Energean's profit in the UK jumps due to lower tax charges, and production recovers from Israel halt

Eastern Mediterranean-focused gas producer ?Energean ?posted a 45% jump in first-half profit on Wednesday helped by a lower tax charge in Italy, and said production had bounced back following a war-driven shutdown in Israel that cut its half-year output.

By expanding in Egypt and seeking deals in West Africa, the independent oil and gas company is trying to reduce its dependence on its flagship fields offshore Israel, where production has repeatedly been disrupted due to regional conflict.

Last month, two sources said that Energean had exclusive negotiations to purchase some of BP’s upstream oil assets and?gas in Egypt.

The?company announced on Wednesday that it had also agreed to terms for the merger of three Egyptian concessions including its flagship Abu Qir license into one single licence with better fiscal conditions. The company has pledged $150 million initially over four years, which it believes will open up new exploration land.

Energean's shares rose by 5.5%, to 835 pence at 1035 GMT.

Energean’s production for the six-month period ending June fell by 10%, to 124,000 barrels equivalent per day. In Israel, Energean’s largest operating region, output was down 7%, to 87,000 Boepd.

The company said that production has recovered significantly since the restart of operations in Israel, in April, and it is still aiming to produce between 130,000 and?140,000 Boepd for the full year.

Energean has reported a profit of $160m for the first half of the year. This is up from $110m a year ago, and was mainly due to the recognition of previously unrecognised tax assets.

The Brent crude price increase also helped to?lift liquids revenues, which includes oil and other hydrocarbons sales, by 14%, to $267 millions.

Jefferies and Peel Hunt analysts said that they believed Energean would be well-positioned to grow 'in the next year. The Katlan project in Israel is on track for the first gas to arrive in the first half 2027. Capital spending will also taper off and the Egyptian gas concessions are being consolidated.

(source: Reuters)