Energean Israel’s H1 2025: Lower Profits, Solid Cash Generation, and Big New Gas Deals
Energean Israel Limited has posted its unaudited interim numbers to 30 June 2025. Headline profits are down year-on-year, with softer sales and higher FX losses doing most of the damage. Against that, cash generation remained healthy, the balance sheet absorbed a large tax outflow and dividend, and management signed meaningful new gas contracts that extend future demand.
Key figures investors should know
| Metric | H1 2025 | H1 2024 | Comment |
|---|---|---|---|
| Revenue | $482.6 million | $602.2 million | Lower gas and liquids sales volumes |
| Operating profit | $222.9 million | $314.2 million | Despite $9.5 million insurance income |
| Net profit | $100.5 million | $173.4 million | Higher net FX losses of $11.8 million |
| Operating cash flow (post tax) | $237.5 million | $430.7 million | $110.5 million tax paid in period |
| Cash and cash equivalents | $100.9 million | $210.7 million | Plus $83.3 million restricted cash |
| Total borrowings | $2,668.0 million | $2,594.2 million | $623.2 million now classified as current |
| Gas sales volumes | ~2.3 bcm | ~2.5 bcm | Note: bcm = billion cubic metres |
| Liquids sales volumes | ~2,057 kbbl | ~2,686 kbbl | kbbl = thousand barrels |
Revenue and profit slide: what changed
Revenue fell to $482.6 million from $602.2 million, mainly because both gas and liquids sales volumes were lower. Gas revenue was $345.7 million on ~2.3 bcm sold, and hydrocarbon liquids revenue was $136.9 million on ~2,057 kbbl sold. Pricing detail is not disclosed.
Cost of sales eased to $256.7 million from $279.0 million, helped by lower royalties ($85.4 million vs $106.6 million) and slightly lower depreciation. Administrative costs nudged up to $10.7 million and there was a $2.0 million impairment on exploration (expiry of Block 21). Other income was boosted by $9.5 million of insurance compensation for remedial work on auxiliary piping systems.
Below the line, net finance costs were $92.2 million, broadly flat year-on-year, but net foreign exchange losses rose to $11.8 million from $0.3 million. After a tax charge of $30.3 million, net profit landed at $100.5 million.
Cash flow, capex and dividends: the moving parts
Cash flow from operations before working capital was strong at $334.8 million. The big swing versus last year is tax: $110.5 million paid in H1 2025 (vs $1.9 million), which also cleared the $81.0 million year-end income tax liability.
- Investing: $183.5 million cash spent on property, plant and equipment, principally the Katlan development; $0.9 million on intangibles.
- Financing: $75.0 million was drawn from the new Term Loan; cash dividends paid were $67.6 million, with a further $28.25 million settled via loan offset, taking total interim dividends to $95.85 million.
- Period-end cash: $100.9 million, plus $83.3 million restricted (earmarked chiefly for the September 2025 interest payment).
Debt stack, new term loan and the 2026 notes
Total borrowings were $2,668.0 million. Notably, the $625 million 2026 senior secured notes are now classified as current ($623.2 million carrying value). The RNS also notes a scheduled redemption date for this 2026 series on 21 September 2025.
In February 2025, the company signed a 10-year senior secured Term Loan for up to $750 million, non-recourse to Energean plc. It can be drawn in USD (SOFR + margin) and NIS (Bank of Israel + margin), with bullet repayment in 2035. $75 million was drawn in Q1. The loan is secured alongside the existing notes, including charges over key assets and the Energean Power FPSO.
Volumes, mix and royalties: why margins moved
Sales volumes were lower across both gas and liquids. Royalty expense dropped to $85.4 million from $106.6 million, consistent with the revenue decline, while depreciation fell slightly to $109.2 million. Other operating costs were $52.9 million, reflecting insurance and planned maintenance.
Hedges, FX and tax: the P&L under the bonnet
The group entered new foreign exchange hedges in February 2025 to protect Katlan-related payments. These were effective: a derivative asset of about $37.2 million was recognised and other comprehensive income of $28.9 million booked, flipping the hedging reserve to a positive $28.6 million from a small deficit at year-end.
FX worked against the P&L, with $11.8 million net losses. The tax charge was $30.3 million, split between current tax of $22.9 million and a deferred tax charge of $7.4 million. No natural resources profits levy is recognised at this stage.
Operations and geopolitical risk: brief disruption, elevated backdrop
Israel’s geopolitical risk backdrop remains heightened. On 13 June 2025, the Ministry of Energy and Infrastructure ordered a temporary suspend of production at the Energean Power FPSO. Operations safely restarted on 25 June 2025. Apart from that two‑week pause, Karish and Karish North have produced without disruption since the conflict began. The company states it has measures in place to maintain operations and security.
Strategic progress: two sizeable new gas contracts signed
- Dalia Energy binding term sheet (January 2025): around $2 billion in value. Supplies ramp from up to 0.1 bcm/year in April 2026 to about 1 bcm/year from June 2035 through 2044 (with potential extension). Terms include floor pricing, take-or-pay and CPI-linked indexation (not Brent-linked). Early years exclude June-September supply between 2026-2034.
- Kesem Energy GSPA: approximately $2 billion revenue over ~17 years, totalling about 12.5 bcm. Roughly 1 bcm/year from the mid‑2030s, with limited intermittent volumes before then. Includes floor pricing, take-or-pay and non‑Brent indexation.
These agreements lengthen the contracted book and, in my view, meaningfully underpin utilisation of Energean’s Israeli infrastructure into the 2030s and 2040s. They also diversify pricing away from oil benchmarks, which should stabilise cash flows.
Capex and assets: Katlan moving through development
Property, plant and equipment rose to $3,058.0 million, with additions largely tied to Katlan. Borrowing costs capitalised were $15.5 million at a 5.34% weighted average interest rate. The second oil train commissioning on the FPSO is expected to complete in late Q4 2025, which should increase liquids capacity thereafter.
What this means for investors
- The negatives: headline revenue and profit are down; FX losses bit; and cash fell after tax payments and dividends. A $623.2 million note is now current, keeping refinancing execution in focus.
- The positives: operations were quickly restored after a mandated pause; operating cash generation is solid; hedging delivered a $28.9 million boost to reserves; and two long‑dated, CPI‑linked gas contracts add visibility and reduce commodity price exposure.
Overall, I’d characterise H1 2025 as a reset half: lower earnings driven by volumes and FX, counterbalanced by resilient cash flow and strategic contract wins. Near-term, watch the 2026 notes redemption timetable and drawdowns under the new Term Loan. Medium-term, delivery of Katlan and completion of the FPSO’s second oil train late in Q4 2025 are the catalysts that could lift volumes and margins.
As ever, detail on pricing, guidance and forward capex phasing beyond what is noted here is not disclosed in this RNS. For now, Energean Israel looks to be trading through a choppy backdrop with an increasingly contracted future.
