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Energean PLC
Investor Presentation • Jun 20, 2024
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Energean
Strategic sale of Egypt, Italy and Croatia portfolio
20 June 2024
The following applies to the information preceding this slide, and you are therefore advised to carefully read the statements below before reading, accessing or making any other use of this presentation. By attending the meeting where this Presentation is made or by accepting a copy of this Presentation, you will be deemed to have represented, warranted and undertaken that (i) you have read and agree to be bound by the following limitations and conditions and (ii) you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of the Presentation.
Disclaimer
The information contained in this document has been prepared and issued by Energean plc ("Energean" or the "Company") exclusively for use in a presentation in connection with the proposed disposal of the Company's Egyptian, Italian, and Croatian interests (the "EIC Group") by the Company (the "Transaction"). For the purposes of this notice, "Presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed or distributed during the meeting. This Presentation may not be copied, distributed, reproduced or passed on, directly or indirectly, in whole or in part, or disclosed by any recipient, to any other person (whether within or outside such person's organisation or firm) or published in whole or in part, for any purpose or under any circumstances. Energean assumes no liability for this Presentation if it is used for a purpose other than the above.
The information and opinions contained in this Presentation have not been independently verified by Energean or other third parties. Therefore, no representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, impartiality, completeness or correctness of the information or the opinions or statements contained herein. Energean assumes no liability of any kind, whether for negligence or any other reason, for any damage or loss arising from any use of this Presentation or its contents. The information contained in this Presentation will not be updated to reflect material developments which may occur after the date of this Presentation. To the extent available, the industry and market data contained in this Presentation has come from official or third party sources, although the Company has not independently verified the data contained therein.
All information presented or contained in this Presentation is subject to verification and Energean may alter, modify or otherwise change in any manner the content of this Presentation, without obligation to notify any person of such revision or changes.
Important Information
This Presentation does not purport to contain all of the information that may be required to evaluate the Company, the EIC Group, any investment in the Company or any of its securities. This Presentation does not constitute or form part of, and should not be construed as, any offer, invitation or recommendation to purchase, sell or subscribe for, underwrite or otherwise acquire, any securities of Energean or a successor entity or any existing or future subsidiary or affiliate of Energean or any other securities, nor should it or any part of it form the basis of, or be relied on in connection with, any decision to purchase or subscribe for any securities of Energean or any of such subsidiaries or affiliates, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever.
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Forward-Looking Statements
This Presentation contains statements that express Energean's opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. Examples include discussion of Energean's and the EIC Group's strategies, financial forecasts, financing plans, growth opportunities and market growth. In some cases, such forward-looking statements can be identified by terminology such as "anticipate," "intend," "believe," "estimate," "plan," "seek," "project," "expect," "may," "will," "would," "could" or "should," the negative of these terms or similar expressions. While Energean always intends to express its best judgment when making statements about what it believes will occur in the future, and although Energean bases these statements on assumptions that it believes to be reasonable when made, these forwardlooking statements are not a guarantee of Energean's or the EIC Group's performance or the performance of any of its existing or future subsidiaries or affiliates.
You are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date they were made. Forwardlooking statements are subject to many risks, uncertainties and other variable circumstances, which may cause actual outcomes and results to be materially different from those expressed or implied by such forward-looking statements and readers are cautioned not to place undue reliance on such forward-looking statements. Many of these risks are outside of Energean's or the EIC Group's control.
Non-IFRS Financial Information
This Presentation contains certain performance measures that are not defined under IFRS or any generally accepted accounting principles.
Enterprise value of up to \$945 million
Energean is selling its Egypt, Italy and Croatia portfolio to Carlyle, expected to close by year-end '24
Enterprise value Retaining a material reserves base and production outlook \$504 million Loc B \$139 million \$177 million Upfront cash consideration upon closing of the transaction1 . Total EV to equity adjustments. Contingent consideration linked to a minimum production threshold in Italy and commodity prices2 . A contingent payment for Location B3 . EV of up to \$945 million Vendor Loan with a 6-years and 3-months tenor with interest charged at SOFR + 7% in year 1, plus 0.5% for each year thereafter. \$125 million Firm EV of \$820 million YE23 2P reserves Divested countries Pro-forma 2P reserves 1,1154 (150)4 965 YE23 reserves (mmboe) 2024 production guidance (kboed) 155 – 175 (39 – 42) 116 – 133 2024 production guidance Divested countries Pro-forma 2024 production guidance Material 2P pro-forma reserve base of 965 mmboe FY24 guidance reiterated
4. As of 31/12/2023 D&M CPR
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1. Energean will also receive working capital/cash adjustments between the effective date and the closing date. 2. Refer to Appendix 2 3. Refer to Appendix 3
Compelling transaction metrics
945
('EV') (\$ million)
Clear financial rationale leading to an expected reduction of gross debt and special dividend
Transaction Metrics Financial Highlights
Enterprise Value1
284
Immediately cashflow accretive
Annual G&A savings of at least \$7.5 million p.a.
Use of Proceeds
Repayment of the \$450 million PLC Corporate Bond
Special dividend of up to \$200 million
Purchase price Sales price
>3x
Reduces decommissioning liability by >60%
Redefined dividend policy upon transaction close
1. Portfolio was acquired for \$284 million in 2020 (UK ascribed minimal value); sales price is for up to \$945 million, of which
5 \$820 million is firm. 2. \$5.4/boe multiple is based upon the firm EV of \$820 million and 150 mmboe of YE23 2P reserves. \$1.2/boe multiple is on the EV of \$284 million and 239 mmboe (excludes 4 mmboe of UK volumes) of YE18 2P reserves.
Sale increases strategic and financial flexibility
Post-sale, Energean's highly disciplined approach to capital allocation will continue
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1. Amounts shown as per Energean's 2023 Annual Report. 2. Europe, Middle East and Africa. 3. Profiles based upon YE23 D&M CPR forecasts for Israel, Greece and UK. Only Athena, Zeus and Hera included within Katlan Area profile, which has an additional 243 mmboe of prospective resources that Energean views as substantially de-risked. 4. Scope 1 and 2 emissions on an equity share basis.
Pro-forma business: Israel production is the foundation of Energean, delivering long-term and visible cash flows
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Pro-forma business: growth targeted through Anchois project
Appraisal well spud planned for August 2024
Pro-forma business: focus is on creating a carbon storage hub in Greece and the wider Med region
- New EnEarth subsidiary created to centralise Energean's carbon storage projects.
- Prinos Carbon Storage project to help decarbonise heavy industries, in line with commitment during COP28:
- Expected to reach an injection capacity of up to 3 million tons of CO2 a year.
- Storage permit application expected to be submitted by end-June '24.
- EUR 150 million of grants have been committed.
- Agreement signed with RepAir for the use of its Direct Air Capture technology for Prinos.
Inorganic growth targets
Energean will continue to evaluate opportunistic M&A that is aligned with its key business drivers
Creating value through capital discipline
Energean has executed five well-timed deals, taking advantage of the opportunities in the market with strict capital discipline.
| Year | Transaction details | Consideration (\$/boe) |
|---|---|---|
| 2007 | Prinos acquisition | 0.81 |
| 2016 | Karish & Tanin acquisition | 0.52 |
| 2020 | Edison E&P acquisition | 1.23 |
| 2021 | 30% minority interest in EISL acquisition | 1.94 |
| 2023 | 45% interest in Chariot's offshore Morocco acreage acquisition |
0.25 |
| 2024 | Strategic sale of Egypt, Italy and Croatia portfolio | 5.46 |
Focus on gas
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Prioritising regions where there is long-term policy support for gas and coal phase-out.
Evaluate wider EMEA region
Energean will now evaluate opportunities beyond the Mediterranean in the wider Europe, Middle East and Africa ("EMEA") region.
Protect dividend per share
Any future acquisitions will be opportunistic and focus on protecting shareholder returns.
Pro-forma countries of operation
1. \$0.8/boe multiple is on the EV of \$1.5 million and 2P reserves of 2 mmboe. 2. \$0.5/boe multiple on \$148.5 million (excludes royalties) and
Management Estimates of net (70% W.I.) 273 mmboe 2C resources 3. \$1.2/boe multiple is on the EV of \$284 million and 239 mmboe
(excludes 4 mmboe of UK volumes) of YE18 2P reserves. 4. \$1.9/boe multiple is based on \$405 million and 219 mmboe 2P reserves. 5. \$0.2/boe multiple is based off of \$10 million cash consideration and net (45% W.I.) 48 mmboe 2C resources. 6. \$5.4/boe multiple is based
upon the firm EV of \$820 million and 150 mmboe of YE23 2P reserves (differences due to rounding).
Appendix
Appendix 1 – Indicative completion timeline
Expected to complete by Q4 2024
| 2024 | 2025 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Jun | Jul | Aug | Sep | Oct | Nov | Dec | Jan | Feb | Mar | |
| SPA signature and announcement | ||||||||||
| UK / Retained Business carve-out | ||||||||||
| Italian and Egyptian Government Approvals | ||||||||||
| Completion |
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Appendix 2 – up to \$125 million Italy contingent consideration
Capped contingent consideration, inflated at the US CPI index from 1 January 2024 onwards, varying from nil to \$125 million (as inflation adjusted) depending on:
• Working interest Italian oil and gas production over the period 2025-2028 exceeding the below Proved Developed Reserves and Proved Reserves1 respectively; and
| 2025 | 2026 | 2027 | 2028 | |
|---|---|---|---|---|
| Oil production (mmbbl) | 1.794 | 1.666 | 1.55 | 1.444 |
| Gas production (mmscf) | 26,918 | 24,551 | 21,574 | 19,063 |
• Brent and Italian PSV gas prices over the period 2025-2028 exceeding the below reference price:
| 2025 | 2026 | 2027 | 2028 | |
|---|---|---|---|---|
| Brent Price (US\$/bbl) | 77.33 | 73.56 | 70.00 | 70.00 |
| Italian PSV Price Gas (€ / MWh) | 29.87 | 29.16 | 25.00 | 25.00 |
The contingent payment due is based on 25% of the incremental commodity price multiplied by the actual production and payable on an annual basis in respect of the years 2025-28.
Appendix 3 – contingent consideration for Location B
An uncapped contingent payment for the recently drilled Location B well in Egypt.
This payment will be calculated based off (i) the 2P reserves (as determined by an independent auditor at YE24) plus (ii) the actual 2024 production, that are in excess of the below pre-drill estimated volumes:
- a) US\$2.00 per boe for gas in excess of 8,672,924 boe;
- b) US\$5.00 per boe for oil in excess of 0 boe;
- c) US\$4.50 per boe for condensate in excess of 490,055 boe; and
- d) US\$3.75 per boe for LPG in excess of 539,060 boe.
The first \$15 million of any payable amount shall be payable in cash in Q3 2025 and any balance due shall be payable (at Carlyle's option) either in cash or as a corresponding increase in the principal amount of the Vendor Loan.
