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(Alliance News) - Energean Oil & Gas PLC is on track to start producing gas from its flagship Karish Tanin project in the first half of 2021, it said Wednesday.
Karish Tanin is located off the coast of Israel. So far, 5.0 billion cubic metres per year worth of sales agreements have been signed in the country, with more in the pipeline.
At the end of 2019, Energean expects working interest reserves and resources across its Mediterranean portfolio to be 554 million barrels of oil equivalent, 38% higher on the year prior, due to the 190 million barrel Karish North discovery.
Energean expects to issue an updated competent persons report and field development plan on Karish North, with a final investment decision due in 2020.
Production in 2019 was 3,300 barrels of oil per day from assets in Greece, generating revenue of USD76 million. Guidance had been 3,400 barrels to 3,600 barrels per day, cut from 4,300 barrels to 4,800 barrels in September due to maintenance work.
Energean's revenue in 2018 was USD90.3 million, up 56% on the prior after production that year climbed 45%.
During 2019, in July, Edison agreed to USD850 million acquisition of the oil business of Italian electricity and gas company Edison SpA for USD850 million.
Energean is working to close this deal "as soon as possible", expecting approval in Italy shortly. The company does, however, expect to now exclude Algerian assets from the deal, with the country's state oil company having asked to discuss the acquisition.
London-headquartered Energean sees 2020 pro forma production, which includes a whole year of Edison's assets, to be between 42,500 barrels to 50,000 barrels of oil equivalent per day. Some USD995 million of capital expenditure will be spent, of which USD620 million will be in Israel.
Other plans for 2020 will be to complete the USD280 million sale of North Sea assets, bought in the Edison deal, to Neptune Energy Group Holdings Ltd. A strategic review of the Prinos asset in Greece will also be initiated.
Chief Executive Mathios Rigas said: "We are already looking at growth opportunities on the resource side from our nine blocks in Israel and on potential additional infrastructure capacity that will allow us to expand gas sales in the region.
"With the expected closing of the acquisition of Edison E&P and subsequent sale of the North Sea assets to Neptune, we will further enhance our position in our core markets, substantially increase our reserves and production and realise immediate operating cash flow. Post completion, the combined portfolio will establish a material long-term cash flow profile that supports our ambition to pay a sustainable dividend."
"I look forward to continuing this positive momentum in 2020, with a key focus on delivering Karish; closing and integrating Edison E&P; and continuing the sustainable growth of Energean, maximising value for all of our stakeholders," Rigas added.
Energean shares were 2.2% lower on Wednesday morning in London at 809.00 pence each.
By George Collard; georgecollard@alliancenews.com
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