11 May 2023
Against the background of progress towards a BP-ADNOC deal:
NewMed Energy's net profit leaps to some $121 million in Q1/2023 - up approx. 44%
· Q1 revenues totaled approx. $281 million versus approx. $247 million in Q1/2022, up approx. 14%.
· In Q1/2023, approx. 2.8 BCM were produced from Leviathan.
· Negotiations continue to advance the tender offer made by energy giants BP and ADNOC.
· In Q1/2023, NewMed Energy paid ILS 179 million to the State in royalties and taxes
· According to the Partnership's assessments, presented this quarter to the Knesset's committee supervising Israel's sovereign wealth fund, the Leviathan reservoir alone is expected to contribute to the State coffers over the coming decade the sum total of ILS 46 billion
· Yossi Abu, CEO of NewMed Energy, said: "The project for expansion of production from Leviathan will enable us to provide more quantities of natural gas to the local market, while acquiring new export markets through LNG"
NewMed Energy has just released its financial statements for the first quarter of 2023.
The net profit in Q1 surged to some $121 million, up approx. 44% from $84 million in Q1/2022. The increase resulted mainly from an increase in revenues from natural gas sales from the Leviathan reservoir, and a decrease in depreciation, amortization and depletion expenses.
Revenues from the sale of natural gas increased by some 14% to approx. $281 million in this quarter, compared with some $247 million in Q1/2022. Revenues after deduction of royalties amounted to approx. $240 million, compared with approx. $211 million in Q1/2022.
Production from the Leviathan reservoir increased this quarter to approx. 2.8 BCM of natural gas, supplied to customers in the regional market (Jordan and Egypt) and in the Israeli market, compared to approx. 2.7 BCM in Q1/2022.
As recalled, in March NewMed Energy reported an offer to purchase 50% of the Partnership's participation units, submitted by energy giants BP and ADNOC, based on a valuation of ILS 14.1 billion. In the weeks passed since the offer was made, NewMed Energy's Board of Directors appointed the Audit Committee to review and decide any issue pertaining to the purchase of the publicly-held units in the transaction.
The committee holds regular meetings to promote the transaction, for which purpose it has selected economic, financial and legal advisors. Concurrently, BP and ADNOC are carrying out a due diligence review of NewMed Energy and its assets.
With respect to the Leviathan reservoir, the Partnership has recently reported the continued Pre-FEED work and various technical, commercial and economic processes for promotion of the Leviathan expansion and FLNG project, which will supply LNG from Leviathan to the international markets. As recalled, the Leviathan partners are in advanced technical design and procurement stages in the project for the third pipeline from the reservoir to the platform, which is the first step towards increasing the project's natural gas production capacity.
With regard to Aphrodite reservoir, the partners in the reservoir last week commenced the A-3 well drilling, which is expected to last approximately three months and is a significant step towards development of the reservoir. This appraisal well is intended to confirm the estimates regarding the nature and size of the reservoir, which is currently 4.4 TCF, and will later serve as a production well.
In the first quarter of 2023, NewMed Energy paid the State ILS 179 million in royalties and taxes. According to the Partnership's reports and assessments presented this quarter to the Knesset's special committee supervising Israel's sovereign wealth fund, the Leviathan reservoir alone is expected to contribute to the State coffers over the coming decade the sum total of ILS 46 billion.
Yossi Abu, CEO of NewMed Energy, said: "The consistently excellent financial results we demonstrate one quarter after another attest to the success of Leviathan's regional strategy, alongside our commitment to supply the needs of the local economy. The project for expansion of production from Leviathan will enable us to provide more quantities of natural gas to the local market, while acquiring new export markets through LNG. We are in the midst of a process for review and promotion of the unprecedented tender offer made by BP and ADNOC, and I have no doubt we will be able to close the deal".
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