Energean stock holds gains as gas output and profit rise on Eastern Mediterranean growth

Energean stock mirrors a business that has moved into a higher production and earnings range, with the Eastern Mediterranean focused oil and gas group Energean plc (ISIN GB00B753SF33) reporting sharply higher revenue and profit for 2023 on the back of increased gas volumes and new infrastructure at its Israeli and Greek assets.

Revenue and EBITDA grow in 2023

According to the companys latest full-year report for 2023, Energean generated total revenue of more than $1 billion in 2023, compared with a significantly lower revenue base in 2022, reflecting the first full year of contribution from new gas projects in the region as described in the Energean investors material.

The same 2023 disclosures show that Energean reported a substantial year on year increase in adjusted EBITDA for 2023, rising from a lower level in 2022 to a materially higher figure in 2023 as new volumes and pricing dynamics in its gas contracts in Israel and Greece took effect.

Net income turns higher on increased production

Energean also reported that net income attributable to shareholders for 2023 increased compared with 2022, moving from a smaller profit in the prior year to a larger net profit in 2023, supported by higher operating earnings and lower unit costs across its production base.

The companys filings for 2023 highlight that total hydrocarbon production in 2023 rose versus 2022 as additional wells came onstream and the Karish field and associated infrastructure in Israel continued to ramp up after start up, with daily production volumes significantly above the levels recorded in the prior year.

Q1 2024 figures extend the trend

In its Q1 2024 trading update, Energean reported that quarterly revenue for the first three months of 2024 was higher than in Q1 2023, demonstrating that the uplift from new contracts and production in Israel and Greece is continuing into the new financial year.

The same Q1 2024 data show that Energean delivered increased adjusted EBITDA compared with the first quarter of 2023, supported by a favorable sales mix weighted toward gas under long term contracts and by ongoing cost discipline at its operated assets.

Production and guidance support valuation

Energean has communicated production guidance for 2024 that implies another year of elevated hydrocarbon output versus 2023, with its planned production range for 2024 sitting above the volumes delivered in 2022 and aligned with the step up seen in 2023, underpinned by the ramp up of the Karish project and associated satellites.

The companys investor material also indicates that Energean continues to invest in targeted growth projects and exploration in the Eastern Mediterranean, allocating a significant capital expenditure budget in 2023 and 2024 toward further development of gas resources that are supported by long term sales agreements to regional utility and industrial customers.

Eastern Mediterranean gas portfolio

Energeans core portfolio is built around gas weighted developments in the Eastern Mediterranean, including operated fields in Israel and Greece that sell gas to power generators and industrial customers under multi year contracts, providing a degree of revenue visibility relative to more oil exposed producers.

These projects include the flagship Karish field offshore Israel and producing assets in the Prinos area offshore Greece, which together underpin the companys production profile and its ability to generate cash flow to fund further development and shareholder returns.

Energean stock and market context

Energean stock is listed in London and reflects the companys increased scale following the ramp up of its Israeli gas assets and continued operations in Greece, with the share price over the past year trading in a range that corresponds to the transition from pre first gas to full scale production in the Eastern Mediterranean.

For investors, the key drivers for Energean stock remain the stability of gas demand in its core markets, the execution of its capital program, and the translation of higher revenue and EBITDA into sustained free cash flow and disciplined balance sheet management.