Greek Oil and gas explorer and producer Energean is preparing to raise $500m through a listing on the London stock market in March as it seeks to tap investor appetite in its gas prospects in Israel Karish and Tanon gas fields on the border to Lebanon.
The company, which was set up in 2007, plans to spend the bulk of the proceeds, $395m, to develop these two offshore fields. “We feel we are in the right place at the right time,” said Mathios Rigas, Energean chief executive. This is a “growth story underpinned by long-term contracts” and our plan is to become “the leading independent in the region”, he added. Investor interest in the eastern Mediterranean has been sparked by a string of high-profile discoveries in Egypt and Israel. ENI, the Italian oil major, is developing the $12bn Zohr field in Egypt. In Israel, work has started on the Leviathan gasfield, the largest energy project in the country’s history. Lebanon is also opening its waters to exploration. Despite the potential of some of these prospects their development is seen as less straightforward given the political rivalries involving the countries concerned.
In December, however, political support was given to a proposed €6bn, 2,000km pipeline from Israel to Italy via Cyprus and Greece. And despite significant global supplies of gas coming from countries including Russia and the US, “Europe needs gas”, Mr Rigas said. Israel, for example, whose economy has relied heavily on imported coal for its power generation, was one of the fastest-growing gas markets last year. Energean expects to deliver its first gas from the Karish field in 2021. It has agreed supply contracts for all the reserves it has found so far to local companies. Any additional gas it finds through further exploration — Energean recently secured more acreage in Israel — can be sold. The arrangements, Mr Rigas said, meant that “the base business is protected but the upside is there”.
Since inception the company has acquired a wide portfolio of producing, development and exploration prospects. Its main production is from its Prinos fields located in Greek waters. Energean produced on average approximately 2,803 barrels of oil a day from the Prinos basin fields during the year that ended on December 31 2017. It plans to increase production this year and will drill up to 25 wells. The company sells all its production to BP under a long-term offtake agreement that runs to 2025. Energean’s largest shareholders are its management team, which has a 30 per cent stake, and US hedge fund Third Point. In addition to the $395m used to develop its Israeli gasfields, a further $10m would go to repay a bridge investment made by the company’s founders. The remaining $95m would be spent on fees, capital expenditure and other costs, the company said. Energean will also consider a secondary listing in Tel Aviv.