26 October 2017

Could you tell us a little more about Energean?

Energean is an independent E&P company with a focus on the East Mediterranean and North Africa, and is the only company producing oil and gas in Greece. The Company holds 4 licenses in Greece and has been awarded a fifth in Western Greece.  It operates assets in North East Greece that have been producing hydrocarbons for 35 years with an excellent HSE and environmental track record. Current production levels from the Prinos field are circa 5,000 barrels per day. Energean also holds a license in Egypt and was recently awarded two offshore blocks in Montenegro. In August 2016, Energean agreed to buy the Karish and Tanin fields, offshore Israel, with 2.4 TCF of discovered natural gas. Energean is backed by committed private and institutional shareholders, including the US based private equity fund Third Point, who have invested more than half a billion dollars in the upstream sector to date.

What your vision/goals are over the next 12-18 months?

Our vision is to become the leading upstream company in the South Eastern Mediterranean. Our primary goal for the next 18 months is to develop the recently acquired Karish and Tanin fields, alongside increasing production from the Prinos field. At the same time the Company intends to pursue its highly prospective exploration drilling programme off Western Greece and the Adriatic. It is a promising area which has the same geology as proven and producing oil and gas fields in Italy, Croatia and Albania.

Energean's $148.5mn acquisition of Karish and Tanin from Delek Group has been called a “strategic turning point” – would you agree and how will this affect your strategic plans moving forwards?

The acquisition and development of the Karish and Tanin fields is a US 1 billion dollar project. It is part of the Israeli Government's gas outline agreement and brings competition to the Israeli market. Alongside recent discoveries in Egypt and Cyprus, it encourages oil and gas companies to invest in a region that will play a key role in securing and diversifying Europe’s natural gas supply for the next decades. Selling gas in a rapidly growing market of significant geopolitical importance will definitely increase Energean’s revenues, add brand awareness and offer opportunities for participation in further promising projects.

You have recently been successful in securing significant financing from EBRD (which is quite unique in Greece I believe).  Are you however still looking for investors and who, in your opinion, will make the best partners for Energean?

The financing granted to Energean was the first ever to be granted by the EBRD relating to the Greek energy sector and is dedicated to development and exploration projects in Greece. Moreover there have been few Reserves Based Loans granted internationally over the last two years of oil price weakness. We have a strong shareholder base, have proven our ability in fund raising, and are confident also of our ability to develop our two 100% held fields. The Karish and Tanin project is significant and we will certainly be considering partnering with outside investors. We will also be looking at the bond markets and other financing opportunities.

The Karish and Tanin project is likely to be technically challenging – where do you see the biggest challenges and what are the solutions?

Yes it is a challenging deep water project, but all the technical requirements have been addressed successfully elsewhere by the industry. The biggest challenge is more the opening up of the Israeli gas market and finding new buyers. The Israeli Government has already taken steps to re-orientate towards the gas market through the shutting down of coal-fired power stations, and more incentives are expected to be put in place. The deal  with Delek and Noble is based on realistic and affordable terms for Energean, and we look forward to taking Karish and Tanin forward in a more positive oil price environment over the coming years.

What are the reasons that an investor has to consider Energean as a valuable and reliable partner?

Energean acquired the Prinos licences when oil output was just a few hundred barrels per day, the subsidiary company had extremely expensive operating and administrative costs with a 30 million dollar negative EBITDA  and just a couple of million barrels of reserves. Today, Prinos is producing more than 5,000 barrels per day, with 30 million barrels of oil 2P reserves and 28 million barrels of 2C reserves. The Company attracted a direct investment by Third Point, which acquired its strategic stake in 2013 against the worst possible economic backdrop in Greece. Moreover, it also secured financing from the EBRD despite the downturn in the upstream sector. Energean has an extremely low breakeven point of less than 30$ per barrel, has managed to withstand the challenges of a low oil price environment and is now emerging as a leading independent upstream player in the region. The Company has taken advantage of the low oil price to secure attractive assets with low development and operating costs on very good terms. We have proven that we create value to our shareholders and are able to deal with complex problems facing the industry and the countries we operate in.  Energean is an ideal platform for growth in the SE Med E&P sector that combines experienced and committed management, a balanced portfolio of assets and an aggressive growth plan.