Energean Profit Soars 45% Despite Revenue Drop, Secures $1.4 Billion Gas Deal

Energean reported a significant 45% increase in net profit for the first half of the year, reaching $160 million, despite an 8% decline in revenues to $743 million. The profit surge was largely attributed to a substantial decrease in the effective tax rate, primarily due to the recognition of previously unrecognized deferred tax assets in Italy. The company's adjusted EBITDAX saw a 5% decrease, falling to $478 million.

The revenue and production dip were influenced by a 41-day shutdown of its production platform in Israel, ordered by the Ministry of Energy due to security escalation and lasting from February 28 to April 10. This, combined with lower output from the Cassiopea field in Italy, resulted in a 10% decrease in average production to 124,000 barrels of oil equivalent per day. However, production has since recovered, with average output reaching 135,000 barrels of oil equivalent per day in the first eight months and exceeding 180,000 barrels per day in August.

In parallel with its financial results, Energean announced a new 15-year gas supply agreement with the Shurak power station in Israel, valued at approximately $1.4 billion. Gas deliveries are expected to commence in late 2029, with volumes ranging from 0.5 to 0.6 billion cubic meters annually. This deal, along with existing agreements with the Kessam and Dalia 2 power stations, brings Energean's total contracted future revenues from the Israeli electricity market to over $5 billion.

Free cash flow increased by 35% to $250 million, driven by reduced capital expenditures. However, the company's net debt stood at $3.23 billion at the end of June, with the net debt to EBITDAX ratio slightly increasing. Energean also declared a dividend of 10 cents per share for the second quarter, down from 30 cents in the same period last year.

The company is continuing development of the Karish project, with over 60% of its $1.2 billion budget already invested, and first gas flow anticipated in the first half of 2027. Energean maintains its full-year production forecast of 130-140,000 barrels of oil equivalent per day.