Energean PLC (EERGF) (Q2 2024) Earnings Call Highlights: Record Growth and Strategic Moves

GuruFocus News
4 min read

In This Article:

  • Revenue: $867 million, up 47% year on year.

  • EBITDAX: $568 million, a 65% increase year on year.

  • Production: First half production increased to 146,000 barrels a day, a 38% increase from the previous period.

  • Liquidity: Over $0.5 billion at the end of June 2024.

  • Leverage: Reduced to 2.5x.

  • Dividend: $0.30 per share declared, with $486 million cumulative dividends so far.

  • Operating Cash Flow: Increased 126% from $233 million to over $0.5 billion.

  • CO2 Emissions: Reduced to 8.5 kilos of CO2 per barrel of oil equivalent, a 20% year-on-year reduction.

Release Date: September 11, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Energean PLC (EERGF) reported record production levels, with monthly production reaching nearly 180,000 barrels a day.

  • First half production increased by over 38% to 146,000 barrels a day compared to the previous period.

  • Group revenues rose by 47% year-on-year to $867 million, with EBITDAX increasing by 65% to $568 million.

  • The company has secured $2.4 billion in new gas contracts in Israel, ensuring a strong revenue stream.

  • Energean PLC (EERGF) is committed to returning $1 billion to shareholders by the end of 2025, with a declared dividend of $0.30 per share.

Negative Points

  • Operations in Morocco have not met expectations, with preliminary results falling short.

  • The geopolitical situation in Israel poses potential risks, although operations have not been affected so far.

  • The company is facing a capital-intensive period with ongoing developments like Katlan and Cassiopea.

  • Energean PLC (EERGF) has a high concentration of business in Israel, raising concerns about geopolitical risk exposure.

  • The Prinos Carbon Storage project faces commercial challenges and requires significant support from the EU and Greek government.

Q & A Highlights

Q: Can you elaborate on the demand outlook for Israel for the remainder of 2024, and are there any maintenance activities planned? A: Mathios Rigas, Managing Director, noted that demand remains strong due to a hot summer, with September expected to be robust. October may see a dip due to holidays. Maintenance includes the installation of the second oil train, requiring a brief shutdown. This will enhance liquid production, contributing significantly to revenues.

Q: What is the outlook for new gas contracts in Israel, and are there any upcoming opportunities? A: Mathios Rigas highlighted that three new power stations are expected to be licensed in Israel. Energean is cautious about over-contracting but aims to capitalize on spare gas. The company recently secured $2.4 billion in revenue from new contracts and sees strong demand in Israel and the broader region, including Egypt.

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