Moody’s rates Energean Israel notes Ba3

Moody’s Investors Service said it assigned a Ba3 rating to $2.5 billion proposed senior secured notes to be issued by Energean Israel Finance Ltd. (Energean Israel Finance).

Energean Israel Finance is a special purpose vehicle owned by Energean Israel Ltd. The notes will be secured by first-priority fixed and floating pledges on certain assets of Energean Israel, including the leases to the Karish Main, Karish North and Tanin gas fields, a first-priority fixed pledge on the shares of Energean Israel and certain cash accounts.

“The rating reflects, as positives, the substantial and low-cost gas and condensate reserves in the Karish Main, Karish North and Tanin fields, which collectively had 1P proved reserves of 66.3 billion cubic meters (bcm) of gas and 62.6 million barrels of oil equivalent (mmboe) of condensate as of Dec. 31, 2020,” Moody’s said in press release.

However, the agency noted uncertainty around Karish Main project’s completion, plans for ongoing development and exploration activity to maintain production at contracted levels and support further growth, high financial leverage and significant flexibility to maintain or increase this over the life of the notes, limited liquidity and reliance on one asset in a region with substantial geopolitical risk limit the rating.

The outlook is stable, reflecting an expectation that Energean Israel will successfully ramp-up to full production without any added material delays and then reach strong financial metrics, particularly the ratio of funds from operations to debt, with a progressive deleveraging, Moody’s said.

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