S&P rates Energean, notes B

S&P said it gave B ratings to Energean plc and its planned senior secured notes.

Energean is developing the Karish gas field in Israel. The agency said if the company succeeds it will be transformative for the company adding scale and diversity.

“Our highly leveraged financial risk assessment reflects weak credit metrics and expectation of negative free operating cash flow over 2021-2022. We expect both FFO to debt and debt to EBITDA to be weak over 2021-2022, given that we consolidate the $2.5 billion project finance in Israel, while the project does not generate EBITDA. At the same time, high capital expenditure (capex) to fund portfolio developments will likely result in negative free operating cash flow (FOCF),” S&P said in a press release.

The outlook is positive. The outlook reflects the potential for a raise Energean’s rating in the next 12 months or so if it starts operations at the Karish field on time and without any meaningful cost overruns, S&P said.

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