Report on Payments to Govts

RNS Number : 2270C

Energean PLC

17 June 2021

 

Energean plc

("Energean" or the "Company")

2020 Report on Payments to Governments

London, 17 June 2021 . Energean plc (LSE: ENOG, TASE: א,) is pleased to present its 2020 Report on Payments to Governments.

Basis for Preparation

This Report provides a consolidated overview of the payments to governments made by Energean plc and its subsidiary undertakings ( "Energean") for the full year 2020 as required under the Report on Payments to Governments Regulations 2014 (2014/3209), as amended in December 2015 ( 2015/1928) , (the "Regulations") and DTR 4.3A of the Financial Conduct Authority's Disclosure and Transparency Rules .

This Report is available for download from www.energean.com.

Reporting entities

This Report includes payments to governments made by Energean.  Edison E&P is included on a pro forma basis, i.e. as if Energean had owned the acquired companies for the duration of the year[1].

Activities

Payments made to governments that relate to Energean's activities involving the exploration, development, and production of oil and gas reserves ("Extractive Activities") are included in this disclosure. Payments made to governments that relate to activities other than Extractive Activities are not included in this report as they are not within the scope of the Regulations.

Government

Under the Regulations, a government is defined as any national, regional or local authority of a country and includes a department, agency or undertaking that is a subsidiary undertaking controlled by such an authority. All of the payments disclosed in this disclosure have been made to national governments, either directly or through a ministry or department of the national government, with the exception of Greek payments in respect of production royalties and licence fees, which are paid to the Hellenic Hydrocarbon Resources Management SA.

Project

Payments are reported at project level with the exception that payments that are not attributable to a specific project are reported at the entity level.  A "Project" is defined as operational activities which are governed by a single contract, licence, lease, concession or similar legal agreement, and form the basis for payment liabilities with a government. If such agreements are substantially interconnected, those agreements are to be treated as a single project.

"Substantially interconnected" means forming a set of operationally and geographically integrated contracts, licences, leases or concessions or related agreements with substantially similar terms that are signed with a government giving rise to payment liabilities. Such agreements can be governed by a single contract, joint venture, production sharing agreement, or other overarching legal agreement. Indicators of integration include, but are not limited to, geographic proximity, the use of shared infrastructure and common operational management.

Payments

The information is reported under the following payment types.

Production entitlements

Under production-sharing agreements ("PSAs"), production is shared between the host government and the other parties to the PSA. The host government typically receives its share or entitlement in kind rather than being paid in cash.

Taxes

Taxes are paid by Energean on its income, profits or production and are reported net of refunds. Consumption taxes, personal income taxes, sales taxes, property and environmental taxes are excluded.

Royalties

Royalties are payments for the rights to extract oil and gas resources, typically at a set percentage of revenue less any allowable deductions. 

Dividends

Dividends, in this context, are dividend payments other than those paid to a government as an ordinary shareholder of an entity, unless paid in lieu of production entitlements or royalties. For the year ended December 31, 2020, there were no reportable dividend payments to a government.

Bonuses

Bonuses are usually paid upon signature of an agreement or a contract, declaration of a commercial discovery, commencement of production or achievement of a specified milestone.

Fees

Fees and other sums are paid as consideration for the acquisition of a licence that enables access to an area for the purposes of performing Extractive Activities. Administrative government fees that are not specifically related to Extractive Activities, or to access to extractive resources, are excluded, as are payments made in return for services provided by a government.

Infrastructure improvements

Infrastructure improvements payments relate to the construction of infrastructure (road, bridge or rail) that are not substantially dedicated for the use of extractive activities. Payments that are of a social investment in nature, for example building of a school or hospital, are also excluded. For the year ended December 31, 2020, there were no reportable payments for infrastructure improvements.

Cash basis

Payments are reported on a cash basis, meaning that they are reported in the period in which they are paid, as opposed to being reported on an accruals basis (which would mean that they were reported in the period for which the liabilities arise).

Materiality Level

For each payment type, total payments below £86,000 to a government are excluded from this report.

Exchange Rate

All payments have been reported in US dollars. Payments made in currencies other than US dollars are typically translated at the average exchange rate of the year under consideration.

PAYMENTS OVERVIEW

The table below shows the relevant payments to governments made by Energean in the year ended 31 December 2020 shown by country and payment type.

Of the seven payment types that the UK regulations require disclosure of, Energean did not make any payments in respect of production entitlements, dividends and or infrastructure improvements, therefore, those categories are not shown in the tables.

Country	Income taxes	Royalties	Bonuses	Fees	Total
	$m	$m	$m	$m	$m
Egypt	58.19[2]	-	2.54	0.34	61.07
Greece	-	0.70	-	0.26	0.96
Israel	-	-	-	0.29	0.29
Italy	-	15.47	-	5.10	20.57
Montenegro	-	-	-	0.12	0.12
United Kingdom	-	-	-	1.14	1.14
TOTAL	58.19	16.17	2.54	7.25	84.15

PAYMENTS BY PROJECT

Payments by Project	Income taxes	Royalties	Bonuses	Fees	Total
	$m	$m	$m	$m	$m
Greece - Prinos asset	-	0.70	-	-	0.70
Greece - Exploration	-	-	-	0.26	0.26
GREEK GOVERNMENT REPORT	-	0.70	-	-	0.96
Egypt - Abu Qir	58.19	-	0.15	0.34	58.68
Egypt - North El Amriya / North Idku	-	-	0.20	-	0.20
Egypt - Exploration	-	-	2.19	-	2.19
EGYPTIAN GOVERNMENT REPORT	58.19	-	2.54	0.34	61.07
Italy - A.C 13.AS	-	0.31	-	0.16	0.47
Italy - A.C 14.AS	-	-	-	0.18	0.18
Italy - A.C 16.AG	-	-	-	0.39	0.39
Italy - A.C Other				0.21	0.21
Italy - B.C 10.AS	-	0.47	-	0.26	0.73
Italy - B.C 13.AS	-	5.61	-	0.47	6.08
Italy - B.C 14.AS	-	1.82	-	0.27	2.09
Italy - B.C 9.AS	-	-	-	0.21	0.21
Italy - B.C1.LF	-	-	-	0.12	0.12
Italy - B.C7.LF	-	1.17	-	0.28	1.45
Italy - B.C8.LF	-	1.95	-	0.53	2.48
Italy - B.C Other				0.34	0.34
Italy - C.C6.EO	-	1.74	-	0.35	2.09
Italy - Candela	-	-	-	0.32	0.32
Italy - Colle Di Lauro	-	0.33	-	0.05	0.38
Italy - Comiso II	-	0.19	-	0.01	0.20
Italy - Garaguso	-	0.57	-	0.10	0.67
Italy - Montignano	-	-	-	0.12	0.12
Italy - S.Anna (Tresauro)	-	1.31	-	0.01	1.32
Italy - Other	-	-	-	0.72	0.72
ITALIAN GOVERNMENT REPORT	-	15.47	-	5.10	20.57
Israel - Karish/Tanin leases	-	-	-	0.14	0.14
Israel - Exploration assets	-	-	-	0.15	0.15
ISRAELI GOVERNMENT REPORT	-	-	-	0.29	0.29
Montenegro - Exploration	-	-	-	0.12	0.12
MONTENEGRIN GOVERNMENT REPORT	-	-	-	0.12	0.12
UK - Tors Licence	-	-	-	0.73	0.73
UK - Wenlock Licence	-	-	-	0.20	0.20
UK - Appraisal assets	-	-	-	0.21	0.21
UK GOVERNMENT REPORT	-	-	-	1.14	1.14
TOTAL	58.19	16.17	2.54	7.25	84.15

Enquiries

Investors, Analysts and Media

Kate Sloan, Head of IR, ECM and Communications      [phone]

About Energean plc

Established in 2007, Energean is a London Premium Listed FTSE 250 and Tel Aviv 35 Listed E&P company with operations in nine countries across the Mediterranean and UK North Sea. Since IPO, Energean has grown to become the leading independent, gas-focused E&P company in the Eastern Mediterranean, with a strong production and development growth profile. The Company explores and invests in new ideas, concepts and solutions to produce and develop energy efficiently, at low cost and with a low carbon footprint.

Energean's production comes mainly from the Abu Qir field in Egypt and fields in Southern Europe. The company's   flagship project is the 3.5 Tcf Karish, Karish North and Tanin development, offshore Israel, where it intends to use the newbuild fully-owned FPSO Energean Power, which will be the only FPSO in the Eastern Mediterranean, to produce first gas, commencing mid-2022. Energean has signed contracts for 7.4 Bcm/yr of gas sales on plateau into the Israeli domestic market, which have floor pricing, take-or-pay and/or exclusivity provisions that largely insulate the project's revenues against global commodity price fluctuations and underpin Energean's goal of paying a meaningful and sustainable dividend.

With a strong track record of growing reserves and resources, Energean is focused on maximising production from its large-scale gas-focused portfolio to deliver material free cash flow and maximise total shareholder return in a sustainable way. ESG and health and safety are paramount to Energean; it aims to run safe and reliable operations, whilst targeting carbon-neutrality across its operations by 2050. These aspirations were significantly advanced with the completion of the Edison E&P acquisition in December 2020, which is now being successfully integrated in Energean's business.

www.energean.com

 

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[1] The transaction closed on 17 December 2020; for accounting purposes results are consolidated from this date. However, the economic reference date of the transaction was 1 January 2019, meaning that all results incurred subsequent to this date accrue to Energean.

[2] Our Egyptian assets are operated under PSAs, which set out the terms of the activities, including the applicable tax laws and regulations. Under the Abu Qir PSA, Energean is entitled to the net production from the asset, which forms the basis for the calculation and reporting of its payments to the Egyptian Government. Taxes include in-kind volumes due by Energean to the Egyptian Tax Authorities under the PSAs, which provide that the tax obligations of the company are settled by the Egyptian General Petroleum Corporation (EGPC) out of its share of profit oil. The monetary value of those payments is determined using the same method as per production entitlements. The corporate income taxes paid in 2020, were settled by EGPC on Energean's behalf out of production entitlement (payment in kind), in accordance with the terms of our PSAs. The terms of our PSAs provide that corporate income taxes are paid in the year following that to which they relate. Accordingly, our 2020 payment relates to our 2019 taxable profits.

 

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