmental taxes are excluded. OTHER INFORMA TION Page 268 of 273 Royalties Royalties are pay ments f or the ri ghts to extract oil and gas reso urces, typically at a set percentage o f revenue less any all owable deductions. Dividends Dividends, in th is context, are dividend pa yments ot her than those pa id to a government as an ordina ry shareholder of an entity, unless paid in lieu of production entitlem ents or royalties. For the y ear en ded December 31, 2021, there were no repo rtable dividend p ayments to a govern ment. Bonuses Bonuses are usually paid upon signature of an agreement or a cont ract, decla ratio n of a commercia l discovery, commen cement of product ion or achievement of a specified mileston e. Fees Fees and other sums ar e paid as consideration for the acquisition of a licence that enables access to an area for the purposes of performing Extractive Activities. Administra tive government fees th at are not specifically related to Extract ive Activities, or to access extractive resources, a re excluded, as are payments made in return for services provided by a gov ernment. Infrastruct ure improvements Infrastructu re improvemen ts pay ments relat e to the construction of infrastructure (roa d, bridge or rail ) that are not substantially dedicated for the use of extractive activities. Paymen ts t hat are of a social investment in natu re, for example buil ding of a scho ol or hospital, are al so excluded. Fo r the year ende d December 31, 2021, there were no reportabl e payments for in frastructure im provements. Cash basis Payments are reported on a ca sh basis, mea ning that they are reported in th e peri od in which they are paid, as o pposed to being reported on an a ccruals ba sis ( which would mea n that they were reported i n the period for whi ch the lia bilities arise). Materiality level For each paym ent type, total payments below $118,329 to a govern ment are excluded from thi s report. Exchange rate All paym ents have been repo rted in US dollars. Pay ments ma de in curren cies other tha n US dolla rs are typically tra nslated at the average exchange ra te of the y ear under considera tion. OTHER INFORMA TION Page 269 of 273 Payments ov erview The table below sho ws the relevant payment s to governments made by Energe an in the year ended 31 December 2021 show n by country an d payment type. Of the seven p ayment types that t he U K regulations require disclosure of, Energean did no t make any payments i n respect o f productio n entitlements, dividends or i nfrastructu re improvements, therefore, those categories a re not shown in th e tables. Country ($m) Income ta x es Royalties Bonuses Fees Total Egypt 33.60 152 - 0.70 0.12 34.42 Israel - - - 0.42 0.42 Italy - 19.13 - 3.37 22.50 United Kingdom (0.79) - - 1.22 0.43 Total 32.81 19.13 0.70 5.13 57.77 Payments by pr oject Payments by Project ($m ) Income ta xes Royalties Bonuses Fees Total Egypt - A bu Qir 33.60 - 0.50 0.10 34.20 Egypt - North El Amriya / North Idku - - - 0.02 0.02 Egypt - Ex ploration - - 0.20 - 0.20 Egyptian Go vernment Report 33.60 - 0.70 0.12 34.42 Israel - Karish/Tanin leases - - - 0.18 0.18 Israel - Explo ration assets - - - 0.24 0.24 Israeli Govern ment Report - - - 0.42 0.42 Italy - A.C 13.AS - - - 0.06 0.06 Italy - A.C 14.AS - - - 0.08 0.08 Italy - A.C 16.AG - - - 0.32 0.32 Italy - A.C Other - - - 0.14 0.14 Italy - B.C 10.AS - 1.35 - 0.15 1.50 Italy - B.C 13.AS - 9.54 - 0.33 9.87 Italy - B.C 14.AS - 4.05 - 0.13 4.18 Italy - B.C 9.AS - - - 0.03 0.03 Italy - B.C1.LF - - - 0.09 0.09 Italy - B.C2.LF - - - 0.07 0.07 152 Our Egyptian assets are o perated under PSAs, which set out the terms of the activities, including the applicable tax laws and regulations. Under the Abu Qir PSA, Energean is entitled to the net production from the asset, which forms t he basis for the calculation and reporting of its payments to the Egyptian Governmen t. Taxes include in -kind volumes due by Energean to the Egyptian Tax Authorities under the PSAs, which provide that the tax obligations of the company are settled by the Egyptian General Petroleum Cor poration (EGPC) out o f its share of profit oil. The monetary v alue of those payments is determined using the s ame method as per produ ction entitlements. The corporate income taxes paid in 2021, were settled by EGPC on Energean’s behalf ou t of pr oduction entitlemen t (payment in kind) , in accordance with th e terms of our PSAs. The terms of o ur PSAs provide that corporate income taxes are paid in t h e year following that to which they relate. Accordingly, 2021 payment relates to 2020 taxable profi ts. OTHER INFORMA TION Page 270 of 273 Italy - B.C7.LF - 0.81 - 0.19 1.00 Italy - B.C8.LF - 1.19 - 0.34 1.53 Italy - B.C Other - - - 0.20 0.20 Italy - C.C6. EO - 0.97 - 0.22 1.19 Italy - Candela - - - 0.26 0.26 Italy - Colle Di Lauro - 0.27 - 0.04 0.31 Italy - Comi so II - 0.12 - 0.01 0.13 Italy - Gara guso - 0.49 - 0.07 0.56 Italy - Monti gnano - - - 0.06 0.06 Italy - S.Anna ( Tresauro) - 0.34 - 0.01 0.35 Italy - Other - - - 0.57 0.57 Italian Govern ment - 19.13 - 3.37 22.50 UK - Tors & Wenlock assets - - - 0.93 0.93 UK – Scott & Telford assets - - - 0.03 0.03 UK - Appra isal assets - - - 0.21 0.21 UK – Ma rkham 0.05 0.05 UK – Corpo rate (0.79) - - - (0.79) UK Governm ent (0.79) - - 1.22 0.43 Total 32.81 19.13 0.70 5.13 57.77 OTHER INFORMA TION Page 271 of 273 Glossary CO2 - Carbon dioxide SO2 - Sulphur dioxide NOx - Nitrogen oxides GBP or £ - Pound sterling USD or $ - US dolla r EUR or € - Euro A ACQ - Annual Contra ct Quantity AGM - Annual Genera l Meeting B bbl - Barrel Bcf - Billion cu bic feet bcm - Billion cubic metres boe - Barrels of oil equi valent boe/d - Barrels of oil equivalent per day bopd - Barrel s of oil per day C Capex - Ca pital expen diture CEO - Chief Executive Of ficer CF O - Chief Financia l Off icer COO - Ch ief Operating Officer CMAPP - Corpora te Major Accident Preven tion Policy CNG - Compresse d natural gas CPR - Competent Per son’s Report CSR - Corporate Socia l Respo nsibility E E&P - Exploratio n and production EBITDAX - Earnings before interest, tax, depreci ation, amorti sation and explora tion expenses EBRD - European Bank f or Reconstruction an d Development EO R - Enhan ced Oil Recovery EPCIC - Engineering, Procu rement, Co nstruction, Installatio n and Commissioning F FAR - Fa tal Accident Rate - number of fatalities per 100 million hours worked FDP - Field Developm ent Plan FEED - Front-end Engin eering and Design FI D - Final Investment Decisio n FPSO - Floatin g Production Storage and Offloa ding vessel FRC - Fina ncial Report ing Council FRS - Financial Reporting Standard G G&A - General and Admini strative GSPA - Gas Sale and Purch ase Agreemen t GSP - GSP Offsho re S.R.L. H H&S - Health and Safety HMRC - HM Revenue an d Custo ms HSE - Health , Safety and Environ ment OTHER INFORMA TION Page 272 of 273 I IAS - International Accounting Standard IASB - Intern ational Ac counting Standards Board IFRS - International Financial Reportin g Standard INGL - Israel Natural G as Lines Ltd IPO - Initia l Public Offering IPP - Independent Power Produce rs IR - Investo r Relations J JOA - Joint Operating Agree ment JV - Joint Venture K kboepd - Thousan ds of barrels of oil equiva lent per day km - Kilo metres KPI - Key Performa nce Indica tor L LIBOR - London Interbank Offered Rate LSE - London St ock Exchange LTI - Lost Time Injury LTIF - Lost Time Inju ry Frequency M M3 - Cubic metre MN - Million MMbbls - Million barrel s MMbo - Mill ion barrels of oi l MMboe - Million barrels of oil equivalents MMbtu - Million British Thermal Units MMscf - Million standard cubic feet MMscf/day or MMscfd - Mill ion standard cubi c feet per day MMtoe - Millio n tonnes of oil equiva lent MoU - Memoran dum of Understanding N NGO - Non-Governm ental Organisat ion NPV - Net Pres ent Valu e NSAI - Netherlan d, Sewell & Associates, Inc. O Opex - Opera ting expenses P PP&E - Property, plant an d equipment R 2P reserves - Proven and probable reserves RBL - Reserve Based Lending 2C resources - Con tingent resources S Sq km or km2 - Squa re kilometres T Tcf - Trillion cubi c feet TRIR - Total Rec ordable Injury Rate TASE - Tel Aviv Sto ck Exchange W WI - Working interest OTHER INFORMA TION Page 273 of 273 Company Information Registered office Energean plc Accurist House 44 Baker Street London W1U 7AL United Kingdom Tel: +44 203 655 7200 Corporate brokers Morgan Stanley 25 Cabot Square Canary Wharf London E14 4QA Stifel Nicolaus Europe 150 Cheapside London EC2V 6ET Peel Hunt Moor House, 120 London Wall London EC2Y 5ET Auditor Ernst & Young LLP 1 More London Place London SE1 2AF Legal adviser White & Case LLP 5 Old Broad Street London EC2N 1DW Financial PR adviser FTI Consulting LLP 107 Cheapside London EC2V 6DN Registrar Computershare Invest or Services plc The Pavilion s Bridgwater R oad Bristol BS13 8AE Financial calendar May 2022: Annua l General Meeting