Good morning from me, and thank you for joining our call today. Obviously, we are in a very interesting time where energy prices and the energy scene is in the center of every discussion around the world. Energean is proving to be correct with the strategy to have invested in the last 2-3 years when the rest of the industry was not investing. The results of our activities, and I will start with the key messages from today's presentation, are that, first of all, the assets that we bought from Edison are exceeding our expectations.
I remind everyone that we bought the portfolio from Edison when the oil price was at a very low level, around $20 a barrel, and the gas price in Europe, if you all remember those days, was around about EUR 15 a megawatt hour. Obviously, the assets that are performing in Italy and Egypt from the old Edison portfolio are exceeding our expectations, giving us very strong results, which Panos will cover later. The key flagship project, our project in Israel, Karish, is on track for first gas in the next weeks. Now, to avoid any confusion, what do we mean by weeks? We are introducing hydrocarbons to the system, to the FPSO within September, and there is a lot of work going on. This has been a multi-year, multi-billion dollar project that is now ready to start production.
All the wells are hooked up. We are in the final stages of commissioning, and the team is doing a fantastic job as we have promised within this quarter. The combination of the strong performance of the Edison assets, the confidence we have in the startup of Karish, the strong liquidity position, and the fact that we have pushed out debt maturities to the future, allowed us to declare our maiden dividend. Again, we are delivering on what we promised. Last time we spoke, we gave everyone our dividend policy. We're coming today to declare the first dividend in line with our expectation and our projections to be a stable cash flow generation company underpinned by the long-term gas contract that we have in the countries of operation. Energean is not just about Karish and the existing Edison assets.
We are drilling the most ambitious drilling program in the East Mediterranean. 5 deep water wells. We will go through the results later, but we have already discovered Athena. We have de-risked a total of 58 BCM in the wider Olympus area. We're already looking at commercialization options, and we are continuing to drill. Hermes is ongoing. We'll cover it later. We should have results coming up in the next weeks again. Let me flip to page 5 just to cover the highlights of the first half of this year. Revenues, EBITDAX, and liquidity all very strong. Panos will cover the results in a minute. We are increasing our midterm targets to $2.5 billion of revenue and $1.75 billion in terms of EBITDAX.
These are very strong numbers, obviously underpinned by the high commodity prices, but also by the fact that we have long-term cash flows underpinned by the gas contract that we have in Israel and Egypt. On the operational front, we delivered the FPSO in Israel. We've delivered a discovery. We have delivered a new GSPA that will get us all the way to the full capacity of the FPSO, the full 8 BCM that we can produce with IEC, the Israel Electric Corporation, in Israel. We have improved our contractual gas sales prices in Israel and Egypt. On the corporate side, I mentioned about our dividend. We are very happy to give money back to our shareholders that have been very supportive from our IPO all the way to where we are today.
Last, but of course not least, ESG has been always at the focus of Energean. It may not be the first priority of the world today, given that a lot of the countries have already gone back even to lignite to ensure that we have affordable prices this winter. We are continuing our efforts. We are continuing to reduce our carbon intensity. We have become a constituent of the FTSE4Good Index Series. We are getting awards and recognitions from everyone, and we are continuing on our path to become a net zero emitter because that is what Energean is all about. Strong cash flow generation and a leading position on the ESG front. With that, I'd like to hand over to Panos Benos, our CFO, to take you through our key figures for the first half. Thank you.
Thank you, Mathios. Good morning from me as well. As per Mathios's intro, our assets delivered excellent results in first half of 2022, benefiting from the strong commodity price environment, as well as our ability to manage our cost of production in spite of the inflationary pressures our sector is facing. The decline in production versus first half of 2021, mainly driven by the expected natural depletion of Abu Qir, as well as the shutdown of Prinos in the first half of the year. We expect both assets to improve performance in second half, given the scheduled startup of Prinos and of course, the completion of our first infill well in Abu Qir.
The first six months of 2022, we recorded an EBITDAX of around $200 million, which if adjusted for our hedging losses, is over $215 million, and an operating cash flow of around $150 million. All our outstanding hedges are due to terminate end of 2022. Finally, our net debt position has been managed well, well below the $2.5 billion we're expecting around the middle of the year, and only $150 million more than end of 2021, in spite of the $400 million CapEx incurred in the first six months of the year. For the rest of the year, I'm moving to page eight. Based on our latest schedule of ongoing drilling and developments, we expect our producing assets to deliver 34,000-37,000 barrels a day of oil equivalent.
Our whole portfolio, including Israel, to deliver 49-62 thousand barrels of oil equivalent. Cost of production, we're confident it will stay within the $370-$380 million range. We see an increase in our CapEx, $90 million of development CapEx due to a combination of timing of receivables from INGL and Technip, as well as acceleration costs that we had to incur to meet the first gas schedule. Our exploration CapEx has increased because, as Mathios mentioned, we have exercised the 2 optional wells for our drilling campaign in Israel. Our OpEx is reduced down to $15 million, as a number of the commission activities are being deferred.
Finally, a key metric for us, our net debt position, is expected now to not exceed $2.5 billion in spite of the increased CapEx, the dividends announced, and the windfall taxes we're incurring in Italy. As announced before, we expect our end of year net debt position to be our peak net debt position, with rapid deleveraging expected as we bring our all our key projects on stream. Moving to page nine. As a result of the increased contractual gas price in Israel and Egypt, we revise our midterm target to $2.5 billion revenues and $1.75 billion EBITDAX, up from $2 billion and $1.4 billion respectively. I want to emphasize that this revision is based on the new pricing under our long-term gas contracts in Israel and Egypt.
For all our oil production and marketed gas sales in Italy, we're still running scenarios of $65 Brent and EUR 20-25 per MWh on PSV as our long-term assumptions. The mid-term target reflects the annualized performance of our portfolio when all our sanctioned developments have been completed. Currently, the last one is expected to be the Cassiopea gas development in Italy, due to come on stream first half of 2024. Moving to page 10, an update of our capital structure and liquidity position. The group as of 30th of June has cash of $880 million. Our group consolidated net debt is $2,174 million. More specifically, our treasury in Israel has more than $350 million of cash, only a few weeks before we achieve first gas and start recording sales from our gas buyers.
The rest of the group has a liquidity of $450 million, which results in a net debt position excluding Israel of just over $60 million. Finally, our whole debt profile has an average life of 5 years, with fixed coupon payments resulting in a cost of debt of 5.5%, with no exposure to the expected rate increases that the central banks are announcing. Moving to page 12. As mentioned by Mathios, we're obviously very excited to declare our first dividend payment of $50 million, one quarter ahead of the schedule announced with our dividend policy earlier in the year.
We reiterate our commitment to pay at least $1 billion by end of 2025, but aiming to deliver a reliable, credible, and progressive dividend stream that we expect to reach at least $100 million per quarter when our medium-term targets have been met. For the avoidance of any doubt, our dividend policy will always be in line, and under no circumstances will undermine our principle for strong capital structure and deleveraging at levels well below 1.5 times. We're confident we can deliver this to our investors in such volatile and uncertain period for the global economy because of the structure of our portfolio and monetization strategy we have followed. Strategic focus in the Med, more than 80% gas-weighted portfolio, 75% of our forecasted revenue stream underpinned by long-term take-or-pay gas contracts with floor price mechanism protection.
Mathios, back to you for the operational update.
Thank you, Panos. Let me start with page 15. I'm not gonna go through all the numbers. The key message here is that the Egyptian asset, Abu Qir, has performed as per our expectations. The reason that we have revised the production is the delay in the startup of the infill drilling program that's due to the delay in the arrival of the rig, totally outside our controls. Obviously, Egypt will benefit from the NEA/NI production that will come on stream towards the end of this year, and the project there is going extremely well. Italy has averaged 9,300 barrels a day. Half of that roughly is gas and is benefiting from the very high prices we see in Europe. The rest of the portfolio, small production obviously, and we've given you the Israel production guidance earlier.
A few more words on page 16 on the FPSO. The project, as I mentioned earlier, is on track. Our contractor, Technip, are working together to finish the project in the coming weeks. As I mentioned earlier, excuse me, we are introducing gas to the system. Currently, the target date is around the week of the 20th of September to introduce gas to the system. Of course, we will continue with our commercial sales immediately thereafter. The long journey is coming to an end. We have had delays. A lot of them were totally outside our control. We were hit by COVID. We were hit by shutdowns of the yard. Despite all the difficulties, we are delivering the project as we promised. On our growth projects, because this is not just Karish, we have two main projects.
We are installing a second oil crane and a gas riser to increase the capacity of the FPSO to the full 8 BCM and to get to 32,000 barrels a day. That project is on track. Also, Karish North will come on stream as per the project deliverables that we've announced earlier. All projects are on track for end of 2023 to be at full capacity, the 8 BCM, and I wish we had more today. We will be able, with the demand of gas we see in the region, to sell at least double this amount. The whole region that we operate, Israel, Egypt, of course, Europe, Italy, Greece, needs as much gas as we can produce. We are very much focused on getting our production up. Moving to page 19.
NEA/NI coming on stream will bring Egypt back up to 40,000 barrel equivalent a day. That will strengthen our production in the country. We have revised and lifted the gas price agreement we have with the government, and that obviously benefits from the Brent linkage that we have in our gas contracts. Italy, as Panos mentioned on page 20, very strong results. The big news in Italy, of course, will come from the production jump from the delivery of the Cassiopea project operated by Eni, which, as Panos mentioned earlier, we expect to come on stream in 2024. The average price that was realized in the first half was close to EUR 100 per megawatt hour. I remind you that when we bought Edison, it was EUR 15. It's been a fantastic performance for us.
We have paid, obviously, our share through a windfall tax that the Italian government has imposed to give back some of the windfall taxes that we've received, the windfall profits we received. This is the only country that we have a windfall tax situation. Egypt's is a very stable contract without any issues. Israel, obviously, we haven't started production. I'll hand over to Steve to take you-
Sorry.
I'll hand over to Nick, to take you through our commercial update and then to Stephen Moore, our Technical Director, to talk about exploration, and the drilling program. Nick, on to you.
Okay. Thank you, Matthew. Yes, I will start on slide 22, which is primarily about Israel, but I'll just pick up on your last comment, in terms of the very strong financial results from the gas price in Italy. Realized price in the first half, just under a hundred dollars, a hundred euros per megawatt hour, as Matthew said. Obviously, the second quarter, the third quarter has been significantly higher than that again, and we're looking at very strong prices continuing through the rest of the year. That's been an excellent bonus. Israel has also had a boost from pricing, as was mentioned before. I think these days, with the global commodity crisis, there is no such thing as an isolated market.
Even Israel is benefiting from higher prices due to exports to Egypt, pulling prices up, certainly short-term and spot prices. Coal prices have had an effect. We've mentioned the increase in our indexed Israeli gas prices, which are indexed through a local electricity input price, the PPI index, which is strongly influenced still by coal. We have Karish gas coming on within weeks. As Matthew said, we expect to be introducing gas into the FPSO and opening up the wells in September. Production levels will rise as we move through commissioning and in line with nominations from our customers who are transiting from their existing supplier to us in their ability to take as much gas from us as possible.
Those contracts include 3 of the large power stations privatized by IEC, and longer-standing large industrial customers like ORL and ICL. I think it's important to understand also that the agreement that we've signed with IEC will give us the ability to access the market to maximize the well potential and the processing potential of the FPSO. We expect to be producing closer to the dotted line on the graph there than the solid bars. We have signed an MoU with EGAS, as we've previously announced, for up to 3 BCM a year. This is one of the markets which we're targeting with the exploration program that Mathios has mentioned.
We anticipate and hope to be supplying further gas to both the Israeli domestic market and to regional export markets, following the completion of the Olympus and the Hermes and Poseidon area exploration program. We've also made a lot of progress on our oil exports and oil marketing. I remind you, this will be the first time that Israel has exported oil. We've been working very closely with our selected marketing partner, Vitol, on the details of those agreements, principally understanding and developing the logistics necessary to export and do export sales from Israel where they've not been done before.
We're looking forward to a very interesting final quarter this year as we ramp up both to our gas customers, and we would expect to be selling our first cargoes of Karish crude in the fourth quarter as well. I will hand you back now to Stephen Moore, who will talk about that very exciting exploration program.
Thank you, Nick. If we switch to page 23, we've provided you with an illustration of the northern section of Israel, showing our license situation and the drilling program that we're undertaking in 2022. I won't talk about Athena and Zeus, because the next slide covers those in more detail. Just skip through the main results of the other wells. Karish Main 4 was an appraisal well. Main outcomes are that we did confirm that there is an oil rim in the northern part of or the central part of the Karish complex, the northern part of Karish Main. We're evaluating what that means in terms of the development at the moment.
We also found for the first time movable and demonstrated movable gas in the A sands. The A sands are very interesting in Karish area because they're very, very extensive, much larger than the C or the B sands where we're expecting to produce gas from. We're currently still evaluating the volumes in Karish Main A sands. Karish North was a development well. Mathios has already mentioned this. It's the first well of a two-well development at Karish. It will come on stream next year before we start up the second oil train. The main highlight there was it was drilled on budget or under budget, actually, on time.
Becomes one of the quickest and cheapest wells drilled in the East Mediterranean, and we came in shallow, so we found about another 30 meters of structure updip from the original exploration and appraisal wells. Hermes is ongoing. We spudded on the second of August. We're about 37 days into the Hermes campaign. It's going well so far. You see, we're targeting quite a wide range of volumes, and this is just in the Hermes section. Hermes is part of a 5-structure cluster, a little bit like Athena is part of Olympus. We're targeting one of these structures, about 55%-60% chance of finding gas. A big range because nobody's drilled here. We don't know how much sand is in the system.
Thirteen signifies if we find something like Tanin or Athena, 40 if we find something similar to Tamar. In a couple of weeks' time, we'll have the answers of what's going on in Hermes. Okay. If we skip to slide 24. Here you can see a blown-up picture of the Block 12 and Tanin leases. In blue, shaded blue area, you see the structures that we consider as part of the Olympus area. This is, as Mathios says, we've demonstrated from the Athena well and also the results of Tanin, as you can see, which is adjacent to Olympus, that we believe there's about 58 P50 volumes across these. I think there's 10 or 11 structures in the Olympus area.
On top of that, of course, we've got 26-28 BCM in the Tanin discovery, which is broken into three structures, Tanin A, B, and C. We're working hard on all the data we've got from Athena. When we calculated the 58 BCM, we only counted the normal pay in the A, B, and the C sands. We know as we drilled through it, we saw gas shows in between those pays. There's a lot of sand in the shale sections, and we're currently quantifying that and see what uplift we expect from it, reading across the whole of the structure. What we've done subsequently while drilling Hermes is firm up the permits to allow us to drill Zeus.
go in and follow up the success of Athena, put a well in Zeus, which is the second-largest structure in the Olympus area adjacent to Athena. Further, show that the results, the DHIs that we see across this whole area are de-risking it, demonstrate that we see the same sand quality, the same contacts in Zeus. and it will also allow us to again drill deeper into the D sands, where we've seen D sand discoveries in a couple of locations in the East Mediterranean. It should work somewhere in the Olympus area, and this is another opportunity. Zeus is the next well after we finish Hermes. Take about 45 days. We do have the option to drill a sixth well. We're still looking at that.
Obviously, if Hermes is a success, we could go and have a follow-on, well in one of the other four structures in the Hermes area. On that, I think I'll hand over to you, Mathios, I assume, for page 26.
Thank you, Steve. Yes, I would like to wrap up obviously with what I started. This is not just about our existing assets and production. This is also about our leadership position on the ESG front. We have continued to reduce our carbon intensity, 17.3 kilos of CO2 per barrel of oil equivalent, substantially below what it was a couple of years ago. We are continuing on our path to net zero, and after Israel comes on stream, we expect to be close to 7 or 8 kilos of CO2 per barrel of oil equivalent. We had a major development, the Greek government passed legislation allowing or putting in place a legal framework for CCUS. We have submitted an application for our Prinos project.
I don't want anyone to think that we will be investing $hundreds of millions and start to ask questions about diverting cash flow to CCUS projects. We are doing the studies, we're doing the developments, we're evaluating the project. It is a very important project for our path to net zero, and that's where we are at the moment. We're staying focused on the milestones that we need to deliver for the remaining of the year. On page 28, we have delivered the project, and it will come on stream. We have delivered on the Edison integration, as we promised, and the results were great, and we will continue to deliver. First gas from NEA/NI is coming. Improved production from the portfolio is coming.
We have delivered on our promise to declare and pay the first dividend, and we have delivered also a new discovery that will allow us to have further commercialization options in a region that needs gas. Last time we spoke, I told you that being long gas in a region that needs gas is the right strategy. Today, I add that having the infrastructure and gas in this region is the winning combination. We stay focused on our Med region, which we know very well. We know the subsurface, and I want to congratulate our team. You may have seen that we drill wells in 45 days. These are deep water wells with sixth-generation drill ships that we're using.
We have timed our investments very well, and we remain committed to be the leading independent in the exploration and production business in the Med. Stable cash flow generation, predictable cash flow generation from our business, from Karish, obviously, that comes on stream, but also further growth from a very exciting portfolio that we have built. With that, I want to thank you for listening and participating and open the floor to any questions.
Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star one one on your telephone. The first question we are going to take. Just please stand by. The first question from David Round from Stifel. Please go ahead.
Great. Thanks. Morning, guys, and thanks for the presentation. First one, Karish, you mentioned you're introducing hydrocarbons soon, which is great. Are you able to set out any of the other remaining, I suppose, specific commissioning steps and the risks you attach to those, please? Also, what point do you need to notify buyers that gas will be available? Secondly, I mean, we've talked about it in the past, but it does feel like there's no better time to get something like the EastMed pipeline moving. I know that project isn't straightforward, but interested if you've had any constructive discussions there, please.
Okay. David, thank you. On the milestones. We have reached the final stretch. There is nothing at the moment, from what we've seen, of course, the unknowns are unknowns, that we see as a potential factor to delay the project from starting. As I mentioned at the beginning, we are introducing hydrocarbons around the week of the 20th. That, if we want, is the next big milestone, having the whole facility run on hydrocarbons, because at the moment, we're not testing with live gas. Everything is in place. Wells, risers, umbilicals, pipelines, it's all up and connected, so we are. There's nothing major outstanding between now and first gas. As I said, we are not there yet.
We're gonna be there in a couple of weeks or in a few weeks. As I said, this is a multi-year, multi-billion dollar project. I don't want to get into a daily monitoring of what happened and what's happening. We are going to deliver as we promised. I'll let Nick comment on your second question. I'll pick from the EastMed pipeline. There was a recent announcement, I guess, in Gastech from somebody from Eni that said that the pipeline will be on stream by 2025. We're not involved in the pipeline, as you know. My position is very clear. Build it, and we will use it. We will be very happy to use a pipeline that connects the EastMed to the rest of the world, Europe.
We are firmly focused on controlling our destiny, delivering projects fast, and not all companies can move at the pace of Energean in the EastMed. I remind you that there are assets that are sitting undeveloped since 2011, and people are still talking about what development option to use. We took over Karish in 2017, January 2017. With COVID in between, we're delivering now a project when others are still talking about the project. We like to do, not to talk about projects.
that more infrastructure is available to the EastMed because as I said in my closing slide and position, whoever has infrastructure like an FPSO and pipelines, will be the winner in this region. Nick, do you want to comment on, the second question that they-
Yeah. Well, I think Matthew. Thank you for that. I'll pick up a little bit on that point as well. We are having discussions and very recently with a number of potential infrastructure developers, partners regarding, as we've talked about, regional exports. We say regional exports because we believe there are a number of possible routes. As Matthew says, we're the sort of company who will not sit around and wait. We're progressing a number of those conversations in parallel, depending on the resource outcome on our upstream development.
Yes, there is a lot of interest, if you like, restarted in some developments, which were perhaps considered to be a little far-fetched, a few months ago, but certainly are not now, and may well be, should we say, reinvigorated by political interest. In terms of the customers in Israel, we have notified them of, as we've gone forward and have the ability to do so, we've notified them of the date on which we expect to start. Following this call, now that this information is public, that we've just heard today, the customers will also be immediately notified of the expected dates by which we wish them to give us nominations.
The steps, as Mathios said, as we introduce hydrocarbons, we start running the power on gas, and then we start to produce gas in initially very small quantities, but we will need therefore customers to take that. Those customers are engaged in detailed conversations with our commercial and operational team in Israel to ensure that we can push through that commissioning program as fast as possible. Of course, our customers are all aligned because they've been waiting patiently for our gas for some time, and they are looking forward to receiving what is still the most, should we say, desired gas in the region.
Okay, thanks. That's very clear.
Thank you for your question. We are now taking our next question. Please stand by. The next question from Nathan Piper from Investec. Please go ahead.
Morning. Thank you for this, taking my question. Thanks for the presentation. A couple of questions from me. Maybe just to kind of follow on from the discussion around the commercialization. How many more exploration wells do you need to drill to prove up the volumes that you can potentially export? And then how mature are your discussions around potential export agreements or even further gas sales agreements? Really trying to understand the next steps on crystallizing the further growth that the exploration success this year has underpinned. It's the first question. And then second question, you're obviously getting higher gas prices in Israel, Egypt and of course in Italy. You've revised up your medium-term guidance.
I wonder when is the right time to bring forward and revise up your the flow of dividends out of the business, or what's the right way to think about you're going to, you know, you've had a 25% increase in your guidance around medium-term financials. Should we expect a 25% increase in the annual dividend as well, or is that too simple? Thank you. Thank you, Nathan. How many more wells do we need to drill? We've only drilled one so far, and that's the Athena well. We are going to drill. We're drilling Hermes in a different block, so this is a totally different area. We're gonna come back to drill Zeus to appraise or prove up more resource in the wider Olympus area.
We have, as you saw in the presentation, as Steve mentioned, an option to drill a sixth well that has not been declared yet. I have to tell you that the prices that we have chartered or booked this rig at, and all our services. We will not be able to see them for the next years with what's happening in the drilling markets around the world. Very clear, just to avoid any misunderstandings, we have not declared the sixth option, but it is very attractive rates that we have to take advantage of. A lot of it will depend on the results of Hermes. If that proves the structures and the gas that Steve mentioned, we will get the confidence to continue and to finish with the sixth well. That's gonna be the end of that drilling program.
Second question was how mature are our discussions on export routes? We are in the center of East Med, and we have three major routes to consider. The first one, and it's public, that has been discussed, is an export route through Cyprus into Europe with an LNG terminal, a floating LNG terminal, not owned, not built by us, but chartered in from the market. This is a route that allows us to take advantage of the highest prices that we see in the LNG world. Second route is to go to Egypt, and there's a MoU that we've signed with EGAS, that's also public information, to send 3 BCM through the existing infrastructure, the existing network through the pipelines that either go through Jordan or through the EMG pipeline.
Third route is to continue selling to Israel, either backfilling the FPSO or putting a new pipeline because we have also a capacity limitation from the pipeline that cannot go beyond 8 BCM. All of which, of course, requires new infrastructure to produce this gas. We are evaluating all three options. At the moment, the problem is not where to take the gas. The issue is finding the gas quantities that will allow us to optimize the results of the commercialization options. Also, remember that we have a huge advantage. We have an FPSO that has just been built. We know how much it costs, we know where to build it, how to build it.
If we find the quantities that we expect, the 200,000 barrel a day target that we've mentioned and that we are aiming to get to can very easily be repeated with an expansion of Energean or a repetition of what Energean is today. If you remember, 2018, we bought Karish and Tanin from Delek, and that was 66 BCM. On the back of 66 BCM, we have built Energean to what it is today. You saw from the presentation that the targets are to find similar amounts of gas. My target would be to double the size of the company over the next years, through a repetition of what we've done before. We don't have to do it 100% this time. We can find partners. There's a lot of interest from governments to support infrastructure to connect the region.
Don't assume that we need to repeat the investment program. We are firmly focused on deleveraging. We're firmly focused on keeping our debt to EBITDA below one and a half times. I'll let Panos talk to you about revised guidance and dividends.
Yeah. Hi, Nathan. Good morning from me as well. Right. Yes. No, today we will not be revising our minimum target of $1 billion. I think you can assume that we can safely say we are $1 billion + $50 million, given the fact that we started a quarter earlier than what we had announced. Is it simplistic to assume 25%, 30% increase in the medium-term target, especially when we don't assume in our projections a very high commodity price environment? I want to reiterate, those targets are based on $65 Brent and €20-€25 per megawatt hour in the medium term. No, it's not simplistic because our cash flows and revenue profile is pretty straightforward. But as Mathios said, we need to be careful with capital allocation.
We don't want to make statements that we cannot beat and definitely meet. We have the growth potential of the company that we need to keep on supporting from our treasury. Of course, the deleveraging that will happen very rapidly in the next 18-24 months. Of course, the dividends, the amounts that we have announced, I want to emphasize, is at least and the minimum. It's not a target. We always try to keep the targets, but we're not in a position right now to be announcing a target. We want to be, you know, some people say prudent, we want to say conservative when we make such statements. I don't think many people have gone out to commit to a billion up to 25. We have done that.
When we are equally confident to increase that minimum level, we will do so and expect that to happen in the next few months.
Fantastic. Thanks very much.
Thank you for your question. We are now taking our next question. Please stand by. The next question from Werner Riding for Peel Hunt. Please go ahead.
Morning, everybody. Actually all my drilling and monetization commercial questions have already been answered, actually. Perhaps while I've got the floor, you know, I'd be interested to hear how you'd characterize the situation at the moment between Israel and Lebanon, and, you know, what your level of concern is there, and also maybe if you could comment on what you're hoping to see come from the talks between Israel and Lebanon and the U.S. envoy, who I believe is shortly going out there.
Sure, sure. We never get involved in political discussions. Of course, we operate in a very sensitive geopolitical area. We know that there are discussions ongoing. Our business is to drill wells, deliver projects, and deliver gas. We let governments do their job, decide what they want to do with their maritime borders. We operate in Israel under a license that the Israeli government has given us. We have total confidence in Israel's country and government and the ability to protect the interests of the country. I think I will leave it there because, you know, it's not my position to comment on the U.S. envoy negotiations between governments about maritime borders. We have done so much activity so far. We've drilled wells, we've laid pipelines, we've got the FPSO, we will start production.
Our vision is to continue producing gas in the region for everyone and, for the benefit of the people of the Mediterranean. That's our position. We started from Greece, as you know. We're a UK PLC listed in London, that has assets in many countries, and we aspire to continue to expand in the region. Not my place to comment on political discussions. Are we concerned? The answer is we are in Israel. We are in a country that has the ability to protect its interests more than anyone else, probably. We are totally confident about that. That's really it. There's not much more we can do.
Sure. Understood. Okay. Thank you.
Thank you for your question. We are now taking our next question, so please stand by. The next question from Matthew Smith from Bank of America.
Hi there. Good morning. Thanks for the call, and agree, absolutely, very comprehensive so far. Perhaps just a couple of smaller remaining questions from me would be around, first of all, the sort of operating and fiscal environment in Egypt, noting the sort of improved gas price agreement that you've secured in Abu Qir. I wondered if you were able to sort of either quantify that at all, but also speak to the environment in Egypt amongst your wider licenses. Do you see scope for whether it's improved gas price offtake or whether it's improved fiscal terms on a wider scale with your other licenses in Egypt? I think that'd be interesting to hear about if we could.
Just my final question would be around the spot price environment for gas in Israel as that sort of relates to the contract you have with the IEC. Could you give us a bit of color where the sort of spot market is in Israel just in terms of current price levels, please?
Yeah, thank you for the question. Egypt. We are in a country that has not changed, ever, license terms. Even in the darkest times when the Muslim Brotherhood had taken over, there was a revolution. Expats were leaving. Countries were leaving. Nobody changed fiscal terms in Egypt. Every license is a concession agreement that is ratified by law, by the parliament, and stamped by the president, and nothing ever changes. The stability of the country as far as, the environment for oil and gas is concerned is, I think, unprecedented. I mean, you know, think about the U.K. Their licenses change, license terms change all the time. Tax terms change all the time. Nothing changes in Egypt.
The reason why we renegotiated the price, and, I'll let Nick comment on, the levels and, what we see in the spot price, which was your other question, is that we need to continue investing in infill drilling in Abu Qir. We need to increase the production, and that's exactly what the Egyptians want. They're incentivizing us to continue investing in the country by giving us or aligning a good gas price amongst our licenses. The operating environment is excellent. Our relationship with the government is very strong. We are very comfortable operating there. There is no issue with suppliers. There is no issue with service providers. We obviously have concerns about the overall financial situation of the country, which is affected, because we are in a country that imports a lot of wheat.
Food prices are going up. Inflation.
Is going to go up like everywhere else. Egypt has its challenges as a country, but we're very comfortable to operate there, and we think that it's a fantastic place to invest and produce more gas, especially taking into consideration that it's 100 million people that are needing energy to continue the growth of their country. Great place to be. No issue with changes, and a gas price that is aligned among our licenses now to incentivize us to continue investing in the country. That's the overall environment. Also, we saw the minister maintain his position despite a major reshuffling of the cabinet. That is another very strong message of stability in the country. Totally comfortable with Egypt. Nick?
Yes. No, I'd say that, Mathios Rigas is already aware of that. We've, you know, taken some new blocks in the last exploration round onshore. We still have a very large gas prospect, which we expect to be drilling along with Eni next year. Our partner made some very bullish statements about their experience in Egypt on a panel at Gastech recently with the Egyptian minister sitting alongside them. Let's share that optimism. Yes, there's plenty of room for growth in Egypt still. As regards to the pricing, yes, we've realigned the pricing in Abu Qir to be similar to our recent NEA/NI investments.
That's sort of more aligned, if you like, with the general convergence of regional pricing, with particularly sort of deep water prospects like Zohr being priced probably even slightly higher. In terms of that knock on to the Israeli market, what that means is that the existing exports of Israeli customers, Israeli producers to Egypt are effectively driving the spot price in Israel, because it's, if you like, it's a discretionary sale for them to sell gas in Israel. We know what the gas prices in the market are because we're buying gas from the market to initially start up Karish to import gas to start up the turbines.
We've been active in that market, and I can tell you that the prices currently in the spot market are materially higher than our long-term prices, so in the region of $6-$7 per MMBtu.
Perfect. Well, thanks so much. Appreciate all the detail. Thank you for your question. We are now taking our next question. Please stand by. The next question from James Carmichael from Berenberg. Please go ahead.
Hi. Morning, guys. Just a couple of quick ones, I guess. Just sort of thinking about the balance sheet going forward. I mean, if we look at your leverage and EBITDAX targets, then I guess you're sort of already there, even taking into account sort of peak net debt guidance, which I guess is for the end of this year. Just I guess the question is, you know, how should we think about sort of absolute debt reduction? Or is it more likely that you just sort of refinance the bonds and push them out to the right and sort of keep that cash for other purposes, dividends or I guess a question on M&A as well, and if there's any appetite to grow inorganically?
Just on the Israel price, interested just to get a bit more detail as far as you can into what goes into setting that. Just a confirmation that if the world sort of calms down at some point, that price can't come back down below that new level. Thanks.
Right. Good morning. Can I refer you to page 10, where our debt profile, there is a schematic on our debt maturity structure. Regarding the absolute debt, and obviously depending on the market conditions at the time and the pricing of the debt capital markets, our intention is to not fully repay that 2024 and 2026, and I think we're implying that pretty much. Will we refinance dollar for dollar? No, we want to achieve in absolute terms, not only as a percentage and as a ratio, in absolute terms, we will be bringing down our debt quantum. We want to do it a little bit more smoother, given the fact that our gas contracts go well into the 2030s.
That will allow us to continue paying our dividends as announced. Again, I want to emphasize our target dividend. The minimum is something that we, you know, want to communicate, but it is the target one that we have in mind, and allow enough capital for the growth aspirations of the company to continue being pursued, number one, and delivered, number two. The company will grow and I hope and trust looking five years forward, we will need to discuss different types of quantum of capital, production and projects. We don't feel that Energean finishes first half of 2024 with the sanctioned developments. As we have communicated, the time that Energean was 100% capital intensive development story is now being balanced.
You know, we will keep a good balance between growth capital, dividend stream, and, you know, obviously deleveraging our capital structure.
Let me pick up the M&A question, and Nick can comment on the Israel price. First M&A deal we did was the acquisition of Prinos, which we bought for $1 million in 2007. Second M&A deal we did was to buy Karish for $48 million plus deferred payments. That created the project that we have today. Third M&A deal we did was to buy Edison, probably at the bottom end of the market, effectively for a $0 price if you add the receivables from Egypt. We have a track record of buying when we see that there's deep value created for our shareholders. We're focused in the Med. If we do see opportunities, of course we will act. Our business is based on three main principles.
We are resilient, we have continuous opportunities, and we're agile. On the back of that, the message is opportunistically only we will look at things that add great value like we've added today. I don't have anything at the moment that I would mention that is in that category. We're looking at everything in our region. As I mentioned earlier, we know our region, but we're not obviously going to destroy the value that we have created. Nick, what happens if gas prices come down in Israel?
I think gas prices are governed in Israel by formulae. Obviously each time there's a new round of long-term investment, those formulae are examined and pegged to the market conditions at the time. I've seen recent reporting in the press, and I'm just referring to that, not necessarily any other opinions, that Israel in common with many other countries in the world these days has realized that it probably needs more gas-fired power generation than it thought, because the transition is a slightly slower one, than perhaps many people hoped. As we've said in this presentation, we have a number of possible export routes, and one of those three legs strongly is to continue to sell into the Israeli market.
The Israeli market continues to have demand and continues to also be an exporter. I think that what that does is it creates a strong environment that the next tranche of developments will go at higher prices. They'll go at something closer to regional prices because those are discretionary. While you can export to markets, to the extent that you're not required to do so to have a domestic obligation, then the price that new developments will be sold at will be something akin to those regional prices.
Also, one more comment from me on this. This is not just our view. We have hard floor prices in our contracts. Regardless of what happens, even if the market collapses again, we're all protected by very hard numbers in each one of those contracts. That's what makes us unique.
Understood. Very clear. Well, thanks.
Thank you for your question. We are now taking our next question. Please stand by. The question from Rachel Fletcher from Morgan Stanley.
Good morning. Thanks for taking my questions. Most of my questions have actually been answered, but I have a couple of quick questions left. The first is on your CCS plans in Greece. I was hoping you could give an update on the project there, please, and timelines for the project and key development to look out for in the near term. That's my first question. And my second question is on your UK portfolio. How are you thinking about your UK portfolio at the moment, considering the focus on energy security? Thanks.
Thank you, Rachel. On CCS, we have the Prinos field in Greece that is a very mature asset. It will produce oil, but clearly the focus from that asset is at some point in time in the future to convert it into a CO2 storage site. Now, today, the economics are not obvious, so I do not have a business plan to share with you to show that it's worth investing the amount of money that is required to have a CCUS project. These projects need heavy subsidies from governments, and that will dictate the pace at which this project will move. What we are doing is we are doing all the technical work, the soft work. So we're doing a subsurface study, we're doing a facility study. We're signing MOUs with all the big emitters to understand what the market looks like.
Greece produces something like 11 million tons of industrial CO2, which is easy to capture and move into a CO2 project, a CCS project. We're mapping the CO2 sources. We are working on legislation. We're working on licensing. We're working on defining the project, but we are nowhere near investment decisions. Which, to be taken, will need heavy subsidies, which is what we're seeing in Norway, what we're seeing in the US. If we want in Europe in general to see our CO2 levels come down through CCUS, governments and the European Union need to intervene. We're not there yet. I don't foresee major CapEx, but we will be ready when and if regulators and governments decide that this is what they want to do to take advantage.
On the UK portfolio, we have clearly said that this is non-core for us since we are Med-focused. We are evaluating all options. It doesn't play a major role in energy security in the UK. It's a small portfolio, non-operated, doesn't fit with our style and our niche, which is the Med. As I said, we're evaluating all options, and as I clearly said, it doesn't fit with our core strategy. I expect that we'll either run down the portfolio or we will find a home for it, which is better suited than it is compared to us.
Very clear. Thank you very much.
Thank you for your question. We are now taking our last question, so please stand by. The next question for HELLENiQ ENERGY from Yael. Please go ahead.
Hey. Good afternoon. My question is actually the one that is left. Referring to percentage of liquids that you expect in Karish now that you have more of the sense of the reservoir and the other drillings. You have this relatively low prices and they are. You have associated condensate or even oil. How do you think the liquids will be in this final mix?
Steve, do you want to take this?
Sure, yeah. Okay, yes. We have liquids. It's a mixture actually. It's not straightforward. It's not oil, it's not a condensate. About a third we would call condensate, and about two-thirds is oil. We have about 100 million barrels, 102 million barrels in total, largely in the central parts of Karish, where we drill the KM3 well. We have three wells on Karish. Two produce at relatively low rates, but still substantial compared to Leviathan and Tamar. One that will produce at a very high rate. In the first year of production, we will balance the gas flow between the three wells and try to fill up the oil train, which has a capacity of about 20,000 barrels a day.
In that first year, you should see production of gas at about 550-650 MMscf/d, 20,000 barrels of liquids. Matthew's mentioned that we've got two growth projects. These ramp up the gas rate from 650 to 800 MMscf/d, and the oil rate to 32,000 barrels a day. As soon as that project is online, which is towards the back end of next year, then we will be able to fully open up the potential of the KM3 well and fill to 32,000 barrels a day. As I mentioned, we've actually found an oil rim in the KM3 area. It's highly unlikely that we will drill a well to produce that oil rim.
What it will give us is a buffer between the water and the very heavily saturated gas. We will have the water pushing the oil through the reservoir. We'll get a much more uniform sweep than you can often see in the gas reservoir. We actually see that this layer of oil will give us a positive benefit in terms of gas. Eventually we will see some of it come through maybe in five years time or eight years time. We'll see an increasing rate again from the KM3 well. Hopefully that clarifies. The other developments, obviously like Athena, Zeus, these don't have the same level of liquid. They're very similar to Tamar and Leviathan. They have 4-5 barrels per million standard cubic feet. Still a mixture of condensate and oil.
There's an overprint of oil everywhere in the basin, but it's concentrated largely in the Karish field, which is a big high and has a high in the deeper levels where we believe the oil is originating.
Okay, thank you. Just a follow-up question. How are you going to dispose of it in terms of marketing? I know that you mentioned already that you have the infrastructure, but can you give a bit more details about it?
I will talk about infrastructure and Nick can talk about the marketing of it. The oil is offloaded at site, at the FPSO. This is the reason we put the FPSO in and not a development like Leviathan, is we wanted to keep this liquid as far away from the coast as possible. Has no environmental connotations. You don't bring it on the shore across the pristine beaches in Israel. We will store it. We have 700,000 barrels of storage. Then once every 2-3 weeks, a tanker will come in. We will hold it in position 200 meters behind the FPSO, and we pump the oil and the condensate mix into the tankers. Tankers of 450,000-500,000 barrels capacity.
Nick finds buyers. Nick, you can talk a little bit about the commercialization.
Sure. During the commissioning period, certainly for the first couple of cargos, we are planning to offload that in probably slightly smaller vessels to refineries in Europe while we just cope with the unpredictability of the commissioning period. Longer term, you know, cargos 3-8 through the rest of late 2022, early 2023, we expect to have through our marketing agreement access to a much wider market base. We'll be looking to establish the value of this new crude, this new light crude on the market.
Mm-hmm.
We have some belief that we think it should be valued as around Asgard, which is very close to Brent, to dated Brent.
Mm-hmm.
We are hoping that markets, particularly in the Middle and Far East, might value this more. This is a, you know, this is an export project. We know there are customers in Israel who are also interested, and they will be participating, as with everyone else, in assessing the value of this and putting their best foot forward.
Okay. Thank you very much for taking my question.
Thank you for your question. There are no further questions. I will hand the conference back over to Mr. Rigas for closing remarks.
Thank you all for participating. Thank you for your excellent questions. We remain focused on delivering gas. We remain focused on delivering our projects and all our promises. That's what Energean is all about. We remain focused on continuing the growth journey that started back in 2018 with our listing. We'll continue undoubtedly with the same appetite, energy, and interest. Thank you everyone for supporting us. To our shareholders, we are very pleased to be giving back the first dividend, which is obviously something that we did ahead of what we had promised. Thank you all, and we will be speaking very soon on more good news, I hope.