Energean Aktie

Good morning, ladies and gentlemen, and welcome to the Energean Half Year 2026 Results Call. [Operator Instructions] I will now hand over to Energean's CEO, Mathaios Rigas. Please go ahead.

Good morning, everyone, and thank you for joining our half year results call today. If we may start with the first slide of the presentation, please. So I would like to start with some introductory remarks. I will hand over to Panos to go through our financial results, and then I'll pick up again to go through our operations and business outlook.

First half was a very strong half for Energean. We're entering the second half of '26 from a position of real strength. Free cash flow is up 36%. Profits after tax up, net debt down and all while we're in the peak of our investment program of Katlan. The first half, obviously, we saw the shutdown due to the security issues in Israel, but that's behind us. We're already exceeding 180,000 barrels of oil equivalent production in August. All our operations are doing extremely well.

Israel, we're seeing strong gas demand. Oil production is up following the second oil train that we completed and all our business units are performing at or above expectations. Egypt that I will focus on a lot more today. We have a new investment program that I will outline later, and that is the next phase of our organic growth. Beyond that, we are focused on our exploration activities in Greece and the other parts of the portfolio and the inorganic opportunities that will form a core part of our growth strategy going forward.

So overall, a very strong first half with the second half being even stronger, leading us to the very positive results that we are announcing today. With that, let me hand over to Panos to take you through the numbers, and then I'll come back to go through the business. Thank you.

Thank you, Mathaios. Good morning, everyone. Moving to the next slide, please. And as per Mathaios's introduction, the company recorded a solid first half of the year despite the highly volatile geopolitical environment, our assets are located and the 41 days of shutdown of production in our largest producer. More specifically, our production was down 12% compared to last year, mainly driven by that shutdown in our Karish asset.

But our total top line was down by only 8% as the production impact was partially offset by the higher oil prices. You will see, however, the gas price in the first half were lower compared to the same period in 2025. But with the current strength of European gas prices, we expect 2026 gas revenues to catch up, if not surpass the equivalents of 2025.

Moving to the next slide and to our cost line analysis, we have managed to keep our cost base well under control and within budgets and guidance despite the high inflationary environment in all countries of operation. That resulted in a 6-month EBITDAX of just 5% off the 2025 results and combined with some favorable movements in FX with the strengthening of the dollar and lower taxation, we recorded a 45% increase to our profit after tax at $160 million.

Another important metric is the increased operating cash flow to over $0.5 billion, $550 million, driven by the reduction in EGPC receivables from $215 million in the start of the year down to only $75 million. We're now seeing an impressive normalization of EGPC receivables, and we are now more confident than ever on the strength of our assets in the country. As expected, CapEx has been at $350 million, well within our 2026 guidance and reflecting progress to our Katlan project with OpEx continues to be both deferred and managed in the most cost-effective way, recording only $4 million spent in the first half of the year.

Finally, another metric of free cash flow, which includes both cash flow from operations and cash flows from investing recorded an impressive number of over $350 million (sic) [ $250 million ] in the first half of the year, which is 35% higher than the same period last year. Next page, please.

Moving to Page 7. A little bit more details of our net cash flow performance for the period. Again, highlighting that this $88 million of net cash flow was delivered in a period that our largest producer was down for more than 40 days, the Katlan project in full capital-intensive mode and European gas prices relatively softer than the same period last year. But of course, the $0.5 billion of cash flow from operation gave us the chance to fully fund all our projects, interest and coupons and dividends as well as reduce our debt by almost $50 million.

Next page, 8, a very repetitive slide for those that follow us the last few years, but extremely important to explain our differentiated debt capital structure. As we're currently in a capital-intensive period with our Katlan project, we expect our leverage ratio to stay around the 2.5x to 3x range, but with a relatively long weighted average life of debt of our target being consistently more than 5, ideally more than 6 years and a competitive, given both the sector and the country risk, weighted cost of debt of circa 7%.

But what gives us the ability to have this favorable debt profile? Clearly, the ownership of more than $1 billion worth of floater, the only one fully operational in the Med, the 18-year reserve life, one of the longest compared with our peers and more than $20 billion contracted top line through long-term gas contracts in Israel and Egypt with floor price and take-or-pay provisions running well into the late 30s.

But I want to clarify something for the avoidance of any doubt and despite the obvious strength of our assets and contracts, our medium-term leverage target is not to stay at 3x, but it is to bring it down to 2x. And we expect that after the completion of the Katlan project, this is the target of our company.

Finally, Page 9. Our guidance for the full year 2026 shouldn't surprise anyone. If we can move to next slide, please. Thank you. Those figures shouldn't surprise anyone as we're still aiming for a production of more than 130,000 barrels a day. Our cost base to stay at around $300 million with $200 million of royalties and our G&A at the usual $35 million range that hasn't really changed the last few years. On development CapEx, we expect progress to Katlan to continue as planned. So we keep our guidance at around $800 million, $850 million mark, but we revised both our exploration and decommissioning expenditure where we do see scope for even further reductions by the end of 2026.

Finally, we keep our net debt guidance at around the $3.3 billion mark, where given our ongoing projects, we are at peak net debt expected to soften as we progress and as the Katlan start-up and the Katlan project is completed in the beginning of 2027. Thank you all. Mathaios, back to you.

Thank you, Panos, and thank you for a great financial performance this year and beyond. Let me go through our operations. Next slide, please. I will start with HSE, which has been, as always, a very key focus for us, a very solid performance of our teams despite multiple operations and something that makes me extremely proud is to see Energean an independent that is able to do offshore operations even in war zones, deepwater in parallel drilling with a deepwater drilling rig, heavy lift operations, bringing in second oil train modules, all with exceptional HSE statistics. That gives everyone confidence to continue and invest more in Israel and, of course, in the other countries of operation.

Next, please. Group production, as we said before, is peaking at the moment at 182,000 barrels a day. When we listed the company back in 2018, we had set a target that we would be at 200,000 barrel a day business when all our projects were on stream. We are pretty close with the exception of the projects that have not performed so far like Cassiopea in Italy, but we're very close to the goal that we had set. 182,000 barrels a day consisting mostly from gas from our operations in Israel and Egypt, but oil plays a very big role also in our operations and especially with the oil prices as today being $100 a barrel, that plays a major role in our cash flow and operations.

Our outlook for 2026 remains stable. We reiterate our guidance that we will be around the 130,000 to 140,000 barrels a day mark, giving us solid financial results, as Panos alluded to earlier. Next one, please. I will focus on the second oil train because I think this was a very important operation for us, and this was a key target that we had discussed in previous results and investor calls. We have increased our oil production capacity to 31,000 barrels of oil a day.

We have already tested the system to 25,000 barrels a day, and we are gradually opening the wells -- the oil-rich wells that we have in Karish to test as much oil as we can or produce as much oil as we can. 32% of Israel revenues comes from liquids. And this is something that investors need to be aware because obviously, our focus is gas. But as I said earlier, oil plays a major role, and we are benefiting from the higher oil prices today, and we've averaged $88.4 a barrel in Q2 in Israel because of the strength of the oil price.

And another important statistic is that we are by far the largest oil producer in Israel with Karish producing more than 3x the oil production of Leviathan and Tamar combined. And we believe that there is a lot more that we can do and a lot more we can produce, and our technical team is totally focused on unlocking the oil potential of our assets offshore in Israel. We are the only ones that have the infrastructure to produce it, both from our existing licenses, but also from new licenses that we're targeting from the upcoming bid rounds.

And the infrastructure that we have built, the second oil train is a great example, gives us the opportunity to unlock value even from smaller accumulations that could be around our infrastructure. Next, please. But it's not only oil. Of course, our focus remains gas. We have announced a new gas sales and purchase agreement with Sorek, another $1.4 billion of secured revenue that brings our total contracted revenue to $22 billion over the next 2 decades.

It demonstrates the strength of the gas demand in Israel, which we see increasing. We see an incremental 10 bcm gas demand growth over the next 2 decades in the country. And we feel very comfortable to continue selling gas to our Israeli buyers. Of course, we are developing the Nitzana pipeline to take advantage of export opportunities, but Israel remains a very strong market for us and a very key focus for our operations and gas sales.

It is important to note that we have now all major new power stations contracted with us. Sorek, Kesem and Dalia II are all expected to be online around the end of the next decade. And we are looking to do a lot more in a country that despite the geopolitical challenges, remains a fantastic place to do business. Next, please. How will we fuel the growth and the future? Our Katlan development, a major development that we started and is getting very close to completion, has seen all the major milestones complete.

We have completed 2 subsea campaigns. We have installed 2 modules on the FPSO already, 2 heavy lift operations, very complex in parallel with live gas production and drilling next to these operations. We have now completed the 2 development wells, Athena and Zeus. We are remaining to finish the subsea campaign in the second half of '26. And we're targeting first gas from Athena and Zeus in the first half of '27, as we have indicated before.

Project remains on budget and on schedule. But as you can see from the map on this slide, we are working gradually from east to west. We started with Karish, Karish North. We're moving now to Athena and Zeus. We have Apollo and Hera, and we still have the remaining gas accumulations of Tanin to be developed in the future to continue selling gas to the Israeli and domestic markets and the international markets of the region.

Beyond this gas that we have already discovered and is already either developed, producing or remains undeveloped, ready to be produced. If I go to the next slide, please. There is the next phase of growth for us in Israel. Israel has a new exploration bid round that has been announced. You can see on this slide, the zones that are being offered. We are very keen to get new acreage. We know the geology very well, and we have the benefit of owning the infrastructure that allows us to develop oil and gas accumulations that will exist next to our FPSO, next to our pipelines. And this is a key focus for us for 2026 and '27, obviously.

Israel is an election period, but it is continuing a long-term energy strategy of being energy independent and an exporter of gas and energy to the region and being 1 of 2 operators in the country, Chevron being the other one, we are very keen to expand our production and exploration potential in the country. We believe that there's a lot more to be discovered in Israel and a lot more to be developed. And in the previous bid round, we were effectively excluded from getting any licenses given our position in the country.

Now that most of our gas has been sold, we are back into a proper competitive environment, and we look to get more licenses and expand our business in Israel. Next, I want to focus on -- next slide, please. I want to focus on Egypt. Egypt, as Panos said, has given us the highest ever year of collections. Our net receivables are down to about $75 million, the lowest ever. And this is a strategy that the country has followed and a strategy that has increased the confidence of us and other investors to invest in Egypt.

We are focused on our existing assets. And if I can go to the next slide, please, which as of today, have reached an agreement to merge the 3 concessions. This is something we've talked about over the past year. Abu Qir, Northeast El Amriya and Northeast Idku are being merged into one concession. Terms have now been agreed with EGPC. We are improving fiscal terms and gas prices. And on the back of these improved fiscal terms and the improved collections, we are committing $150 million to a new investment program in Egypt, a program that unlocks development projects that allow us to be confident that production can be doubled from the existing areas.

But beyond that, we're adding exploration acreage from the deep horizon of Abu Qir that was not part of our concession until now, where we see 4 Tcf of exploration potential, probably more than 4 Tcf of exploration potential. And this is sitting right next or under our existing platforms and pipelines and infrastructure, so very low development cost and very fast time to market. Egypt is a core country for Energean, a country that we look to invest more in our existing concessions and in new opportunities that we are evaluating.

Next, please. Beyond Egypt, obviously, the big exploration target for 2027 is Block 2 in Greece. It's a very big prospect, 1,000 square kilometers. I repeat what I've said in previous presentations. Together with Exxon and HELLENiQ, but with Energean and as the operator, we are planning to drill the well. The rig has been contracted.

We are targeting to spud the well in the second quarter, early second quarter of 2027. We're waiting for Stena to give us the final timetable, but we are very confident that we will be drilling a very high-impact well, obviously, with the risks of a deepwater frontier exploration well, but with a massive potential that we see over 9 Tcf of prospective gas resource that could bring a substantial new area of operation for us and our partners.

Next, I will focus very briefly on the remaining business operations. Can I have the next slide, please? Italy, operated production remained stable, about 8,000 to 9,000 barrels a day. We are looking to optimize production and increase cash flow and profitability, taking advantage, obviously, of high oil and European gas prices. In Greece, we will be focusing just on the Epsilon development. Prinos is reaching the end of its life, but Epsilon remains a key focus for us, 27 million barrels of 2P reserves in an OECD country with fantastic fiscal terms remains a very nice project for us.

Croatia, the Irena project development is continuously progressing. First half expected -- sorry, first gas expected in H1 '27. And we're adding now an additional exploration well in Izabela 9, small but extremely profitable operation in Croatia. And U.K. decommissioning, Garrow and Kilmar platforms have been safely removed. I repeat and I remind everyone, we are -- we've become the operators of our decommissioning projects to control costs.

And we are carrying tax losses of over GBP 700 million, which obviously we would look to monetize and use in the business environment of the U.K. North Sea. Next slide, please. I will finish with a couple of slides of the next one, the outlook and M&A. And I know that many of you have possibly seen leaks that have been in the market. I will not comment on leaks. So I would preempt any question about things that may or may not happen. But I will outline what our strategy is.

We remain focused on our core areas, which is the Mediterranean and West Africa. These are the countries that we know, we understand, we know how to operate. And given our deepwater operating capabilities, which I consider to be unique for a company of our size. We are targeting assets that either majors consider noncore or too small for them, but are too big for the independents and countries that are looking for new investors, companies that have the technical and financial capability to work in the deepwaters of those core countries.

Our goal is very clear. We want to diversify production. We want to have 3 pillars of production: Israel, Egypt and one in West Africa, all of a similar or equal weighting. We want to build at least a new core hub in the near future and increase our cash flow, which allows us, obviously, to increase our returns to shareholders. We remain totally focused on strict capital allocation. We want leverage, as Panos said, to be reduced, although I have to comment on leverage that with $22 billion of secured revenue in Israel, I feel pretty good about the strength of the balance sheet and our ability to service all our debt obligations.

And that, I think, is very obvious from the support we get, both from the bond markets and our banks and other private credit markets. Finally, and can I have the last slide, please, wrapping it all up. 2026 is a very strong year despite the geopolitical challenges. Full year production of 130,000 to 140,000 barrels a day with August over 180,000 barrels a day gives us the momentum we want to get into the last quarter of this year and achieve all our stated objectives.

Egypt, this for me, is extremely important. The signing of the 3 concessions into one. The new investment program unlocks a significant potential to double our Egyptian production and target substantial gas upside in a country that needs gas desperately. There's gas imports today in Egypt, both from Israel and from LNG FSRUs. And the focus of the Egyptian government is to increase domestic production, and that remains our focus as well.

In Israel, our Katlan project remains on target. That will be a step change in our EBITDAX given that Katlan doesn't have any royalties as Karish and -- has also the export rights that allow us to target higher-priced gas molecules that we can sell either locally or internationally. Block 2, as I said earlier, remains a big, I would call it, dream for Greece, but also a key target for us given the strength of the relationship with Exxon and the size of the prize, this remains a very big focus for us for 2027.

Deleveraging, strengthening the balance sheet, increasing cash flow, allowing us to return money to shareholders and being one of the biggest ones that is a very strong message to everyone that we remain focused on returns to our shareholders and strength of our business going forward. Last but not least, we're targeting transformational M&A opportunities in our existing core countries and West Africa. And as everybody remembers, for those that have followed us from day 1 when we started with the Greek asset, then with the Edison acquisition, then with the Karish acquisition, we have built this business from what was a 1,000 barrel a day business in Greece to what is today 180,000 barrels a day business, a business that we listed at GBP 4 in 2018, trading at over GBP 8 today and returning substantial amounts of dividends to shareholders.

Energean is entering the next cycle of growth from a position of strength with a very strong core business, delivering on the business plan, as you heard from Panos with our numbers, which are very strong, giving us the base to go into our next phase of growth. With that, I want to thank everybody for participating and open the floor to questions.

[Operator Instructions] Our first question comes from Werner Riding with Peel Hunt.

I have a question on capital allocation as peak CapEx rolls off next year when you move into a stronger phase of cash generation, what balance sheet or free cash flow milestones would you need to see before your thoughts move back to higher shareholder returns, which you've talked about are important. And related to that, just based on what you see your expectations, can you both reduce debt and pay a higher dividend in 2027?

Let me -- Mathaios, let me take that. Look, of course, the situation as it stands today makes us cautiously optimistic that we will be able to do that. We have a very solid operating cash flow starting from the top line and keeping the costs down in all our operations, and that applies in all our assets from the smallest in Italy down to the biggest in Israel. So with a little bit help and the tailwind from the very strong commodity prices, we're confident we're going to get there.

As you may have seen, and I think in our presentation, we have made the point, we are chasing and looking for a couple of transformational M&A opportunities. Those will have to get into the mix. We do like nonrecourse asset-based leverage to do that. Again, staying within and not breaching that 3x leverage position we are today. But within the bigger frame of a wider business, we will need to reevaluate anything.

Our commitment to returns credible returns, repetitive returns through dividends to our shareholders stays intact. I cannot right now tell you the specific timing that we will be getting those returns back to what we had used as shareholders. But given the continued geopolitical volatility, the capital intensity of Katlan currently and of course, our lookout for big M&A transactions, I think it will be premature to give you a specific date.

What I want to give you factually is that our existing assets will start getting into a much more solid free cash flow position from Q2 next year when Katlan will be behind us. And ceteris paribus, effectively the same assets right now would be providing enough cash flows for us to consider increasing both dividends and reducing the leverage.

Our next question comes from David Round with Stifel.

Firstly, on the power station contract, I mean, good to see that come in. My understanding was that the security situation in Israel over the last couple of years had slowed down a number of these awards. So is this something we can read into? Is this a sign that things are returning to normal and we might see a few more of these?

The second question, please, interested in Israel again, just how you intend to balance production from Karish and Katlan next year, i.e., before Nitzana comes on stream. Just wondering, I guess, is there a way to balance or to benefit from the higher liquids at Karish and then the better terms at Katlan at the same time? And is that how you're thinking about it?

Thanks for the questions, David. I travel to Israel very often. I'm there pretty much every month. The security situation that you mentioned is or has been a challenge, but life in Israel continues. Economy grows. The strength of the economy, you can see it from the results and the shekel. The demand for electricity continues to grow. There is a lot of additional electricity demand coming from data centers. And Israel is effectively an energy island, not connected to any other country. So it needs its own energy supply.

So the answer to your question is I don't see any slowdown in award of licenses for power stations. I do see, in fact, the opposite. I do see new licenses being awarded. I do see new demand coming, as I mentioned earlier, the 10 bcm demand growth in Israel that we forecast or others forecast for us as well is there, driven primarily from electricity demand. At the same time, Egypt has incremental demand, 120 million people and growing with existing production in Egypt declining needs gas coming from Israel and from other sources.

So overall, I don't see any signs of slowdown of gas demand in the region. And we haven't even started talking about exports of gas to Europe through the LNG terminals of Egypt. So the demand is not the issue. It's the resource, and that's why I focused a lot today on the new bid round and unlocking new potential. How do we plan to manage production? We plan to maximize sales of gas and obviously, through proper management of the reservoirs optimize the recovery from our wells.

We don't want to be pulling wells too hard. We don't want to see water coming into our wells. We've seen other projects in the region in Egypt that pulled wells very hard and ended up with gas decline rates because of water influx. So reservoir management is a top priority. Diversification of number of wells producing the gas we need is extremely important. We have 4 today. We are adding 2 more. These are big wells. Our wells are doing 300 million scfs a day each. These are world-class wells. We will be managing the reservoirs.

Our priority, obviously, is to maximize cash flow and returns, but beyond that, we want to optimize reservoir management because with the wrong management of the reservoir, there's going to be no cash flow. So that is our top priority. How we continue to produce the FPSO at the maximum capacity, fill the shoulder months because that is the only weakness of the market there. We have the slow months of the spring and the fall where we don't have the same demand that we have in the summer.

In the summer, even if we had double the gas capacity in the FPSO, we could sell it to the region. So the constraint in the summer is the capacity of the FPSO and the target is to maximize sales in the slow months.

Our next question comes from Alice Winograd with Morgan Stanley.

Congratulations on results. First on the Egypt concession merger, there's a couple of things I was hoping you might be able to elaborate on, please. First, what do you expect can be the immediate improvement to the existing business in the region after this becomes effective? You alluded to better fiscal terms, higher gas price. So is there anything you can guide us on that?

And second, there is also a reference of potential to be unlocked there in terms of future growth and resources in the region. So how would you frame this underpins either growth or longevity for the Energean production more generally. So for instance, under what time line can this be unlocked? And will this support more near-term growth or longer-term potential, if I can put it like that?

And second, just on your comments about M&A. You apparently have continued interest in West Africa even after the Angola deal fell through. And I guess you alluded to this potentially having a similar weighting in the mix over time as there is for Israel and Egypt. So what is your view with regards to increasing commodity exposure, right, in the business because, of course, Israel and Egypt today have different dynamics there in terms of pricing.

Thank you, Alice. Great questions. Egypt terms, unfortunately, I can't give details of the gas prices which are substantially higher than the ones we have today. I remind you, we are selling all our gas to EGAS and EGPC, so it's all government contracts. Improved fiscal terms come from combining the cost pool of Abu Qir with NEA/NI, which means that we can offset the $250 million investment that was made in NEA/NI from our Abu Qir production, which is a very old and mature production. And that improves the level of the cost pool that we have to depreciate.

We will guide the market when we are ready and we're able to announce those terms. I have to make sure that everybody is clear. These are terms that have been agreed, but they remain subject to the approval by the Egyptian parliament, and that should take a couple of months until they become effective from, I hope, 1st of January 2027.

The time line and what it unlocks. First of all, it extends the life of Abu Qir, which otherwise would be ending its life around the beginning of the next decade. And that gives us more reserves because we have a longer tail from Abu Qir. We stated that we are targeting to double production from Abu Qir, and this is from very well-defined targets that the team has identified, which are either sidetracks from existing wells or new wells, which would be classified as exploration wells, but with a very high probability of success next to infrastructure.

So very easy to monetize. The investment program of $150 million, to answer your question, is committed over the next 5 years, and that's the horizon where we see gradually the production increasing. But the big prize is not just the production increase. The big prize is the exploration potential. It's a deep horizon of Abu Qir, where I mentioned earlier, we see more than 3 Tcf of potential. We will be shooting new seismic and we will be planning to drill a well.

That is more risky, obviously, we will be looking for partners there and that would give the equivalent of another Karish if it comes in. I remind you, Karish and Tanin was 3.5 Tcf. So we're talking about another Israel potentially sitting under our existing infrastructure without the need to invest billions of dollars to unlock it. So big focus on the exploration and Egypt upside. Abu Qir will increase its production. But if we are looking for the transformational organic growth opportunities, this potential sitting next to infrastructure is a very big focus for us going forward.

The M&A in West Africa, which was your last question, obviously, yes, you're right, the Angola deal fell through. I think that this is a sign of the times where with the high commodity prices, we do see a lot more local players wanting to play a role. But deepwater is not an easy place to operate. You need to know what you're doing, you need to have capabilities. You need to have the ability to finance because these projects are requiring a lot of money and a lot of technical capabilities.

So the mistake that should be avoided by the West African countries, in my view, is to end with operators that don't have the capabilities to drill wells or fund new developments because then they will end up with stranded gas and oil and a dream to produce more. So deepwater operating capabilities and funding capabilities are extremely important, and that's what we bring to the table.

So we do see opportunities in West Africa. We do see opportunities from producing assets. We do see opportunities also from discovered undeveloped resources, which is, if you want, our specialty. This is exactly what we did in Israel. So if you take the Israel model, where we took over in 2016, Karish. Karish was -- Karish and Tanin 3.5 Tcf undeveloped. Nobody was -- very few people were interested because it was too small for the majors, but it was too big for the independents.

Similar models we are chasing in West Africa. And we do see a lot of opportunities there with obviously the challenges of each country that we need to navigate. But on this, I think if we are able to navigate production development, drilling, deepwater complex operations in the middle of a war zone, I think we're pretty well positioned to navigate the complexities of the West African country.

Our next question comes from James Carmichael with Berenberg.

Just a couple of quick ones. I think you answered some of this when speaking today. But I guess I was just looking at the read-through sort of gas price in the Sorek agreement, and it looks a little bit higher than maybe we would have expected based on the previous sort of average value. Just wondering if there's anything fundamental that's sort of changed in the Israeli market since you last signed a contract and how you expect pricing to evolve?

I guess you sort of touched on the higher demand outlook. And then just looking at the 2028 notes refinancing, just wondering whether the expectation should be roll that through with conventional bonds or if there are any other structures that you're thinking about bringing on to the balance sheet.

I'll take the gas price, Panos will answer the refinancing. Gas price in Israel is gradually increasing. Obviously, not as much as in Europe. And the benefit that Israel has is that through the long-term contracts that we brought to the market, there's a lot of stability in the energy prices. There's no energy price inflation. They don't suffer from the peaks of gas prices that we see in Europe or in the U.S. or other places. And that allows the economy to be strong and resilient.

We have a very different model when we agree to sign long-term contracts. Obviously, we lock ourselves into nearly fixed price contracts, but that gives us the stability of cash flow that I mentioned earlier, the $22 billion of secured revenue that allow us to have a solid base business. We do see prices ticking higher. But obviously, this is linked to inflation. This is linked to the general environment in the competitive environment in Israel. But I don't see prices shooting up through the roof because of the nature of those contracts.

But we do see higher prices. And the target in the next phase of contracts is to bring our contract prices closer to the export markets that everybody else is enjoying given that our next phase of production does not have the export limits that we talked about earlier and allow us to get even higher gas prices. But for us, this is a long-term game. This is not a spot take advantage of gas prices today. Prices will go up, will go down. We are long-term focused, and I'll let Panos talk about the refinancing of the bonds.

Yes. Thank you, Mathaios. Look, on the refinance, this is now getting into our radars. We have never ambushed or surprised when it comes to our debt management. So now we're getting to that 18-month mark. Our bondholders and our banks, we're talking to them on a regular basis. We don't want to effectively ambush anyone with what we do with our debt profile. There is a make-whole in those notes that is dropping a lot from the start of 2027. We have a lot of options. The secondary -- the current bonds in the secondary market are trading very well despite the volatility in the market.

We have a good presence to the bond markets, both for the Israeli bonds and the PLC bonds. So we don't expect any drama and we don't expect any excitement around that for us is a regular tapping of the markets. We will explore other avenues if those are more cost competitive. I think that will benefit everyone, even the existing bondholders if there is another route. But yes, this is key for us, and we expect anywhere between the next 3 to 6 months, those bonds to be refinanced again with a usual type of 7- to 10-year tenure, pushing that out to the late 2030s.

We do have the capacity, the new gas contracts that carry the same provisions, the same protections allow us to continue printing long-term debt that fits our assets and, of course, our balance sheet profile.

Our next question comes from Mark Wilson from Jefferies. [Operator Instructions]

Excellent results, considering everything is going on, very impressive. My first question was going to be on Israel pricing, but you've answered that. And so let me just end with regarding M&A opportunities and the manner of execution of them. It does seem to me that the big one big change in the sector in the past 1, maybe 2 years is the availability of credit for such opportunities. And just a few years ago, for example, reserve-based lending facilities almost disappeared from the market.

So I just wonder if you could expand on your commentary regarding that side of things for some of these opportunities that may be available out there, some of which are obviously quite large size.

If I heard you correctly because the line wasn't clear. But if the question was about funding sources, about those type of M&A opportunities, yes, you're right. The market and the debt capital markets and the credit capacity seems to be pretty enhanced and favorable currently. Of course, all the projects that we are looking have this similar long-term profile that we have and we like and we prefer to manage. Currently, we will focus mostly on nonrecourse debt and try to max this out when it comes to specific target. That is always a priority.

And then we will see if and at what cost we can fund the rest. The current environment is not only the credit availability, but it provides a very positive cash flow for any asset you agree to buy. That means the current price environment allows for a nice positive carry in whatever M&A transaction you do. So it seems that whatever price you assume as a lock box date of X by the time you close, if -- especially if it is a producing asset, ultimately, the final money that you need to pay is less than the headline price.

So the combination of those makes us pretty confident that we will not ambush anyone, meaning specifically the shareholders with any surprise tap, but -- and that's the priority. And the other metric that we will always comply with is that we will not disturb the current leverage position of the company as well as the medium targets when it comes to dropping that leverage.

So we will definitely not do something to increase the current leverage ratios even at the group level. And it won't disturb the medium-term targets to reduce that to the 2x we explained. But yes, the credit availability is good. That makes M&A more executable. And most importantly, the current price environment allows us to factor in a better closing price to the one -- to the headline one agreed.

Our next question is a written question from Thomas Streeter with Straits Research. With oil and gas supply uncertainty from the Middle East, are you seeing more exploration and development activity in the Greater Mediterranean region? If so, is this impacting pricing for equipment and service providers for Energean?

The straight answer is no. What we do see is increased level of activity in the Mediterranean. And indeed, we are drilling a well in Greece. There is developments being discussed in Cyprus. We have our big projects in Israel. Egypt has increased demand. But the prices that we see from service providers, and I'm talking about drilling rigs, heavy lift vessels and related service and equipment is more related to the global demand for oil and gas services. And that is what is affecting the availability of drilling rigs and the pricing.

The pricing that we've seen for the drilling rig in Greece coming up in 2027 is similar to what we saw last year. So we haven't seen a substantial or a material increase in the levels of activity. These are deepwater projects and not everybody can go and drill deepwater wells in 2,000 meters of water depth. So the projects are in the hands of very few companies, the majors and us. We are the only ones that have drilled wells in Israel in the last, I think, 5 years now.

So there isn't that much activity to drive prices, specifically in the Mediterranean. The global situation is a different story, but not because of activity in the Mediterranean.

And a follow-up from Thomas Streeter with Straits Research. As you see it, what is driving the long-term electricity growth in Israel? The country is a technology hub. Are we seeing data centers construction there as part of the electricity demand growth? Does this impact your marketing strategy in any way? Or are you limited to selling gas into Israel's grid?

Yes, the demand is increasing primarily because of the growth of the economy, because of what is happening in the tech sector and because of the new drive for demand centers in country, which, of course, Israel wants data centers to be stationed in Israel also for security reasons. So the combination of all 3, and if you add on top of that, the lack of wind because Israel is a country that doesn't have wind. So there's very limited renewable potential from wind.

Solar is increasing, but that cannot be a replacement for the gas. It does -- we do see incremental -- in the mix, we see incremental electricity supply from solar, but that's it. So does it change our marketing strategy? As I said earlier, we have been selling to Israel, and we are very confident and happy to continue selling to Israeli buyers as long as the prices that we see in the next phase of our contracts are in line with the regional gas prices that we see in Egypt and elsewhere.

So we want to sell gas to the best buyers. We don't discriminate against buyers. We don't want to be taking unnecessary credit risk. So credit quality is very important. We like to be paid on time, and we like to know our customers. And this is something that is very comfortable for us in Israel.

So the next phase of our marketing is to cover the Israeli needs because obviously, that remains a priority, but also take advantage of the regional higher gas prices that we see in Egypt and potentially also from the Southeast European market.

And a final written question from Rohan Vohra from Aegon AM. How are you structuring the Egypt concession merger to avoid the repeat buildup of receivables? And will the new arrangement include any payment security mechanisms? Can you confirm the current drilling status of the Athena and Zeus wells? And what are the key milestones between now and first gas in H1 2027?

There's no security if the question is about a potential LC or something like that. It is the confidence in the Egyptian market. We are -- we've been operating in Egypt for over 15 years. We've seen all the cycles. Cycles go up and down, and you have to be confident and you have to be supportive of the country that you do business regardless of the challenges. This is our DNA. We are committed to Israel. We're committed to Egypt. We are committed to Greece. We are committed to the core countries that give us the opportunity to develop our assets.

And even in the tough times, even when receivables were at peaks, we always stayed committed to Egypt and in good faith, negotiated with the government and EGPC and EGAS ways to mitigate the challenges. So I don't have a magic solution, but I have a lot of confidence, especially in the new administration, the new minister and the policy of the President to maintain this record of no overdues to the industry.

This is not just an Energean phenomenon. This is also -- this is covering the rest of the market. So we remain confident without any specific safety mechanism. Could you repeat the second question, please?

Yes. Can you confirm the current drilling status of the Athena and Zeus wells? Yes, and what are the key milestones between now and first gas?

Thank you. Zeus and Athena have been completed. And in the next, I would say, days, if not weeks, the rig will be released. So everything has gone according to plan, and the wells will be hooked up with the remaining production platforms -- production facilities. There are obviously more milestones. We have other units that will allow us to continue the project. Nothing related to the subsurface. It's all facilities and equipment that are being developed in various parts of the world by Technip, our major contractor.

As I said earlier, first half 2027, we will see gas flowing from Athena and Zeus, and then we will move to the other wells in the next phase of development of Katlan. I can give a lot of technical details or I can have a separate call, but I don't think anybody is interested in specific details of the technical session of Katlan, but happy to take the question offline in more details.

Thank you. That is all the questions that we have for now. This concludes today's call. Thank you, everyone, for joining. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to Energean's Full Year 2025 Results Call. [Operator Instructions] I will now hand over to Energean's CEO, Mathaios Rigas. Please go ahead.

Good morning, and thank you all for joining us for our full year results call. I want to begin, as I always do, by acknowledging the context in which this call is being taking place and the situation that is evolving around us. The broader Middle East conflict and the regional escalation that we're watching is obviously very serious. And the first thing that I want to say is that our thoughts are with the people of the region, our colleagues, our partners and all the communities where we operate. Safety remains and will always remain the first priority for Energean.

Against this, I want to be clear today about 3 things before we get into the numbers and before we get into the results, which is the main purpose of the presentation. I will talk about where we stand operationally. I will talk about how financially resilient we are and why the long-term case of Energean remains intact in my view. As you all know, when this war started about 20 days ago, we were instructed by the Ministry of Energy and Infrastructure of Israel to suspend production and all the activities of the Energean Power FPSO until further notice. And we acted immediately as we all do. And as I said earlier, the safety of our people is our highest priority, and we fully supported the decision of the Ministry because that is keeping everybody safe.

For those of you that have followed us and know our story from last year, you know that we've been there before. So we're managing a situation that we've managed before. In June of last year, as you remember, the Ministry ordered us to shut down and 12 days later, they gave us the green light to restart. It took us 24 to 48 hours to get back up to full production and ended up the year at the higher end of our 2025 guidance. Our operational team, the people that run the FPSO, run onshore and offshore operations are in the best position to restart our production and get us back online as soon as we get the green light. We've done it before. We know how to do it, and we are standing by ready to restart as soon as we get back the green light to restart.

The one thing I can't tell you because I will not speculate about how long this is going to take is that we're in constant communication with both the Ministry of Defense and the Ministry of Energy, and we are all aligned about the importance of restarting this operation, and we will restart very soon is my expectation.

The second point is the obvious question, how is this affecting us as a business and how resilient we are. Let me be very specific. I'll give you a very simple number that frames the discussion. Our monthly running costs in Israel are $10 million. That's the cost of operating the FPSO, our people, our staff. And of course, on top of that, we have the financial costs. But we are sitting on more than $300 million of liquidity. All our debt service reserve accounts are filled. And most importantly, our finance team did a phenomenal job to refinance all our debt facilities, so we have no debt maturities ahead of us. So there's no financial pressure. Of course, it hurts not to produce from Israel. But in the bigger scheme of things and with oil and gas in the ground, we will produce this oil and gas as soon as we get the green light.

Panos will obviously give you the details, but beyond Israel, all other production facilities in Egypt, in Italy, Greece, which is back online at the moment. We are benefiting from the higher commodity prices, and that is strengthening significantly the cash flow of what I call the international business outside of Israel. Another obvious question that people are asking us and are worried about is what's happening with our contracts and our buyers. I refer to the exact same situation that we went through before. We were in a situation like this last year and force majeure applies. We have no take-or-pay provisions, and our buyers are serving the market with alternative sources. And as soon as we get online, we will start selling gas to them without any financial burden.

Next important point and question that people are asking is what is happening with our growth and our projects. We find ourselves in a very fortunate situation that Katlan, our major investment is that all the key activities are happening outside of Israel for the time being. So we see no impact so far on the schedule. We remain confident that Katlan will be on stream in the first half of '27. Again, the caveat that this conflict ends in the near future, and we will be able to get back on track to drill the wells that we planned in May, bring the construction vessels in May and keep the project going. If I can have the first slide, please.

Now despite the challenges that we faced in 2025, we maintained group production at 154,000 barrels a day, which is the upper end of our guidance. We were able to recover from the shutdown we had last year and get back up to an average of 154,000. Our EBITDAX of $1.1 billion, our operating cash flow of similar levels and the strength of our contracts, I remind everyone, we have $20 billion worth of gas contracts signed for the next 15 years, gives us a very strong base to work from and be confident about the resilience of this business for the future. I mentioned earlier about our balance sheet. Panos will give you more details. But I repeat, no pressure at the moment from any front on Energean. So we're very confident that as soon as this is over, we go back into normal operations.

Last, before we turn the floor to Panos to go to take you through the numbers, I want to talk about our investment thesis and growth because that is a key focus for us for the year to come. Two very important points. One -- or three very important points. One, in our existing business in Egypt, we are working very closely with the government to complete the merger of the three concessions that will allow us to invest more in the country. We believe in Egypt. We believe it's a great place to produce oil and gas. The country needs every drop of oil and gas it can produce, and we have an excellent relationship with the government that is making every effort they can to support us on all fronts, and we'll go into details later.

Two, in Greece, we are -- we completed in March, the farmout of the Exxon -- to Exxon of our wells in Block 2, and this is a fantastic prospect. It's an exploration well that we will drill in February of '27 that has great prospectivity and very limited financial impact on us in a no success case. And last but not least, and I'll close with this. We are continuing to grow. We said we will go to West Africa, and we delivered on what we said as we always do. You all know we signed a deal to buy Block 14, the operated position of Chevron in Angola, our first project in West Africa. We needed and we said we would diversify and add a third production leg for our business, and we did it. We're working now to get to closing. It's a great asset that allows us to start from a very nice base in Angola, our expansion in West Africa. So overall, as I said in the beginning, I feel that we are in the best position to manage this crisis. We've done it before. We know how to manage a crisis like this. The team -- the operating team is in a great position to shut down, but most importantly, to restart as soon as possible. We are financially strong, and we're totally focused on growth and managing all our balance sheet and liabilities in the future. So I remain confident and optimistic, obviously, in a very challenging situation, but this is what this management is built to do, manage challenges and continue the growth of the business as we've always done.

With this, let me hand over to Panos to take us through the results of 2025.

Thank you, Mathaios. Good morning from me as well. Moving to Slide 5, please. 2025 was a mixed year with a challenging first 6 months until June when our Karish field was shut in for a few weeks, but followed by a record second half of the year when the company recorded average production of more than 170,000 barrels a day, with August being a record month with 180,000 barrels a day. As a result, the total production came in just a bit higher of 2024 at 51.5 million barrels of oil equivalent, with higher gas production offsetting the lower oil production, which was affected by the Rospo oil field in Italy, shutdown. Total revenue came in flat compared to 2024, just below $1.8 billion with higher gas production and prices achieved as well as insurance proceeds we had linked to the Rospo oil incident, offsetting the lower oil production and prices compared to 2024.

Moving to Slide 6. I would like to highlight a couple more KPIs that we always record and guide. Cash cost of production and G&A flat, which is actually, I have to say, a modest reduction if adjusted for the weakness of the dollar versus our sterling, euro and shekel OpEx in 2025. Adjusted EBITDAX came in just below 2024 figure at $1.117 billion. The final P&L result, however, as flagged in our January trading update, came in at $250 million loss, effectively being the impact of our Cassiopea gas field impairment, which including the annual depreciation on the field plus the adjustment of the deferred tax asset had an impact of circa $550 million. So if adjusted with that, the profitability of the business would have been almost double than last year.

CapEx, development CapEx specifically came in 20% lower than 2024, but still pretty high, and we want it to be high because that means that the Katlan project is going as planned. And our OpEx came in at $60 million at the lower end of the guidance, reflecting better performance of decommissioning costs and the ability of the teams, respective teams to keep on deferring decommissioning.

Moving to Slide 7, please. A familiar slide for people that follow our presentations, but always an important one to highlight the commercial structure of our revenues, where the long-term gas contracts in Israel and Egypt have a hard floor price mechanism, protecting our base revenues and profitability when oil and gas prices are low but then are complemented by circa 20% of our total production being priced off Brent and PSV, representing 40% of our revenue stream in 2024 and 30% in 2025. We expect if prices remain as they are now during the 2026, and I'm not talking about $110 barrels. We have adjusted our profiles at around $80 to $85 for the full year. We do expect these open market barrels of our total production to make more than 50% of the total revenue of the year.

Slide 8, please. So in a very challenging and volatile environment, as Mathaios mentioned, for our sector and especially in the region we operate, our capital structure provides us enough flexibility and time to manage both our liquidity and capital allocation at the most optimal way. On the back of our 18-year reserve life and more than $20 billion of gas contracts expanding well into the late 2030s, we have a weighted average maturity of other loans of around 6 years and a weighted average cost of debt of 7%. But most importantly, no debt maturity until 2028. Our net debt position for the year came in $50 million higher than guided at $3.25 billion but that was the result of effectively a slower recoverability of our EGPC receivables in the year versus what we were expecting. However, I have to flag here that the progress has been very good since January, and we are getting those receivables down. And of course, our euro and shekel-denominated credit lines and notes that given the dollar weakness, we had an impact of around $40 million linked to that effect. But I have to flag this is unrealized since maturity have not happened yet.

Closing with next slide, Slide 9, please. The guidance for the year, where we will need to spend our guidance for Israeli linked figures. The rest of the numbers are pretty much in line with what we had guided earlier in the year in January with the rest of the portfolio of the company still guided at mid-30s, 32,000 to 36,000 barrels a day. Our OpEx, we expect it to stay at around the $190 million or the $200 million mark for the rest of the portfolio. Our cash G&A, as you have seen years now, we are pretty much consistent around the $35 million mark. On the capital expenditure, we don't expect investment to go more than $100 million and our decommissioning to continue as always guided at around $60 million per annum and a very light exploration expenditure, especially given that we are carried to the big wells that Mathaios mentioned. Our net debt, again, this is a very provisional number at around $3.2 billion to $3.3 billion as guided initially. This is a very odd position to be as a CFO, not provide guidance on some figures. Obviously, we have run a number of sensitivities, and I would like to share those let's call it, a soft guidance to our investors and analysts.

So roughly for each month of starting production, you can assume roughly 10,000 -- 9,000 to 10,000 barrels a day reduction in the initial guidance. The OpEx line for the time being, you should consider to be similar because we're keeping the facilities ready to turn on within 24 to 48 hours, reflecting what Mathaios said that our expectation is that this is a short-term event. And the same applies to the Katlan CapEx. For the time being, all projects are on time and they haven't been affected. Of course, we do have the flexibility to postpone that, and we're keeping a close eye. Technical operations and HSE, of course, have the first -- they will need to advise us on that. But for the time being, we are on track on all our projects.

Mathaios, back to you.

Thank you. Let's move to the next slide, please. Very quickly, a high-level comment on HSE, which is extremely important and even more important these days. All our ratios and all our KPIs have improved in '25. Even our emissions came down by 11%. I know this is not the priority clearly when we have a war going on, but we remain committed to our sustainability, the sustainability of this business.

Next one, please. Production shows -- I think this slide shows the resilience of our production, 154,000 barrels of average production in '25, a very strong start of the year with 155,000 and it was going to get higher. Third and fourth quarter, strongest ever, third and fourth quarter production in 2025, reflecting the strong operational performance of the FPSO and all the other assets, but also the better understanding of the market and stronger sales in the shoulder months to fill in the gaps of the lower demand months in Israel.

Next one, please. This is, for me, probably one of the most important slides, and I'm talking about reserves because this is what this business is about. We're sitting on 1 billion barrels of 2P reserves across all our fields and 18-year reserve life, which is obviously matched with the gas contracts we have in Israel. On top of that, close to 200 million barrels of 2C resources that we're working with our technical team and our commercial teams to convert to 2P. And most importantly, in this existing portfolio, close to 2.6 billion barrels of oil equivalent of STOIIP or gas in place of prospective resources that we are targeting to move through the drill bit into 2C and 2P. So this is a great portfolio to be handling.

And a lot of people ask me if I'm happy that we have kept the portfolio following the Carlisle fallout. And the answer is absolutely yes because there is huge upside in our existing business, regardless of M&A, regardless of any new transactions. We have gas to discover in Egypt under our platforms, gas to discover in Greece with Block 2, more gas to discover in our existing other assets in Israel, oil to be produced and discovered or developed in Italy. So it's a portfolio full of opportunities without the need for any additional M&A, and all of them are next to existing infrastructure. And that's what makes it a very exciting portfolio to be managing. Next, please.

A bit of a deeper dive in Israel. I will not repeat what I said before on the highlights. But in 2025, we added another $4 billion of new long-term gas contracts, getting our total to over $20 billion of contracted revenue. Katlan is, as we mentioned earlier, on track. I repeat that all the works at the moment are being done outside of Israel. May is the critical month for our operations. But as Panos said, we have the flexibility to push things back, and this is the benefit of being an operator. I remind everyone that we are in this unique situation of being an independent with a deepwater operating capability. That's what we intend to continue to do because that gives us total control over our projects, over how we want to spend our CapEx, how we deal with our contractors and how we manage financial liabilities on our balance sheet. And this has been our strategy from day 1. This is what we did in Angola. I'll come to Angola in a minute. But this is what gives us the control of our destiny in our life. Next, please.

Egypt is a country that, as I said earlier, I really like and I really trust despite the challenges, and there are challenges there that are increasing because of the energy crisis that we're going through at the moment. But the relationship with the government is excellent. We're working very closely with EGAS, EGPC, the Ministry and all our stakeholders there to complete the merger of the 3 concessions. This unlocks significant value, and this reduces our G&A and admin costs, giving us the opportunity to invest more. We see a lot of potential sitting under the Abu Qir platform, and this is probably the fastest gas to market that Egypt can get in a period where Egypt needs a lot of gas, as you can imagine, especially with what's going on with the LNG bases around the world. Beyond Abu Qir, which has showed a very stable production and continues to produce above expectations.

We have the other project that we will ask -- go to the next slide, please. Ebn, we're drilling our first wells in 2026, a partnership with INA from Croatia. Wells will be drilled. We are targeting close to 270 million barrels of STOIIP volumes onshore, low-cost wells, very fast to develop, a very great -- a very nice project to add to our Egyptian team's production in 2026. Obviously exploration, obviously with the risks of exploration, but one that if it works, it can turn into cash flow very quickly.

Next, please. By group, Italy, Greece, Croatia and the U.K., I still consider the U.K., Europe. A production base of 12,000 barrels a day from all the assets, obviously benefiting from the higher commodity prices today, strong cash flow. The Irena project in Croatia is expected to come on stream first half of '27 that will produce gas in Europe. And with the gas prices we're seeing today, this is a fantastic opportunity to invest, not a huge one like Karish, obviously, but a very nice addition to our European production.

The big one, of course, that we're expecting, and this is one that we're looking forward to, next slide, please, is Block 2 in Greece, where we have formed a very strong alliance with Exxon that farmed into our well, took a 60% working interest. Energean remains the operator, and we're very proud that Exxon trusts Energean to be the operator of this exploration well, which is a testament to our operating capabilities in the deepwaters of the East Mediterranean. We will drill the well in early '27. As Panos said, it's a well that will be carried, and we have already received all our past costs, targeting close to 10 Tcf of gas in the middle of 2 countries that need a lot of gas, both Italy and Greece and especially with what's going on now, these are even more important projects. We got the approvals from the Greek government in record time. In November, we signed the deal. Deal that was witnessed by Secretary Wright and Secretary Burgam of the United States, showing the support that this project has from the U.S. administration.

Next, please. And I will close with the new area, the strategic entry offshore Angola. In Block 14, we signed an agreement with Chevron to take over the 31% operated position they had in the block, a block that has today about 28 million barrels is producing net working interest, 13,000 barrels for the percentage that we're buying. Cash flowing close to $90 million. These are all based on old prices, obviously. And most importantly, it gives us the strong base to create and start our expansion into Africa, diversifying from the Med and getting a new a new area of operation that we believe has huge potential because we start always with the rocks. We start with the subsurface. We believe there is a lot of upside in the PKBB project in Angola in Block 14. We will be working on that.

And this is in line with our strategy that I've outlined many times, which is to go after projects that are immaterial or below the radar screen of the majors, look for opportunities to cut costs, look for opportunities to develop assets next to existing infrastructure. This is exactly what we did in Israel. We took over Karish, developed it and started to add assets next to it like Katlan and later Tanin. This is exactly what we did with Egypt. We took over Abu Qir and then added NEA/NI with a subsea tieback to increase and stabilize production. This is exactly what we will do in Angola. So we have the unique position of being a deepwater operator, independent with deepwater operating capabilities, targeting projects that are below the radar screen of the majors. It's very complementary for the country. It's very complementary for our relationships with the majors like Chevron and Exxon in Greece. And I believe that this gives us a great base to add more into our portfolio going forward in West Africa.

Next one, I will hand back to Panos because this is a deal that has been led by him and the M&A team to walk you through next steps and what we plan to do with the asset.

All right. Thank you, Mathaios. On Block 14, the transaction highlights are $260 million base consideration with a lockbox date of 1st January 2026. Transaction is subject to the usual government regulatory approval and waiver of the preemption rights. The target closing is within 2026. We hope that we will be able to achieve that as soon as possible. And fundraise, the funding of this transaction expected to be a combination of the nonrecourse reserve-based loan and the available group liquidity.

As Mathaios said, we are very excited about the potential of both our new country entry and specifically Block 14 as in addition to the roughly 30 million barrels we're acquiring an asset that is currently doing around 13,000 barrels a day. The $120 million of EBITDAX for 2025 at an average oil price of just above $60 and around $90 million of operating cash flow. We have the PKBB development, near infrastructure development where we would like or we're aiming to start subject, of course, to the approval and alignment with our new partners, a 5-well initial development where we can see a 6,000 barrels a day additional production and further material upside.

The whole area of that PKBB area is around 30 million barrels of 2P reserves with 1 well drilled so far and producing 72 million barrels of 2C resources and 600 million barrels of gross STOIIP. So the potential are great. We can't wait to get our hands on the asset and make that development a little bit more ambitious. Of course, there are additional opportunities around Block 14 and the existing infrastructure is what makes those very economic. And as Mathaios said, we will try to apply what we've learned or what we are doing currently in Israel, where we do have the base infrastructure in place, and that allows us to monetize different accumulations around our FPSO very quickly and very profitably.

We expect to do the same in Block 14, where we have 2 appraised fields, the Malanze and Lucapa within Block 14, and this is a very simple subsea tieback development. And of course, two additional discoveries, which we would like to appraise as soon as possible with our partners. Energean is well qualified to apply its experience and track record as a deepwater operator in East Med now into West Africa. And this acquisition, as we have mentioned in the past, provides a foothold for further inorganic growth in the region. We continue seeking for opportunities. And we hope and trust you will hear from us very soon for further exciting new transactions, but always within the discipline and the capital allocation priorities we have already communicated to our shareholders. Mathaios, back to you.

Thank you. And let's get to the final slide, what to look for. Obviously, you -- we all want a safe restart of production operations in Israel, and that's our top focus and continuing to produce from the rest of the portfolio. We focus on value, value created through the deal that we are negotiating with the Egyptian authorities that will allow us to invest more in the country that we really like and trust.

We look to complete the Katlan project during 2026 and be able to start in the first half of 2027 without any interruption. We look for exploration growth in our existing portfolio. I mentioned earlier the wells that are planned to be drilled in the next 18 months, both in Egypt and Greece. We look for the completion of our entry into Angola, adding another 12 to 13 barrels of existing production, increasing production in West Africa and building our presence there in the same way we build it in the Mediterranean. All of that, as Panos said, with a very strict capital discipline. We recognize that the oil price is where it is today and any deal has to be very value accretive to our shareholders. So we will do only deals that add value to us and to our shareholders that are in line with our trajectory of growth, but also deleveraging, which is very firmly focused in our minds to bring our leverage ratios down to where we have communicated before that our targets are going to be.

Closing and before I open for questions, I want to say just a personal note. Energean was built for this exact environment that we're going through right now. We've chosen to operate in challenging geopolitical environments, not because we like to be involved in wars, but that's where oil and gas exists. And that is what we know very well how to handle. We know how to handle above surface issues. We know how to navigate these challenging times. We've done it before, and we will continue to operate safely and making sure that all our people are safe, our facilities are safe, and we maximize value for all our shareholders as we've done from the day of our IPO all the way today.

With that, I want to thank you for being with us today and open the floor to questions.

[Operator Instructions] Our first question comes from Dave Round with Stifel.

A couple of questions from me, please. Firstly, you mentioned a couple of times that Karish could be a short-term event. I'm just wondering if there are any discussions ongoing in the background that give you confidence that will be the case or whether it's just the fact you've been in this situation before and you've sort of seen the situation and that kind of gives you confidence that with that situation that things will open up.

The second one was on Katlan, please. I mean, comments that it remains on track, which is great. I suppose I'm just slightly taking the other side, and I appreciate it's not your base case. But under what circumstances might you choose to slow that down? And to what extent would you be able to slow it down if you wanted to?

Thank you for the question, David. Why am I confident? You're right. We've been there before. We've seen it, and we've seen how situations like this, one day you get a green light that says we are now safe to restart. So this is not just about the wider geopolitics and what is going on is about the confidence that the IDF and the security services have in Israel that they can protect this very strategic asset for the country. So I'm not going to speculate. I don't think anybody in this planet can predict when this escalation and this war is going to be over. But what I do know is that the region needs so much gas. So the moment that people feel that it is safe to restart, we will restart immediately. And this is the message that we're getting from the government of Israel because simply everybody needs the gas.

On your second question about Katlan, we are in a very fortunate situation that, as I said earlier, all the work streams at the moment are happening outside of Israel. The critical month, as I said, is May because that is when we are scheduled to have drilling rigs and construction vessels in Israel. We're working very closely with all the contractors that have those rigs and construction vessels to make sure that they are comfortable also to operate in this environment. Today, there is activity going on in Israel, tankers and ships go in and out of the Port of Haifa every day to bring fuel, supplies and all the rest. So operations keep going.

And this is something that, again, that we will work very closely with the ministers, the ministries in Israel to make sure that everything is done safely for people and assets. If this war continues beyond May, then we have the choice to delay things, push things back. And of course, that will have an impact on the schedule of Katlan. So we were very careful to state that as of today and based on the scenario that we go back to a more normal situation in the next 3 to 4 weeks, then we see no schedule impact on Katlan. If this extends, then obviously, we will advise the market and give proper guidance as soon as we know.

[Operator Instructions] At this point, there are no more questions. I will now hand back over to Mathaios Rigas for closing remarks.

Thank you. It's surprising not to have any further questions. I assume we covered all your questions and everything that everybody needed to ask. We remain available for everyone, analysts, investors, colleagues 24/7 to provide any answers or support that you may need. As I said earlier, and I will repeat it again, Energean is made to handle this situation and grow out of it stronger. We're resilient. We have the balance sheet. We have the operating capability. We have the growth potential. So despite the challenges, we see great opportunities ahead.

Thank you very much, and I look forward to seeing you all, especially my colleagues in Israel very soon.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect.

Welcome to the Energean Half Year 2025 Results Webinar. This session is led by Mathaios Rigas, CEO; and Panagiotis Benos, CFO. [Operator Instructions] I will now pass over to Mathaios Rigas. Go ahead.

Good morning, everyone, and thank you for joining our call today. We have been through some challenging times in the first half of 2025, but our business remains resilient [Technical Difficulty] remains strong. And I think this is a testament to the group and allow us to get to record production of 178 kboed, which is producing at the moment at maximum capacity for the last months without interruptions. The only effect we had in the first half was from the forced shutdown of 2 weeks that the government imposed on us.

And then obviously, we had a short period to be able to ramp back up, but we were able to get back up and enjoy the strong season of the summer months with peak demand for our gas in Israel and the wider region. We are focused, as always, on long-term value creation, #1 priority is the reliability of our production. The bedrock of our business is the cash flow coming out of Israel, Egypt, Italy, and we are totally focused on continuing to sell gas to the domestic market in Israel. We have signed another $4 billion worth of gas contracts to the local market in Israel, bringing our total value of contracted revenue to $20 billion over the next period.

And I think this is a unique position to be in for any independent and -- probably not just independent, a very predictable business, a very predictable cash flow from very high credit quality buyers in Israel that we have an excellent relationship with. We are continuing also the efforts to export gas from Katlan, our project, which is continuing to be on budget and on time, has no export restrictions. And from '27 onwards, we're able, if we choose so, to export this gas to the regional markets. We see very strong demand. Egypt obviously is importing large quantities of LNG to meet its gas demand these days. So there is a very strong regional demand for our gas, which we want to take advantage of.

We are introducing today, and we will talk a little bit more about organic growth opportunities because Energean is not just about the existing business, the bedrock, as I mentioned earlier, of our cash flow coming out of Israel and Egypt. We have 3 very exciting projects that we're working on in the portfolio, one in Greece, one in Egypt, one in Israel that we will be maturing, looking for partners in the near future to be able to take them to a drilling stage and prove additional potential in our portfolio. I'll talk about that a bit later. Very excited about the developments of our carbon storage project. We received the first tranche of grant funding from the RRF supported by the European Union.

Both Greece -- government of Greece and the European Union remain committed to assist us in the decarbonization of heavy industries in Greece, and the project has now kickstarted with initial drilling and well testing targeted in 2026 with a project that we'll be talking more about it over the coming period and calls that we will have together that is taking center stage in our transition of the Prinos field from the mature oil production or the depleted oil production into the CCS project that we have been talking about. We are continuously reviewing all strategic options to maximize shareholder value and to grow our business. And you all know me, I'm very direct, and we will talk more about what we plan to do with potential M&A.

But I want to give a very clear message that we will be extremely disciplined because we want to maintain the 3 pillars that we have promised to our shareholders, a dividend policy, which is stable, a deleveraging and a strong balance sheet and growth opportunities, organic and inorganic. The result of all this is very strong results of $800 million of revenue for the period, $0.5 billion of EBITDAX, $110 million of profits. Our leverage sits at 2.7x, and we are on track to the promise we made with our dividend policy. We have now with the dividend we are declaring today, paid a cumulative or will have paid a cumulative of $700 million of dividends from the great business that we are running.

Moving to the next slide and getting a bit deeper into our operations. Next slide, please, Ben. I'm starting with our commitment to safety. Great results from our safety team and our operating team with very low numbers on all safety records and continuously reducing carbon emission intensity. I know that this is not the top priority of everyone. We used to be talking only about emission intensity in the past. We continue to focus on this, although the focus of the world with the drill, baby, drill policy of the U.S. has shifted. We remain committed to a safe and responsible operating model.

Moving on to production. We are -- we did achieve 138,000 barrels of oil equivalent production in the first half. It is down from the previous year, affected mainly by the planned shutdown that we had in the second -- for the second oil train, which is on the FPSO and getting ready to be put on stream in the coming months. And of course, the unplanned shutdown following the suspension order by the Ministry of Energy and Infrastructure that we had in June due to the geopolitical tensions. Having said that, as I mentioned earlier, group August stand-alone production stood at 178,000 barrels of oil equivalent a day, and we do see continuing strong demand.

A lot of, what will happen for the remainder of the year and the outlook that we see and we revised our guidance to 145,000 to 155,000 barrels a day, will depend on weather conditions in Israel in the last quarter. September is strong. We will see what happens over the next month depending on weather. Next, please. Israel, I mentioned earlier, a new contract signed in the first half, $4 billion. We are focusing on the export option. Nitzana, the pipeline that will export additional gas from Israel to Egypt, is progressing. Chevron is the operator. They have the lead in the development timetable. We are booking capacity in the pipeline to be able to export our gas coming from Katlan.

And the slide shows the total revenue that we have contracted, $15 billion; over the next decade, $20 billion to 2037, giving us the confidence that we have a very strong cash flow, a very long reserve life. Average reserve life of our assets is about 19 years. So a very healthy business that has a very long-term plan to grow based on this fantastic business that we will build in Israel. Next one, please. Katlan, our major project, remains on budget, in line with the FID that we made, a $1.2 billion investment. The rig that we have secured is coming in 2026. We have 2 firm wells, Athena and Zeus and 2 optional wells. At the moment, our intention is to exercise the first option for Israel and keep the second option for one of our very exciting exploration prospects that we have in the portfolio in the region that I will talk about a bit later.

Next slide, please. On the rest of the portfolio, very briefly, in Egypt, we have seen very strong performance from our location B well. We are actively talking to the government, obviously, to continuously manage the outstanding receivables position. There is a tough situation in Egypt. We all know it. We are committed to Egypt. We have been there for over 15 years. And in tough times, we stick with our partners and obviously try to maximize value. Our top priority at the moment is to merge the 3 concessions, NEA and NI and Abu Qir to create incremental value for all our shareholders, which is something -- which is progressing very well. I've met with the Egyptian authorities very recently, and there is progress that we will be able to report over the coming months.

Italy, the Vega West work program has been amended and submitted to the government. It contains at least 10 million barrels of additional volumes that we can produce through the existing infrastructure. And we are waiting for permits from the Italian government to be able to drill the extended reach wells and increase production from the Vega assets. Rospo, following the unfortunate event that we had with the fire, is planned to restart production in early Q4 2025. I expect that to be in the beginning of October. So that will be behind us and Italy production will be back strong again. All the costs have been covered by the insurance contracts that we have. So we've seen deferred production, obviously, with no major impact on our business.

Croatia, exciting project, not a huge one, but one that we took FID on, on the Irena development with first gas expected in the first half of '27. European gas production is our business plan, our focus. As I said, not a game changer, but a very profitable one that adds a lot of value to our business. U.K. decommissioning project is going extremely well with Energean as operator. We have been able to reduce costs, remain on time and on budget, and we are looking to complete all the work of decommissioning Tors and Wenlock over the coming months. And we are actually seeing a much better performance of the U.K. portfolio than what we originally anticipated.

So a total business that in the first half produced 44,000 barrels of oil equivalent a day that we are focusing on to see how we can squeeze more barrels and molecules of gas out of all our assets to maximize value and push decommissioning to the right, which is a key target of the team. Next slide, please. I talked earlier about the prospectivity that we have in the portfolio, organic growth that can come from four projects. First one in Israel, project called Tsav Yam. Tsav Yam in Hebrew is the sea turtle, continuation of the sea creatures of Karish, Shark, Tanin, Crocodile, a very exciting block with a deep prospect that we have mapped in the Mesozoic. It's a risky prospect, but one that could be a game changer for the whole East Mediterranean.

We are looking to mature this. We will be looking for partners to drill this well and potentially use one of the options that we have on the drilling rig to drill that well in '26 or '27. Block 2 in Greece. The only block in the country that has real prospectivity for a well in the coming period. Yesterday, Chevron submitted a bid for block south of creek in Greece. Greece is becoming a focus for the international oil and gas companies. We are there. We have a block with very significant prospectivity. We have some numbers that we report here. We're targeting over 7 Tcf of gas and potentially also oil, if we are successful with the drilling operation.

This is going to be a focus for us over the coming months. To mature it and potentially use, again, as I said earlier, the option we have on the drilling rig to drill a well in Block 2 in the coming 18 months. Abu Qir Deep, a very exciting prospect of close to 2 Tcf that we see and we map under the platforms of Abu Qir, an easy project to develop, but one that needs obviously exploration risk. And those 3 prospects are all prospects with very material impact on our business. They are exploration prospects. They carry risk. We understand that very well, but I wanted today to highlight the organic growth opportunities we have in the portfolio that gives us the base for the missing piece in the business plan that is growth from our existing assets over and above our efforts to look at inorganic opportunities that I will talk about later.

Last but not least, I want to move to the Prinos carbon storage project. As I said earlier, kickstarted the project with the first tranche of $20 million that came in from the resilience and recovery facility of Greece that is supporting a project that can reach 3 million tonnes of storage capacity that will substantially help Greece to decarbonize its heavy industries. We are working very closely with the government and the emitters, the cement factories and the refineries that will be using the Prinos facility as a storage site for the CO2. Some very important milestones. We have now certified storage volumes, the equivalent of a CPR, but for CO2 storage from NSAI that has certified 66 million tonnes of storage capacity. The demand far exceeds the capacity of the field.

All the emitters in Greece are very committed to decarbonize, and we have very active discussions with the government about how we will be filling the storage capacity. In terms of funding -- and I'm sure the question will come later, how will you fund the project that could reach $1 billion. We are committed and we remain committed not to put stress on our balance sheet. So for the time being, the EUR 270 million of grants that have been received or approved by the Connecting Europe Facility and the RRF will be used to fund the first phase of the project until we reach the point where we are able to take FID. And at that point, we will have partners and funding in more detail.

So for now, what I want everybody to remember is that this is a great project that transitions our oil -- mature oil asset into a CCS project without burden on our balance sheet. With that, I would like to pass the floor to Panos to go through the financial review. Thank you.

Thank you, Mathaios. Good morning from me as well. As you have seen from our financial results, the production disruptions in our Israeli operations in the first half of the year, specifically the unplanned 2-week suspension ordered by the Ministry and the planned shutdown for the second oil train did have an impact on our sales volumes and revenues. Having said that, however, our group gas production was largely flat compared to last year, as the increased gas sales in Italy offset the lower production in Israel. And combined with the strong PSV prices, our group gas revenues did record $540 million, an increase of 7% compared to last year.

However, that was clearly not the case in the liquids part of the business, where we recorded both a drop in volumes produced due to the production disruption in Karish and Rospo Mare and lower realized prices compared to the same period last year. As a result, our total group revenue for the first half of the year was just over $800 million, 7% lower than same period last year. Moving to Slide 14 and other key performance indicators. You can see that all controllable cost and expenditure areas of our business were kept well under control despite the operational challenges we had, the ongoing development of Katlan and the new asset, the Cassiopea gas field that has been added to our OpEx lines.

More specifically, our production cost and G&A was flat at circa $290 million. I want to mention here that the slight G&A increase that has been flagged for the first 6 months versus last year was due to the legal costs associated with the Carlyle deal, and we expect the full year ultimately to be flat compared to last year and as we're guiding at a number of $30 million to $40 million. Our capital expenditure was around $300 million, $100 million less than the same period last year, with all our projects, however, especially Katlan being on time and on budget year-to-date. And finally, our decom expenditure at $30 million increased compared to last year, but much lower than the number initially budgeted for 2025.

Moving to Slide 15. As announced before, we will be drawing on our Bank Leumi loan to prepay the outstanding 2026 bonds with redemption date now confirmed to be 21st of September. Our group cost of debt, even at the current high interest rate environment, is just below 7% and our weighted average maturity at 6 years, which makes our debt profile very competitive, our balance sheet resilient and most importantly, allows for flexibility and optionality, as we grow our business and deliver returns to our shareholders. Despite the challenging first half of the year, we have kept our net debt levels at $3 billion, only slightly higher than the $2.95 billion recorded in June 2024, while maintaining all our projects on track and our dividend policy intact.

As we have said before, deleveraging both in absolute and ratio terms is one of our key targets, but we should not ignore the fact that our $3 billion of net debt has a long 6-year maturity profile to be serviced by business with 20-year reserve life and over $20 billion of contracted revenue only from the Israeli gas sales. Moving to final slide for me, Slide 16, and our revised guidance for the full year 2025. As Mathaios mentioned, we adjust our production guidance to 145,000 to 155,000 barrels per day to reflect the first half performance and the planned commissioning of the second oil train towards the fourth quarter of the year.

Net debt slightly higher by $100 million. Although I'm cautiously optimistic, we will keep this at below the $3 billion level as June -- as we recorded in June 2025. Cost of production reduced by $40 million to below $600 million as we adjust royalties linked to production. And of course, we continue keeping all OpEx and expenditure well under control. G&A, CapEx and exploration unchanged to previous guidance. Our OpEx down by at least $20 million, if not more, driven by further deferrals of platform removal activities, but most importantly, through realized savings on our decom activities in the U.K. versus initial budgets. Mathaios, back to you.

Thank you, Panos. Moving to the next slide, please. Last point from my side, we did talk about our M&A activity and the wider geographic focus in the Mediterranean and wider EMEA region. I want to make a very clear statement here that we are looking at every opportunity, both in the Med and West Africa, but we are extremely disciplined. It has to have deep value for our shareholders, and it has to be accretive to our dividend policy and our plan to have a very strong balance sheet. So we are in no rush. We are very comfortable with our existing business and the growth opportunities we have, both organically and the cash flow that we have to produce in the coming years.

There are a lot of opportunities that I see around the region, especially projects that majors do not want to develop because they are too small or below the radar screen, but there is no other independent out there that can claim the operating track record in the deep waters that we have and that gives us the confidence to sit in front of governments and discuss projects that we can take over and operate safely and with the results that we have shown that we can deliver in the Med. So we want to repeat, the Med success in West Africa, but only with projects that are -- that have the characteristics I mentioned. We are reviewing all strategic options of our existing portfolio.

We did go through the Carlyle story, which was painful. But ultimately, I think it's going to be more painful for them than it will be for us, as we have the assets and we continue to produce and get value out of them. And that is an effort -- the effort of maximizing value through reviewing all strategic options. We'll continue with discussions that we have about all our assets. Closing and moving to the last slide. What we're focused on for the next period. We're looking to sign more gas contracts in line with our strategic focus on long-term value creation and stable cash flows, both in Israel and outside of Israel.

We're looking to export opportunities, mostly to fill the shoulder months and keep our boat full. That is proving to be a fantastic machine that keeps producing at maximum rates that will be further increased by the start of the M10 project, the second oil train that will allow us to increase oil production as well. We're looking to optimize all our asset values outside of Israel, particularly in Egypt, where the concession merger will create immediate value and NPV uplift to our business through the improved terms that we're negotiating with the Egyptian government.

We are continuing our quarterly dividend to our shareholders, always keeping in mind that we need to have a strong balance sheet and we need to deleverage. And finally, we are looking to mature all the options in the existing portfolio, which are very rich, as I demonstrated earlier, but also a very disciplined M&A approach to any new opportunity outside of our existing portfolio. Thank you for your attention today, and happy to take any questions.

[Operator Instructions] We'll take our first question from the line of Werner Riding from Peel Hunt.

Yes. First of all, good to hear about the portfolio's upside through exploration that you highlighted and the focus on M&A. But my question this morning relates to financing. So Panos, perhaps I was just looking at your capital structure and the bond tenors and the principal repayment schedule, there's no pressure. But with net debt increasing to $3 billion, wondering if you could set out when you think that will start to come down sustainably and when you see net debt peaking?

Yes. Just -- okay. I don't want to give guidance because this is driven by quite a few things. And you can understand the fact that the $3 billion number has not reduced further is given the amount of curveballs we have been served the last 18 months or so in our main operations that resulted in quite a few deferrals of key projects. Having said that, as Mathaios said, of course, the business and the team has proven extremely resilient.

Now I'll be very specific what our target is. Our target is for that $3 billion to be the peak, which we expect to be reached towards the end of this year. Our target is to get well into the $2 billion -- $2.5 billion going down to the $2 billion in the next 18 months or so. Our plan for the time being -- and then I don't want to be committing to anything, but our initial plan is any refinancing on the corporate bond to be at lower amounts of the $450 million that we currently hold. And we expect the 2028 as well refinancing of the Israeli bonds either to be fully repaid or if refinanced, it will be at lower numbers.

Of course, as we said, we do have a lot of organic growth opportunities. We are screening the market for inorganic opportunities as well, and those statements may change. But it is -- for the avoidance of any doubt, we don't ignore the net debt levels. As we have said before, our comfort zone is at around 2x, maybe a little bit lower 1.5 to 2x leverage, and this is a sustainable and the target metrics we are aiming for. Having said that, again, I want to draw your attention to the metrics of our debt, which are extremely competitive. I cannot think of a peer that has 6-year average life and cost of debt, which is less than 7%.

And especially you see it with Slide 7 that Mathaios went through, where we have $15 billion to go to 2036 and another $5 billion to go post 2036 with more contracts being signed and with any export volumes that we're trying to get not included there and only from the gas sales from Israel, you can see that we have plenty of flexibility. So our target is to give full ammunition to the team to continue growing the business, to keep the dividend policy intact and at the same time, get to our target leverage ratio that, as I said, is around the 2x EBITDAX.

Werner, let me add something to what Panos just said here. One very important point that I mentioned and probably wasn't clear. I said very clearly, we will be looking for partners. These are wells that we will probably not drill 100%. And as you've seen from our strategy so far, we have 100% of the Israeli asset, 100% of the Greek asset, 100% of the Egyptian asset, 100% of all our Italian assets, the ones that we even took over from ENI. This is not a common strategy in this industry.

So exploration wells that carry risk we would drill with partners. And it's an obvious question, how will you fund these wells and at the same time, reduce leverage and maintain your dividend policy. Very clearly, this is not a plan to go drill very risky, deep frontier wells without the confidence and support of other partners that will be obviously sharing the cost and potentially over -- also a promote because we have matured these assets to the level they are today. So it's not just the strength that Panos very correctly outlined. It's also a different approach to partnering going forward for these kind of more risky projects that we have in the portfolio.

Your next question comes from the line of David Round from Stifel.

I was interested in the 178,000 barrel a day number. I mean you guys must have been pretty happy with that, but were you surprised by the level of summer demand? I mean if I look back at last year, it looks like it was up on last year, and I suspect that's despite some of your buyers having a few issues post June. So just sort of wondering sort of that level at which you've reached and peaked at, was that a number that exceeded expectations? And if it did, does that change any of your thinking going forward?

The answer is very clear. It is in line with expectations that in the summer months, we are going to be full -- the boat is going to be full. What has exceeded expectations is the performance of the FPSO that has been working extremely well, nonstop and able to deliver at peak capacity. And that is something that we intend obviously to continue and also increase with the addition of the M10 that will allow us to go above 23,000, 24,000 barrels of oil a day. So that's the expectation.

The market in Israel continues to grow. The gas demand continues to grow despite the wars. Despite what is going on, the economy remains very resilient and strong. Demand from Egypt remains strong. I'm sure everybody has read and seen the big export contract that has been signed to get more gas to Egypt from the Leviathan expansion. And we also see more gas demand coming from the neighboring countries, Jordan. And ultimately, when the dust settles from all the geopolitical tensions, there are countries that need gas for the reconstruction. We have next to us Lebanon. We have Syria.

There are export opportunities for the whole region, and that is something that we need to take advantage of. We are not surprised that the Israeli market is strong. We expected that, and we have everything contracted. But we're obviously very pleased that we reached levels of 180,000 barrels equivalent a day that could be higher once the M10 is on stream.

Okay. Understood. And just since June, what's the situation like in Israel? Is everything back to normal now?

Everything was back to normal throughout this period. And I go to Israel every month, and everything remains the same. Life goes on, obviously, with the challenges that the Israeli people have to go through, and it's not easy to live with sirens going off and attacks from drones and missiles, but there is a very resilient population and life is normal. I've said it many times and anybody that wants is invited to come and visit both the country and the FPSO to see how we operate and how life keeps going on.

All our employees that are offshore, both Israeli and international employees continue to work without any interruption and everybody is very happy and comfortable to go work on the FPSO.

And I like that we have music on the conference call these days. It's a new style.

[Operator Instructions] Your next question comes from the line of Matt Smith from BofA.

A couple of questions from me, please. And the first was with reference to your comments about reviewing strategic options within the portfolio. I guess, first of all, I presume that's ex Israel. And second of all, I just wondered whether you'd be able to comment upon, is that more likely to be a sort of straightforward disposals that you're looking at sort of as you did with the Carlyle deal? Or is there a likelihood of some more creative options with JVs, asset combinations, that sort of thing. I just sort of wondered what sort of solutions and opportunities that you see out there, please? So that would be the first.

And then the second one was sort of stepping back to the dividend. Obviously, you've sort of reiterated the commitment once again to the quarterly dividend and the stability of that is clearly a feature of the company. I know circumstances have changed a great deal in the recent past, where I suppose once upon a time, Energean had the desire to grow the current dividend as well. So I just wanted to ask stepping back, as we look over the medium term, what would it take for you to see within the business to be comfortable actually resuming a growth trajectory to the current dividend, please?

I'll take the first question, Matt, and I'll let Panos comment on the dividend. The answer is we will look at both. JVs are very popular these days, and they have proven to be successful business models for a number of companies. And of course, we will evaluate every option that we have in our hands, given our very strong East Mediterranean position that very few people can claim they have because we understand in this part of the world, both what is going on below the surface as we've proven from the development of the assets, but also how to navigate above surface issues.

And given our understanding of all the countries, Greece, Italy, Egypt, Israel, Cyprus, I think we're in a very strong position, and this is something that is publicly stated by all the political leaders of the region that Energean represents the East Mediterranean champion because we are present in all the countries. And as you've seen from our portfolio, we do have presence, investments and projects in pretty much all the East Mediterranean countries that are of interest to us. So that is answer to your first question about JVs.

Sales of the portfolio -- of the assets, I remind everyone, we didn't go looking for Carlyle. Carlyle came knocking on our door and made a proposal to buy the portfolio. We're open to hear ideas and open to maximize value to our shareholders across the board. And that is our duty, and that is how we deal with the business. Having said that, I remind everyone, and I know that governments and different countries are listening to what we say, we remain totally committed to the countries that we operate. And that is a very strong statement that I made earlier about Egypt despite the growing receivables number.

I mentioned today also the deep horizon prospectivity that we see. There's another block that we have called EBEN in partnership with INA that we shot seismic and we're getting ready to drill onshore wells that has prospectivity because what happens if you are not committed to the countries and governments start to see that you are thinking of selling or exiting, then situation gets much worse in terms of payments and the priority that one has in the country. So we remain totally committed to countries. But at the same time, we are open to whatever structure can add value to our shareholders and what Panos very clearly outlined as our target to continue the stable dividend to deleverage and grow. Panos, comment on...

Yes. On the dividends, I think -- and I'll take a step back here. We set the current dividend policy in the summer of 2022 before the commissioning of the FPSO. We were, if not the first one of the very few in our sector to be setting an absolute level with no ifs and buts, no percentages. We said this is the number that we will be paying to our shareholders going forward. And we have kept that promise despite the delays we had in commissioning. If you remember back then, the windfall taxes in Italy and, of course, one of the most important and challenging geopolitical events in our region since decades, I would say. And still, we paid that $50 million.

So for us to be resetting that, it will need to be a credible and reliable number that we can keep irrespective of uncontrollable or even controllable incidents that may happen to this volatile sector we're working on. So we have said, however, what will take for us to reset the dividend. And as I've said before, I would be looking as a first indicator to have the leverage dropping to 2x or below leverage. That is a key metric for us before we start discussing and assessing an increase in the dividend stream.

The second one is, of course, more controllable to us, but we will need to see Katlan having finished, which is our biggest capital-intensive project at the moment. And as I explained before, we do expect those events to be completed in the next 15, 18 months, as I replied to Werner. We see end of '26, beginning of '27, all those things coming together very nicely. I don't want to guide to any change in dividend policy or anything like that for the avoidance of any doubt. I'm just laying out the specific metrics that we are monitoring. And of course, the principle under which we will be resetting the dividend. The dividend will be reset not in an opportunistic manner, but at a level that we can sustain for the long run and not ambush or surprise our shareholders that rely on that dividend stream.

There are no further questions at this moment. I will now hand back over to Energean team for any closing remarks.

Thank you, everyone, for participating. Just a quick recap. Our business remains strong. We are very pleased with the performance of the assets that we have so far in the portfolio and looking to continue the growth trajectory. I remind everyone, we listed at GBP 4. We're trading at about GBP 9 now. Everybody that has invested in Energean has seen and benefited from the growth on top of the $700 million of dividends that we paid so far. We are totally committed to, first of all, defending the balance sheet and the business.

We don't want to take the same trajectory as many other E&P companies have taken where overstretched balance sheets and aggressive exploration or growth strategies have led them to become penny stocks. That's not us. We are focused on long-term value creation, but we are also looking to continue the growth that we have proven that we can deliver. Thank you all and look forward to seeing and speaking to you very soon. Thank you.