Energean Israel 1Q 2026 Accounts

ENERGEAN ISRAEL LIMITED

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

31 MARCH 2026

ENERGEAN ISRAEL LIMITED

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF 31 MARCH 2026

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ENERGEAN ISRAEL LIMITED

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

ENERGEAN ISRAEL LIMITED

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

ENERGEAN ISRAEL LIMITED

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

ENERGEAN ISRAEL LIMITED

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(1) An interim dividend of US$28.25 million was declared in May 2025 and was settled through the offset of a loan to the parent company, including accrued interest.

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

NOTE 1: - General

a. Energean Israel Limited (the "Company") was incorporated in Cyprus on 22 July 2014 as a private company with limited liability under the Companies Law, Cap. 113. As of 1 January 2024, the Company is tax resident in the UK by virtue of having transferred its management and control from Cyprus to the UK, with its registered address being at One Great Cumberland Place, London, W1H 7AL.

b. The Company and its subsidiaries (the "Group") have been established with the objective of the exploration, production and commercialisation of natural gas and hydrocarbon liquids. The Group's main activities are performed in Israel by its Israeli Branch.

c. As of 31 March 2026, the Company had investments in the following subsidiaries:

d. The Group's core assets as of 31 March 2026 comprised:

(1) The concession agreement expires in 2044.

(2) The concession agreement expires in 2054.

(3) Refer to Note 8.

 e. There have been no significant changes to related parties since 31 December 2025, refer to note 22 in the 2025 Group's annual consolidated financial statements for more information.

NOTE 2: - Accounting policies and basis of preparation

The interim consolidated financial information included in this report has been prepared in accordance with IAS 34 "Interim Financial Reporting". The results for the interim period are unaudited and, in the opinion of management, include all adjustments necessary for a fair presentation of the results for the period ended 31 March 2026. All such adjustments are of a normal recurring nature. The unaudited interim consolidated financial statements do not include all the information and disclosures that are required for the annual financial statements and must be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 December 2025.

These financial statements are presented in U.S. Dollars and all values are rounded to the nearest thousand dollars except where otherwise indicated.

NOTE 2: - Accounting policies and basis of preparation (Cont.)

The financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing the Group's annual consolidated financial statements for the year ended 31 December 2026 which are the same as those used in preparing the annual consolidated financial statements for the year ended 31 December 2025.

The directors consider it appropriate to adopt the going concern basis of accounting in preparing these interim consolidated financial statements. The Going Concern assessment covers the period up to 30 June 2027, "the forecast period".

Since 7 October 2023, regional geopolitical risk has remained elevated. The intensification of tensions in the Middle East has increased the security risks to essential infrastructure, including the Energean Power FPSO offshore Israel, which may be exposed to missile fire or sabotage. Any event affecting production from the Karish and Karish North fields could have a material adverse impact on the Group's business, results of operations, cash flows, financial condition and prospects.

On 28 February 2026, the Ministry of Energy and Infrastructure ordered the temporary suspension of production and activities of the Energean Power FPSO following further escalation of geopolitical tensions in the region. On 9 April 2026, the Ministry of Energy and Infrastructure instructed the safe restart and resumption of production and operations of the Energean Power FPSO, and Energean acted in accordance with those instructions. Production of the Energean Power FPSO was resumed and the FPSO became fully operational on 10 April 2026.

Throughout 2026 and subsequent to the reporting period, Energean has maintained all necessary measures to support the continuity of business operations (subject to any governmental instructions), including the mobility of its people and the security of its information.

NOTE 3: - Revenues

(1) Sales gas for three months ended 31 March 2026 totaled approximately 0.96 bcm (billion cubic metres) and for three months ended 31 March 2025 totaled approximately 1.19 bcm.

(2) Sales from hydrocarbon liquids for three months ended 31 March 2026 totaled approximately 532 kbbl (kilo barrel) and for three months ended 31 March 2025 totaled approximately 1,042 kbbl.

See also Note 2 regarding the temporary suspension of production of the Energean Power FPSO.

NOTE 4: - Operating profit before taxation

(1) Other operating costs comprise of insurance costs and planned maintenance costs.

(2) The Administration expenses mainly consist of legal expenses, intercompany management fees and external advisors' fees.

(3)  The licence for Block 21 expired on 13 January 2025. Capitalized costs associated with Block 21 were written off. (Refer to Note 8)

(4) The amount of US$9.5 million relates to insurance compensation due to remedial work on auxiliary piping systems.

NOTE 5: - Net finance costs

NOTE 6: - Taxation

1. Corporate Tax rates applicable to the Company:

Israel:

The Israeli corporate tax rate is 23% in 2026 and 2025.

United Kingdom:

Starting from 1 January 2024, the company's control and management was transferred from the Republic of Cyprus to the United Kingdom ("UK") and as such the company's tax residency migrated from Cyprus to UK from the first day of the accounting period. The applicable tax rate in the UK is 25%.

The Group's taxable profits arise in Israel through the Israeli branch and are taxed at the Israeli statutory tax rate of 23%. No material taxable income was generated at the UK parent entity level.

Under s.18A of the UK CTA 2009, the Company made an election for the branch of Energean Israel Limited (and any other branches that may open from time to time) to be exempt from UK corporation tax from its first accounting period commencing on 1 January 2024 and all subsequent accounting period.

NOTE 6: - Taxation (Cont.)

2. The Income and Natural Resources Taxation Law, 5771-2011 - Israel- the main provisions of the law are as follows:

In April 2011, the Knesset passed the Income and Natural Resources Tax Law, 5771-2011 ("the Law"), introducing an oil and gas profits levy at a rate calculated as described. The rate of the levy will be calculated according to a proposed R factor mechanism, according to the ratio between the net accrued revenues from the project and the cumulative investments as defined in the law. A minimum levy of 20% will be levied at the stage where the R factor ratio reaches 1.5, and when the ratio increases, the levy will increase gradually until the maximum rate of 50% until the ratio reaches 2.3. In addition, it was determined that the rate of the levy as stated will be reduced starting in 2017 by multiplying 0.64 by the difference between the corporate tax rate prescribed in section 126 of the Income Tax Ordinance for each tax year and the tax rate of 18%. In accordance with the corporate tax rate from 2018 onwards, the maximum rate will be 46.8%.

In addition, additional provisions were prescribed regarding the levy, inter alia, the levy will be recognised as an expense for the purpose of calculating income tax; The limits of the levy shall not include export facilities; The levy will be calculated and imposed for each reservoir separately (Ring Fencing); Payment by the owner of an oil right calculated as

a percentage of the oil produced, the recipient of the payment will be liable to pay a levy according to the amount of the

payment received, and this amount will be subtracted from the amount of the levy owed by the holder of the oil right. The law also sets rules for the unification or separation or consolidation of oil projects for the purposes of the Law. In accordance with the provisions of the Law, the Group is not yet required to pay any payment in respect of the said levy, and therefore no liability has been recognised in the financial statements in respect of this payment.

3. Taxation charge:

NOTE 7: - Property, Plant and Equipment 

a. Composition:

(1) The additions to oil & gas assets in Q1 2026 mainly relate to the Katlan development.

Second oil train lift safely and successfully performed in Q4 2024; commissioning activities are ongoing and are expected to complete by around the end of May, which will result in an increase in liquids' production capacity.

Borrowing costs capitalised for qualifying assets during the year are calculated by applying a weighted average interest rate of 7.89% for the period ended 31 March 2026 (for the year ended 31 December 2025: 7.02%).

NOTE 7: - Property, Plant and Equipment (Cont.)

b.  Depreciation expense for the year has been recognised as follows:

c. Cash flow statement reconciliations:

d.  Details of the Group's rights in petroleum and gas assets are presented in note 1.

NOTE 8: - Intangible Assets

a.  Composition:

The additions to other intangible assets in Q1 2026 are mainly related to Nitzana pipeline, see note (1) below.

(1) Nitzana transmission agreement- In October 2025, the company signed a transmission agreement with Israel Natural Gas Lines Ltd. ("INGL") for capacity in the Nitzana pipeline. The agreed terms in the transmission agreement are for the supply of up to 1 bcm/year up to 6 bcm total contracted supply for a 15-year period, with provisions for extensions and early termination. The terms also include rights, during the construction phase, to access available capacity in the Jordan-North pipeline. Nitzana is expected to be operational no later than Q4 2028.

The Company's 16.4% share of the construction costs for the pipeline and compression station is expected to be approximately US$100 million (excludes contingency amounts, which may add up to an additional 12%, as per the transmission agreement) and will primarily be funded via the Unsecured Term Loan. Refer to note 16 below. During the fourth quarter of 2025, approximately US$50 million was paid, representing approximately 50% of the total expected investment. The remaining investment will be made in accordance with the milestones set out in the agreement with INGL. Subsequent to the reporting date, during the second quarter of 2026, an additional approximately US$10 million was paid, representing approximately 10% of the total expected investment.

As the Group does not obtain ownership of, or control over, the physical pipeline asset, but instead acquires a contractual right to access defined transportation capacity for a period of 15 years, the arrangement has been recognised as an intangible asset in accordance with IAS 38. The asset will be amortised on a straight-line basis over the 15-year access period from the date the pipeline becomes operational.

NOTE 8: - Intangible Assets (Cont.)

b.  Cash flow statement reconciliations:

c.  Details on the Group's rights in the intangible assets:

d.  Additional information regarding the Exploration and Evaluation assets:

As of 31 March 2026, the Group holds two licences to explore for gas and oil, Block 23 and Block 31, which are located in the economic waters of the State of Israel. In January 2025 the licences for Blocks 23 and 31 were extended until 13 January 2027.

The licence for Block 21 was not extended and expired on 13 January 2025.

NOTE 9: - Deferred taxes

The Group is subject to corporation tax on its taxable profits in Israel at the rate of 23%. The Capital Gain Tax rates depends on the purchase date and the nature of asset. The general capital tax rate for a corporation is the standard corporate tax rate.

Tax losses can be utilised for an unlimited period, and tax losses may not be carried back.

According to Income Tax (Deductions from Income of Oil Rights Holders) Regulations, 5716-1956, the exploration and evaluation expenses of oil and gas assets are deductible in the year in which they are incurred.

Below are the items for which deferred taxes were recognised:

NOTE 10: - Trade and other receivables

(2) The balance relates to the final amount related the agreement with Israel Natural Gas Lines ("INGL") for the transfer of title (the "Hand Over") of the near shore and onshore segments of the infrastructure that delivers gas from the Energean Power FPSO into the Israeli national gas transmission grid is approximately US$5 million and is expected to be received in 2026.

NOTE 11: - Inventories

NOTE 12: - Borrowings