Energean Israel Half Year 2025 Accounts

ENERGEAN ISRAEL LIMITED

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

30 JUNE 2025

ENERGEAN ISRAEL LIMITED

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF 30 JUNE 2025

INDEX

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INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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

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 the 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 Accurist House, 44 Baker Street, London, Q1U 7AL.

b. The Company and its subsidiaries (the "Group") has been established with the objective of 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 30 June 2025, the Company had investments in the following subsidiaries:

d. The Group's core assets as of 30 June 2025 were comprised of:

(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 2024, refer to note 22 in the 2024 Group's annual consolidated financial statements for more information.

NOTE 2: Accounting policies and basis of preparation

The interim 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 30 June 2025. 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 2024.

The 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 2025 which are the same as those used in preparing the annual consolidated financial statements for the year ended 31 December 2024.

The directors consider it appropriate to adopt the going concern basis of accounting in preparing these interim financial statements. The Going Concern assessment covers the period up to 31 December 2026, "the forecast period".

Israel geopolitical environment - Energean highlights the following as important in relation to its principal risks. Since 7 October 2023, and the ongoing conflict in Israel, the magnitude of regional geopolitical risk remains elevated. Concerns of escalations in the Middle East have intensified the security risk in the region, as essential infrastructure systems (such as the Energean Power FPSO offshore Israel) may be targets for missile fire and sabotage operations. Any event that impacts production from these fields could have a material adverse impact on the business, results of operations, cash flows, financial condition and prospects of the Group. On June 13, 2025, the Ministry of Energy and Infrastructure ordered the temporary suspension of production and activities of the Energean Power FPSO, following geopolitical escalation in the region at the time of the notice. On June 25, 2025, 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 the instructions. Apart from that temporary suspension, the Karish and Karish North fields have continued to produce with no disruption since the start of the conflict. In the first half of 2025, Energean has ensured that all measures are in place to continue business operations, maintain the mobility of its people and make certain that the security of information is unaffected.

New and amended accounting standards and interpretations:

The following amendments became effective as of 1 January 2025 and have been applied in the preparation of these consolidated financial statements

· Amendments to IAS 21- Lack of exchangeability.

The adoption of the above standard and interpretations did not lead to any material changes to the Group's accounting policies and did not have any other material impact on the financial position or performance of the Group.

NOTE 3: Revenues

(1) Sales gas for six months ended 30 June 2025 totaled approximately 2.3 bcm (billion cubic metres) and for six months ended 30 June 2024 totaled approximately 2.5 bcm.

(2) Sales from hydrocarbon liquids for six months ended 30 June 2025 totaled approximately 2,057 kbbl (kilo barrel) and for six months ended 30 June 2024 totaled approximately 2,686 kbbl.

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 expenses /(income)

(1) US$343 thousand included in intangible assets additions (See note 8) and US$198 thousand included in Oil and gas assets additions (See note 7).

NOTE 6: Taxation

1. Corporate Tax rates applicable to the Company:

Israel:

The Israeli corporate tax rate is 23% in 2025 and 2024.

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%.

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.

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"). The imposition of oil and gas profits levy at a rate to be set as set out below. 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 as from 2017 the maximum rate of the levy as stated will be reduced by multiplying 0.64 with the difference between the corporate tax rate prescribed in section 126 of the Income Tax Ordinance for each tax year and the rate of 18%.

NOTE 6: Taxation (Cont.)

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).

In accordance with the provisions of the Law, the Group is not yet required to pay any amount 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 and gas assets for the period of six months ended 30 June 2025 mainly relates to Katlan development. In February 2024, Karish North first gas was achieved and the second gas export riser was completed. The second oil train lift safely and successfully performed in Q4 2024; commissioning activities are ongoing and are expected to complete in late Q4 2025, which will result in an increase in liquids production capacity.

(2) Final Investment Decision ("FID") for Katlan was made in July 2024, and the concession agreement was granted in the same month, it expires in 2054. Refer to note 8 for further details.

(3) Borrowing costs capitalised for qualifying assets during the year are calculated by applying a weighted average interest rate of 5.34% for the period ended 30 June 2025 (for the year ended 31 December 2024: 3.93%).

(4) The lease modification pertains to the termination of vessel lease in May 2025.

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 exploration and evaluation assets in 2024 are mainly related to pre-FID costs for Block 12 "Katlan".

(*) Katlan Final Investment Decision

In July 2024, the Ministry of Energy and Infrastructure granted the Company a 30-year concession for the Katlan area including a 20-year extension option. Following this, Energean announced in July 2024 that it had taken FID for the Katlan development project in Israel. The Katlan area is being developed in a phased approach through a subsea tieback to the existing Energean Power FPSO. First gas is planned for H1 2027. The EPCI (Engineering, Procurement, Construction and Installation) contract for the subsea scope was awarded to Technip FMC.

b. Cash flow statement reconciliations:

NOTE 8: Intangible Assets (Cont.)

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

d. Additional information regarding the Exploration and Evaluation assets:

As of 30 June 2025, 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 9: Deferred taxes (Cont.)

NOTE 10: Trade and other receivables