NOTE 2: -     Accounting policies and basis of preparation

These unaudited interim condensed consolidated financial statements for the three months ended 31 March 2023, have been prepared in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the European Union (EU). The unaudited interim condensed consolidated financial statements do not include all the information and disclosures that are required for the annual financial statements and must be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 December 2022.

These unaudited interim financial statements have been prepared on a going concern basis.

 

NOTE 3: -     Revenues

						31 March (Unaudited)
				2023 $'000				2022 $'000
Revenue from gas sales (1)				113,090				-
Revenue from Hydrocarbon liquids sales (3)				50,691				-
Compensation to customers (2)				(4,928)				-
Total revenue				158,853				-

⁽¹⁾ Sales gas for three months ended 31 March 2023 totaled approximately 0.72 bcm (the Company started production on 26 October 2022).

⁽²⁾ During 2021 and in accordance with the GSPAs signed with a group of gas buyers, the Company paid compensation to these counterparties following delays to the supply of gas from the Karish project. The compensation is accounted for as variable consideration under IFRS 15 Revenue Recognition, as a deduction from revenue once production commences and gas is delivered to the gas buyers.

⁽³⁾ Sales Hydrocarbon liquids for three months ended 31 March 2023 totaled approximately 0.714mmbbl (the Company did not sell Hydrocarbon liquids during 2022).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE 4: -     Operating profit (loss) before taxation

		31 March (Unaudited)
		2023 $'000		2022 $'000
(a)   Cost of sales
Staff costs		1,885		-
Energy cost		1,288		-
Royalty payable		29,474		-
Depreciation and amortisation (Note 7)		30,279		-
Other operating costs		20,110		-
Stock movement (Note 11)		869		-
Total cost of sales		83,905		-
(b)   General & administration expenses
Staff costs		960		397
Share-based payment charge		99		31
Depreciation and amortisation (Note 7, 8)		592		38
Auditor fees		48		80
Other general & administration expenses		2,223		1,659
Total administrative expenses		3,922		2,205
(c)    Exploration and evaluation expenses
Other exploration and evaluation expenses		50		-
Total exploration and evaluation expenses		50		-
(d)   Other expenses
Loss from disposal of property, plant and equipment		-		824
Total other expenses		-		824
(e)   Other income
Other income		-		53
Total other income		-		53

 

 

 

 

 

 

 

 

 

NOTE 5: -     Net finance income/(expenses)

		31 March (Unaudited)
		2023 $'000		2022 $'000
Interest on senior secured notes (1)		34,375		34,323
Interest expense on long terms payables (3)		612		2,064
Less amounts included in the cost of qualifying assets (2)		(3,568)		(33,744)
		31,419		2,643
Finance and arrangement fees		145		1,459
Other finance costs and bank charges		107		264
Unwinding of discount on provision for decommissioning		861		171
Unwinding of discount on right of use asset (1)		15		83
Less amounts included in the cost of qualifying assets (2)		(60)		(1,542)
		1,068		435
Total finance costs		32,487		3,078
Interest income from time deposits		654		557
Change of discount estimate on payables (3)		872		-
Interest income from loans to related parties		-		2,781
Total finance income		1,526		3,338
Net foreign exchange losses		(257)		(68)
Net finance income/(expense)		(31,218)		192

 

(1)    See also Note 12.

(2)    See also Note 7(A).

(3)    See also Note 13.

 

NOTE 6: -     Taxation

1.      Taxation charge:

				31 March (Unaudited)
		2023 $'000			2022 $'000
Tax - current year		(143)			(67)
Deferred tax		(9,339)			1,327
Total taxation income (expense)		(9,482)			1,260

 

 

 

 

 

 

NOTE 7: -     Property, Plant and Equipment  

a.          Composition:

		Oil and gas Assets $'000		Leased assets $'000		Furniture, fixtures and equipment $'000		Total $'000
Cost:
At 1 January 2022		2,241,783		4,009		829		2,246,621
Additions (1)		514,373		731		1,165		516,269
Disposals		(900)		-		-		(900)
Capitalised borrowing cost (2)		129,357		-		-		129,357
Capitalised depreciation		632		-		-		632
Change in decommissioning provision		47,544		-		-		47,544
Total cost at 31 December 2022		2,932,789		4,740		1,994		2,939,523
Additions (1)		29,048		-		41		29,089
Handover to INGL(4)		(111,105)		-		-		(111,105)
Capitalised borrowing cost (2)		3,628		-		-		3,628
Change in decommissioning provision		1,020		-		-		1,020
Total cost at 31 March 2023		2,855,380		4,740		2,035		2,862,155
Depreciation:
At 1 January 2022		433		693		228		1,354
Charge for the year (3)		10,976		134		297		11,407
Capitalised to oil and gas assets		-		632		-		632
Disposals		(433)		-		-		(433)
Write down of the assets		250		-		-		250
Total Depreciation at 31 December 2022		11,226		1,459		525		13,210
Charge for the year		30,279		412		95		30,786
Total Depreciation at 31 March 2023		41,505		1,871		620		43,996
At 31 December 2022		2,921,563		3,281		1,469		2,926,313
At 31 31 March 2023		2,813,875		2,869		1,415		2,818,159

⁽¹⁾ The additions to oil & gas assets in 2023 are primarily due to development costs for the FPSO, Karish North and 2^nd Oil Train. The additions in 2022 are primarily due to development costs for the Karish field, incurred under the EPCIC contract, FPSO, subsea and onshore construction.

⁽²⁾ Capitalised borrowing costs relate primarily to the secured senior notes.

⁽³⁾ First production from the Karish project was achieved on 26 October 2022.

⁽⁴⁾ Handover to INGL took place on 22 March 2023.

 

 

 

 

NOTE 7: -     Property, Plant and Equipment  (Cont.)

b.         Depreciation expense for the year has been recognised as follows:

		31 March (Unaudited)
	2023 $'000			2022 $'000
Cost of sales	30,279			-
Administration expenses	507			38
Capitalised depreciation in oil & gas assets	-			177
Total	30,786			215

 

c.          Cash flow statement reconciliations:

						31 March (Unaudited)
					2023 $'000			2022 $'000
Additions to property, plant and equipment, net				77,368			88,654
Associated cash flows
Payment for additions to property, plant and equipment				(55,752)			(44,002)
Non-cash movements/presented in other cash flow lines
Capitalised borrowing costs				(3,628)			(35,284)
Right-of-use asset additions				-			(107)
Capitalised share-based payment charge				-			(40)
Capitalised depreciation				-			(177)
Change in decommissioning provision				(1,020)			-
Movement in working capital				(16,968)			(9,044)

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTE 8: -     Intangible Assets

a.          Composition:

		Exploration and evaluation assets $'000		Software licences $'000		Total $'000
Cost:
At 1 January 2022		20,141		255		20,396
Additions (1)		123,005		1,713		124,718
Write off of exploration and evaluation costs (2)		(1,277)		-		(1,277)
At 31 December 2022		141,869		1,968		143,837
Additions (1)		9,089		-		9,089
At 31 March 2023		150,958		1,968		152,926
Amortisation:
At 1 January 2022		-		255		255
Charge for the year		-		28		28
Total Amortisation at 31 December 2022		-		283		283
Charge for the year		-		85		85
Total Amortisation at 31 March 2023		-		368		368
At 31 December 2022		141,869		1,685		143,554
At 31 March 2023		150,958		1,600		152,558

⁽¹⁾ Additions to exploration and evaluation assets are primarily due to the 2022 growth drilling programme undertaken offshore Israel.

⁽²⁾  Zone D: On 27 July 2022, the Company sent a formal notice to the Ministry of Energy notifying the relinquishment of Zone D and discontinuation of related work. As such, the licences subsequently expired on 27 October 2022.

b.         Cash flow statement reconciliations:

				31 March (Unaudited)
			2023 $'000			2022 $'000
Additions to intangible assets			9,089			5,173
Associated cash flows
Payment for additions to intangible assets			(25,318)			(2,231)
Non-cash movements/presented in other cash flow lines
Movement in working capital			16,229			(2,942)

 

 

 

 

 

 

NOTE 9: -     Deferred taxes

The Group is subject to corporation tax on its taxable profits in Israel at the rate of 23%. The capital gain tax rates depend on the purchase date and the nature of the asset. The general capital gains tax rate for a corporation is the standard corporate tax rate.

Tax losses can be utilised for an unlimited period, and tax losses may not be carried back.

According to Income Tax (Deductions from Income of Oil Rights Holders) Regulations, 5716-1956, the exploration and evaluation expenses of oil and gas assets are deductible in the year in which they are incurred.

The Group expects that there will be sufficient taxable profits in the following years and that deferred tax assets, recognised in the consolidated financial statements of the Group, will be recovered.