Earnings Release • Sep 8, 2022
Earnings Release
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National Storage Mechanism | Additional information RNS Number : 6996Y Energean PLC 08 September 2022 THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION Energean plc ("Energean" or the "Company") Results for Half Year Ended 30 June 2022 London, 8 September 2022 - Energean plc (LSE: ENOG TASE: ��������) is pleased to announce its half-year results for the six months ended 30 June 2022 ("H1 2022"). Mathios Rigas, Chief Executive of Energean, commented: "During H1 2022, Energean delivered strong operational and financial results. The ex-Edison assets have outperformed our expectations and our flagship Karish project is on track to start production within weeks and will enhance energy security in Israel and the region. In addition, our growth drilling and development operations offshore Israel have enhanced our portfolio by de-risking 58 bcm of natural gas, and we are evaluating multiple geographical routes to monetisation through either increased Israeli domestic sales or key regional export markets. The strong financial performance of our existing assets, the current readiness status of our Karish project, and our strong liquidity position have allowed us to, today, declare our maiden quarterly dividend, in line with our previously announced dividend policy. We are concurrently raising our medium-term targets to annual revenues of $2.5 billion and Adjusted EBITDAX of $1.75 billion, underpinned by production of more than 200 kboed. "In a year where global focus has shifted to security of energy supply and affordability of energy for the consumers, we remain proud of our landmark ESG commitments, which remain at the heart of our operations. From choosing to focus on gas as the driver of energy transition; to a 74% reduction in emissions intensity since 2019[1]; to our commitment to be net zero by 2050, and our ongoing positive engagement with the communities that host our operations, we commit to being the best version of Energean possible. "Finally, the global energy dynamic changed in February 2022. Russia's tragic invasion of Ukraine revealed a major weakness in European energy security and, by extension, European energy policy. Overreliance on a single supplier has - and will continue to - fundamentally disrupt the European global energy dynamic. We therefore call on governments and the broader international energy stakeholder community to recognise the value of natural gas as the foundation of, and catalyst for, a just transition. Policy must be adjusted to encourage domestic upstream projects that will enhance security of energy supply as well as international energy transportation projects that will interconnect Europe with the East Med, which can be a stable and reliable supplier of energy for the European consumer." Highlights - Operational and Corporate �� Declared maiden quarterly dividend of 30 US$ cents/share o Accelerated timetable due to strong cash flows from the ex-Edison E&P assets, readiness of Karish project and strong liquidity position o Aligned with commitment to: �� Return an initial $50 million per quarter no later than the end of 2022 and at least $1 billion by the end of 2025 �� Provide a reliable and progressive dividend stream to shareholders, expecting to reach a minimum of $100 million per quarter once medium-term targets are achieved �� On track to deliver first gas from Karish within weeks �� 58 bcm of resources de-risked across the Olympus Area following successful results from the Athena exploration well in May 2022; Zeus elected for the fifth drilling slot with the aim of further refining volumetrics and enabling faster progress to commercialisation �� Ongoing drilling operations on the Hermes prospect, with results expected later this year �� New spot gas sales agreement signed with Israel Electric Corporation ("IEC") in March 2022, enhancing ability to fill the capacity of the Energean Power FPSO �� Improved gas sales prices confirmed in Egypt and Israel o Abu Qir Production Sharing Contract ("PSC") amendment increases gas sales prices o 13% increase in the Israeli Price Tariff ("PT") raises current weighted average sales price to $4.3/mmBTU (approximately $4.6/mcf) Highlights - Financial �� Strong half-year financial results underpinned by strong commodity prices o Revenues were $339.0 million, a 65% increase versus H1 2021 ($205.5 million) o Adjusted EBITDAX was $198.2 million[2], a 165% increase versus H1 2021 ($74.7 million) o Group cash as of 30 June 2022 was $812.1 million (including restricted amounts of $138.4 million) �� H1 production was 35.4 kboed (73% gas), a 19.5% reduction year-on-year, primarily due to anticipated natural decline at Abu Qir, which is expected to be offset by production from NEA/NI, expected onstream by the end of 2022 �� One-off windfall tax in Italy totalling $29.3 million (40% paid in H1 2022, with the remainder to be paid by end-November 2022). The Company continues to advocate for domestic energy investment to support Italian energy and socio-economic security H1 2022 $m H1 2021 $m Increase / (Decrease) % Average working interest production (kboed) 35.4 44.0 (19.5) Sales and other revenue 339.0 205.5 65.0 Cash Cost of Production[3] 123.3 122.4 0.7 Cash Cost of Production per boe 19.2 15.4 24.7 Cash S,G&A6 15.1 17.0 (11.4) Adjusted EBITDAX[4] 198.23 74.7 165.3 Operating cash flow[5] 146.6 53.1 176.0 Development capital expenditure 345.7 200.8 72.2 Exploration capital expenditure 37.0 29.2 26.7 Decommissioning expenditure 1.5 1.7 (11.8) Net debt (including restricted cash) 2,174.6 1,692.6 28.5 Outlook �� Medium-term targets increased following confirmation of improved gas prices in Israel and Egypt o Annual revenues now expected to be $2.5 billion (up from $2.0 billion) o Annual Adjusted EBITDAX6 now expected to be $1.75 billion (up from $1.4 billion) �� First gas from Karish on track for delivery within weeks �� First gas from NEA/NI, Egypt is on track for year-end 2022 �� Results from the Hermes and Zeus wells, expected later this year �� 2022 net debt guidance reduced to $2.4 - $2.5 billion (down from $2.6 - $2.8 billion) �� 2022 production guidance (ex-Israel) narrowed to 34 - 37 kboed (from 35 - 40 kboed) o H2 production (ex-Israel) expected to benefit from the start-up of the Abu Qir NAQ-PII#6 infill well and recommencement of production at fields in Italy following planned maintenance in June 2022 o Israel production rate in Q4 2022 expected to average 60 - 100 kboed (15 - 25 kboed on a 2022 annualised basis) �� Per barrel financial and operational metrics expected to be significantly enhanced following first gas from Karish o Cash Cost of Production expected to reduce to $14 - 18/boe o Emissions intensity expected to reduce to 7 - 8 kgCO2e/boe, approximately half the current average for the global oil and gas industry Enquiries For capital markets: [email protected] Kate Sloan, Head of IR and ECM Tel: +44 7917 608 645 For media: [email protected] Paddy Blewer, Head of Corporate Communications Tel: +44 7765 250 857 Conference call A webcast will be held today at 08:30 BST / 10:30 Israel Time. Webcast: https://edge.media-server.com/mmc/p/79ysvw5a Dial-In: https://register.vevent.com/register/BIe2a07fbb3e0745b29986a53e01755548 (Please note, once you register for the conference call line you will receive a unique pin code and dial-in details.) The presentation slides will be made available on the website shortly www.energean.com. Maiden Dividend Declaration Strong financial performance in H1 2022 has allowed Energean to accelerate payment of its maiden quarterly dividend, and the Company has today declared a dividend of 30 US$ cents per share. This represents Energean's first payment under its commitment to pay average quarterly dividends of $50 million, rising to $100 million once it achieves its medium-term targets. Energean remains committed to sharing its success with shareholders and re-confirms its target of returning at least $1 billion to shareholders by end-2025. Energean Operational Review Production H1 2022 average working interest production was 35.4 kboed (73% gas), down 19.5% year-on-year due to natural decline in Egypt, maintenance activities at Rospo Mare, Italy, and the shut-in of production at Prinos, Greece. Energean is narrowing the full year guidance range (excluding Israel) to 34 - 37 kboed (from 35 - 40 kboed). Karish is expected to commence production within weeks, with Q4 2022 production contribution of 60 - 100 kboed (15 - 25 kboed annualised). Production during H2 2022 is expected to benefit from: �� Commencement of production from the Abu Qir NAQ-PII#6 infill well �� Resumption of production at Rospo Mare, Italy, following planned maintenance in June 2022 �� Commencement of production from Karish H1 2022 Kboed FY 2022 guidance Kboed H1 2021 Kboed Israel - 15.0 - 25.0 (including 0.7 - 1.2 bcm of gas) - Egypt 24.8 24.0 - 26.0 31.4 Italy 9.3 9.0 - 9.5 10.2 Greece, Croatia and UK 1.3 1.0 - 1.5 2.4 Total production (including Israel) 35.4 49.0 - 62.0 44.0 Total production (excluding Israel) 35.4 34.0 - 37.0 44.0 Israel Karish Project The Energean Power FPSO arrived in Israel on 5 June 2022, after which it was moored to the seabed and connected to the risers as planned. Energean remains on track to deliver first gas from the Karish development project within weeks. During H1 2022, Energean negotiated an amendment to the deferred payment to TechnipFMC. Payment for a total of $250 million relating to capital expenditure accrued due to 2022 activities will be deferred, with payment made in eight equal quarterly instalments commencing nine months following practical completion of the project. Deferred amounts do not incur any interest. Energean's capital expenditure guidance of $560 - 610 million for Israel includes the full $250 million that will be deferred. As part of the amendment, the period from which liquidated damages due to Energean apply now commences on 30 September 2022. Growth Projects The Karish North KN-01 development well was successfully drilled and completed in early August 2022. First gas from Karish North, as well as the completion and installation of the second gas sales export riser and the second oil train, remains on track for end-2023. Drilling Campaign 1. Athena Gas Discovery In May 2022, Energean announced a commercial discovery from the Athena exploration well, which is estimated to contain recoverable gas volumes of 8 bcm (283 bcf / 51 mmboe) on a standalone basis. The discovery de-risked an additional 50 bcm (1.8 tcf / 321 mmboe) of mean unrisked prospective resources across Energean's Olympus Area (total 58 bcm / 372 mmboe including Athena). Multiple commercialisation options continue to be under evaluation for a standalone tie-back to the Energean Power FPSO or as part of a new Olympus Area development. 2. Karish Main (KM-04) In June 2022, Energean safely and successfully completed the KM-04 appraisal well. The KM-04 appraisal well achieved the following: �� Gas and associated liquids were encountered in the previously undrilled fault block between Karish Main and Karish North; �� Gas was encountered in the A-sands on the flanks of the Karish Main structure, these sands were tested and fluid samples obtained; and �� An oil rim was confirmed in the central part of the field, with thickness towards the lower end of the pre-drill expectation range (5-10 metres vs. 0-100 metres pre-drill). A sample of oil was obtained for testing. Energean expects to be able to commercialise the oil volumes through the existing well stock. Additional analysis is being undertaken to further refine reserves volumes and the liquids-to-gas ratio across the Karish lease. 3. Hermes Exploration Well The Hermes exploration well spudded in August 2022. Drilling operations are ongoing, with results expected later this year. Energean has an option to drill a sixth well, which may be exercised, depending on the results from Hermes. 4. Zeus Well Energean has elected to drill the Zeus structure, Block 12 (Olympus Area) using its fifth drilling rig slot and the well will spud following drilling of the Hermes well. Zeus is estimated to contain 10 - 12 bcm of gross prospective unrisked gas resources in the A/B/C sands and results will enable Energean to gather additional data to further refine resource estimates across the entire Olympus Area. Gas and Liquids Contracts and Gas Pricing In July 2022, Israel Electric Authority announced a 13% increase in the PT from 27.6 to 31.4. This translates into a weighted average sales price under Energean's Gas Sales and Purchase Agreements ("GSPAs") to $4.3/mmBTU (approximately $4.6/mcf). In March 2022, Energean signed a limited-term exclusivity agreement and term sheet for the marketing of its Karish liquids with Vitol SA. A firm offtake agreement is in the final stages of negotiation and is expected to be signed before Karish first gas. In May 2022, Energean signed a new GSPA, representing up to 0.8 bcm/yr, to supply gas to the East Hagit Power Plant Limited Partnership ("EH Partnership"), a partnership between the Edeltech Group and Shikun & Binui Energy. The GSPA is for a term of approximately 15 years, for a total contract quantity of up to 12 bcm. The contract contains provisions regarding floor pricing, offtake exclusivity and a price indexation mechanism (not Brent price linked). In July 2022, Energean Israel signed a new GSPA, representing 0.08 bcm/yr, to supply gas to Shapir-G.E.S Concessionaire IPP Ltd for the Ashdod Desalination Plant. The GSPA is for a term of 20 years starting from January 2024 and includes take-or-pay provisions and floor pricing. Energean has now signed a total of 20 GSPAs for the firm supply of 7.2 bcm/yr of gas on plateau. The contract signed with IEC during March 2022 helps to optimise Energean's gas sales portfolio and may enable Energean to fully utilise the available capacity of its FPSO. Under the contract with IEC, the gas price will be determined month ahead with volumes determined on a daily basis. Starting upon commencement of first gas, the agreement is valid for an initial one-year period with an option to extend, subject to ratification by both parties. Egypt Production Working interest production from the Abu Qir area averaged 24.8 kboed (86% gas) during H1 2022 with full year production guidance narrowed to between 24 - 26 kboed. NEA/NI NEA/NI was 72% complete as of 31 July 2022. Subsea installation activities are complete and the first well is expected to spud imminently. Remaining activities include the finalisation of the Abu Qir platform modifications and the tie-in and commissioning of the subsea production systems. First gas from the first well is on track for end-2022. Abu Qir Commercial During August 2022, Abu Qir Petroleum and EGPC agreed an amendment to the PSC, resulting in improved gas sales pricing. Drilling programme Energean is completing the NAQ-PII#6 well to support production in the Abu Qir concession. Four additional infill wells on the Abu Qir field are expected to be drilled between 2023 and 2024. Receivables At 30 June 2022, net receivables (after provision for bad and doubtful debts) in Egypt were $109.6 million (30 June 2021: $158.7 million), of which $64.2 million (30 June 2021: $94.0 million) was classified as overdue. Italy Working interest production from Italy averaged 9.3 kboed (43% gas) during H1 2022 with full year production expected to be between 9.0 and 9.5 kboed. First gas from Cassiopea remains on track for H1 2024. Windfall tax During H1 2022, Italy introduced a windfall tax in the form of a law decree which imposed a 25% one-off tax on profit between October 2021 and April 2022 compared to the same period in the prior year. At 30 June 2022, an advance payment of 40%, or approximately $11.7 million, had been remitted to the Italian Revenue Agency, with the remaining balance, $17.6 million, to be paid by the end of November 2022. Rest of producing portfolio In the six-months to 30 June 2022, working interest production from the rest of the portfolio averaged 1.3 kboed (30% gas). Full year production is expected to be between 1.0 - 1.5 kboed. Greece First oil from the Epsilon development is expected in H1 2024. In July 2022, the Greek government passed legislation setting out the legal framework for Carbon Capture, Utilisation and Storage ("CCUS") licences. Pre-FEED activities with Wood Group and the subsurface studies with Haliburton have progressed well and are expected to complete before the end of this month. This progresses Energean's plans to achieve net zero emissions by 2050. Croatia Energean is continuing FEED activities for the development of the Irena gas field. The target for final investment decision remains Q4 2022. United Kingdom The Isabella appraisal well spudded in September 2022. Energean Corporate Review ESG Net Zero Energean's Scope 1 and 2 carbon emissions intensity in H1 2022 was estimated to be approximately 17.3 kgCO2e/boe, a 5.5% reduction versus 2021 emissions levels[6]; and a 74% reduction versus the 2019 base measurement year[7]. Post-first gas from Karish, emissions are expected to be approximately 7-8 kgCO2e/boe, which is approximately half the current average for the global oil and gas industry, and Energean expects to maintain or reduce this lower level going forward. The decrease between YE21 and H122 carbon emissions intensity was due to energy use optimisation activities in Egypt and the prolonged shut-down of the Prinos facilities in Greece. Environmental, Social and Governance ("ESG") Reporting and Ratings In April 2022, Energean was rated as AA by MSCI for a second year running. In July 2022, Israeli's Maala Index updated its rating for Energean to Platinum, up from Gold in the previous year. The Maala Index is an ESG rating system and stock market index that rates the largest companies in Israel on an annual basis. Also in July, Moody's published ESG Issuer Profiles, wherein Energean ranked above average on all three categories compared to 89 E&P peers. In August 2022, Energean was confirmed as a constituent of the FTSE4Good Index Series, following the FTSE4Good Index Series June 2022 review. The FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong ESG practices. Energean has also continued to comply with the Task Force on Climate Related Financial Disclosure ("TCFD") recommendations, full disclosure of which is provided in the 2021 Annual Report and Accounts as well as the 2021 Sustainability Report. Corporate In July 2022, Energean re-entered the Tel Aviv Stock Exchange 35 Index. 2022 guidance FY 2022 Production Israel (kboed) 15.0 - 25.0 (including 0.7 - 1.2 bcm of gas) Egypt (kboed) 24.0 - 26.0 Italy (kboed) 9.0 - 9.5 Greece, Croatia & UK North Sea (kboed) 1.0 - 1.5 Total production, including Israel (kboed) 49.0 - 62.0 Total production, excluding Israel (kboed) 34.0 - 37.0 Financials Consolidated net debt ($ million) 2,400 - 2,500 Cash Cost of Production (operating costs plus royalties) Israel ($ million) 100 - 110 Egypt ($ million) 50 Italy ($ million) 170 including flux costs of 30 Greece, Croatia & UK North Sea ($ million) 50 Total Cash Cost of Production ($ million) 370 - 380 Cash S,G&A ($ million) 35 - 40 Development and production capital expenditure Israel ($ million) 560 - 610 Egypt ($ million) 140 Italy ($ million) 60 Greece, Croatia & UK North Sea ($ million) 40 Total development & production capital expenditure ($ million) 800 - 850 Exploration expenditure Israel ($ million) 150 - 180 (5 wells) Egypt, Italy, Greece, Croatia & UK North Sea ($ million) 15 Total exploration expenditure ($ million) 165 - 195 Decommissioning UK North Sea 5 Italy 10 Decommissioning expenditure ($ million) 15 Energean Financial Review Financial results summary H1 2022 H1 2021 Change Average daily working interest production (kboed) 35.4 44.0 (19.5%) Sales revenue ($m) 339.0 205.5 65.0% Realised weighted average oil price ($/boe) 87.5 47.3 85.0% Realized weighted average gas price pre-hedging ($/mcf) 10.4 4.2 147.6% Realized PSV gas (Italian gas) price pre-hedging ($/mcf) 30.9 7.3 323.3% Cash cost of production[8] ($m) 123.3 122.4 0.74% Cash cost of production per barrel ($/boe)[9] 19.2 15.4 24.7% Cash SG&A[10] 15.1 17.0 (11.2%) Adjusted EBITDAX[11] ($m) 198.2 74.7 165.3% Profit/(Loss) after tax ($m) 118.7 (35.7) 432.5% Cash flow from operating activities ($m) 146.6 53.1 176.0% Capital expenditure ($m) 398.3 230.0 73.2% H1 2022 FY 2021 Change Total borrowings ($m) 2,986.8 2,947.1 1.4% Cash and cash equivalents and restricted cash ($m) 812.1 930.6 (12.7%) Net debt / (cash) ($m) (including restricted cash) 2,174.6[12] 2,016.6 7.8% Revenue, production and commodity prices Group working interest production averaged 35.4 kboed, a decrease of 19.5% for the period (H1 2021: 44.0 kboed), with the Abu Qir field, offshore Egypt, accounting for approximately 70% of total output. The production split was 73% gas (H1 2021: 72%) and 27 % oil (H1 2021: 28%). Production decreased due to planned maintenance activities in Italy commenced in June 2022 and the shut-down of Prinos. Egypt production expected to benefit in H2 2022 from the start-up of the Abu Qir NAQ-PII#6 infill well and the re-start of production at Prinos. The Company has narrowed its guidance for production (excluding Israel) to 34 to 37 kboed for the full year (49.0 to 62.0 kboed for the full year including Israel). H1 2022 revenue was $339.0 million, a 65.0% increase for the period (H1 2021: $205.5 million), primarily due to the higher commodity prices achieved: �� During H1 2022, the average Brent oil price was $104.9/bbl (H1 2021: $65.2/bbl) and the average PSV (Italian gas) price was ���101.2/MWh ($32.4/mcf) (1H 2021: ���21.2/MWh ($7.3/mcf)) �� Commodity price strength underpinned 1H 2022 total revenues of $339 million (H1 2021: $206 million). Gas sales were $211 million (H1 2021: $106 million) with a post-hedge realised PSV price in Italy ���82.6/MWh or $26.6/mcf (H1 2021: ���20.6/MWh or $4.7/mcf). Liquid sales, crude and petroleum product, were $145 million (H1 2021: $99 million), with a realised price of $87.5/boe (H1 2021: $47.3/boe). Adjusted EBITDAX for the period was $198.2 million (H1 2021: $74.7 million), the increase of 165% is predominantly a result of the higher revenue achieved due to strong commodity prices. Underlying cash production costs Cash production costs for the period were $123.3 million (H1 2021: 122.4 million). Although production costs are relatively stable year on year, the unit costs for the period were $19.2 /boe (H1 2021: $15.4 /boe), this increase in unit production costs was primarily driven by decreased production in Italy and Egypt, as applied to a primarily fixed cost base. Additionally, production costs were also impacted by increased royalties in Italy associated with the commodity price-drive higher revenues. Depreciation, impairments and write-offs Depreciation charges on production and development assets decreased by 7% to $33.9 million (H1 2021: $36.3 million). On a per barrel of oil equivalent of production basis, this represented a 15% increase, to $5.3/boe (H1 2021: $4.6/boe). During the current period and comparative prior period no impairment of cash generating units (CGUs) was recognised. An impairment of intangible assets of $0.4million was recognised in Italy, following relinquishment of an exploration licence. Other income and expenses Other expenses of $8.8 million (H1 2021: $3.1 million) includes $3.5 million of one-off restructuring costs incurred in Greece, $1.3 million write down of inventory supplies, $1.1 million loss incurred from disposal of property, plant and equipment and $1.4 million increase in legal provisions. Other income of $1.6 million (H1 2021: $3.6 million) relates to reversal of prior period provisions, that were reassessed in the current year based on the latest facts and circumstances. Finance income / costs Net finance costs in H1 2022 were $35.9 million (H1 2021: $42.2 million). Finance costs ($38.6 million (H1 2021: $44.9million)) are composed of $19.8 million (H1 2021: $17.0 million) of interest on borrowings excluding amounts capitalised and other finance cost of $18.8 million (H1 2021: $27.9 million), excluding amounts capitalised. Other finance costs include debt arrangement fees and unwinding of the discount on the right of use assets, decommissioning provisions, deferred consideration, convertible loan notes and contingent consideration. Finance income was $2.7 million for the period (H1 2021: $2.7 million). Commodity hedging Energean undertakes hedging activities as part of the ongoing financial risk management to protect against commodity price volatility and to ensure the availability of cash flow for re-investment in capital programmes that are driving business delivery. Commodity hedge contracts entered into in Italy aim to mitigate the risk of changes to the selling price of natural gas. Energean has commodity price hedges of $33 million outstanding as of 30 June 2022 (H1 2021 $nil). The hedges reflect 300,000 MWh hedged at an average price of ���39.60/MWh($12.7mcf). Taxation Energean recorded a net income tax recovery of $8.9 million in H1 2022 (H1 2021 taxation expense: $15.2 million), composed of corporation tax charges of $67.1 million as offset by a deferred tax recovery of $76.0 million. The deferred tax recovery is a result of the utilisation of carried forward tax losses in the period and the recognition of previously unrecognised deferred tax on carried forward losses, of which the largest is Italy ($66.5million), to offset forecast taxable profits stemming from increased Brent and PSV price expectations. Taxation charges in the period ended 30 June 2022 include $27.1 million relating to taxes (non-cash in nature) being deducted at source in Egypt plus windfall tax payable in Italy of $29.3 million. During H1 2022, Italy introduced a windfall tax in the form of a law decree which imposed a 25% one-off tax on profit between October 2021 and April 2022 compared to the same period a year earlier. At 30 June 2022 an advance payment of 40%, or approximately $11.7 million, had been remitted to the Italian Revenue Agency, with remaining balance, $17.6million, to be paid by the end of November 2022. Profit after tax Profit after tax was $118.7 million (1H 2021: $35.7 million loss). This increase is primarily due to the $134 million year-on-year increase in revenue, relatively stable operating cost, $9 million decrease in foreign exchange losses and $24 million increase in a net income tax recovery when compared to H1 2021. Earnings per share were $0.67 per share compared to a loss of $0.20 per share for H1 2021. The increased earnings per share was driven by increased profit after tax. The diluted earnings per share were $0.66 per share which consider the impact of Long Term Incentive Plans (LTIPs), the Deferred Bonus Plans (DBP) and the convertible loan notes. Operating cash flow In H1 2022, Energean recorded a cash inflow from operations before changes in working capital of $159.1 million (1H 2021: $48.6 million). After working capital movements and taxation received/(paid), the cash inflow in H1 2022 was $146.6 million (H1 2021: $53.1 million). The year-on-year increase in operating cash flow has been predominantly driven by the growth in revenues delivered between the two periods. As discussed above, the increase in revenues during the period is predominantly due the higher commodity price environment. Capital Expenditures During the period, the Group incurred capital expenditure of $398.3 million (H1 2021: $230 million). Capital expenditure mainly consisted of development expenditure in relation to the Karish Main and Karish North Fields ($286.8 million) in Israel, the NEA/NI project in Egypt ($40.9 million), the Cassiopea field in Italy ($9.9 million), the Scott field in the UK ($0.2 million) and exploration and appraisal expenditure relating to Athena in Israel ($34.4 million) plus the Glengorm and Isabella discoveries in the UK ($1.4 million). Net Debt As at 30 June 2022, net debt of $2,174.6 million (FY21: $2,016.6 million) consisted of $2,500 million of Energean Israel senior secured notes, $450 million of Energean plc senior secured notes, $50 million of convertible loan notes (relating to the acquisition of the minority stake in Energean Israel), $10 million of Greek Loan notes, $26 million draw down on the Greek Black Sea Trade Development Bank loan, less deferred amortised fees, the equity component of the convertible loan ($10.5 million) and cash balances of $812.1 million (including $138.4million of restricted cash). The Senior Secured Notes (both at Energean Plc and Energean Israel) have fixed interest rates, a blended average interest rate of approximately 5%, and have decreased Energean's interest rate exposure and increased Energean's weighted average debt maturity to approximately six years. Shareholder Distributions Strong financial performance in H1 2022 has allowed Energean to accelerate payment of its maiden quarterly (Q2) dividend, and the Board is pleased to declare a dividend of 30 US$ cents per ordinary share to be paid on 30 September 2022. Non-IFRS measures 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, underlying cash cost of production and S,G&A, capital expenditure, net debt and gearing. Adjusted EBITDAX Adjusted EBITDAX is a non-IFRS measure used by the Group to measure business performance. It is calculated as profit or loss for the period, adjusted for discontinued operations, taxation, depreciation and amortisation, share-based payment charge, impairment of property, plant and equipment, other income and expenses, net finance costs and exploration and evaluation expenses. The Group presents adjusted EBITDAX as it is used in assessing the Group's growth and operational efficiencies as it illustrates the underlying performance of the Group's business by excluding items not considered by management to reflect the underlying operations of the Group. H1 2022 $m H1 2021 $m Adjusted EBITDAX[13] 198.2 74.7 Reconciliation to profit / (loss): Depreciation and amortisation (33.9) (36.3) Share-based payment charge (2.7) (2.3) Exploration and evaluation expense (4.3) (1.0) Other expenses (8.8) (3.1) Other income 1.6 3.6 Finance income 2.7 2.7 Finance cost (38.6) (44.9) Net foreign exchange loss (4.5) (13.9) Taxation income / (expense) 8.9 (15.2) Profit / (loss) from continuing operations 118.7[14] (35.7) Cash Cost of Production Cash Cost of Production is a non-IFRS measure that is used by the Group as a useful indicator of the Group's underlying cash costs to produce hydrocarbons. The Group uses the measure to compare operational performance period-to-period, to monitor cost and assess operational efficiency. Cash cost of production is calculated as cost of sales, adjusted for depreciation and hydrocarbon inventory movements. H1 2022 $m H1 2021 $m Cost of sales 158.0 147.6 Less: Depreciation (32.3) (33.8) Change in inventory (2.4) 8.6 Cost of production 123.3 122.4 Total production for the period (MMboe) 6.4 7.9 Cost of production per boe ($/boe) 19.215 15.4 Cash Selling, General & Administrative Expense (SG&A) Cash SG&A excludes certain non-cash accounting items from the Group's reported SG&A. Cash SG&A is calculated as follows: Administrative and Selling and distribution expenses, excluding depletion and amortisation of assets and share-based payment charge that are included in SG&A. H1 2022 H1 2021 $m $m Administrative expenses 19.1 21.7 Selling and distribution expenses 0.3 0.1 Less: Depreciation 1.5 2.5 Share-based payment charge included in SG&A 2.7 2.3 Cash SG&A 15.1[15] 17.0 Energean incurred Cash SG&A costs of $15.1 million in H1 2022. This represents a 11.2% decrease versus the comparable period last year (1H 2021: $17.0 million) and is due to cost efficiencies implemented across the Group. Capital Expenditure Capital Expenditure is defined as additions to property, plant and equipment and intangible exploration and evaluation assets, cash lease payments made in the period, less lease asset additions, asset additions due to decommissioning provisions, capitalised share-based payment charge, capitalised borrowing costs and certain other non-cash adjustments. Management believes that capital expenditure is a useful indicator of the Group's organic expenditure on oil and gas development assets, exploration and evaluation assets incurred during a period because it eliminates certain accounting adjustments such as capitalised borrowing costs and decommissioning asset additions. H1 2022 H1 2021 $m $m Additions to property, plant and equipment 404.5 317.8 Additions to intangible exploration and evaluation assets 37.0 30.3 Less: Capitalised borrowing cost 60.1 114.0 Leased assets additions and modifications (0.2) 12.3 Lease payments related to capital activities (5.8) (5.8) Capitalised share-based payment charge 0.1 0.2 Capitalised depreciation 0.4 0.1 Change in decommissioning provision (11.5) (2.5) Total capital expenditures 398.316 230.0 Movement in working capital (185.3) (60.0) Cash capital expenditures per the cash flow statement 213.016 170.0 The breakdown of capital expenditure during H1 2022 and H1 2021 was as follows: H1 2022 H1 2021 Capital expenditure $m Capital expenditure $m Development and Production Israel 286.8 161.8 Egypt 40.9 17.5 Italy 9.9 11.4 Greece, Croatia, UK and Other 8.7 10.1 Total 346.3 200.8 Exploration and Appraisal Israel 34.4 3.7 Egypt - 0.3 Italy - 2.0 Greece, Croatia, UK and Other 2.6 23.2 Total 37.0 29.2 Net Cash / Debt Net debt is defined as the Group's total borrowings less cash and cash equivalents and restricted cash held for loan repayments. Management believes that net debt is a useful indicator of the Group's indebtedness, financial flexibility and capital structure because it indicates the level of borrowings after taking account of any cash and cash equivalents that could be used to reduce borrowings. Net debt reconciliation H1 2022 $m FY 2021 $m Current borrowings - - Non-current borrowings 2,986.8 2,947.1 Total borrowings 2,986.8 2,947.1 Less: Cash and cash equivalents (673.7) (730.8) Restricted cash held for loan repayment (138.4) (199.7) Net Debt[16] 2,174.6[17] 2,016.618 Net Debt Excluding Israel18 61.7 102.6 Going Concern The Directors assessed the Group's ability to continue as a going concern over a going concern assessment period to 31 December 2023. As a result of this assessment, the Directors are satisfied that the Group has sufficient financial resources to continue in operation for the foreseeable future and for this reason they continue to adopt the going concern basis in preparing the consolidated financial statements. Detail of the Group's going concern assessment for the period can be found within note 2.2 of the interim condensed consolidated financial statements. Subsequent Events Zone D On 27 July 2022 the Company sent a formal notice to the Ministry of Energy asking the relinquishment of Zone D licenses and discontinue any work regarding them. The licenses will expire at the end of their term, i.e., on 27 October 2022. Principal Risks and Uncertainties Effective risk management is fundamental to achieving Energean's strategic objectives and protecting its personnel, assets, shareholder value and reputation. The Board has overall responsibility for determining the nature and extent of the risks it is willing to take in achieving the strategic objectives of the Group and ensuring that such risks are managed effectively. A key aspect of this is ensuring the maintenance of a sound system of internal control and risk management. For all the known risks facing the business, Energean attempts to minimise the likelihood and mitigate the impact. Energean has a zero-tolerance approach to financial fraud or ethics non-compliance and ensures that HSE risks are managed to levels that are as low as reasonably practicable. Overview of key risks and key changes since 31 December 2021 The Group's principal risks for the remaining 6 months of the year and key changes since 31 December 2021 are set out below. For further information on key risks, please refer to Energean's 2021 Annual Report and Accounts: Strategic risks #1 Progress key development project in Israel Principal risk: Delay to first gas at Karish. H1 2022 movement: ��� The risk remained static in H1 2022. The Energean Power FPSO arrival on location in Israel in June 2022 and is expected to deliver first gas within weeks. The closer to completion the project gets, the lower the risk of delays. #2 Progress other key development projects Principal risk: Delayed delivery of future development projects (including NEA / NI in Egypt, Cassiopea in Italy and Epsilon in Greece). H1 2022 movement: ��� The risk increased in H1 2022. Although Energean continued to make progress on its growth projects, Joint Venture ("JV") and contractor misalignment risks associated with the Cassiopea project in Italy increase the exposure to potential cost and schedule overruns. #3 Deliver exploration success and reserves addition Principal risk: Lack of new commercial discoveries and reserves replacement H1 2022 movement: ��� The risk decreased in H1 2022. In May 2022, the Athena exploration well discovered 8 bcm of recoverable gas volumes on a standalone basis. This discovery is particularly significant as it de-risks an additional 50 bcm of mean unrisked prospective resources across Energean's Olympus Area (total 58 bcm including Athena). Multiple commercialisation options are under evaluation for a standalone tie-back to the Energean Power FPSO or as part of a new Olympus Area development. #4 Market risk in Israel Principal risk: The potential for Israeli gas market oversupply may result in offtake being at the take-or-pay level of existing GSPAs and could result in the failure to secure new GSPAs. H1 2022 movement: ��� The risk remained static in H1 2022. #5 Maintaining liquidity and solvency Principal risk: Insufficient liquidity and funding capacity H1 2022 movement: ��� The risk remained static in H1 2022. #6 Organisational & HR risk Principal risk: The potential risk of group level roles being overwhelmed by the additional workload associated with the Company's growth. H1 2022 movement: ��� The risk remained static in 1H 2022. #7 Misalignment with JV operators Principal risk: Misalignment with JV operators. H1 2022 movement: ��� The risk increased in H1 2022. Non-operated positions are held in the entire UK portfolio and a large component of the Italian portfolio. Contractor misalignment risks associated with the Cassiopea project in Italy increase the exposure to potential cost and schedule overruns. Energean will continue to manage any risks associated with non-operator roles by actively participating in operational and technical meetings to challenge, apply influence and/or support partners to establish a cohesive JV view. #8 Egypt receivables Principal risk: Recoverability of revenues and receivables in Egypt. H1 2022 movement: ��� The risk remained static in H1 2022. At 30 June 2022, net receivables (after provision for bad and doubtful debts) in Egypt were $109.6 million (30 June 2021: $158.7 million), of which $64.2 million (30 June 2021: $94.0 million) was classified as overdue. #9 Decommissioning liability Principal risk: Higher than expected decommissioning costs and acceleration of abandonment schedules. H1 2022 movement: ��� The risk remained static in H1 2022. Organisational, Compliance and Regulatory Risks #10 Cyber/Information Communication Technologies ("ICT") security Principal risk: Major cyber-attack or information security incident. H1 2022 movement: ��� The risk increased in H1 2022. Information and operations technology systems are being closely monitored as Energean grows into a >200 kboed producer, following first gas from Karish and the start-up of its other growth projects. #11 Fraud, bribery and corruption Principal risk: Major breach of values, business principles and 'Ethos' H1 2022 movement: ��� The risk remained static in H1 2022. #12 Health Safety and Environment (HSE) Principal risk: Lack of adherence to health, safety, environment and security policies. H1 2022 movement: ��� The risk remained static in H1 2022. Climate Change Risks #13 Climate change - Transition Principal risk: Failure to manage the risk of climate change and to adapt to the energy transition. H1 2022 movement: ��� The risk remained static in H1 2022. #14 Climate change - Physical Principal risk: Disruption to operations and/or development projects due to severe weather (both acute and chronic). H1 2022 movement: ��� This risk remained static in H1 2022. External Risks #15 External geopolitical, political and social risks Principal risk: Political and fiscal uncertainties in the Eastern Mediterranean. H1 2022 movement: ��� The risk increased in H1 2022. Energean continues to monitor any risks associated with the ongoing dispute between Israel and Lebanon over their maritime boundary. Following the arrival of the FPSO on location in June 2022, the State of Israel restated that the Company's assets are located in Israeli territory, several kilometres south from the area over which negotiations are being conducted between the State of Israel and the Republic of Lebanon, mediated by the United States, and that the State of Israel prioritises the protection of its strategic assets. #16 Global pandemic Principal risk: Risk related to the spread of pandemics and epidemics and the continuing impact of Covid-19, including the associated deterioration of health response capacity, financial and business disruption, whilst maintaining operability. H1 2022 movement: ��� The risk decreased in H1 2022. Global Covid-19-related restrictions and security measures have been removed or reduced, which has reduced the related risks to the business. Statement of Directors' responsibilities The Directors confirm that to the best of their knowledge: 1) The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted in the UK; 2) The interim management report contains a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); 3) The interim management report includes a true and fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein). Mathios Rigas Panos Benos Chief Executive Officer Chief Financial Officer 7 September 2022 7 September 2022 Inside Information Some of the information contained within this announcement is considered by Energean to constitute inside information, as defined under the EU Market Abuse Regulation, EU No.596/2014 (which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018. By the publication of this Announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of Energean is Eleftheria Kotsana, Company Secretary. Forward looking statements This announcement contains statements that are, or are deemed to be, forward-looking statements. In some instances, forward-looking statements can be identified by the use of terms such as "projects", "forecasts", "on track", "anticipates", "expects", "believes", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. Forward-looking statements are subject to a number of known and unknown risks and uncertainties that may cause actual results and events to differ materially from those expressed in or implied by such forward-looking statements, including, but not limited to: general economic and business conditions; demand for the Company's products and services; competitive factors in the industries in which the Company operates; exchange rate fluctuations; legislative, fiscal and regulatory developments; political risks; terrorism, acts of war and pandemics; changes in law and legal interpretations; and the impact of technological change. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained in this announcement is subject to change without notice. INDEPENDENT REVIEW REPORT TO ENERGEAN PLC Conclusion We have been engaged by Energean plc (the Company) to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 which comprises the interim condensed consolidated income statement, the interim condensed consolidated statement of comprehensive income, the interim condensed consolidated statement of financial position, the interim condensed consolidated statement of changes in equity, the interim condensed consolidated statement of cash flows and the related explanatory notes 1 to 27. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. Basis for Conclusion We conducted our review in accordance with International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" (ISRE) issued by the Financial Reporting Council. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. As disclosed in note 2, the annual financial statements of the group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting". Conclusions Relating to Going Concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern. Responsibilities of the directors The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the review of the financial information In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report. Use of our report This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed. Ernst & Young LLP London 8 September 2022 Interim Condensed Consolidated Income Statement Six months ended 30 June 2022 30 June (Unaudited) 2022 2021 $'000 $'000 Notes Revenue 4 338,955 205,466 Cost of Sales 5(a) (158,043) (147,640) Gross profit 180,912 57,826 Administrative and selling expenses 5(b)/(c) (19,349) (21,770) Exploration and evaluation expenses 5(d) (4,254) (1,041) Other expenses 5(e) (8,826) (3,071) Other income 5(f) 1,630 3,571 Operating profit 150,113 35,515 Finance Income 6 2,701 2,700 Finance Costs 6 (38,551) (44,912) Net foreign exchange loss 6 (4,473) (13,787) Profit/ (Loss) before tax 109,790 (20,484) Taxation income / (expense) 8 8,944 (15,174) Profit/ (Loss) from continuing operations 118,734 (35,658) Attributable to: Owners of the parent 118,734 (35,550) Non-controlling Interests - (108) 118,734 (35,658) Basic and diluted total loss per share (cents per share) Basic 9 $0.67 ($0.20) Diluted 9 $0.66 ($0.20) Interim Condensed Consolidated Statement of Comprehensive Income Six months ended 30 June 2022 30 June (Unaudited) 2022 2021 $'000 $'000 Profit/ (Loss) for the period 118,734 (35,658) Other comprehensive income: Items that may be reclassified subsequently to profit or loss Cash Flow hedges Gain/(loss) arising in the period (22,945) 2,278 Reclassification to profit and loss upon repayment of related borrowings - 4,641 Income tax relating to items that may be reclassified to profit or loss 5,507 (1,591) Exchange difference on the translation of foreign operations, net of tax (8,234) (6,576) Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit plan 65 - Income taxes on items that will not be reclassified to profit and loss (16) - Other comprehensive loss after tax (25,623) (1,248) Total comprehensive profit/ (loss) for the period 93,111 (36,906) Total comprehensive loss attributable to: Owners of the parent 93,111 (36,800) Non-controlling Interests - (106) 93,111 (36,906) Interim Condensed Consolidated Statement of Financial Position As at 30 June 2022 30 June 2022 (Unaudited) 31 December 2021 Notes $'000 $'000 ASSETS Non-current assets Property, plant and equipment 10 3,822,664 3,499,473 Intangible assets 11 256,788 228,141 Equity-accounted investments 4 4 Other receivables 16 26,694 52,639 Deferred tax asset 12 216,182 154,798 Restricted cash 14 2,799 100,000 4,325,131 4,035,055 Current assets Inventories 15 80,307 87,203 Trade and other receivables 16 326,037 288,526 Restricted cash 14 135,610 99,729 Cash and cash equivalents 13 673,708 730,839 1,215,662 1,206,297 Total assets 5,540,793 5,241,352 EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital 17 2,380 2,374 Share premium 17 415,388 915,388 Merger reserve 139,903 139,903 Other reserves (9,901) 7,488 Foreign currency translation reserve (21,057) (12,823) Share-based payment reserve 22,172 19,352 Retained earnings 264,175 (354,559) Equity attributable to equity holders of the parent 813,060 717,123 Non-controlling interests - - Total equity 813,060 717,123 Non-current liabilities Borrowings 18 2,986,757 2,947,126 Deferred tax liabilities 12 64,542 67,425 Retirement benefit liability 19 1,957 2,767 Provisions 20 724,374 801,026 Other payables 21 265,664 225,987 4,043,294 4,044,331 Current liabilities Trade and other payables 21 607,853 449,707 Current Tax Liability 31,148 5,279 Derivative financial instruments 7 33,305 12,546 Provisions 20 12,133 12,366 684,439 479,898 Total liabilities 4,727,733 4,524,229 Total equity and liabilities 5,540,793 5,241,352 Interim Condensed Consolidated Statement of Changes in Equity Six months ended 30 June 2022 Share Capital Share Premium1 Hedge and Defined Benefit Pension Plan2 Equity component of convertible bonds3 Share based payment reserve 4 Translation Reserve5 Retained earnings Merger reserve Total Non -Controlling Interests Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 At 1 January 2022 2,374 915,388 (2,971) 10,459 19,352 (12,823) (354,559) 139,903 717,123 - 717,123 Profit for the period - - - - - - 118,734 - 118,734 - 118,734 Remeasurement of defined benefit pension plan, net of tax - - 49 - - - - - 49 - 49 Hedges, net of tax - - (17,438) - - - - - (17,438) - (17,438) Exchange difference on the translation of foreign operations - - - - - (8,234) - - (8,234) - (8,234) Total comprehensive income - - (17,389) - - (8,234) 118,734 - 93,111 - 93,111 Transactions with owners of the company Share based payment charges (note 22) - - - - 2,826 - - - 2,826 - 2,826 Exercise of employment share options 6 - - - (6) - - - - - - Share premium reduction6 - (500,000) - - - - 500,000 - - - - At 30 June 2022 2,380 415,388 (20,360) 10,459 22,172 (21,057) 264,175 139,903 813,060 - 813,060 1 The share premium account represents the total net proceeds on issue of the Company's shares in excess of their nominal value of ��0.01 per share less amounts transferred to any other reserves. 2 The reserve is used to recognise remeasurement gain or loss on cash flow hedges and actuarial gain or loss from the defined retirement benefit plan. In the Statement of Financial Position this reserve is combined with the 'Equity component of convertible bonds' reserve. 3 Refers to the Equity component of $50 million of convertible loan notes, which were issued in February 2021 and have a maturity date of 29 December 2023 4 The share-based payments reserve is used to recognise the value of equity-settled share-based payments granted to parties including employees and key management personnel, as part of their remuneration. 5 The foreign currency translation reserve is used to record unrealised exchange differences arising from the translation of the financial statements of entities within the Group that have a functional currency other than US dollar. 6 Energean plc by special resolution reduced its share premium account, as confirmed by an Order of the High Court of Justice on the 14 June 2022. Interim Condensed Consolidated Statement of Changes in Equity Six months ended 30 June 2022 Share Capital Share Premium1 Hedge and Defined Benefit Pension Plan2 Equity component of convertible bonds3 Share based payment reserve4 Translation Reserve5 Retained earnings Merger reserve Total Non- Controlling Interests Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 At 1 January 2021 2,367 915,388 1,792 - 13,419 (42) (144,734) 139,903 928,093 266,299 1,194,392 Loss for the period - - - - - - (35,550) - (35,550) (108) (35,658) Hedges, net of tax - - 5,326 - - - - - 5,326 2 5,328 Exchange difference on the translation of foreign operations - - - - - (6,576) - - (6,576) - (6,576) Total comprehensive income - - 5,326 - - (6,576) (35,550) - (36,800) (106) (36,906) Transactions with owners of the company Employee share schemes (note 22) 1 - - - 2,474 - - - 2,475 2,475 Acquisition of non-controlling Interests - - - 10,459 - - (113,779) - (103,320) (266,193) (369,513) At 30 June 2021 2,368 915,388 7,118 10,459 15,893 (6,618) (294,063) 139,903 790,448 - 790,448 Interim Condensed Consolidated Statement of Cash Flows Six months ended 30 June 2022 30 June (Unaudited) 2022 2021 Note $'000 $'000 Operating activities Profit/ (Loss) before taxation 109,790 (20,484) Adjustments to reconcile profit/(loss) before taxation to net cash provided by operating activities: Depreciation, depletion and amortisation 10, 11 33,885 36,343 Impairment loss on intangible assets 11 362 - Loss from the sale of property, plant and equipment 1,074 36 Defined benefit (gain)/expense 19 (676) (1,120) Finance income 6 (2,701) (2,700) Finance costs 6 38,551 44,912 Non-cash revenues from Egypt1 (27,177) (21,577) Movement in provisions 20 (1,239) 483 Other income 5 - (3,602) Share-based payment charge 22 2,717 2,474 Net foreign exchange gain/(loss) 6 4,473 13,787 Cash flow from/(used in) operations before working capital adjustments 159,059 48,552 Decrease/ (Increase) in inventories 2,748 (5,185) Increase in trade and other receivables 14,309 42,392 (Decrease) in trade and other payables (17,282) (33,082) Cash inflow from operations 158,834 52,677 Income tax paid (12,267) 388 Net cash inflow from operating activities 146,567 53,065 Investing activities Payment for purchase of property, plant and equipment (194,491) (141,182) Payment for exploration and evaluation, and other intangible assets (18,513) (28,818) Acquisition of a subsidiary - (3,335) Proceeds from disposal of property, plant and equipment 1,996 - Movement in restricted cash 14 61,320 (266,241) Amounts received from INGL related to the future transfer of property, plant and equipment 17,371 - Interest received 2,911 861 Net cash outflow for investing activities (129,406) (438,715) Financing activities Drawdown of borrowings 18 35,835 293,000 Repayment of borrowings 18 - (1,452,509) Senior secured notes Issuance 18 - 2,500,000 Transaction costs related to Senior secured notes paid - (37,218) Acquisition of non-controlling interests 18 - (175,000) Transaction costs related to acquisition of non-controlling interest - (1,677) Repayment of obligations under leases (5,785) (5,875) Finance cost paid for deferred license payments - (3,494) Finance costs paid (87,341) (55,641) Net cash inflow from financing activities (57,291) 1,061,586 Net increase / (decrease) in cash and cash equivalents (40,130) 675,936 Cash and cash equivalents at beginning of the period 730,839 202,939 Effect of exchange rate fluctuations on cash held (17,001) 1,142 Cash and cash equivalents at end of the period 13 673,708 880,017 1 Non-cash revenues from Egypt arise due to taxes being deducted at source from invoices as such revenue and tax charges are grossed up to reflect this deduction but no cash inflow or outflow results. Notes to the Interim Condensed Consolidated Financial Statements (continued) 1. Corporate Information Energean plc (the 'Company') was incorporated in England & Wales on 8 May 2017 as a public company with limited liability, under the Companies Act 2006. Its registered office is at 44 Baker Street, London W1U 7AL, United Kingdom. The Company and all subsidiaries controlled by the Company, are together referred to as 'the Group'. The Group has been established with the objective of exploration, production and commercialisation of crude oil and natural gas in Greece, Israel, Italy, North Africa and the wider Eastern Mediterranean. The Group's subsidiaries and core assets, as of 30 June 2022, are presented in notes 26 and 27 respectively. 2. Basis of preparation 2.1 Basis of preparation The unaudited interim condensed consolidated financial statements for the six months ended 30 June 2022 included in this interim report have been prepared in accordance with UK-adopted International Accounting Standard 34 'Interim Financial Reporting', and unless otherwise disclosed have been prepared on the basis of the same accounting policies and methods of computation as applied in the Group's Annual Report for the year ended 31 December 2021. The interim condensed consolidated financial statements have been prepared on a historical cost basis and are presented in US Dollars, which is also the Company's functional currency, rounded to the nearest thousand dollars ($'000) except as otherwise indicated. The US dollar is the currency that mainly influences sales prices and revenue estimates, and also highly affects the Group's operations. The functional currencies of the Group's main subsidiaries are as follows: for Energean Oil & Gas S.A, Energean Montenegro, Energean Italy Spa and Energean International E&P Spa the functional currency is Euro, for Energean E&P Holdings Ltd, Energean International Limited, Energean Capital Ltd, Energean Egypt Ltd and Energean Israel Limited the functional currency is US$. The interim financial statements do not constitute statutory accounts of the Group within the meaning of Section 435 of the Companies Act 2006 and do not include all the information and disclosures required in the annual financial statements. The interim financial statements should be read in conjunction with the Group's Annual Report and Accounts for the year ended 31 December 2021, which were prepared UK-adopted International Accounting Standards ('UK-adopted IAS') and also in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board (IASB) as applied to financial periods beginning on or after 1 January 2021. The auditor's report on those financial statements was unqualified with no reference to matters to which the auditor drew attention by way of emphasis and no statement under s498(2) or s498(3) of the Companies Act 2006. 2.2 Going concern The Group carefully manages the risk of a shortage of funds by closely monitoring its funding position and its liquidity risk. The Going Concern assessment covers the period up to 31 December 2023 'the Forecast Period'. Cash forecasts are regularly produced based on, inter alia, the Group's latest life of field production, budgeted expenditure forecasts, management's best estimate of future commodity prices (based on recent published forward curves) and headroom under its debt facilities. The Base Case cash flow model used for the going concern assessment assumes first gas from Karish in October 2022, Brent at $100/bbl for the YTG (Year to Go) 2022 and $90/bbl in 2023 and PSV (Italian gas price) at EUR200/MWh for the YTG 2022 and EUR150/MWh in 2023. In addition, on a regular basis, the Group performs sensitivity analysis of its liquidity position to evaluate adverse impacts that may result from changes to the macro-economic environment such as a reduction in commodity prices and reduction in the Group production (due to deferral of key projects) throughout the going concern period. In this combined downside scenario applied to the base case forecast, the Group is forecasted to have sufficient financial headroom throughout the Forecast Period. Reverse stress testing was performed to determine what levels of prices and/or production would need to occur for the liquidity headroom to be eliminated, prior to any mitigating actions; the likelihood of such conditions occurring was concluded to be remote. The portfolio can withstand a material drop in commodity price and average production largely because most of the revenue is generated from fixed gas price contracts. In the event an extreme downside scenario occurred, prudent mitigating actions could be executed in the necessary timeframe such as postponement of discretionary exploration and development expenditures. Energean is predominantly Operator of its assets, therefore the majority of the key development projects are 100% within its control. There is no material impact of climate change within the Forecast Period therefore it does not form part of the reverse stress testing performed by management. As of 30 June 2022, the Group's available liquidity was $880 million ($674 million unrestricted cash, $138 million restricted cash and $68 million available under Greek State-Backed Loan). In forming its assessment of the Group's ability to continue as a going concern, including its review of the forecasted cashflow of the Group over the Forecast Period, the Board has made judgements about: ��� Reasonable sensitivities appropriate for the current status of the business and the wider macro environment; and ��� the Group's ability to implement the mitigating actions, such as deferral of Capex expenditure in the Group's control, in the event this were required. After careful consideration, the Directors are satisfied that the Group has sufficient financial resources to continue in operation for the foreseeable future, for the Forecast Period to 31 December 2023. For this reason, they continue to adopt the going concern basis in preparing the consolidated financial statements. 2.3 New and amended accounting standards and interpretations The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are the same as those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2021, except for the adoption of the new standards and interpretations effective as of 1 January 2022 listed below: �� Annual improvements to IFRS 2018-2020 �� Property, Plant and Equipment: Proceeds before intended use (Amendments to IAS 16) �� Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) �� Reference to the Conceptual Framework (Amendments to IFRS 3) �� AIP IFRS 9 Financial Instruments - Fees in the '10 per cent' test for derecognition of financial liabilities None of the above amendments had a significant impact on the Group's interim condensed consolidated financial statements. 2.4 Approval of interim condensed consolidated financial statements by Directors These unaudited interim condensed consolidated financial statements were approved by the Board of Directors on 7 September 2022. 3. Segmental Reporting The information reported to the Group's Chief Executive Officer and Chief Financial Officer (together the Chief Operating Decision Makers) for the purposes of resource allocation and assessment of segment performance is focused on four operating segments: Europe, (including Greece, Italy, UK, Croatia), Israel, Egypt and New Ventures (Montenegro and Malta). The Group's reportable segments under IFRS 8 Operating Segments are Europe, Israel and Egypt. Segments that do not exceed the quantitative thresholds for reporting information about operating segments have been included in Other. Segment revenues, results and reconciliation to profit before tax The following is an analysis of the Group's revenue, results and reconciliation to profit/ (loss) before tax by reportable segment: Europe Israel Egypt Other & inter-segment transactions Total $'000 $'000 $'000 $'000 $'000 Six months ended 30 June 2022 (unaudited) Revenue from Oil 111,007 - - - 111,007 Revenue from Gas 137,717 - 73,511 - 211,228 Petroleum product sales 1,288 - 33,040 - 34,328 Rendering of services 4,008 - - (3,383) 625 Loss on forward transactions (18,233) - - - (18,233) Total revenue 235,787 - 106,551 (3,383) 338,955 Adjusted EBITDAX1 122,423 (5,343) 79,914 1,171 198,165 Reconciliation to profit before tax: Depreciation and amortisation expenses (11,303) (110) (22,258) (214) (33,885) Share-based payment charge (2,501) (88) (30) (98) (2,717) Exploration and evaluation expenses (2,499) - (1,482) (273) (4,254) Other expense (6,263) (1,074) (342) (1,147) (8,826) Other income 1,391 53 552 (366) 1,630 Finance income 1,467 4,504 521 (3,791) 2,701 Finance costs (10,436) (4,671) (453) (22,991) (38,551) Net foreign exchange gain/(loss) 20,548 (1,778) (219) (23,024) (4,473) Profit/(loss) before income tax 112,827 (8,507) 56,203 (50,733) 109,790 Taxation income / (expense) 33,429 2,889 (27,177) (197) 8,944 Profit/(loss) from continuing operations 146,256 (5,618) 29,026 (50,930) 118,734 Six months ended 30 June 2021 (unaudited) Revenue from Oil 70,736 - 27,431 - 98,167 Revenue from Gas 34,765 - 70,929 - 105,694 Petroleum products sales 492 - - - 492 Rendering of services 5,228 - - (4,115) 1,113 Total revenue 111,221 - 98,360 (4,115) 205,466 Adjusted EBITDAX1 9,685 (1,563) 69,113 (2,584) 74,651 Reconciliation to profit before tax: - Depreciation and amortisation expenses (21,586) (50) (14,256) (451) (36,343) Share-based payment charge (431) (122) - (1,699) (2,252) Exploration and evaluation expenses (630) - - (411) (1,041) Other expense (1,458) (28) (88) (1,497) (3,071) Other income 2,887 - 641 43 3,571 Finance income 1,667 1,808 676 (1,451) 2,700 Finance costs (10,797) (9,436) (624) (24,055) (44,912) Net foreign exchange gain/(loss) 2,879 (727) (1,055) (14,884) (13,787) Profit before income tax (17,784) (10,118) 54,407 (46,989) (20,484) Taxation income / (expense) 3,342 2,571 (21,535) 448 (15,174) Profit from continuing operations (14,442) (7,547) 32,872 (46,541) (35,658) 1Adjusted EBITDAX is a non-IFRS measure used by the Group to measure business performance. It is calculated as profit or loss for the period, adjusted for discontinued operations, taxation, depreciation and amortisation, share-based payment charge, impairment of property, plant and equipment, other income and expenses (including the impact of derivative financial instruments and foreign exchange), net finance costs and exploration and evaluation expenses. The following table presents assets and liabilities information for the Group's operating segments as at 30 June 2022 and 31 December 2021, respectively: Europe Israel Egypt Other & inter-segment transactions Total $'000 $'000 $'000 $'000 $'000 Six months ended 30 June 2022 (unaudited) Oil & Gas properties 505,690 2,922,369 366,077 (10,326) 3,783,810 Other fixed assets 14,723 5,570 19,786 (1,225) 38,854 Intangible assets 69,043 130,327 20,484 36,934 256,788 Trade and other receivables 159,459 55,110 123,702 (12,234) 326,037 Deferred tax asset 218,349 (1,210) - (957) 216,182 Other assets 761,556 218,793 109,471 (170,698) 919,122 Total assets 1,728,820 3,330,959 639,520 (158,506) 5,540,793 Trade and other payables 169,045 156,395 53,187 229,226 607,853 Borrowings 33,528 2,467,251 - 485,978 2,986,757 Decommissioning provision 700,088 26,609 - - 726,697 Other current liabilities 64,418 - - 34 64,452 Other non-current liabilities 125,510 225,129 21,872 (30,537) 341,974 Total liabilities 1,092,589 2,875,384 75,059 684,701 4,727,733 Other segment information Capital Expenditure: - Property, plant and equipment 21,753 288,964 41,132 4,551 356,400 - Intangible, exploration and evaluation assets 1,496 34,386 - 1,076 36,958 Year ended 31 December 2021 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 receivables 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 payables 202,797 74,115 25,511 152,563 454,986 Borrowings - 2,463,524 - 483,602 2,947,126 Decommissioning provision 766,573 35,525 - - 802,098 Other current liabilities (20,395) - - 32,941 12,546 Other non-current liabilities 134,203 180,689 24,663 (32,082) 307,473 Total liabilities 1,083,178 2,753,853 50,174 637,024 4,524,229 Other segment information Capital Expenditure: - Property, plant and equipment 72,782 247,463 52,085 (14,330) 358,000 - Intangible, exploration and evaluation assets 40,523 6,342 215 3,329 50,409 Segment Cash flows Europe Israel Egypt Other & inter-segment transactions Total $'000 $'000 $'000 $'000 $'000 Six months ended 30 June 2022 (unaudited) Net cash from / (used in) operating activities 87,922 (5,286) 64,578 (647) 146,567 Net cash (used in) investing activities (23,560) (56,932) (43,931) (4,983) (129,406) Net cash from financing activities (85,460) (66,819) 280 94,708 (57,291) Net increase/(decrease) in cash and cash equivalents, and restricted cash (21,098) (129,037) 20,927 89,078 (40,130) Cash and cash equivalents at beginning of the period 71,316 349,828 19,254 290,441 730,839 Effect of exchange rate fluctuations on cash held (4,542) (2,080) (919) (9,460) (17,001) Cash and cash equivalents at the end of the period 45,676 218,711 39,262 370,059 673,708 Six months ended 30 June 2021 (unaudited) Net cash from / (used in) operating activities 22,329 (2,802) 52,958 (19,420) 53,065 Net cash (used in) investing activities (41,614) (378,265) (15,695) (3,141) (438,715) Net cash from financing activities 22,447 1,075,374 (87,054) 50,819 1,061,586 Net increase/(decrease) in cash and cash equivalents 3,162 694,307 (49,791) 28,258 675,936 At beginning of the year 13,609 37,421 76,240 75,669 202,939 Effect of exchange rate fluctuations on cash held 409 (146) (1) 880 1,142 Cash and cash equivalents at end of the period 17,180 731,582 26,448 104,807 880,017 4. Revenue 30 June (Unaudited) 2022 2021 $'000 $'000 Revenue from crude oil sales 111,007 70,736 Revenue from gas sales 211,228 105,694 Gain/ (Loss) on forward transactions (18,233) - Petroleum products sales 34,328 27,923 Rendering of services 625 1,113 Total revenue 338,955 205,466 5. Operating profit/(loss) before taxation 30 June (Unaudited) 2022 2021 $'000 $'000 (a) Cost of sales Staff costs 27,895 32,626 Flux costs 17,391 6,957 Energy cost 5,716 3,475 Royalty payable 11,678 5,814 Other operating costs 60,661 73,546 Depreciation and amortisation 32,345 33,845 Stock overlift/(underlift) movement 2,357 (8,623) Total cost of sales 158,043 147,640 (b) Administrative expenses Staff costs 9,765 7,329 Other General & administration expenses 4,103 8,815 Share-based payment charge included in administrative expenses 2,717 2,247 Depreciation and amortisation 1,539 2,498 Auditor fees 951 779 Total administrative expenses 19,075 21,668 (c) Selling and distribution expense Staff costs 116 29 Other Selling and distribution expense 158 73 Total selling and distribution expense 274 102 (b) + (c) Total Administrative and Selling Expenses 19,349 21,770 (d) Exploration and evaluation expenses Staff costs for Exploration and evaluation activities 2,118 355 Exploration costs written off 362 - Other exploration and evaluation expenses 1,774 686 Total exploration and evaluation expenses 4,254 1,041 5. Operating profit/(loss) before taxation (continued) 30 June (unaudited) 2022 $'000 2021 $'000 (e) Other expenses Transaction costs in relation to Edison E&P acquisition - 1,470 Restructuring costs1 3,481 Provision for litigation and claims 1,443 - Loss from disposal of Property plant & Equipment 1,074 36 Write down of inventory 1,335 - Expected credit losses 342 279 Other expenses 1,151 1,286 8,826 3,071 (f) Other income Reversal of prior period accruals 1,630 3,496 Other income - 75 1,630 3,571 1One-off restructuring costs incurred in Greece 6. Net finance cost 30 June (Unaudited) 2022 2021 $'000 $'000 Interest on bank borrowings 307 55,710 Interest on Senior Secured Notes 83,630 33,791 Interest expense on long term payables 4,734 467 Interest expense on short term liabilities - 28 Less amounts included in the cost of qualifying assets (68,866) (72,969) 19,805 17,027 Finance and arrangement fees 4,003 11,869 Unamortised financing costs related to the repayment of the Karish project finance2 - 36,200 Other finance costs and bank charges 593 2,172 Loss on interest rate hedges - 6,988 Unwinding of discount on right of use asset 694 837 Unwinding of discount on provision for decommissioning 5,261 4,946 Unwinding of discount on deferred consideration 7,912 5,124 Unwinding of discount on convertible loan 1,963 - Unwinding of discount on contingent consideration 1,322 744 Less amounts included in the cost of qualifying assets (3,002) (40,995) Total finance costs 38,551 44,912 Interest income from time deposits (2,701) (1,534) Gain from revised estimated loan cash flow - (1,166) Total finance revenue (2,701) (2,700) Foreign exchange losses/(gain) 4,473 13,787 Net financing costs 40,323 55,999 2 On 29 April 2021, the Group fully repaid the Israel Project Finance Facility before the maturity date of 31 December 2021 and, as such, the unamortised financing costs have been expensed in the period. 7. Fair value measurements The information set out below provides information about how the Group determines the fair values of various financial assets and liabilities. The fair values of the Group's non-current liabilities measured at amortised cost are considered to approximate their carrying amounts at the reporting date. The carrying value less any estimated credit adjustments for financial assets and financial liabilities with a maturity of less than one year are assumed to approximate their fair values due to their short term-nature. The fair value of the Group's finance lease obligations is estimated using discounted cash flow analysis based on the group's current incremental borrowing rates for similar types and maturities of borrowing and are consequently categorized in level 2 of the fair value hierarchy. Contingent consideration The share purchase agreement (the "SPA") dated 4 July 2019 between Energean and Edison Spa provides for a contingent consideration of up to $100.0 million subject to the commissioning of the Cassiopea development gas project in Italy. The consideration was determined to be contingent on the basis of future gas prices (PSV) recorded at the time of the commissioning of the field, which is 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 second 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. US$100 million is payable if that average price exceeds ���20/MWh. The fair value of the contingent consideration is estimated by reference to the terms of the SPA and the simulated PSV pricing by reference to the forecasted PSV pricing, historical volatility and a log normal distribution, discounted at a cost of debt. The contingent consideration to be payable in 2024 is estimated at acquisition date to amount to $61.7 million, which discounted at the acquisition date resulted in a present value of $55.2 million. As at 30 June 2022, the two year future curve of PSV prices indicate an average price in excess of ���20/MWh. Therefore, the Group's estimate as at 30 June 2022 of the fair value of the contingent consideration payable in 2024 is $79.8 million, based on a Monte Carlo simulation (31 December 2021: $78.5 million). The fair value of the consideration payable has been recognized at level 3 in the fair value hierarchy. Contingent consideration reconciliation Contingent consideration 2022 1 January 2022 78,450 Fair value adjustment 1,322 30 June 2022 79,772 Management believes there are no reasonably possible change to any key assumptions that would impact the contingent consideration valuation. Fair values of derivative financial instruments The Group held financial instruments at fair value at 30 June 2022 related to commodity derivatives. All derivatives are recognised at fair value on the balance sheet with valuation changes recognised immediately in the income statement, unless the derivatives have been designated as a cash flow hedge. Fair value is the amount for which the asset or liability could be exchanged in an arm's length transaction at the relevant date. Where available, fair values are determined using quoted prices in active markets. To the extent that market prices are not available, fair values are estimated by reference to market-based transactions or using standard valuation techniques for the applicable instruments and commodities involved. Values recorded are as at the balance sheet date and will not necessarily be realised. The Group undertakes hedging activities as part of the ongoing financial risk management to protect against commodity price volatility and to ensure the availability of cash flow for re-investment in capital programmes that are driving business delivery. Commodity hedge contracts entered into in Italy aim to mitigate the risk of changes to the selling price of natural gas. Hedged Quantity (MWs) Contract Month Cargo Month Gas Sales Size Fixed Price EUR 50,000 July 2022 July 2022 222,110 39.13 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 The Group's commodity derivatives are level 2. There were no transfers between fair value levels during the period. The fair value hierarchy of financial assets and financial liabilities that are not measured at fair value (but for which disclosure of fair value is required) is as follows: Fair value hierarchy as of 30 June 2022 (Unaudited) Level 1 $'000 Level 2 $'000 Level 3 $'000 Total $'000 Financial assets Trade and other receivables (note 16) - 292,896 - 292,896 Cash and cash equivalents (note 13) 673,708 - - 673,708 Restricted cash (note 14) 138,409 - - 138,409 Total 812,117 292,896 - 1,105,013 Financial liabilities Financial liabilities held at amortised cost: Trade and other payables - current - 270,096 - 270,096 Trade and other payables- non-current - 122,579 - 122,579 Senior Secured Notes (note 18) 2,591,675 - - 2,591,675 Borrowings (note 18) - 76,824 - 76,824 Deferred consideration for acquisition of minority - 175,140 - 175,140 Net obligations under finance leases (note 21) - 35,412 - 35,412 Deferred licence payments (note 21) - 60,098 - 60,098 Financial liabilities held at fair value through OCI: Derivative - 33,305 - 33,305 Financial liabilities held at FVTPL: Contingent consideration (note 7) - - 79,772 79,772 Total 2,591,675 773,454 79,772 3,444,901 Fair value hierarchy as at 31 December 2021 Level 1 $'000 Level 2 $'000 Level 3 $'000 Total $'000 Financial assets Trade and other receivables - 284,692 - 284,692 Cash and cash equivalents 730,839 - - 730,839 Restricted Cash 199,729 199,729 Total 930,568 284,692 - 1,215,260 Financial liabilities Financial liabilities held at amortised cost: Trade and other payables -current - 173,319 - 173,319 Senior Secured Notes 2,931,950 - 2,931,950 Borrowings - 41,495 - 41,495 Deferred consideration for acquisition of minority - 167,228 - 167,228 Net obligations under finance leases - 44,425 - 44,425 Deferred licence payments - 57,230 - 57,230 Financial liabilities held at FVTPL: - Interest rate derivatives - 12,546 - 12,546 Contingent consideration - - 78,450 78,450 Total 2,931,950 496,243 78,450 3,506,643 8. Taxation 30 June (Unaudited) 2022 2021 $'000 $'000 Corporation tax - current period (67,069) (21,565) Corporation tax - prior years - 448 Deferred tax (Note 12) 76,013 5,943 Total taxation income / (expense) 8,944 (15,174) (b) Reconciliation of the total tax charge The Group calculates its income tax expense as per IAS 34 by applying a weighted average tax rate calculated based on the statutory tax rates in Greece (25%), Israel (23%), Italy (24%), Cyprus (12.5%), Egypt (40.55%) and United Kingdom (40%) weighted according to the profit or loss before tax earned by the Group in each jurisdiction where deferred tax is recognised, or material current tax charge arises. The effective tax rate for the period is -8% (30 June 2021: -74%). The tax (charge)/ credit of the period can be reconciled to the loss per the consolidated income statement as follows: 30 June (Unaudited) 2022 2021 $'000 $'000 Profit/(loss) before tax 109,790 (20,484) Tax calculated at 29.5% weighted average rate (2021: 19.7%) (32,197) 4,035 Impact of different tax rates 1,920 13 Utilisation of unrecognised deferred tax/ (non-recognition of deferred tax) 89,417 (4,834) Permanent differences1 (12,758) (1,912) Foreign taxes (5,171) (21,535) Windfall tax2 (29,274) - Tax effect of non-taxable income and allowances (3,304) 10,985 Other adjustments 311 (2,374) Prior year tax - 448 Taxation income/(expense) 8,944 (15,174) 1 Permanent differences mainly consisted of non-deductible expenses, consolidation differences, intercompany dividends and foreign exchange differences. 2 During H1 2022, Italy introduced a windfall tax in the form of a law decree which imposed a 25% one-off tax on profit margins that rose by more than 5 million euros between October 2021 and April 2022 compared to the same period a year earlier. The amount of the windfall tax to be paid by Energean Italy is estimated to be $29.3mil with an advance payment of 40% or c$11.7million remitted to the Italian Revenue Agency at the end of June 2022, while the remaining balance shall be paid by the end of November 2022. The windfall tax has been determined to be an income tax as defined by IAS 12. 9. Earnings per share Basic earnings per ordinary share amounts are calculated by dividing net income for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted income per ordinary share amounts is calculated by dividing net income for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued if dilutive employee share options were converted into ordinary shares. 30 June (Unaudited) 2022 2021 $'000 $'000 Total profit/(loss) attributable to equity shareholders 118,734 (35,550) Effect of dilutive potential ordinary shares 1,963 - 120,697 (35,550) Number of shares Basic weighted average number of shares 177,821,533 177,117,612 Dilutive potential ordinary shares 6,362,834 - Diluted weighted average number of shares 184,184,367 177,117,612 Basic earnings/ (loss) per share $0.67/share ($0.20)/share Diluted earnings/ (loss) per share $0.66/share ($0.20)/share 10. Property, plant and equipment Oil and gas properties Leased assets Other property, plant and equipment Total Property, plant and equipment at Cost $'000 $'000 $'000 $'000 At 1 January 2021 3,430,329 50,841 60,237 3,541,407 Additions 345,180 6,428 1,623 353,231 Lease modification - 2,261 - 2,261 Disposal of assets (23) - (34) (57) Capitalized borrowing cost 178,891 - - 178,891 Capitalized depreciation 227 - - 227 Change in decommissioning provision (13,174) - - (13,174) Transfer from Intangible assets 14,317 - 26 14,343 Foreign exchange impact (57,960) (2,285) (2,806) (63,051) At 31 December 2021 3,897,787 57,245 59,046 4,014,078 Additions 353,374 746 2,280 356,400 Lease modifications - (897) - (897) Disposal of assets (900) - - (900) Capitalized borrowing cost 60,131 - - 60,131 Capitalised depreciation 357 - - 357 Change in environmental rehabilitation provision (11,469) - - (11,469) Foreign exchange impact (52,051) (1,088) (1,308) (54,447) At 30 June 2022 4,247,229 56,006 60,018 4,363,253 Accumulated Depreciation At 1 January 2021 376,643 6,979 50,513 434,135 Charge for the period Expensed 81,234 12,274 1,998 95,506 Impairments 774 774 Disposal of assets - - 21 21 Foreign exchange impact (16,129) (151) 449 (15,831) At 31 December 2021 442,522 19,102 52,981 514,605 Charge for the period expensed 29,130 4,661 354 34,145 Write down on disposal of assets 250 - - 250 Disposal of assets (433) - - (433) Foreign exchange impact (8,050) 393 (321) (7,978) At 30 June 2022 463,419 24,156 53,014 540,589 Net carrying amount At 31 December 2021 3,455,265 38,143 6,065 3,499,473 At 30 June 2022 3,783,810 31,850 7,004 3,822,664 Included in the carrying amount of leased assets at 30 June 2022 are right of use assets related to oil and gas properties and other property, plant and equipment of $30.3 million and $1.6 million respectively. The depreciation charged on these classes for the six-month ending 30 June 2022 were $4.4 million and $0.2 million respectively The additions to oil & gas properties for the period of six months ended 30 June 2022 are mainly due to development costs of Karish field related to the EPCIC contract (FPSO, Sub Sea and On-shore construction cost) at the amount of $286.8 million and NEA/NI project in Egypt at the amount of $44.2 million. Borrowing costs capitalised for qualifying assets, included in oil & gas properties, for the six months ended 30 June 2022 amounted to $70.6 million. The average interest rates used was 5.16% for the six months ended 30 June 2022. There were no impairment indicators identified at 30 June 2022. 11. Intangible assets Exploration and evaluation assets Goodwill Other Intangible assets Total $'000 $'000 $'000 $'000 Intangibles at Cost At 1 January 2021 158,213 101,146 22,355 281,714 Additions 47,995 - 2,413 50,408 Capitalized borrowing costs 2,202 - - 2,202 Change in decommissioning provision 2,141 2,141 Transfers to property, plant and equipment (265) - (14,078) (14,343) Exchange differences (4,953) - (983) (5,936) At 31 December 2021 205,333 101,146 9,707 316,186 Additions 36,045 - 914 36,959 Capitalized borrowing costs - - - - Exchange differences (8,434) - (138) (8,572) At 30 June 2022 232,944 101,146 10,483 344,573 Accumulated amortisation and impairments At 1 January 2021 3,004 - 2,894 5,898 Charge for the period - - 1,946 1,946 Impairment 82,125 - - 82,125 Exchange differences (1,850) - (74) (1,924) At 31 December 2021 83,279 - 4,766 88,045 Charge for the period - 96 96 Impairment 362 - - 362 Exchange differences (603) - (115) (718) At 30 June 2022 83,038 - 4,747 87,785 Net Carrying Amount At 31 December 2021 122,054 101,146 4,941 228,141 At 30 June 2022 149,906 101,146 5,736 256,788 12. Net deferred tax (liability)/ asset Deferred tax (liabilities)/assets 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 and other short���term liabilities Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 At 1 January 2021 (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 (Note 8) 9,848 (718) 50,808 890 (254) (32,501) 5,020 (932) 6,996 39,157 Other comprehensive income 1,586 1,586 Reclassifications in the current period1 (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) At 31 December 2021 (140,553) (990) 89,440 (1,571) 183 120,180 11,030 266 9,388 87,373 Increase / (decrease) for the period through: Profit or loss (Note 8) (7,216) 34 242 2,601 250 85,902 (4,687) (61) (1,052) 76,013 Other comprehensive income - - - - - - - - 5,507 5,507 Exchange difference 4,565 20 (7,148) - (28) (13,510) - (10) (1,142) (17,253) At 30 June 2022 (Unaudited) (143,204) (936) 82,534 1,030 405 192,572 6,343 195 12,701 151,640 30 June 2022 31 December 2021 $'000 $'000 Deferred tax liabilities (64,542) (67,425) Deferred tax assets 216,182 154,798 Net deferred tax assets 151,640 87,373 At 30 June 2022 the Group had gross unused tax losses of $988.2 million (as of 31 December 2021: $1,123.8 million) available to offset against future profits and other temporary differences. A deferred tax asset of $192.6 million (2021: $120.2 million) has been recognised on tax losses of $758.5 million, based on the forecasted profits. The Group did not recognise deferred tax on tax losses and other differences totalling $629.4 million. In Greece, Italy and the UK, the net DTA for carried forward losses recognised in excess of the other net taxable temporary differences was $60.7 million, $63.0 million and $12.2 million (2021: $59.3 million, $0.19 million and $13.8 million) respectively. An additional DTA of $80.3 million (2021: $81.4 million) arose primarily in respect of deductible temporary differences related to property, plant and equipment, decommissioning provisions and accrued expenses, resulting in a total DTA of $216.2 million (2021: $154.8 million). During the period, Italy recognised a DTA of $63.0 million on tax losses of $262.7 million in accordance with its latest tax loss utilisation forecast which was revised given the high forecast PSV and Brent prices. Greek tax losses (Prinos area) can be carried forward without limitation up until the relevant concession agreement expires (by 2039), whereas the tax losses in Israel, Italy and the United Kingdom can be carried forward indefinitely. Based on the Prinos area forecasts (including the Epsilon development), the deferred tax asset is fully utilised by 2029. In Italy, a deferred tax asset of $62.3 million is recognised on decommissioning costs scheduled to be incurred up to 2030. Finally, in the UK, decommissioning spend is expected to be tax relieved up until 2027, and the deferred tax asset recognised on UK tax losses is fully offset against deferred tax liabilities on temporary differences. On 3 March 2021 it was announced in the UK budget that the UK non-ring fence corporation tax rate will increase from 19% to 25% with effect from 2023. The Group does not currently recognise any deferred tax assets in respect of UK non-ring fence tax losses and therefore this rate change did not impact the tax disclosures. 13. Cash and cash equivalents 30 June 31 December 2022 (Unaudited) 2021 $'000 $'000 Cash at bank 673,708 729,390 Deposits in escrow - 1,449 673,708 730,839 Bank demand deposits comprise deposits and other short-term money market deposit accounts that are readily convertible into known amounts of cash. The annual effective interest rate on short���term bank deposits was 0.854% for the six months period ended 30 June 2022 (year ended 31 December 2021: 0.386%). 14. Restricted Cash Restricted cash comprises cash retained under the Israel Senior Secured Notes and the Greek State Loan requirement as follows: Current - $35.6 million -Interest Payment Account for the accrued interest (less coupons actually paid) for the period to September 2022 and - $100 million Debt Payment Fund which will be used partly for the September 2022 coupon payment and the remainder released in June 2023, upon achieving six months production at an annualized rate of 3.8 bcm/year from the Karish asset in Israel. Non-Current - $2.8million- $2.1million required to be restricted in Interest Service Reserve Account ('ISRA') in relation to the Greek Loan Notes and $0.6million for Prinos Guarantee. 15. Inventories 30 June 2022 (Unaudited) 31 December 2021 $'000 $'000 Crude oil 35,297 32,832 Raw materials and supplies 45,010 54,371 Total inventories 80,307 87,203 16. Trade and other receivables 30 June 31 December 2022 (Unaudited) 2021 $'000 $'000 Trade and other receivables-Current Financial items: Trade receivables 166,130 178,804 Receivables from partners under JOA 8,534 5,138 Other receivables1 26,749 38,683 Government subsidies2 2,946 3,212 Receivable Vat 73,742 42,376 Receivables from related parties (note 23) - 1 278,101 268,214 Non-financial items: Deposits and prepayments3 19,392 17,139 Deferred issuance expenses 4,940 2,095 Other deferred expenses4 22,958 - Accrued interest income 646 1,078 47,936 20,312 326,037 288,526 Trade and other receivables-Non Current Financial items: Other tax recoverable 14,795 16,478 14,795 16,478 Non-financial items: Deposits and prepayments 11,398 12,337 Other deferred expenses4 - 22,958 Other non-current assets 501 866 11,899 36,161 26,694 52,639 1 Included in other receivables is $26 million (31 December 2021: $29.4million) cash on account in relation to the hedges in Italy 2 Government subsidies mainly relate to grants from Greek Public Body for Employment and Social Inclusion (OAED) to financially support the Kavala Oil S.A. labour cost from manufacturing under the action plan for promoting sustainable employment in underdeveloped or deprived districts of Greece. 3 Mainly relates to prepayments for goods and services under the GSP Engineering, Procurement, Construction and Installation Contract (EPCIC) for the Epsilon project. 4 In accordance with the Gas Sale and Purchase Arrangements (GSPAs) signed with a group of gas buyers, the Company has agreed to pay compensation due to the fact the first gas supply date is taking place beyond the 30 June 2021. The compensation, amounting to $23million, was fully paid in H2 2021 and presented as a current asset as it will be accounted for as variable consideration in line with IFRS 15 against the first gas sale once production commences and gas is delivered to the offtakers, which is expected within the next 12 months. 17. Share capital The below tables outline the share capital of the Company. Equity share capital allotted and fully paid Share capital Share premium Number $'000 $'000 Issued and authorized At 1 January 2021 177,089,406 2,367 915,388 Issued during the year - New shares - - - - Share based payment 513,154 7 - At 31 December 2021 177,602,560 2,374 915,388 Issued during the period - Share based payment 437,945 6 - Share Premium Reduction1 (500,000) At 30 June 2022 (Unaudited) 178,040,505 2,380 415,388 1 Energean plc by special resolution reduced its share premium account, as confirmed by an Order of the High Court of Justice on the 14 June 2022. 18. Borrowings 30 June 2022 (Unaudited) 31 December 2021 $'000 $'000 Non-current Bank borrowings - after two years but within five years 4.5% Senior Secured notes due 2024 ($625 million) 618,741 617,060 4.875% Senior Secured notes due 2026 ($625 million) 616,930 615,966 Convertible loan notes ($50 million) 43,458 41,495 Bank borrowings - more than five years 6.5% Senior Secured notes due 2027 ($450 million) 442,682 442,107 5.375% Senior Secured notes due 2028 ($625 million) 616,107 615,451 5.875% Senior Secured notes due 2031 ($625 million) 615,473 615,047 BSTDB Loan and Greek State Loan Notes 33,366 - Carrying value of non-current borrowings 2,986,757 2,947,126 Current Carrying value of current borrowings - - Carrying value of total borrowings 2,986,757 2,947,126 The Group has provided security in respect of certain borrowings in the form of share pledges, as well as fixed and floating charges over certain assets of the Group. US$2,500,000,000 senior secured notes: On 24 March 2021, the Group completed the issuance of US$2.5 billion aggregate principal amount of senior secured notes. The Notes were issued in four series as follows: 1. Notes in an aggregate principal amount of US$625 million, maturing on 30 March 2024, with a fixed annual interest rate of 4.500%. 2. Notes in an aggregate principal amount of US$625 million, maturing on 30 March 2026, with a fixed annual interest rate of 4.875%. 3. Notes in an aggregate principal amount of US$625 million, maturing on 30 March 2028, with a fixed annual interest rate of 5.375%. 4. Notes in an aggregate principal amount of US$625 million, maturing on 30 March 2031, with a fixed annual interest rate of 5.875%. The interest on each series of the Notes is be paid semi-annually, on 30 March and on 30 September of each year. The Notes are listed for trading on the TACT Institutional of the Tel Aviv Stock Exchange Ltd. (the "TASE"). The Company has provided the following collateral in favour of the Trustee: 1. First rank fixed charges over the shares of Energean Israel Limited, Energean Israel Finance Ltd and Energean Israel Transmission Ltd, the Karish & Tanin Leases, the gas sales purchase agreements ("GSPAs"), several bank accounts, Operating Permits (once issued), Insurance policies, the Company exploration licenses and the INGL Agreement. 2. Floating charge over all of the present and future assets of Energean Israel Limited and Energean Israel Finance Ltd. 3. Energean Power FPSO (subject to using commercially reasonable efforts, including obtaining Israel Petroleum Commissioner approval and any other applicable governmental authority). Kerogen Convertible Loan On 25 February 2021, the Group completed the acquisition of the remaining 30% minority interest in Energean Israel Ltd from Kerogen Investments No.38 Limited, Energean now owns 100% of Energean Israel Limited. This resulted in a reduction of the Group's reported non-controlling interest balance to $nil at 31 December 2021. The total consideration includes: �� An up-front payment of $175 million paid at completion of the transaction �� Deferred cash consideration amounts totalling $180 million, which are expected to be funded from future cash flows and optimisation of the group capital structure, post-first gas from the Karish project. The deferred consideration is discounted at the selected unsecured liability rate of 9.77%. �� $50 million of convertible loan notes (the "Convertible loan notes"), which have a maturity date of 29 December 2023, a strike price of ��9.50 and a zero-coupon rate $450,000,000 senior secured notes: On 18 November 2021, the Group completed the issuance of $450 million of senior secured notes, maturing on 30 April 2027 and carrying a fixed annual interest rate of 6.5%. The interest on the notes is paid semi-annually on 30 April and 30 October of each year. The notes are listed for trading on the Official List of the International Stock Exchange ("TISE"). The issuer is Energean plc and the Guarantors are Energean E&P Holdings, Energean Capital Ltd, Energean Egypt Ltd, and Energean Egypt Services JSC. The company undertook to provide the following collateral in favour of the Security Trustee: 1. Share pledge of Energean Capital Ltd, Energean Egypt Ltd, Energean Italy Ltd and Energean Egypt Services JSC 2. Fixed charges over the material bank accounts of the Company and the Guarantors (other than Energean Egypt Services JSC) 3. Floating charge over the assets of Energean plc (other than the shares of Energean E&P Holdings) Energean Oil and Gas SA ('EOGSA') loan for Epsilon/Prinos Development: On 27 December 2021 EOGSA entered into a loan agreement with Black Sea Trade and Development Bank for ���90.5 million to fund the development of Epsilon Oil Field. The loan is subject to an interest rate of EURIBOR plus a margin of 2% on 90% of the loan (guaranteed portion) and 4.9% margin on 10% of the loan (unguaranteed portion). The loan has a final maturity date 7 years and 11 months after first disbursement. On 27 December 2021 EOGSA entered into an agreement with Greek State to issue ���9.5 million of notes maturing in 8 years with fixed rate -0.31% plus margin as outlined in the table below: 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 total equity and net debt of the Group. Capital is managed in order to provide returns for shareholders and benefits to stakeholders and to safeguard the Group's ability to continue as a going 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 for cash, repay debt, engage in active portfolio management, adjust the dividend payment to shareholders, or undertake other such restructuring activities as appropriate. 30 June 2022 (Unaudited) 31 December 2021 $'000 $'000 Net Debt Current borrowings - - Non-current borrowings 2,986,757 2,947,126 Total borrowings 2,986,757 2,947,126 Less: Cash and cash equivalents (673,708) (730,839) Restricted cash (138,409) (199,729) Net Debt (1) 2,174,640 2,016,558 Total equity (2) 813,060 717,123 Gearing Ratio (1/2): 267.46% 281.2% Reconciliation of liabilities arising from financing activities 1 January 2022 Cash inflows Cash outflows Reclassification Additions Lease modification Borrowing costs including amortisation of arrangement fees Foreign exchange impact 30 June 2022 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 2022 3,294,459 35,835 (85,970) (365) 746 (897) 97,229 (3,858) 3,337,179 Secured Senior Notes 2,905,631 - (77,763) - - - 82,065 - 2,909,933 Convertible loan notes 41,495 - - - - - 1,963 - 43,458 Long -term borrowings - 35,835 (2,422) (365) - - 365 (47) 33,366 Lease liabilities 44,425 - (5,785) - 746 (897) 734 (3,811) 35,412 Deferred licence payments 57,230 - - - - - 2,868 - 60,098 Contingent consideration 78,450 - - - - - 1,322 - 79,772 Deferred consideration for acquisition of minority 167,228 - - - - - 7,912 - 175,140 19. Retirement benefit liability 19.1 Provision for retirement benefits 30 June 2022 (Unaudited) 31 December 2021 $'000 $'000 Defined benefit obligation 1,957 2,767 Provision for retirement benefits recognised 1,957 2,767 Allocated as: Non-current portion 1,957 2,767 19.2 Defined benefit obligation 30 June 2022 (Unaudited) 31 December 2021 $'000 $'000 At 1 January 2,767 7,839 Change in estimate - (3,463) Current service cost 52 191 Interest cost 21 13 Extra payments or expenses 2,934 775 Actuarial losses - from changes in financial assumptions (48) 162 Benefits paid (3,574) (2,314) Transfer in/(out) - (34) Exchange differences (195) (402) At 30 June / 31 December 1,957 2,767 20. Provisions Decommissioning provision Litigation and other provisions Total $'000 $'000 $'000 At 1 January 2022 802,098 11,294 813,392 New provisions 1,443 1,443 Change in estimates (11,469) - (11,469) Recognised in property, plant and equipment (11,469) - (11,469) Recognised in Intangible assets - - - Recognised in profit& loss - - - Payments (1,474) (1,474) Unwinding of discount 5,261 5,261 Currency translation adjustment (67,719) (2,927) (70,646) At 30 June 2022 (Unaudited) 726,697 9,810 736,507 Current provisions 12,133 - 12,133 Non-current provisions 714,564 9,810 724,374 Decommissioning provision The decommissioning provision represents the present value of decommissioning costs relating to oil and gas properties, which are expected to be incurred up to 2040, when the producing oil and gas properties are expected to cease operations. The key assumptions underpinning the estimated decommissioning provision are as follows: Inflation assumption 30 June 2022 Discount rate assumption 30 June 2022 Cessation of production assumption 30 June 2022 $'000 31 December 2021 $'000 Greece 0.8%- 2.4% 2.87% 2034 13,610 17,058 Italy 1.1% - 1.4% 1.23% 2022-2040 485,560 527,801 UK 2.5% 1.49% 2023-2031 183,878 203,246 Israel1 2.0%-5.3%1 3.43%1 2041 26,609 35,525 Croatia 1.8% 1.25% 2022 17,040 18,467 Total 726,697 802,097 1US inflation rate and US Bond rates have been used. Litigation and other claims provisions Litigation and other claim provision relates to litigation actions currently open in Italy with the Termoli Port Authority in respect of the fees payable under the marine concession regarding FSO Alba Marina serving the Rospo Mare field. Energean Italy Spa has appealed these cases to the Campobasso Court of Appeal. None of the other cases has yet had a decision on the substantive issue. The Group provided $7.5 million (���7.2 million) against an adverse outcome of these court cases. Energean Italy SpA has currently open litigations with three municipalities in Italy related to the imposition of real estate municipality taxes (IMU/TASI), interest and related penalties concerning the periods 2016 to 2019. For the years before 2019, Edison SpA bears uncapped liability for any amount assessed according to the sale and purchase agreement (SPA) signed between the companies while Energean is liable for any tax liability related to tax year 2019. For all three cases, Energean Italy SpA (together with Edison SpA, as appropriate) filed appeals presenting strong legal and technical arguments for reducing the assessed taxes as well as cancelling the assessed penalties. Based on legal advice received, the Group strongly believes that the outcome of the court decisions will be in its favour with no material exposure expected in excess of the provision of $2.2 million (���2.1million) recognised. It is not currently possible to accurately predict the timing of the settlement of these claims and therefore the expected timing of the cash flows have been disclosed as non-current based timings of the next court hearing dates. 21. Trade and other payables 30 June 2022 (Unaudited) 31 December 2021 $'000 $'000 Trade and other payables-Current Financial items: Trade accounts payable 154,181 109,525 Payables to partners under JOA1 41,607 43,499 Deferred licence payments due within one year2 24,466 - Deferred consideration for acquisition of minority 175,140 167,228 Other creditors 19,618 12,043 Short term lease liability 8,394 8,253 423,406 340,548 Non-financial items: Contract Liability3 54,690 - Accrued Expenses4 87,848 64,823 Other finance costs accrued 37,581 36,693 Social insurance and other taxes 4,328 7,643 184,447 109,159 607,853 449,707 Trade and other payables-Non Current Financial items: Trade and other payables5 122,579 - Deferred licence payments2 35,632 57,230 Contingent consideration (note 7) 79,772 78,450 Long term lease liability 27,018 36,172 265,001 171,852 Non-financial items: Contract Liability3 - 53,537 Social insurance 663 598 663 54,135 265,664 225,987 1 Payables related to operated Joint operations primarily in Italy 2 In December 2016, Energean Israel acquired the Karish and Tanin offshore gas fields for a $40.0 million closing payment with an obligation to pay additional consideration of $108.5 million plus interest at an annual rate of 4.6% in ten equal annual payments. As at 30 June 2022 the total discounted deferred consideration liability remaining was $60 million (31 December 2021: $57 million). The Sale and Purchase Agreement ("SPA") includes provisions in the event of Force Majeure that prevents or delays the implementation of the development plan as approved under one lease for a period of more than ninety (90) days in any year following the final investment decision. In the event of Force Majeure, the applicable annual payment of the remaining consideration will be postponed by an equivalent period of time, and no interest will be accrued in that period of time as well. Due to the effects of the COVID-19 pandemic which constitute a Force Majeure event, the deferred payment due in March 2022 was postponed accordingly. 3 In June 2019, Energean signed an agreement with Israel Natural Gas Lines ("INGL") for the transfer of title (the "hand over") of the nearshore and onshore part of the infrastructure that will deliver gas from the Karish and Tanin FPSO into the Israeli national gas transmission grid. As consideration, INGL will pay Energean 369 million Israeli new shekel (ILS) (c. $115 million) for the infrastructure being built by Energean which will be paid in accordance with milestones detailed in the agreement. The agreement covers the onshore section of the Karish and Tanin infrastructure and the nearshore section of pipeline extending to approximately 10km offshore. It is intended that the hand over to INGL will become effective at least 90 days after the delivery of first gas from the Karish field which expected within weeks. Following Hand Over, INGL will be responsible for the operation and maintenance of this part of the infrastructure. 4 Included in trade payables and accrued expenses in HY22 and FY21 are mainly Karish field-related development expenditures (mainly FPSO and sub-sea construction cost) and the NEA/NI project in Egypt. 5 The amount represents an amount payable to Technip in respect of costs incurred starting 1 April 2022 until completion, in terms of the EPCIC contract. The amount is payable in eight equal quarterly deferred payments due after practical completion date and therefore has been discounted at 5.831%. p.a. 22. Share based payments Analysis of share-based payment charge 30 June (Unaudited) 2022 2021 $'000 $'000 Energean Deferred Bonus Plan (DSBP) 609 530 Energean Long Term Incentive Plans (LTIP) 2,217 1,944 Total share-based payment charge 2,826 2,474 Capitalised to intangible and tangible assets 109 207 Expensed as cost of sales - 5 Expensed as administration expenses 2,717 2,247 Expensed to exploration and evaluation expenses - 14 Expensed as other expenses - 1 Total share-based payment charge 2,826 2,474 Energean Long Term Incentive Plan (LTIP) Under the LTIP, Senior Management can be granted nil exercise price options, normally exercisable from three to ten years following grant provided an individual remains in employment. The size of awards depends on both annual performance measures and Total Shareholder Return (TSR) over a period of up to three years. There are no post-grant performance conditions. No dividends are paid over the vesting period; however, Energean's Board may decide at any time prior to the issue or transfer of the shares in respect of which an award is released that the participant will receive an amount (in cash and/or additional Shares) equal in value to any dividends that would have been paid on those shares on such terms and over such period (ending no later than the Release Date) as the Board may determine. This amount may assume the reinvestment of dividends (on such basis as the Board may determine) and may exclude or include special dividends. The weighted average remaining contractual life for LTIP awards outstanding at 30 June 2022 was 1.6 years, number of shares outstanding 2,103,849 and weighted average price at grant date ��8.49. Deferred Share Bonus Plan (DSBP) Under the DSBP, the portion of any annual bonus above 30 per cent of the base salary of a Senior Executive nominated by the Remuneration Committee was deferred into shares. Deferred awards are usually granted in the form of conditional share awards or nil-cost options (or, exceptionally, as cash-settled equivalents). Deferred awards usually vest two years after award although may vest early on leaving employment or on a change of control. The weighted average remaining contractual life for DSBP awards outstanding at 30 June 2022 was 1.3 years, number of shares outstanding 230,707 and price at grant date ��10.05. 23. Related parties 23a. Related party relationships Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. The Directors of Energean Plc are considered to be the only key management personnel as defined by IAS 24. The following information is provided in relation to the related party transaction disclosures provided in note 23b below: Adobelero Holdings Co Ltd. is a beneficially owned holding company controlled by Panos Benos, the CFO of the Group. Growthy Holdings Co Ltd is a beneficially owned holding company controlled by Matthaios Rigas, the CEO of the Group. Oil Co Investments Limited is beneficially owned and controlled by Efstathios Topouzoglou, a Non-Executive Director of the Group. Seven Maritime Company (Seven Marine) is a related party company controlled by one the Company's shareholders Mr Efstathios Topouzoglou. Seven Marine owns the offshore supply ship Energean Wave which support the Group's operation in northern Greece. Capital Earth: During the period ended 30 June 2022 the Group received consultancy services from Capital Earth Limited, a consulting company controlled by the spouse of one of Energean's executive directors, for the provision of Group Corporate Social Responsibility Consultancy and Project Management Services. Prime Marine Energy Inc: Following a competitive tender process, the Group entered into an agreement to purchase a Field Support Vessel ("FSV") from Prime Marine Energy Inc., a company controlled by director and shareholder at Energean plc, for $33.3 million. The FSV is being constructed to meet the Group's specifications and will provide significant in-country capability to support the Karish project, including FPSO re-supply, crew changes, holdback operations for tanker offloading, emergency subsea intervention, drilling support and emergency response. The purchase of this multi-purpose vessel will enhance operational efficiencies and economics when compared to the leasing of multiple different vessels for the various activities. 23b. Related party transactions Purchases of goods and services 30 June (Unaudited) 2022 2021 $'000 $'000 Nature of transactions Other related party "Seven Marine" Vessel leasing 1,079 993 Other related party "Prime Marine Energy Inc" Construction of field support vessel 1,556 3,300 Other related party "Capital Earth Ltd" Consulting services 48 46 2,683 4,339 23c. Related party balances Payables 30 June 2022 (Unaudited) 31 December 2021 $'000 $'000 Nature of balance Seven Marine Vessel leasing 232 417 232 417 24. Commitments and contingencies In acquiring its oil and gas interests, the 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 the Group of performing these work programmes: 30 June 2022 (Unaudited) 31 December 2021 $'000 $'000 Capital Commitments: Due within one year 35,866 20,575 Due later than one year but within two years 38,658 51,180 Due later two years but within five years 2,035 1,497 76,559 73,252 Contingent liabilities: Performance guarantees*: Greece 2,540 1,176 Israel 101,100 89,683 UK 83,320 99,570 Italy 13,551 21,292 Egypt 2,000 - Montenegro - 566 202,511 212,287 * Performance guarantees are in respect of abandonment obligations, committed work programmes and certain financial obligations Issued guarantees: Karish and Tanin Leases ($25 million) - As part of the requirements of the Karish and Tanin Lease deeds, the Group provided the Ministry of National Infrastructures, Energy and Water with bank guarantees for each lease. The bank guarantees expire 29 June 2023. Blocks 12, 21, 22, 23 and 31 ($21.1 million)- As part of the requirements of the exploration and appraisal licences which granted to the Group during the Israeli offshore bid in December 2017, the Group provided the Ministry of National Infrastructures, Energy and Water in January 2018 with bank guarantees for all 5 blocks mentioned above. The bank guarantees are in force until 13 January 2023. Additionally, a bank guarantee related Block 12 drilling was issued in November 2021 and is in force until 17 December 2022. Blocks 55, 56, 61 and 62, also known as "ZONE D" ($3.2million)- As part of the requirements of the exploration and appraisal licences which granted to the Group during the Israeli 2nd offshore bid in July 2019, the Group provided the Ministry of National Infrastructures, Energy and Water in January 2018 with bank guarantees for all 4 blocks mentioned above. The bank guarantees are in force until 28 September 2022. Israeli Natural Gas Lines ("INGL") ($47.3million) - As part of the agreement signed with INGL on June 2019 the Group provided INGL bank guarantee in order to secure the milestone payments from INGL. These bank guarantees are in force until 30 November 2022 ($42.1million) and June 2023 ($5.2million). Israel Other ($4.4million) - As part of ongoing operations in Israel, the Group has provided various bank guarantees to third parties in Israel. United Kingdom: Following the Edison E&P acquisition, the Group issued letters of credit amounting to $83.3 million for United Kingdom decommissioning obligations and other obligations under the United Kingdom licenses. Italy: Following the Edison E&P acquisition, the Group issued letters of credit amounting to $13.5 million for decommissioning obligations and other obligations under the Italian licenses. Legal cases and contingent liabilities The Group had no material contingent liabilities as of 30 June 2022 and 31 December 2021. 25. Subsequent events Zone D On 27 July 2022 the Company sent a formal notice to the Ministry of Energy asking the relinquishment of Zone D licenses and discontinue any work regarding them. The licenses will expire at the end of their term, i.e., on October 27, 2022. 26. Subsidiary undertakings At 30 June 2022, the Group had investments in the following subsidiaries: Name of subsidiary Country of incorporation / registered office Principal activities Shareholding At 30 June 2022 (%) Shareholding At 31 December 2021 (%) Energean E&P Holdings Ltd 22 Lefkonos Street, 2064 Nicosia, Cyprus Holding Company 100 100 Energean Capital Ltd 22 Lefkonos Street, 2064 Nicosia, Cyprus Holding Company 100 100 Energean MED Limited 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas exploration, development and production 100 100 Energean Oil & Gas S.A. 32 Kifissias Ave. 151 25 Marousi Athens, Greece Oil and gas exploration, development and production 100 100 Energean International Limited 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100 Energean Israel Limited 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100 Energean Montenegro Limited 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100 Energean Israel Finance SARL 560A rue de Neudorf, L-2220, Luxembourg Financing activities 100 100 Energean Israel Transmission LTD Andre Sakharov 9, Haifa, Israel Gas transportation license holder 100 100 Energean Israel Finance LTD Andre Sakharov 9, Haifa, Israel Financing activities 100 100 Energean Egypt Limited 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100 Energean Hellas Limited 22 Lefkonos Street, 2064 Nicosia, Cyprus Oil and gas exploration, development and production 100 100 Energean Italy S.p.a. Piazza Sigmund Freud 1 20154 Milan,Italy Oil and gas exploration, development and production 100 100 Energean International E&P S.p.a. Piazza Sigmund Freud 1 20154 Milan,Italy Oil and gas exploration, development and production 100 100 Energean Sicilia Srl Via Salvatore Quasimodo 2 - 97100 Ragusa (Ragusa) Oil and gas exploration, development and production 100 100 Energean Exploration Limited 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas exploration, development and production 100 100 Energean UK Ltd 44 Baker Street, London W1U 7AL, United Kingdom Oil and gas exploration, development and production 100 100 Energean Egypt Energy Services JSC Building 11, 273 Palestine Street New Maadi , Cairo EGYPT Oil and gas exploration, development and production 100 100 27. Exploration, Development and production 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 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 Northwest 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 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 [1] When considering H1 2022 data versus 2019 Energean standalone (pre-Edison acquisition) [2] Adjusted H1 2022 EBITDAX includes losses on forward transactions of $18.2 million (H1 2021: $nil) reported in Revenue (Note 5 in the interim financial statements). Adjusted EBITDAX excluding these hedges would be $216.4 million [3] Cash Cost of Production is defined in the Financial Review section. Includes $17.4 million of flux costs. [4] Cash S,G&A and Adjusted EBITDAX are defined in the Financial Review section [5] After working capital movements [6] On an equity share basis [7] 2019 data is Energean standalone (pre-Edison acquisition) [8] Cash cost of production is defined later in the financial review [9] Inclusive of flux costs [10] Cash SG&A is defined later in the financial review [11] Adjusted EBITDAX is defined later in the financial review. Energean uses Adjusted EBITDAX as a core business KPI. [12] Numbers may not sum due to rounding [13] Adjusted EBITDAX includes losses on forward transactions of $18.2million (H1 2021: $0million) reported in Revenue (Note 4 in the interim financial statements). Adjusted EBITDAX excluding these hedges would be $216.4million [14] Numbers may not sum due to rounding [15] Numbers may not sum due to rounding [16] Inclusive of restricted cash [17] Numbers may not sum due to rounding This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com. RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy. 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