“The Covid-19 pandemic and Opec+ price war have put us into uncertain times,” CEO Mathios Rigas said in the company’s 2019 results statement. “Once the Edison E&P transaction is completed, around 70% of our production will be sold under long-term gas sales agreements that insulate our future revenues against oil price volatility.”
Energean agreed to buy the Italian company in July 2019 for $750 million of up-front consideration. The transaction is expected to close “as soon as possible,” within 2020. The approval from Italian authorities is “anticipated soon” and formal approval from Egyptian regulatory authorities is expected “soon after shareholder approval at the EGM.”
Gas produced in Israel will account for 34% of the planned 2020-2025 production and will be sold under long-term agreements domestically to power plants and industrial customers. The contracts have a floor pricing and take-or-pay provisions, Energean said.
Egyptian gas, from assets owned by Edison, will correspond to 37% of Energean’s five-year guidance output. It will be sold to Egypt’s EGPC under a concession agreement. In Abu Qir, gas is priced at $3.50 per million British thermal units (MmBtu) or $3.71 per thousand cubic feet (Mcf), when Brent prices are between $40 and $72 a barrel. With Brent at $35/Bbl, gas prices will be $3.16/MmBtu or $3.35/Mcf.
In NEA, the gas prices have been agreed at $4.60/MmBtu or $4.77/Mcf. With Brent ranging between $40 and $25 a barrel, gas prices will gradually reduce to the floor price of $4.45/MmBtu, Kallanish Energy reports.
