19th Mar 2020 10:22
(Alliance News) - Energean Oil & Gas PLC on Thursday said it is protected from fluctuating commodity prices given most its current and future production will be gas, not oil.
Energean is currently the developing the Karish Tanin gas project off the coast of Israel, which is on track for first gas in the first half of 2021.
Some 70% of production between 2020 and 2025 is expected to be gas, Energean said, and it is all sold under gas agreements that are "largely" insulated from the Brent oil price.
Production during 2019 fell 18% to 3,300 barrels of oil equivalent per day, as reported in late January, from the Prinos field in Greece. Prinos is currently under strategic review.
In 2020, Energean sees proforma production of 42,500 barrels to 50,000 barrels of oil equivalent per day.
The large increase is due to the acquisition of Italian electricity and gas company Edison SpA's oil business for USD850 million, announced July last year. The deal has not yet completed, but Energean hopes to shortly, adding producing assets in Egypt, Italy, and Croatia.
Revenue for 2019 fell 16% to USD76 million, again as reported in January. Edison has swung to a pretax loss of USD104.3 million from a USD85.3 million profit due to a USD71 million impairment on Prinos.
Energean said continued its strong growth trajectory in 2019, becoming firmly established as a leading, FTSE 250 E&P independent.
"The Covid-19 pandemic and OPEC+ price war have put us into uncertain times, but we are well-placed to weather the challenges. Once the Edison E&P transaction is completed, around 70% of our production will be sold under long-term gas sales agreements that insulate our future revenue against oil price volatility," said Chief Executive Mathios Rigas.
"Following the completion of the Edison transaction, we will continue to own and operate the majority of our asset base, and are well-funded for all of our projects. This will ensure we can respond quickly and appropriately to the macro environment and take the right decisions to protect our business and our shareholders."
Shares were 7.7% higher on Thursday morning in London at 321.50 pence each.
By George Collard; [email protected]
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