Energean Oil and Gas plc (ENOG) intends to announce its preliminary results for the year to 31 December
2018 on Thursday 21 March 2019. In advance of these results, Energean is pleased to provide an update on recent operations and the Group’s trading performance in 2018 together with guidance for 2019. This information is unaudited and subject to further review.
Mathios Rigas, Chief Executive, Energean Oil & Gas commented:
"2018 was a very successful year for Energean. We increased revenues by 56% while reducing
cost of production by 29%, made significant progress on our development projects and converted
significant volumes of resources into reserves. In Israel, Karish and Tanin remains on track for first
gas in 1Q 2021 and we have secured $12.9 billion of future revenues through 4.6 bcm/yr of
contracted gas sales, firmly underpinning the project’s economics. I look forward to continuing
this positive momentum in 2019, which will include the drilling of at least six new wells across our
acreage in Israel and Greece, targeting significant increases in reserves, resources and
production. In Israel we continue to see increasing demand for our gas and are aiming to fill the
3.4 bcm/yr of spare capacity in our FPSO in the medium term. We continue to target valueenhancing
opportunities in the Mediterranean area and aim to match the growth achieved over
the last decade.
Energean’s Karish and Tanin development project remains on track to deliver first gas into the
Israeli domestic market in 1Q 2021. The next visible milestone will be mobilisation of the Stena
Drillship in February 2019 ahead of spudding of Karish North in March.
2019 Drilling Programme
The Company’s 2019 drilling programme will target up to 2.3 Tcf of gross prospective gas
resources and is well aligned with its exploration strategy to target resources that can be quickly,
economically and safely monetised.
Karish North will directly target 1.3 Tcf of gas and 16 million barrels of liquids (gross) with a
volume-weighted geological chance of success of 69%. Energean believes that success at Karish
North could have a positive read-across to Karish East; technical analysis indicates that the fault
between Karish North and Karish East does not form a barrier and, therefore, does not limit the extent or flow of any hydrocarbons. Karish East contains gross prospective resources of 0.5 Tcf of
gas and 7.5 million barrels of liquids with a volume-weighted geological probability of success of
70%. Karish North will also provide important read-across information for the Karish Main
Drilling of the three Karish Main development wells will immediately follow Karish North and
completion is expected by year end 2019.
The exploration component of the Karish Main wells consists of drilling into the deeper D sand
horizons, which have been proven in the Tamar field (upper D sands) and Aphrodite (lower D
sands) discovery. Energean believes that Karish Main drilling offers additional upside beyond
that reflected in NSAI independent estimates.
Energean has a further six options available on the Stena drilling contract at a favourable rig rate.
NSAI has identified additional gross prospective resources of 5 Tcf of gas and 62 million bbls
across the Tanin lease and five exploration blocks. Energean is evaluating all potential
opportunities to monetise the value of the remaining options.
Gas Sales & Purchase Agreements (GSPAs)
Following signature of the I.P.M. Beer Tuvia (“IPM”) gas sales agreement announced on 2
January 2019, Energean has now signed GSPAs for 4.6 BCM/yr from its Karish and Tanin FPSO
, which is being built with a total capacity of 8 BCM/yr. Energean targets filling the remaining 3.4
BCM/yr of FPSO spare capacity in the medium term, which it believes will deliver attractive
The IPM agreement has added between 0.265 and 0.38 BCM/yr of gas sales, currently expected
to commence in approximately 2024, contingent on results of the 2019 drilling programme.
Energean estimates that the agreement will contribute revenues of approximately $0.9 billion
over the life of the contract, bringing total secured revenues to $12.9 billion over the life of the
Energean continues to see strong incremental demand for its gas. Privatisation of the Alon Tavor
power station is ongoing and is expected to generate additional opportunities to sell gas to the
domestic market. Energean is also evaluating export options to key regional export markets.
Project progress and upcoming milestones
The facilities workstream, managed and executed by TechnipFMC under the $1.36 billion lump
sum turnkey EPCIC contract signed in 2018, is progressing in line with expectations. First steel cut
on the topsides was achieved in December 2018. Key upcoming milestones are:
- March 2019: Keel laying on the FPSO to commence.
- June 2019: Beach crossing at Dor to be completed.
- December 2019: FPSO Hull sailaway from the Cosco Yard (China) to Singapore for