Energean Israel Half Year 2023 Accounts

Energean PLC

07 September 2023

 

ENERGEAN ISRAEL LIMITED

UNAUDITED INTERIM CONDENCED CONSOLIDATED FINANCIAL STATEMENTS

30 JUNE 2023

ENERGEAN ISRAEL LIMITED

UNAUDITED INTERIM CONDENCED CONSOLIDATED FINANCIAL STATEMENTS

AS OF 30 JUNE 2023

INDEX

		Page
Interim Condensed Consolidated Statement of Comprehensive Income		3
Interim Condensed Consolidated Statement of Financial Position		4
Interim Condensed Consolidated Statement of Changes in Equity		5
Interim Condensed Consolidated Statement of Cash Flows		6
Notes to the Interim Condensed Consolidated Financial Statements		7-20

- - - - - - - - - - - - - - - - - - - -

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

SIX MONTHS ENDED 30 JUNE 2023

									30 June (Unaudited)
			Notes				2023 $'000				2022 $'000
Revenue			3				347,743				-
Cost of sales			4				(178,077)				-
Gross profit							169,666				-
Administrative expenses			4				(9,048)				(5,453)
Exploration and evaluation expenses			4				(50)				-
Other expenses			4				-				(1,074)
Other income			4				-				53
Operating profit/(loss)							160,568				(6,474)
Financial income			5				1,044				4,504
Financial expenses			5				(67,569)				(4,671)
Foreign exchange loss, net			5				(5,578)				(967)
Profit/(loss) for the period before tax							88,465				(7,608)
Taxation (expense)/income			6				(20,215)				2,703
Net profit (loss) for the period							68,250				(4,905)

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

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF 30 JUNE 2023

		Notes		30 June 2023 (Unaudited) $'000		31 December 2022 $'000
ASSETS:
NON-CURRENT ASSETS:
Property, plant and equipment		7		2,873,206		2,926,313
Intangible assets		8		156,689		143,554
Other receivables		10		8,506		108
Deferred tax asset		9		2,827		22,886
				3,041,228		3,092,861
CURRENT ASSETS:
Trade and other receivables		10		97,381		82,611
Inventories		11		13,327		8,313
Restricted cash				8,481		71,778
Cash and cash equivalents				64,688		24,825
				183,877		187,527
TOTAL ASSETS				3,225,105		3,280,388
EQUITY AND LIABILITIES:
EQUITY:
Share capital				1,708		1,708
Share premium				212,539		212,539
Retained losses				(2,278)		(70,528)
TOTAL EQUITY				211,969		143,719
NON-CURRENT LIABILITIES:
Senior secured notes		12		1,852,685		2,471,030
Decommissioning provisions				87,400		84,299
Trade and other payables		13		205,870		210,241
				2,145,955		2,765,570
CURRENT LIABILITIES:
Current portion of senior secured notes		12		622,225		-
Trade and other payables		13		244,956		371,099
				867,181		371,099
TOTAL LIABILITIES				3,013,136		3,136,669
TOTAL EQUITY AND LIABILITIES				3,225,105		3,280,388

06 September 2023
		Panagiotis Benos Director		Matthaios Rigas Director

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

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

SIX MONTHS ENDED 30 JUNE 2023

		Share capital $'000		Share Premium $'000			Accumulated losses $'000		Total equity $'000
Balance as of 1 January 2023		1,708		212,539			(70,528)		143,719
Profit for the period		-		-			68,250		68,250
Balance as of 30 June 2023 (unaudited)		1,708		212,539			(2,278)		211,969
Balance as of 1 January 2022		1,708		572,539			(35,946)		538,301
Transactions with shareholders
Share premium reduction (*)		-		(360,000)			-		(360,000)
Comprehensive loss
Loss for the period		-		-			(4,905)		(4,905)
Balance as of 30 June 2022 (unaudited)		1,708		212,539			(40,851)		173,396

(*) In April 2022 the Company reduced its share premium capital by US$360 million and credited US$346 million against the shareholder loan account plus accrued interest.

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

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS PERIOD ENDED 30 JUNE 2023

				30 June (Unaudited)
		Notes		2023 $'000		2022 $'000
Operating activities
Profit (Loss) for the period before tax				88,465		(7,608)
Adjustments to reconcile loss before taxation to net cash provided by operating activities:
Depreciation, depletion and amortisation		4		74,375		110
Loss from sale on property, plant and equipment		4		-		1,074
Amortisation of payment made in advance to customers		3		4,928		-
Finance Income		5		(1,044)		(4,504)
Finance expenses		5		67,569		4,673
Net foreign exchange loss		5		5,578		967
Cash flow from operations before working capital				239,871		(5,288)
(Increase)/decrease in trade and other receivables				(36,564)		871
Increase in inventories				(5,014)		-
Decrease in trade and other payables				(25,707)		(310)
Cash from operations				172,586		(4,727)
Income taxes paid				(368)		(558)
Net cash inflows from/(used in) operating activities				172,218 819		(5,285)
Investing activities
Payment for exploration and evaluation, and other intangible assets		8(B)		(69,227)		(10,034)
Payment for purchase of property, plant and equipment		7(C)		(115,511)		(130,118)
Proceeds from disposals of property, plant and equipment				-		188
Amounts received from INGL related to transfer of property, plant and equipment		10		56,906		17,371
Movement in restricted cash, net				63,297		64,119
Interest received				1,841		1,544
Net cash outflows used in investing activities				(62,694)		(56,930)
Financing activities
Senior secured notes - interest paid		12		(64,453)		(64,453)
Other finance cost paid				(91)		(1,869)
Finance costs paid for deferred licence payments				(2,496)		-
Transaction cost related to Senior Secured Notes		16		(1,214)		-
Repayment of obligations under leases		13		(570)		(499)
Net cash outflow used in financing activities				(68,824)		(66,821)
Net increase/(decrease) in cash and cash equivalents				40,700		(129,036)
Cash and cash equivalents at beginning of the period				24,825		349,827
Effect of exchange differences on cash and cash equivalents				(837)		(2,080)
Cash and cash equivalents at end of the period				64,688		218,711

The accompanying notes are an integral part of the interim condensed 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. Its registered office is at Lefkonos 22, 1^st Floor, Strovolos, 2064 Nicosia, Cyprus.

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

c.   As of 30 June 2023, the Company had investments in the following subsidiaries:

Name of subsidiary	Country of incorporation / registered office	Principal activities	Shareholding At 30 June  2023 (%)	Shareholding At 31 December 2022 (%)
Energean Israel Transmission LTD	121, Menachem Begin St. Azrieli Sarona Tower, POB 24, Tel Aviv 67012039 Israel	Gas transportation license holder	100	100
Energean Israel Finance LTD	121, Menachem Begin St. Azrieli Sarona Tower, POB 24, Tel Aviv 67012039 Israel	Financing activities	100	100

d.   The Group's core assets as of 30 June 2023 are comprised of:

Country	Asset	Field	Working interest	Field phase
Israel	Karish	Karish Main	100%	Production
Israel	Karish	Karish North	100%	Development
Israel	Tanin	Tanin	100%	Development
Israel	Blocks 12, 21, 23, 31	Athena, Zeus, Hera, Hermes and Hercules	100%	Exploration

NOTE 2: -     Accounting policies and basis of preparation

These unaudited interim condensed consolidated financial statements for the six months ended 30 June 2023, have been prepared in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the European Union (EU). The unaudited interim condensed 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 2022.

These unaudited interim financial statements have been prepared on a going concern basis.

NOTE 3: -     Revenues

						30 June (Unaudited)
				2023 $'000				2022 $'000
Revenue from gas sales (1)				271,399				-
Revenue from Hydrocarbon liquids sales (3)				81,272				-
Compensation to customers (2)				(4,928)				-
Total revenue				347,743				-

⁽¹⁾ Sales gas for six months ended 30 June 2023 totaled approximately 1.8 bcm (the Company started production on 26 October 2022).

⁽²⁾ During 2021 and in accordance with the GSPAs signed with a group of gas buyers, the Company paid compensation to these counterparties following delays to the supply of gas from the Karish project. The compensation is deducted from revenue, as variable consideration, as the gas is delivered to the gas buyers, in accordance with IFRS 15 Revenue Recognition

⁽³⁾ Sales Hydrocarbon liquids for six months ended 30 June 2023 totaled approximately 1.16 mmbbl (the Company did not sell Hydrocarbon liquids during 2022).

NOTE 4: -     Operating profit (loss) before taxation

		30 June (Unaudited)
		2023 $'000		2022 $'000
(a)   Cost of sales
Staff costs		4,071		-
Energy cost		2,285		-
Royalty payable		63,474		-
Depreciation and amortisation (Note 7)		73,397		-
Other operating costs		38,203		-
Liquids inventory movement (Note 11)		(3,353)		-
Total cost of sales		178,077		-
(b)   General & administration expenses	(c)		(d)
Staff costs		1,715		935
Share-based payment charge		312		80
Depreciation and amortisation (Note 7, 8)		978		110
Auditor fees		106		88
Other general & administration expenses		5,937		4,240
Total administrative expenses		9,048		5,453
(c)    Exploration and evaluation expenses
Other exploration and evaluation expenses		50		-
Total exploration and evaluation expenses		50		-
(d)   Other expenses
Loss from disposal of property, plant and equipment		-		1,074
Total other expenses		-		1,074
(e)   Other income	(f)		(g)
Other income		-		53
Total other income		-		53

NOTE 5: -     Net finance income/(expenses)

		30 June (Unaudited)
		2023 $'000		2022 $'000
Interest on senior secured notes (1)		68,333		68,179
Interest expense on long terms payables (3)		1,554		4,731
Less amounts included in the cost of qualifying assets (2)		(7,592)		(68,866)
		62,295		4,044
Finance and arrangement fees		1,481		2,842
Other finance costs and bank charges		55		284
Unwinding of discount on trade payable		2,060		264
Unwinding of discount on provision for decommissioning		1,668		343
Unwinding of discount on right of use asset (1)		98		160
Less amounts included in the cost of qualifying assets (2)		(88)		(3,266)
		5,274		627
Total finance costs		67,569		4,671
Interest income from time deposits		(1,044)		(1,290)
Interest income from loans to related parties		-		(3,214)
Total finance income		(1,044)		(4,504)
Net foreign exchange losses		5,578		967
Net finance expense		72,103		1,134

(1)    See also Note 12.

(2)    See also Note 7(A).

(3)    See also Note 13.

NOTE 6: -     Taxation

1.      Taxation charge:

				30 June (Unaudited)
		2023 $'000			2022 $'000
Tax - current period		(156)			(180)
Deferred tax		(20,059)			2,883
Total taxation income (expense) yyyyyuuuu(		(20,215)			2,703

NOTE 7: -     Property, Plant and Equipment  

a.          Composition:

		Oil and gas Assets $'000		Leased assets $'000		Furniture, fixtures and equipment $'000		Total $'000
Cost:
At 1 January 2022		2,241,783		4,009		829		2,246,621
Additions (1)		514,373		731		1,165		516,269
Disposals		(900)		-		-		(900)
Capitalised borrowing cost (2)		129,357		-		-		129,357
Capitalised depreciation		632		-		-		632
Change in decommissioning provision		47,544		-		-		47,544
Total cost at 31 December 2022		2,932,789		4,740		1,994		2,939,523
Additions (1)		111,124		12,197		111		123,432
Handover to INGL(4)		(111,448)		-		-		(111,448)
Capitalised borrowing cost (2)		7,680		-		-		7,680
Change in decommissioning provision		1,433		-		-		1,433
Total cost at 30 June 2023 (unaudited)		2,941,578		16,937		2,105		2,960,620
Depreciation:
At 1 January 2022		433		693		228		1,354
Charge for the year (3)		10,976		134		297		11,407
Capitalised to oil and gas assets		-		632		-		632
Disposals		(433)		-		-		(433)
Write down of the assets		250		-		-		250
Total Depreciation at 31 December 2022		11,226		1,459		525		13,210
Charge for the period		73,397		618		189		74,204
Total Depreciation at 30 June 2023 (unaudited)		84,623		2,077		714		87,414
At 31 December 2022		2,921,563		3,281		1,469		2,926,313
At 30 June 2023 (unaudited)		2,856,955		14,860		1,391		2,873,206

⁽¹⁾ The additions to oil & gas assets in 2023 are primarily due to development costs for the FPSO, Karish North and 2^nd Oil Train. The additions in 2022 are primarily due to development costs for the Karish field, incurred under the EPCIC contract, FPSO, subsea and onshore construction.

⁽²⁾ Capitalised borrowing costs relate primarily to the secured senior notes.

⁽³⁾ First production from the Karish project was achieved on 26 October 2022.

⁽⁴⁾ Handover to INGL took place on 22 March 2023.

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

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

		30 June (Unaudited)
	2023 $'000			2022 $'000
Cost of sales	73,397			-
Administration expenses	807			110
Capitalised depreciation in oil & gas assets	-			357
Total	74,204			467

c.          Cash flow statement reconciliations:

						30 June (Unaudited)
					2023 $'000			2022 $'000
Additions and disposals to property, plant and equipment, net				21,097			339,911
Associated cash flows
Payment for additions to property, plant and equipment , net				(58,605)			(130,118)
Non-cash movements/presented in other cash flow lines
Capitalised borrowing costs				(7,680)			(60,749)
Right-of-use asset additions				(12,197)			(198)
Handover to INGL				111,448			-
Capitalised share-based payment charge				-			(109)
Capitalised depreciation				-			(357)
Change in decommissioning provision				(1,433)			9,259
Movement in working capital				(52,630)			(157,639 +)

NOTE 8: -     Intangible Assets

a.          Composition:

		Exploration and evaluation assets $'000		Software licences $'000		Total $'000
Cost:
At 1 January 2022		20,141		255		20,396
Additions (1)		123,005		1,713		124,718
Write off of exploration and evaluation costs (2)		(1,277)		-		(1,277)
At 31 December 2022		141,869		1,968		143,837
Additions (1)		13,306		-		13,306
At 30 June 2023 (unaudited)		155,175		1,968		155,173
Amortisation:
At 1 January 2022		-		255		255
Charge for the year		-		28		28
Total Amortisation at 31 December 2022		-		283		283
Charge for the period		-		171		171
Total Amortisation at 30 June 2023 (unaudited)		-		454		454
At 31 December 2022		141,869		1,685		143,554
At 30 June 2023 (unaudited)		155,175		1,514		156,689

⁽¹⁾ Additions to exploration and evaluation assets are primarily due to the 2022 growth drilling programme undertaken offshore Israel.

⁽²⁾  Zone D: On 27 July 2022, the Company sent a formal notice to the Ministry of Energy notifying the relinquishment of Zone D and discontinuation of related work. As such, the licences subsequently expired on 27 October 2022.

b.         Cash flow statement reconciliations:

				30 June (Unaudited)
			2023 $'000			2022 $'000
Additions to intangible assets			13,306			34,386
Associated cash flows
Payment for additions to intangible assets			(69,227)			(10,034)
Non-cash movements/presented in other cash flow lines
Movement in working capital			55,921			24,352

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 depend on the purchase date and the nature of the asset. The general capital gains 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.

The Group expects that there will be sufficient taxable profits in the following years and that deferred tax assets, recognised in the interim condensed consolidated financial statements of the Group, will be recovered.

NOTE 9: -       Deferred taxes (Cont.)

Below are the items for which deferred taxes were recognised:

		Property, plant and equipment & intangible assets $'000		Right of use asset IFRS 16 $'000			Tax losses $'000		Deferred expenses for tax $'000		Staff leaving indemnities $'000		Accrued expenses and other short‑term liabilities and other long‑term liabilities $'000			Decommissioning provision $'000		Total $'000
At 1 January 2023		(40,344)		(754)			56,415		6,209		167		1,193			-		22,886
Increase/(decrease) for the period through:
Profit or loss		(13,597)		(2,663)			(6,305)		(314)		50		2,770			-		(20,059)
At 30 June 2023		(53,941)		(3,417)			50,110		5,895		217		3,963			-		2,827
At 1 January 2022		(12,632)		(762)			4,750		11,031		94		923			8,171		11,575
Increase/(decrease) for the year through:
Profit or loss		(27,712)		8			51,665		(4,822)		73		270			(8,171)		11,311
At 31 December 2022		(40,344)		(754)			56,415		6,209		167		1,193			-		22,886

		30 June 2023 (Unaudited) $'000		31 December 2022 $'000
Deferred tax liabilities		(57,358)		(41,099)
Deferred tax assets		60,185		63,985
		2,827		22,886

NOTE 10: -   Trade and other receivables

		30 June 2023 (Unaudited) $'000		31 December 2022 $'000
Current
Financial items    Trade receivables
Trade receivables		93,896		37,491
Other receivables (1)		2,294		999
Refundable VAT		-		37,131
Accrued interest income		92		888
		96,282		76,509
Non-financial items
Prepayments		363		159
Prepaid income tax		189		-
Deferred expenses (2)		-		4,929
Prepaid expenses and other receivable		547		1,014
		1,099		6,102
Total current trade and other receivables		97,381		82,611
Non-current
Financial items
Other receivables (1)		4,949		-
Non-financial items
Deferred borrowing fees(3)		3,449		-
Deposits and prepayments		108		108
		3,557		108
Total non-current trade and other receivables		8,506		108

⁽¹⁾ The increase from 2022 is due to the recognition of a receivable from INGL (US$2.3 million current (US$57 received during Q2 2023) and US$4.95 million non-current) following the handover of the asset to INGL, in line with the agreement. See Note 13(4) for further details.

⁽²⁾ Deferred expenses relate to compensation to gas buyers following delays to the supply of gas from the Karish project. This compensation is treated as variable consideration under IFRS 15 Revenue Recognition and therefore, reduced from gas sales following commencement of production, see also Note 3.

⁽³⁾ Fees incurred in relation to the $750 million senior secured note offering. See Note 16 for further details.

NOTE 11: -   Inventory

		30 June 2023 (Unaudited) $'000		31 December 2022 $'000
Hydrocarbon liquids		5,707		2,367
Natural gas		457		383
Raw materials and supplies		7,163		5,563
Total		13,327		8,313

NOTE 12: -   Borrowings and secured notes

a.     Issuance of US$2,500,000,000 senior secured notes:

On 24 March 2021 (the "Issue Date"), Energean Israel Finance Ltd (a 100% subsidiary of the Company) issued US$2,500 million of senior secured notes. The proceeds were primarily used to repay in full the project finance facility

The Notes were issued in four equal tranches as follows:

			30 June 2023 (Unaudited)		31 December 2022
Series	Maturity	Annual fixed Interest rate	Carrying value $'000		Carrying value $'000
US$ 625 million	30 March 2024	4.500%	622,225		620,461
US$ 625 million	30 March 2026	4.875%	618,918		617,912
US$ 625 million	30 March 2028	5.375%	617,447		616,767
US$ 625 million	30 March 2031	5.875%	616,320		615,890
US$2,500 million			2,474,910		2,471,030

		30 June 2023 (Unaudited) $'000		31 December 2022 $'000
Senior secured notes - current		622,225		-
Senior secured notes - non current		1,852,685		2,471,030
Total		2,474,910		2,471,030

The interest on each series of the Notes is paid semi-annually, on 30 March and on 30 September of each year.

The Notes are listed on the TASE-UP of the Tel Aviv Stock Exchange Ltd (the "TASE").

With regards to the indenture document, signed on 24 March 2021 with HSBC BANK USA, N.A (the "Trustee"), no indenture default or indenture event of default has occurred and is continuing.

Collateral:

The Company has provided/undertakes to provide the following collateral in favor of the Trustee:

a.       First rank fixed charges over the shares of Energean Israel Limited, Energean Israel

Finance Ltd and Energean Israel Transmission Ltd, the Karish & Tanin Leases, the gas sale and purchase agreements ("GSPAs"), several bank accounts, operating permits, insurance policies, the Company's exploration licences and the INGL Agreement.

b.      Floating charge over all of the present and future assets of Energean Israel Limited and Energean Israel Finance Ltd.

c.       The Energean Power FPSO.

Subsequent to 30 June 2023, the notes maturing on 30 March 2024 were refinanced. Please refer to note 16 for more

details

Credit rating:

The senior secured notes have been assigned a Ba3 rating by Moody's and a BB- rating by S&P Global.

NOTE 13: -   Trade and other payables

		30 June 2023 (Unaudited) $'000				31 December 2022 $'000
Current
Financial items
Trade accounts payable (1)		113,144				209,853
Payables to related parties		32,260				21,028
VAT payable		2,398				-
Deferred licence payments due within one year (2)		12,852				13,345
Other creditors		10,300				6,712
Current lease liabilities		7,868				1,792
		178,822				252,730
Non-financial items
Accrued expenses (1)		33,182				29,404
Other finance costs accrued		32,227				32,227
Contract liability (4)		-				56,230
Social insurance and other taxes		724				502
Income taxes		-				6
		66,133				118,369
Total current trade and other payables		244,956				371,099
Non-current
financial items
Trade and other payables (3)				169,869		169,360
Deferred licence payments (2)				27,698		38,488
Long term lease liabilities				7,937		2,214
				205,504		210,062
Non-financial items
Accrued expenses to related parties				366		179
				366		179
Total non-current trade and other payables				205,870		210,241

⁽¹⁾      Trade payables and accrued expenses relate primarily to development expenditure on the Karish project, with the main contributors being FPSO and subsea construction costs and for drilling activities performed offshore Israel. Trade payables are non-interest bearing.

⁽²⁾      In December 2016, the Company acquired the Karish and Tanin leases for US$40 million of upfront consideration plus contingent consideration of US$108.5 million (paid over 10 equal instalments) bearing interest at an annual rate of 4.6%. On 30 June 2023, the total discounted deferred consideration was US$41 million (31 December 2022: US$52million).

⁽³⁾      This represents the amount payable to Technip in respect of the EPCIC contract. Under this contract, US$250 million becomes payable nine months following the practical completion date (as defined under that contract), and is payable in eight equal quarterly instalments, bearing no interest.  A discount rate of 5.831% has been applied (being the yield rate of the senior secured loan notes, maturing in 2024, at the date of entering into the settlement agreement). The amounts payable to Technip up to 30 June 2024 under this contract are presented as part of trade accounts payable - current.

⁽⁴⁾      The contract liability relates to 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. The Hand Over became effective in March 2023. Following the Hand Over, INGL is responsible for the operations and maintenance of this part of the infrastructure and the related asset (refer to Note 7) and contract liability was derecognised. The final $5million consideration is receivable within 12 months of handover and is recognised within other receivable (refer to Note 10)  

NOTE 14: - Financial Instruments

Fair Values:

Fair value is the amount for which the asset or liability could be exchanged in an arm's length transaction at the relevant date. Where available, fair values are determined using quoted prices in active markets. To the extent that market prices are not available, fair values are estimated by reference to market-based transactions or using standard valuation techniques involved. Values recorded are as at the balance sheet date and will not necessarily be realised. There were no transfers between fair value levels during the year.

The fair value hierarchy of financial assets and financial liabilities that are not measured at fair value (but fair value disclosure is required) is as follows:

		Fair value hierarchy as at 30 June 2023 (unaudited)
		Level 1 $'000		Level 2 $'000			Total $'000
Financial assets
Long term other receivables		-		4,949			4,949
Short term restricted cash		8,481		-			8,481
Short term trade and other receivables		-		96,282			96,282
Cash and cash equivalents		64,688		-			64,688
Total		73,169		101,231			174,400
Financial liabilities
Senior secured notes (1)		2,311,875		-			2,311,875
Trade and other payables - long term		-		205,504			205,504
Trade and other payables - short term		-		178,822			178,822
Total		2,311,875		384,326			2,696,201

			Fair value hierarchy as at 31 December 2022
				Level 1 $'000		Level 2 $'000			Total $'000
Financial assets
Short term restricted cash				71,778		-			71,778
Short term trade and other receivables				-		76,509			76,509
Cash and cash equivalents				24,825		-			24,825
Total				96,603		76,509			173,112
Financial liabilities
Senior secured notes (1)				2,298,125		-			2,298,125
Trade and other payables - long term				-		210,062			210,062
Trade and other payables - short term				-		252,730			252,730
Total				2,298,125		462,792			2,760,917

⁽¹⁾ The senior secured notes are measured at amortised cost in the Group's financial statements. The notes are listed for trading on the TACT Institutional of the Tel Aviv Stock Exchange Ltd (the "TASE"). The carrying amount as of 30 June 2023 was US$2,475 million and as of 31 December 2022 was US$2,471 million.

NOTE 15: -   Significant events and transaction during the reporting period

(a)  Gas Sales Agreements - Energean signed spot gas sale and purchase agreement with three Israeli gas buyers. The gas price will be determined in each period, with purchased amounts determined on a daily basis. The agreement will be valid for an initial one-year period with an option to extend subject to ratification by both parties.

(b)   INGL Hand-Over completion - The Hand Over became effective in March 2023. Following the Hand Over, INGL is responsible for the operations and maintenance of this part of the infrastructure.

NOTE 16: -    Significant events and transaction after the reporting period

Pricing of an offering of US$750,000,000 senior secured notes

Subsequent to period end, Energean Israel Finance Ltd. has priced the offering of US$750 million aggregate principal amount of senior secured notes due September 30, 2033, with a fixed annual interest rate of 8.500%. The interest on the Notes will be paid semi-annually, on March 30 and September 30 of each year, beginning on March 30, 2024.

The issuance of the Notes was completed on July 11, 2023, subject to satisfaction of customary conditions. The Notes are expected to be listed for trading on the TASE-UP of the Tel Aviv Stock Exchange Ltd. (the "TASE"), subject to the approval of the TASE.

The proceeds from the Offering, upon release from escrow are expected to be used to refinance the $625 million notes due in 2024, pay fees and expenses associated with this refinancing, contribute towards funding the interest payment reserve account, and contribute towards the payment of the final deferred consideration to Kerogen.

 

END