14th Jan 2021 10:19
(Alliance News) - Energean PLC on Thursday announced it has taken a final investment decision on the Karish North gas development in Israel after reporting the significant gas discovery at the asset in April 2019.
The London-based exploration and production company, with operations in Israel, Greece and Egypt, confirmed in November 2019 that 0.9 trillion cubic feet of gas, or 25 billion cubic metres, plus 34 million barrels of light oil or condensate was discovered at the Karish North sidetrack, which was drilled 700 metres north of the original Karish North penetration to confirm the gas water contact.
Energean said the discovery will be commercialised via a low-cost tie-back to the Energean Power FPSO, which will be 5.4 kilometres away.
It expects production from the first well at Karish North to be up to 300 million standard cubic feet per day, or three billion cubic metres per year, and first production is expected during the second half of 2023. Energean estimates initial capital expenditure of approximately USD150 million and that the project will deliver an internal rate of return in excess of 40%.
In addition, Energean said it has signed an 18-month USD700 million loan facility agreement with JP Morgan AG and Morgan Stanley Funding Inc, which will be used to accelerate the development of Karish North to enable capital expenditure on the project to be undertaken in advance of first gas from Karish Main.
It also plans to put USD175 million towards the acquisition of a 30% stake in Energean Israel Ltd from Kerogen Investments No 38 Ltd, an affiliate of Kerogen Capital, which is valued between between USD380 million and USD405 million. The purchase is expected to close in the first quarter of 2021.
"I am delighted that we have taken final investment on Karish North, proving the value of the Energean Power FPSO as a quick and low-cost commercialisation route for our assets in Israel. We are also increasing the liquid processing capacity of our FPSO to process the additional volumes we discovered for minimal incremental cost. We remain on track to achieve our goal of delivering meaningful free cash flows that will support the payment of a sustainable dividend whilst also moving towards our stated target to achieve net zero emissions," said Chief Executive Mathios Rigas.
Shares in Energean were up 5.5% at 907.40 pence in London on Thursday.
By Zoe Wickens; [email protected]
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