Energean Israel 3Q 2023 Accounts

AS OF 30 SEPTEMBER 2023

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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

NINE MONTHS ENDED 30 SEPTEMBER 2023

30 September (Unaudited)

(*) In April 2022 the Company reduced its share premium capital by US$360 million and credited US$346 million against the shareholder loan account plus accrued interest.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

30 September (Unaudited)

Adjustments to reconcile loss before taxation to net cash provided by operating activities:

NOTE 1: - GENERAL

• 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. Its registered office is at Lefkonos 22, 1st Floor, Strovolos, 2064 Nicosia, Cyprus.
• As of 30 September 2023, the Company had investments in the following subsidiaries:

• The Group's core assets as of 30 September 2023 are comprised of:

NOTE 2: - Accounting policies and basis of preparation

The interim financial information included in this report has been prepared in accordance with IAS 34 "Interim Financial Reporting" . The results for the interim period are unaudited and, in the opinion of management, include all adjustments necessary for a fair presentation of the results for the period ended 30 September 2023. All such adjustments are of a normal recurring nature. 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.

NOTE 3: - Revenues

30 September (Unaudited)

• Sales gas for nine months ended 30 September 2023 totaled approximately 3.1 bcm (the Company started production on 26 October 2022).
• Sales from hydrocarbon liquids for nine months ended 30 September 2023 totaled approximately 2.22 mmbbl (the Company did not sell hydrocarbon liquids during 2022).
• 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 deducted from revenue, as variable consideration, as the gas is delivered to the gas buyers, in accordance with IFRS 15 Revenue Recognition

NOTE 4: - Operating profit (loss) before taxation

30 September (Unaudited)

• Refer also to Note 12.
• Refer also to Note 13.
• Refer also to Note 7(A).

NOTE 6: - Taxation

Taxation charge:

30 September (Unaudited)

• The additions to oil & gas assets in nine month period 2023 are primarily due to development costs for the FPSO, Karish North and 2nd 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.
• Handover to INGL took place on 22 March 2023, please refer to note 13

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

• Depreciation expense for the period has been recognised as follows:

30 September (Unaudited)

• Additions to exploration and evaluation assets are primarily related to the 2022 growth drilling programme undertaken offshore Israel.
• 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.
• Cash flow statement reconciliations:

30 September (Unaudited)

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.

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

NOTE 9: - Deferred taxes (Cont.)

Below are the items for which deferred taxes were recognised:

• The increase from 2022 is due to the recognition of a receivable from INGL, please refer to Note 13(4) for further details.
• Deferred expenses relate to compensation to gas buyers following delays to the supply of gas from the Karish project. This compensation is treated as variable consideration under IFRS 15 Revenue Recognition and therefore, reduced from gas sales following commencement of production, please refer also Note 3.

NOTE 11: - Inventory

NOTE 12: - Borrowings and secured notes

Issuance of US$2,500,000,000 senior secured 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 repay in full the project finance facility.

On 11 July 2023, Energean Israel Finance Ltd. Ltd completed the offering of US$750 million aggregate principal amount of senior secured notes with a fixed annual interest rate of 8.500%. The interest on the Notes will be paid semi-annually, on March 30 and September 30 of each year, beginning on March 30, 2024. The Notes are listed for trading on the TASE-UP of the Tel Aviv Stock Exchange Ltd. (the "TASE"). The proceed from the Offering, was released from escrow in September 2023 and was used to a) refinance the $625 million notes due in 2024 (redemption date on 30 September 2023), b) pay fees and expenses associated with this refinancing, c) contribute towards funding the interest payment reserve account, and d) contribute towards the payment of the final deferred consideration to Kerogen.

The Notes were issued in five tranches as follows:

The Notes are listed on the TASE-UP 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"), as amended and supplemented, no indenture default or indenture event of default has occurred and is continuing.

Collateral:

The Company has provided/undertakes to provide the following collateral in favor of the Trustee:

• 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 sale and purchase agreements ("GSPAs"), several bank accounts, operating permits, insurance policies, the Company's exploration licences and the INGL Agreement.

• 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.

NOTE 13: - Trade and other payables

• Trade payables and accrued expenses relate primarily to development expenditure on the Karish project, with the main contributors being FPSO and subsea construction costs and for drilling activities performed offshore Israel. Trade payables are non-interest bearing.
• In December 2016, the Company acquired the Karish and Tanin leases for US$40 million of upfront consideration plus contingent consideration of US$108.5 million (paid over 10 equal instalments) bearing interest at an annual rate of 4.6%. On 30 September 2023, the total discounted deferred consideration was US$41 million (31 December 2022: US$52million). Refer to Note 16.
• This represents the amount payable to Technip in respect of the EPCIC contract. Under this contract, US$250 million becomes payable nine months following the practical completion date (June 18, 2023), and is payable in eight equal quarterly instalments, bearing no interest. A discount rate of 5.831% has been applied (being the yield rate of the senior secured loan notes, maturing in 2024, at the date of entering into the settlement agreement). The amounts payable to Technip up to 30 September 2024 under this contract are presented as part of trade accounts payable - current.
• The contract liability relates to the agreement with Israel Natural Gas Lines ("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. Following the Hand Over, INGL is responsible for the operations and maintenance of this part of the infrastructure and the related asset (refer to Note 7) and contract liability was derecognised. The final $5million consideration is receivable within 12 months of handover and is recognised within other receivable (refer to Note 10).

NOTE 14: - Financial Instruments

Fair Values:

The fair values of the Group's non-current liabilities measured at amortised cost are considered to approximate their carrying amounts at the reporting date.

The carrying value less any estimated credit adjustments for financial assets and financial liabilities with a maturity of less than one year are assumed to approximate their fair values due to their short-term nature. The fair value of the Group's finance lease obligations is estimated using discounted cash flow analysis based on the Group's current incremental borrowing rates for similar types and maturities of borrowing and are consequently categorized in level 2 of the fair value hierarchy.

There were no transfers between fair value levels during the period.

The fair value hierarchy of financial assets and financial liabilities that are not measured at fair value (but fair value disclosure is required) is as follows:

Fair value hierarchy as at 30 September 2023 (unaudited)

• The senior secured notes are measured at amortised cost in the Group's financial statements. The notes are listed for trading on the TACT Institutional of the Tel Aviv Stock Exchange Ltd (the "TASE"). The carrying amount as of 30 September 2023 was US$2,588 million and as of 31 December 2022 was US$2,471 million.

NOTE 15: - Significant events and transaction during the reporting period

• Gas Sales Agreements - Energean signed spot gas sale and purchase agreement with three Israeli gas buyers. The gas price will be determined in each period, with purchased amounts determined on a daily basis. The agreement will be valid for an initial one-year period with an option to extend subject to ratification by both parties.
• INGL Hand-Over completion - The Hand Over became effective in March 2023. Following the Hand Over, INGL is responsible for the operations and maintenance of this part of the infrastructure.
• Completion of offering of US$750,000,000 senior secured notes - see Note 12.

NOTE 16: - Significant events and transaction after the reporting period

• Interim dividend - An interim dividend of US$78 million was declared and paid on the 18 October, as part of the process to make the final deferred consideration to Kerogen.
• Israel-Hamas conflict (Swords of Iron War) - as of 7 October 2023, following an unprecedented attack against Israel by Hamas, Israel has been declared in a state of war. While the situation has not impacted the Company's production from the FPSO, it is not possible to predict whether the conflict will have a material adverse effect on our future earnings, cash flows and financial conditions.
• Karish and Tanin purchase agreement - In November 2023, Energean Israel reached a settlement with NewMed Energy for the remaining deferred consideration under the original purchase agreement of the Karish and Tanin leases of approximately $47.4 million, which includes the agreed annual interest. This will be paid in 2024 in two instalments. This agreement is final and unappealable.