NOTE 1: -     GENERAL

a.     Energean Israel Limited (the "Company") was incorporated in Cyprus on 22 July 2014 as a private company with limited liability under the Companies Law, Cap. 113. As of 1 January 2024, the Company is tax resident in the UK by virtue of having transferred its management and control from Cyprus to the UK, with its registered address being at Accurist House, 44 Baker Street, London, W1U 7AL. Subsequent to the reporting date, the Company changed its registered address to One Great Cumberland Place, London, W1H 7AL.

b.   The Company and its subsidiaries (the "Group") has been established with the objective of exploration, production and commercialisation of natural gas and hydrocarbon liquids. The Group's main activities are performed in Israel by its Israeli Branch.

c.   As of 31 December 2025, the Company had investments in the following subsidiaries:

Name of subsidiary	Country of incorporation / registered office	Principal activities	Shareholding At 31 December 2025 and 2024 (%)
Energean Israel Transmission LTD	121, Menachem Begin St. Azrieli Sarona Tower, POB 24, Tel Aviv 6701203 Israel	Gas transportation license holder	100
Energean Israel Finance LTD		Financing activities	100

d.   The Group's core assets as of 31 December 2025 were comprised of:

Country	Asset	Working interest	Field phase
Israel	Karish including Karish North (1)	100%	Production
Israel	Tanin (1)	100%	Development
Israel	Katlan (Block 12) (2)	100%	Development
Israel	Block 23 (3)	100%	Exploration
Israel	Block 31 (3)	100%	Exploration

⁽¹⁾ The concession agreement expires in 2044.

⁽²⁾ Katlan Final Investment Decision was taken in July 2024, and the concession agreement received in the same month

expires in 2054.

⁽³⁾ Refer to Note 11.

NOTE 2: -     Basis of preparation and presentation of financial information 

The following accounting policies have been applied consistently in the consolidated financial statements for all periods presented, unless otherwise stated.

a.      Basis of presentation of the financial statements:

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).

These consolidated financial statements have not been prepared in accordance with the requirements of the Cyprus Companies Law, Cap.113 and are not intended for statutory filing in Cyprus.

The consolidated financial statements have been prepared on the historical cost basis.

The consolidated financial statements have been prepared on a going concern basis. The principal accounting policies adopted by the Group are set out below.

 b.     The financial statements are presented in U.S. Dollars and all values are rounded to the nearest thousand

dollars except where otherwise indicated.

NOTE 2: -       Basis of preparation and presentation of financial information (Cont.)

c.      Going Concern:

The Group carefully manages the risk of a shortage of funds by closely monitoring its funding position and its liquidity risk. The going concern assessment covers the period from the date of approval of the Group Financial Statements on 18 March 2026 to 30 June 2027 (the 'Assessment Period').

On 28 February 2026, the Ministry of Energy and Infrastructure ordered the temporary suspension of production and all activities of the Energean Power FPSO, following geopolitical escalation in the region. As at the date of approval of these consolidated financial statements, production remains suspended. The Group continues to monitor the situation closely and maintains active dialogue with the Ministry of Energy and Infrastructure and other relevant stakeholders to facilitate the safe resumption of production as soon as possible.
Given that the Karish and Karish North fields, processed through the Energean Power FPSO, represent all of the Group's revenue and operating cash generation, the Directors has given particular and careful consideration to the impact of this suspension on the Group's going concern assessment. The going concern assessment has been prepared taking full account of the suspension and reflects all information available to the Directors as at the date of approval.

The going concern assessment is founded on a cashflow forecast prepared by management, which is based on a number of assumptions, most notably the Group's latest life of field production forecasts, budgeted expenditure forecasts and estimated future commodity prices (based on recent published forward curves). The going concern assessment contains a 'Base Case' and a 'Reasonable Worst Case' (RWC') scenario and Reverse stress testing.

The base case scenario assumes that production resumes in the near term, consistent with the temporary and government-directed nature of previous suspensions, including the suspension in June 2025 which lasted 12 days.  Under the base case and applying a Brent oil price assumption of US$65/bbl with gas revenues recognised at contractually agreed prices under the Group's long-term GSPAs, the Group maintains adequate liquidity and significant covenant headroom throughout the Assessment Period.

The Directors has also modelled a reasonable worst-case scenario in which the current suspension extends for a materially longer period.  In assessing the Group's resilience under this scenario, the Directors have identified a range of mitigating actions that are within management's control, including the deferral of dividends, deferral and/or reduction of non-committed development capital expenditure, reduction of discretionary operating costs, and management of working capital. These mitigating actions do not require third-party consent and can be implemented promptly should the suspension be prolonged. Under the reasonable worst-case scenario, and after applying these mitigating actions, the Group is able to maintain adequate liquidity during the Assessment period.

The Directors has further performed reverse stress testing to determine the conditions under which liquidity headroom would be eliminated. The conditions necessary for the reverse stress test scenario to crystallise are judged to be remote and are not considered a realistic basis for the going concern assessment.

The Directors' assessment is based on the temporary and government-directed nature of the suspension, which reflects geopolitical conditions rather than any operational, commercial or financial deficiency of the Group; the Group's track record of resuming operations promptly following previous government-ordered shutdowns; and the strategic importance of the Karish and Karish North fields to Israel's domestic energy security. The Directors are satisfied that appropriate support mechanisms are available to the Group should extreme and remote circumstances require it.

After careful consideration of the above, including the post-period suspension and its potential impact on the Group's cash flows and liquidity position, the Directors are satisfied that the Group has sufficient financial resources to continue in operation throughout the Assessment Period. Accordingly, the Directors continue to adopt the going concern basis in preparing these consolidated financial statements. No material uncertainty exists in relation to going concern.

 

 

 

 

NOTE 2: -       Basis of preparation and presentation of financial information (Cont.)

Israel geopolitical environment - Energean highlights the following as important in relation to its principal risks. Since 7 October 2023, the magnitude of regional geopolitical risk has remained elevated. Concerns of escalation in the Middle East have intensified the security risk in the region, as essential infrastructure systems (such as the Energean Power FPSO offshore Israel) may be targets for missile fire and sabotage operations. Any event that impacts production from the Karish and Karish North fields could have a material adverse impact on the business, results of operations, cash flows, financial condition and prospects of the Group.

In 2025, following geopolitical escalation in the region, the Ministry of Energy and Infrastructure ordered a temporary suspension of production and activities if the Energean Power FPSO between 13 June 2025 and 25 June 2025; otherwise, 2025 production was not disrupted due to geopolitical situation. 

Post-period end, regional geopolitical risk remained elevated. On 28 February 2026, the Ministry of Energy and Infrastructure ordered the temporary suspension of production and activities of the Energean Power FPSO following further geopolitical escalation in the region. Energean maintains close dialogue with the Ministry of Energy and Infrastructure and other relevant stakeholders to facilitate the safe resumption of production as soon as possible.

In 2025 and following the reporting period, Energean has ensured that all measures are in place to continue business operations (subject to Governmental instructions), maintain the mobility of its people and security of its information.

d.      New and amended accounting standards and interpretations:

The following amendments became effective as at 1 January 2025 and have been applied in the preparation of these consolidated financial statements:

·      Amendments to IAS 21- Lack of exchangeability;

In August 2023, the IASB issued Amendments to IAS 21: Lack of Exchangeability ("the Amendments") to clarify how an entity should assess whether a currency is exchangeable and how it should measure and determine a spot exchange rate when exchangeability is lacking. The adoption of the above standard and interpretations did not lead to any material changes to the Group's accounting policies and did not have any other material impact on the financial position or performance of the Group.

The following amendments and interpretations have been issued but were not effective for the 2025 reporting period:

·      Amendments to IFRS 9 and IFRS 7: "Financial Instruments: Disclosures";

On May 30, 2024, the IASB issued "Amendments to the Classification and Measurement of Financial Instruments Amendments to IFRS 9 and IFRS 7" ("the Amendments"). The Amendments clarify certain aspects of the classification and measurement of financial instruments.

·      Annual improvements to IFRS accounting standards: Volume 11;

·      Amendments to IFRS 9 and IFRS 7: Contracts referencing nature-dependent electricity;

·      IFRS 18: Presentation and Disclosure in Financial Statements;

In April 2024, the International Accounting Standards Board ("the IASB") issued IFRS 18, "Presentation and Disclosure in Financial Statements" ("IFRS 18") which replaces IAS 1, "Presentation of Financial Statements".

IFRS 18 is aimed at improving comparability and transparency of communication in financial statements.

·      IFRS 18 retains certain existing requirements of IAS 1 and introduces new requirements on presentation within the statement of profit or loss, including specified totals and subtotals. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information.

·      IFRS 19: Subsidiaries without Public Accountability: Disclosures.

 

 

 

NOTE 3: -     Material accounting policies

The Company is evaluating the implications of the adoption of the Amendments on its consolidated financial statements.

e.      Basis of consolidation:

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) as detailed in Note 1 above.

Accounting Policies:

The principal accounting policies and measurement bases used in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all periods presented in the consolidated financial statements unless otherwise stated.

a)      Functional and presentation currency and foreign currency:

1.      Functional and presentation currency:

Items included in the financial statements of the Group are measured using the currency of the primary economic

environment in which the Group operates (''the functional currency'').

The functional currency of the Company is U.S. Dollars (US$). The U.S. Dollar is the currency that influences future

sales prices, revenue estimates and also highly affect the Group's operations.

The presentation currency of the Group's consolidated financial statements is U.S. Dollar.

2.      Transactions and balances:

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss. Such monetary assets and liabilities are translated using the functional currency exchange rates at the reporting date. Non-monetary items that are measured in terms of historical cost denominated in a foreign currency are translated at the exchange rates prevailing at the date of the transaction and are not subsequently remeasured.

b)      Intangible assets - Exploration and evaluation expenditures:

The Group adopts the successful efforts method of accounting for exploration and evaluation costs. Pre-licence costs are expensed in the period in which they are incurred. All licence acquisition, exploration and evaluation costs and directly attributable administration costs are initially capitalised as intangible assets by field or exploration area, as appropriate. All such capitalised costs are subject to technical, commercial and management review, as well as review for indicators of impairment at least once a year. This is to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no longer the case, the costs are written off through the statement of comprehensive income (loss). When proved reserves of oil and gas are identified and development is sanctioned by management, the relevant capitalised expenditure is first assessed for impairment and (if required) any impairment loss is recognised, then the remaining balance is transferred to oil and gas properties.

c)      Commercial reserves:

Commercial reserves are proven and probable oil and gas reserves, which are defined as the estimated quantities of crude oil, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from known reservoirs and which are considered commercially producible. There should be a 50 per cent statistical probability that the actual quantity of recoverable reserves will be more than the amount estimated as proven and probable reserves and a 50 per cent statistical probability that it will be less.

 

 

NOTE 3: -     Material accounting policies

d)      Oil and gas properties - assets in development:

Expenditure is transferred from 'Exploration and evaluation assets' to 'Assets in development' which is a subcategory of 'Oil and gas properties' once the work completed to date supports the future development of the asset and such development receives appropriate approvals. After transfer of the exploration and evaluation assets, all subsequent

expenditure on the construction, installation or completion of infrastructure facilities such as platforms, pipelines and the drilling of development wells, including unsuccessful development or delineation wells, is capitalised within 'Assets in development'.

condition necessary for it to be capable of operating in the manner intended by management (such as samples produced when testing whether the asset is functioning properly) has been recognised in profit or loss in accordance with IFRS 15 Revenue Recognition. The Group measures the cost of those items applying the measurement requirements of IAS 2 Inventories. When a development project moves into the production stage, all assets included in 'Assets in development' are then transferred to 'Producing assets' which is also a sub-category of 'Oil and gas properties. The capitalisation of certain construction/development costs ceases, and costs are either regarded as part of the cost of inventory or expensed, except for costs which qualify for capitalisation relating to 'Oil and gas properties' asset additions, improvements or new developments.

e)      Depletion and amortisation:

All expenditure carried within each field will be amortised from the commencement of production on a unit of production basis, which is the ratio of oil and gas production in the period to the estimated quantities of commercial reserves at the end of the period plus the production in the period, generally on a field-by-field basis or by a group of fields which are reliant on common infrastructure. Costs included in the unit of production calculation comprise the net book value of capitalised costs plus the estimated future field development costs required to recover the commercial reserves remaining. Changes in the estimates of commercial reserves or future field development costs are dealt with prospectively.

f)       Impairments of oil & gas properties:

Where there is evidence of economic interdependency between fields, such as common infrastructure, the fields are grouped as a single CGU for impairment purposes. A CGU's recoverable amount is the higher of its fair value less costs of disposal and its value in use. Where the carrying amount of a CGU exceeds its recoverable amount, the CGU is considered impaired and is written down to its recoverable amount.

Fair value less costs of disposal is the price that would be received to sell the asset in an orderly transaction between market participants and does not reflect the effects of factors that may be specific to the Group and not applicable to entities in general.

For discount of the future cash flows the Group calculates CGU-specific discount rate. The discount rate is based on an assessment of a relevant peer group's pre-tax Weighted Average Cost of Capital (WACC). The Group then adds any exploration risk premium which is implicit within a peer group's WACC and subsequently applies additional country risk premium for Israel.

g)      Impairment of non-financial assets:

At each reporting date, the Group reviews the carrying amounts of its depreciable property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. Impairment is assessed at the level of cash-generating units (CGUs) which, in accordance with IAS 36 'Impairment of Assets', are identified as the smallest identifiable group of assets that generates cash inflows, which are largely independent of the cash inflows from other assets. This is usually at the individual royalty, stream, oil and gas or working interest level for each property from which cash inflows are generated.

An impairment loss is recognised for the amount by which the asset's carrying value exceeds its recoverable amount, which is the higher of fair value less costs of disposal (FVLCD) and value-in-use (VIU). The future cash flow expected is

NOTE 3: -       Material accounting policies (Cont.)

derived using estimates of proven and probable reserves, a portion of resources that is expected to be converted into reserves and information regarding the mineral, stream and oil & gas properties, respectively, that could affect the future recoverability of the Group's interests. Discount factors are determined individually for each asset and reflect their respective risk profiles.

In addition, exploration and evaluation assets are assessed for impairment upon their reclassification to producing assets (oil and gas interest in property, plant and equipment).

In assessing the impairment of exploration and evaluation assets, the carrying value of the asset would be compared to the estimated recoverable amount and any impairment loss is recognised immediately in profit or loss.

h)      Leases:

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the date of inception. The arrangement is assessed to determine whether fulfilment is dependent on the use of a specific asset (or assets) and the arrangement conveys a right to use the asset (or assets), even if that asset is (or those assets

are) not explicitly specified in an arrangement. The Group is not a lessor in any transactions, it is only a lessee.

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

i)       Right-of-use assets:

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:

-        Property leases 2 to 5 years

-        Motor vehicles and other equipment 1 to 3 years

-         Fiber Optic 14 years

-         Vessel- 3 years

         Lease liabilities:

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.

 

 

NOTE 3: -       Material accounting policies (Cont.)

Other leases outside the scope of IFRS 16:

Leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources are outside the scope of IFRS 16 and are recognised as exploration and evaluation costs or as oil and gas assets, as appropriate. Please refer to notes c and e above.

j)       Financial instruments - initial recognition and subsequent measurement:

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

1.         Financial assets:

Initial recognition and measurement:

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), or fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.

In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows

that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Group's business model for managing financial assets refers to how it manages its financial assets in order

to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement-

For purposes of subsequent measurement, financial assets are classified in two categories:

·      Financial assets at amortised cost (debt instruments)

·      Financial assets at fair value through profit or loss

Financial assets at amortised cost:

The Group measures financial assets at amortised cost if both of the following conditions are met:

-           The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

-           The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment under the expected credit loss model. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The Group's financial assets at amortised cost includes trade receivables.

Financial assets at fair value through profit or loss

The Group's financial assets at fair value through profit or loss include financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value.

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.

NOTE 3: -       Material accounting policies (Cont.)

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's consolidated statement of financial position) when the rights to receive cash flows from the asset have expired or are transferred.

Impairment of financial assets:

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating allowance for

expected credit losses (ECLs). Therefore, the Group does not track changes in credit risk, but instead recognises

a loss allowance based on lifetime ECLs at each reporting date.

Derivative financial instruments and hedge accounting

Initial recognition and subsequent measurement

 The Group uses derivative financial instruments, specifically forward foreign currency contracts, to hedge exposure to exchange rate risks. Such derivative financial instruments are initially recognised at fair value on the date on which the derivative contract is entered into and are subsequently re‑measured at fair value. Derivatives are presented as financial assets when their fair value is positive and as financial liabilities when their fair value is negative.

For the purpose of hedge accounting, hedges are classified as:

·      Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment

·      Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment

At the inception of a hedge relationship, the Group formally designates and documents the hedging instrument and the hedged item to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.

A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:

·      There is 'an economic relationship' between the hedged item and the hedging instrument.

·      The effect of credit risk does not 'dominate the value changes' that result from that economic relationship.

·      The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.

Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below:

 

 

 

NOTE 3: -       Material accounting policies (Cont.)

Cash flow hedges:

The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit or loss. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item attributable to the hedged risk.

From time to time, the Group may use forward commodity contracts for its exposure to volatility in the foreign exchange rates. The ineffective portion relating to forward commodity contracts is recognised in revenue or

cost of sales. The Group designates only the spot element of forward contracts as a hedging instrument. The forward element is recognised in OCI and accumulated in a separate component of equity.

The amount accumulated in the cash flow hedge reserve in OCI is reclassified to profit or loss as a reclassification adjustment in the same period or periods during which the hedged cash flows affect profit or loss. Where the hedged item is a forecast purchase of goods or services that is subsequently recognised in profit or loss, the reclassification is recorded in the same line of the statement of profit or loss as the hedged item.

When the hedged forecast transaction results in the recognition of a non-financial asset, including the construction or acquisition of property, plant and equipment or intangible assets, the cumulative effective portion of the gain or loss deferred in the cash flow hedge reserve, together with any related cost of hedging amount, is removed from equity and included as a basis adjustment to the initial carrying amount of the related asset at the point that asset is first recognised. This basis adjustment is made once, at the point of initial recognition of the asset, and is not subsequently reversed through profit or loss. Following the basis adjustment, the adjusted carrying amount of the asset forms the basis for depreciation or amortisation over the useful life of the asset.If cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain in accumulated OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to profit or loss or to the carrying amount of the related asset as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs, any amount remaining in accumulated OCI must be accounted for depending on the nature of the underlying transaction.

2.         Financial liabilities:

Initial recognition and measurement:

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group's financial liabilities include trade and other payables, loans and borrowings and derivative financial instruments.

Subsequent measurement:

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9 Financial Instruments. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

NOTE 3: -       Material accounting policies (Cont.)

Gains or losses on financial liabilities recognised at fair value through profit and loss are recognised in the statement of profit or loss. The Group discloses the unwinding of the discount separately, in finance costs, from the mark to market gain or loss.

Loans and borrowings:

After initial recognition, interest-bearing liabilities such as senior secured notes and bank loans are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, modified and through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

 Derecognition:

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms,

or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

3.         Offsetting of financial instruments:

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Equity, reserves and dividend payments:
Share capital represents the nominal (par) value of shares that have been issued. Share premium

includes any premiums received on issue of share capital. Any transaction costs associated with the

issuing of shares are deducted from share premium, net of any related income tax benefits.

Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the balance sheet date.

k)      Share-based payments:

Employees of the Group receive remuneration in the form of share-based payments under equity incentive plans operated by Energean plc, the ultimate parent company. Under the terms of the intercompany recharge agreement between the Group and Energean plc, the Group has a legally binding obligation to reimburse Energean plc in cash for the cost of shares delivered to Group employees upon vesting. Accordingly, the awards are classified as cash-settled share-based payment transactions in accordance with IFRS 2.A liability is recognised over the vesting period with a corresponding charge to employee benefits expense. In accordance with IFRS 2, the liability is remeasured to fair value at each reporting date based on the current market price of Energean plc ordinary shares, adjusted for the probability of vesting by reference to expected satisfaction of service and non-market performance conditions. Any change in the fair value of the liability between reporting dates is recognised in profit or loss in the period in which it arises. The liability is derecognised upon settlement in cash with Energean plc.

 

 

 

 

 

 

NOTE 3: -       Material accounting policies (Cont.)

l)       Fair value measurement:

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities, for which fair value is measured or disclosed in the financial statements, are categorised within the fair value hierarchy, described as follows, based on the lowest-level input that is significant to the fair value measurement as a whole:

-       Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

-       Level 2 - Valuation techniques for which the lowest-level input that is significant to the fair value measurement is directly or indirectly observable.

-       Level 3 - Valuation techniques for which the lowest-level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest-level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

m)     Cash and cash equivalents and restricted cash:

Cash and cash equivalents comprise of cash in hand and time deposits, with a maturity of three months or less, that are subject to an insignificant risk of changes in their fair value.

Restricted cash comprises balances retained in respect of the Group's Borrowings and cash collateral provided under a letter of credit facility for issuing bank guarantees for Group's activities in Israel (see Note 16A). The nature of the restrictions on these balances mean that they do not qualify for classification as cash equivalents.

n)      Inventories:

Inventories comprise hydrocarbon liquids and natural gas, consumables and other spare parts. Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads. It does not include borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. Spare parts consumed within a year are carried as inventory and recognised in profit or loss when consumed.

The Group assesses the net realisable value of the inventories at the end of each year and recognises in the consolidated statement of profit or loss the appropriate valuation adjustment if the inventories are overstated.

o)      Decommissioning provision:

Provision for decommissioning is recognised in full when the related facilities are installed. A corresponding amount equivalent to the provision is also recognised as part of the cost of the related property, plant and equipment. The amount recognised is the estimated cost of decommissioning, discounted to its net present value at a risk-free discount

rate, and is reassessed each year in accordance with relevant conditions and requirements. Changes in the estimated timing of decommissioning or decommissioning cost estimates are dealt with prospectively by recording an adjustment to the provision, and a corresponding adjustment to property, plant and equipment. The unwinding of the discount on the decommissioning provision is included as a finance cost.

p)      Revenue

Revenue from contracts with customers is recognised when control of the gas/ hydrocarbon liquids are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has concluded that it is the principal in its revenue arrangements because it typically

NOTE 3: -       Material accounting policies (Cont.)

controls the goods or services before transferring them to the customer.

In Israel royalties are levied by the government. The government can request that these royalty payments be made in cash or in kind. In the current year and in prior years the government has requested cash payments be made and therefore the Group has not made any royalty payments in kind. As such the Group obtains control of all the underlying reserves once extracted, sells the production to its customers and then remits the proceeds to the royalty holder and is therefore considered to be acting as the Principal. In addition, the Group is also subject to royalty arrangements with third parties, which operate in the same manner as the government royalties, whereby the Group obtains control of the full production and subsequently transfers the relevant share of proceeds to the third‑party royalty holders.

Sale of natural gas and hydrocarbon liquids

Sales revenue represents the sales value, net of VAT, of actual sales volumes to customers in the year.

The Group's accounting policy under IFRS 15 is that revenue is recognised when the Group satisfies a performance obligation by transferring hydrocarbon liquids or gas to its customer. The title to hydrocarbon liquids and gas typically transfers to a customer at the same time as the customer takes physical possession of the hydrocarbon liquids or gas. Typically, at this point in time, the performance obligations of the Group are fully satisfied. The revenue is recorded when the hydrocarbon liquids or gas has been physically delivered to a vessel or pipeline.

q)      Retirement benefit costs regarding the employees by the directly owned Branch in Israel:

The Israeli Branch has defined contribution plans pursuant to section 14 to the Severance Pay in Israel Law under which the Israeli Branch pays fixed contributions and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient amounts to pay all employee benefits relating to employee service in the current and prior periods. Contributions to the defined contribution plan in respect of severance or retirement pay are recognised as an expense when contributed concurrently with performance of the employee's services.

r)      Borrowing costs:

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of

those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Excluded from the above capitalisation policy are any qualifying assets that are inventories that are produced in large quantities on a repetitive basis. and any Exploration and Evaluation assets which have not resulted in the classification of commercial reserves. Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds.

s)      Tax:

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the financial statements because it excludes items of income or expense that are taxable or deductible in other years and it

further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, based on tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable

profits will be available against which deductible temporary differences can be utilised.

The Group recognises tax provision liabilities for anticipated tax issues based on if it is probable, defined as more likely than not, that additional taxes will be due. This assessment is based on all available evidence and, where appropriate, in

NOTE 3: -       Material accounting policies (Cont.)

the light of external advice. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax liability in the period in which such determination is made.

Current and deferred tax assets and corresponding liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its tax assets and liabilities on a net basis

t)       Levies:

Levies imposed on the Company by government entities through legislation, are accounted for pursuant to IFRIC 21 according to which the liability for the levy is recognized only when the activity that triggers payment occurs.

u)      Statement of cash flows:

Under IAS 7, the Group classifies interest paid as a financing cash flow.

 

NOTE 4: -     Critical accounting estimates and judgments

The preparation of these consolidated financial statements in conformity with IFRS requires the use of accounting estimates and assumptions, and also requires management to exercise its judgement, in the process of applying the Group's accounting policies.

Estimates, assumptions and judgement applied are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Although these estimates, assumptions and judgement are based on management's best knowledge of current events and actions, actual results may ultimately differ.

1.         Critical judgements in applying the Group's accounting policies:

The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements:

Carrying value of intangible exploration and evaluation assets:

Amounts carried under intangible exploration and evaluation assets represent active exploration projects. Capitalised costs will be written off to the income statement as exploration costs unless commercial reserves are established, or

the determination process is not completed and there are no indications of impairment in accordance with the Group's accounting policy. The process of determining whether there is an indicator for impairment or calculating the impairment requires critical judgement. The key areas in which management has applied judgement are as follows: the Group's intention to proceed with a future work programme; the likelihood of licence renewal or extension; the assessment of whether sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale; and the success of a well result or geological or geophysical survey.

Identification of cash generating units (note 10):

In considering the carrying value of property, plant and equipment the Group has to make a critical judgement in relation to the identification of the smallest cash generating unit to which those assets are allocated.

The Israel development is one CGU, all the production from both the Karish Main and Karish North fields and future production from Tanin and Katlan is processed through the FPSO and flows through one pipeline onto gas buyers and therefor there are no separate cash inflows.

2.         Estimation uncertainty:

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities, are discussed below:

 

NOTE 4: -     Critical accounting estimates and judgments (Cont.)

Carrying value of property, plant and equipment (note 10):

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an indicator of impairment exists, the recoverable amount (which is the higher of fair value less costs to sell and value in use) of the cash-generating unit to which the assets belong is then estimated based on the present value of future discounted cash flows.

For oil and gas assets, the expected future cash flow estimation is based on a number of factors, variables and assumptions, the most important of which are estimates of reserves, future production profiles, oil prices and costs. In most cases, the present value of future cash flows is most sensitive to estimates of future oil and gas price, estimates of reserves, estimates of development costs and discount rates.

A change in the assumptions could materially change the recoverable amount. In the event that future circumstances vary from these assumptions, the recoverable amount of the Group's development and production assets could change materially and result in impairment losses or the reversal of previous impairment losses.

Hydrocarbon reserve and resource estimates (Note 10, 11, 12 and 17):

The Company's oil and gas development and production properties are depreciated on a unit of production basis at a rate calculated by reference to developed and undeveloped proved and probable commercial reserves (2P developed and undeveloped) which are estimated to be recoverable with existing and future developed facilities using current operating methods, determined in accordance with the Petroleum Resources Management System published by the Society of Petroleum Engineers, the World Petroleum Congress and the American Association of Petroleum Geologists.
Commercial reserves are determined using estimates of oil and gas in place, recovery factors and future oil prices. The level of estimated commercial reserves is also a key determinant in assessing whether the carrying value of any of the Company's oil and gas properties has been impaired. As the economic assumptions used may change and as additional geological information is produced during the operation of a field, estimates of recoverable reserves may change.

Such changes may impact the Company's reported financial position and results which include:

•      Depreciation and amortisation charges in profit or loss may change where such charges are determined using the units of production method, or where the useful life of the related assets change.

•      Impairment charges in the income statement

•      Provisions for decommissioning may change - where changes to the reserve estimates affect expectations about when such activities will occur and the associated cost of these activities.

•      The recognition and carrying value of deferred tax assets may change due to changes in the judgements regarding the existence of such assets and in estimates of the likely recovery of such assets.

Decommissioning provision (Note 17):

There is uncertainty around the cost of decommissioning as cost estimates can vary in response to many factors, including from changes to market rates for goods and services, to the relevant legal requirements, the emergence of new technology or experience at other assets. The expected timing, work scope, amount of expenditure, discount and inflation rates may also require estimation. Therefore, significant estimates and assumptions are made in determining

the provision for decommissioning. The discount rate applied to determine the carrying amount of provisions provides a source of estimation uncertainty as referred to in IAS 1

The estimated decommissioning costs are reviewed annually by management and the results of this review are then assessed alongside estimates from operators. Provision for environmental cleanup and remediation costs is based on current legal and contractual requirements, technology and price levels. Discount rate applied is reviewed regularly and adjusted following the changes in market rates.

The Group considers the impact of climate change on environmental restoration and decommissioning provisions, specifically the timing of future cash flows, and has concluded that it does not currently represent a key source of estimation uncertainty. Changes to legislation, including in relation to climate change, are factored into the provisions when the legislation becomes enacted.

NOTE 5: -     Revenues

		2025 $'000		2024 $'000
Revenue from gas sales (1)		848,887		838,881
Revenue from hydrocarbon liquids sales (2)		316,326		400,230
Total revenue		1,165,213		1,239,111

⁽¹ Sales gas for 2025 totaled approximately 5.6 bcm (billion cubic metres) and for 2024 totaled approximately 5.5 bcm.

⁽²⁾ Sales from hydrocarbon liquids for 2025 totaled approximately 5,065 kbbl (kilo barrel) and for 2024 totaled approximately 5,351 kbbl.

 

Additional information on revenues:

		2025 $'000		2024 $'000
Revenues from major customers which each accounts for 10% or more of total revenues reported in the financial statements:
Customer A (1)		316,326		400,230
Customer B (2)		NA		135,872

⁽¹⁾ As of December 31, 2025, and December 31, 2024, Customer A had no outstanding balance

⁽²⁾ As of December 31, 2024, the Customer's B total outstanding balance was US$27.4 million. As of December 31, 2025, transactions conducted with Customer B fell below the 10% threshold

 

 

 

 

NOTE 6: -     Operating profit before taxation

		2025 $'000		2024 $'000
(a)   Cost of sales
Staff costs (Note 7)		17,431		16,469
Energy cost		2,367		2,109
Royalty payable		206,196		219,273
Depreciation (Note 10)		276,248		262,074
Other operating costs (1)		105,909		100,780
Oil stock movement		2,781		(1,847)
Total cost of sales		610,932		598,858
(b)   General & administration expenses
Staff costs (Note 7)		5,687		4,542
Share-based payment charge (note 7, 20)		1,354		1,207
Depreciation and amortisation (Note 10, 11)		1,880		2,132
Auditor fees (2)		344		313
Other general & administration expenses (3)		11,299		8,474
Total administrative expenses		20,564		16,668
(c)    Exploration expenses written off
Exploration expenses written off (4)		1,994		-
Total exploration and evaluation expenses		1,994		-
(d)   Other expenses
Loss from disposal of property, plant and equipment		-		448
Other expenses(5)		9		600
Total other expenses		9		1,048
(e)   Other income
Insurance compensation due to remedial work on auxiliary piping systems		9,500		-
Other income		294		269
Total other income		9,794		269

⁽¹⁾ Other operating costs comprise of planned maintenance and insurance.

⁽²⁾ In addition to the services outlined in the preceding table, the Company's auditor also rendered services related to the refinance of US$0.06 million in 2024. These services were capitalised as transaction costs.

⁽³⁾ The Other general & administration expenses mainly consists of legal expenses, intercompany management fees and external advisors fees.

⁽⁴⁾ The licence for Block 21 expired on 13 January 2025. Capitalized costs associated with Block 21 were written off. (Refer to Note 11).

⁽⁵⁾ Legal claim settlement in 2024.

 

 

 

NOTE 7: -     Staff costs

The average monthly number of employees employed by the Group was:

				2025			2024
Average number of employees		147				119

 

					2025 $'000					2024 $'000
Salaries and social security costs (1)			22,096				19,456
Pension contribution			3,316				2,993
Share-based payments			1,354				1,207
Total staff costs			26,766				23,656
Payroll Cost capitalised in oil & gas assets		(2,294)							(838)
Staff cost expensed			24,472				22,218
Included in:
Total payroll cost in cost of sales			17,431				16,469
Total payroll cost in administration expenses			7,041				5,749
			24,472				22,218

 

NOTE 8: -     Net finance costs

		2025 $'000		2024 $'000
Interest on borrowing (Note 16)		184,267		170,035
Interest expense on long terms payables		-		1,245
Less amounts included in the cost of qualifying assets (Note 10(a), 11(a))		(40,724)		(14,626)
		143,543		156,654
Costs related to parent company guarantees		2,121		2,898
Other finance costs and bank charges		4,849		1,768
Unwinding of discount on trade payable (Note 18(2))		8,969		14,417
Unwinding of discount on provision for decommissioning (Note 17)		4,095		3,951
Unwinding of discount on right of use asset (1)		518		813
Less amounts included in the cost of qualifying assets (Note 10(a))		(473)		(722)
		20,079		23,125
Total finance costs		163,622		179,779
Interest income from time deposits		(4,918)		(8,894)
Interest income from related parties		(224)		-
Loss (Income) from hedging operations		(233)		392
Other interest income		(15)		-
Total finance income		(5,390)		(8,502)
Net foreign exchange losses		18,713		938
Net finance costs		176,945		172,215

 

 

NOTE 9: -     Taxation

1.      Corporate Tax rates applicable to the Company:

Israel:

The Israeli corporate tax rate is 23% in 2025 and 2024.

United Kingdom:

Starting from 1 January 2024, the company's control and management was transferred from the Republic of Cyprus to the United Kingdom ("UK") and as such the company's tax residency migrated from Cyprus to UK from the first day of the accounting period. The applicable tax rate in the UK is 25%.

The Group's taxable profits arise in Israel through the Israeli branch and are taxed at the Israeli statutory tax rate of 23%. No material taxable income was generated at the UK parent entity level.

Under s.18A of the UK CTA 2009, the Company made an election for the branch of Energean Israel Limited (and any other branches that may open from time to time) to be exempt from UK corporation tax from its first accounting period commencing on 1 January 2024 and all subsequent accounting period.

2.      The Income and Natural Resources Taxation Law, 5771-2011 - Israel- the main provisions of the law are as follows:

In April 2011, the Knesset passed the Income and Natural Resources Tax Law, 5771-2011 ("the Law"), introducing an oil and gas profits levy at a rate calculated as described. The rate of the levy will be calculated according to a proposed R factor mechanism, according to the ratio between the net accrued revenues from the project and the cumulative investments as defined in the law. A minimum levy of 20% will be levied at the stage where the R factor ratio reaches 1.5, and when the ratio increases, the levy will increase gradually until the maximum rate of 50% until the ratio reaches 2.3. In addition, it was determined that the rate of the levy as stated will be reduced starting in 2017 by multiplying 0.64 by the difference between the corporate tax rate prescribed in section 126 of the Income Tax Ordinance for each tax year and the tax rate of 18%. In accordance with the corporate tax rate from 2018 onwards, the maximum rate will be 46.8%.

In addition, additional provisions were prescribed regarding the levy, inter alia, the levy will be recognised as an expense for the purpose of calculating income tax; The limits of the levy shall not include export facilities; The levy will be calculated and imposed for each reservoir separately (Ring Fencing); Payment by the owner of an oil right calculated as

a percentage of the oil produced, the recipient of the payment will be liable to pay a levy according to the amount of the

payment received, and this amount will be subtracted from the amount of the levy owed by the holder of the oil right. The law also sets rules for the unification or separation or consolidation of oil projects for the purposes of the Law. In accordance with the provisions of the Law, the Group is not yet required to pay any payment in respect of the said levy, and therefore no liability has been recognised in the financial statements in respect of this payment.

 

3.      Taxation charge:

		2025 $'000	2024 $'000
Current income tax charge		(84,199)	(81,703)
Prior years income tax		-	(30)
Deferred tax relating to origination and reversal of temporary differences (Note 12)		(972)	(22,140)
Total taxation expense		(85,171)	(103,873)

 

 

 

 

 

NOTE 9: -       Taxation (Cont.)

4.      Reconciliation of the total tax charge:

The reconciliation between the tax expense, assuming that all the income, expenses, gains and losses in profit or loss were taxed at the statutory tax rate of Israel and the taxes on income recorded in profit or loss is as follows:

		2025 $'000		2024 $'000
Profit before tax		364,563		450,591
Tax credit at the applicable tax rates of 23% (1)		(83,849)		(103,636)
Effect of unrecognised deferred tax assets(2)		(1,092)		(12)
Permanent differences - non deductible (3)		(272)		20
Prior year tax		-		(30)
Other adjustments		42		(215)
Taxation expenses		(85,171)		(103,873)
Effective tax rate		23%		23%

¹⁾      For the reconciliation of the effective tax rate, the statutory tax rate of the Israeli Branch of 23% has been used.

²⁾      Temporary differences primarily comprise unused tax losses of Energean Israel Finance Ltd, including losses generated during the year, for which no deferred tax asset has been recognised.

³⁾      Permanent differences consisted of non-deductible expenses with the majority derived from the Israeli Branch and, inter alia, related to refreshments, accommodation, donations and travelling.

The Group is within the scope of the Pillar Two Model Rules starting from 1 January 2025. Legislation implementing these rules has been enacted or substantively enacted in a number of jurisdictions in which the Group operates.  The Group has applied the mandatory temporary exception under IAS 12 from recognising and disclosing deferred taxes related to Pillar Two income taxes.

The Group has performed an assessment of its potential exposure to Pillar Two top-up taxes. Based on the analysis performed using information currently available, including consideration of transitional safe harbour provisions where applicable, the Group does not expect material exposure to arise. Accordingly, no amount has been recognised in the consolidated financial statements for the year.

The Group will continue to monitor developments in legislation, guidance and the geographic mix of earnings, which may impact future periods.

 

 

 

NOTE 10: -   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 2024		2,979,038		16,986		2,390		2,998,414
Additions (1)		172,421		1,363		351		174,135
Transfer from Intangible Assets (2)		205,324		-		-		205,324
Disposals		(448)		-		-		(448)
Capitalised borrowing cost		15,348		-		-		15,348
Change in decommissioning provision		(11,207)		-		-		(11,207)
Total cost at 31 December 2024		3,360,476		18,349		2,741		3,381,566
Additions (1)		390,756		8,988		937		400,681
Lease disposal (3)		-		(11,250)		-		(11,250)
Capitalised borrowing cost		40,144		-		-		40,144
Change in decommissioning provision		547		-		-		547
Total cost at 31 December 2025		3,791,923		16,087		3,678		3,811,688
Depreciation:
At 1 January 2024		195,124		4,425		1,034		200,583
Charge for the year		258,328		4,962		418		263,708
Total Depreciation at 31 December 2024		453,452		9,387		1,452		464,291
Charge for the year		271,276		5,755		527		277,558
Lease disposal (3)		-		(7,190)		-		(7,190)
Total Depreciation at 31 December 2025		724,728		7,952		1,979		734,659
At 31 December 2024		2,907,024		8,962		1,289		2,917,275
At 31 December 2025		3,067,195		8,135		1,699		3,077,029

⁽¹⁾ The additions to oil & gas assets in 2025 and 2024 are primarily due to development costs for Katlan and the second oil train.

Second oil train lift safely and successfully performed in Q4 2024. The commencement of operation is expected to take place in Q2 2026, which will result in an increase in liquids' production capacity.

⁽²⁾ The Final Investment Decision for Katlan was made in July 2024, and the concession agreement granted in the same month expires in 2054. Refer to note 11 for further details.

⁽³⁾ The lease disposal pertains to the termination of vessel lease in May 2025.

Borrowing costs capitalised for qualifying assets during the year are calculated by applying a weighted average interest rate of 7.02% for the year ended 31 December 2025 (for the year ended 31 December 2024: 3.93%).

 

 

 

NOTE 10: -   Property, Plant and Equipment (Cont.)

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

	2025 $'000		2024 $'000
Cost of sales	276,248		262,074
Administration expenses	1,310		1,634
Total	277,558		263,708

c.   Cash flow statement reconciliations:

				2025 $'000		2024 $'000
Additions and disposals to property, plant and equipment			400,681		174,135
Associated cash flows
Payments for additions to property, plant and equipment			(475,531)		(260,013)
Non-cash movements/presented in other cash flow lines
Right-of-use asset additions			(8,988)		(1,363)
Repayment of lease liabilities			6,139		5,691
Movement in working capital			77,699		81,550

 

d.  Details of the Group's rights in petroleum and gas assets are presented in note 1.

 

 

 

NOTE 11: -   Intangible Assets

a.  Composition:

		Exploration and evaluation assets $'000		Other Intangible assets (1) $'000		Total $'000
Cost:
At 1 January 2024		166,466		2,330		168,796
Additions		133,224		536		133,760
Transfer to Property Plant and Equipment (2)		(205,324)		-		(205,324)
At 1 January 2025		94,366		2,866		97,232
Additions		1,860		51,498		53,358
Capitalized borrowing cost		-		580		580
At 31 December 2025		96,226		54,944		151,169
Amortisation:
At 1 January 2024		-		631		631
Charge for the year		-		498		498
Total Amortisation at 31 December 2024		-		1,129		1,129
Charge for the year		-		570		570
Impairment of exploration and evaluation assets		1,994		-		1,994
Total Amortisation at 31 December 2025		1,994		1,699		3,692
At 31 December 2024		94,366		1,737		96,103
At 31 December 2025		94,232		53,245		147,477

 

The additions to exploration and evaluation assets in 2025 are mainly related to Nitzana pipeline, see note (1) below. In 2024, additions mainly related to pre-FID costs for Block 12 "Katlan".

 

⁽¹⁾ Nitzana transmission agreement- In October 2025, the company signed a transmission agreement with Israel Natural Gas Lines Ltd. ("INGL") for capacity in the Nitzana pipeline. The agreed terms in the transmission agreement are for the supply of up to 1 bcm/year up to 6 bcm total contracted supply for a 15-year period, with provisions for extensions and early termination. The terms also include rights, during the construction phase, to access available capacity in the Jordan-North pipeline. Nitzana is expected to be operational no later than 36 months from end of October 2025.

The Company's 16.4% share of the construction costs for the pipeline and compression station is expected to be approximately US$100 million (excludes contingency amounts, which may add up to an additional 12%, as per the transmission agreement) and will primarily be funded via the Unsecured Term Loan. Refer to note 16 below. During the fourth quarter of 2025, approximately US$50 million was paid, representing approximately 50% of the total expected investment. The remaining investment will be made in accordance with the milestones set out in the agreement with INGL. As the Group does not obtain ownership of, or control over, the physical pipeline asset, but instead acquires a contractual right to access defined transportation capacity for a period of 15 years, the arrangement has been recognised as an intangible asset in accordance with IAS 38. The asset will be amortised on a straight-line basis over the 15-year access period from the date the pipeline becomes operational.

 

 

 

NOTE 11: -   Intangible Assets (Cont.)

 

⁽²⁾ Katlan Final Investment Decision- In July 2024, the Ministry of Energy and Infrastructure granted the Company a 30-year concession for the Katlan area including a 20-year extension option. Following this, Energean announced in July 2024 that it had taken Final Investment Decision ("FID") for the Katlan development project in Israel. The Katlan area will be developed in a phased approach through a subsea tieback to the existing Energean Power FPSO. First gas is planned for H1 2027. The EPCI (Engineering, Procurement, Construction and Installation) contract for the subsea scope was awarded to Technip FMC and includes four-well-slot tieback capacity to a single large ~30 kilometer production line, which can be used by future Katlan area phases.

 

b.  Cash flow statement reconciliations:

		2025 $'000		2024 $'000
Additions to intangible assets		53,358		133,760
Associated cash flows
Payment for additions to intangible assets		(53,212)		(127,407)
Non-cash movements/presented in other cash flow lines
Movement in working capital		(145)		(6,353)

 

c.  Details on the Group's rights in the intangible assets:

Right	Type of right	Valid date of the right	Group's interest as at 31 December 2025
Block 23	Licence	13 January 2027	100%
Block 31	Licence	13 January 2027	100%

 

As of 31 December 2025, the Group holds two licences to explore for gas and oil in Block 23 and Block 31, which are located in the economic waters of the State of Israel.

 

 

 

NOTE 12: -   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 depends on the purchase date and the nature of asset. The general capital 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.

Below are the items for which deferred taxes were recognised:

		Property, plant and equipment & intangible assets $'000		Right of use asset IFRS 16 $'000		Tax losses $'000		Deferred expenses for tax $'000		Staff leaving indemnities $'000	Accrued expenses and other short‑term liabilities and other long‑term liabilities $'000	Derivative liability $'000	Total $'000
At 1 January 2024		(61,050)		(2,888)		8,983		4,082		337	3,551	-	(46,985)
Increase/(decrease)for the year through:
Profit or loss		(12,040)		860		(8,983)		(1,373)		(45)	(559)	-	(22,140)
Other comprehensive income		-		-		-		-		-	-	79	79
At 31 December 2024		(73,090)		(2,028)		-		2,709		292	2,992	79	(69,046)

 

		Property, plant and equipment & intangible assets $'000		Right of use asset IFRS 16 $'000		Tax losses $'000		Deferred expenses for tax $'000		Staff leaving indemnities $'000	Accrued expenses and other short‑term liabilities and other long‑term liabilities $'000	Derivative liability/ asset $'000	Total $'000
At 1 January 2025		(73,090)		(2,028)		-		2,709		292	2,992	79	(69,046)
Increase/(decrease) for the year through:
Profit or loss		(679)		190		-		(546)		5	59	-	(972)
Other comprehensive income		-		-		-		-		-	-	(8,469)	(8,469)
Cashflow hedge related to basis adjustment		-		-		-		-		-	-	2,492	2,492
At 31 December 2025		(73,769)		(1,838)		-		2,163		297	3,050	(5,898)	(75,995)

 

		2025 $'000		2024 $'000
Deferred tax liabilities		(81,505)		(75,118)
Deferred tax assets		5,510		6,072
		(75,995)		(69,046)

NOTE 13: -   Trade and other receivables

		2025 $'000		2024 $'000
Current
Financial items    Trade receivables
Trade receivables		121,006		108,085
Receivables from related parties		6		330
Other receivables (1)		5,737		5,038
Accrued interest income		968		1,048
		127,717		114,501
Non-financial items
Prepayments and prepaid expenses		10,231		6,779
Refundable excise		7,954		-
		18,185		6,779
Total current trade and other receivables		145,902		121,280
Non-current
Non-financial items
Prepayments and prepaid expenses		12,282		9,848
Total non-current trade and other receivables		12,282		9,848

⁽¹⁾ The balance mainly relates to the agreement with INGL for the transfer of title (the "Hand Over") of the near shore and onshore segments of the infrastructure that delivers gas from the Energean Power FPSO into the Israeli national gas transmission grid. The Hand Over became effective in March 2023 and the final amount of approximately US$5 million is expected to be received in 2026.

The table below summarises the maturity profile of the Group receivables:

31 December 2025 ($'000)	Carrying amounts	Contractual cash flows	3 months or less	3-12 months
Trade receivables	121,006	121,006	121,006	-
Short term other receivables	6,711	6,711	977	5,734
Total	127,717	127,717	121,983	5,734

 

31 December 2024($'000)	Carrying amounts	Contractual cash flows	3 months or less	3-12 months
Trade receivables	108,085	108,085	108,085	-
Short term other receivables	6,416	6,416	1,387	5,029
Total	114,501	114,501	109,472	5,029

 

 

 

NOTE 14: -   Inventories

		2025 $'000		2024 $'000
Hydrocarbon liquids		1,031		3,581
Natural gas		506		502
Raw materials and supplies		19,454		12,631
Total		20,991		16,714

 

NOTE 15: -   Cash and cash equivalents

		2025 $'000	2024 $'000
Cash and cash equivalents		118,819	157,728
Total		118,819	157,728

Cash and cash equivalents comprise short-term deposit accounts that are readily convertible into known amounts of cash. The effective interest rate on short‑term bank deposits was 4.87% for the year ended 31 December 2025 (year ended 31 December 2024: 4.835%).

 

NOTE 16: -   Borrowings

US$2,000 Million Senior secured notes (the "Notes"):

On 24 March 2021 (the "Issue Date"), Energean Israel Finance Ltd (a 100% subsidiary of the Company) issued US$2,500 million of senior secured notes. The proceeds were primarily used to prepay in full the Project Finance Facility.

On 11 July 2023, Energean Israel Finance Ltd completed the offering of US$750 million aggregate principal amount of the Notes bearing a fixed annual interest rate of 8.500%. The proceeds were used mainly to repay the US$625 million Notes series due in March 2024. On 21 September 2025, Energean Israel Finance Ltd redeemed in full the US$625 million Notes series due

in March 2026, See below disclosure regarding the US$750 Million Secured Term Loan. As of 31 December 2025, the group has three Senior secured notes series of the total amount of US$2,000 Million.

 

US$750 Million Secured Term Loan:

In February 2025 Energean Israel Finance Ltd signed a 10-year, senior-secured term loan with banking corporation in Israel as the facility agent and arranger for US$750 million (the "Term Loan" and the "Term Loan Agent", respectively). The purpose of Term Loan was to refinance its 2026 senior secured notes and provide additional liquidity for the Katlan development. Up to US$475 million is in US dollars and up to US$275 million is in New Israeli Shekel. The Term Loan bears a floating interest rate of SOFR plus a margin on the USD component and the Bank of Israel (BOI) rate plus a margin on the ILS component. The Term Loan is secured on the assets of the Group (including the Company's shares), pari passu with the senior secured Notes, non-recourse to Energean plc and has a bullet repayment in 2035 (refer to note 12(d) for related collaterals).

As of 31 December 2025, Energean Israel Finance Ltd drew down the full US$750 million amount of the Term Loan.

 

US$70 Million Unsecured Term Loan:

In October 2025, the Company signed an unsecured term loan facility agreement with a banking corporation in Israel for US$70 million ("Unsecured Term Loan"), to fund the development of the Nitzana pipeline (see note 11(1)). The Unsecured Term Loan bears a floating interest rate of SOFR plus a margin and non-utilization fee.

During October 2025, the Company drew US$33.2 million from the above facility loan and US$36.2 million was drawn as a letter of credit in favor of INGL (see note 21(b)).

NOTE 16: -   Borrowings (Cont.)

 

Composition:

 

Series	Type	Maturity	Annual fixed Interest rate	31 December 2025 Carrying value $'000		31 December 2024 Carrying value $'000
US$ 625 million	Senior secured notes	30 March 2026	4.875%	-		622,102
US$ 625 million	Senior secured notes	30 March 2028	5.375%	621,144		619,602
US$ 625 million	Senior secured notes	30 March 2031	5.875%	618,673		617,689
US$ 750 million	Senior secured notes	30 September 2033	8.5%	735,990		734,820
US$ 275 million	Secured term Loan	26 February 2035	3.1%+ BOI	279,850		-
US$ 475 million	Secured term Loan	26 February 2035	4.25%+ SOFR	456,580		-
US$ 33.2 million	Unsecured term Loan	30 September 2034	3.9%+ SOFR	31,848		-
				2,744,085		2,594,213

The interest on each series of the Notes and loans is paid semi-annually, on 30 March and on 30 September of each year.

The Notes are listed on the TACT Institutional of the Tel Aviv Stock Exchange Ltd. (the "TASE").

With regards to the indenture document, signed on 24 March 2021 with HSBC BANK USA, N.A (the "Trustee"), no indenture

default or indenture event of default has occurred and is continuing.

Collateral:

The Company has provided the following collateral in favor of HSBC BANK USA, N.A, which serves as the "Collateral Agent" under both the Notes and the Term Loan:

1)      First rank fixed charges over the shares of Energean Israel Limited, Energean Israel Finance Ltd and Energean Israel Transmission Ltd, the Karish & Tanin Leases, the gas sales purchase agreements ("GSPAs"), several bank accounts, operating permits, insurance policies, the Company's exploration licences and the INGL Agreement.

2)      Floating charge over all of the present and future assets of Energean Israel Limited and Energean Israel Finance Ltd (except specifically excluded assets).

3)      The Energean Power FPSO.

 

Credit rating:

The senior secured Notes have been assigned a Ba3 rating by Moody's and a BB- rating by S&P Global.

 

a. Restricted cash:

As of 31 December 2025, the Company had short-term restricted cash of US$97.65 million (31 December 2024: US$82.43 million), which will be used for the March 2026 interest payment. For details regarding the interest rate, see Note 15

NOTE 16: -   Borrowings (Cont.)

b.    Reconciliation of liabilities arising from financing activities:

 

	1 January	Cash outflows	Cash inflows	Additions	Borrowing costs including amortisation of arrangement fee	Foreign exchange impact	Reclassification	31 December
2025 ($'000)	2,604,276	(834,896)	783,199	8,988	184,785	19,239	(8,142)	2,753,095
Borrowings	2,594,213	(828,757)	783,199	-	184,267	19,305	(8,142)	2,744,085
Lease liabilities	10,063	(6,139)	-	8,988	518	(66)	-	9,010
2024 ($'000)	2,648,244	(231,683)	-	1,349	172,094	(6)	14,278	2,604,276
Borrowings	2,588,492	(178,592)	-	-	170,035	-	14,278	2,594,213
Lease liabilities	13,598	(5,691)	-	1,349	813	(6)	-	10,063
Deferred license payments (1)	46,154	(47,400)	-	-	1,246	-	-	-

 

⁽¹⁾ Cash outflows relate to finance costs paid for deferred license payments of approximately US$4,000 thousand in 2024 and payment for purchase of oil & gas leases of US$43,400 thousand in 2024, which are included in the cash flows from financing and investing activities respectively, in the Consolidated Statement of Cash Flows.

NOTE 17: - Decommissioning provision

 

		2025 $'000		2024 $'000
At 1 January		85,357		92,613
New provisions		-		-
Changes in estimates		547		(11,207)
Unwinding of discount		4,095		3,951
At 31 December		89,999		85,357
Current provisions		-		-
Non-current provisions		89,999		85,357

 

As of 31 December 2025, the decommissioning provision represents the present value of decommissioning costs relating to the four wells for Karish, Karish North and subsea infrastructure. The decommissioning provision represents the present value of decommissioning costs relating to oil and gas properties, which are expected to be incurred up to 2044, when the producing oil and gas properties are expected to cease operations. These provisions have been created based on the Group's internal estimates. Assumptions based on the current economic environment have been made, which management believes form a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual decommissioning costs will ultimately depend upon future market prices for the necessary decommissioning works required that will reflect market conditions at the relevant time.

Furthermore, the timing of decommissioning is likely to depend on when the fields cease to produce at economically viable rates. This, in turn, will depend upon future oil and gas prices, which are inherently uncertain.

As of 31 December 2025, the inflation assumption applied ranges from 2.19% to 2.7%. (31 December 2024: 2.15% to 2.7%).  The discount rate applied is 4.71% (31 December 2024: 4.86%).  Depreciation is based on the depletion method upon commercial reserves.

NOTE 18: -   Trade and other payables

			2025 $'000			2024 $'000
Current
Financial items
Trade accounts payable (2)			159,638			140,840
Payables to related parties (Note 22)			14,812			11,021
Other creditors (1)			36,803			35,468
Short term lease liabilities			5,002			5,296
			216,255			192,625
Non-financial items
Accrued expenses			29,457			24,480
Other finance costs accrued			49,275			41,133
Social insurance and other taxes			940			504
Deferred revenues			5,530			-
VAT payable			9,677			4,182
			94,879			70,299
Total current trade and other payables			311,134			262,924
Non-current
Financial items
Trade and other payables (2)				-		61,758
Long term lease liabilities				4,008		4,767
				4,008		66,525
Non-financial items
Accrued expenses to related parties				409		519
				409		519
Total non-current trade and other payables				4,417		67,044

⁽¹⁾       The amount mainly comprises of royalties payables to the Israel government and third parties with regards to the Karish Lease, including US$13.1 million (2024: US$12.9 million) of royalties payable to third parties. Contractual royalties are payable to NewMed (previously Delek Drilling) and third-party holders at a total rate of 7.5%, increasing to 8.25% after the date at which the lease in question starts to pay the oil and gas profits levy. The royalty payable to NewMed under the SPA is calculated on the value of the total amount of natural gas and condensate produced at the wellhead without any deduction (except for natural gas and Petroleum (as defined under the Petroleum Law) used in the production process). No contractual royalties under the SPA will be payable on future discoveries that were not part of the original acquisition of the Karish and Tanin leases.

⁽²⁾       The amount represents a long-term amount payable in terms of the EPCIC (Engineering, Procurement, Construction, Installation and Commissioning) contract. Following the amendment to the terms of the deferred payment agreement with Technip signed in February 2024, the remaining amount payable under the EPCIC contract has been reduced to US$210 million. The amount is payable in twelve equal quarterly deferred payments starting in March 2024 and therefore has been discounted at 8.668% per annum (being the yield rate of the senior secured loan notes, maturing in 2026, as at the date of agreeing the payment terms). As of 31 December 2025, 8 installments have been paid and the remaining outstanding payable amounted to US$67.1 million.

 

 

 

NOTE 19: -   Equity

a.      Share capital:

		31 December 2025				31 December 2024
		Number of shares		US$		Number of shares		US$
Authorised, issued and fully paid
Ordinary A shares of US$1 each		1,708,415		1,708,415		1,708,415		1,708,415

b.      Shares rights:

An ordinary share gives the shareholder the right to vote on matters put before all of the shareholders of the Company. One share equals one vote. An ordinary share also provides the shareholder with the right to receive a share of the Company's profits by way of dividends.

c.       Dividends:

Dividends of US$129million were declared and paid during 2025 and US$394 million were declared and paid during 2024.

e.       Share Premium:

The share premium of US$212,539 thousand is presented net of transaction costs amounting to US$53 thousand, which were capitalised the past.

NOTE 20: -   Share-based payment

Analysis of share-based payment charge:

		2025 $'000		2024 $'000
Energean Long Term Incentive Plan		949		891
Energean Deferred Share Bonus Plan		405		316
Total share-based payment charge		1,354		1,207
Expensed as administration expenses		1,354		1,207
Total share-based payment charge		1,354		1,207

Energean plc's Long Term Incentive Plan (LTIP)

Under the Energean plc's  LTIP rules, senior executives may be granted conditional awards of shares or nil cost options.  Awards are subject to performance conditions, including Total Shareholder Return (TSR) normally measured over a period of three years. Vesting of awards is generally subject to an individual remaining in employment except in certain circumstances such as good leaver and change of control. Awards may be subject to a holding period following vesting. No dividends are paid over the vesting period; however, Energean plc's Board may decide at any time prior to the issue or transfer of the shares in respect of which an award is released that the participant will receive an amount (in cash and/or additional Shares) equal in value to any dividends that would have been paid on those shares on such terms and over such as the Energean plc Board may determine. This amount may assume the reinvestment of dividends (on such basis as the Board may determine) and may exclude or include special dividends.

The weighted average remaining contractual life for LTIP awards outstanding at 31 December 2025 was 1.58 years, (31 December 2024: 1.29 years).

All amounts related to share-based payments are recognised as liabilities, because Energean plc charges the Group, using the share price at grant date, for the shares issued upon vesting.

 

NOTE 20: -   Share-based payment (Cont.)

Deferred Share Bonus Plan (DSBP)

Under the DSBP, a portion of any annual bonus of a senior executive may be deferred into shares.

Deferred awards are usually granted in the form of conditional share awards. Deferred awards usually vest two years after award although they may vest early on leaving employment or on a change of control.

The weighted average remaining contractual life for DSBP awards outstanding at 31 December 2025 was 0.80 year, (31 December 2024 was 0.61 year).

All amounts related to share-based payments are recognised as a liability since Energean plc charges the Group, using the share price at grant date, for the shares issued upon vesting.

NOTE 21: -   Material engagements, commitments and contingencies

a.         Material engagements:

a)    New Gas Sales Purchase Agreements ("GSPAs") in the period:

 

1)    During April 2025 the Company signed a Gas Sale and Purchase Agreement ("GSPA") with Kesem Energy Ltd ("Kesem"). The contract is for the supply of gas to Kesem's new power plant, which is estimated to be operational before the end of the current decade. The contracted supply is approx. 1 bcm/year from around the middle of the 2030s with limited quantities of gas supplied intermittently before then. The contract represents over US$2 billion in revenues and approx.12.5 bcm in contracted supply over the approx. 17-year period. The contract contains provisions regarding floor pricing, take or pay and price indexation (not Brent-price linked). The terms of GSPA are in line with the other material, long-term contracts within the Company portfolio.

 

2)    During November 2025 the Company signed a GSPA with Dalia Energy Companies Ltd representing over US$2 billion in contracted revenues. The contract is for approximately 0.5 bcm/year from around January 2030 and then approximately 1.2 bcm/year from June 2035 onwards and excludes supply in the summer months (June to September) between 2030-2034. The contract contains provisions regarding floor pricing, take or pay and price indexation (not Brent-price linked). The terms of GSPA are in line with the other material, long-term contracts within the Company portfolio.

 

b.         Performance guarantees:

		2025 $'000		2024 $'000
Performance guarantees		87,276		50,629

1.     Performance guarantees use -US$48.1 million (31 December 2024: US$48.6 million) of the balance above is related to performance bank guarantees the Company provided to the Ministry of Energy in Israel due to the requirement under its oil and gas licenses and leases. The remaining amount is due to the Company's ongoing operations in Israel.

2.     INGL Nitzana- The Company provided INGL a parent company guarantee ("PCG") from its ultimate parent company, Energean PLC at the amount of ILS 82.5 million (approx. US$ 25.9 million). As of February 2026, the PCG amount decreased to NIS 49.5 million. In addition, the Company provided INGL with a letter of credit issued by a local bank in Israel, which amounted to ILS 115.5 million (approx. US$ 36.2 million) to secure future milestone obligations. Pursuant to the contractual mechanism, future milestone payments will be applied first to reduce the PCG and subsequently to decrease the bank guarantee.

In addition, according to the gas transmission agreement, a Bank Guarantee, provided by a local bank in Israel for the capacity fee in total of ILS 1.5 million, (approx. US$0.5 million), was provided to INGL.