Energean reports 45% profit rise as CEO favours Egypt over UK

Energean has reported a 45 per cent increase in profit after tax for the first half of the year, demonstrating resilience against geopolitical headwinds while simultaneously expanding its production capabilities. The London-listed energy company stated that it successfully navigated regional challenges to boost output, with its chief executive offering a notably positive assessment of the Egyptian investment climate. Mathios Rigas, the company’s CEO, explicitly contrasted the regulatory stability of Egypt with the perceived unpredictability of the United Kingdom, suggesting that the North African nation offers a more favourable environment for long-term energy investment.

Rigas highlighted that Egypt has become a critical growth area for Energean, noting that the company’s net receivables in the region have fallen to their lowest levels since 2020. Although he acknowledged that the Egyptian economy faces ongoing pressures from inflation and regional conflict, he expressed confidence that the government’s commitment to timely payments has fundamentally shifted. He noted that Cairo has prioritised paying producers on schedule to encourage further investment, a policy shift that has directly benefited Energean’s cash flow and operational planning in the region.

To solidify its position in Egypt, Energean has agreed principal terms to consolidate its three existing concessions, Abu Qir, North El Amriya and North Idku, into a single licence. This strategic move is expected to provide improved fiscal terms and underpins a plan to invest 150 million dollars over the next four years. The company aims to use this capital to double its production in the area, reflecting a broader strategy to deepen its operational footprint in one of its most stable markets.

In Israel, the Katlan project is progressing towards its scheduled start-up in the first half of 2027. Energean reported capital expenditure of 350 million dollars for the six-month period, with 267 million dollars allocated specifically to the Katlan project. The total estimated cost for the development plan is 1.2 billion dollars. Rigas indicated that his confidence in the project timeline has increased recently, noting that the Saipem drillship has concluded its drilling operations and is set to depart within days. He revealed that these works were conducted without the use of GPS for security reasons, a logistical hurdle that has now been overcome.

The company is on track to average between 130,000 and 140,000 barrels per day this year. Its debt position remains largely unchanged from a year ago, standing at 3.22 billion dollars, or three times adjusted EBITDAX. Rigas defended this leverage level by pointing to the company’s 22 billion dollars in secured revenues and its 18-year reserve life. He stated that bondholders do not view the company as overleveraged, supporting the current financial structure.

Despite the strong operational performance, Energean reduced its second-quarter dividend to 0.10 dollars per share, down from 0.30 dollars in the same period last year. Rigas attributed this reduction to the 41-day shutdown of operations offshore Israel caused by the outbreak of war. He emphasised his personal commitment to shareholder returns, noting his stake of just over eight per cent in the company. The long-term goal is to reduce debt to 2.5 times EBITDAX, and eventually to two times, although he acknowledged that achieving all strategic objectives simultaneously is not feasible.

The company also flagged a new risk regarding mergers and acquisitions after being pre-empted by a local partner in a bid for a Chevron asset offshore Angola. Rigas expressed discomfort with the new operator’s lack of deepwater experience, stating that he does not wish to be associated with licences where the operator has never drilled a deepwater well. Meanwhile, Energean continues to explore opportunities in West Africa and is involved in a gas exploration well off Greece with ExxonMobil, despite a low probability of success. He remains sceptical about the East Mediterranean becoming a major gas supplier to Europe, citing local demand that currently outstrips supply.