Energean’s 2025 trading update: resilient volumes, firm cash flows, and a sizeable impairment
Energean’s latest RNS is a meaty one. The group delivered production at the top end of guidance, kept revenue and adjusted EBITDAX broadly flat year on year, and locked in billions more of future gas sales. The flip side: a material non-cash impairment on Cassiopea and an uptick in net debt, with a capex-heavy year ahead.
Here is what matters for investors, in plain English, and why the 2026 plan sets up a pivotal execution year.
Production and sales: upper-end delivery despite disruption
Group working interest production averaged 154 kboed in 2025, 85% gas, landing at the upper end of the 145-155 kboed guidance. Israel averaged 113 kboed, with the rest of the portfolio at 41 kboed. A temporary suspension in Israel in June did not derail the full-year outcome thanks to a strong second half.
Sales revenue came in at $1,716 million and adjusted EBITDAX at $1,112 million, both in line with last year. That is noteworthy given a 17% drop in realised liquids prices to $59.3/boe. The long-term gas contracts are doing their job insulating cash generation.
January 2026 has started well too, with Israel sales averaging 132 kboed month to date to 26 January.
Key 2025 numbers at a glance
| Metric | FY 2025 | FY 2024 |
|---|---|---|
| Total W.I. production | 154 kboed (85% gas) | 153 kboed (83% gas) |
| Israel W.I. production | 113 kboed | 112 kboed |
| Sales revenue | $1,716 million | $1,779 million |
| Adjusted EBITDAX | $1,112 million | $1,162 million |
| Cost of production incl. royalties | $556 million | $559 million |
| Cash G&A | $38 million | $37 million |
| Development and production capex | $575 million | $616 million |
| Exploration spend | $1 million | $117 million |
| Decommissioning spend | $62 million | $44 million |
| Dividend per share | $1.20 | $1.20 |
| Cash and restricted cash | $330 million | $321 million |
| Net debt | $3,255 million | $2,949 million |
| Leverage ratio | 2.9x | 2.5x |
Jargon watch: kboed is thousand barrels of oil equivalent per day. W.I. means Energean’s share of production. Adjusted EBITDAX is earnings before interest, tax, depreciation, amortisation and exploration expense – a cash proxy often used in oil and gas.
Contracts, exports and cost control: the strategic backbone
Energean signed more than $4 billion of new long-term domestic gas contracts in Israel to supply new power stations. That stacks on top of over $20 billion already contracted over the next two decades, giving high visibility over future revenue.
On exports, the Nitzana pipeline from Israel to Egypt has been sanctioned and is in development. This enhances route diversity and supports demand optionality in a tight regional gas market.
Costs stayed tight. Cost of operations excluding royalties held at $6/boe, and cash G&A was $38 million. Development and production expenditure of $575 million landed slightly below the $580-620 million guidance, mainly because roughly $50 million of Katlan capex slipped into 2026.
Shareholder returns were protected, with $221 million returned in 2025. The balance sheet is termed out following 2025 refinancing, with no short-term maturities. Net debt rose to $3,255 million, impacted by timing of an $80 million payment from EGPC, part of which arrived in early January instead of by year-end.
2026 guidance: a heavy build year ahead of 2027 first gas
Management frames 2026 as a pivotal delivery year. Expect planned downtime in Israel tied to Katlan, natural decline in Egypt ahead of new drilling contingent on the merger of offshore concessions, and elevated capex as key projects move through execution.
| 2026 guidance | Range |
|---|---|
| Israel production | 108 – 114 kboed |
| Rest of portfolio production | 32 – 36 kboed |
| Total production | 140 – 150 kboed |
| Total cash cost of production | $510 – $550 million (incl. $210 – $230 million royalties) |
| Cash G&A | $35 – $40 million |
| Development and production capex | $740 – $800 million |
| Exploration expenditure | $5 – $10 million |
| Decommissioning spend | $60 – $70 million |
| Consolidated net debt | $3,200 – $3,300 million |
Two near-term drivers stand out. First, project execution on Katlan in Israel and Irena in Croatia, with development drilling and infrastructure installation targeted and first gas on both in H1 2027. Second, exploration activity is back, starting with East Bir El-Nus in Egypt in Q2 2026, then the high-impact Block 2 well offshore Greece in late 2026 or early 2027.
Management also flags additional long-term gas contracting in Israel, advancing export pathways, and evaluating M&A in West Africa. Guidance excludes $130-135 million of contingent Prinos Carbon Storage spend that is expected to be grant-funded.
Cassiopea impairment and arbitration: size, scope and impact
The headline negative is Cassiopea in Italy. As of 31 December 2024, net 2P reserves were 31 mmboe, around 3% of group 2P. Energean expects that to be revised to around 3-4 mmboe as of 31 December 2025 due to performance below the operator’s initial expectations.
Energean therefore expects to record a non-cash impairment of around EUR 300 million in the FY 2025 accounts, subject to further review. This hits accounting earnings but not cash.
Separately, formal arbitration has commenced between Energean Italy S.p.A. and the operator. Energean’s total claims are EUR 265 million for reimbursement and damages, not yet recognised as assets. The operator is seeking approximately EUR 154 million for disputed invoices. Energean has recorded disputed expenses billed by the operator of approximately EUR 152 million as at 31 December 2025.
Operationally, Cassiopea’s 2026 net working interest production is projected at around 2 kboed, about 1% of the group. The impairment is large, but the asset’s contribution to volumes is small.
Positives, pressure points, and what to watch next
What looks good
- Volume delivery and cash resilience: production at the top end, revenue and adjusted EBITDAX steady despite lower oil prices.
- Contracted cash flows: more than $4 billion of new domestic Israeli gas contracts plus over $20 billion contracted over two decades underpin visibility.
- Execution runway: Nitzana export route sanctioned, Katlan and Irena moving toward 2027 first gas, exploration restarts with clear timelines.
- Cost discipline: $6/boe operating cost excluding royalties maintained, cash G&A tightly controlled.
Where the risk sits
- Cassiopea impairment and arbitration: sizeable non-cash hit and ongoing JV dispute introduce uncertainty until resolved.
- Leverage and capex: net debt at $3,255 million and 2026 capex of $740-800 million mean execution needs to stay tight to keep leverage broadly flat.
- Operational downtime: planned shutdowns in Israel and short-term decline in Egypt could make quarterly cadence choppy.
Catalysts and timeline
- Full Year 2025 results on 19 March 2026, including the final impairment number.
- Egypt merger concession terms targeted by end of this quarter – key to unlocking new drilling.
- Progress on new Israeli gas contracts and export pathways, including Nitzana.
- EBEN exploration spud in Q2 2026, then Block 2 offshore Greece late 2026 or early 2027.
My take
This is a robust update on the core Israeli-led gas business, supported by long-term contracts and disciplined costs. The Cassiopea impairment is a clear negative, but its production impact is modest and the charge is non-cash. With a capex-heavy 2026 to set up 2027 first gas from Katlan and Irena, the story now hinges on execution and maintaining balance sheet discipline.
If Energean delivers on project milestones, secures additional Israeli gas contracts, and progresses the Egypt merger, the foundation for growth into 2027 looks solid. Keep an eye on arbitration developments and quarterly cash movements given the elevated spend profile.
Quick glossary
- kboed: thousand barrels of oil equivalent per day.
- 2P reserves: proven plus probable reserves.
- Adjusted EBITDAX: earnings before interest, tax, depreciation, amortisation and exploration expense.
- Royalties: payments to resource owners or the state based on production or revenue.
